72 THE POPULAR SCIEXCE MONTHLY. 



But for tlie losses referred to is there not too often somebody else to 

 blame ? The seller of investment securities is usually not the maker of 

 them, but a professional middle-man known as a broker. The extent 

 of his responsibility is a very interesting question. Is he justified in 

 assuming that caveat emptor is the rule that is to govern ; or is it in- 

 cumbent upon him to inform himself as to the true character of the 

 paper he offers, and give his customer the benefit of the knowledge he 

 acquires ? In other words, does he not, by virtue of the relation he 

 bears to the purchaser, which is ordinarily one of confidence, become, 

 morally at least, a sponsor for what he sells ? In view of the millions 

 of trash that have been unloaded upon the public as solid investments, 

 of the true character of which it would not have been difiicult for any 

 one making a business of handling paper to inform himself, it is hard 

 to reach any other conclusion than that there has been very great 

 laxity on the part of many who, under the plausible titles of banker 

 and broker, have made the selling of securities an occupation. It will 

 hardly suffice for them to say in defense that they sold the paper at 

 market prices. They should have known that the value of what they 

 sold bore a reasonable approximation to the price that was paid. If 

 they did not know it, and could not ascertain the fact, they had no 

 business to dispose of the property. Manifestly, a higher standard in 

 such matters should prevail, and the way to secure it is to hold those 

 who professionally market investment securities to a far more rigid 

 accountability than has heretofore been insisted on. 



By what rule or rules is the investor now to govern himself ? No 

 formula can guarantee him absolute safety. One thing, however, he 

 can properly count upon, viz., that he must expect to pay a fair price 

 for a good security — one that will return him no more than a mod- 

 erate interest on his money. If he wants to speculate, and is willing 

 to take risks, that is another thing. He can then look for bargains. 

 But there is such a thing as going too far in the matter of prudence. 

 The investor may pay too dearly for safety. There are securities which, 

 compared with others that are to be had, sell at prices much above 

 their real value. The reason is that they are universally known to be 

 good both as to principal and interest ; but there are plenty of others, 

 that may be had at lower figures, which arc just as good. There is 

 no reason in the world why the investor should not get at par all the 

 paper he wants, that will yield him six per cent interest, and be as safe 

 as any property can be under human supervision. In making the 

 selection no more judgment is demanded than in purchasing lands 

 and cattle. Two very common and often fatal mistakes should 

 be avoided. One is in relying solely upon the advice of a broker. 

 By far the greatest number of losses to investors has been in securi- 

 ties purchased exclusively on the recommendations of interested com- 

 mission-men. While it is well to get the opinion of a reputable broker, 

 the purchaser should investigate and decide for himself. The other 



