( 
181 
American Agriculturist, September 15,1923 
Shall I Buy Stocks or Land ? 
Matters of Finance and Investment 
By G. T. HUGHES 
AT the age of 43 I find 
myself possessed of 
about $6,000 cash at 
present in savings hanks and I own jointly 
with my brother, our farm, stock and equip¬ 
ment free from debt. I am unmarried—no 
dependents. 
I should appreciate your advice as to in¬ 
vestment of my money. Most of the con- 
servative investment advice I read in the 
various magazines seems to be toward safe 
bonds or stock, but it has always seemed to 
me that this advice fails to take iato con- 
sideration what I regard as very probable, 
that is—the cheapening of money as time 
goes on. For instance, a thousand dollar 
bond bought with money at its present value 
will be paid off in say twenty years with 
$1,000 of cheap money worth only perhaps 
half as much. 
Thus it seems to me that actual property 
is the thing to invest in—dwelling houses, 
for instance, except that at present they are 
only to be had at inflated war time prices— 
actual property that would depreciate in 
value as money cheapens. What do you 
think of this idea? 
How do stocks behave as money cheapens? 
Do they go up in value or not? 
I might say that I think your articles in 
the American Agriculturist are an interest¬ 
ing and valuable feature of the paper and 
I trust they will be continued.—H. L. H., 
New York. 
What is the basis for your belief 
that twenty years hence money will 
be worth only half as much as it 
is to-day? Surely if that is the case 
it would be a mistake to invest in any 
bond or security the rate of return 
on which is fixed. However, as far 
as we are able to discover there is no 
justification for the theory that prices 
move continuously in one direction for, 
of course, what you mean when you 
say money will be cheaper is that prices 
will rise. It is only over a compara¬ 
tively recent time that statistics are 
available covering fluctuations in com¬ 
modity prices. The best summary for 
the period from 1810 to date is that 
prepared by the Harvard Economic 
Service, and this shows that except for 
the war periods the general tendency 
of prices was downward and not up¬ 
ward, as it would have to be if your 
theory was correct. 
which you are sure 
will be in a better rel¬ 
ative position a year hence than it is 
to-day to say nothing of twenty years. 
And the investor in stocks takes a risk 
of unfavorable business developments 
generally and of unfavorable develop¬ 
ments in the case of his particular com¬ 
pany. These two risks are less in the 
case of seasoned and conservative 
bonds, in our judgment,_ than the case 
of some real estate and in most stocks. 
This is as near as we can come to 
answering your question. 
Back in 1812 
Starting from the peak just after 
the War of 1812, prices declined with 
temporary interruptions until 1849, 
when gold discoveries in Australia and 
California increased production and in¬ 
augurated a period of rising prices. 
Then came the Civil War and currency 
inflation which raised prices enormous¬ 
ly, but even so not quite to the peak 
reached in 1812. The following de¬ 
cline continued until 1897. You may 
remember that prices about that time 
were at the low, and this low was lower 
than at any time since the beginning 
of the century. Since 1897 there has 
been a very sharp rise, including the 
period when the high cost of living 
was so much talked about and cul¬ 
minating in the great inflation follow¬ 
ing the World War. Prices at the 
peak during this period were higher 
than ever before. Since that peak in 
1920 there has been a decline. Now no 
one can predict the future, but, reason¬ 
ing from the historical record, there is 
no ground for the belief that the trend 
will continuously be upward. 
The Problem of all Investors 
Coming down to your investment 
problem. If you buy bonds in a period 
of low prices such as prevailed in 1897, 
and they mature twenty years later, 
1917, in a period of high prices, why 
obviously you lose. The $1,000 you 
loaned in 1897 would buy more goods 
than the $1,000 returned to you in 1917. 
Also, during that period each succes¬ 
sive interest coupon would buy less in 
the market, but if you had bought a 
bond in 1877 which matured in 1897, 
you would have been the gainer. For the 
$1,000 returned to you in 1897 would 
buy a great deal more than the $1,000 
you loaned twenty years previously. 
There is no way of avoiding this risk 
except by not having any money to in¬ 
vest. You will take it the opposite way 
if you invest in real estate, as you sug¬ 
gest. In periods of higher prices and 
periods of advancing prices the owner 
of stocks and the owner of real property 
benefits but conversely in periods of 
declining prices he suffers. There js 
also, as you know, risk involved in 
investment in real estate as in stocks. 
It is very difficult to select real estate 
TRY SOMETHING MORE 
CONSERVATIVE 
The Archer-Daniels-Midland Co., with plants 
■at Minneapolis, Toledo, Edgewater, N. J., 
Buffalo and Chicago offer some five million 
dollars of preferred 7 per cent stock at 98 
and interest. Could you give me any in¬ 
formation on this stock? Is $100 in Central 
Mass. Light and Power 6 per cent con¬ 
vertible five-year bond series C due January 
1, 1927 a good risk? Do you consider Pneu¬ 
matic Scale Corporation (Mass.) 8 per cent 
First mortgage bond convertible into 8 per 
cent preferred stock a safe buy ? This costs 
105.—R. J. T., New York. 
Archer-Daniels-Midland preferred 
stock is probably good but not high 
grade. The same is true of the other 
securities you name. For a small in¬ 
vestor we think something more conser¬ 
vative is very much better. We sug¬ 
gest the preferred stock of the Stand¬ 
ard Oil of New Jersey, listed on the 
New York Stock Exchange, selling 
about 117, paying $7 annually, and so 
giving you a return of around 6 per 
cent. We are confident you will be 
better satisfied in the end to buy this 
stock. 
* * * 
Financial Department:—I have invested 
500 shares in the New England Furniture 
Company, Minneapolis, Minn., at the rate of 
8 per cent. Please let me know if this in¬ 
vestment is safe?—A. R., Minneapolis. 
The method adopted by this company 
to provide funds for its business is 
novel to say the least. As we under¬ 
stand it, they sell furniture on the in¬ 
stalment plan and finance themselves 
by selling 8 per cent notes to indi¬ 
viduals instead of by bank loans. As 
long as the company is financially pros¬ 
perous we see no objection to the plan. 
You understand just what you are do¬ 
ing, you are not investing money in 
stocks or bonds, but are loaning money 
on a promissory note to a business firm. 
The strength of the investment depends 
entirely on the credit of the firm. In¬ 
asmuch as your residence is in the ter 
ritory covered by this company you are 
in a position to keep yourself informed. 
* * * 
Financial Department:—Will you kindly ad¬ 
vise, if the Colorado Fuel and Iron Sinking 
Fund 5%, due 1943, is a safe investment? I 
would also like your opinion of Wabash R. R. 
First or Second Gold Bond 5s, due 1939.— J. 
F. T., New York. 
Earnings of the Colorado Fuel & 
Iron Company do not justify a high 
rating for the bond, which sells about 
89. We would rather have a Hudson 
& Manhattan refunding 5 of 1957, 
which sells about 81. Nor do we regard 
the Wabash bonds as particularly de¬ 
sirable. The road manages to earn 
charges, but there is little left over. 
Instead of Wabash first _5s we suggest 
Southern Railway consolidated 5s sell¬ 
ing about the same jirice, and instead 
of the second 5s we suggest Colorado 
& Southern 4 1 / 6s of 1935. 
* * * 
Financial Department:—I hold a small 
block of shares of the Hydro United Tire 
Co. of Pottstown, Pa., who are in the hands 
of a receiver. The largest stockholders have 
formed a refinancing committee. They offer 
to give new stock for my old at $5 per 
share, providing I buy the new stock for 
50 per cent of the amount I now hold. Would 
you advise me to invest in order to save 
what I have? Can you tell me if Frishmouth 
stock is any good?—W. F. R., Pennsylvania. 
Our advice is to put no more money 
into the tire enterprise. It would be 
better to rest content with the loss you 
already have than to take any more 
chances. Probably the tobacco stock 
you name has merit, but as the com¬ 
pany does not issue a financial state¬ 
ment it is not easy to appraise the in¬ 
vestment rating of its stock. We think 
it would be more conservative for you 
to leave it alone. 
There’s A Reason! 
Why are all Moncrief Pipeless Users, Boosters? 
Because the furnace does deliver the best of 
service, distributing moist warm air to all corners 
of the house. It puts the dust and muss of the 
coal, wood and ashes down in the basement. It 
eliminates the unnecessary work of putting up 
and taking down of stoves. Everyone in the 
family is benefited by the comfort and conven¬ 
ience supplied by the Moncrief Pipeless Furnace. 
No cold, drafty floors in cold, windy weather 
with a Moncrief Pipeless Furnace. 
Ask for catalog today 
Eastern Distributors 
F. H. HANLON, Batavia, N.Y. 
E. L. GARNER 
177 23d St., Jackson Heights, L. I., N. Y. 
THE HENRY FURNACE & FOUNDRY COMPANY 
CLEVELAND, OHIO 
M0NC 
PIPELESS 
FU 
TREES AND PLANTS 
Direct from grower at lower prices. Apple and Peach trees. 
Asparagus and Berry plants, Privet and Barberry hedging. 
Guaranteed. Write for new price list. 
WESTMINSTER NURSERY, Desk 25, WESTMINSTER. MD. 
PATENTS 
Booklet free. Highest 
r Terence-. Best results. 
Promptness assured. 
WATSON E. COLEMAN. Patent Lawyer, 624 F Street, 
WASHINGTON. D C. 
__matj 
are ijmi property Insured? 
IVlANY'a farmer who says"‘Tm 
Insured”—simply means that he has a 
fire insurance policy. The policy is 
undoubtedly all right as far as it goes, 
but frequently it is inadequate 
because it does not give enough 
protection. That is the reason that 
the booklet-“MY PROPERTY”,is 
of such importance, and why it will 
be sent without charge to owners 
and managers of farm property. 
Send for “MY PROPERTY”—it 
helps you determine property 
values and may save you a bad 
loss. Here is a coupon. 
ARTFORD FIRE 
NSURANCE C 
HARTFORD — CON 
Mail the Coupon today for Your 
copy of this Farm Inventory Booklet 
