The Investor's Primer 
 
 BY 
 
 John Moody 
 
 OF THE 
 
 { UNIVERSITY ) 
 
 OF 
 
 Published by 
 
 The Moody Corporation 
 
 35 Nassau Street, New York 
 1907 
 
Copyright, 1Q07, by 
 JOHN MOODY 
 All rights reserved 
 
 THE MOODY-BARTON PRESS 
 ELIZABETH, N. J. 
 
PREFACE. 
 
 There has long been a demand for a concise 
 handbook which would give, in simple, under- 
 standable language, definitions of all the im- 
 portant terms and phrases employed in the in- 
 vestment and banking business. This little 
 book represents an effort to in some measure 
 supply this demand. 
 
 The book is really in two parts, the first part 
 covering the general definitions of finance ; the 
 second giving specific information regarding 
 the various issues of preferred and guaranteed 
 stocks which are generally classed among the 
 investment issues. Many other small books 
 furnish information regarding bonds, quota- 
 tions, etc., etc., but this specific and useful in- 
 formation has not, as far as the writer knows, 
 been heretofore presented for popular uses, in 
 this particular way. 
 
 Although the definitions are all arranged 
 alphabetically in dictionary style, yet, to facili- 
 tate practical use of the volume, an alphabetical 
 index is inserted in the back. 
 
 173039 
 
vS 1 
 
 V 
 
 OF 
 
 CALIF 
 
 Introduction 
 
 >-pHE investment of money is a business, 
 just as the manufacture of shoes and the 
 selling of food are businesses. But modern 
 investing is even more than a business; it is 
 influenced by and covers all businesses, all en- 
 terprises, all industry. In the early days of 
 the Republic, the situation was, of course, 
 somewhat different. At that time there was 
 but little wealth and therefore little capital. 
 Population was sparse, privation was great, 
 men were absorbed in holding body and soul 
 together, in feeding and clothing themselves, 
 rather than in seeking for luxuries. There 
 was no leisure class in those days and, as a 
 consequence, no investing class. For then, an 
 investing class could only be drawn from a 
 leisure class. Nowadays investors are made 
 up from all classes, and a vast amount of 
 money which is invested in stocks and bonds 
 and other enterprises is the money of the poor, 
 of the moderately-well-to-do and of the indus- 
 trious, as well as of the merely rich and the 
 non-industrious or idle. One hundred years 
 
 5 
 
6 THE INVESTOR'S PRIMER 
 
 ago only a very few could spare anything be- 
 yond their daily needs for investment in out- 
 side things. If they accumulated any wealth 
 at all above their cost of living, it was used to 
 buy or build a home, raise and educate a family 
 or develop a small undertaking of their own. 
 And, indeed, even though they acquired or 
 possessed surplus wealth, practically the only 
 forms of investment accessible were govern- 
 ment securities or loans upon realty. There 
 were no railroads, no trolley companies, no 
 manufacturing enterprises of large size, or 
 other fields for the productive employment of 
 surplus capital. Even savings banks were 
 practically unknown, and mining or explora- 
 tion enterprises were largely of that uncertain, 
 speculative nature that only the boldest and 
 least timorous would look favorably upon. 
 
 But to-day the field of investment covers 
 enterprises of every conceivable nature. 
 Manufacturing corporations covering every 
 thinkable need or luxury of the human being, 
 distributing concerns selling every kind and 
 class of necessity and luxury in the line of 
 food, clothing, or what not, are all embraced 
 in the investment field. Transportation 
 methods of every kind from the stage-coach 
 to the powerful locomotive, from the coal cart 
 to the automobile, are operated with the capi- 
 
INTRODUCTION 7 
 
 tal of investors. Our department stores, our 
 restaurants, our candy manufacturers, our 
 theaters, our magazines and newspapers, the 
 advertisements in the street cars, many of the 
 metropolitan barber shops, the boot-black 
 stands, and the news stands and book stores are 
 operated by corporations, the capital in which 
 is largely derived from investors. Not a large 
 building is now put up on lower Broadway but 
 that an enormous corporation puts in the foun- 
 dation; another corporation erects the super- 
 structure and still others put on the finishing 
 touches, all being concerns whose shares or 
 bonds are owned by investors in all parts of 
 the country. The hats we wear, the umbrellas 
 we carry, the suit of clothes, the shoes, the 
 socks, the shave we had this morning, or the 
 ham we ate this noon all these were shaped 
 and produced to a large extent by the money of 
 investors. When we realize that one corpo- 
 ration in this country boasts of over eighty 
 thousand stockholders, and that many others 
 are known to have over thirty thousand, we be- 
 gin to get a slight idea of the magnitude of 
 the investment field. 
 
 But this is not all. Not only is all modern 
 (business essentially the investors' field, but 
 all the obligations of municipalities, of coun- 
 ties, cities and States are held by investors. 
 
8 THE INVESTOR'S PRIMER 
 
 The governments themselves build up their 
 navies and armies, carry on wars and develop 
 public works with the money of investors. A 
 case in point is our own Panama Canal. And 
 not only do the investors of one country sup- 
 ply funds for their own activities, but they also 
 supply much for the activities of other nations. 
 Thus, when the American is investing money 
 in a Mexican gold mine or in Japanese Govern- 
 ment bonds, he is supplying investment funds 
 to undertakings in those countries, and when 
 the Englishman or Frenchman buys our rail- 
 road or industrial bonds or stocks, he is supply- 
 ing investment capital for undertakings in our 
 own country. The investors* field in this 
 country would seem, therefore, to be limited 
 only by the wealth of the country itself. 
 
 But what about the methods for investing 
 money? Where does the money come from? 
 Does it all come into Wall Street and the other 
 financial centers, or does it flow directly from 
 the pockets of the investors into the under- 
 taking or enterprise itself? 
 
 Speaking broadly, there are two methods 
 by which money is invested in any given enter- 
 prise. These are, direct and indirect. The 
 person who places money directly, or through 
 a broker or banker, in a specific enterprise or 
 undertaking is a direct investor. He person- 
 
INTRODUCTION 9 
 
 ally becomes the stock or bond-holder in a cor- 
 poration of his own choosing. But the man 
 who deposits his money in a savings bank, in- 
 surance, or trust company or State or National 
 bank, is an indirect investor. His money goes 
 into an investment of some sort where it earns 
 the interest which he receives and possibly a 
 little more. In the former case, he sees his 
 money at work; it stays presumably in the 
 place where he puts it. In the latter case, he 
 delegates the matter of actual investment to 
 another to the bank which acts in the ca- 
 pacity of a trustee, and invests his money for 
 him. And in both cases, the money may 
 easily be invested in the same enterprise. Thus, 
 in the latter case, he may place his money in a 
 savings bank, and the bank may then invest 
 it in New York Central Railroad y/2% bonds. 
 In the former case he may himself, through an 
 investment banker, purchase New York Central 
 Railroad 3%% bonds. His money is in the 
 same enterprise in both instances, the chief 
 difference being that, in one case, he knows it; 
 in the other, he does not. 
 
 This brief sketch of the investment field 
 which obtains in this country to-day will give 
 a rough idea of the breadth of the subject 
 under discussion. And, in taking this broad 
 view, we must bear the fact in mind that this 
 
10 THE INVESTOR'S PRIMER 
 
 is not a stationary condition, for the American 
 investment field is broadening and intensify- 
 ing every day. It is not only growing in size 
 and volume, but also in density. We, even 
 more, I think, than most other modern nations, 
 are going through a quiet, steady, but most re- 
 markable evolution in the methods of wealth 
 production and distribution. Ten years ago 
 we were referred to as "a nation of investors," 
 but this appellation is far more appropriate to- 
 day than it was then. The changes during the 
 past ten years in this respect are in no way 
 better illustrated than in the remarkable ex- 
 pansion of Wall Street. The mere growth of 
 stock exchange business, while great in itself, 
 is not a complete guide in this matter. We 
 must necessarily take into consideration the 
 vast expansion of investment business outside 
 of the stock exchange floor. 
 
 While there are no accurate figures for 
 demonstration, the acknowledged fact that a 
 hundred first-class investment houses exist in 
 the Street to-day where ten existed in 1896 is 
 evidence enough in itself that the expansion 
 has been great. In 1896 or 1897, if an invest- 
 ment bond house bought or sold $500,000 or 
 $1,000,000 of bonds in one block or at one time, 
 the fact was heralded far and wide as a notable 
 event; nowadays such transactions and much 
 
INTRODUCTION 11 
 
 larger ones are constantly going through and 
 create no comment whatever. In those days, 
 if a bond or investment firm made half a 
 million dollars in any one year, it was regarded 
 as a most remarkable showing, but at the 
 present time, dozens of houses can be pointed 
 out in the Street which are making this or a 
 better showing every year. To-day, single 
 firms buy entire issues of bonds or stocks) 
 sometimes running into the tens of millions in 
 amount; ten years ago this was unheard of, 
 and usually a "million dollar loan" was re- 
 garded as of such magnitude that it required 
 a syndicate of half a dozen or more concerns 
 to underwrite it. In the field of stock specula- 
 tion and trading, in those days, a business of 
 15,000 shares in one day was regarded as very 
 large. To-day many firms do 50,000 to 100,000 
 shares per day right along in normal times. 
 Then, a firm carrying on margin $5,000,000 
 worth of stocks was a large firm ; to-day many 
 are constantly carrying from $30,000,000 to 
 $40,000,000 worth. In the actual banking field 
 the expansion has been equally great. Now 
 many banks and trust companies in the city of 
 New York can boast of deposits of $40,000,000 
 and over; in those days none could. And yet 
 there are now several times the banking facili- 
 ties in New York that there were in 1896. 
 
12 THE INVESTOR'S PRIMER 
 
 While Wall Street is the main center of in- 
 vestment, it alone has not enjoyed all the ex- 
 panding. Other cities, all over the land, can 
 now boast of financial and investment centers 
 of no mean extent. In most cases they have 
 close alliances with the main center in New 
 York, but they are all sharing in the general 
 expansion of this particular phase of modern 
 commercial advancement. 
 
 The fact should be consistently borne in 
 mind that this great investment field is con- 
 stantly being accelerated from several sources. 
 Not only does it benefit by the steady growth 
 of population and general development of the 
 country, but it expands steadily because of 
 the fact that it is becoming increasingly neces- 
 sary to do things more and more on a large 
 scale, and this tendency automatically involves 
 the elimination of the smaller producer and 
 competitor, and forces a steadily expanding 
 element into the field of investment. Even 
 the busy workers of today, as well as the 
 leisure classes and those who pursue the pro- 
 fessions, find it profitable to place their surplus 
 funds more and more into enterprises outside 
 of their chosen environment. It is this tend- 
 ency of modern civilization which has much to 
 do with making the investor class of greater 
 importance in all parts of the country. 
 
PART I. 
 
The Investor's Primer 
 
 ACCOUNT AND RISK. The forms usu- 
 ally provided by brokers for the use of their 
 customers when giving orders for purchases or 
 sales of securities, bears the inscription, "Buy 
 or sell for my account and risk." The meaning 
 of this is that when an order as given is exe- 
 cuted by the broker, it is done for the account 
 and risk of the customer exclusively, and that 
 the broker is simply acting as the agent in the 
 matter and is therefore in no sense liable him- 
 self, but holds the customer wholly responsible 
 for the transaction. 
 
 ACCRUED DIVIDEND. The amount or 
 proportion of a regular dividend not yet pay- 
 able that has accumulated at a given time after 
 the date of payment of the preceding regular 
 dividend. For instance, if a dividend on a 
 stock at the rate of 6% per annum is payable 
 semi-annually January and July 1st, the 
 amount of accrued dividend on a given date, 
 such as April 1st, will be 1%%. Cumulative 
 dividends which have not been paid when due, 
 15 
 
Ifi THE INVESTOR'S PRIMER 
 
 but which have accumulated, are sometimes 
 called accrued dividends, but the correct term 
 for such is "accumulated dividends." A cumu- 
 lative dividend is an entirely different matter. 
 
 ACCRUED INTEREST. This is the 
 amount of interest on a bond or debenture* 
 stock not yet payable, but which has accrued 
 over a given period of time subsequent to the 
 last regular payment. For instance, if the in- 
 terest on a 4% bond is payable semi-annually 
 January and July 1, the amount of accrued 
 interest on the bond on April 1st would be ex- 
 actly 1%, which on a $1,000 bond would 
 amount to $10. Many bonds are quoted 
 "with accrued interest" and sold on this basis. 
 This is particularly true of unlisted issues, 
 municipal bonds, etc. Most of the issues 
 quoted on the stock exchanges are sold "flat" ; 
 that is, the accrued interest is not separately 
 figured but is included in the price. To bring 
 the distinction out concretely between a price 
 quoted with accrued interest, and a price 
 quoted "flat" the following illustration is sub- 
 mitted: If a 4% bond is selling at 90 and ac- 
 crued interest on January 1st, the total cost of 
 the bond will be exactly $900 ; but if on April 1st 
 it is still quoted at 90 and accrued interest, the 
 total cost of the bond will be not $900 but 
 
THE INVESTOR'S PRIMER 17 
 
 $910, the $10 representing the accrued inter- 
 est over the preceding three months. If, how- 
 ever, the bond is quoted "flat" the price on 
 April 1st, other things being equal, would be 
 given as 91. It will be seen, therefore, that the 
 matter of accrued interest directly affects the 
 "flat" price but does not affect the "and in- 
 terest" price. As very large transactions are 
 made daily in bonds on an accrued interest 
 basis, it is necessary to do a great deal of fig- 
 uring from day to day on the amounts of ac- 
 crued interest when making purchases and 
 sales. To facilitate this, most bankers and 
 brokers make use of pocket bond interest 
 tables, which contain the figures showing the 
 amounts of accrued interest on $1,000 bonds 
 for every day from one day to six months, at 
 the various rates of interest from 2% up to 
 S%. The most popular of these pocket tables 
 in the United States is published by The 
 Moody Corporation. 
 
 ACCUMULATED DIVIDENDS. This 
 term is properly used to describe cumulative 
 dividends which for one reason or another have 
 not been paid as they fell due. For instance, 
 in many corporations, particularly industrials, 
 there are issues of preferred stocks on which 
 the dividend charge is so heavy that the corpo- 
 
18 THE INVESTOR'S PRIMER 
 
 ration is not able to earn and meet the pay- 
 ments. The amounts of dividends, therefore, 
 have accumulated, and, theoretically at least, 
 must be paid off some day. Usually when divi- 
 dends of this kind or portions of dividends have 
 accumulated over a series of years and it has 
 been pretty well demonstrated that there is 
 little prospect of the corporation being able 
 ever to make good the back payments, some 
 plan of compromise is then submitted to the 
 stockholders whereby the accumulations are 
 paid, possibly in securities of some kind, and 
 then the rate of dividends is scaled down for 
 the future. It is not always difficult for the 
 corporation to make a readjustment of this 
 kind, as the cumulative clause in a stock is 
 really not of a great deal of value if the corpo- 
 ration cannot in some way earn sufficient 
 money to pay the full dividend. In other 
 words, the stockholder has no means of fore- 
 closing on the property or bringing legal ac- 
 tion if the past dividends are not paid. 
 
 ADJUSTMENT BOND. This term is used 
 to describe a bond which has been issued for 
 the purpose of in some way adjusting the 
 finances of a company, usually at the time of 
 a reorganization. For example, when the 
 Atchison, Topeka & Santa Fe system was re- 
 
THE INVESTOR'S PRIMER 19 
 
 organized in 1897, some compromise had to be 
 made with the old preferred stockholders and 
 the holders of the general mortgage bonds. It 
 was necessary for the road to radically reduce 
 its fixed charges, but at the same time the re- 
 organization committee could not avoid giv- 
 ing the holders of a large proportion of the 
 old securities something more tangible than a 
 mere preferred stock. The holders were there- 
 fore given a second mortgage bond, which 
 would be entitled to receive interest only in 
 case the same had been earned, and in no 
 case would the holders of the bond be able to 
 foreclose before maturity in the event of the 
 interest not being paid. The interest on this 
 particular issue was to become accumulative 
 after 5 years, but as far as any positive guar- 
 antee of interest being currently paid was con- 
 cerned, the issue was simply in the same class 
 as the ordinary accumulative preferred stock. 
 It will thus be seen that this issue of bonds 
 was in the nature of a compromise for the 
 benefit of the holders of old securities, and it 
 was therefore given the title of "adjustment 
 bond." Several other large issues of adjust- 
 ment bonds have since been created by other 
 companies, but the Atchison "adjustments" 
 are the most conspicuous example of this kind 
 of security. 
 
20 THE INVESTOR'S PRIMER 
 
 ALLOTMENT. A term used in connec- 
 tion with the amounts assigned to members or 
 subscribers in underwriting syndicates. For 
 example, it is generally understood when an 
 underwriting syndicate is being formed and 
 different concerns are subscribing for portions 
 of the underwriting, that the managers of the 
 syndicate have it in their power to allot to a 
 given subscriber less than the amount applied 
 for, provided the total subscription or under- 
 writing exceeds the total amount offered for 
 subscription. There have been many instances 
 where an over-subscription of a stock or bond 
 issue has been so great that the subscriber is 
 finally allotted only a small proportion, some- 
 times only 10% of the amount for which he 
 has subscribed. This fact of a tendency for 
 over subscription has often, in the case of 
 popular securities, had the result of inducing 
 underwriters to sometimes subscribe for even 
 greater amounts than they expected to get. In 
 this way, they have been able to secure the 
 amounts which they actually desired. 
 
 ARBITRAGE. The meaning of this ex- 
 pression is the buying and selling of the same 
 thing in two different markets, as, for instance, 
 New York and London, the purpose being to 
 make a profit from the difference in the quo- 
 
THE INVESTOR'S PRIMER 21 
 
 tations between the two markets. The term is 
 used chiefly in reference to dealings in stocks 
 and bonds, but is also used in dealings in ex- 
 change and in other commodities. 
 
 Arbitrage in stocks is based on the tempo- 
 rary differences in prices between the different 
 markets for the same stock. For instance, 
 when a stock is selling at a higher price in one 
 market than in another, it is sold in the market 
 where the higher price prevails and is bought 
 in the market where the lower price prevails. 
 The operator speculates on a return to the 
 same price in both markets. When the 
 equality in price has been restored he closes 
 his transaction by buying where he sold and 
 selling where he bought. The difference in 
 price that existed, of course, represents his 
 profit, unless the transaction has not been a 
 successful one, in which case a loss may be 
 reported. 
 
 To illustrate the method of arbitrage trad- 
 ing we will assume that a stock is selling in 
 one market at 100 and in another at 98. It is 
 then sold in the first market at 100 and bought 
 on contract in the second market at 98. If 
 the stock advances to 100 in the second 
 market while it remains stationary in the first 
 market a sale is then made in the second 
 market and thus 2% is made on the transac- 
 
22 THE INVESTOR'S PRIMER 
 
 tion there. The same amount of stock is then 
 bought back in the first market at 100, and 
 hence neither profit nor loss, barring commis- 
 sions, results in the transaction in the first 
 market, the profit in the second market repre- 
 senting the entire net profit of the double 
 transaction. Should the stock decline to 99 in 
 the first market and advance to 99 in the sec- 
 ond market the transaction can be closed up 
 with a profit of \% in each market or 2% in 
 the two markets. 
 
 Because of the system of calculating values 
 for American stocks on the London Stock Ex- 
 change, prices on the London Exchange are 
 2%% higher than the prices for the same 
 stocks on the New York Stock Exchange when 
 they are actually the equivalent of the prices 
 on the New York Exchange. Hence, in arbi- 
 trage dealings, allowance has to be made for 
 this difference in prices between London and 
 New York, which is merely apparent and not 
 actual. The figure of 2y%% mentioned above 
 is arrived at in the following manner : In deal- 
 ings in American stocks on the London Stock 
 Exchange four shillings is counted as one dol- 
 lar. Four shillings being equal to 97 1-3 cents, 
 the price of an American stock must be 2 2-3% 
 (quotably 2S/ S %) higher in London than in 
 New York if the London price is to be equiva- 
 
THE INVESTOR'S PRIMER 23 
 
 lent to (or at a parity with) the New York 
 price. Not 2%% of the par value is to be 
 added arbitrarily to the New York price, but 
 2%% of the New York price, whatever it may 
 be, is to be added to the New York price to 
 make an equivalent London price. Thus, for 
 a stock selling at 50 in New York the equiva- 
 lent price in London would be quotably 51%%. 
 For a stock selling at 100 in New York the 
 equivalent price in London would be 102%%- 
 Conversely, for a stock selling at 100 in Lon- 
 don the equivalent price in New York would 
 be 97%%, and for a stock selling at 50 in Lon- 
 don the equivalent price in New York would 
 
 be 48H%- 
 
 The difference in equivalent prices between 
 New York and London permits two kinds of 
 operations in stocks that are dealt in in both 
 markets. One operation is called a "spread" 
 and the other is called a "back spread." See 
 also definition of "spread" as used locally 
 under its own heading. 
 
 In the "spread" as employed in arbitrage 
 dealings there must be more than a normal 
 difference in prices between London and New 
 York. The stock is sold in London where the 
 higher price prevails, and bought in New York 
 where a lower price prevails. Then, when the 
 equality in price is restored the transaction is 
 
24 THE INVESTOR'S PRIMER 
 
 closed by buying in London and selling in 
 New York. The difference in excess of the 
 normal difference represents the profit in the 
 transaction. 
 
 In the "back spread" there must be less than 
 the normal difference in prices between New 
 York and London. The stock is therefore 
 bought in London where the nominal higher 
 price prevails, and is sold in New York where 
 the nominal lower price prevails. The tran- 
 saction is finally closed when the equality in 
 price has been restored by selling in London 
 and buying in New. York. The difference in 
 price that existed less than the normal differ- 
 ence, represents the profit in the transaction. 
 
 A large arbitrage business in active stocks is 
 carried on between London and New York by 
 cable daily. By the clock London is five hours 
 ahead of New York. At 10 a. m. in New York, 
 when the New York Stock Exchange opens, 
 it is 3 p. m. in London. The London Exchange 
 opens at 11 a. m. and closes at 4 p. m., except 
 on the last day of accounting, when it closes 
 at 4.30 p. m. After the closing of the London 
 Exchange, American stocks are still traded in 
 in the Street. A good part of this street market 
 represents arbitrage business with New York. 
 Very little business is transacted in New York 
 before the opening of the New York Exchange, 
 
THE INVESTOR'S PRIMER 20 
 
 but orders are sent to London for execution. 
 The London curb brokers remain active as 
 long as there is business to keep them, con- 
 tinuing usually as late as 5.30 or 6 o'clock. 
 
 There is also a business in arbitrages car- 
 ried on in grain, cotton, coffee and so forth, 
 between different markets in one country or 
 between different countries, just the same as in 
 stocks between New York and London. 
 
 ASSENTED STOCKS OR BONDS. A 
 
 term which describes securities, deposited 
 under an agreement by which the owners as- 
 sent to some change in the status of the securi- 
 ties. Many reorganizations of properties are 
 carried through without foreclosure or other 
 legal process, the owners of the securities as- 
 senting to some change in the status of their 
 stocks or bonds such as an exchange for new 
 securities, with possibly less principal or in- 
 terest. See also Reorganization. 
 
 ASSESSMENT. An assessment on a se- 
 curity is a demand or call from a company or 
 its management upon stockholders to pay into 
 the treasury a specified sum of money on each 
 share of the security which they may hold. 
 There are many kinds of assessments, the most 
 common in Wall Street being that which re- 
 
26 THE INVESTOR'S PRIMER 
 
 suits as part of a plan of reorganization by 
 means of which funds are secured for the dis- 
 charge of debts and for working capital. 
 While most stocks of railroads and other 
 large corporations are, in a legal sense, non- 
 assessable yet in a reorganization where con- 
 ditions have made it necessary for the differ- 
 ent security-holders to make concessions and 
 sacrifices, assessments are often paid. These 
 assessments are, of course, in a sense voluntary, 
 and are agreed to by the stockholder and paid 
 in order to preserve the property with the hope 
 that the reorganization will result in ultimately 
 adding value enough to the securities to repay 
 the stockholder for the expense of the assess- 
 ment. Often the stockholder has no alterna- 
 tive except to pay the assessment. If he does 
 not pay it, usually an underwriting syndicate 
 stands ready to take his stock at a current 
 market price (which is often a merely nominal 
 one) and pay the assessment itself. This re- 
 sults in the former stockholder sacrificing 
 practically his entire interest and he is then, 
 in a sense, "frozen out." Any future benefit 
 from the reorganization is, of course, derived 
 by the payer of the assessment, who naturally 
 takes the chance of the future success of the 
 company and is therefore entitled to its future 
 profits. 
 
THE INVESTOR'S PRIMER 27 
 
 ASSIGNED IN BLANK. The ordinary 
 stock certificate has on its back a printed form 
 of assignment, whereby the owner of the cer- 
 tificate can endorse the same and thus make 
 it a good delivery in selling it or passing it on 
 to another party. By signing this form in 
 blank he makes a legal and formal assignment 
 of the stock to any purchaser who, of course, 
 can fill in his own name in the blank provided 
 for the purpose and then have it transferred 
 on the books of the company in the usual way, 
 receiving a new certificate in his own name. 
 The New York Stock Exchange rules provide 
 that any stock certificate assigned in blank by 
 the owner must carry a witness to the signa- 
 ture, and also a formal guarantee of the sig- 
 nature by some stock exchange house in good 
 standing. This, of course, is to guard against 
 forgeries, errors, etc. 
 
 AVERAGING. This is a speculative term 
 describing a method of purchases or sales of 
 stock, which speculators often pursue in ad- 
 vancing or declining markets, for the purpose 
 of improving their position regarding the aver- 
 age cost of certain purchases or sales of stock. 
 For instance, should a man be dealing in New 
 York Central stock on a speculative basis, he 
 might begin by purchasing 100 shares at 110. 
 
28 THE INVESTOR'S PRIMER 
 
 Should the price then decline to 105, his trans- 
 action up to that date would show him a loss 
 of $500. He might then purchase another 100 
 shares at 105, and he would thus be carrying 
 200 shares at an average cost of 107^. Should 
 the price then advance to above 107^ his 
 entire account would show no loss, and he 
 could close out the transaction 2*/ 2 points be- 
 low the cost of the first hundred shares and 
 yet not lose any money. The practice of aver- 
 aging is carried on sometimes on a much 
 larger scale. Investors or speculators will 
 often put in orders to make purchases on a 
 "scale down," buying at every point or two, 
 and in a declining market where a given stock 
 may drop 25 points, 100 shares may have been 
 purchased at every point down. Each pur- 
 chase naturally brings the average cost of the 
 entire account down to a lower figure. 
 
 The method of averaging is also employed 
 in the sales of stocks by investors and specu- 
 lators in the same way, both in selling stocks 
 for long account and for short account. 
 
 BALANCE OF TRADE. The difference in 
 money value between sales and purchases. 
 In foreign trade, the difference in money value 
 between exports and imports. As commonly 
 used the term signifies the balance or differ- 
 
THE INVESTOR'S PRIMER 29 
 
 ence in favor of a country ; as, for instance, the 
 United States as against the rest of the world; 
 or in favor of the rest of the world and against 
 that country. When exports exceed imports 
 over a given period the balance of trade is said 
 to be in favor of the country, and vice versa. 
 
 BANKING. The banking business is al- 
 most as old as civilization itself. Money lend- 
 ers are mentioned many times in the Bible and 
 in all other ancient literature, but banking in 
 its modern sense as understood in the civilized 
 countries of the world today is more of an 
 evolution that has resulted as the natural out- 
 growth of modern industrial development and 
 commercial conditions. Modern banking may 
 be said to have begun, therefore, within the 
 past three hundred years. Prior to that time 
 each man was, in a large degree, the individual 
 defender and protector of his own property. 
 For instance, three centuries ago it was not 
 safe to venture out after nightfall in the streets 
 of London unless properly armed or in com- 
 pany, and the carrying of valuables of any 
 kind was particularly hazardous. Goldsmiths, 
 who in those days necessarily had to keep on 
 hand large stocks of the precious metals, took 
 great precautions for the safe keeping of prop- 
 erty of this kind and people gradually acquired 
 
30 THE INVESTOR'S PRIMER 
 
 the habit of depositing money with them, pay- 
 ing something for the privilege in order to re- 
 ceive the accompanying protection. In the 
 course of time the goldsmiths learned from ex- 
 perience that many people who had so de- 
 posited money did not require it at once, and 
 they thus began to lend out a certain percent- 
 age of their surplus on their own authority. 
 Furthermore, it was found that if a man had to 
 discharge a debt it was often more convenient 
 for him to give his creditor an order for the 
 money on deposit with the goldsmith than to 
 go in person and carry away the gold and de- 
 liver it, and thus impose upon the creditor the 
 necessity of returning the gold for deposit in 
 his own name, and many times in the same 
 place. This situation developed the system of 
 a transfer of credits by means of checks. This 
 method was not only safer but much more con- 
 venient than the earlier method of delivering 
 the actual coin or bullion. In making loans, 
 likewise, the goldsmith now became the banker 
 and learned to merely put the loan on his 
 books as a credit to the borrower, against 
 which the latter could draw his order or check 
 precisely as if he had deposited the actual 
 money; or the goldsmith issued his own note 
 or promise to pay to the borrower, the latter 
 passed it on in payment of debts and it became 
 
THE INVESTOR'S PRIMER 31 
 
 a circulating medium wherever the credit of 
 the goldsmith was good. 
 
 Modern banking has evolved to its present 
 state from this beginning. The chief function 
 of the modern bank is to receive on deposit and 
 make legitimate use of the money of its cus- 
 tomers. It makes this money and its own paid 
 up capital the basis of loans, on which it 
 charges interest in accordance with the laws 
 under which it is chartered. While these loans 
 may take the form of actual money, they are, 
 as a rule, merely credits against which the bor- 
 rower is privileged to draw. Such loans are 
 entered on the books of banks as deposits. In 
 actual experience the loans and deposits so 
 nearly counterbalance each other that only a 
 small percentage of actual money is required 
 to transact the larger affairs of business. It is 
 only in retail transactions, in the payment of 
 employees and in the smaller daily affairs of 
 life that actual money is usually used. For all 
 other business the transfer of credits by means 
 of bank checks and bills of exchange is the 
 almost universal rule. In brief, the modern 
 bank has become the principal mechanism of 
 exchange. To what a remarkable extent bank 
 checks have supplemented or taken the place 
 of actual money as a medium of exchange in 
 modern business, thus making possible the 
 
32 THE INVESTOR'S PRIMER 
 
 wonderful commercial and industrial activity 
 of the present day, can be best realized by 
 studying the figures of the operations of the 
 various clearing houses of this and other coun- 
 tries and the relation which the actual money 
 in the vaults of the banks bears to the total 
 transactions recorded. 
 
 In addition to its functions as depositories 
 for money and the negotiation of credits, the 
 modern bank exercises the function of note- 
 issuing. In the United States, under the na- 
 tional banking law, any national bank may 
 issue notes up to the amount of its paid in 
 capital stock upon depositing with the United 
 States Treasurer, government bonds of the 
 United States equal in par value to the amount 
 of circulating notes so issued. State banks are 
 also authorized to issue notes, but the Federal 
 tax of 10% on their circulation acts as an ef- 
 fective prohibition on the exercise of this right. 
 
 While the business of banking is embraced 
 within the above general scope, yet the term 
 banker is very broadly used, particularly in the 
 United States. Stock brokers, investment 
 dealers, dealers in exchange and commercial 
 paper, money lenders, and others are accus- 
 tomed to call themselves bankers. Strictly 
 speaking these are inaccurate uses of the term, 
 although it is now generally acknowledged 
 
THE INVESTOR'S PRIMER 33 
 
 that in modern usage the term banker must be 
 understood to carry a broader meaning than 
 was formerly the case. 
 
 BANK OF ENGLAND. The Bank of Eng- 
 land, which is the largest and most important 
 monetary institution in the world, was incor- 
 porated in 1694. It is the custodian of the pub- 
 lic monies of Great Britain and the manager of 
 the public debt. Its official title is "The Gov- 
 ernor and Company of the Bank of England." 
 It conducts the banking business of the British 
 government ; it receives the revenue of the gov- 
 ernment and makes all disbursements for it; 
 and it also issues exchequer and treasury bills 
 and advances money to the government. It is 
 also the central bank of the City of London. 
 That is, the other banks keep on their own 
 premises only enough of their deposits for the 
 requirements of their business, and deposit the 
 remainder with the Bank of England. Thus, 
 the bank is not only the financial institution of 
 the British Government, but also of the other 
 London banks and of the whole of the London 
 money market. 
 
 BANK OF ENGLAND NOTE. The circu- 
 lating note or money issued by the Bank of 
 England performs the chief note-issuing func- 
 
34 THE INVESTOR'S PRIMER 
 
 tion in the United Kingdom. The bank is per- 
 mitted to issue a certain amount of notes upon 
 government securities, and it has the privilege 
 of issuing, also on government securities, an 
 amount equal to two-thirds of the issues of all 
 other banks in England and Wales when the 
 latter go out of existence or surrender their 
 circulation. In addition, the Bank of England 
 may issue notes to any further amount it sees 
 fit by providing and setting aside an equal 
 amount of gold coin or bullion. 
 
 In times of panic the bank is allowed by 
 parliament to increase the number of notes that 
 it may issue against securities. This is accom- 
 plished by the suspension of the "Bank Act," 
 which limits the amount of the bank's circula- 
 tion of notes backed only by securities. The 
 Bank Act was last suspended in 1866. 
 
 The Bank of England's notes are legal tender 
 in England and Wales, but are not legal tender 
 in payments made by the bank itself. The 
 holders of the bank notes are entitled to de- 
 mand gold for them on presentation at the 
 bank. The notes of other English, Irish and 
 Scotch banks are not legal tender, with the ex- 
 ception of the notes of the Bank of Ireland, 
 which are legal tender in Ireland only. All the 
 notes, however, constitute an important circu- 
 lating medium. Ultimately the Bank of Eng- 
 
THE INVESTOR'S PRIMER 35 
 
 land will possess the monopoly of note issue in 
 England and Wales. 
 
 The lowest denomination of a Bank of Eng- 
 land note is 5 and the largest 1,000. 
 
 BANK OF ENGLAND RATE. This is the 
 proper title for the minimum rate of discount 
 of the Bank of England. The .minimum rate 
 is nominally the rate at which the Bank of 
 England itself will discount the best three 
 months bills. In short, it is the official stand- 
 ard of discount. The rate has a direct relation 
 to the movement of gold to and from London. 
 For instance, the raising of the rate raises the 
 value of money and is calculated to attract gold 
 from foreign centers where the value of money 
 is, for the time being at least, less. The di- 
 rectors of the bank often insure the effective- 
 ness of the rate by borrowing in the money 
 market, thus denuding it of supplies. As the 
 raising of the bank's rate raises the value of 
 money, so the lowering of it lowers the value 
 of money. 
 
 BANK STATEMENT. In New York City 
 a bank statement is issued from the New York 
 Clearing House on each Saturday. The weekly 
 statement is the collective showing made by 
 the banks belonging to the Clearing House As- 
 
36 THE INVESTOR'S PRIMER 
 
 sociation. This consolidated bank statement 
 shows the average deposits, loans, specie, legal 
 tenders, circulation, reserve and surplus re- 
 serve for the week ending with and including 
 Friday. 
 
 The deposits include the credit balances of 
 persons and concerns, balances to the credit 
 of other banks, and all other money and credits 
 subject to withdrawal. The item loans, in- 
 cludes money loaned and paper bought, such 
 as promissory drafts, etc. Specie includes gold 
 and silver coin and also gold and silver certifi- 
 cates, which are redeemable in gold or silver. 
 Legal tenders means United States notes 
 (greenbacks) and treasury notes (notes issued 
 for silver bullion, purchased under the so-called 
 Sherman act). Circulation means the notes is- 
 sued by national banks which are secured by 
 government bonds, deposited with the United 
 States Treasurer. A bank cannot count circu- 
 lation in its reserve, and whether it is its own 
 circulation or the circulation of some other 
 bank makes no difference. Reserve means the 
 amount of specie and legal tenders held. Sur- 
 plus reserve is the amount of specie and legal 
 tenders held in excess of legal requirement. 
 For instance, a national bank in New York 
 City must, by law, maintain a reserve equal to 
 23% of its profits; a State bank must by law 
 
THE INVESTOR'S PRIMER 37 
 
 maintain a reserve of 15%. In compiling a 
 bank statement a reserve of 25% is allowed or 
 figured for State banks as well as national 
 banks. The bank statement is said to be made 
 up on rising averages when the items in it have 
 been increasing in amount during the week; 
 or the statement is said to be made up on fall- 
 ing averages when the items in it have been 
 decreasing in amount during the week. The 
 bank statement is favorable or good when it 
 shows that the position of the banks has been 
 strengthened, as by an increase in the surplus 
 reserve through an increase in the cash hold- 
 ings rather than by a decrease in the deposits, 
 which latter is often affected by the calling of 
 loans. As money loaned is largely credited to 
 borrowers on their deposit accounts and in- 
 creases the total deposits of the banks, so the 
 payment of loans by borrowers takes from and 
 decreases deposits. It will thus be seen that 
 the calling and payment of loans does not in- 
 crease cash holdings, but merely changes bal- 
 ances in individual accounts. A reduction in 
 deposits reduces the amount of cash required 
 to be held as legal reserve, and correspondingly 
 expands the surplus reserve. 
 
 The bank statement is understood to be 
 unfavorable when the position of the banks has 
 been weakened, as by a decrease in the surplus 
 
38 THE INVESTOR'S PRIMER 
 
 reserve through a decrease in the cash holdings 
 rather than by an increase in the deposits, 
 which often is effected by an expansion in the 
 loans, thus correspondingly expanding the de- 
 posits and increasing the amount of cash re- 
 quired to be held as a legal reserve. The bank 
 statement may be said to be favorable, how- 
 ever, if an increase in loans is reported when 
 the banks have a large surplus reserve. Also, 
 it may be said to be unfavorable when money 
 is idly accumulating in the banks and deposits 
 are increasing, not as a result of increasing 
 loans, but in the absence of a borrowing de- 
 mand for money. 
 
 In addition to the statement issued by the 
 clearing house banks on Saturday there is also 
 issued on Monday what is known as the non- 
 member bank statement, which shows the con- 
 dition of the banks which are not members of 
 the clearing house, but which clear through 
 members of that institution. The non-member 
 statement shows the loans, discounts, invest- 
 ments, specie, legal tender notes and bank 
 notes, deposits with clearing house agents, de- 
 posits with other New York City banks and 
 trust companies, net deposits, circulation, capi- 
 tal stock and net profits. 
 
 BEAR. A bear in Wall Street is a specula- 
 
THE INVESTOR'S PRIMER 39 
 
 tor who works to secure or who believes in 
 lower prices ; in the stock market it is one who 
 sells stock short, or advises the selling of stock 
 short for the purpose of buying back at a 
 lower price. A speculative dealer in grain, cot- 
 ton or other commodities may be a bear as well 
 as a speculator in stocks. For methods of 
 operation pursued by bears see "Selling Short." 
 
 BILL OF EXCHANGE. A written order 
 or request from one person to another for the 
 payment of money to a third, the amount to be 
 charged to the issuer of the bill. There is prac- 
 tically no difference between a bill of exchange 
 and a draft. The term, however, is commonly 
 applied to an order for money payable in a 
 foreign country, whereas the term draft is ap- 
 plied to an order payable within the country 
 of its origin. 
 
 Bills of exchange constitute a most import- 
 ant circulating medium. The wholesale tran- 
 sactions of the world between countries are 
 affected by bills of exchange, which are not 
 limited like bank notes to the country of their 
 origin. When commercial bills of exchange are 
 accompanied by bills of lading or warehouse 
 receipts, or by other documents, they are of a 
 superior nature. They command a lower rate 
 of discount, or in other words, bring a better 
 
40 THE INVESTOR'S PRIMER 
 
 price than bills not secured. In a stringent 
 money market they are saleable when other 
 bills are refused. See also Foreign Exchange. 
 
 BLIND POOL. When several persons con- 
 tribute capital to a pool for operating in stocks 
 or bonds, either on the long or short side, and 
 only the manager of the pool knows in what 
 way the money is to be used, it is known as a 
 blind pool. The purpose of such a pool is to 
 insure secrecy. Speculative blind pools are not 
 uncommon undertakings in Wall Street. 
 
 BONDS. A bond is a certificate of obliga- 
 tion usually issued by a corporation to pay 
 money secured by mortgage or otherwise. It 
 is usually an interest bearing certificate, and is- 
 sued in denominations of $1,000. There are 
 many kinds of bonds, some being issued by 
 corporations, others by municipalities or gov- 
 ernments, and still others by individuals. 
 
 The securities issued by governments are 
 generally designated as bonds, rather than 
 stocks. The United States government issues 
 are nowadays known as bonds, although they 
 were many years ago known as stocks. Some 
 of the securities issued by New York City are 
 still designated as stocks, but American mu- 
 
THE INVESTOR'S PRIMER 41 
 
 nicipalities usually now designate their securi- 
 ties as bonds rather than stocks. 
 
 A coupon bond is one both interest and prin- 
 cipal of which are payable to bearer. Such a 
 bond carries with it a series of coupons, usually 
 attached to the bond itself, which are clipped 
 off on the respective interest periods and de- 
 posited with the banks for collection by the 
 holder of the bond in the same manner as 
 checks are deposited. A registered coupon 
 bond is one which bears the name of the owner, 
 and only the principal can be paid to him. The 
 interest, however, is still payable to bearer. A 
 straight registered bond is one bearing the 
 name of the owner whose name is registered 
 on the books of the company issuing the bond, 
 and the interest payments are made by checks 
 forwarded to the address of the owner. 
 
 A gold bond is one which is specifically pay- 
 able, both principal and interest, in gold coin; 
 a currency bond is one which is payable with 
 any kind of money that is legal tender. A large 
 bond is one with a denomination of $10,000. 
 A small bond is one of a denomination of $500 
 or less. 
 
 Investment bonds are issued in various de- 
 nominations and at all rates of interest from 
 3% up to 7%. There are at least two dozen 
 different kinds of investment bonds, such as 
 
42 THE INVESTOR'S PRIMER 
 
 the various railroad bond issues, public utility 
 issues, industrial issues, bonds on mines and 
 other enterprises, in addition to government or 
 municipal securities. The various kinds of 
 bond issues are described throughout the pages 
 of this book under their own titles or headings. 
 
 BOOKS CLOSE. This relates to the trans- 
 fer books for stocks and registered bonds. 
 Usually on an advertised date sometime prior 
 to the payment of a dividend on a stock the 
 transfer books close and the stockholders of 
 record on that day receive the dividend when 
 it is paid. On and after the day the stock 
 books close the stock sells "ex dividend" or 
 without the dividend. The transfer books are 
 also usually closed on an advertised day prior 
 to an election or other stockholders' meeting, 
 and only the stockholders of record at the 
 closing of the books can vote at that election 
 or meeting. A contract in a stock falling due 
 during the regular closing of the transfer books 
 of the company is settled at maturity by the 
 delivery of a certificate and power of attorney ; 
 on a contract which is at the option of the 
 buyer or of the seller, notice for settlement may 
 be given as if the books were open. In case 
 the books are closed for a dividend, the person 
 entitled to the latter receives a due bill for it. 
 
THE INVESTOR'S PRIMER 43 
 
 BOOKS OPENED. When the transfer 
 books of the company are opened the owner- 
 ship of a security can be changed on the rec- 
 ord, and at no other time. In other words, 
 while certificates can change hands at any time, 
 they cannot be formally transferred from one 
 holder to another during the period between 
 the closing or the opening of the transfer books 
 of the corporation. See above under Books 
 Close. 
 
 BOOK VALUE. The book value of a 
 stock is based on the net profits or deficit of 
 the corporation which has issued it. The term 
 book value is more frequently used in relation 
 to bank stocks than to the stocks of any other 
 particular kind of corporation. To ascertain 
 the book value of any particular bank stock the 
 following process is adopted: If the official 
 statement of a bank shows net profits (surplus 
 and undivided profits) equal to say 75% on the 
 stock outstanding, then the book value of the 
 stock is the original amount of the stock, 100%, 
 plus the equivalent in net profits, 75%, or 175. 
 If, on the other hand, the bank shows no net 
 profits, but instead shows a deficit equal to 
 say 10% on the stock, the book value of the 
 stock would be only 90. The book value of 
 stocks of other corporations is ascertained in 
 
44 THE INVESTOR'S PRIMER 
 
 the same manner, but is not nearly so simple 
 for the reason that it is not usually easy to 
 ascertain the uniform facts regarding assets, 
 liabilities, surplus, and so forth, and when the 
 information is obtainable it is usually too com- 
 plex and involved for uniform and intelligent 
 use. 
 
 BORROWING AND LENDING STOCKS. 
 When a speculator sells stock short or gives 
 his broker an order to sell stock short, the stock 
 must be borrowed to make delivery to the pur- 
 chaser. This is usually a simple matter on the 
 exchanges, as there are generally plenty of 
 holders who are long of stock and possess cer- 
 tificates, who are just as anxious to loan it as 
 the one who has sold the certificate short is 
 anxious to borrow it. The lender of stock on 
 the exchanges receives from the borrower the 
 market value of it in money, but except when 
 the stock is loaning "flat" or at a premium, 
 the lender of the stock pays to the borrower in- 
 terest on the money paid for the stock by the 
 borrower. On the New York Stock Exchange, 
 brokers who have stocks to borrow and to lend 
 assemble immediately after the close of busi- 
 ness on the Exchange, and those who need 
 stocks borrow the amounts necessary to make 
 deliveries the next day. Those who neglect to 
 
THE INVESTOR'S PRIMER 45 
 
 borrow at this time must do so the next morn- 
 ing or before the delivery hour at 2.15 p. m. 
 The same rules govern the receipt and delivery 
 of stocks borrowed and loaned as govern 
 stocks bought and sold. In returning bor- 
 rowed stock the borrower must notify the 
 lender before 1 o'clock on the day of delivery ; 
 the lender in calling or demanding the return 
 of stock is required to do likewise. 
 
 When a stock is loaned "flat," the owner is 
 relieved from the cost of carrying the stock. 
 If loaned at a premium he is still better off, for 
 the premium is clear gain. If a stock that has 
 been borrowed advances in market price, the 
 lender may require the borrower to pay to him 
 the difference between the price at which the 
 stock was loaned and the new higher price. 
 On the other hand, if the stock declines in 
 price, the borrower may require the lender to 
 return to him the difference between the price 
 at which the stock was borrowed and the new 
 lower price. 
 
 When a corner is being worked in a stock, 
 it is the practice of those engineering it, freely 
 to loan the stock in order to encourage the cre- 
 ation of a short interest in it. When this short 
 interest has become large enough, or in other 
 words, when the stock has become sufficiently 
 
46 THE INVESTOR'S PRIMER 
 
 oversold, a demand for the return of the stock 
 brings the corner to a culmination. 
 
 An apparent borrowing demand for stocks 
 is sometimes created by the efforts of money 
 lenders to obtain higher interest on their 
 money than is obtainable in lending it in the 
 money market. If the lending rate for a par- 
 ticular stock is 6% when money is loaning at 
 4%% in the money market, the money lenders 
 will borrow the stock in order to obtain the 
 extra interest. 
 
 BUCKETING. As distinguished from the 
 manner in which a bucket shop operates (see 
 Bucket Shop), bucketing of stocks consists in 
 sales by a broker for his own account and risk, 
 against a customer's purchase or purchases by 
 the brokers, against customers' sales. The pur- 
 pose of the broker is sometimes to avoid the 
 employment of money in carrying stocks, but 
 more often it is to speculate against his cus- 
 tomers' trades. In either case the broker wins 
 if his customers lose or he loses if his cus- 
 tomers win. For example, if the customer 
 buys 100 shares of stock at 120 the broker sells 
 100 shares at the same price. A cross trade is 
 thus made by the broker ; the transactions bal- 
 ance and the broker does not have to pay out 
 the money representing the cost of the stock 
 
THE INVESTOR'S PRIMER 47 
 
 purchased for the customer. If the customer 
 has put up 20% margin, the broker has the 
 use of that entire margin for other purposes. 
 If the stock goes down to 108 and the customer 
 sells while the broker buys, the transactions 
 again balance, and the customer loses 2% which 
 the broker gains. On the other hand, if the 
 stock goes up to 112 and the customer sells 
 while the broker buys, the customer makes 
 2%, which the broker loses. The broker, how- 
 ever, reduces his loss by the extent of the 
 commission which he receives from his cus- 
 tomer. If the customer loses and the broker 
 wins in the above illustration, the broker's gain 
 is really 2%% instead of 2%, while if he loses 
 and the customer wins his loss is actually only 
 
 There are cases of frequent occurrence where 
 some customers of a broker have bought, while 
 others have sold a given stock on the same day 
 and at about the same price. If more has been 
 bought than has been sold the broker will sell 
 enough to effect a balance; if more has been 
 sold than has been bought the broker will buy 
 enough to effect a balance. 
 
 BUCKET SHOP. A bucket shop is a place 
 where bets are made on regular exchange quo- 
 tations. No actual transactions take place. 
 
48 THE INVESTOR'S PRIMER 
 
 The margin is put up by the customer and a 
 commission is charged for buying and selling 
 the same as on an exchange. When the quo- 
 tation shows a profit to the customer he is 
 privileged to demand the profit; when the 
 limit of the customer's margin has been 
 reached the customer has lost his bet and the 
 transaction is closed. There are many large as 
 well as small bucket shops in existence in the 
 cities of the United States, and an enormous 
 amount of trading is done in them. Inasmuch 
 as more than 80% of the ordinary speculators 
 fail to make money in the long run, it will be 
 seen that the chances of money being made 
 by the bucket shop are as five to one in com- 
 parison with the chances of the customer. In 
 ordinary times, therefore, the bucket shop is 
 almost sure to make money. It is only in the 
 times of great bull movements, when for short 
 periods the public in the market cannot help 
 but make money in spite of their mistakes, that 
 the bucket shop is apt to be on the losing side. 
 At such times the bucket shop usually closes 
 its doors, for the time being, before it has 
 undergone very heavy losses. It is unneces- 
 sary to say that bucket shops are illegal, and 
 from time to time, as charges are proven against 
 them, they are closed up by the civil authori- 
 ties. 
 
THE INVESTOR'S PRIMER 49 
 
 BULL. This is the title usually given to 
 a speculator in Wall Street whose attitude in 
 relation to future prices is optimistic. That 
 is, he believes in higher prices and works to 
 secure them. A bull is therefore anyone who 
 buys or favors buying stocks, grain, cotton or 
 any other speculative commodity in the ex- 
 pectation of selling it at a higher price. See 
 also Bear. 
 
 BUYERS' OPTION. In securities bought 
 on the buyers' option the buyer may demand 
 delivery of the stock on any day within the 
 time specified on one day's notice to the seller. 
 The buyer, unless the contract is "flat," pays 
 the seller interest at the legal rate on the price 
 of the stock up to the day of delivery. No 
 contract or buyers' or sellers' option for less 
 than four days, or for more than 60 days, can 
 be entered into on the New York Stock Ex- 
 change. 
 
 CALL. A call on a stock or bond is a con- 
 tract or written agreement binding the issuer 
 to deliver to the holder the security named in 
 the agreement within a specified time at a par- 
 ticular price, if the holder shall so demand. 
 For example, A signs a promise to deliver 100 
 shares of a given stock to B at 110 at any time 
 
50 THE INVESTOR'S PRIMER 
 
 within 60 days if B makes a demand for it. A 
 sells this privilege to B for, we will say, $200. 
 If, within the 60 days, the stock rises in price 
 so that B can sell it at a profit above the cost 
 of the privilege and commissions for selling, 
 B then sells the hundred shares and calls on A 
 to make the delivery of the certificate to him. 
 Naturally the stock must go above 112% be- 
 fore there is any profit in it for B. If the stock 
 declines or does not go above 112J/, B does 
 not call for it and A makes the $200 on his risk, 
 B losing just this amount See also under 
 Privilege. See also Put. 
 
 CALL LOAN. A call loan is a loan which 
 is payable on call or demand. In Wall Street 
 a very large amount of money is loaned on call 
 by the banks to the brokers, the latter in all 
 cases supplying collateral to cover the loan. 
 By the New York Stock Exchange rules a de- 
 mand for the payment of a call loan must be 
 made before 1 p. m. on any given day and the 
 payment must be made at or before 2.15 p. m. 
 the same day. Also notice must be given to the 
 leaner of intention to pay a call loan before 1 
 o'clock and the payment must be made by or 
 before 2.15 o'clock. 
 
 CALLED BOND. A called bond is one 
 which carries a clause giving the company is- 
 
THE INVESTOR'S PRIMER 51 
 
 suing the bond the right to redeem the princi- 
 pal at a certain figure and at a certain time. 
 Said right having been exercised, interest on 
 such a bond usually ceases after the bond is 
 called. 
 
 CAR MILES. A railroad term which signi- 
 fies the number of miles traversed within a 
 given time by all the cars on a railroad. The 
 number of miles traveled by all cars, divided 
 by the number of cars, shows the average num- 
 ber of miles traveled by each car. Most rail- 
 road reports give these figures when sub- 
 mitting statements of operations and earnings 
 to their stockholders. 
 
 CHARTER. The charter or certificate of 
 incorporation of a company is the authority 
 conferred upon it by act of legislature which 
 allows it to do business along certain lines as 
 specified in the charter, which usually defines 
 the general purposes and limits the privileges 
 of the corporation. 
 
 CLOSE CORPORATION. An incorpo- 
 rated company, the stock of which is held by 
 the managers or a very limited number of per- 
 sons and is not in the hands of the public, is 
 usually known as a close corporation. It is 
 
52 THE INVESTOR'S PRIMER 
 
 sometimes assumed that only small companies 
 carrying on limited kinds of business as suc- 
 cessors to former partnerships in many cases 
 are close corporations. This idea, however, is 
 quite erroneous, as there are a good many cor- 
 porations, the capitalization of which runs into 
 the millions, which are in every essential re- 
 spect close corporations. Usually in a close 
 corporation there is an agreement or under- 
 standing among the few stockholders whereby 
 each is prohibited from disposing -of or selling 
 his interest without the consent of the others. 
 
 COMMERCIAL PAPER. As generally 
 understood, commercial paper means accept- 
 ances and promissory notes. Acceptances are 
 drafts or bills of exchange which have been ac- 
 cepted. In large cities like New York there 
 is a great deal of business done at all times in 
 the buying and selling of commercial paper. 
 Individual dealers buy from makers at one rate 
 of discount and sell to banks and other dealers 
 at a lower rate. Good commercial paper repre- 
 sents a high class of investment. 
 
 COMMON STOCK. Common stock is dis- 
 tinguished from preferred stock in that it has 
 no preference as to dividends or assets. It is 
 sometimes called general or ordinary stock. 
 
THE INVESTOR'S PRIMER 53 
 
 When a corporation has an issue of preferred 
 stock it is, of course, necessary to give the ordi- 
 nary stock the title of common to distinguish 
 it from the preferred. If, however, there is no 
 issue of preferred or other stock outstanding, 
 then the ordinary stock is not referred to as 
 "common" but is simply known as plain capi- 
 tal stock. Sometimes there are, however, dif- 
 ferent kinds of common or ordinary stock, this 
 being particularly true of some English issues. 
 In such cases, a portion of the issue may be 
 called deferred, for the reason that it may re- 
 ceive no dividend until a prior portion has re- 
 ceived a dividend at a fixed rate. Often it is 
 the custom to designate a portion of the issue 
 as A stock and a portion as B stock to distin- 
 guish the two classes. This employment of A 
 and B is also often used in connection with 
 different classes of preferred stock. See Pre- 
 ferred Stock. 
 
 CONSOL. This term is really an abbrevi- 
 ation or contraction of the word consolidated. 
 In England, however, it is specifically used in 
 connection with the funded debt of Great 
 Britain. The debt of this country is in the 
 form of stock which represents a consolidation 
 of various loans, and is therefore commonly 
 known in modern times as English Consols. 
 
54 THE INVESTOR'S PRIMER 
 
 This public debt, representing nine different 
 loans, was consolidated in 1851 into 3% stocks 
 or, as Americans would say, bonds. In 1888 
 the 3%s were converted into 2%%, and in 1903 
 the rate was reduced to 2y 2 %. The official 
 name of English consols is Consolidated An- 
 nuities. 
 
 CONTANGO. This is a London Stock Ex- 
 change term referring to the charge paid by a 
 buyer for the privilege of continuing a contract 
 to the next fortnightly settlement. For in- 
 stance, % to y$ contango means that the bull 
 (who is long) pays to the jobber y^% for the 
 accommodation and the bear (who is short) 
 receives from the jobber %%. One-eighth 
 contango to % back (abbreviation for "back 
 wardation") means that the bull pays %% and 
 the bear pays %%. One-sixteenth to even 
 means that the bull pays 1-16% and the bear 
 carries over "at even," or in other words, pays 
 nothing. Contango day means the first day 
 of settlement on the London Stock Exchange, 
 when arrangements are made to continue bar- 
 gains or contracts. The same as continuation 
 day or making-up day. 
 
 CORNER. A corner in a stock is created by 
 the purchase of all the floating or purchasable 
 
THE INVESTOR'S PRIMER 55 
 
 supply of a given stock, after which the price 
 can be advanced by the operators of the corner 
 at will. Speculators who are short of the stock 
 and are unable to buy or borrow to make de- 
 livery to buyers, or to return stock which they 
 have borrowed, are generally said to the 
 "squeezed." In other words, they must settle 
 with the buyers at the buyers' terms. Corners 
 are created in grain, cotton, coffee and other 
 commodities as well as in stocks. 
 
 COUPON BOND. A coupon bond is a bond 
 which is payable to bearer without registration 
 of the owner's name, and carries a coupon 
 covering the interest on the bonds, which is 
 clipped at each interest period and deposited 
 for collection, the same as a check, or presented 
 for payment at the office of the corporation 
 issuing the bond or the corporation's agent. 
 The great majority of bonds issued by steam 
 railroads and other corporations for sale to in- 
 vestors are coupon bonds. Coupon bonds are 
 much more available for speculative dealings 
 and for selling generally. While they are, of 
 course, no better secured and intrinsically 
 worth no more than registered bonds, yet they 
 usually are quoted at a fractionally higher price 
 than the latter, for the simple reason that a 
 change in ownership involves no formal trans- 
 
56 THE INVESTOR'S PRIMER 
 
 fer beyond the mere delivery of the bond itself. 
 In many cases coupon bonds are convertible at 
 the option of the holder into registered bonds, 
 and in some instances the registered bond can 
 be converted back at will of the owner into a 
 coupon bond. This is not, however, true in all 
 cases. Many coupon bonds can be registered 
 as to principal but not as to interest. 
 
 CUMULATIVE DIVIDENDS. This term 
 carries the same meaning as accumulative divi- 
 dends. If a dividend on a stock is accumula- 
 tive it implies that all back dividends must be 
 paid in full before current dividends can be 
 paid. In other words, a stock on which the 
 dividends are not cumulative can omit to pay 
 its dividend when the management sees fit 
 and in another year begin to pay a current 
 dividend again without regard to the period 
 which has gone by during which no dividend 
 has been paid. On the other hand, a cumu- 
 lative stock must sooner or later pay up all 
 back dividends. A least this is the theory, al- 
 though naturally if a company does not earn 
 the money to make the payments it does not 
 pay them, and the back dividends simply accrue 
 from year to year on the stock. See also ac- 
 cumulative dividends. 
 
THE INVESTOR'S PRIMER 57 
 
 CURRENT ASSETS. This term, as used 
 in connection with the balance sheet of a rail- 
 road or other corporation, covers the so-called 
 shifting or changeable assets as distinguished 
 from the capital assets. In the case of the 
 steam railroad, current assets usually include 
 cash on hand, loans and bills receivable, ac- 
 counts receivable, amounts due from other 
 companies and individuals, amounts due from 
 companies' agents, advances to other com- 
 panies, etc. The capital assets as distinguished 
 from the current include cost of road and 
 equipment, permanent investments, etc. 
 
 CURRENT LIABILITIES. Current lia- 
 bilities as distinguished from capital liabilities 
 of a railroad or corporation, include loans and 
 bills payable, accounts payable, payrolls and 
 vouchers, interest and dividends accrued, 
 amounts due to other companies, etc. Capital 
 liabilities, on the other hand, cover capital 
 stock, bonded debt, mortgages assumed, etc. 
 
 CUTTING A MELON. When a corpora- 
 tion makes a large extra distribution to its 
 stockholders either in the shape of an extra 
 large cash dividend or a stock dividend, it is 
 usually said that the company is "cutting a 
 melon.* 
 
58 THE INVESTOR'S PRIMER 
 
 DEBENTURE. A debenture, or, as called 
 in this country, a debenture bond, is simply a 
 certificate of indebtedness or promise to pay 
 issued by a corporation. In other words, it is 
 not a mortgage. It usually differs from the 
 average income bond in that it contains a 
 promise to pay a certain amount of interest at 
 stated periods. While an income bond is 
 sometimes a mortgage and not a debenture, 
 yet as it cannot be foreclosed before maturity, 
 which may be 50 years away, the position of 
 the principal of the two classes of bonds is 
 therefore practically the same. In England a 
 debenture bond or stock is sometimes secured 
 by a mortgage, but not usually. 
 
 DEFAULT. A default on a bond is simply 
 the failure to perform or fulfil the obligation to 
 pay the interest or principal when due. 
 Usually a default furnishes ground for appli- 
 cation for a receivership, although in some in- 
 stances mortgage bonds carry a clause which 
 does not allow the holder to begin foreclosure 
 proceedings until the bond has defaulted over 
 a certain stated period. For instance, in the 
 case of the United States Steel Corporation 
 second mortgage 5s, th'e holder could not be- 
 gin foreclosure proceedings until the bond had 
 
THE INVESTORS PRIMER 59 
 
 been in default in the payment of its interest 
 for at least two years. 
 
 DISCRETIONARY ACCOUNT. In stock 
 speculation a discretionary account is an ac- 
 count, the handling of which is intrusted to 
 the broker with whom it is open. While there 
 are conditions under which it is necessary for 
 a broker to act on his own discretion, yet most 
 reputable brokerage houses dislike to do this, 
 and many of them refuse to. 
 
 DIVIDEND. A dividend is the stockhold- 
 ers' share of the divisible profits of a corpora- 
 tion, usually paid to him in cash at certain 
 stated periods. There are, of course, various 
 conditions under which dividends are paid, and 
 in many cases they are not paid in cash. For 
 instance, a "scrip" dividend is one payable in 
 scrip, or in other words in a small certificate 
 bearing interest at the legal rate and which is 
 usually converted into stock, but has no voting 
 power and is entitled to no dividend until con- 
 verted into stock. A stock dividend, however, 
 is one payable in the stock of the company, and 
 is large enough to enable the holder of the 
 stock to receive a full certificate and not frac- 
 tions or scrip. Cash dividends are usually sent 
 by check to the owner of the stock, in whose 
 
60 THE INVESTOR'S PRIMER 
 
 name the certificate stands. In case the owner 
 of the stock has not had his certificate trans- 
 ferred to his name before the closing of the 
 books, the dividend, of course, is sent to the 
 former owner and he must pass it on to the 
 new owner. When a speculator is short of a 
 stock on which a dividend becomes due, he is 
 obliged to pay the amount of the dividend to 
 the person from whom he has borrowed the 
 stock certificate to make delivery to the per- 
 son to whom he has sold the stock. 
 
 EQUITY. The equity in a property is un- 
 derstood to be the difference between the 
 value of the property mortgaged or otherwise 
 encumbered and the amount of the obligation 
 to secure which the property is pledged. For 
 instance, the equity in a loan is the difference 
 between what the securities pledged as col- 
 lateral are worth and the amount borrowed on 
 them. Securities are usually accepted as col- 
 lateral by the banks at about 80% of their 
 market value, that is, the lender will usually 
 lend $80,000 on securities of the market value 
 of $100,000. The difference, of course, between 
 the market value of the securities and the 
 amount of the loan is the equity. The term 
 equity back of the bonds is often used by 
 dealers in/ investment securities, and refers 
 
THE INVESTOR'S PRIMER 61 
 
 usually to the total market value of all the se- 
 curities which may be junior in lien or position 
 to the specific security which is referred to. 
 Thus, if a property has secured on it a bond 
 issue of $10,000,000 and the property itself has 
 a capital stock of $40,000,000, the stock being 
 quoted at par, then the equity above the mort- 
 gage is about $30,000,000. If the stock is 
 quoted at 150, the equity above the mortgage 
 would presumably be about $50,000,000. 
 
 EXCHANGE. The word exchange in 
 finance refers to the payment of an obligation 
 in one place by the transfer of a credit from 
 another place. By this operation the obliga- 
 tion is discharged without the direct borrow- 
 ing of money. The exchange itself is an order 
 obtained in one place for the payment of 
 money in another place. There is really no 
 practical difference between a bill of exchange 
 and a draft. The term bill of exchange is 
 usually applied to an order for money payable 
 in a foreign country, whereas the term draft 
 is applied to an order payable within the coun- 
 try of its origin. 
 
 EX-DIVIDEND. This term means with- 
 out or not including a dividend. For instance, 
 dividends on stocks are usually declared pay- 
 
62 THE INVESTOR'S PRIMER 
 
 able on a certain day after the transfer books 
 of the corporation have closed. This may be 
 five days or it may be 30 days. During this 
 period the stock cannot be transferred from 
 one name to another, and it therefore sells from 
 that time on at a new price, which is usually 
 measured by the amount of the dividend which 
 has been declared and on which the books have 
 closed. Thus, unless specifically arranged 
 otherwise, no stock during this period will 
 carry the dividend which will be mailed when 
 the books open, as the dividend goes to the 
 owners of stock of record on the day the books 
 close. 
 
 EX-INTEREST. This means without in- 
 terest or not including interest, and applies 
 usually to bonds. Registered bonds sell ex- 
 interest in the same way that stocks sell ex- 
 dividend when the books are closed. In the 
 case of coupon bonds the term ex-coupon is 
 used in the same sense. Of course, in the case 
 of coupon bonds no books are closed, and the 
 bonds sell ex-coupon from the day that the 
 coupon is paid and cut off the bond. 
 
 EX-RIGHTS. A stock that is sold ex-rights 
 does not convey to the buyer the privilege to 
 
THE INVESTOR'S PRIMER 63 
 
 participate in any right that may recently have 
 been granted to the stockholders. 
 
 FIXED CHARGE. A fixed charge is one 
 that becomes due regularly and at stated in- 
 tervals and permanently. For instance, in the 
 case of railroads, fixed charges include interest 
 on bonded debt, interest on floating debt, sink- 
 ing fund charges, rentals, taxes, etc. Failure to 
 pay these charges usually constitutes a legal 
 default and cannot be deferred except by agree- 
 ment of all parties concerned. 
 
 FLAT. The term flat is used in relation to 
 bonds or other securities which are sold with- 
 out interest. That is, the interest is not com- 
 puted and added to the price, but is, to a more 
 or less extent, embraced in the price itself. In 
 other words, the accrued interest, whatever it 
 may amount to, is included in the net figure 
 which is named as the price. In the stock 
 market, when stock certificates are loaned flat 
 the lender does not have to pay interest to the 
 borrower of the stock. Ordinarily the bor- 
 rower of stock pays the lender the market 
 value of the stock, and the lender pays interest 
 to the borrower on this money. When a stock 
 is lending flat it signifies that this particular 
 stock is not in adequate supply, or at least it 
 
64 THE INVESTOR'S PRIMER 
 
 is not easy to obtain by borrowing. When, on 
 the other hand, a stock is lending at a pre- 
 mium the borrower not only receives no inter- 
 est on the money that he advances to the 
 lender, but he also has to pay whatever amount 
 may be agreed upon for the use of the stock. 
 In such a case the stock is very scarce on the 
 market or it is very difficult to obtain. 
 
 FLOATING DEBT. The floating debt of 
 a corporation is the unfunded indebtedness; 
 that is, indebtedness not represented by per- 
 manent security. Usually, floating debt con- 
 sists of money directly borrowed ; money owed 
 for miscellaneous purposes, and money pay- 
 able within a short period. 
 
 FOREIGN EXCHANGE. Foreign Ex- 
 change is, briefly, the payment of an obligation 
 in a given place in one country by the transfer 
 of a credit from a given place in another coun- 
 try by means of a bill of exchange, as for in- 
 stance, a bill drawn in New York and payable 
 in London. 
 
 For instance, A in London owes $100,000 
 or the equivalent in pounds sterling to B in 
 New York; likewise C in New York owes 
 $100,000, or the equivalent of that sum, to D 
 in London. 
 
THE INVESTOR'S PRIMER 65 
 
 A in London buys a bill of exchange on New 
 York collectible in New York, for the amount 
 of his obligation and forwards it to B in New 
 York; likewise C in New York buys a bill of 
 exchange on London collectible in London for 
 the amount of his obligation and forwards it 
 to B in London. Thus, both A and C have 
 paid what they owed, while B and D have re- 
 ceived what is due them, and no money has 
 crossed the ocean in settling the accounts. 
 
 A merchant in New York usually pays for 
 goods bought in Paris or London with a bill 
 of exchange or draft purchased from a bank 
 or banker in New York, which is payable by 
 the correspondent in London or Paris, as the 
 case may be, of the New York bank or banker. 
 The bill of exchange thus saves trouble, time 
 and expense to the remitter. It is payable in 
 French or English money as the case may be, 
 and is purchased at the equivalent in United 
 States money. Such is the method where ex- 
 change is bought. 
 
 Following is an instance where exchange is 
 sold: A in New York makes a shipment of 
 goods to B in London for which immediate 
 payment is to be made. A makes out a draft 
 on B for the amount due him and attaching 
 to the draft the bill of lading for the goods 
 sells the draft to a dealer in foreign exchange 
 
66 THE INVESTOR'S PRIMER 
 
 in New York, who forwards it to his corres- 
 pondent in London for collection from B. 
 Thus, A receives pay for his goods as soon as 
 they are shipped, and does not have to first 
 ship the goods, then wait for them to reach 
 London and then wait for a ship to bring back 
 gold in payment for them, nor even to wait for 
 the mail to bring back a draft bought by B in 
 London on some bank or banker in New York ; 
 much less has he to wait for B to receive the 
 goods, draw a check on his own (B's) bank in 
 London and send it to him (A in New York) 
 who would have to sell the check to some 
 dealer in foreign exchange in New York. B, 
 on the other hand, by receiving the bill of 
 lading for the goods when the draft is pre- 
 sented to him for payment, knows not only 
 that the goods have been shipped to him by A, 
 but by possession of the bill of lading holds 
 actual title to them. 
 
 Bills payable on demand or sight are called 
 sight bills; bills payable in ten to thirty days 
 are called short bills ; bills payable in sixty days 
 or in a longer period are called long bills. 
 There are also cable transfers by which money 
 (or credit) is transferred by cable. These for 
 brevity are called cables. Bills drawn by banks 
 or bankers against their credits abroad are 
 called bankers' bills. These include letters of 
 
THE INVESTOR'S PRIMER 67 
 
 credit. Bills drawn against shipments of com- 
 modities or manufactures are called commer- 
 cial bills. Specifically, grain-bills are drawn 
 against grain shipped and cotton-bills are 
 drawn against cotton shipped. 
 
 FOUNDERS' SHARES. Shares which are 
 sometimes given to the founders and pro- 
 moters of a company; such shares generally 
 divide the surplus profits with the common 
 shares after a certain percentage has been paid 
 on the latter. These shares are seldom created 
 in this country, being chiefly the result of an 
 English custom. 
 
 FRANCHISE. A franchise is a privilege 
 conferred by grant from a government or mu- 
 nicipality to a corporation or an individual. 
 For instance, the right to construct a railroad 
 from one point to another and operate the 
 same over a given period of years constitutes 
 a franchise. Also, a privilege given to a street 
 railway, gas or electric light company or water 
 company to operate on certain streets or 
 within certain limits for a given period more 
 or less exclusively, constitutes a franchise. 
 These franchises are, in modern times, very 
 largely capitalized; the capitalization being 
 measured by the value given to the property 
 
68 THE INVESTOR'S PRIMER 
 
 through its earning power. This earning 
 power is of course fluctuating, and as the mu- 
 nicipalities grow the earning power usually 
 grows also. Therefore the franchise value 
 which may have been small when the franchise 
 was granted, sometimes grows to a very vast 
 extent. Thus, the public utility franchises of 
 New York City, many of which were of doubt- 
 ful value when granted, have grown to be as- 
 sets of enormous value and have been heavily 
 capitalized. 
 
 FUNDED DEBT. A funded debt of a cor- 
 poration is a debt usually running some years 
 and represented by one or more issues of 
 bonds. It is distinguished from floating debt 
 chiefly by its relatively permanent character. 
 While a floating debt may represent capital 
 which has been borrowed for permanent uses, 
 yet a funded debt nearly always represents this. 
 Funded debt is also a term used for the liabili- 
 ties of the British government, such as have 
 been issued in the form of permanent or long- 
 dated securities, as distinguished from the 
 floating debt, which is in the form of exchequer 
 bonds and treasury bills, and is regarded as 
 temporary. This distinction, however, is not 
 always clear, as the English War Loan issued 
 
THE INVESTOR'S PRIMER 69 
 
 in 1900 and payable in 1910 is called a floating 
 debt, but should be rated as funded debt. 
 
 GOLD BONDS. A bond which is specifi- 
 cally payable, principal and interest, in gold. 
 In the days before 1896, when there was much 
 doubt in the minds of investors as to the prob- 
 ability of the United States maintaining the 
 gold standard, corporations found it necessary 
 to insert what was called the gold clause in the 
 mortgages they issued. Otherwise investors 
 would not so readily purchase the bonds and 
 it was difficult to float any issues which did not 
 include the gold clause. The reason for this 
 was that in the event of the currency system 
 of this country going on a silver basis the prin- 
 cipal and interest of the bonds would have 
 been payable in this depreciated currency, and 
 the investor would therefore lose possibly one- 
 half of his principal. At the present time the 
 gold clause is, of course, unnecessary, as there 
 is no doubt whatever about the permanency of 
 the gold standard in this country. 
 
 GRANGER RAILROADS. This is the 
 Wall Street name which is given to the rail- 
 road systems of the west, like the Chicago, 
 Burlington and Quincy, Chicago, Milwaukee 
 & St. Paul, Chicago & Northwestern, Chicago 
 
70 THE INVESTOR'S PRIMER 
 
 & Alton, Rock Island, etc. These railroads are 
 called granger roads because many years ago 
 a wide agitation was carried on by the State 
 Granges in the particular sections where these 
 railroads run. The grange agitation was of 
 such national interest and for so long a time 
 affected the position and earning of these par- 
 ticular properties, that they came to be known 
 as the granger roads, and have carried the name 
 ever since. The mere fact that they carried 
 grain had nothing to do with this particular 
 appellation, as there are many other roads 
 which nowadays carry as much, if not more 
 grain than these systems and which are not 
 included among the grangers. 
 
 G. T. C. When these letters are used with 
 an order to buy or sell stock or commodities, 
 they mean that the order is good till counter- 
 manded or good till cancelled. 
 
 GUARANTEED BONDS. A bond, the 
 payment of the principal and interest of which 
 is guaranteed by another corporation. When 
 a railroad leases another railroad it frequently 
 guarantees the principal and interest on the 
 bonds of the leased road. Sometimes this 
 guarantee is shown by endorsement on the 
 
THE INVESTOR'S PRIMER 71 
 
 bond itself and sometimes is simply provided 
 for in the lease. 
 
 GUARANTEED STOCK. A stock the 
 dividends on which are guaranteed by a com- 
 pany other than the one which issued the stock. 
 When a railroad leases another road it fre- 
 quently guarantees the dividends on the stock 
 of the leased road. 
 
 HOLDING COMPANY. This is the same 
 as a security company. That is, a company 
 which owns the securities of other companies 
 and depends for its income upon the interest 
 and dividends yielded by these securities. It 
 frequently issues bonds as well as stock itself. 
 Thf most notable example of a holding com- 
 pany in the railroad field was that of the North- 
 ern Securities Co., which, however, was dis- 
 solved as being illegal by the United States 
 Courts. It planned to hold the stocks of the 
 Great Northern and Northern Pacific Railroad 
 companies and possibly of other companies 
 also. A holding company is frequently also 
 an operating company. For instance, the 
 Pennsylvania Railroad is both a holding com- 
 pany and an operating company. It operates 
 several thousand miles of railroad and in ad- 
 dition holds a majority of the stocks and many 
 
72 THE INVESTOR'S PRIMER 
 
 other securities of a large number of other 
 railroads. On the other hand, the Pennsyl- 
 vania Company of Pittsburg, itself controlled 
 through stock ownership by the Pennsylvania 
 Railroad, is a pure holding company, and 
 simply holds the stocks and certain other se- 
 curities of the various Pennsylvania lines west 
 of Pittsburg and Erie. The New York Central 
 Railroad is a holding company as well as an 
 operating company. This is also true of all 
 the large systems such as the New Haven, the 
 Union Pacific, Baltimore & Ohio, Illinois Cen- 
 tral, etc. The Reading Company on the other 
 hand, is simply a holding company, and holds 
 a majority of the stocks of railroads like the 
 Philadelphia & Reading, New Jersey Central, 
 as well as the stocks of certain coal and iron 
 companies in the anthracite coal fields. 
 
 HYPOTHECATION. This implies the 
 pledging of securities or other property as col- 
 lateral for loans. When securities are pledged 
 for a loan the title to them is surrendered for 
 the time being to the bank or lender with 
 which or with whom they are pledged. On the 
 London Stock Exchange stock or securities 
 pledged as collateral are said to be pawned. 
 
 INCOME ACCOUNT. This is the revenue 
 account, and in the case of most corporations 
 
THE INVESTOR'S PRIMER 73 
 
 it embraces such items as gross earnings, oper- 
 ating expenses, net earnings, income from 
 other sources, fixed charges and other deduc- 
 tions for dividends, dividend charges and sur- 
 plus. 
 
 INCOME BASIS. The income basis of an 
 investment is the percentage of return on the 
 price. As for example, the percentage that the 
 interest on a bond or the dividend on a stock 
 equals when calculated on the cost of the bond 
 or stock. A stock paying 6% which is bought 
 at 120 yields 5%, therefore, this stock at 120 
 is on a 5% basis. 
 
 INCOME BOND. A bond that is pre- 
 sumably a lien on the net income or earnings 
 of a corporation after all prior charges have 
 been paid. It receives interest only when 
 earned, and is somewhat similar in character 
 and position to a preferred stock, with the ex- 
 ception that a preferred stock usually has 
 voting power. An income bond is not usually 
 a mortgage, and even when it is, it cannot be 
 foreclosed before maturity, provided the pro- 
 visions regarding interest payments on earn- 
 ings are technically adhered to. 
 
 IRREDEEMABLE BOND. A bond which 
 cannot be redeemed or paid off, but the interest 
 
74 THE INVESTOR'S PRIMER 
 
 on which goes on forever. There have been 
 many such issues made by European govern- 
 ments and municipalities, but very few have 
 been issued in this country. 
 
 JOINT BOND. A bond in which the pay- 
 ment of the principal and interest is assumed 
 by two or more parties or corporations who are 
 jointly bound. There are many such issues 
 among railroad bonds. The most frequent in- 
 stances are where two or more railroads use 
 the same station or terminal property at a 
 given point, and jointly issue a mortgage for 
 the purpose of expanding or improving the 
 said property. The bond is usually issued by 
 the terminal company itself, and then jointly 
 guaranteed as to both principal and interest 
 by the railroad companies which use the prop- 
 erty. 
 
 KAFFIRS. This is the London Stock Ex- 
 change name for all shares of South African 
 mining, land, industrial and other companies. 
 
 KANGAROOS. This is the London Stock 
 Exchange name for shares of all West Aus- 
 tralian mining, land, industrial and other com- 
 panies. 
 
THE INVESTOR'S PRIMER 7S 
 
 KITING. Kiting is, simply stated, the in- 
 curring of a fresh obligation to discharge an 
 old one. The commonest form of kiting is by 
 means of checks. For example, a depositor 
 in a bank has issued a check which overdraws 
 his account. He makes out another check, 
 obtains cash for it elsewhere than at the bank, 
 and deposits the cash in the bank in time to 
 meet the first check. Two or three days may 
 elapse before the second check reaches the 
 bank, and before its arrival another check has 
 been made out and the cash obtained for it and 
 deposited. So the process may continue. 
 
 A person engaged in kiting may arrange to 
 exchange checks with one or more persons, and 
 thus enlarge the circle of operations to greater 
 and greater degrees. He may also gain time 
 by sending his checks to other places which are 
 remote from his bank. It is unnecessary to say 
 that check kiting is illegal. 
 
 LISTED STOCKS. Stocks which have 
 been placed on the regular list of the New 
 York Stock Exchange or other stock ex- 
 changes, and are thereby admitted to dealings 
 on the exchanges, are commonly known as 
 listed stocks. In the case of the New York 
 Stock Exchange there are two classes of 
 stocks; those known as listed securities and 
 
76 THE INVESTOR'S PRIMER 
 
 those known as unlisted securities. In order 
 that a security may be listed certain rules must 
 be conformed to by the company making the 
 application, these rules bearing particularly 
 upon the financial statement submitted by the 
 company. With the unlisted securities, how- 
 ever, the case is somewhat different. The lat- 
 ter are not obliged to submit details regarding 
 their earnings or financial condition. In the 
 method or scope of dealings on the floor of the 
 exchange there is, however, no difference be- 
 tween listed and unlisted securities. 
 
 LOMBARD STREET. A street in London, 
 located in the financial district. The name 
 Lombard Street, however, applies to the whole 
 banking center of London. The name was 
 probably originally given to the street for the 
 reason that some of the Lombard Jews, who 
 began banking in Italy in the Ninth Century, 
 afterwards went to London and settled in this 
 particular locality. 
 
 LONDON QUOTATIONS. A quotation 
 on the London Stock Exchange means the 
 price at which the jobber or dealer will either 
 buy or sell. Thus, when a jobber quotes 
 99% 100% it means that he will buy at 99% 
 or will sell at 100%. When, in giving a quota- 
 
THE INVESTOR'S PRIMER 77 
 
 tion the "middle price" is named, it means the 
 price midway between the jobber's buying and 
 selling price. In the above quotation the 
 middle price would be 100. On the New York 
 Stock Exchange, on the other hand, the quo- 
 tations (except "bid" and "asked") are the 
 prices at which actual transactions take place, 
 
 LONG ACCOUNT. This term designates 
 a stock or other account on the ledger o a 
 broker which shows one or more purchases 
 made in expectation of a rise in the price oi the 
 particular security which is in the account. 
 The same term also applies to similar pur- 
 chases of grain, cotton, coffee, etc. It is just 
 the reverse of "short account," the latter desig- 
 nating securities sold "short." 
 
 MANIPULATION. In speculation this 
 term is applied in a broad sense, to the various 
 operations employed for the working of stock 
 or other quotations up or down, or both ways* 
 as the case may be. Among the familiar 
 methods employed for thus affecting the prices 
 of securities, is the dissemination of reports* 
 sometimes true and sometimes false, to affect 
 the prices of particular stocks; the circulation 
 of rumors, coloring of news or suppression of 
 facts. In the sensitive, mercurial atmosphere 
 
78 THE INVESTOR'S PRIMER 
 
 of Wall Street, rumors are often most potent 
 in affecting stock quotations, and often prices 
 are temporarily changed to a very absurd and 
 abnormal extent by such methods. In addition, 
 there are other more positive ways of manipu- 
 lating prices, a favorite one being what is 
 known as "wash sales." "Washing" in Wall 
 Street consists of buying and selling a given 
 security at the same price and at the same 
 time. The operator wishes to advance a stock 
 in price and gives to one broker an order to 
 bid the stock up on a scale ; that is to say, the 
 broker is instructed to offer to buy a certain 
 amount of stock, bidding for each lot J4 of one 
 per cent, above the last price paid. At the 
 same time, the operator gives another broker 
 an order to sell the same amount of stock at 
 similar prices. Thus, other things not inter- 
 fering, the operator raises the price of the stock 
 without actually buying anything. If, on the 
 other hand, the operator desires to depress the 
 price of a stock, similar methods are employed, 
 except that they are reversed. 
 
 Pools are often formed in Wall Street to 
 manipulate stocks, in which cases, everything 
 is usually done on a much more comprehensive 
 scale than when only a single operator is 
 carrying on the washing process. 
 
THE INVESTOR'S PRIMER 79 
 
 MARGIN. The money deposited with a 
 toanker or broker by an operator or speculator 
 in stocks or in grain, cotton, coffee, and so 
 forth, to protect the broker against loss. In 
 other stocks the amount of margin required 
 by a broker varies from 5% to 20% of the par 
 value, according to the kind of security dealt 
 in, or the character of trading done. The aver- 
 age margin is 10%, which is equal to $1,000 
 on 100 shares of stock, or on $10,000 of bonds. 
 
 Stocks or bonds bought on margin by a 
 broker for a customer are at all times, in the 
 absence of an agreement to the contrary, sub- 
 ject to the order of the customer. A customer 
 has the right to demand delivery at any time 
 of the securities upon payment of the amount 
 owing on them, including commissions, inter- 
 est and any other proper expenses or charges. 
 At the same time, unless there is a specific 
 agreement to the contrary, the broker may at 
 any time, upon giving proper formal notice, re- 
 % quire the customer to "take up"; that is, pay 
 in full for the stocks or other securities which 
 are being carried. If the customer is short of 
 stocks the broker may demand that he buy the 
 stocks or otherwise close out his account. 
 
 When 100 shares of stock is bought at the 
 New York Stock Exchange on a 10% margin 
 (the price being $100 per share), the broker 
 
80 THE INVESTOR'S PRIMER 
 
 executing the order receives the stock and 
 pays $10,000 for it to the broker from whom it 
 is purchased. The buying broker having re- 
 ceived only $1,000 from his customer, thus ad- 
 vances $9,000 additional, which he treats as a 
 loan to the customer, holding the stock as se- 
 curity for the money so advanced. On the 
 amount of money so advanced he charges the 
 current rate of interest. Should the stock be 
 later sold at 115, $11,500 could be received for] 
 it. The gross profit on such a transaction" 
 would be $1,500, but from this amount would 
 be deducted the broker's commission and the 
 interest on the money advanced by the broker. 
 In the event of a stock declining below the 
 purchase price, the customer is of course re- 
 quired to deposit more margin. If he fails to 
 do this, the broker has the right to "sell him 
 out"; that is to say, to sell the stock for what 
 it will bring, after which he will return to the 
 customer whatever balance, if any, is due the 
 latter, less whatever commissions, interest or 
 other expenses that may have properly been* 
 charged. 
 
 If a speculator sells a stock short he deposits 
 margin the same as he does when he buys a 
 stock. If the stock is sold at 100 and is bought 
 back at 90 the speculator's profit would be 
 $1,000, less the broker's commission. Should 
 
THE INVESTOR'S PRIMER 81 
 
 the stock advance to any considerable extent, 
 the customer is, of course, required to deposit 
 sufficient additional cash to keep his margin 
 intact; in the event of his failure so to do, the 
 broker may close him out by buying in the 
 stock at the lowest price and settling the dif- 
 ference, if any, less the commission, etc. 
 
 MATCHED ORDER. A Wall Street term, 
 which means an order to buy and sell the same 
 stock; such an order is usually employed for 
 the purpose of artificially raising or lowering 
 the price of a stock. It is the same as stock- 
 watering. 
 
 MILEAGE. Means length or distance in 
 miles. The road mileage of a railroad is the 
 length in miles of the railroad itself. Track 
 mileage is the length in miles of the tracks of 
 the railroad, each mile of double track being 
 counted as two miles; side tracks and switch- 
 ing tracks also being counted and included in 
 the mileage. Track miles means the same as 
 track mileage. 
 
 Train mileage is the number of miles trav- 
 ersed by a particular train; or the number of 
 miles, collectively, traversed by all trains of a 
 railroad. The result attained by adding to- 
 gether the number of miles traversed by all 
 
82 THE INVESTOR'S PRIMER 
 
 trains and dividing 'by the number of trains 
 shows the average number of miles traversed 
 by each train. Train miles means the same as 
 train mileage. 
 
 Car mileage is the number of miles trav- 
 ersed by a particular car; or, again, it is the 
 number of miles, collectively, traversed by all 
 cars. The result attained by adding together 
 the number of miles traversed by all cars and 
 divided by the number of cars shows the aver- 
 age number of miles traversed by each car. 
 Car miles means the same as car mileage. 
 
 Ton mileage is the number of miles the whole 
 number of tons are hauled. The average num- 
 ber of miles each ton is hauled (transported) 
 is ascertained by adding together the number 
 of miles each ton is hauled and then dividing 
 by the number of tons. Ton miles means the 
 same as ton mileage. 
 
 Passenger mileage means the number of 
 miles, collectively, traveled by all passengers. 
 The number of miles traveled by all pas- 
 sengers, divided by the number of passengers 
 shows the average number of miles traveled 
 by each passenger. Passenger miles means the 
 same as passenger mileage. 
 
 MIXED LOAN. A loan secured by col- 
 lateral of different character, as railroad ami 
 
THE INVESTOR'S PRIMER 83 
 
 industrial stocks, instead of railroad stocks 
 alone or industrial stocks alone. 
 
 MONETARY. Pertaining to money or 
 finance; consisting of money; financial; pe- 
 cuniary; as monetary convention, monetarjj 
 union, etc. 
 
 MONETARY STANDARD. The standard 
 of value established by law as the basis for 
 the money of a country. By long process of 
 evolution or natural selection gold and silver 
 have been left in possession of the field to the 
 exclusion of everything else, and now all the 
 monetary systems of the world are based on 
 one or the other or both together. Gold, 
 however, is rapidly becoming the universal 
 standard in law as it has been in fact for many 
 years. 
 
 Great Britain first adopted the gold stand- 
 ard (1816). One by one the nations have fal- 
 len into line, the United States as recently as 
 1900, leaving the Latin Union as the most im- 
 portant representative of the double standard 
 system, while the use of silver is practically 
 confined to the Far East and to Mexico and 
 some parts of Central and South America. 
 
 The bimetallic system in its unrestricted 
 form has proved a failure owing to the wide 
 
84 THE INVESTOR'S PRIMER 
 
 variation in value between gold and silver, and 
 no nation any longer undertakes to coin both 
 gold and silver in unlimited quantities. The 
 countries which still retain nominally the 
 double standard, place severe restrictions on 
 the use of silver, and mint it only on govern- 
 ment account, while gold is coined as freely as 
 it is offered. 
 
 Thus, gold has become practically the stand- 
 ard of the world, for not only do the double 
 standard countries restrict the use of silver for 
 the purpose of keeping their silver money at a 
 parity with gold, but the silver standard coun- 
 tries in all international transactions are 
 forced to use gold as the basis of exchange. 
 
 The value of a gold coin depends on the 
 amount of pure gold it contains; therefore, 
 governments in establishing their monetary 
 standard and monetary unit declare by law the 
 weight and quantity of the coin in which values 
 are to be measured. Thus, in the United 
 States, where gold is the standard and the dol- 
 lar the unit, it is enacted that a gold dollar 
 shall contain 23.2 grains of pure gold and 2.6 
 grains of alloy, making the weight of the dollar 
 25.8 grains of standard gold .900 fine. In Great 
 Britain the unit is the sovereign or pound 
 sterling and contains 113 grains of pure gold 
 and 10.27 grains of alloy, making the standard 
 
THE INVESTOR'S PRIMER 85 
 
 of fineness .916 2-3 instead of .900 as in the 
 United States and most other gold-using coun- 
 tries. 
 
 MONEY BROKER. A dealer in coin and 
 paper money and in foreign money; also one 
 who borrows and lends money for others. 
 
 The regular commission of a money broker 
 for negotiating a time loan (a loan for a speci- 
 fied time) is 1-32 of 1% of the amount bor- 
 rowed or $31.25 on $100,000. The commission 
 is paid by the borrower. 
 
 A money broker receives nothing from the 
 borrower or the lender for effecting a call 
 loan. The reason is that a call loan may con- 
 tinue for a day only. The broker expects the 
 free negotiation of call loans to bring business 
 to him when the borrower on call becomes a 
 borrower on time. 
 
 MONEY MARKET. This is a term ap- 
 plied to the business of lending money and not 
 to a place where money is loaned, for there is 
 no specific place (in New York) for lending 
 money. 
 
 In New York the banks, trust companies 
 and insurance companies are the chief lenders 
 of money, but there are other corporations and 
 not a few firms and individuals who are lend- 
 
86 THE INVESTOR'S PRIMER 
 
 ers. As in every other market, supply and de- 
 mand are the factors which determine prices, 
 or in other words, the rates exacted for the use 
 of money. If the demand is large and the 
 supply small, rates are high; if the demand is 
 small and the supply large, rates are low. 
 
 Money is stiff when it commands high rates 
 of interest. It is tight when it is difficult- to 
 obtain even at high rates; in these circum- 
 stances there is a pinch or stringency in money. 
 There is a squeeze in money when it cannot be 
 borrowed except at exorbitant rates; in a 
 squeeze a premium as well as interest is ex- 
 acted on call loans. A premium of %% a day 
 and interest (at the rate of 6%) figuring on 
 the customary basis of 365 days in a year, 
 means a rate equal to 52% a year. 
 
 MONEY RATES. Means the rates of in- 
 terest at which money is lending. There are 
 different rates for call money (money loaned 
 on call that is, returnable on the demand of 
 the lender) and time money (money loaned on 
 time that is, loaned for a specified period). 
 The rates for call money are usually lower 
 than those for time money. For additional in- 
 formation see Call loan; also see Time loan. 
 
 MONOMETALISM. Exists in a country 
 
THE INVESTOR'S PRIMER 87 
 
 when the currency of the country is based on a 
 single metal, as either gold or silver. 
 
 MORTGAGEE. The grantee under a 
 mortgage; the one to whom the mortgage is 
 executed. 
 
 MOVABLE EXCHANGE. If foreign ex- 
 change is quoted and also is payable in the 
 money of the country where collection is to be 
 made, it is called movable exchange. For in- 
 stance, exchange on Paris is quoted in francs 
 in New York and is therefore movable ex- 
 change. The dollar is the basis and the franc 
 fluctuates instead of the dollar in which it is 
 reckoned. The opposite of movable exchange 
 is fixed exchange. 
 
 MUNICIPAL BONDS. Those issued by a 
 borough, town or city possessed of a charter of 
 incorporation conferring privileges of local 
 self-government. 
 
 NATIONAL DEBT. Same as public debt; 
 the debt due from a nation to individual credi- 
 tors. 
 
 The national debt of the United States con- 
 sists of bonds, United States notes (green- 
 backs), old demand notes (notes issued prior 
 
88 THE INVESTOR'S PRIMER 
 
 to the present United States notes), national 
 bank notes for the redemption of which money 
 has been deposited by the issuing banks, frac- 
 tional currency, gold certificates, silver certifi- 
 cates and Treasury notes (issued for the pur- 
 chase of silver bullion). 
 
 NET. Clear of all charges or deductions as 
 actual profit or actual loss. The net earnings 
 of a stock company are the earnings left after 
 deducting expenses. 
 
 Brokers on the outside or curb market in 
 stocks often take an order net, which means 
 that the customer will deliver or receive the 
 stock, as the case may be, at a fixed price. 
 The broker receives no commission but is al- 
 lowed to make as much on the transaction for 
 himself as he can. 
 
 NEW YORK CLEARING HOUSE ASSO- 
 CIATION. The official title of the organiza- 
 tion under which the associated banks of New 
 York conduct daily clearings. 
 
 The association was organized September 
 13, 1853, and clearings were begun on October 
 11 in the basement of No. 14 Wall Street. The 
 first day's clearings amounted to $22,648,109.87 
 and the balances to $1,290,572.38. The number 
 of banks making clearings was 52. The first 
 
THE INVESTOR'S PRIMER 89 
 
 manager was George D. Lyman, who had been 
 a teller in the Bank of North America. The 
 association now owns the handsome white 
 marble building Nos. 79 to 83 Cedar Street. 
 
 NEW YORK STOCK EXCHANGE. The 
 
 New York Stock Exchange is an unincorpo- 
 rated voluntary association, and while it is not 
 a corporation neither is it a partnership. It 
 exists, however, under a written constitution 
 and by-laws. Neither the constitution of the 
 New York Stock Exchange nor the rules and 
 regulations of the London Stock Exchange in 
 express terms state the object for which those 
 bodies were organized, but they are so mani- 
 fest that a statement of them has not been 
 deemed essential. 
 
 The New York Stock Exchange has its 
 origin in an agreement dated May 17, 1792, by 
 "Brokers for the Purchase and Sale of Public 
 Stock." By public stock was meant govern- 
 ment securities; in other words, government 
 bonds. At that time the brokers met and did 
 business under a buttonwood tree that stood 
 in front of the dividing line between the present 
 Nos. 68 and 70 Wall Street. In 1817 a consti- 
 tution was adopted under the name "New 
 York Stock and Exchange Board." On Janu- 
 
90 THE INVESTOR'S PRIMER 
 
 ary 29, 1863, the present name, "New York 
 Stock Exchange," was adopted. 
 
 The membership of the New York Stock Ex- 
 change is limited to 1,100. The admission fee 
 is $2,000, but this is in addition to the cost of 
 a membership itself, which depends on the 
 "state of the market" for seats, as member- 
 ships are called. A membership is obtained by 
 buying the seat of a retiring, deceased or ex- 
 pelled member. A member is elected for life, 
 or until he resigns or is expelled. 
 
 Expulsion from the exchange forfeits mem- 
 bership, but not the proceeds of it. Tempo- 
 rary insolvency involves suspension. Perma- 
 nent insolvency involves loss of membership, 
 and the proceeds of the membership are ap- 
 plied to the payment of the claims of creditors 
 wha are members of the exchange. If there 
 is a surplus, it goes to the member or to his 
 assignee, if he has been declared a bankrupt. 
 
 When a member dies his seat may be dis- 
 posed of by the committee on admission and 
 the proceeds delivered to his executor or the 
 administrator of his estate. 
 
 NEW YORK STOCK EXCHANGE 
 CLEARING HOUSE. The place where the 
 differences in the accounts of the brokers on 
 the New York Stock Exchange are settled. 
 
THE INVESTOR'S PRIMER 91 
 
 Before the establishment of the clearing 
 house a broker who had made sales of stock 
 was obliged to send the stocks to the office of 
 the various purchasers and collect payment 
 from them. At the same time brokers from 
 whom he had bought stocks were obliged to 
 send the stocks to his office and collect pay- 
 ment from him. A broker may have made 
 sales to the amount of $500,000, and purchases 
 to the amount of $475,000. He was compelled 
 to make collections and payments for the full 
 amounts, whereas under a clearing house plan 
 he might have settled all the transactions in 
 one operation, and by the payment of only the 
 difference of $25,000. 
 
 Now, a broker, at the end of each day, makes 
 up a sheet called a clearing house sheet, con- 
 taining his purchases and sales. On one side 
 of the sheet (the left hand side), the broker 
 puts down his purchases, each purchase having 
 a line for itself. In each transaction the name 
 of the broker from whom the purchase was 
 made comes first and then in order follow the 
 numbers of shares, the name of the stock, the 
 price at which purchased, and finally, the 
 amount in dollars of the purchase. This side 
 of the sheet is headed "Received from," mean- 
 ing that the broker has contracted to receive 
 the stocks enumerated. 
 
92 THE INVESTOR'S PRIMER 
 
 The other side of the sheet (the right hand 
 side) contains the list of stocks sold (made out 
 in the same order as the list of stocks bought), 
 and this side of the sheet is headed "Delivered 
 to," meaning that the broker has contracted to 
 deliver the stocks enumerated. 
 
 If his purchases amount in money to more 
 than his sales, he accompanies his sheet with 
 a check drawn on his own bank and payable to 
 the clearing house bank (a bank in which the 
 clearing house account is kept). If his sales 
 amount in money to more than his purchases 
 he accompanies his sheet with a draft on the 
 clearing house bank, which is accepted by the 
 manager of the clearing house (made collect- 
 able by the indorsement of the manager) . This 
 draft is returned to the broker and is deposited 
 by him in his own bank for collection in the 
 ordinary course. 
 
 If the broker has bought more of any par- 
 ticular stock than he has sold or sold more 
 than he has bought, there is a stock difference 
 (as well as a money difference) to be settled, 
 but the settlement of this stock difference is 
 provided for when the sheet is made up. If, 
 for instance, the broker has bought 200 shares 
 of a certain stock and has sold 100 shares he 
 receives the difference or balance of stock, 
 which is 100 shares. Some other broker who 
 
THE INVESTOR'S PRIMER 93 
 
 sold 100 shares more of the stock in question 
 than he bought is directed toy the manager of 
 the clearing house to deliver this extra 100 
 shares to the first broker. The first broker 
 credits himself on his sheet with the amount 
 in money of this stock at the settling price, 
 while the second broker charges himself with 
 the amount of it on his sheet. 
 
 The settling price is an arbitrary price fixed 
 by the manager of the clearing house. Each 
 day at the close of business the manager of the 
 clearing house sends out through the ticker the 
 settling prices for the various stocks for the 
 use of brokers in making up their clearing 
 house sheets. In their use in making up the 
 sheets they are called making-up prices; in 
 their use in making settlements they are called 
 settling prices. These settling prices are the 
 even prices next nearest to the last prices of the 
 day. Thus, if the last price of a stock was 
 99^4 or 100/4 the settling price would be 100. 
 
 The broker who bought 200 shares may have 
 bought them at 99^, and the 100 shares which 
 he sold may have been sold at 100^. If the 
 settling price was 100, he would put down the 
 extra 100 shares due him in the sold column 
 at 100, the same as if he actually had sold the 
 stock at 100. 
 
94 THE INVESTOR'S PRIMER 
 
 Then his account would figure out thus: 
 Bought 200 at 99J4 which equals $19,900; sold 
 100 at 100^ and 100 at 100, which equals $20,- 
 050. The difference is $150, which the broker 
 collects by draft on the clearing house. Had 
 he not included the 100 shares at 100 he would 
 have owed $8,850. To the broker who delivers 
 the 100 shares to him at 100 he gives a check 
 for $10,000. 
 
 This particular part of the operation (the 
 delivery of the stock and collection for it), is 
 wholly outside of the clearing house. Deduct- 
 ing from this $10,000 the $150 received in the 
 clearing house settlement, his net payment is 
 $8,850, exactly what it would have been had he 
 not included the 100 shares at 100 in the clear- 
 ing house sheet. 
 
 No matter if the broker bought more stock 
 than he sold, or sold more than he bought, or 
 what the prices may be or how many stocks 
 may be included in his sheet, the system em- 
 ployed in clearing his sheet accomplishes its 
 end. Inasmuch as the differences both in cash 
 and stocks are provided for in the clearing 
 house sheet, there is, when the general settle- 
 ment is concluded, no balance left of either 
 cash or stock. There was, of course, as much 
 of each stock sold as was bought, because there 
 was a seller as well as a buyer at the same 
 
THE INVESTOR'S PRIMER 95 
 
 price in each individual transaction, and, ac- 
 cordingly, there was as much receivable in the 
 aggregate as there was payable. Both sides 
 of every account are bound to balance or equal- 
 ize when the differences in the stock and 
 money are figured out and put down in the 
 proper places. 
 
 The broker who is short of stocks in his 
 sheet (who sold more than he bought), must 
 borrow the stocks that he is short of for the 
 deliveries which he is directed by the managei 
 of the clearing house to make. 
 
 Not all stocks that are dealt in on the New 
 York Stock Exchange are cleared through the 
 stock exchange clearing house. Only those on 
 the clearing house list are cleared. The stocks 
 on this list are the ones actively (largely) 
 dealt in. If an inactive stock becomes act've 
 it is put on the list; if an active stock be- 
 comes inactive it is taken off the list. 
 
 Transactions in stocks not on the clearing 
 house list are not reported to the clearing 
 house at all. Settlements in these stocks are 
 made between the brokers in the ordinary 
 course of business. For another thing, only 
 stocks bought and sold "regular way" (in the 
 regular way) and at seller 3 are cleared. 
 
 Stocks bought and sold "regular way" are 
 put on the clearing house sheet on the day 
 
 
 
 OF THE 
 
 UNIVERSITY 
 
96 THE INVESTOR'S PRIMER 
 
 they are bought and sold, but are deliverable 
 on the following day. Stocks bought and sold 
 at seller or buyer 3 are not delivered until the 
 third day after they are sold, and are not put 
 on the clearing house sheet until the second 
 day after they are bought and sold; they are 
 put on the clearing house sheet at the selling 
 price on the second day. 
 
 NON-ASSENTED STOCK OR BONDS. 
 
 Stock or bonds which the owners refuse to de- 
 posit under an agreement by which their 
 status will be changed. For additional in- 
 formation see Readjustment. 
 
 NON-CUMULATIVE STOCK. Stock on 
 which dividends, if not paid, do not accumu- 
 late that is, if dividends are not paid for a 
 period they have not subsequently to be paid 
 for the period when they were not declared. 
 
 NON-INTEREST-BEARING. Bearing or 
 paying no interest. The money issued by the 
 United States government, since the govern- 
 ment pays no interest on it, is a non-interest- 
 bearing obligation; the bonds issued by the 
 United States government, since the govern- 
 ment pays interest on them, are interest-bear- 
 ing obligations. 
 
THE INVESTOR'S PRIMER 97 
 
 NOTE BROKER. One who effects the sale 
 of promissory notes. A note broker is differ- 
 ent from a money broker. The commission of 
 a note broker is generally % or % of 1% of 
 the amount of the note. This commission is 
 paid by the one for whom the broker sells the 
 paper. The buyer pays no commission. 
 
 ON A SCALE. A term used in speculative 
 operations in stocks, meaning buying or sell- 
 ing, as the case may be, at stated intervals, in 
 prices as prices decline or advance. For in- 
 stance, buying at 100, 98, 96, 94 and 92 would 
 be buying on a 2% declining scale. Reversing 
 the order of prices would be buying on an 
 ascending scale. The operation of selling on a 
 scale is conducted in the same fashion. 
 
 ON MARGIN. When stocks are bought or 
 are sold short on margin a percentage of the 
 par (face) value, say 10^, is deposited with 
 the broker to secure him against possible loss. 
 The amount deposited is margin. 
 
 For information as to margin or speculative 
 operations in stocks bonds, grain, lard, pork, 
 short ribs, cotton, coffee and silver bullion 
 see margin. 
 
 OPTION. Property bought or sold to be re- 
 ceived or delivered by the buyer or seller in 
 
98 THE INVESTOR'S PRIMER 
 
 accordance with the terms agreed upon. 
 Sometimes the buyer pays for the privilege of 
 calling for the delivery of the property within 
 a certain time if he so wills, but he is not 
 obliged to take it; sometimes the seller pays 
 for the privilege of delivering the property. 
 
 In speculation an option is the purchased 
 privilege of either receiving or delivering a 
 specific amount of anything (as stocks, grain, 
 cotton, coffee, etc.) at a specified price within 
 a specified time. 
 
 In stocks bought on the buyer's option the 
 buyer may, when the option is for four days or 
 more, demand delivery of the stock on any day 
 within the time specified on one day's notice to 
 the seller. In stocks sold on seller's option, 
 when the option is for four days or more, the 
 seller may deliver the stock to the buyer on 
 any day within the time specified on one day's 
 notice to the buyer. 
 
 When a dividend becomes due on a stock 
 during the pendency of an option on it the 
 dividend is collected by the seller of the stock, 
 who holds it, allows interest on it and pays the 
 dividend, with the interest on it, to the buyer 
 on the settlement of the contract. When an 
 option on a stock matures during the closing 
 of transfer books, the seller of the stock gives 
 to the buyer of the stock a due bill for the 
 
THE INVESTOR'S PRIMER 99 
 
 amount of the dividend which is payable when 
 the dividend is paid, but the due bill does not 
 bear interest. 
 
 OPTIONAL BOND. A bond maturing 
 (expiring) at a specified date, but which may 
 be redeemed (paid and cancelled) after a 
 designated date at the pleasure (option) of the 
 company (or government) issuing it. Thus, a 
 bond maturing in fifty years, but which may 
 be redeemed after ten years, is an optional 
 bond. 
 
 ORDINARY STOCK. Common or general 
 stock. In Great Britain, when an ordinary 
 (common) stock has been divided into two 
 parts, one part, called deferred, receives no 
 dividend until the other part, called preferred, 
 has received a dividend at a fixed rate. The 
 deferred stock is called A stock and the pre- 
 ferred stock is called B stock. 
 
 This B or preferred stock is not the same as 
 preferred stock in the United States. What in 
 the United States is called preferred stock is in 
 Great Britain called preference stock, and 
 preference stock in Great Britain may be di- 
 vided into two or more classes called first 
 preference, second preference, etc., just as pre- 
 ferred stock in the United States may be di- 
 
100 THE INVESTOR'S PRIMER 
 
 vided into two or more classes called first pre- 
 ferred, second preferred, etc. When, how- 
 ever, there is but one class of preference stock 
 ahead of an ordinary stock in Great Britain, 
 the B or preferred stock is equivalent to sec- 
 ond preferred stock in the United States. 
 
 OUTSIDE BROKER. A broker who is not 
 a member of an exchange; one who deals in 
 securities that are not dealt in on a stock 
 exchange. A dealer in the outside market 
 or on the curb is an outside broker. In New 
 York such a broker is not a bucket shop 
 keeper; see Bucket Shop. In London an out- 
 side broker is one who is not a member of the 
 London Stock Exchange, and is sometimes 
 described as a bucket shop keeper. Many Eng- 
 lish outside brokers, however, conduct a per- 
 fectly legitimate business. 
 
 PAR. The face value. On the New York 
 Stock Exchange if the face value of a stock is 
 $100 it is at par when it is selling at 100. It is 
 above par when it is selling at a higher price, 
 as 101 ; it is below par when it is selling at a 
 lower price, as 99. Half-stock (stock of the 
 face value of $50) also is at par when it is 
 quoted at 100 % which in this case means $50. 
 The face value of a stock is divided into 100 
 
THE INVESTOR'S PRIMER 101 
 
 parts for quotation purposes, no matter what 
 the face value may be, and each part is called 
 1% or 1 point. Therefore, when a half-stock 
 is quoted at 101 it is one point above par, which 
 means that the stock is worth $50.50 a share; 
 when it is quoted at 99 it is 1 point below 
 par, which means that the stock is worth $49.50 
 a share. The same principle applies to quar- 
 ter stock (stock of the face value of $25) and, 
 in brief, to stock of any face value. 
 
 In some markets stocks are quoted in dol- 
 lars instead of by percentage. Thus, in such 
 markets if a stock of the face value of $100 is 
 selling at 100 it is at par; if selling at 101 it is 
 1 point above par; if selling at 99 it is 1 below 
 par. Likewise, if a stock of the face value of 
 $50 is selling at 50 it is at par; if selling at 51 
 it is 1 above par; if selling at 49 it is 1 below 
 par. So, also, if a stock of the face value of 
 $25 is selling at 25 it is at par; if selling at 26 
 it is 1 above par; if selling at 24 it is 1 below 
 par; and so on. 
 
 PAR OF EXCHANGE. The par of foreign 
 exchange is the fixed intrinsic value of the cur- 
 rency unit (monetary unit) of one country ex- 
 pressed in the terms of the currency of an- 
 other country which uses the same metal as a 
 standard of Value. Thus in United States gold 
 
102 THE INVESTOR'S PRIMER 
 
 money is 4.11 shillings, or 4 shillings 1.31 pence 
 in English gold money, or 5 francs 18.26 cen- 
 times in French gold money, or 4 reichmarks 
 (marks) 19.79 pfennig in German gold money, 
 or 2 guilders (florins) 48.78 cents in Nether- 
 lands (Holland) gold money, and so on. 
 
 If the price paid for a bill of exchange just 
 equals the amount for which it is drawn, then 
 exchange is at par; if more is paid exchange is 
 above par ; if less is paid exchange is below par. 
 
 Between a gold standard country and a 
 silver standard country there can exist no fixed 
 par of exchange, for the reason that silver, un- 
 like gold, has not a fixed value ; in other words, 
 silver being merely a commodity, its value de- 
 pends on the state of the market for it. 
 
 PARTICIPATING BOND. Comparable 
 to an income bond, inasmuch as the return to 
 the holder in interest depends on the extent of 
 the revenues so applicable. 
 
 The first bonds to bear this name were is- 
 sued in 1902, and were designated "4 per cent, 
 and participating bonds." These bonds were 
 in effect collateral as well as income bonds. 
 The company which issued the bonds owned 
 stock in another company, and this stock was 
 deposited and pledged as security for the prin- 
 cipal of the bonds. Interest at 4% was guar- 
 
THE INVESTOR'S PRIMER 103 
 
 anteed by the company which issued the bonds 
 and the bonds were also entitled to receive in- 
 terest in excess of 4% as permitted by the divi- 
 dends paid on the stock securing the bonds 
 beyond the amount necessary first to provide 
 for the 4% as guaranteed. 
 
 PASSENGER DENSITY. A term used in 
 railroad accounting, meaning the result ob- 
 tained when the total number of miles of pas- 
 sengers carried is divided by the number of 
 miles of road operated. 
 
 PASSENGER MILES. A railroad term; 
 the number of miles, collectively, traveled by 
 all passengers. The result attained by adding 
 together the number of miles traveled by all 
 passengers shows the average number of miles 
 traveled by each passenger. Passenger mile- 
 age means the same as passenger miles. 
 
 PASSING A DIVIDEND. Failure to de- 
 clare a dividend that had previously been regu- 
 larly paid. When the directors vote not to pay 
 a dividend that previously had been regularly 
 declared the dividend is stopped; when the 
 dividend simply is not declared it is passed. 
 
 PLAIN BOND. A bond not secured by 
 mortgage or collateral and without a sinking 
 
104 THE INVESTOR'S PRIMER 
 
 fund provision. A debenture bond being (as a 
 rule) merely a promissory note in the form of 
 a bond is a plain bond. 
 
 POOL. This term applies when interests 
 join together for mutual advantage. 
 
 The anthracite coal pool, as it formerly ex- 
 isted, was an agreement whereby each com- 
 pany belonging to the pool was to mine a cer- 
 tain percentage of the total production. The 
 production for each month was determined in 
 the preceding month. The purpose of the pool 
 was regulation of both output and prices. By 
 restricting the output to the consumptive de- 
 mand, control of prices was accomplished. A 
 schedule of prices was prepared for each month 
 and all the companies made sale of coal in ac- 
 cordance with it. The anthracite coal pool 
 was declared illegal by the courts on the 
 ground that it was in restraint of trade. 
 
 PREFERENCE STOCK. This is the Eng- 
 lish designation for stock that is preferred over 
 other classes as to dividends and assets. It is 
 equivalent to what in the United States is called 
 preferred stock when there is only one class of 
 preferred stock, or to what is called first pre- 
 ferred when there are two classes. Preference 
 stock is sometimes divided into classes, as first 
 
THE INVESTOR'S PRIMER 105 
 
 preference, second preference, etc., with the 
 right to dividends in the order named. 
 
 PREFERRED ORDINARY STOCK. 
 
 English also called B stock receives a divi- 
 dend at a fixed rate before any payment can 
 be made on the deferred ordinary stock. For 
 additional information see Preferred Stock. 
 
 PREFERRED STOCK. Stock that is pre- 
 ferred as to dividends and assets; it must re- 
 ceive a dividend before a dividend can be paid 
 on the common stock, and in a distribution of 
 assets it participates ahead of the common 
 stock. Cumulative preferred stock is stock 
 the dividends on which, if not paid regularly 
 or in full, accumulates, and must be paid in 
 the future before a dividend can be paid on the 
 common stock.. Preferred stock is the English 
 designation for preferred ordinary (common) 
 stock. When for dividend purposes the ordi- 
 nary stock of a company has been divided into 
 two parts called preferred or "B" stock and 
 deferred or "A" stock, the dividend on the "A" 
 stock is deferred until a fixed amount has been 
 paid on the "B" stock. 
 
 This "B," or preferred stock, is not the same 
 as preferred stock in the United States. What 
 in the United States is called preferred stock 
 
106 THE INVESTOR'S PRIMER 
 
 is in Great Britain called preference stock, and 
 preference stock in Great Britain may be di- 
 vided into two or more classes called first pref- 
 erence, second preference, etc., just as pre- 
 ferred stock in the United States may be di- 
 vided into two or more classes called first pre- 
 ferred, second preferred, etc. When, however, 
 there is but one class of preference stock ahead 
 of an ordinary stock in Great Britain, the "B," 
 or preferred stock, is equivalent to second pre- 
 ferred stock in the United States. 
 
 Preference stock is sometimes divided into 
 classes, as first preference, second preference, 
 etc., with the right to dividends in the order 
 named. 
 
 PREMIUM. The amount named in excess 
 of the par (face) value. When a stock, for in- 
 stance, is selling at a premium, the premium 
 is the amount it brings beyond its par or face 
 value. When a stock is lending at a premium 
 (see Borrowing and Lending Stocks), the pre- 
 mium is the amount paid by the borrower of 
 the stock to the lender of it for the use of it. 
 The purpose, usually, for which a stock is bor- 
 rowed is to enable the borrower, who has sold 
 it short (sold stock he did not possess), to 
 make delivery to the purchaser. 
 
 In Great Britain when a stock or other se- 
 
THE INVESTOR'S PRIMER 107 
 
 curity is at a premium the premium is reck- 
 oned at so much in the pound on shares and at 
 a percentage on stock or 'bonds. 
 
 In insurance in Great Britain the premium is 
 the consideration paid by the policy holder for 
 insurance. Thus, a premium of 20 shillings 
 per cent, means that 20 shillings is the premium 
 on each 100 insured. 
 
 PRINCIPAL. The capital sum upon which 
 interest is payable ; also, the one who employs 
 a broker or other agent. 
 
 A principal is responsible for the act of an 
 agent, but an agent who exceeds his authority 
 renders himself personally liable. 
 
 A person who has given money to his own 
 agent to be delivered to his creditor cannot set 
 up the claim that he has paid his creditor un- 
 less the money actually reaches the creditor. 
 In other words, while the money is in the con- 
 trol of the agent of the debtor it is at the debt- 
 or's risk, and it cannot be charged against the 
 creditor any more than if it remained in the 
 debtor's own hands. 
 
 PRIVILEGE. A general name for a call, 
 put, spread or straddle, information as to each 
 of which is furnished under its own title. 
 
108 THE INVESTOR'S PRIMER 
 
 There can be no loss to the buyer of a privi- 
 lege beyond the amount paid for it. Privileges 
 are legal and are enforceable as contracts, but 
 they are not recognized by the New York 
 Stock Exchange. 
 
 Privileges are often bought as a protection 
 against loss on transactions in the stock 
 market. Illustration: One hundred shares of 
 stock are bought at 100. A put under which 
 the stock can be delivered at 98 is purchased 
 for 1%, which makes the net price of the put 
 97. Then, if the stock goes down to say 94, 
 the stock owned by the holder of the put can 
 be put (delivered) to the issuer of the put at 
 98 so that the net loss is only Z% instead of 
 6%, as would be the case if no put had been 
 bought and the stock had to be sold at 94. On 
 the other hand, should the stock go up to say 
 106, only the cost of the put would have to be 
 deducted from the profit on the stock. 
 
 In the case of a stock sold short a call would 
 be employed for protection against loss. JE 
 the stock were sold short at 100 and if a call at 
 102 were purchased for \% and the stock ad- 
 vanced to 106, the net loss would be only 3%', 
 as against 6% if no call had been purchased 
 and the stock had to be covered (bought back) 
 at 106. If the stock against which the put was 
 bought went down to 94, only a deduction of 
 
THE INVESTOR'S PRIMER 109 
 
 1%, the cost of the put, would have to be made 
 from the profit on the stock. 
 
 Calls and puts on grain are based on the 
 same general principle as those on stocks, but 
 they are not employed to any extent except to 
 limit loss. In some states puts and calls on 
 grain are illegal. 
 
 PROXY. A person who is empowered to 
 represent another in a given matter ; the name 
 is also given to the instrument by which a per- 
 son is empowered so to act. 
 
 A person who votes by proxy on stock be- 
 longing to another is said to hold a proxy on 
 the stock. 
 
 PUT. A put (on a stock) is a contract or 
 written agreement binding the issuer to receive 
 from the holder, stock named in the agreement 
 within a certain time at a certain price if the 
 holder shall so demand, or in other words, 
 shall elect to deliver (put) the stock. For ex- 
 ample, A signs a promise to receive 100 shares 
 of some specified stock from B at 100 at any 
 time within 60 days if B so demands. A sells 
 this promise to B for, say $100. If, within the 
 60 days, the stock falls in price so that B can 
 buy it at a profit, B buys it at the lower price 
 and calls on A to receive the stock. The stock 
 
110 THE INVESTOR'S PRIMER 
 
 must go below 99 before there is a profit for 
 B. If the stock advances or does not fall be- 
 low 99, B, of course, does not deliver (put) it 
 and A makes $100 on his risk. In delivering 
 the stock B must give one day's notice, except 
 on the last day, when no notice is required. 
 
 If a dividend becomes due on a stock during 
 the pendency of a put on it the dividend goes 
 to the seller of the put if the stock is put (de- 
 livered) to him. A dividend always goes with 
 the stock. 
 
 A put on grain or any other speculative com- 
 modity is based on the same general principle 
 as in the ease of stocks. 
 
 PYRAMIDING. A system of enlarging 
 operations by use of paper profits (profits in 
 transactions not yet closed and consequently 
 not yet in hand). 
 
 Illustration : One hundred shares of stock of 
 the par value of 100 is bought at 10 on a mar- 
 gin of 5%. The stock advances to 15. There 
 is a profit of 5% which can be used as margin 
 in the purchase of 100 shares more. The price 
 goes up to 20. There is then a profit of 5% on 
 the second lot and an additional profit of 5%* 
 on the first lot, so that there is an unencum- 
 bered profit of 10% on 100 shares or 5^> on 
 200 shares. The profit is utilized as margin for 
 
THE INVESTOR'S PRIMER 111 
 
 the purchase of 200 shares more. The price 
 goes up to 25. Then there is an unencum- 
 bered profit of 5% on the whole 400 shares or 
 20% on 100 shares. This profit is used to buy 
 400 shares more. 
 
 Then, perhaps, the price drops to 20. There 
 being only 5% margin on the whole 800 shares 
 the whole accumulated profit of $3,500 disap- 
 pears, as well as the margin of 5% provided 
 for the purchase of the first 100 shares. Should 
 the price go on up to 30, however, the profits 
 would be increased by $4,000, which would 
 provide 5% margin for 800 shares more of 
 stock, making the total amount of stock held 
 1,600 shares, 1,500 of which would have been 
 purchased with profits. 
 
 Selling stock at intervals on a decline, using 
 profits for margin, is pyramiding, as well as 
 buying it on profits on an advance. 
 
 RAILROAD EARNINGS. In compiling 
 railroad reports the total earnings or receipts 
 from traffic are set down as gross earnings and 
 the remainder, after deducting operating ex- 
 penses (cost of handling traffic), is net earn- 
 ings. To net earnings is added other income 
 (usually derived from investments, which are 
 often in the form of securities held to control 
 other roads) and the total is gross income (as 
 
112 THE INVESTOR'S PRIMER 
 
 distinguished from gross earnings). From 
 gross income are paid rentals and other 
 charges, interest requirements (commonly 
 called fixed charges), etc. The remainder is 
 designated as net income. From it are paid 
 dividends and what is left is surplus. 
 
 In reporting gross earnings it is the practice 
 to divide each month into four weeks. The 
 first seven days are counted as the first week, 
 the second seven days as the second week and 
 the third seven days as the third week, while 
 the remaining days of the month are counted 
 as the fourth week. In a month of 30 days the 
 fourth week consists of nine days, and in a 
 month of 31 days it consists of ten days. Thus, 
 the fourth week may contain two Sundays. 
 
 The custom is to compare railroad earnings 
 in a given period with those in the correspond- 
 ing period in the year before. Railroad traffic 
 is light on Sunday, so that when a fourth week 
 containing two Sundays is compared with a 
 fourth week containing only one Sunday, or 
 vice versa, allowance must be made for the 
 difference in the number of working days 
 (week days). Likewise, in a monthly report 
 of earnings a month may contain five Sun- 
 days, whereas the same month in the pre- 
 ceding year may have contained only four Sun- 
 days, or the reverse. 
 
THE INVESTOR'S PRIMER 113 
 
 A railroad as a rule makes a weekly report 
 of gross earnings; it makes a monthly report 
 of gross and net earnings, with deductions for 
 charges of all kinds, so that a monthly report 
 takes account of everything in the month in 
 question; and finally, the road makes a yearly 
 (annual) report which is a consolidation of the 
 twelve monthly reports with details added, and 
 with remarks by the president and other of- 
 ficials. 
 
 READJUSTMENT. Sometimes called 
 simple adjustment ; a readjustment is when the 
 financial reconstruction or rehabilitation of a 
 railroad or other corporation is voluntary 
 that is, by concurrence of the security holders. 
 Reorganization, as distinguished from read- 
 justment, is when the financial reconstruction 
 is compulsory that is, when it is effected by 
 a receivership and foreclosure. 
 
 In a readjustment (a financial reconstruction 
 that is voluntary) bondholders may exchange 
 their bonds for new bonds bearing a lower 
 rate of interest than the old ones, but in such a 
 case the loss in interest is compensated for by 
 the delivery to the holders of the bonds who 
 make the exchange of a bonus in (a gift of) 
 stock or in some other security, such as in- 
 come bonds (income bonds receive interest 
 
114 THE INVESTOR'S PRIMER 
 
 only if earned). Or, the bondholders may ex- 
 change their bonds for a smaller amount of 
 new bonds, receiving stock or income bonds 
 as compensation for the surrender of a portion 
 of tlieir holdings. 
 
 Again, cumulative stock may be exchanged 
 for a larger amount of non-cumulative stock. 
 Or, the exchange may be on even terms, with 
 compensation for the surrender of the cumu- 
 lative right on the stock. 
 
 The compensation usually takes the form of 
 a bonus of some kind as, for instance, income 
 bonds. 
 
 Financial readjustments without foreclosure 
 to enforce them are not numerous. 
 
 Bonds and stocks, the holders of which 
 agree to accept the terms of a readjustment 
 plan, are termed assenting bonds and stock; 
 bonds and stock the holders of which do not 
 accept the terms of a readjustment plan are 
 termed non-^assenting or unassenting bonds 
 and stock. 
 
 REGISTERED BOND. A registered bond 
 is one registered in the name of the owner, and 
 the bond itself bears his name. Such a bond 
 is transferable the same as a stock certificate. 
 The bond itself contains a form for assignment 
 and transfer. When a registered bond is trans- 
 
THE INVESTOR'S PRIMER 115 
 
 ferred a new bond is issued for the old one just 
 as when a stock certificate is transferred a new 
 certificate is issued for the old one. 
 
 The interest on a registered bond is paid by 
 check, which is sent by mail to the postoffice 
 address of the owner of the bond. Due notice 
 of change of address should, therefore, be 
 given. The old address should be given as 
 well as the new one. 
 
 There are some registered coupon bonds, but 
 such issues are not numerous. 
 
 REGISTERED COUPON BOND. A bond 
 the principal of which is payable only to the 
 one whose name is inscribed on it, ?.nd in whose 
 name also the bond is registered (entered on 
 the books of the company issuing it), while the 
 coupons calling for the payment of the interest 
 as it becomes due, are payable to the bearer. 
 
 REHYPOTHECATION. The hypotheca- 
 tion again of collateral already hypothecated. 
 Rehypothecation, except by consent of the 
 owner of the collateral, is illegal. 
 
 RELEASED INDORSED, BOND. Any 
 indorsement on a coupon bond stating that it 
 has been deposited as security for bank circu- 
 lation (bank notes) or for insurance require- 
 
116 THE INVESTOR'S PRIMER 
 
 ment may be released by an acknowledgment 
 of the release before a notary public; it will 
 then be a delivery in accordance with New 
 York Stock Exchange rules as a released in- 
 dorsed bond. 
 
 REORGANIZATION. When the financial 
 reconstruction or rehabilitation of a railroad or 
 other corporation is voluntary that is, by 
 concurrence of the security-holders the term 
 readjustment applies. When the financial re- 
 construction is compulsory that is, when it 
 is effected by a receivership and foreclosure 
 the term reorganization applies. Most recon- 
 structions are compulsory ; they seldom can be 
 effected except by legal process following in- 
 solvency. 
 
 The method of reorganization is ordinarily 
 as follows : Alter default has been made in in- 
 terest on bonds, say the first mortgage bonds, 
 a receiver is appointed, after which a plan 
 of reorganization is formulated. Provision 
 usually is made in the plan whereby the first 
 mortgage bonds, together with the accumu- 
 lated unpaid interest, are to be paid in full. 
 Such holders as may desire to do so take for 
 their bonds, bonds of a newly formed com- 
 pany, with perhaps stock for the unpaid in- 
 terest. Such holders as prefer cash for their 
 
THE INVESTOR'S PRIMER 117 
 
 bonds and unpaid interest are paid in cash. 
 It sometimes is the case that the holders of 
 bonds who take bonds of the new company for 
 their old bonds receive the unpaid interest in 
 cash. 
 
 The money to pay those bondholders who 
 prefer cash (and to pay unpaid interest if it is 
 to be paid in cash) and to provide other needed 
 funds and working capital, is raised by levying 
 an assessment on the stock (on the holders of 
 the stock at so much per share). Then an 
 order for sale of the property under fore- 
 closure is obtained from the court (the prop- 
 erty being under the control of the court after 
 the appointment by it of a receiver). 
 
 The sale wipes out the bonds and the stock. 
 The proceeds of the sale, however, must go to- 
 ward the liquidation of the mortgage debt. 
 The property (generally) is bid in by a com- 
 mittee of the bondholders for the benefit of the 
 bondholders. The reorganization plan (gen- 
 erally) is primarily in the interest of the bond- 
 holders and only secondarily in the interest of 
 the stockholders. 
 
 REPUDIATION. The rejection, in whole 
 or in part, of a contract, debt or obligation. 
 The term applies in particular to the rejection 
 
118 THE INVESTOR'S PRIMER 
 
 or mandatory scaling of its debt by a govern- 
 ment. 
 
 The repudiation, as applied to the rejection 
 of a debt by a state, was first used in 1841 
 when the state of Mississippi repudiated bonds 
 issued to railroad companies which failed to 
 comply with conditions on which they received 
 them. 
 
 RUPEE PAPER. Securities of the govern- 
 ment of India, interest and principal being pay- 
 able in rupees in India and by bills of ex- 
 change on Calcutta in England. 
 
 SCRIP. Usually the term is applied to a 
 certificate for a fraction of a share of stock and 
 usually, also, scrip is convertible into shares 
 when presented in amounts equal to the face 
 value of a full share. 
 
 It has no voting power or dividend rights 
 until converted into full shares of stock, al- 
 though sometimes interest is paid on it. 
 
 Scrip was also the name given to United 
 States paper currency of denomination less 
 than $1, which is no longer issued ; such money 
 was commonly called "shin plasters." 
 
 In Great Britain it is the practice to issue 
 scrip to represent instalments paid on sub- 
 scriptions for stock; when all instalments are 
 
THE INVESTOR'S PRIMER 119 
 
 paid the scrip is exchanged for stock certifi- 
 cates. 
 
 SCRIP DIVIDEND. One payable in scrip, 
 or in other words, a due bill, sometimes bear- 
 ing interest at the legal rate and usually con- 
 vertible into stock, but having no voting power 
 and entitled to no dividend until so converted. 
 
 SECOND MORTGAGE. The mortgage 
 that is a lien after the first mortgage. 
 
 SECURITIES COMPANY. Same as 
 holding company; a company which owns the 
 securities of other companies and depends for 
 its income upon the interest and dividends 
 yielded by these securities. It usually issues 
 bonds as well as stock itself. Its bonds are 
 collateral trust bonds, being secured by bonds 
 or stocks of other companies owned by it. A 
 securities company is not necessarily a con- 
 trolling company it is not necessary that it 
 should possess a majority of the stocks of the 
 companies whose securities are included in its 
 assets. 
 
 SELLER'S OPTION. A seller's option is, 
 in effect, a put. In stocks sold on seller's op- 
 tion the seller may, when the option is for more 
 
120 THE INVESTOR'S PRIMER 
 
 than three days, put (deliver) the stock on any 
 day within the specified time on one day's 
 notice to the buyer. In a contract for four or 
 more days the buyer, unless the contract is flat 
 (without interest), pays to the seller interest 
 at the legal rate on the price of the stock up 
 to the day of delivery. The amount of a divi- 
 dend becoming due during the pendency of a 
 contract is payable by the seller to the buyer. 
 No contract on seller's (or buyer's) option 
 for less than 4 days or which extends beyond 
 60 days can be entered into on the New York 
 Stock Exchange. 
 
 SELLING SHORT. In Wall Street this 
 consists in selling stocks not owned, and bor- 
 rowing them for immediate delivery. When 
 finally bought in (covered) the borrowed 
 stocks are returned. If, in the interval between 
 selling and buying, the stocks have declined, 
 the trade is profitable; if there has been an 
 advance it is unprofitable. See Short. 
 
 SETTLEMENT, The. The fortnightly set- 
 tlement on the London Stock Exchange, which 
 formerly lasted for three consecutive days, now 
 takes four days, as the "carry-over" in mining 
 shares begins the day before the ordinary 
 "carry-over." According to the London cus- 
 
THE INVESTOR'S PRIMER 121 
 
 torn, payments and deliveries in stock tran- 
 sactions are made only twice a month instead 
 of every day as is the case in New York. 
 
 SHORT. One who has sold a stock which 
 he does not possess and has borrowed the 
 stock for delivery to the buyer, is short of that 
 stock. One who is short of several stocks is 
 said to be short of the market. One who is 
 short is a bear. 
 
 The object of selling short is, of course, to 
 repurchase subsequently at a lower figure. 
 The rules of the New York Stock Exchange 
 enforce the completion of each transaction en- 
 tered into "regular way" on the day following 
 the transaction. Hence, the speculator who 
 has sold short is forced to borrow the stock 
 he has sold, but does not own and make actual 
 delivery of it next day to the purchaser. This 
 he accomplishes through his broker by paying 
 the market value of the stock to the one from 
 whom he borrowed it and then returning the 
 borrowed stock to the lender when he has cov- 
 ered, or in other words, bought back the stock. 
 
 When a speculator is short of stock (has 
 sold stock which he did not own) on which a 
 dividend becomes due, he has to pay the 
 amount of the dividend to the person from 
 
122 THE INVESTOR'S PRIMER 
 
 whom he borrowed the stock, to make delivery 
 to the one to Whom he sold the stock. 
 
 In speculation in grain, cotton, coffee and 
 other commodities, contracts to receive and 
 deliver the property are entered into the same 
 as in stocks. 
 
 SINKING FUND. A fund to which are 
 contributed amounts of money at specified 
 times for the redemption of a debt. For in- 
 stance, when a sinking fund is established for 
 the redemption of an issue of bonds a certain 
 amount of money is added to the fund each 
 year (or at other stated intervals) until finally 
 the fund amounts to enough to redeem (pay 
 off) the bonds. 
 
 Sometimes the money paid into a sinking 
 fund is invested in other bonds (or other se- 
 curities), the interest payments (or dividends) 
 received from which help to swell the sinking 
 fund. It is not infrequently the case that a 
 sinking fund is established to redeem drawn 
 bonds. 
 
 SINKING FUND BOND. A bond, pro- 
 vision of the payment of the principal of which, 
 is made by the creation of a sinking fund. See 
 Sinking Fund. 
 
THE INVESTOR'S PRIMER 123 
 
 SPECIAL AID BOND. One of an issue in 
 aid of some enterprise, as a railroad or manu- 
 facturing concern, which is expected to benefit 
 the nation, state or municipality which issues 
 the bonds. 
 
 SPECIAL ASSESSMENT BOND. One 
 of an issue of municipal bonds payable, princi- 
 pal and interest, from special taxes levied upon 
 particular property, for an improvement from 
 which this property derives special benefit. 
 
 SPREAD. A spread is like a straddle, a 
 double privilege, a put and a call combined. 
 If the stock goes below the price named in the 
 put end (or part), plus the cost of the spread, 
 the holder of the spread profits ; so, also if the 
 stock goes above the price named in the call 
 end (or part), plus the cost of the call, the 
 holder of the call profits. 
 
 Illustration: A spread on 100 shares may be 
 bought on which the stock may be called 
 (called for) atJ02^, or put (delivered) at 
 97^. Say, 2y 2 % ($250) is paid for the spread. 
 Then the stock must go above 105 or below 95 
 before there is a profit in the spread. 
 
 If a dividend becomes due on a stock during 
 the pendency of a spread on it the dividend 
 goes to the holder of the spread if he elects to 
 
124 THE INVESTOR'S PRIMER 
 
 receive and pay for the stock, but it goes to the 
 seller of the spread if the stock is put (de- 
 livered) to him. A dividend always goes with 
 the stock. 
 
 STOCK POWER. The name given to the 
 irrevocable power of attorney used in assign- 
 ing or transferring title to a certificate of stock. 
 
 STOP ORDER. When an order is given 
 to a broker for the purchase of a stock, for in- 
 stance, at 100 with instructions to "stop it" at 
 98, it means that the stock is to be sold if it 
 declines to 98. On the other hand, if a stock 
 is sold short at 100 with instructions to "stop 
 it" at 102, it is to be bought back if it advances 
 to 102. A stop order is employed principally 
 to limit loss in speculation ; in such a case it is 
 specifically designated as a stop-loss order. 
 
 STRADDLE. A straddle is like a spread, 
 a double privilege, a put and a call combined, 
 but only one price is named in it. The stock 
 may be called (called for) or put (delivered) 
 at this price. The stock must go up or down 
 more than the amount paid for the straddle be- 
 fore there is a profit in it. Illustration : A stock 
 is selling at 100 and a straddle on 100 shares is 
 bought at this price, for which 5% ($500) is 
 
THE INVESTOR'S PRIMER 125 
 
 paid. The stock, therefore, must go above 105 
 or below 95 before there is a profit to the pur- 
 chaser of a straddle. 
 
 If a dividend becomes due on a stock during 
 the pendency of a straddle on it, the dividend 
 goes to the holder of the straddle if he elects 
 to receive and pay for the stock, but it goes to 
 the seller of the straddle if the stock is put (de- 
 livered) to him. 
 
 SYNDICATE. As a financial term syndi- 
 cate means several bankers or capitalists who 
 join together to carry out or to insure the 
 carrying out of some plan or scheme which in- 
 volves a large amount of money. 
 
 The commonest form of syndicate is an 
 underwriting syndicate. For instance, the 
 capital stock of a company (or a certain 
 amount of it) is to be offered for public sub- 
 scription at, say, 100 (par). An underwriting 
 syndicate is organized and it underwrites the 
 entire issue at 90. It, in effect, buys the whole 
 issue at 90. The stock taken (subscribed for) 
 by the public practically is sold for account of 
 the syndicate, for it receives the difference of 
 10% between the price at which the stock is 
 sold to the public (100) and the price at which 
 it is underwritten by the underwriting syndi- 
 cate (90). The syndicate is obliged to take 
 
126 THE INVESTOR'S PRIMER 
 
 the stock not sold to (subscribed for by) the 
 public, but it has to pay only 90 for it as 
 against 100 which the public has to pay. If 
 all the stock is taken by the public (as is often 
 the case) the underwriting syndicate has not 
 to take and pay for any stock, but simply re- 
 ceives and divides among its members (in pro- 
 portion to their shares in the syndicate) the 
 amount represented by the difference of 10% 
 between the price of the stock to the public 
 and the price to the underwriting syndicate. 
 If some of the stock is not taken by the public 
 it may be apportioned among the members of 
 the syndicate, but usually it is sold (in the 
 open market or otherwise) for the syndicate. 
 
 TIME LOAN. Wall Street designation for 
 money borrowed for a specified period, usually 
 not less than 30 days nor more than six 
 months, the repayment of which is secured by 
 the deposit of collateral (stocks and bonds) 
 with the lender. 
 
 TON MILE COST. A railroad term, mean- 
 ing the average cost per mile of carrying each 
 ton of freight. 
 
 TON MILES. A railroad term; the whole 
 number of miles the whole number of tons was 
 
THE INVESTOR'S PRIMER 127 
 
 hauled. The result attained by adding together 
 the number of miles each ton was hauled and 
 then dividing by the number of tons shows the 
 average number of miles each ton was hauled 
 (transported). Ton mileage means the same 
 as ton miles. 
 
 TRAIN MILES. A railroad term ; the num- 
 ber of miles traversed by a particular trail*; 
 or, the number of miles collectively traversed 
 by all trains of a railroad. The result attained 
 by adding together the number of miles trav- 
 ersed by all trains on a railroad and dividing 
 by the number of trains shows the average 
 number of miles traversed by each train. 
 Train mileage means the same as train miles. 
 
 TRANSFER. The act of placing a certifi- 
 cate of stock or a registered bond in the nam<? 
 of a new owner. The new owner of a stock 
 which is in receipt of dividends or of a regis- 
 tered bond upon which interest is paid, should 
 have it transferred into his name before the 
 closing of the books for a dividend or for in- 
 terest for the check for the dividend, or in- 
 terest will be sent to the person in whose name 
 the stock or bond stands. 
 
 TRUSTEE STOCK. A stock of the highest 
 
128 THE INVESTOR'S PRIMER 
 
 class in which trustees are authorized by law to 
 invest. 
 
 TWO DOLLAR BROKER. A member of 
 the New York Stock Exchange who executes 
 orders for other members for $2 per hundred 
 shares, and whose participation in transactions 
 ends with the simple act of buying or selling. 
 
 UNASSENTED STOCK OR BONDS. 
 
 Stock or bonds which the owners refuse to 
 deposit under an agreement by which their 
 status will be changed. For additional infor- 
 mation see Readjustment. 
 
 UNDERLYING MORTGAGE. A mort- 
 gage anterior and prior in claim to another 
 mortgage, as, for instance, when speaking of 
 a second mortgage the first mortgage is the 
 underlying mortgage. 
 
 UNDERWRITER. One who insures; a 
 member of an underwriting syndicate. For ad- 
 ditional information see Syndicate. 
 
 UNIFIED BONDS. Another name for con- 
 solidated bonds or consols; an issue of bonds 
 created to unify or consolidate or refund (take 
 up and replace) two or more previous issues. 
 
THE INVESTOR'S PRIMER 129 
 
 UNLISTED STOCKS. This is the com- 
 mon designation for stocks which, in official 
 terms, have been "admitted to quotation" in the 
 "unlisted department" of the New York Stock 
 Exchange. Admitted to quotation means ad- 
 mitted to dealings. 
 
 VALUE BILL (of exchange). A draft (bill 
 of exchange) drawn against a consignment of 
 property. For instance, if A in New York 
 ships goods to B in London and draws on B for 
 the value of the goods, attaching the bill of 
 lading, insurance policy, etc., to the draft (bill 
 of exchange), the bill is a value bill. 
 
 Again, if a banker in New York sells securi- 
 ties to a banker in London and draws on the 
 bank in London for the value of the securities, 
 attaching the securities to the draft (bill of 
 exchange), the bill is a value bill. 
 
 VOTING TRUST. This is created by 
 placing the stock of a company, either all or a 
 majority, in a trust, usually for a specified 
 period, for voting purposes. Thus, the control 
 of the company is locked up in the hands of 
 trustees. Receipts for the stock are issued, and 
 these may be dealt in and receive dividends the 
 same as the stock itself, but they have no 
 voting power. 
 
130 THE INVESTOR'S PRIMER 
 
 VOTING TRUST CERTIFICATE. When 
 the stock of a company is lodged in a 
 voting trust so that the voting power of 
 the stock is confined to the trustees of the 
 voting trust (commonly designated voting 
 trustees), certificates or receipts for it, called 
 voting trust certificates, are issued in place of 
 and represent ownership of the stock. The 
 certificates are dealt in and transferred the 
 same as the stock, and when the voting trust 
 terminates or is dissolved the certificates are 
 exchanged for the stock itself. 
 
 If dividends are declared on the stock while 
 the voting trust is in force, they are paid to the 
 holders of the voting trust certificates. The 
 certificates, in brief, are in all respects the 
 equivalent of the stock, with the exception that 
 they do not possess voting power. 
 
 WASHING. A Wall Street colloquialism 
 used to describe the operation of simultane- 
 ously buying and selling the same stock for the 
 purpose of making quotations, and generally 
 for the purpose of inducing speculation in the 
 stock by imparting apparent activity to it. 
 The transaction is fictitious and so is the price. 
 
 WATERED STOCK. A colloquialism used 
 when the capital stock of a company is in- 
 
THE INVESTOR'S PRIMER 131 
 
 creased in amount without a corresponding in- 
 crease in assets. When a stock is declared the 
 original stock is watered to that extent, unless 
 the new stock represents added property or 
 value in some form. 
 
 WHEN ISSUED. A term employed when 
 dealing in a stock not yet issued. When a 
 stock is sold "w. i." it is deliverable when, as 
 and if issued. This is a stock future corres- 
 ponding to a grain, cotton or coffee future, ex- 
 cept that it is indefinite as to time. 
 
 X-D. Ex-dividend, that is, without the divi- 
 dend. If a stock upon which a dividend has 
 been declared is sold and the sale is not to in- 
 clude the amount of the dividend, the stock is 
 sold ex-dividend. 
 
 X-I. Ex-interest; that is, without interest, 
 or in other words, interest not included. 
 
PART II. 
 
Characteristics of Leading Steam Rail- 
 road Preferred Stock Issues. 
 
 ATCHISON, TOPEKA & SANTA FE RY CO. 
 5% NON-CUMULATIVE PREFERRED STOCK. 
 The total capital of this system consists of $114,199,- 
 530 preferred and $102,998,000 common stock. Par 
 of both issues, $100. The preferred stock has pref- 
 erence as to assets and non-cumulative dividends not 
 exceeding 5% per annum, as declared out of net 
 profits. No new mortgage or increase in preferred 
 stock can be made without the consent of a majority 
 of all the preferred stock and of all the common 
 stock represented at the meeting. Dividends on the 
 preferred stock are paid semi-annually, June & De- 
 cember 1, by check. Listed on the New York Stock 
 Exchange. Transfer office, 5 Nassau St., New York. 
 
 BALTIMORE & OHIO RR CO. 4% NON-CUMU- 
 LATIVE PREFERRED STOCK. The total out- 
 standing capital of this system consists of $60,000,000 
 preferred and $152,604,100 common. Par of both is- 
 sues, $100. The preferred stock. has preference as to 
 assets and non-cumulative dividends, not exceeding 
 4% per annum as declared out of net profits. Both 
 classes of stock were vested in a voting trust for 
 five years from July 1, 1899, but the trust was dis- 
 solved and the trustees delivered the stock on Sep- 
 tember 12, 1902. Dividends on the preferred stock 
 
 195 
 
136 THE INVESTOR'S PRIMER 
 
 are paid semi-annually March & September 1 by 
 chock. Listed on the New York Stock Exchange. 
 Transfer agent, E. M. Deveraux, 2 Wall St., New 
 York. 
 
 BUFFALO, ROCHESTER & PITTSBURGH 
 RY 6% NON-CUMULATIVE PREFERRED 
 STOCK. The total outstanding capital of this 
 system consists of $6,000,000 preferred and $10,500,- 
 000 common. Par of both issues, $100. The pre- 
 ferred stock has preference as to assets and non- 
 cumulative dividends not exceeding 6% per annum. 
 After the preferred and common stocks have both 
 received 6% dividends in any one year, both classes 
 of stock share equally in any further dividend. Pay- 
 ments on preferred stock are made semi-annually 
 February and August 15, by check. Six per cent, has 
 been regularly paid on both classes for some years. 
 Listed on the New York Stock Exchange. Transfer 
 agent, John H. Hocart, 36 Wall St., New York. 
 
 CANADIAN PACIFIC RY 4% NON-CUMULA- 
 TIVE PREFERRED STOCK. Total outstanding 
 capital of this system consists of $37,853,333 pre- 
 ferred and $121,680,000 common. Par of both issues, 
 $100. The preferred stock, commonly called prefer- 
 ence, has equal voting power with the common; has 
 preference to 4% non-cumulative dividends and must 
 never exceed one-half the amount of common stock 
 outstanding. Payments of dividends are made semi- 
 annually April & October 1 by check. Transfer 
 agent, Bank of Montreal, Montreal, London and 
 New York. 
 
 CHICAGO & ALTON RR 4% NON-CUMULA- 
 
THE INVESTOR'S PRIMER 137 
 
 TIVE PREFERRED STOCK. Total outstanding 
 capital of this system consists of $899,300 4% cumu- 
 lative participating and prior lien stock; $19,544,000 
 4% non-cumulative preferred and $19,542,800 com- 
 mon. Par, $100. The cumulative 4% participating 
 and prior lien stock has priority for dividends up to 
 4%, and is entitled to receive additional dividends 
 equal to the rate of dividends, if any, declared on the 
 common stock. The non-cumulative preferred has 
 preference to the 4% dividend over the common 
 stock. Listed on the New York Stock Exchange. 
 
 CHICAGO & NORTHWESTERN RY 7% NON- 
 CUMULATIVE PREFERRED. Total outstanding 
 capital of this system consists of $22,395,000 preferred 
 and $99,516,200 common. Par of both classes, $100. 
 Preferred stock has prior right to dividends up to 
 7% per annum, after which the common stock is en- 
 titled to 7%; then the preferred is entitled to 3% 
 more, and then the common to 3% more, after which 
 both share alike in any further distribution. Pre- 
 ferred dividends are paid quarterly January, by 
 check. Listed on the New York Stock Exchange. 
 Transfer office, 52 Wall St., New York. 
 
 CHICAGO, ST. PAUL, MINNEAPOLIS & 
 OMAHA RY PREFERRED STOCK. Total out- 
 standing capital of this system $11,259,911 preferred 
 and $18,558,963 common. Par of both classes, $100. 
 Preferred stock has preference as to 7% non-cumu- 
 lative dividend, then common stock is to receive 7%, 
 after which both stocks share equally in any further 
 distribution of earnings. Dividends are paid semi- 
 annually February & August 20 by check. Listed 
 
138 THE INVESTOR'S PRIMER 
 
 on the New York Stock Exchange. Transfer office, 
 52 Wall St., New York. 
 
 CHICAGO, MILWAUKEE & ST. PAUL RY 
 PREFERRED STOCK. Total outstanding capital 
 of this system, $49,654,400 non-cumulative preferred 
 and $58,183,900 common. Par of both classes, $100. 
 Preferred stock has preference as to dividends up 
 to 7% per annum, after which common stock is to 
 receive 7%, then both issues share equally in any 
 further distribution of earnings. Dividends paid 
 semi-annually April & October 25 by check. Listed 
 on New York Stock Exchange. Transfer office, 30 
 Broad St., New York. 
 
 CHICAGO TERMINAL TRANSFER RR PRE- 
 FERRED STOCK. Total outstanding capital of 
 this system, $17,000,000 preferred and $13,000,000 
 common. Par of both classes, $100. Preferred stock 
 has preference as to assets and 4% non-cumulative 
 dividends. Any further distribution above this 4% 
 goes to the common stock. Dividends on preferred 
 are payable semi-annually, but none have been de- 
 clared as yet. Listed on New York Stock Exchange. 
 Transfer office, 30 Broad St., New York. 
 
 COLORADO & SOUTHERN RY PREFERRED 
 STOCKS. Total outstanding capital consists of $8,- 
 500,000 first 4% non-cumulative preferred, $8,500,000 
 second 4% non-cumulative preferred and $31,000,000 
 common stock. Par of all classes, $100. The first 
 preferred has preference as to assets and 4% divi- 
 dends over the other classes; the second preferred 
 has preference to assets and 4% dividends over the 
 common stock. Any further division of profit goes to 
 
THE INVESTOR'S PRIMER 139 
 
 the common stock. Dividends on the first preferred 
 have been paid at varying rates, but none on the sec- 
 ond preferred. Listed on New York Stock Ex- 
 change. Transfer agent, Hallgarten & Co., 5 Nassau 
 St., New York. 
 
 DENVER & RIO GRANDE RR PREFERRED 
 STOCK. Total outstanding capital consists of $50,- 
 000,000 5% non-cumulative preferred and $38,000,000 
 common. Par of both classes, $100. Preferred has 
 preference as to assets and 5% non-cumulative divi- 
 dends, but is entitled to no further share of the 
 profits. Dividends are paid on preferred semi-an- 
 nually January & July 15 by check. Listed on New 
 York Stock Exchange. Transfer office, 195 Broad- 
 way, New York. 
 
 ERIE RR PREFERRED STOCKS. Total capi- 
 tal consists of $48,000,000 4% non-cumulative first 
 preferred, $16,000,000 4% non-cumulative second pre- 
 ferred, and $153,000,000 common stock. Par of all 
 classes, $100. The first preferred has preference as 
 to assets and 4% non-cumulative dividends. The 
 second preferred has preference over the common 
 as to assets and 4% non-cumulative dividends. All 
 additional divisions of earnings above these pre- 
 ferred dividends are to go to the common stock. No 
 additional mortgage can be placed upon the prop- 
 erty, nor the amounts of the preferred stocks in- 
 creased without the consent of a majority of the en- 
 tire preferred stock and of such of the common 
 stock as may be represented at a stockholders' meet- 
 ing called for the purpose. The company reserves 
 the right to retire either or both of its preferred 
 stocks at par. Dividends on the first preferred are 
 
140 THE INVESTOR'S PRIMER 
 
 paid semi-annually February 28 and August 31, and 
 on second preferred semi-annual April & October 
 10. In 1907, a dividend on the second preferred stock 
 was omitted in cash and paid in warrants. Listed on 
 New York Stock Exchange. Transfer agents, J. P. 
 Morgan & Co., New York. 
 
 GREAT NORTHERN RY PREFERRED 
 STOCK. Total authorized capital consists of $210,- 
 000,000 of preferred stock. No common stock has 
 ever been issued and therefore the outstanding capi- 
 tal consists entirely of preferred. Dividends are paid 
 at the rate of 7% per annum. Par value, $100. Listed 
 on New York Stock Exchange. Transfer office, 31 
 Nassau St., New York. 
 
 HOCKING VALLEY RY PREFERRED STOCK. 
 
 Total authorized capital, $15,000,000 4% non-cumula- 
 tive preferred and $11,000,000 common. Par of both 
 issues, $100. Preferred stock has preference as to 
 assets and 4% dividends and is redeemable at any 
 time at par at the option of the company. After 
 both the common and preferred stocks have re- 
 ceived 4% dividends in any one year they share alike 
 in any further distribution for such year. Dividends 
 on preferred are paid semi-annually January & July 
 1. Listed on New York Stock Exchange. Transfer 
 agents, J. P. Morgan & Co., New York. 
 
 MINNEAPOLIS & ST. LOUIIS RR PRE- 
 FERRED STOCK. Total authorized capital, $4,- 
 000,000 non-cumulative preferred and $6,000,000 com- 
 mon. Par of both classes, $100. Preferred stock 
 has preference as to assets and 5% dividends, but 
 both stock participates equally in any further dis- 
 
THE INVESTOR'S PRIMER 141 
 
 tribution. Payments on preferred are to be made 
 semi- annually January & July 15 by check. Listed 
 on New York Stock Exchange. Transfer office, Cen- 
 tral Trust Co., New York. 
 
 MISSOURI, KANSAS & TEXAS RY PRE- 
 FERRED STOCK. Total outstanding capital, $13,- 
 000,000 4% non-cumulative preferred and $63,300,300 
 common. Par of both classes, $100. The preferred 
 stock has preference as to assets and 4% non-cumu- 
 lative dividends, the common receiving all further 
 distributions of earnings. Preferred dividends paid 
 semi-annually May & November by check. Listed 
 on New York Stock Exchange. Transfer office, 49 
 Wall St., New York. 
 
 NORFOLK & WESTERN RY PREFERRED 
 STOCK. Total authorized capital, $23,000,000 4% 
 non-cumulative adjustment preferred stock and 
 $100,000,000 common stock. Par of both classes, 
 $100. The preferred stock has preference as to as- 
 sets and 4% non-cumulative dividends, the common 
 receiving the entire balance of dividends if any are 
 declared. Preferred dividends are paid semi-annually 
 February & August 16. Listed on New York Stock 
 Exchange. Transfer agent, Guaranty Trust Co., 
 New York. 
 
 PITTSBURGH, CINCINNATI, CHICAGO & 
 ST. LOUIS PREFERRED STOCK. Total out- 
 standing capital, $27,457,274 4% preferred and $24,- 
 780,851 common. Par of both classes, $100. Pre- 
 ferred stock is non-cumulative and is entitled to 4% 
 dividends per annum with the right to an additional 
 1% after 3% has been paid on the common, thus 
 
142 THE INVESTOR'S PRIMER 
 
 making 5% in all for the preferreb!. After S% has 
 been paid on both the common and preferred, both 
 stocks share alike in any further distribution. Pre- 
 ferred dividends are paid semi-annually January and 
 July 15 by check. Listed on New York Stock Ex- 
 change. Transfer agent, Farmers' Loan & Trust 
 Co., New York. 
 
 READING COMPANY PREFERRED STOCKS. 
 
 Total authorized capital, $28,000,000 first 4% non- 
 cumulative preferred, $42,000,000 second 4% non- 
 cumulative preferred and $70,000,00 common stock. 
 Par of all classes, $50. The company may, after 
 dividends of 4% have been paid on the first preferred 
 for two consecutive years, convert the second pre- 
 ferred into one-half first preferred and one-half com- 
 mon stock. No additional mortgage can be placed 
 upon the property, nor can the first preferred stock 
 be increased, without the consent of a majority of 
 the holders of both preferred stocks and of a majority 
 of holders of common stock. The company had the 
 right to retire either or both classes of preferred stock 
 at par in cash at any time. Par of all classes, $50. 
 The first preferred is entitled to 4% non-cumulative 
 dividends, the second preferred also to 4%, after the 
 first preferred has received 4%, and the common 
 receives all additional dividends. Payments are 
 made semi-annually on first preferred, March & Sep- 
 tember 10; on second preferred, May & November 
 10, and on common, February & August 1, all by 
 check. Listed on New York Stock Exchange. 
 Transfer agents, J. P. Morgan & Co., New York. 
 
 ROCK ISLAND COMPANY PREFERRED 
 STOCK. Total capital outstanding $54,000,000 non- 
 
THE INVESTOR'S PRIMER 143 
 
 cumulative preferred and $96,000,000 common stock. 
 Par of both classes, $100. The preferred stock has 
 preference as to assets and also to non-cumulative 
 dividends up to 4% yearly to and including 1909, up 
 to 5% yearly to and including 1916, and 6% there- 
 after. Preferred stock can only be increased with 
 the consent of two-thirds of the outstanding issue 
 of both classes of stock. The preferred stockholders 
 are entitled to elect a majority of the board of di- 
 rectors. No dividends are now being paid on the 
 preferred. Listed on the New York Stock Exchange. 
 Transfer office, 71 Broadway, New York. 
 
 SEABOARD COMPANY PREFERRED 
 STOCKS. Total outstanding capital $6,360,000 first 
 preferred, $15,993,000 second preferred and $28,544,- 
 000 common stock. Par of all classes, $100. The 
 first preferred has preference as to assets and also 
 dividends of 5% per annum non-cumulative up to 
 July 1, 1910, and cumulative thereafter. Convertable 
 at option of holder into second preferred stock at 
 par, and redeemable, at option of company, if and 
 when the law allows, after three years from the issue 
 thereof. The second preferred is entitled to 6% non- 
 cumulative dividends, and is redeemable at the option 
 of the company after three years from the issue 
 thereof at 110, provided the first preferred shall have 
 been redeemed or converted. Provision is made for 
 increase of the second preferred stock for purpose 
 of conversion of first preferred. All classes of stock 
 have equal voting power. 
 
 SOUTHERN PACIFIC COMPANY PRE- 
 FERRED STOCK. Total outstanding capital $39,- 
 569,840 preferred and $197,849,358 common. Par of 
 
144 THE INVESTOR'S PRIMER 
 
 both classes, $100. Preferred stock is entitled to 7% 
 non-cumulative dividends, is redeemable at the op- 
 tion of the holder at any time between July 1, 1905, 
 and July 1, 1910, at 115, and is convertible into com- 
 mon stock at the option of the holder at par at any 
 time. Preferred dividends are paid quarterly Janu- 
 ary 1 by check. Listed on New York Stock Ex- 
 change. Transfer office, 120 Broadway, New York. 
 
 SOUTHERN RY PREFERRED STOCK. Total 
 
 outstanding capital $60,000,000 5% non-cumulative 
 preferred and $120,000,000 common stock. Par of 
 both classes, $100. Preferred stock has prior right 
 to assets and 5% non-cumulative dividends and no 
 additional mortgage can be put upon the property 
 without the consent of the holders of a majority of 
 the preferred stock. A majority of both classes of 
 stock was deposited under the reorganization plan 
 in a voting trust until the preferred stock should 
 have paid 5% in cash dividends in one year. This 
 was accomplished in 1902, but a majority of holders 
 of both stocks agreed to an extension of the trust 
 until October 15, 1907, and thereafter unless termin- 
 ated by majority vote. Dividends are paid April & 
 October 15 by check. Listed on New York Stock 
 Exchange. Transfer agents, J. P. Morgan & Co., 
 New York. 
 
 UNION PACIFIC RR PREFERRED STOCK. 
 Total capital authorized $200,000,000 4% non-cumu- 
 lative preferred, and $196,178,000 common. Par of 
 both classes, $100. The preferred stock has prefer- 
 ence to 4% non-cumulative dividends, but is not en- 
 titled to any further distribution of the net profits 
 of the company, Dividends are paid quarterly Janu- 
 
THE INVESTOR'S PRIMER 145 
 
 ary 1 by check. Listed on New York Stock Ex- 
 change. Transfer office, 120 Broadway, New York. 
 
 WABASH RR PREFERRED STOCK. Total 
 capital outstanding $40,500,000 7% non-cumulative 
 preferred and $169,500,000 common. Par of both 
 classes, $100. The preferred is entitled to 7% non- 
 cumulative dividend when earned. No dividends 
 have been paid. Listed on New York Stock Ex- 
 change. Transfer office, 195 Broadway, New York. 
 
 WISCONSIN CENTRAL RR PREFERRED 
 STOCK. Total authorized capital $12,500,000 4% 
 non-cumulative preferred and $17,500,000 common. 
 Par, $100. The preferred stock is entitled to 4% non- 
 cumulative dividend and after 4% dividends have 
 been paid on both classes of stock in any one year 
 they participate equally in any further distribution. 
 The preferred stock has the right to elect a majority 
 of directors whenever for two successive years divi- 
 dends shall not have been paid at 4% in cash upon 
 the said stock. Listed on New York Stock Ex- 
 change. Transfer agent, Trust Co. of America, New 
 York. 
 
Characteristics of Leading Guaranteed 
 Investment Stocks 
 
 ALBANY & SUSQUEHANNA RR 9% GUAR- 
 ANTEED STOCK. Line of road, Albany to Bing- 
 hamton, N. Y., 142.59 miles. Capital stock, $3,500,- 
 000; par, $100. Leased to Del. & Hud. Co. from 
 February 24, 1870, in perpetuity, rental being interest 
 on bonds, and dividends on stock at rate of 1% 
 per annum until July, 1902, and 9% per annum there- 
 after. Dividends January & July 1, at 32 Nassau St., 
 New York. Transfer office, New York. Listed on 
 New York Stock Exchange. 
 
 ALLEGHENY & WESTERN RY 6% GUAR- 
 ANTEED STOCK. Line of road, Lindsey to 
 Butler, Pa., with branch, 66.16 miles. Capital stock, 
 $3,200,000; par, $100. Leased to Butt., Roch. & Pitts- 
 burg Ry Co. from January 1 ,1900, for term of corpo- 
 rate existence; rental now $272,000 per annum, equal 
 to interest on bonds, and 6% on capital stock. Divi- 
 dends January & July 1, at A. Iselin & Co., 36 Wall 
 St., New York. Transfer agents, A. Iselin & Co., 
 New York. Listed on New York Stock Exchange. 
 
 AMERICAN SMELTERS SECURITIES CO. 
 5% GUARANTEED SERIES "B" PREFERRED 
 STOCK. Amount outstanding, $30,000,000; par, $100. 
 Guaranteed, principal and dividends, by American 
 
 147 
 
148 THE INVESTOR'S PRIMER 
 
 Smelting & Refining Co. Redeemable at par and ac- 
 crued dividends, by American Smelting Securities 
 Co., or may be purchased at par and accured divi- 
 dends by Amer. Smelting & Refining Co. on June 
 1, 1930, or on any quarterly dividend date thereafter, 
 upon two months' notice. The American Smelting 
 & Refining Co. has agreed that, so long as any of this 
 stock remains outstanding, it will issue no bonds, nor 
 make any further guarantee to any capital stock or 
 obligation which, including the guarantee of this 
 preferred stock, shall create a liability, actual or con- 
 tingent, for interest or dividends, that shall in any 
 year exceed in the aggregate 25% of its net earnings 
 for the 12 months next preceding the creation of 
 such bonds or guarantee. Dividends, quarterly, 
 March 1, at 71 Broadway, New York. 
 
 AMERICAN TELEGRAPH & CABLE CO. 5% 
 GUARANTEED STOCK. Outstanding, $14,000,- 
 000; par, $100. Leased to Western Union Telegraph 
 Co. for 50 years, from May 12, 1882, at rental of 5% 
 on stock, lessee to maintain, operate and renew the 
 cables and equipment. Dividends payable quarterly, 
 March 1, at 195 Broadway, New York. Transfer 
 office, 195 Broadway, New York. Listed on New 
 York Stock Exchange. 
 
 ATLANTA & CHARLOTTE AIR LINE RY 
 GUARANTEED STOCK. Line of road, Charlotte, 
 N. C., to Atlanta, Ga., 268.17 miles. Capital stock, 
 $1,700,000; par, $100. Operated by Southern Ry Co. 
 under 99-year contract, dated April 1, 1881, which 
 calls for payment of interest on bonds, organization 
 expenses and minimum of 5% on stock; dividends 
 to be increased to 6% should earnings exceed $1,- 
 
THE INVESTOR'S PRIMER 149 
 
 500,000, and to 7% should they exceed $2,500,000 in 
 any one year. Dividends have been paid as follows: 
 1881 to 1889, inclusive, 5% per annum; 1890, 5^%; 
 1891 to March, 1901, inclusive, 6% per annum; 7% 
 per annumt since. Dividends March & September 5 
 at U. S. Mortgage & Trust Co., New York. Transfer 
 office, Central Trust Co., New York. 
 
 BALD EAGLE VALLEY RR 10% GUARAN- 
 TEED STOCK. Line of road, Lock Haven to Vail 
 Station, Pa., and branches, 93.95 miles. Capital stock 
 authorized, $2,600,000; outstanding, $1,673,150; par, 
 $50. Leased to Penna. RR for 99 years from De- 
 cember 7, 1864, at net earnings for the section oper- 
 ated as part of Phila. & Erie Div. and 40% of gross 
 earnings, 60% of taxes on gross receipts and tax on 
 bonds for section operated in Penn. Division. Semi- 
 annual dividends of 5% are paid February & August 
 1, at Broad St. Station, Phila.; on May 1, 1906, a 9% 
 stock dividend was paid. Transfer office, Broad 
 Street Station, Philadelphia, Pa. 
 
 BE^CH CREEK RR 4% GUARANTEED 
 STOCK. Line of road, Jersey Shore to Mahaffey 
 June., Pa., and branches, 167.28 miles. Capital stock, 
 $6,000,000; par, $50. Leased to N. Y. C. & Hudson 
 River RR for 999^ years, from October 1, 1890, at 
 rental of interest on bonds and 4% on stock. Divi- 
 dends quarterly, January 1, at Grand Central Station, 
 New York. Listed on New York Stock Exchange. 
 Transfer office, Grand Central Station, New York. 
 
 BOSTON & ALBANY RR 8% GUARANTEED 
 STOCK. Line of road, Boston, Mass., to Albany, 
 N. Y., and branches, 304.09 miles. Capital stock 
 
150 THE INVESTOR'S PRIMER 
 
 authorized, $30,000,000; outstanding, $25,000,000; par, 
 $100. Leased to N. Y. Central & Hudson River RR 
 for 99 years, from July 1, 1900, at rental of guaran- 
 teed dividends of 8% on stock, organization ex- 
 penses, interest on bonds, taxes, expenses of mainte- 
 nance, etc. The Boston & Albany RR received $5,- 
 500,000 N. Y. Central 3^% 100-year debentures to 
 cover certain property not included in the lease, 
 which yield about 0.77% additional per annum on the 
 stock. Dividends, quarterly, March 31, at Term. 
 Station, Boston. For many years prior to the lease, 
 8% per annum was paid; from 1901 to date 8^4%, 
 viz., 2% in March, 2y 2 % in June; 2% in September 
 and 2}4% in December; payments at treasurer's 
 office, Boston. Listed on Boston Stock Exchange. 
 Transfer office, Boston, Mass. 
 
 BOSTON & LOWELL RR 8% GUARANTEED 
 STOCK. Lines of road, Boston to Lowell, Mass., 
 with branches, 96.95 miles. Capital stock, $6,599,400; 
 par, $100. Leased to Boston & Maine RR for 99 
 years, from April 1, 1887. Rental, 7% on stock for 
 first ten years; thereafter 8%, together with interest 
 on bonds and $7,000 for organization expenses. Divi- 
 dends, January and July 2, at treasurer's office, Bos- 
 ton. Listed on Boston Stock Exchange. Transfer 
 office, Treas. of Company, Boston, Mass. 
 
 BOSTON & NEW YORK AIR LINE RR 4% 
 GUARANTEED PREFERRED STOCK. Line of 
 road, New Haven to Willimantic, Conn., 52.26 miles. 
 Preferred stock $2,998,500, of which $1,738,000 has 
 been exchanged for N. Y., N. H. & H. RR Co. stock. 
 Leased to N. Y., N. H. & Hartford RR for 99 years, 
 from October 1, 1882, at rental of interest on bonds, 
 
THE INVESTOR'S PRIMER 151 
 
 taxes and 4% on preferred stock. Dividends, August 
 & October, in New Haven, Conn. Listed on New 
 York Stock Exchange. Transfer office, New Haven, 
 Conn. 
 
 BOSTON & PROVIDENCE RR 10% GUARAN- 
 TEED STOCK. Line of road, Boston, Mass., to 
 Providence, R. I., and branches, 63.03 miles. Capi- 
 tal stock, $4,000,000; par, $100. Leased to Old 
 Colony RR for 99 years, from April 1, 1888, at rental 
 of interest on bonds, dividends of 10% per annum on 
 stock and $3,000 per annum for organization ex- 
 penses. The Old Colony RR was leased to the N. 
 Y., N. Haven & Hartford RR for 99 years, from 
 March 1, 1893, the lessee assuming all liabilities. 
 Dividends, quarterly, January, at Boston Terminal 
 Station. Listed on Boston Stock Exchange. Trans- 
 fer office, Terminal Station, Boston, Mass. 
 
 BROADWAY & SEVENTH AVENUE RR 10% 
 GUARANTEED STOCK. Capital stock, $2,100,000; 
 par, $100. Leased May 13, 1890, for unexpired term 
 of charter and for any extensions thereof, to Hous- 
 ton, West St. & Pavonia Ferry RR, now Met St. Ry, 
 at annual rental of interest on bonds and 10% on 
 stcck. Under the lease of the Met. St. Ry to Inter- 
 urban St. Ry, road is now operated by New York 
 City Ry. Dividends, quarterly, January, at 621 
 Broadway, New York. Transfer office, 621 Broad- 
 way, New York. 
 
 BROOKLYN CITY RR 10% GUARANTEED 
 STOCK. Capital stock, $12,000,000; par, $10. Leased 
 on February 14, 1893, for 999 years to Brooklyn 
 Heights RR Co., at annual rental of all fixed charges, 
 
152 THE INVESTOR'S PRIMER 
 
 organization expenses, taxes and dividends of 10% 
 per annum on the stock. Dividends quarterly, Janu- 
 ary 15, at Long Island Loan & Trust Co., Brooklyn. 
 New York, by mail. Transfer office, 44 Court St., 
 Brooklyn. 
 
 CATAWISSA RR 5% GUARANTEED PRE- 
 FERRED STOCK. Line of road, Tamanend to 
 Newberry Junction, Pa., and branches, 102.95 miles. 
 Preferred stocks, $2,200,000 first preferred and $1,- 
 000,000 second preferred; par, $50. Leased December 
 1, 1896, to the Phila. & Reading Ry for 999 years at 
 guaranty of principal and interest on the bonds, be- 
 sides taxes, $8,000 a year for organization, and 5% 
 per annum on both classes of preferred stock. Divi- 
 dends payable May & November, at company's office, 
 Philadelphia. Listed on Philadelphia Stock Ex- 
 change. Transfer office, 237 South Third St., Phila- 
 delphia, Pa. 
 
 CHICAGO & EASTERN ILLINOIS RR STOCK 
 TRUST CERTIFICATES. $10,416,000 common 
 stock trust certificates, due July 1, 1942, in denomi- 
 nation of $1,000 each. Each certificate of $1,000 is 
 secured by 4 shares of Chicago & Eastern Illinois 
 common stock. Interest at 4% per annum is guar- 
 anteed by the St. Louis & San Francisco RR Co., 
 payable January & July, by mail. Redeemable at 
 par and accrued interest at any time. 
 
 $3,051,400 common stock trust certificates, due 
 July 1, 1942. Par, $100. Issued against an equal 
 amount of Chicago & Eastern Illinois common stock. 
 Dividends of 10% per annum are guaranteed by the 
 St. Louis & San Francisco RR Co., payable Janu- 
 
THE INVESTOR'S PRIMER 153 
 
 ary & July, by mail. Redeemable at 250 and accrued 
 dividends at any time. 
 
 In 1905, the holders of common stock trust cer- 
 tificates were given the privilege of exchanging their 
 certificates, representing shares of Chicago & East- 
 ern Illinois common stock, for new certificates in 
 the denomination of $1,000 each, bearing 4% interest. 
 Up to April 30, 1907, all but $3,051,400 had been so 
 exchanged. 
 
 $6,211,700 preferred stock trust certificates; due 
 July 1, 1942; par, $100. Issued against an equal 
 amount of Chicago & Eastern Illinois preferred 
 stock. Dividends of 6% per annum are guaranteed 
 by the St. Louis & San Francisco RR Co., payable 
 quarterly, January, by mail. Redeemable at 150 and 
 accrued dividends at any time. Listed on New York 
 Stock Exchange. 
 
 CLEARFIELD & MAHONING RY 6% GUAR- 
 ANTEED STOCK. Line of road, DuBois Junction 
 to Clearfield, Pa., 25.87 miles. Capital stock, $750,- 
 000; par, $50. Leased to Buff., Roch. & Pitts. Ry 
 from January 3, 1893, for term of its corporate exist- 
 ence at rental of interest on bonds, and 6% on stock. 
 Dividends, January & July 1, checks mailed. Trans- 
 fer agent, John G. Whitmore, Ridgway, Pa. 
 
 CLEVELAND & MAHONING VALLEY RY 
 GUARANTEED STOCK. Line of road, Cleveland, 
 O., to Pa. State line, and Niles to New Lisbon, O., 
 with branches, 123.94 miles. Capital stock, $3,259,- 
 200, of which $2,258,250 is held by Atlan. First Leased 
 Lines Rental Trust Co., Ltd., of London; par, $100. 
 Leased to Erie RR until October 1, 1982, at rental 
 of $525,967 per annum, payable monthly. This rental 
 
154 THE INVESTOR'S PRIMER 
 
 pays interest on bonds and dividends on stock. In 
 1897, 13^4% was paid; 1898 to 1904, inclusive, 13%% 
 per annum; 1905, 11.42%; in 1906, 11.4%; payable 
 quarterly (March) at Treasurer's office, Cleveland, 
 Ohio. 
 
 ** 
 
 CLEVELAND & PITTSBURG RR GUARAN- 
 TEED STOCKS. Line of road, Cleveland, O., to 
 Rochester, Pa., with branches and 22.90 miles of 
 trackage, 224.64 miles. Capital stock, $11,247,593 7% 
 guaranteed stock and $7,477,800 4% guaranteed spe- 
 cial betterment stock; par, $50. The special better- 
 ment stock is issuable for improvements and is sub- 
 ordinate to the original stock as to dividends only. 
 Leased for 999 years from December 1, 1871, to 
 Penna. RR; lease transferred to Penna. Co., April 
 14, 1873; rental 7% on stock, interest on bonds, sink- 
 ing fund, and $10,000 for organization expenses. 
 Dividends quarterly (March 1), at Winslow, Lanier 
 & Co., New York. Listed on New York Stock Ex- 
 change. Transfer agent, Winslow, Lanier & Co., 
 New York. 
 
 COLUMBUS & XENIA RR 8% GUARANTEED 
 STOCK. Line of road: Columbus to Xenia, O., 
 54.70 miles. Capital stock, $1^86,200; par, $50. 
 Leased Nov. 30, 1868, for 99 years, with privilege of 
 renewal, to Little Miami RR & sub-leased in De- 
 cember, 1869, together with Little Miami to Pitts., 
 Cin. & St. L. Ry (now Pitts., Cin., Chic. & St. L.). 
 Rental, 8% per annum on stock and interest on 
 bonds. The bonds matured September 1, 1890. 
 Lease is guaranteed by Penna. RR. Dividends, quar- 
 terly, March 10, at Treasurer's office, Columbus, O. 
 Transfer office, Columbus, O. 
 
THE INVESTOR'S PRIMER 155 
 
 CONCORD & MONTREAL RR 7% GUARAN- 
 TEED STOCK. Line of road owned, Nashua to 
 Groveton, N. H., with branches, 368 miles. Capital 
 stock, $7,447,600; par, $100; divided into four classes 
 as follows: $800,000 class 1; $540,400 class 2; $459,600 
 class 3; $5,647,600 class 4. Leased together with its 
 proprietary, controlled and leased lines, to Boston 
 & Maine RR for 91 years, from April 1, 1895; lease 
 to go to Boston & Lowell RR, in case same termi- 
 nates before 91 years have elapsed. Lessee assumed 
 all the liabilities, and by agreement pays 7% on 
 stocks as rental. Dividends, quarterly, January 1, 
 by check. Listed on Boston Stock Exchange. 
 Transfer office, Concord, N. H. 
 
 CONNECTICUT & PASSUMPSIC RIVERS RR 
 6% GUARANTEED STOCK. Line of road, White 
 River Junction, Vt., to Canadian line, 110.30 miles. 
 Capital stock, $2,500,000; par, $100. Leased for 99 
 years, from January 1, 1887, to Boston & Lowell RR 
 (B. & M. System) at rental of interest on bonds and 
 dividends at 5% per annum until January, 1897, and 
 6% thereafter; also $3,000 for expenses of organiza- 
 tion. Dividends, February & August, at Boston Safe 
 Deposit & Trust Co. Transfer office, Boston, Mass. 
 Listed on Boston Stock Exchange. 
 
 CONNECTICUT RIVER RR 10% GUARAN- 
 TEED STOCK. Line of road, Springfield, Mass., to 
 Keene, N. H., and branches, 79.85 miles. Capital 
 stock, authorized, $3,670,300; outstanding, $3,113,000; 
 par, $100. Leased to Boston & Maine RR for 99 
 years, from January 1, 1893, at rental of 10% per 
 annum on stock, interest on bonds and $2,000 for 
 organization expenses. Dividends January & July 1, 
 
156 THE INVESTOR'S PRIMER 
 
 at B. & M. office, Boston, Mass. Transfer office, 
 Springfield, Mass. Listed on Boston Stock Ex- 
 change. 
 
 DAYTON & MICHIGAN RR GUARANTEED 
 8% PREFERRED AND $y a % COMMON STOCK. 
 Line of road: Dayton to Toledo Junction, O., 141.82 
 miles. Capital stock, $1,211,250 preferred, and $2,- 
 401,900 common; par, $50. Leased in perpetuity 
 from May 1, 1863, to Cine., Ham. & Day. Ry at 
 rental of interest on bonds, 8% on preferred stock 
 and y/2.% per annum on common. Dividends on pre- 
 ferred, quarterly, January (first Tuesday); on com- 
 mon, August & October, in Cincinnati, O. Transfer 
 office, Cincinnati, O. 
 
 DELAWARE & BOUND BROOK RR 8% 
 GUARANTEED STOCK. Line of road, Bound 
 Brook Junction, N. J., to Penn. State line, and 
 branches, 30.81 miles. Capital stock, $1,800,000; par, 
 $100. Leased for 990 years, from May 12, 1879, to 
 Phila. & Reading RR, and assumed by Phila. & 
 Read. Ry in the reorganization. Rental, maintenance 
 expenses, interest on bonds and 8% per annum on 
 stock. Dividends, quarterly, February 20, at 240 
 South Third St., Philadelphia. Listed on Philadelphia 
 Stock Exchange. Transfer office, 240 South Third 
 St., Philadelphia, Pa. 
 
 DETROIT, HILLSDALE & SOUTHWESTERN 
 RR 4% GUARANTEED STOCK. Line of road, 
 Ypsilanti to Bankers, Mich., 64.76 miles. Capital 
 stock, $1,350,000; par, $100. Leased in perpetuity, 
 from July 1, 1881, to Lake Shore & Mich. Southern 
 Ry at annual rental of $54,000, being 4% on stock. 
 
THE INVESTOR'S PRIMER 157 
 
 Dividends, January & July 5, at Farmers' Loan & 
 Trust Co., N. Y. Listed on New York and Boston 
 Stock Exchanges. Transfer offices, Farmers' Loan 
 & Trust Co., New York; also Boston. 
 
 ELMIRA & WILLIAMSPORT RR GUARAN- 
 TEED COMMON AND PREFERRED STOCKS. 
 Line of road, Williamsport, Pa., to Elmira, N. Y., 
 75.50 miles. Capital stock, $500,000 common and 
 $500,000 preferred; par, $50. Leased for 999 years, 
 from May 1, 1863, to Northern Cent. Ry at rental of 
 interest on bonds, dividends of 7% (less taxes) on 
 preferred stock and 5% (less taxes) on common, and 
 organization expenses. The Northern Cent. Ry is 
 controlled by Penna. RR Co. through majority stock 
 ownership, and the obligation of the Northern Cent., 
 under the lease, is guaranteed by Penna. RR Co. Net 
 dividends paid: 6.3% on preferred and 4.48% on com- 
 mon; payments on the former are January & July 1, 
 and on the latter May & November 1, at Broad St. 
 Station, Philadelphia. Listed on Philadelphia Stock 
 Exchange. Transfer office, Philadelphia, Pa. 
 
 ERIE & PITTSBURG RR 7% GUARANTEED 
 STOCKS. Line of road, New Castle to Girard, 
 Pa., with branches, and 16.74 miles of trackage, 101.21 
 miles. Capital stock, outstanding, $2,000,000 original 
 7% guaranteed stock and $941,750 (auth. $2,500,000) 
 special 7% guaranteed betterment stock; par, $50. 
 Leased for 999 years, from March 1, 1870,' to Penna. 
 RR, and lease subsequently assigned to Penna. Co. 
 Rental, interest on bonds, 7% per annum on capital 
 stock, and $2,500 for organization purposes. An al- 
 lowance, amounting to about 51 cents per share, for 
 Penna. State tax, must be made in the net returns. 
 
158 THE INVESTOR'S PRIMER 
 
 Dividends, on both classes, paid quarterly, March, at 
 Union Trust Co., New York. Transfer offices, New 
 York and Pittsburg. 
 
 EUROPEAN & NORTH AMERICAN RY 5% 
 GUARANTEED STOCK. Line of road, Bangor to 
 Vanceboro, Me., with branches, 120.34 miles. Capi- 
 tal stock, $2,494,100; par, $100. Leased from April 1, 
 1882, to Maine Cent. RR, for its corporate existence, 
 at an annual rental of $125,000, lessee assuming all 
 liabilities. Dividends August & October 3, at Treas- 
 urer's office, Bangor, Me. 
 
 FALL BROOK RY 7% PREFERRED AND 
 COMMON GUARANTEED STOCK. Line of 
 road, Corning, N. Y., to Antrim, Pa., and branches, 
 91.51 miles. Capital stock, $500,000 preferred and 
 $4,500,000 common; par, $50. Leased to N. Y. Cent. 
 & Hudson River RR for 999 years, from May 1, 1899, 
 at rental of $175,000 per annum; also taxes and re- 
 pairs. Prior to the lease, dividends had been paid 
 since 1891 at rate of 7% per annum on preferred and 
 6% on common; dividends on common were re- 
 duced to 2y z % when lease went into effect. Pay- 
 ments, quarterly, (February 5) at company's office, 
 Corning, N. Y. 
 
 FITCHBURG RR 5% GUARANTEED PRE- 
 FERRED STOCK. Line of road owned, Green- 
 field, Mass., to Rotterdam, N. Y., with branches, 
 394.14 miles. Preferred stock outstanding, $17,360,- 
 000; par, $100. Leased to Bos. & Me. RR, on July 1, 
 1900, for 99 years, at rental of 5% on preferred, 1% 
 on common stock, and $7,000 for organization ex- 
 penses, lessee assuming all obligations of the com- 
 
THE INVESTOR'S PRIMER 159 
 
 pany. Of the common stock, $5,454,550 was pur- 
 chased by the Bos. & Me. RR, and the balance of 
 the issue, which was in the treasury of the company, 
 was turned over to the lessee under the lease. Divi- 
 dends on preferred, quarterly, January 1, at Boston 
 & Maine office, Boston. Listed on Boston Stock 
 Exchange. Transfer office, Boston, Mass. 
 
 FORT WAYNE & JACKSON RR S*/ 2 % GUAR- 
 ANTEED PREFERRED STOCK. Line of road, 
 Jackson, Mich., to Ft. Wayne, Ind., 97.83 miles. 
 Preferred stock outstanding, $2,291,416; par, $100. 
 Leased in perpetuity on August 24, 1882, to Lake 
 Shore & Mich. Southern Ry, at rental of $126,027, 
 equal to S%% on the preferred stock, and after 1887, 
 any net earnings over 8% on preferred stock to be 
 paid on common, but not exceeding 2% a year. 
 Dividends, March & September 1, at Farmers' Loan 
 & Trust Co., New York. Transfer office, Farmers' 
 Loan & Trust Co., New York. 
 
 GEORGIA RR & BANKING CO. 11% GUAR- 
 ANTEED STOCK. Line of road, Augusta to At- 
 lanta, Ga., and branches, 303 miles. Capital stock, 
 $4,200,000; par, $100. T::e railroad was leased May 
 7, 1881, for 99 years, to W. M. Wadley, at a rental 
 of $600,000 per annum, but in April, 1899, the Louis- 
 ville acquired all rights under the lease and in July, 
 1899, the Atlantic Coast Line acquired a half in- 
 terest. As security for the performance of the terms 
 of the lease this company holds $500,000 5% bonds 
 of the So. & No. Ala. RR and a like amount of first 
 4s of the Atlantic Coast Line RR of S. C. Divi- 
 dends, 11% per annum, quarterly, January 15, at 
 Georgia Railroad Bank, Augusta, Ga. This rate has 
 
160 THE INVESTOR'S PRIMER 
 
 been paid since 1889; prior to that date, rate ranged 
 from 9% to 10$4%. Transfer office, Augusta, Ga. 
 
 GOLD & STOCK TELEGRAPH CO. 6% 
 GUARANTEED STOCK. Capital stock, $5,000,000; 
 par, $100. Leased until January, 1981, to Western 
 Union Telegraph Co. Dividends payable January 1, 
 at 195 Broadway, N. Y. Listed on New York Stock 
 Exchange. Transfer office, 195 Broadway, New 
 York. 
 
 ILLINOIS & MISSISSIPPI TELEGRAPH CO. 
 4% GUARANTEED STOCK. Capital stock, $1,- 
 930,500; par, $100. Leased in perpetuity to Western 
 Union Telegraph Co. Dividends, January & July, 
 at 195 Broadway, New York. Transfer office, 
 Ottawa, 111. 
 
 ILLINOIS CENTRAL LEASED LINE 4% 
 GUARANTEED STOCK. Capital stock, $10,000,- 
 000; par, $100. Secured by deposit of $10,000,000 
 Chic., St. L. & New Orleans stock, which road is 
 leased to the 111. Cent. RR for 400 years, from July 
 1, 1882, at annual rental of interest on bonds and 4% 
 on stock. In case of default for 60 days in any semi- 
 annual payment of 2%, the holders of the certifi- 
 cates will be entitled to the stock pledged. Divi- 
 dends, January & July, at 11 Broadway, New York, 
 and London. Listed on New York Stock Exchange. 
 Transfer office, 11 Broadway, New York. 
 
 INTERNATIONAL OCEAN TELEGRAPH 
 CO. 6% GUARANTEED STOCK. Capital stock, 
 $3,000,000; par, $100. Leased until January, 1981, to 
 the Western Union Telegraph Co. Dividends quar- 
 
THE INVESTOR'S PRIMER 161 
 
 terly, January, 195 Broadway, New York. Transfer 
 office, 195 Broadway, New York. 
 
 JACKSON, LANSING & SAGINAW RR 
 GUARANTEED STOCK. Line of road, Jackson 
 to Mackinac City, Mich., with branches, 379.23 
 miles. Capital stock, $2,000,000; par, $100. Leased 
 to Mich. Cent. RR on September 1, 1871, in per- 
 petuity. Rental received 1906, $70,000 and $750 ad- 
 ditional for expenses. Dividends, March & Sep- 
 tember 1, at Cent. Station, New York. Transfer 
 office, Grand Central Station, New York. 
 
 JOLIET & CHICAGO RR 7% GUARANTEED 
 STOCK. Line of road, Chicago to Joliet, 111., 37.20 
 miles (forming part of the through line of Chic. & 
 Alton RR, Chicago to St. L.). Capital stock, $1,- 
 500,000; par, $100. Leased January 1, 1864, in per- 
 petuity, to Chic. & Alton RR, at rental of 7 on 
 stock and $1,800 for organization expenses. Divi- 
 dends, quarterly, January (first Monday) at 71 
 Broadway, New York. Listed on New York Stock 
 Exchange. Transfer office, 17 Broadway, New York. 
 
 KANSAS CITY, ST. LOUIS & CHICAGO RR 
 6% GUARANTEED PREFERRED STOCK. 
 Line of road, Mexico to Kansas City, Mo., 162 miles. 
 Preferred stock outstanding, $1,750,000. Leased, in 
 perpetuity, from November, 1879, to Chic. & Alton 
 RR at rental of 35% of gross earnings, less assess- 
 ments and taxes. When this percentage is in ex- 
 cess of interest on bonds, 6% on preferred and 7% 
 on common stock, after deducting taxes, etc., such 
 excess goes to Chic. & Alton RR. Dividends on 
 preferred stock are unconditionally guaranteed by C. 
 
162 THE INVESTOR'S PRIMER 
 
 & A. RR and are paid quarterly (February 1), at 71 
 Broadway, New York. Transfer office, 71 Broad- 
 way, New York. 
 
 LITTLE MIAMI RR 8% GUARANTEED 
 STOCK. Line of road, Cincinnati to Springfield, O., 
 with branches, 138 miles. Capital stock, $4,943,- 
 100; par, $50. Leased for 99 years, from December 
 1, 1869, to Pitts., Cine. & St. L. Ry (now P., C., C. 
 ,& St. L. Ry), with permanent renewal, at rental of 
 interest on bonds; rentals of leased lines; 8% per an- 
 num on stock, and $5,000 for maintenance of or- 
 ganization. The Penna. RR is a party to the lease, 
 and guarantees its faithful execution. Dividends, 
 quarterly, March 10, at 41 East 4th St, Cincinnati. 
 From December, 1899, one-fith p. c. extra has been 
 paid semi-annually (July & December) from surplus 
 invested fund making 8 2-5% per annum. Trans- 
 fer office, Cincinnati, O. 
 
 LITTLE SCHUYLKILL NAVIGATION RR & 
 COAL CO. 1% GUARANTEED STOCK. Line of 
 road, Port Clinton to Tamanend, Pa., and branches, 
 31.48 miles. Capital stock, $2,487,850; par, $50. 
 Leased to Phila. & Read. Ry for 999 years, from 
 December 1, 1896, at rental of 5% per annum on 
 stock, and $5,000 organization expenses. Since 
 1897, dividends have been paid as follows: 1897, 6%; 
 1898 and 1899, 5^% each; 1900, 5%; 1901 and 1902, 
 S*/ 2 % each; 1903 and 1904, 5% each; 1905, 5y 2 %; 1906, 
 5%; January, 1907, 3%; payable January & July, at 
 410 Walnut St., Philadelphia. Listed on Philadelphia 
 Stock Exchange. Transfer office, 410 Walnut St., 
 Philadelphia, Pa. 
 
THE INVESTOR'S PRIMER 163 
 
 LOUISIANA & MISSOURI RIVER RR 7% 
 PREFERRED STOCK. Line of road, Louisiana 
 to Cedar City, Mo., 101 miles. Guaranteed preferred 
 stock, $1,010,000; par, $100. Leased in perpetuity, 
 August 1, 1870, to Chic. & Alton RR, at rental of 
 35% of gross earnings, but the lease was modified, 
 November 13, 1894, whereby the lessee agreed to pay 
 the interest on the bonds and the principal when 
 due; 7% dividends on $329,000 preferred stock (the 
 balance being owned by C. & A. RR) and to dis- 
 charge the floating debt. Dividends, February & 
 August 1, at 71 Broadway, N. Y. Transfer office, 71 
 Broadway, New York. 
 
 MASSAWIPPI VALLEY RY 6% GUARAN- 
 TEED STOCK. Line of road: Province Line to 
 Lennoxville, Que., and branch, 35.46 miles. Capital 
 stock, $800,000; par, $100. Leased for 999 years, 
 from July 1, 1870, to Conn. & Passumpsic Rivers 
 RR, which is itself leased for 99 years to the Bos- 
 ton & Lowell RR. The lessee pays interest on 
 bonds and dividends identical with those paid to 
 its own stockholders. Of the stock, $400,000 is 
 owned by the Conn. & Pass. Rivers RR, and is de- 
 posited under its mortgage and $50,000 is repre- 
 sented by Conn. Tr. & Safe Dep. Co., of Hartford 
 5% trust certificates. Dividends were formerly 5%, 
 but since January 1, 1897, 6% has been paid. Divi- 
 dends, February & August 1, at Bost. Safe Dep. & 
 Tr. Co. Listed on Boston Stock Exchange. Trans- 
 fer office, 95 Milk St., Boston. 
 
 MORRIS & ESSEX RR 7% GUARANTEED 
 STOCK. Line of road, Hoboken to Phillipsburg, 
 N. J., with branch, 118.9 miles. Capital stock, $15,- 
 
164 THE INVESTOR'S PRIMER 
 
 000,000; par, $50. Leased in 1868 to Del., Lack. & 
 West. RR, in perpetuity, the lessee assuming all lia- 
 bilities and agreeing to pay interest on bonds and 
 7% on stock. The valuable terminal facilities in N. 
 Y. Harbor of the D., L. & W. system are owned by 
 this company. Dividends, January & July, at 26 
 Exchange Place, N. Y. Listed on N. Y. Stock Ex- 
 change. Transfer office, 26 Exchange Place, N. Y. 
 
 MORRIS CANAL & BANKING CO GUARAN- 
 TEED 10% PREFERRED AND 4% CONSOLI- 
 DATED STOCKS. Length of canal, Jersey City 
 to Phillipsburg, N. J., with feeders, 106.48 miles. 
 Capital stock, $1,025,000 consolidated and $1,175,000 
 preferred; par, $100. Leased from April 1, 1871, to 
 Lehigh Valley RR, for 999 years, lessee assuming 
 the bonds and paying 10% on preferred and 4% on 
 Consolidated stock. Dividends on both classes, 
 February & August (first Tuesday), at 228 South 
 Third St., Philadelphia, Pa. Transfer office, Phila- 
 delphia, Pa. 
 
 NASHVILLE & DECATUR RR 7^% GUAR- 
 ANTEED STOCK. Line of road, Nashville, Tenn., 
 to Decatur, Ala., 119.24 miles. Capital stock, $3,- 
 553,750; par, $25. Leased to Louisville & Nashville 
 RR for 30 years from July 1, 1872, at rental of 6% 
 on stock and re-leased for 999 years from July 1, 
 1900, at rental of T*/ 2 % per annum on stock. The 
 $2,100,000 bonds, which were due July 1, 1900, were 
 retired, and stock issued therefor. Stock of record 
 before original lease was terminated is indorsed 
 "original stock," and guaranteed regardless of net 
 earnings and superior to any lien. Dividends, July 
 
THE INVESTOR'S PRIMER 165 
 
 & December, in Nashville, Tenn. Transfer office, 
 Nashville, Tenn. 
 
 NEW YORK & HARLEM RR 14% GUARAN- 
 TEED COMMON AND PREFERRED STOCKS. 
 Line of road, New York to Chatham, N. Y., with 
 branches, 136.51 miles. Capital stock, $10,000,000, 
 of which $1,343,950 is preferred and $8,656,050 com- 
 mon stock; par, $50. In addition, this company 
 owns the Fourth Ave. St. RR, with 9.71 miles of 
 surface lines and branches. The steam portion of 
 the road was leased to N. Y. C. & H. R. RR for 401 
 years from April 1, 1873, at rental of interest on 
 bonds and 8% on both classes of stock. Under a 
 supplementary agreement dated October 1, 1898, the 
 rentaL is now interest on $12,000,000 3^% first mort- 
 gage bonds, and 10% on both classes of stock. The 
 street railway section was leased in July, 1896, for 
 999 years to Metropolitan St. Ry, at $350,000 per 
 annum (equal to 3^% on total stock) until July, 
 1901, and $400,000 per annum (equal to 4% on total 
 stock) thereafter. This property is now operated 
 by New York City Ry. Dividends, 14% per annum 
 on both classes of stock, viz., 10% under lease of 
 steam railroad property, January & July, and 4% 
 under lease of street railway line, August & October, 
 at Grand Central Station, N. Y. Listed on New 
 York stock Exchange. Transfer office, Grand Cen- 
 tral Station, New York. 
 
 NEW YORK, LACKAWANNA & WESTERN 
 RY 5% GUARANTEED STOCK. Line of road, 
 Binghamton to International Bridge, N. Y., with 
 branches, 208.06 miles. Capital stock, $10,000,000; 
 par, $100. Leased October 2, 1882, to Del., Lack. & 
 
166 THE INVESTOR'S PRIMER 
 
 West. RR, in perpetuity, at rental of 5% on stock; 
 lessee guaranteeing principal and interest of bonds. 
 Dividends, quarterly, January, at 26 Exchange Place, 
 N. Y. Listed on New York Stock Exchange.| Trans- 
 fer office, 26 Exchange Place, N. Y. 
 
 NORTH CAROLINA RR 7% GUARANTEED 
 STOCK. Line of road, Goldsboro to Charlotte, N. 
 C., and branch, 224.34 miles. Capital stock, $4,000,- 
 000; par, $100. State of N. C. owns $3,000,000 stock. 
 Leased for 99 years, from January 1, 1896, to South- 
 ern Ry, at rental of $266,000 per annum (equaling 
 6%% on stock and taxes), until December 31, 1901, 
 and $286,000 (equaling 7% on stock and taxes) there- 
 after. Dividends, February & August 10, at Burling- 
 ton, N. C. Transfer agent, Sec. of company, Bur- 
 lington, N. C. 
 
 NORTHERN (N. H.) RR 6% GUARANTEED 
 STOCK. Line of road, Concord, N. H., to White 
 River Junction, Vt, and branch, 82.91 miles. Capi- 
 tal stock, $3,068,400; par, $100. Leased to Bos. & 
 Lowell RR for 99 years from January 1, 1890, lease 
 being later assigned to Boston & Me. RR. Rental, 
 interest on bonds of subsidiary cos., $5,000 per an- 
 num for organization expenses, and 6% per annum 
 on stock. Dividends, quarterly, January 1, at 1023 
 Old South Building, Boston. Until July, 1897, 1% 
 extra was regularly paid from contingent fund; in 
 1894, 5%; in 1896, 2%; in 1897, 5%, and in July, 1904, 
 1/2%. Listed on Boston Stock Exchange. 
 
 NORTHERN RR OF N. J. 4% GUARANTEED 
 STOCK. Line of road, Bergen Junction, N. J., to 
 Sparkill, N. Y., 21.54 miles. Capital stock, $1,000, : 
 
THE INVESTOR'S PRIMER 167 
 
 000; par, $100. Leased from June 1, 1899, to Erie 
 RR, for the period of its charter and any renewals 
 thereof. Rental, interest on bonds, taxes and ex- 
 penses, and 4% on stock. Dividends, quarterly, 
 March, at 11 Broadway, N. Y. Transfer office, 11 
 Broadway, New York. 
 
 NORTH PENNA. RR 8% GUARANTEED 
 STOCK. Line of road, Phila. to Bethlehem, Pa., 
 and branches, 86.21 miles. Capital stock: Author- 
 ized, $6,000,000; outstanding, $5,382,150; par, $50. 
 Leased to Phila. & Read. RR for 990 years, from 
 May 1, 1879, and lease assumed by Phila. & Read. 
 Ry in 1896. Rental, S% per annum on capital stock, 
 interest on bonds, and $12,000 organization ex- 
 penses. Dividends, quarterly, February 25, at 240 
 South Third St., Phila. Listed on Phila. Stock Ex- 
 change. Transfer office, Philadelphia, Pa. 
 
 NORTHWESTERN TELEGRAPH CO 6% 
 GUARANTEED STOCK. Capital stock, $2,500,000; 
 par, $50. Leased until May 7, 1980, to West. Union 
 Tel. Co. Dividends, January & July, in N. Y. Listed 
 on New York Stock Exchange. Transfer office, 195 
 Broadway, N. Y. 
 
 NORWICH & WORCESTER RR 8% GUAR- 
 ANTEED PREFERRED STOCK. Line of road, 
 Groton, Conn., to Worcester, Mass., with branch, 
 71.60 miles. Preferred stock, $3,000,000; par, $100. 
 Leased from February 1, 1869, for 99 years, to New 
 England RR; lease assumed by N. Y., N. Haven & 
 Hartford RR July 1, 1898. Rental, 8% per annum 
 on stock and interest on bonds. Dividends, quar- 
 terly, January 1, at Mechanics' Nat. Bank, Wor- 
 
168 THE INVESTOR'S PRIMER 
 
 cester, Mass. Listed on Boston Stock Exchange. 
 Transfer office, Second Nat. Bank, Boston, Mass. 
 
 OLD COLONY RR 7% GUARANTEED 
 STOCK. Line of road, Boston, Mass., to Newport, 
 R. I., with branches, 518.3 miles. Capital stock, 
 authorized, $20,000,000; outstanding, $18,371,400; 
 par, $100. Leased to N. Y., N. Haven & Hartford 
 RR for 99 years, from March 1, 1893, at rental of 
 7% per annum on stock, lessee assuming all liabili- 
 ties. Dividends, quarterly, January, at company's 
 office, South Term. Station, Boston. As of July 1, 
 1906, the New Haven owned $2,244,900 of this stock. 
 Listed on Boston Stock Exchange. Transfer agent, 
 G. B. Phippen, Treas., Boston. 
 
 OSWEGO & SYRACUSE RR 9% GUARAN- 
 TEED STOCK. Line of road, Oswego to Syracuse, 
 N. Y., 34.98 miles. Capital stock, $1,320,400; par, 
 $50. Leased February 13, 1869, for term of corpo- 
 rate existence, with renewal thereof, to Del., Lack. 
 & West. RR, at rental of interest on bonds, and 
 9% per annum on stock. Dividends, February & 
 August 20, at 26 Exchange Place, N. Y. Transfer 
 office, 26 Exchange Place, New York. 
 
 PACIFIC & ATLANTIC TELEGRAPH CO. OF 
 THE U. S. 4% GUARANTEED STOCK. Capital 
 stock, $2,000,000, of which West. Union Tel. Co. 
 owns $1,458,150; par, $25. Leased to West. Union 
 Tel. Co. for 999 years, from January 1, 1874. Divi- 
 dends, January & July 1, at 195 Broadway, N. Y. 
 Transfer office, 195 Broadway, New York. 
 
 PETERBOROUGH RR 4% GUARANTEED 
 STOCK. Line of road, Wilton to Greenfield, N. H., 
 
THE INVESTOR'S PRIMER 169 
 
 10.50 miles. Capital stock, $385,000; par, $100. 
 Leased on April 1, 1893, to Bost. & Lowell RR, for 
 93 years, at rental equal to 4% on stock, taxes and 
 $300 for organization expenses; operated by Bost. 
 & Me. RR through its lease of Bost. & Lowell. 
 Dividends, August & October 1, at Treasurer's 
 office, Nashua, N. H. Transfer office, Nashua, N. H. 
 
 PHILA. & TRENTON RR 10% GUARAN- 
 TEED STOCK. Line of road, N. J. & Pa. State 
 line in Del. River at Trenton, to Frankfort Junction, 
 Phila., with branch, 26.30 miles. Capital stock, $1,- 
 259,100; par, $100. Leased, conjointly with United 
 RRs of N. J., for 999 years from June 30, 1871, to 
 Penna. RR, at rental of 10% per annum on $494,100 
 stock, the remaining $765,000 being owned by the 
 United RRs of N. J. Dividends, quarterly, January 
 10, at Broad St. Station, Phila. Listed on Philadel- 
 phia Stock Exchange. 
 
 PHILA., GERMANTOWN & NORRISTOWN 
 RR 12% GUARANTEED STOCK. Line of road, 
 Philadelphia to Norristown, Pa., with branches, 
 20.96 miles. Capital stock, $2,246,900; par, $50. 
 Leased for 999 years, from December 1, 1870, to 
 Phila. & Read. RR, the lease being assumed by 
 Phila. & Read. Ry in the reorganization in 1896. 
 Rental, $277,623 per annum, representing 12% on 
 stock and $8,000 organization expenses. Dividends, 
 quarterly, March 4, at Mar. & Mer. Bldg., Phila. 
 Listed on Philadelphia Stock Exchange. Transfer 
 office, Mariner & Merchant Bldg., Philadelphia, Pa. 
 
 PITTSBURG, BESSEMER & LAKE ERIE RR 
 GUARANTEED 3% COMMON AND 6% CUMU- 
 
170 THE INVESTOR'S PRIMER 
 
 LATIVE PREFERRED STOCK. Line of road, 
 North Bessemer, Pa., to Conneaut Harbor, Ohio, 
 with branches, 204.05 miles. Capital stock, $10,000,- 
 000 common and $2,000,000 preferred. Leased to 
 Bessemer & Lake Erie RR for 999 years from April 
 1, 1901, at annual rental of interest on bonds, or- 
 ganization expenses, and dividends of 6% on pre- 
 ferred and 3% on common stock. Dividends on com- 
 mon stock, August & October; on preferred, July & 
 December 1, by check. Transfer agents, U. S. Trust 
 Co., N. Y., for common, and Union Tr. Co., Pitts- 
 burg, for preferred stock. 
 
 PITTSBURG, FORT WAYNE & CHICAGO 
 RY 7% GUARANTEED STOCK. Line of road, 
 Pittsburg, Pa., to Chic., with branches and leased 
 lines, 497.10 miles. Capital stock, $37,374,500 special 
 improvement and $19,714,286 general stock; par, $100. 
 The former is subject to the general stock, and is 
 issued to the Penna. RR for improvements. Leased, 
 in perpetuity, from July 1, 1869, to the Penna. RR 
 at rental of interest and sinking fund of debt, and 
 7% per annum on both classes of stock. Lease as- 
 signed to Penna. Co., lessee assuming all obliga- 
 tions of the lessor. Dividends on general stock, 
 quarterly, on Tuesday after the first Monday in 
 January, April, July and October, and on special 
 stock quarterly, January 1 ; payments on both classes 
 at Winslow, Lanier & Co., N. Y. In July, 1901, 2% 
 extra was declared. Listed on New York Stock Ex- 
 change. Transfer office, Winslow, Lanier & Co., 
 New York. 
 
 PITTSBURG, McKEESPORT & YOUGHIO- 
 GHENY RR 6% GUARANTEED STOCK. Line of 
 
THE INVESTOR'S PRIMER 171 
 
 road, Pittsburg to New Haven, Pa., and branches, 
 109.6 miles. Capital stock, authorized, $4,000,000; 
 outstanding, $3,959,650; par, $50. Leased for 999 
 years to Pittsburg & Lake Erie RR from August 3, 
 1881, at rental of 6% per annum on stock, and 
 guarantee of principal and interest, on bonds jointly 
 by Pittsburg & Lake Erie and Lake Shore & Michi- 
 gan Southern Cos., the guarantee being endorsed on 
 both bonds and stock certificates. The stock guar- 
 antee contains the proviso that the holder shall ac- 
 cept par for stock on July 1, 1934. Dividends, Janu- 
 ary & July 1, at Union Tr. Co., N. Y. Listed on 
 New York Stock Exchange. Transfer office, Central 
 Trust Co., New York. 
 
 PORTLAND & OGDENSBURG RY 2% GUAR- 
 ANTEED STOCK. Line of road, Portland, Me., to 
 Lunenburg, Vt., 109.1 miles. Capital stock, $4,392,- 
 538; par, $100. Leased to Me. Cent. RR for 999 
 years, from August 20, 1888, rental being interest on 
 bonds and 2% on stock. Dividends, quarterly, Feb- 
 ruary (last day), at Treas.' office, Me. Cent. RR, 
 Portland, Me. Transfer office, Treasurer's office, 
 Portland, Me. 
 
 PROVIDENCE & WORCESTER RR 10% 
 GUARANTEED STOCK. Line of road, Providence, 
 R. I., to Worcester, Mass., and branch, 47.9 miles. 
 Capital stock, $3,500,000; par, $100. Leased to N. Y., 
 N. Haven & H. RR Co. for 99 years, from July 1, 
 1892, at rental of 10% per annum on stock, interest on 
 bonds and $6,000 for organization expenses. Divi- 
 dends, quarterly, March 31, at Providence, R. I. 
 Listed on Boston Stock Exchange. Transfer office, 
 Providence, R. I. 
 
172 THE INVESTOR'S PRIMER 
 
 RENSSELAER & SARATOGA RR 8% GUAR- 
 ANTEED STOCK. Line of road owned, Saratoga 
 Spa to Lake Station, Whitehall, N. Y., 40.39 miles; 
 Troy to Ballston Spa, 25.48 miles; Eagle Bridge, N. 
 Y., to Rutland, Vt., 62.44 miles; branches, 22.83 miles 
 total, 151.14 miles. Capital stock, $10,000,000; par, 
 $100. Leased in perpetuity from March 1, 1871, to 
 Del. & Hudson Co., at rental of interest on bonds, 
 lease obligations and 8% per annum on stock. Divi- 
 dends, January & July 1, at National Bank of Com- 
 merce, New York. Listed on New York Stock Ex- 
 change. Transfer office, National Bank of Com- 
 merce, New York. 
 
 ROME, WATERTOWN & OGDENSBURG RR 
 5% GUARANTEED STOCK. Line of road, Mas- 
 sena Springs to Richland, N. Y., with branches, 
 410.14 miles. Capital stock, $10,000,000; par, $100. 
 Leased to N. Y. Cent. & Hud. River RR on March 
 14, 1891, for corporate existence, at rental of $15,000 
 per annum until April 1, 1901, thereafter $7,000 per 
 annum, interest on bonds and 5% per annum on 
 stock. Dividends quarterly (February 15) at Grand 
 Central Station, New York. Listed on New York 
 Stock Exchange. Transfer office, Central Trust Co., 
 New York. 
 
 SECOND AVENUE RR 9% GUARANTEED 
 STOCK. Capital stock, $1,862,000; par, $100. Leased 
 to Metropolitan St. Ry from January 28, 1898, for 
 the term of its corporate existence at annual rental 
 of 8% on the stock, for three years from March 1, 
 1898, and 9% thereafter. Under lease of the Metro- 
 politan Street Ry Co. to the Interurban Street Ry 
 Co., this road is now operated by the New York City 
 
THE INVESTOR'S PRIMER 173 
 
 Ry. Dividends quarterly, March 1, at 621 Broad- 
 way, New York. Transfer agent, Sec. of company, 
 New York. 
 
 (JNITED NEW JERSEY RR & CANAL CO. 
 10% GUARANTEED STOCK. Line of road, Cam- 
 den to South Amboy, N. J., Trenton to Jersey City, 
 N. J., with branches, 471.93 miles. Canal from Bor- 
 dentown to New Brunswick, N. J., and feeder, 66 
 miles. Capital stock, $21,240,000; par, $100. Leased 
 to Penna. RR Co. June 30, 1871, for 999 years at 
 rental of 10% on stock, interest on bonds, taxes, etc. 
 Dividends (quarterly) January 10, at Nat. Bank of 
 Commerce, New York, and Broad Street Station, 
 Philadelphia. Transfer office, Trenton, N. J. Listed 
 on Philadelphia Stock Exchange. 
 
 UTICA & BLACK RIVER CO. 7% GUARAN- 
 TEED STOCK. Line of road, Utica to Ogdensburg, 
 N. Y., with branches, 150.13 miles. Capital stock 
 authorized $3,000,000; outstanding, $2,223,000, of 
 which $1,120,000 (a majority) is held in the treasury 
 of the Rome, Watertown & Ogdensburg RR Co. 
 Par, $100. Leased in perpetuity, April 14, 1886, to 
 Rome, Watertown & Ogdensburg RR; lease trans- 
 ferred to the New York Central & Hudson River 
 RR, March 14, 1891. Rental, interest on bonds, 7% 
 per annum on stock and $4,500 for organization ex- 
 penses. Dividends, March and September 30, at 
 Grand Central Station, New York. Transfer office, 
 Central Trust Co., New York. Listed on the N. Y. 
 Stock Exchange. 
 
 UTICA, CHENANGO & SUSQUEHANNA 
 VALLEY RY 6% GUARANTEED STOCK. Line 
 
174 THE INVESTOR'S PRIMER 
 
 of road, Utica to Greene, N. Y., with branches, 97.41 
 miles. Capital stock, $4,000,000; par, $100. Leased 
 April 9, 1870, in perpetuity, to Del., Lack. & West. 
 RR Co. at rental of 6% per annum on capital stock. 
 Dividends, March & November 1, at 26 Exchange 
 Place, New York. Transfer office, 26 Exchange 
 Place, New York. 
 
 VERMONT & MASS. RR 6% GUARANTEED 
 STOCK. Line of road, Fitchburg to Greenfield, 
 Mass., and branch, 58.58 miles. Capital stock, $3,- 
 193,000; par, $100. Leased for 999 years from Janu- 
 ary 1, 1874, to Fitchburg RR (Bost. & Me. RR). 
 Rental, interest on bonds, $3,000 organization ex- 
 penses and 6% per annum on stock. Dividends, 
 August & October 1, at 53 Devonshire Street, Boston. 
 Listed on Boston Stock Exchange. Transfer office, 
 Boston, Mass. 
 
 WARREN RR 7% GUARANTEED STOCK. 
 Line of road, New Hampton Junction, N. J., to Del. 
 River, 18.82 miles. Capital stock, $1,800,000; par, $50. 
 Leased, October 1, 1857, in perpetuity, to Del., Lack. 
 & West. RR at rental of interest on bonds and 7% 
 on stock. Dividends August & October 15, at 26 
 Exchange Place, New York. Transfer office, 26 Ex- 
 change Place, New York. 
 
 WORCESTER, NASHUA & ROCHESTER RR 
 GUARANTEED STOCK. Line of road, Wor- 
 cester, Mass., to Rochester, N. H., 94.48 miles. 
 Capital stock, $3,099,800; par, $100. Leased to Bos- 
 ton & Maine RR for 50 years, from January 1, 1886, 
 at annual rental of $250,000 and taxes. Dividends 
 have been paid as follows: 1887 to 1893, 6% per an- 
 
THE INVESTOR'S PRIMER 175 
 
 num; 1894 to 1897, 5% per annum; 1898, 554%; 1899, 
 4^%; 1900, 4%; 1901, 534%; 1902, 5%; 1903, 4^%; 
 1904, Sy 2 %; 1905, 53,4%; 1906, 534%; 1907, January, 
 234%. Dividends, January & July 1, at American 
 Trust Co., Boston, Mass. Listed on Boston Stock 
 Exchange. Transfer office, American Trust Co., 
 Boston. 
 
ALPHABETICAL INDEX 
 
 Page 
 
 Account and Risk 15 
 
 Accrued Dividends 15 
 
 Accrued Interest 16 
 
 Accumulated Dividends 17 
 
 Adjustment Bonds 18 
 
 Albany & Susquehanna RR 9% Guaranteed 
 
 Stocks 147 
 
 Allegheny & Western Ry 6% Guaranteed Stocks 147 
 
 Allotment 20 
 
 American Smelters Secur. Co. 5% Guaranteed 
 
 Stock 147 
 
 American Telegraph & Cable Co. 5% Guaranteed 
 
 Stock 148 
 
 Atchison, Topeka & Sante Fe Ry Preferred Stock 135 
 
 Arbitrage 20 
 
 Assented Stocks or Bonds 25 
 
 Assessment 25 
 
 Assigned in Blank 27 
 
 Atlanta & Charlotte Air Line Guaranteed Stock. 148 
 
 Averaging 27 
 
 Balance of Trade 28 
 
 Bald Eagle Valley RR Guaranteed Stock 149 
 
 Baltimore & Ohio RR Preferred Stock 135 
 
 Banking 29 
 
 Bank of England 33 
 
 Bank of England Note 33 
 
 Bank of England Rate 35 
 
 Bank Statement 35 
 
 Bear 38 
 
 Beech Creek RR Guaranteed Stock 149 
 
 Bill of Exchange 39 
 
 Blind Pool 40 
 
 Bonds 40 
 
 Books Closed 42 
 
 Books Opened c 43 
 
 (177) 
 
178 INDEX. 
 
 Page 
 
 Book Value 43 
 
 Borrowing and Lending Stocks . . . . . . .' .' 44 
 
 Boston & Albany RR Guaranteed Stock.. . 149 
 
 Boston & Lowell RR Guaranteed Stock 150 
 
 Boston & New York Air Line Guaranteed Stock 150 
 
 Boston & Providence RR Guaranteed Stock 151 
 
 Broadway & Seventh Ave. RR Guar. Stock 151 
 
 Brooklyn City RR Guaranteed Stock 151 
 
 Bucketing 45 
 
 Bucket Shop ................ 47 
 
 Buffalo, Rochester & Pittsburgh Ry Pref. Stock 136 
 
 Bull 49 
 
 Buyers* Option 49 
 
 Call | ] | ] 49 
 
 Call Loans 50 
 
 Called Bonds 50 
 
 Canadian Pacific Ry Preferred Stock ..... 136 
 
 Car Miles 51 
 
 Catawissa RR Guaranteed Stock 152 
 
 Chicago & Alton RR Preferred Stock 136 
 
 Chicago & Eastern Illinois RR Guaranteed Stock 152 
 Chicago & Northwestern Ry Preferred Stock.. 137 
 Chicago, St. Paul, Minneapolis & Omaha Pfd. 
 
 Stock 137 
 
 Chicago, Milwaukee & St. Paul Preferred Stock 138 
 Chicago, Terminal Transfer RR Preferred Stock 138 
 Clearfield & Mahoning Ry Guaranteed Stock... 153 
 Cleveland & Mahoning Valley Ry Guaranteed 
 
 Stock 153 
 
 Cleveland & Pittsburg RR Guaranteed Stock... 154 
 
 Close Corporation 51 
 
 Colorado & Southern Ry Preferred Stock 138 
 
 Columbus & Xenia RR Guaranteed Stock 154 
 
 Commercial Paper 52 
 
 Common Stock 52 
 
 Concord & Montreal RR Guaranteed Stock 155 
 
 Connecticut & Passumpsic Rivers RR Guar. 
 
 Stock 155 
 
 Connecticut River RR Guaranteed Stock 155 
 
 Consol 53 
 
 Contango 54 
 
 Corner 54 
 
INDEX. 179 
 
 Page 
 
 Coupon Bonds 55 
 
 Cumulative Dividends 56 
 
 Current Assets 57 
 
 Current Liabilities 57 
 
 Cutting a Melon 57 
 
 Dayton & Michigan RR Guaranteed Stock 156 
 
 Debenture 58 
 
 Default 58 
 
 Delaware & Bound Brook RR Guaranteed Stock 156 
 
 Denver & Rio Grande RR Preferred Stock 139 
 
 Detroit, Hillsdale & Southwestern RR Guar. 
 
 Stock 156 
 
 Discretionary Accounts 59 
 
 Dividend 59 
 
 Elmira & Williamsport RR Guaranteed Stock.. 157 
 
 Equity 60 
 
 Erie RR Preferred Stock 139 
 
 Erie & Pittsburgh RR Guaranteed Stock 157 
 
 European & North American Rys. Guar. Stock. . 158 
 
 Exchange 61 
 
 Ex-Dividend 61 
 
 Ex-Interest 62 
 
 Ex-Rights 62 
 
 Fall Brook Ry Guaranteed Stocks 158 
 
 Fitchburg RR Guaranteed Stocks 158 
 
 Fixed Charge 63 
 
 Flat 63 
 
 Floating Debt 64 
 
 Foreign Exchange 64 
 
 Fort Wayne & Jackson RR Guaranteed Stock.. 159 
 
 Founders' Shares 67 
 
 Franchise 67 
 
 Funded Debt 68 
 
 Georgia RR & Banking Co. Guaranteed Stock.. 159 
 
 Gold Bonds 69 
 
 Gold & Stock Telegraph Co. Guaranteed Stock. . 160 
 
 Granger Railroad 69 
 
 Great Northern Ry Preferred Stock 140 
 
 G. T. C 70 
 
 Guaranteed Bonds 70 
 
 Guaranteed Stock 71 
 
 Hocking Valley Ry Preferred Stock 140 
 
180 INDEX. 
 
 Page 
 
 Holding Company 71 
 
 Hypothecation 72 
 
 Illinois & Mississippi Telegraph Guar. Stock.. 160 
 Illinois Central Leased Line Guaranteed Stock.. 160 
 
 Income Account 72 
 
 Income Basis 73 
 
 Income Bonds 73 
 
 International Ocean Telegraph Co. Guar. Stock 160 
 
 Irredeemable Bonds 73 
 
 Jackson, Lansing & Saginaw RR Guar. Stock.. 161 
 
 Joint Bonds 74 
 
 Joliet & Chicago RR Guaranteed Stock 161 
 
 Kaffirs 74 
 
 Kangaroos 74 
 
 Kansas City, St. Louis & Chicago, Guar. Stocks 161 
 
 Listed Stock 75 
 
 Little Miami RR Guaranteed Stock 162 
 
 Little Schuylkill Navigation & Coal Co. Guar. 
 
 Stock 162 
 
 Lombard Street 76 
 
 London Quotations 76 
 
 Long Accounts 77 
 
 Louisiana & Missouri River Ry Preferred Stock. 163 
 
 Manipulation 77 
 
 Margin 79 
 
 Massawippi Valley Ry Guaranteed Stock 163 
 
 Matched Order 81 
 
 Mileage 81 
 
 Minneapolis & St. Paul Preferred Stock 140 
 
 Missouri, Kansas & Texas Ry Preferred Stock. . 141 
 
 Mixed Loan 82 
 
 Monetary 83 
 
 Monetary Standing 83 
 
 Money Broker 85 
 
 Money Market 85 
 
 Money Rates 86 
 
 Monometalism 86 
 
 Morris & Essex RR Guaranteed Stock 163 
 
 Morris Canal & Banking Co. Guaranteed Stock. 164 
 
 Mortgagee 87 
 
 Movable Exchange 87 
 
 Municipal Bonds 87 
 
INDEX. 181 
 
 Page 
 
 Nashville & Decatur RR Guaranteed Stock 164 
 
 National Debt 87 
 
 Net 88 
 
 New York & Harlem RR Guaranteed Stocks . . 165 
 
 New York Clearing House Association 88 
 
 New York, Lackawanna & Western Ry Guar. 
 
 Stock 165 
 
 New York Stock Exchange 89 
 
 New York Stock Exchange Clearing House 90 
 
 Non-Assented Stocks or Bonds 96 
 
 Non-Cumulative Stock 96 
 
 Non-Interest Bearing 96 
 
 Norfolk & Western Ry Preferred Stock 141 
 
 North Carolina RR Guaranteed Stock 166 
 
 Northern RR Guaranteed Stock 166 
 
 Northern RR of N. J. Guaranteed Stock 166 
 
 North Pennsylvania RR Guaranteed Stock 167 
 
 Northwestern Telegraph Co. Guaranteed Stock. 167 
 Norwich & Worcester RR Guaranteed Stock... 167 
 
 Note Broker 97 
 
 Old Colony RR Guaranteed Stock. 168 
 
 On a Scale 97 
 
 On Margin 97 
 
 Option 97 
 
 Optional Bonds 99 
 
 Ordinary Stock 99 
 
 Oswego & Syracuse RR Guaranteed Stock 168 
 
 Outside Broker 100 
 
 Pacific & Atlantic Telegraph Co. Guar. Stock.. 168 
 
 Par 100 
 
 Par of Exchange 101 
 
 Participating Bonds 102 
 
 Passenger Density 103 
 
 Passenger Miles 103 
 
 Passing a Dividend 103 
 
 Peterborough RR Guaranteed Stock 168 
 
 Philadelphia & Trenton RR Guaranteed Stock.. 169 
 Philadelphia, Germantown & Norristown RR 
 
 Guar. Stock 169 
 
 Pittsburgh, Bessemer & Lake Erie RR Guar. 
 
 Stock 169 
 
182 INDEX. 
 
 Page 
 Pittsburgh, Cincinnati, Chicago & St. Louis RR 
 
 Pfd. Stock 141 
 
 Pittsburgh, Fort Wayne & Chicago Ry Guar. 
 
 Stock 170 
 
 Pittsburgh, McKeesport & Youghiogheny RR 
 
 Guar. Stock 170 
 
 Plain Bond 103 
 
 Pool ., 104 
 
 Portland & Ogdensburg RR Guaranteed Stock.. 171 
 
 Preference Stock 104 
 
 Preferred Ordinary Stock 105 
 
 Preferred Stock 105 
 
 Premium 106 
 
 Principal 107 
 
 Privilege 107 
 
 Providence & Worcester RR Guaranteed Stock. 171 
 
 Proxy 109 
 
 Put > 109 
 
 Pyramiding 110 
 
 Railroad Earnings Ill 
 
 Reading Company Preferred Stocks 142 
 
 Readjustment 113 
 
 Registered Bonds 114 
 
 Registered Coupon Bond 115 
 
 Rehypothecation 115 
 
 Released Endorsed Bond 115 
 
 Renssalaer & Saratoga RR Guaranteed Stock.. 172 
 
 Reorganization 116 
 
 Repudiation 117 
 
 Rock Island Company Preferred Stock 142 
 
 Rome, Watertown & Ogdensburg RR Guaran- 
 teed Stock 172 
 
 Rupee Paper 118 
 
 Scrip 118 
 
 Scrip Dividends 119 
 
 Seaboard Company Preferred Stocks 143 
 
 Second Avenue RR Guaranteed Stock 172 
 
 Second Mortgage 119 
 
 Securities Company 119 
 
 Sellers Option 119 
 
 Selling Short 120 
 
 Settlement (The) 12Q 
 
INDEX. 183 
 
 Page 
 
 Short 121 
 
 Sinking Fund 122 
 
 Sinking Fund Bonds 122 
 
 Southern Pacific Company Preferred Stock 143 
 
 Southern Ry Preferred Stock 144 
 
 Special Aid Bond 123 
 
 Special Assessment Bond 123 
 
 Spread 123 
 
 Stock Power 124 
 
 Stop Order 124 
 
 Straddle 124 
 
 Syndicate 125 
 
 Time Loan 126 
 
 Ton Mile Cost 126 
 
 Ton Miles 126 
 
 Train Miles 127 
 
 Transfer 127 
 
 Trustee Stock 127 
 
 Two Dollar Broker 128 
 
 Unassented Stock or Bonds 128 
 
 Underlying Mortgage 128 
 
 Underwriter 128 
 
 Unified Bonds 128 
 
 Unlisted Stocks 129 
 
 Union Pacific RR Preferred Stock 144 
 
 United New Jersey RR & Canal Co. Guar. Stock 173 
 
 Utica & Black River RR Guaranteed Stock 173 
 
 Utica, Chenango & Susquehanna Valley Ry 
 
 Guar. Stock 173 
 
 Value Bill 129 
 
 Vermont & Massachusetts RR Guaranteed Stock 174 
 
 Voting Trust 129 
 
 Voting Trust Certificates 130 
 
 Wabash RR Preferred Stock 145 
 
 Warren RR Guaranteed Stock 174 
 
 Washing 130 
 
 Watered Stock 130 
 
 When Issued 131 
 
 Wisconsin Central RR Preferred Stock 145 
 
 Worcester, Nashua & Rochester RR Guar. Stock 174 
 
 X-D 131 
 
 X-I 
 
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