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O a very large majority of the readers of this magazine there arrives a day when it becomes necessary to decide upon the disposition of a surplus sum of money. Such sum may have accrued either from the labor of brain or hand, or from inheritance. This surplus should not be allowed to remain idle even for a single day. Wisely directed, it may prove a more potent earner than its creator. Limited opportunity within the sphere with which the latter is familiar makes it imperative that he seek other fields wherein his surplus may work and expand to his further profit. For the workman is now the prospective investor. His mission is to select that form of investment best suited to his peculiar needs and experience.

There are to be found in the dictionary few more significant words than the noun "investment." It is fraught with important meaning for the present generation and for posterity. An understanding of the principles which underlie the science of investment has often marked the line between poverty and prosperity. The study of this science is fascinating as well as profitable. It suggests a delightful play of the imaginative faculties while at the same time demanding the exercise of shrewd praeticality.

The business of investment dates back to the first glimmer of intelligent thought among human beings. Investors probably existed before the birth of intelligible speech. In a now obsolete primer of political economy there used to be related this anecdote concerning a primitive tribe of cliff-dwellers. At night, within the caves which they had scooped out of the rocks, these shaggy wild men suffered from thirst. But they dared not go down to the water-hole after dark for fear of savage beasts. Finally, one in whom must have burned the divine and

inextinguishable spark of imagination bethought him of the dried gourds that hung upon vines here and there about the rocks. With a sharp stone he hacked off the neck of a gourd, and, filling it with water, he carried it up to his cave. His comrades examined the rude vessel covetously, but were too stupid to imitate the craftsman. Next day he cut off the neck of another gourd. The first, however, was sufficient for his own wants. Therefore he loaned the second gourd to a neighbor, and as consideration for the loan the latter agreed to fill both gourds and bring them up to the cave at nightfall. Soon this skillful workman had fitted out the entire tribe with water gourds, exacting as interest upon his loans tribute of berries, fish, and roots. Presently the tribe, delighted with his cleverness, threw the reigning chieftain, a foolish old fellow, over the cliffs and elected the gourd man in his stead. The latter was probably the earliest type of investor, or one who loans his surplus earnings to others for a consideration.

To-day the investor is the fountainhead of world development. He turns the dream of the inventor into useful reality. He furnishes the sinews of material progress by helping with his savings to shape and complete great enterprises. This is the side of investment that must appeal to every person's imagination. But before he may exercise that very pleasing faculty with wisdom and profit, he must for his own safety drill himself in the rudiments, at least, of investment value. It is his duty towards himself and society at large to learn the rules whereby he may distinguish between good and bad investments, and to adhere to these rules in their selection. If he does not do this, the man with a surplus is no longer an investor, but has degenerated to the plane of the speculator who helps create noth

ing; who is, in fact, content to profit by the actual destruction of value. Every business man is, of course, an investor, since previously accumulated savings are involved in his business. But to the management of that business he brings a special knowledge. Thus equipped, he may, in anticipation of relatively greater returns, legitimately assume risks that should be shunned by one who for the sake of a fixed income intrusts his savings to the control of others.

The prime object of this and succeeding articles is to aid by suggestion the comparatively inexperienced investor to distinguish between sound and unsound securities. To-day each provident citizen is offered countless chances to make his money work for him, or literally to give it away to unscrupulous promoters whose assets consist entirely of enticing words. Each day his mail is filled with advertisements and circulars setting forth the attractions of innumerable bonds, stocks, mortgages, home sites, and mining ventures. In the attempt to sort and classify this chaotic mass confusion and bewilderment must necessarily arise in a mind absorbed by habit in some special field of work.

In a small Western town there lives to-day a young widow whose husband, a physician, died af w years ago leaving her a home and some $40,000 in life insurance. It so chanced that this young woman was wholly unfamiliar with financial matters. A friend of her husband, a man destined to become later a great financier and world-builder, called To him she confided her perplexities. Then this man, simply, as great men speak, made clear to her the essential principles of investment. Doubtless he was all unconscious of laying down rules. Yet this is what he said: "Mrs. Blank, you must place your money where the safety of your principal is assured. That is the first consideration. You should also be able to exercise control over your principal, that is, to convert it, or at least a part of it, into cash with readiness should occasion arise. Finally, we must find for you securities that will return the largest possible income consistent with the first two requirements, and that promise to

increase in market value, under normal conditions."

These principles are fundamental. They should be applied to the selection of any form of investment whatsoever. Yet they need not be regarded as absolutely rigid, but,may, like the Constitution under present-day construction, be interpreted to suit cases and circumstances. For instance, a security which could be purchased with wisdom by a shrewd and well-informed business man might be wholly unfit for a trust estate or a

woman.

Having in mind the three cardinal points to be considered in all investments, i. e., safety of principal, readiness of convertibility, and income, the investor will wisely go to his banker and, stating his own peculiar circumstances, will consult the latter as to the advisability of his investing in bonds, or stocks, or mortgages. It is impossible for the average investor to decide conclusively upon all points of merit and demerit without expert advice. He would not think of attempting to conduct a lawsuit unadvised, or to diagnose a disease. Perhaps it may be his first experience in investment matters. The writer knows a professional man, a teacher, who at the age of thirty had never taken the trouble to comprehend clearly the difference between bonds and stocks. He never read a financial paper or report, and had not the remotest acquaintance with investment values or how to measure them. Because of his ignorance he missed a golden opportunity to increase his savings materially by buying when substantial and proven securities were low, as they are to-day. He felt ashamed to learn from his banker that a bond is a promise to pay at a given date, the consideration for the loan being a fixed rate of interest, while a stock represents the right to, or equity in, what remains of earnings and assets after the claims of the bondholders have been fully satisfied.

It is purposed in this series of papers to discuss those classes of investments open to moderate savings. These include steam railway bonds and stocks; the bonds and stocks of public service corporations, such as street railways, both urban and interurban, gas, electric

light, and water companies; National, State, and municipal bonds. No attempt will be made to suggest the purchase of any particular kind of investment as being superior to another. Final decision in such matters lies between the investor and his banker, or should do So. But there are points of difference that may be advantageously set forth. It is sometimes far more difficult to direct your idle money into the best and most profitable channels, compatible with safety, than it is to earn that money by daily business operations with which one is entirely familiar. What to buy and what to sell? When to buy and when to sell? And why? These are questions which no man may presume to answer positively. Yet experience has established beyond argument certain principles for the guidance of judgment in the estimate of values.

sons.

and appraises his assets as to intrinsic value and marketability. If collateral is offered to secure the loan, it is scrutinized with the utmost care. Usually a promise is exacted that the margin of collateral over and above the sum advanced be kept at an agreed level during the life of the loan. Should the latter be unsecured by collateral, the banker usually demands that the note be indorsed by one or more responsible perEvery possible effort is made to guard the principal. The question of return is entirely a secondary consideration. Interest rate is determined by the relative security of the loan and conditions of the money market, just as in the case of the yield on a bond for the payment of which tangible corporate property is pledged. The banker is, of course, acting in a fiduciary capacity in that he is investing the money of his depositors. The law compels him to exercise care. Why should not the individual investor do the same for his children and himself?

In a succeeding paper the general differences between bonds and stocks of the investment class will be discussed.

B

OLEY, Indian Territory, is the youngest, the most enterprising, and in many ways the most interesting of the negro towns in the United States. A rude, bustling, Western town, it is a characteristic product of the negro immigration from the South and Middle West into the new lands of what is now the State of Oklahoma.

The large proportions of the northward and westward movement of the negro population recall the Kansas Exodus of thirty years ago, when within a few months more than forty thousand helpless and destitute negroes from the country districts of Arkansas and Mississippi poured into eastern Kansas in

search of "better homes, larger opportunities, and kindlier treatment."

It is a striking evidence of the progress made in thirty years that the present northward and westward movement of the negro people has brought into these new lands, not helpless and igno rant horde of black people, but land-seekers and home-builders, men who have come prepared to build up the country. In the thirty years since the Kansas Exodus the Southern negroes have learned to build schools, to establish banks and conduct newspapers. They have recovered something of the knack for trade that their foreparents in Africa were famous for. They have learned

through their churches and their secret orders the art of corporate and united action. This experience has enabled them to set up and maintain in a raw Western community, numbering 2,500, an orderly and self-respecting govern

ment.

In the fall of 1905 I spent a week in the Territories of Oklahoma and Indian Territory. During the course of my visit I had an opportunity for the first time to see the three races-the Negro, the Indian, and the white man-living side by side, each in sufficient numbers to make their influence felt in the communities of which they were a part, and in the Territory as a whole. It was not my first acquaintance with the Indian. During the last years of my stay at Hampton Institute I had charge of the Indian students there, and had come to have a high respect both for their character and intelligence, so that I was particularly interested to see them in their own country, where they still preserve to some extent their native institutions. I was all the more impressed, on that account, with the fact that in the cities that I visited I rarely caught sight of a genuine native Indian. When I inquired, as I frequently did, for the "natives," it almost invariably happened that I was introduced, not to an Indian, but to a Negro. During my visit to the city of Muskogee I stopped at the home of one of the prominent "natives " of the Creek Nation, the Hon. C. W. Sango, Superintendent of the Tullahasse Mission. But he is a negro. The negroes who are known in that locality as "natives" are the descendants of slaves that the Indians brought with them from Alabama and Mississippi, when they migrated to this Territory, about the middle of the last century. I was introduced later to one or two other "natives" who were not negrces, but neither were they, as far as my observation went, Indians. They were, on the contrary, white men. "But where," I asked at length, 66 are the Indians ?"

"Oh! the Indians," was the reply, "they have gone," with a wave of the hand in the direction of the horizon, "they have gone back!"

I repeated this question in a number

of different places, and invariably received the same reply, "Oh, they have gone back!" I remembered the expression because it seemed to me that it condensed into a phrase a great deal of local history.

One cannot escape the impression, in traveling through Indian Territory, that the Indians, who own practically all the lands, and until recently had the local government largely in their own hands, are to a very large extent regarded by the white settlers, who are rapidly filling up the country, as almost a negligible quantity. To such an extent is this true that the Constitution of Oklahoma, as I understand it, takes no account of the Indians in drawing its distinctions among the races. For the Constitution there exist only the negro and the white man. The reason seems to be that the Indians have either receded-" gone back," as the saying in that region ison the advance of the white race, or they have intermarried with and become absorbed with it. Indeed, so rapidly has this intermarriage of the two races gone on, and so great has been the demand for Indian wives, that in some of the Nations, I was informed, the price of marriage licenses has gone as high as $1,000.

The negroes, immigrants to Indian Territory, have not, however, "gone back." One sees them everywhere, working side by side with white men. They have their banks, business enterprises, schools, and churches. There are still, I am told, among the "natives" some negroes who cannot speak the English language, and who have been so thoroughly bred in the customs of the Indians that they have remained among the hills with the tribes by whom they were adopted. But, as a rule, the negro natives do not shun the white man and his civilization, but, on the contrary, rather seek it, and enter, with the negro immigrants, into competition with the white man for its benefits.

This fact was illustrated by another familiar local expression. In reply to my inquiries in regard to the little towns through which we passed, I often had occasion to notice the expression, “Yes, so and so? Well, that is a 'white