It is a remarkable fact that many men who have shown remarkable shrewdness in conducting a business in which a fortune may have been accumulated, exhibit the judgment of children when it comes to making investments.

There are able lawyers who have made fortunes in the practice of the profession which they understood, only to lose them by investments in mines or other ventures, about which they knew absolutely nothing but what was told them by the scheming speculator and smooth-tongued promoter.

As has been intimated before in these pages, there is a great difference between saving through and hoarding through a spirit of miserliness.

SAVINGS

Every wage or salary earner, no matter how small his compensation, should try to lay by something of that little as a provision against the unproductive days.

No matter how small the amount a man has set aside, after paying for life's necessities and meeting all just debts, he is to that extent a capitalist.

The miser would hide his savings out of reach, but the man with the foresight to save will usually have the judgment to place these savings where they will fructify and grow, producing the fruitage known as interest.

The young man or the young woman, or any one else who places his little accumulations in a savings bank, has begun a form of investment that may, if persisted in, place him or her above want, even if it does not entitle either to a place on the lists of great capitalists.

CAPITALISTS

The capitalist not only has money of his own to invest, but he may and very often does need more money properly to exploit the enterprises in which he is engaged.

Money loaned to such men, after being assured of their ability and integrity, is an advantage to the lender as it is to the user.

The lender's profit is assured if the enterprise does not fail, and the added capital not only insures against failure, but it may enable the manager to succeed beyond any expectations he could have if forced to carry on the work with only his own resources.

The capitalist may choose to buy land in the suburbs of a city and build thereon a house to be sold or rented. This should always be made to secure the money borrowed.

A capitalist may establish a fund from which, on good security, the business men of the community may obtain loans, for which they get a higher interest than that which they undertake to pay to those whose money they are using.

Again a capitalist may undertake to loan to farmers, who have not the means to carry on the work, but who are anxious to make their lands more productive, through drainage and crop rotation. In this case the money loaned is secured by the usual bond and mortgage.

Or it may be that another body of men is anxious to start a great manufacturing enterprise in the neighborhood, but has not enough money to place the venture on a paying basis.

In the latter case it appeals to the capitalist, and he, though not bearing enough available means of his own, undertakes the work with the knowledge that he can rely on the small investors, whose contributions he has before managed successfully.

STOCKHOLDERS

Or it may be that the manufacturing company does not ask the capitalist to assist, but itself goes to the small investor with a prospectus of the enterprise, and offers to sell stock in the concern at $50 or $100 a share, as the case may be.

This gives a chance to enjoy the profits, be they great or small; but with the chance for larger profits there comes the greater risk which must always be assumed in such cases.

Sometimes, when a company is starting, its stock may be put below par. This stock, in the event of success, may appreciate, as with some bank and other corporation stocks, many times above the par value.

When stocks sell in the open market for their face value, they are said to be at par.

KINDS OF STOCKS

Most companies, organized on a stock basis, issue stocks of two kinds. One is known as "common" the other as "preferred."

As the name implies, preferred stock (its rate of interest is always fixed) is entitled to be paid out of the net dividends first.

Whatever is left after paying the preferred stock interest is divided up equally among the shares of common stock, each getting according to his holdings.

Sometimes the dividends on common stock are far greater than those on the preferred. The preferred stock dividends are regarded as a fixed charge, but there can be no limit as to the payments on the common stock, if the funds are available.

The stocks of railroads, factories, banks and other enterprises may be good forms of investment, and for this they are often held for long periods by investors for revenue.

Most stocks, however, particularly of railroads, are continually changing hands. The buying and selling of such securities has grown to be an enormous business, managed largely by men known as "stock brokers," many of whom are strong factors in the financial world.

As a rule, the buying and selling of stocks through brokers is a hazardous form of speculation, which has in it all the elements of gambling, and we cannot advise too strongly against it.

There is another kind of stock, which some companies keep in their safes to meet an emergency. This is known as "treasury stock," and, like the preferred, its rate of interest is fixed.

Let us suppose that a company is capitalized and prints stock to the amount of $100,000.

This company sells $80,000 worth, and the officers believe that they can force the enterprise to success with the money on hand.

Now, it follows that, with the same amount of earnings, the profits on $80,000 will be greater than on $100,000, so the $20,000 unsold stock is held in reserve.

If to extend the business, or for any other reason, it is necessary to have more money, the treasury stock may be sold to secure the extra capital.

If the business is placed on a basis where its success is beyond all question, then the treasury stock may be divided pro rata between the holders of the other stock, for, till disposed of in some way, it was an asset common to the whole company.

Each stock certificate tells when dividends are declared; they may be paid quarterly, half yearly, or annually.