Loading ...INTRODUCTION
IN an old Pennsylvanian almanac of the eighteenth century two qualities were postulated for success in business: first, application or industry, and second, thrift or frugality. The first without the second often leads to nothing. “A man if he knows not how to save as he gets, may keep his nose all his life to the grindstone, and die not worth a groat at last.” The old proverb, A fat kitchen makes a lean mil, should remind us moderns that not only excess in eating and drinking, but luxurious and expensive follies of all kinds may drive the hardest worker into debt and difficulty, until after long enjoyment of a good income he ends his career in poverty and dependence. This book is not concerned, however, with the moral value of thrift, or even with the advantages which savings bestow upon the individual. Without savings indeed, or without an inherited fortune, no one can feel quite independent. This is a strong and sufficient moral ground for not spending all that one earns. But our particular business is neither with the first process of earning, nor with the second of saving, but with a third. We have to consider neither the making nor the saving of money, but its investment after it has been earned and saved. “Investment” is a comparatively new word; it was not known to Dr. Johnson as a financial term, and many of the investor’s facilities are essentially modern. Nor does our subject allow us to treat of all investments, it confines us to that most usual form of investment in Stock Exchange Securities.
But it is important to bear in mind throughout that the accumulation of wealth, and the reduction of poverty, and all the means by which material comforts and conveniences are multiplied, by which the arts flourish, by which letters and learning are spread through all ranks of society, depend ultimately upon the thrift and savings of individuals, assisted by the honesty, the efficiency and the peaceful proclivities of their Governments. That the virtue of saving is easy for the rich and difficult for the poor must be confessed; that it is sometimes morally and economically right to spend all one’s income
and even to borrow may be admitted. But, nevertheless, progress depends upon saving, Banks and Stock Exchanges, which facilitate and encourage saving, are themselves the fruits of saving; without saving they could not have been called into existence. When capital shrinks, when the community they serve sinks into decay, these institutions likewise must come to grief. Thanks, however to the onward march of invention and science, as well as to the growing reluctance of nations to engage in war, progress is now the rule and decay the exception.
The art of making money is a mystery which cannot be taught; and though many books have been written with prescriptions, for acquiring a fortune, few men have ever made themselves a penny the richer by reading them. But the art of keeping money after you have made it, and of increasing: your surplus capital by judicious investments, can be learnt. Any person with prudence and self-restraint can in ordinary times and circumstances secure himself against serious capital depreciation, and obtain a steady dividend on the moneys he has been able to put by from time to time. This was not always so. In fact, until the last century property and trade were so insecure, even in the most settled and civilised countries, that a man who had saved money was often at a loss what to do. He might have to choose between spending it and hiding it away. The miser, who hoarded his gold, because he could not trust it out of his sight, was to be found side by side with the Jew, who lent it out at exorbitant rates of interest, calculating that he would gain in usury from those who paid more than he lost in bad debts. Pirates by sea, brigands on land, sovereigns and nobles who extorted loans only to repudiate them, Governments which supplied their needs by debasing the coinage, or by issuing worthless paper money these are but samples from a big bunch of circumstances that made the accumulation and investment of wealth in olden times so difficult and hazardous.
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