Making Money

"The possession of money gives confidence, the lack of it self-consciousness."

IN the preceding chapters of this book we have discussed "The Law of Financial Success," and suggested methods and given instruction for the development of the various positive qualities necessary to the one who desires to get into harmony with the LAW.

But our exposition of the LAW is not yet complete. Like everything else in Nature, it has two sides: for instance, we have male and female, heat and cold, light and darkness, sunshine and rain, and one is just as necessary to the whole as is the other.

We have said very little as to the handling of money. What has gone before was extremely practical and all very necessary, because we must "know" before we "do"—we must "possess" before we "use." If you have read carefully and studied with a purpose that which has preceded, and have decided to take advantage of the suggestions given, you are now ready for this final chapter, "Making Money," toward which all the others have been leading you.

A person might possess every one of the positive qualities, but if he were in the back woods or the Desert of Sahara, where there is no money in circulation, he never could become financially independent, for the second part of the LAW could not be brought into action. And again, on the other hand, a person might be left a mint of money and if he did not know how to take care of it, or if he did not possess the necessary positive qualities by means of which he might make more money, he would lose it all in a few years, and he himself become a tramp of the worst type. This is not an uncommon occurrence, and may be verified at any shelter house or Salvation Army Barracks in our larger cities.

An illustration from real life, showing how the LAW worked in one instance will here be given. The writer is acquainted with a gentleman of middle age now occupying an enviable position in financial circles, and when, because of the development of the positive qualities, will before he dies become much more prominent and leave his mark on the world. This man was born "with a gold spoon in his mouth," and all during his youthful days had everything and anything a young man could want, as well as many things he did not need. In time reverses came, and these, combined with extravagance, swept away the fortune that had been bequeathed to him.

Here was a young man about twenty years of age left without a dollar, and with absolutely no training in the direction of earning a living. After a few years of the hardest kind of knocks, he made his way to the far West. There he obtained an inside position where he worked for a time, until it began to tell on his health. One day while at work in the office, and wondering what was going to become of him, a great truth dawned on his mind. It was this: I can never amount to anything or become very wealthy like my father by merely working with my hands. The only way to make money is to compel money to work for me.

With a definite object in view, he gave up his inside "position" and took a "job" on the railroad grade as a teamster. In less than six months, by depriving himself of every luxury, he had accumulated enough money to partly pay for one pair of mules. These he hired out, acting himself as driver. After a while he bought a second pair on credit, giving a mortgage on both pair for payment, and hired a man to drive the second pair. When that pair was paid for he bought two more pairs, again mortgaging all he had to pay for the second two pairs. When they were paid for he bought four more pairs, and then he went to work, not as a hired man, but as a contractor on his own account in a small way, and thus made money. The capital invested in these mules worked for him, and step by step in a few years he was in a position of affluence and power.

This man, just like every other man, had the germs of the positive qualities in him. All they needed was developing. This development was obtained by the knocks he received, both before and after that great truth dawned upon him.

Let me again express that truth in a little different language so that it may be impressed upon the mind of every one of my readers: No man ever became very wealthy working with his hands alone; this applies to the brain worker also. The only way to obtain much money is to make money work for you.

Jay Gould, the noted financier, once said: "One hundred dollars invested in the right place at the right time will earn as much as one man steadily employed." This is a great truth too, in financial matters, that we must let sink deeply into our consciousness.

But the question right now with many is, "How shall we acquire the first one hundred dollars so as to invest it?" And the only answer is, by saving it. There is no person, who, if he can earn wages, but can in time, by sacrificing some luxury, or by rigid economy, lay aside one, two or three hundred dollars. And the best way to do this is by putting in some good savings bank a stated sum each week, no matter how small that sum may be. One of the best aids to this is the metal bank in which you can drop your odd change, such as are loaned to their customers by up-to-date savings institutions. If you keep this up long enough, you are bound to acquire your first hundred dollars. By doing this you have acquired at the same time two valuable habits—economy and patience.

It is now necessary to place or invest this money, and more to be obtained in like manner, where it will bring back to you the largest possible returns and yet be perfectly safe. And the question comes to one at this point, "Shall I go into business for myself, as the young man did, or shall I work for another and invest my savings and watch them grow?"

That depends. If you have developed the qualities of courage, initiative, self-confidence and grit to a remarkable degree, and the opportunity presents itself, go into business for yourself and you will win. If not, hold onto your present position, but be always on the lookout to better yourself, and increase your salary, and in the meantime invest your surplus money in some good security.

When making an investment do not be blinded either by your own prejudice or the prejudice or craftiness of some stock, bond, mortgage or banking house salesman. Remember this—and in doing so realize that it is a frailty of human nature and the instinct of self-preservation that makes it so—that whatever a man or firm is offering for sale at the time you approach them is the best thing for you to buy. Other investments offered by other firms may be good—but, this is best for you. Realize this frailty, use your own judgment, don't knock the other fellow, and invest in what seems best to you after hearing the stories of all of them.

The writer can command no language strong enough in which to express his contempt for the social parasite who obtains the money of people under false pretenses or by making glittering promises of great wealth on short notice without ever intending or expecting to make any returns. It matters not whether he be an absconding cashier or president of a bank, the president or representative of a noted stock or bond house, who has knowingly sold the stocks or bonds of a corporation that is watered beyond all limits, or a "fake" mining promoter. These men all belong in the same class, they are rascals and their place is behind the prison bars.

I shall now present, as concisely as possible, the various methods of investing money, and in an unprejudiced manner give the advantages and disadvantages of each.

At the head of all investments, as regards safety of capital, stand government bonds. They are in no way attractive to the small investor, because of the low rate of interest. Their principal demand is by National Banks, which are compelled to buy and deposit these bonds with the United States Treasurer, to protect their issue of bank bills. State bonds are considered almost as safe as government bonds (though some states have repudiated their obligations), but also pay a low rate of interest.

Savings banks pay their depositors three and sometimes four percent. Placing money in a savings bank may be regarded as an investment, since the depositor loans his money to the banker, and he in turn uses that money to earn money for the stockholders of the bank. It would take a great many years for a man to acquire a competence or to become financially independent by merely keeping his money in a savings bank.

Municipal bonds, including county, city, town, school, water, city hall, sewer and special assessment bonds pay from four to five percent. The best ones are in large demand, at these low rates of interest, by large estates and trustees for the investment of trust funds, the investing of which is restricted by law to securities of this character. Some municipal bonds are safer than others, depending upon the standing and character of the municipality issuing them. All depend upon some form of taxation for the payment of interest, as well as principal. The best way to purchase municipal bonds is to get in touch with some reputable bond house making a specialty of them, and buy under the instruction of some man whom you can trust to tell the truth.

Steam and electric railway bonds and public service corporation bonds may all be classed together for convenience sake. They pay from four to seven percent. In buying them it is best to consult an authority, as some are very much safer than others.

Real estate mortgages pay from four to eight percent, depending upon locality and the character of security, and are in large demand by a class of investors who have sums varying from $5,000 and upwards, and who depend upon this class of investment for an income. In buying real estate mortgages, know the people who are placing the mortgages—their ability to make the interest payments, and whether there is any chance of default. There is a moral as well as a financial obligation involved here.

Real estate pays anywhere from five to ten percent, depending upon its location. While there are opportunities for large profits in the appreciation of real estate in some localities, there is always the risk of great depreciation. One thing should be remembered in buying real estate for a permanent investment and that is the danger of booms, with their enthusiasm, lack of judgment, inflated prices and general lack of conservatism. Remember that the yield should be adequate to the risk—see to it that the uncertainty of an income is reduced to a minimum.

Industrial stocks pay from five to twenty percent, and are dependent largely upon the commercial conditions of the country, the nature of the business, the amount of competition, and the character of the management. The utmost caution should be exercised in investing your savings in stocks of this character, and you must know absolutely that you are dealing with reliable, capable and honest people.

The stocks of legitimate mining companies pay from six to many hundred percent on the par value, and are dependent upon the diameter and location of the property, and the reliability of the men in control. There is always great danger to the small investor in putting his money into mining stocks, as he is not in a position to determine, as a rule, the intrinsic value of same. He must depend wholly upon the character and reliability of the men who are responsible for the intelligent and conscientious use of his money in the operation of a mining property. More fortunes have been made in mining than in any other of the many industries in the United States. There have also been many a poor man's and woman's hard earned savings lost by turning over their little all to some glib-tongued promoter while there was not at any time even a remote possibility of ever getting any return.

The all-important question, when investing your money, is to know those with whom you are doing business. There are many meritorious propositions being handled by honest, capable men, which offer great opportunities to the small investor, and if he can but use careful judgment and discretion in determining the right persons to do business with, there is no reason why the most humble cannot acquire a competency by careful and intelligent investing.

The reader may know of or learn about lots of other ways of investing money, besides those presented above. If so, and they "look good to you" after putting the facts in each case through the mill of Reason and Judgment, take advantage of the opportunity. If you lose, do not be a "namby-pamby" and cry over spilt milk; "get busy" and begin again.

And even if great reverses come and everything you possess is swept away, don't sink back in despair and give up the ship. Rest a while and then go at it again harder than ever, but this time follow the LAW. It is no sin to go broke or even to be bankrupt. The dishonor lies in remaining so. As Josh Billings said: "Sukces don't konsist in never makin' mistakes, but in never makin' the same one twice." And Ella Wheeler Wilcox writes:

"Tis easy enough to be pleasant

When life flows by like a song,

But the man worth while Is the man with a smile

When everything goes dead wrong."

In judging any investment it is always wise to know a few inside facts in regard to the proposition offered. The only way to find out anything is by asking questions either of yourself, while you are reading the "prospectus," or else of the officers of the company, if you do not find these questions answered somewhere in the literature.

The following "Investors' Questions" are taken from a book called "Financing an Enterprise" by Francis Cooper, published by the Ronald Press, and will bring out the truth in regard to an investment, if anything will. Don't hesitate to ask them of anyone who wants you to invest your money with him.

1. Is the basis of the enterprise sound?

2. Is the business or undertaking profitable elsewhere?

3. What competition or opposition will be met?

4. What peculiar advantages does it enjoy over these others?

5. Can it be conducted profitably under existing conditions?

1. In what state organized?

2. What is the capitalization?

3. Is the capitalization reasonable?

4. Has the stock been issued in whole or in part and if so what?

5. Is the stock offered for sale full-paid and non-assessable?

6. Has any of the stuck preferences?

7. Is any stock unissued or held in the treasury?

8. Who has stock control?

9. Are the rights of smaller stockholders protected?

10. Are there any unusual features in charter or by-laws?

As to Property.

1. What properties or rights are controlled?

2. What is their value and how estimated?

3. Are these properties or rights owned, or held under lease, license, grant, option or otherwise?

4. If owned, are titles perfect?

5. Are there any encumbrances on the properties or rights?

6. If not owned, are the holding papers in due form?

7. If not owned, are the terms of building reasonable, satisfactory and safe?

8. In event of liquidation, what would be worth of property?

As to Operation.

1. What operations have been or are now carried on?

2. What have been the results?

3. What difficulties, if any, have been encountered?

4. What is the demand for the product or operation of the enterprise?

5. What is present status of the enterprise?

6. Are proper books kept?

As to Finance.

1. What are the present assets and their actual value?

2. What debts, claims, fees, rents, royalties or other payments or obligations are now due or are to be met and carried?

3. From what resources are these to be met?

4. Who handles the moneys and under what safeguards?

5. What are or will be the running expenses, salaries, etc.?


1. How many members in the board?

2. Who are these members?

3. What is their past record and present business status?

4. Who are the active members of the board?

5. Who, if any, are inactive?

6. Are meetings regularly held and attended?

7. Who compose the executive committee, if any, and what are its powers?

8. Are the directors stockholders to a material


1. Who we the officers?

2. What are their previous records?

3. What are their special present qualifications?

4. Are they able to work together without friction?

5. What compensation do they receive or are they to receive?

6. Are they interested in the enterprise beyond their salaries?

1. What is the general plan of operation?

2. What special reasons, if any, led to its adoption?

1. Is the general proposition a fair one?

2. Is the price of .stock or bonds reasonable?

3. How do these prices compare with any former prices?

4. If common stock is offered, do preferred stock, bonds or other profit-sharing obligations take precedence and to what amount?

5. What reserve of profits will be retained before dividends are to be declared?

6. If preferred stock is offered, is it cumulative, does it vote, when is it redeemable and at what price, what sinking fund provision is made for redemption and are any peculiar provisions attached? Do any bonds or other obligations take precedence of the preferred stock?

7. If bonds are offered, what interest is paid, and when and where; upon what property are they secured, and when and how paid; is the trustee or trust company of repute; under what conditions are the bonds foreclosable; when and how are they or may they be redeemed; are there any other securities taking precedence, and are there any peculiar provisions in deed of trust?


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