Financial Department

Conducted by WILLIAM LEAVITT STODDARD

An Investor's Dream

I

DECIDED that I would become an investor and that I would begin by buying a bond.

It near

Though only two

was getting Christmas time. Why would it not be a good idea to buy a bond, just, a baby bond, for my small son? years old, he could not, of course, understand the full significance of bondownership. But it would do both him and me good for him to possess a real investment, and as time went on we could study investment problems together. I grew quite enthusiastic.

Away uptown I hesitated before the window of a branch office of a famous house that sells bonds all over the world. I noticed that one of the gentlemanly ond purveyors was at leisure, and I walked in.

department will furnish in

formation regarding standard investment securities, but cannot undertake to advise the purchase of any specific security. It will give to inquirers facts of record or information resulting from expert investigation, and a nominal charge of one dollar per inquiry will be made for this service. Not more than five issues of stocks or bonds can be discussed in reply to any one inquirer. All letters should be addressed to The Outlook Financial Department.

said. "I might die
in Vermont, where
we go summers.”

Deeper and deep-
er we delved into
the intricacies of
bonds. I had never
imagined that they
could be so varied
and complex. Just
before he concluded
I almost said:
"I want a bright-green bond for $500
for my baby boy. All I want is just a
plain bond."

"I am sorry," replied the salesman.
"They are completely out of fashion,
and all we have are pink."

"Something in bonds," I said. "For yourself?" he inquired politely. "Yes-in a way," I replied. "What Would you suggest?"

"We have some very good first-mortage public utilities," he said. "If you vill only give me an idea"

I

HAVE taken space to describe this figment of the sleeping imagination because, upon careful consideration, it seems accurately to picture a very common experience. Often this experience is represented to us by an inquiring reader who says, "How can I educate myself about investments?" Or by readers who, revealing that they own a considerable property, show by their inquiries that they have never taken the

This, of course, was impossible. One pains to inform themselves of the ele-
annot give what one hasn't.

ments of investments, not to say of
investing.

I checked an impulse to say, "You hoot first." But I must have said somehing like it because he opened a drawer his desk and took out a set of circuirs and charts and began to expound.

There is no royal road to expert learning in any field, particularly in the investment field. Nor is there any short cut. Reading, study, discussion, experience these are the things needed to give one even an approach to familiarity if one would avoid the mental confusion which attacks him who first ventures into this realm.

HEREUPON there ensued one of the

most confusing half-hours of my fe. I kept my eyes fixed on his face hile he talked, somewhat atoning by y attention for the lack of intelligence hich, had he been less earnest, he ould surely have observed.

"1

He spoke of long and short term nds; of bonds with and without cerin features which he called "convertiHe mentioned tax-free clauses, d in this connection named several ates in which I, a resident of Rhode land, had absolutely no interest. "I on't live there," I told him. He went iskly on to inheritance-tax matters. But I may not die in Rhode Island," I

Then, as the reader must by now have guessed, I woke up.

Reading and good reading-on investment problems is available today at little cost of anything but time. Metropolitan daily newspapers run well-edited financial sections. These departments, not omitting the advertisements, should be read. Some weeklies and several monthlies have more or less adequate financial articles and columns of comment. In addition, there is a fairly large and comprehensive literature about investing and investments.

Those who live in the larger cities can

We are far from advocating that the schools and colleges should "teach investments." If they perform their tasks well, they are already giving instruction in the very fundamentals of investment when they teach economics, business, and law. But we strenuously advocate courses in investing and investments for the adult man, whether in business or out of it, whether rich or poor. Such courses can be carried on at any time, at any place, under self-instruction. And no one knows when the knowledge thus attained will be worth many times the effort needed to acquire it. W. L. S.

olume 147

The Outlook

THE WEEK

e Prison Revolt at Folsom

under such conditions that the type of

T is no new thing for desperate desperado who is always willing to lead

criminals with liberty in their minds and, as they look at it, with little to e, to form and try to carry out a plot escape. This is one of the explana

a forlorn hope in a fight for liberty finds
it possible to get assistance from outside
and to spread throughout the prison the
propaganda for the attempt.

ns back of the recent incident at the Isom Prison in California. Add to s the fact that, as we are informed, it is long been the practice to send the gs of the convicted underworld to Foln, which is regarded by criminals as ir worst possible fate.

A telegram received by The Outlook CH

m its Pacific coast correspondent just this issue is going to press states that break had evidently been planned for nths, and that, despite all devices of dern prison discipline, quite an arhal of weapons of various kinds had en accumulated by the prisoners. ly merest chance the changing of > repository for the master keys-preated the break from being successful, which case a thousand escaped crimds might have created a reign of terror roughout the countryside. Governor Young, of California, is edited with the statement that, to his owledge, a break at Folsom has been red for at least a dozen years—ever ce the prison began to be badly consted.

As was seen in the almost successful ot for an outbreak from the Tombs ison in New York City about a year o, and as was also seen in the escapes the desperado Chapman from the lanta Federal Penitentiary, there is thing so wild and reckless that it will t be undertaken by prisoners who have en able to possess themselves of arms d money.

December 7, 1927

This tragic event, which will probably d in the execution of several of the spirators on a charge of murder, uld be taken as a warning, not only prison authorities and legislators, but the country at large, for such things ppen most often when crowded condins in prisons exist, and there is far too ach of this evil, not alone in Califor■, but throughout the country. It is

Better prisons and an adequate number of them provide one means to forestall revolt.

Chicago's Right to
Lake Michigan Water

HICAGO cannot be enjoined under
present circumstances from draw-

Number 14

matter is likely to come up for further debate.

This is not merely a National, but also an international question. Canada has rights on the Great Lakes which the United States is bound to respect. These are not involved in this particular decision, but they will have to be considered ultimately in our treatment of the whole subject of plans for inland waterways.

Chicago's drainage canal is not, and cannot be, a local issue.

Safer and Saner Flying

ing water, as it is now doing, through LIFE insurance is a cold, hard busi

the Chicago Drainage Canal from Lake
Michigan. This is the opinion of
Charles E. Hughes in his report as Spe-
cial Master to the United States Su-
preme Court. Several States have been
trying to get an injunction to prevent
Chicago from drawing off this water.
They still have the right to file briefs
opposing the opinion of the Special Mas-
ter. But even if the Supreme Court up-
holds Mr. Hughes, the controversy will
not have ended. Appeal can still be
made to Congress.

ness. It issues policies and fixes premiums on statistics, not on sympathy or enthusiasm. Accident insurance in particular has in every policy a somewhat grisly valuation of every lost digit or limb and evaluates the sum each dollar of premium entitles the payee to receive for everything from a hurt thumb to a deadly wound.

There are two main reasons for opposing the drawing off of this water. In the first place, as we have had occasion to report, the use of this water enables Chicago to empty its sewage into the Illinois River, and thus to make of that river what amounts to an open sewer. But besides that the drawing off of this water has lowered the level of Lake Michigan and Lake Huron to the injury of navigation.

So, when we find that insurance companies now recognize aviation as a proper field for their activity, we know that, like railway and motor-car travel, flying is no longer a sport or a desperate occupation, but part of the world's business. Not long ago an aviator who asked for accident insurance was politely refused. Now, we are told, policies will be issued to pilots and passengers flying on regularly scheduled aircraft between established airports in licensed aircraft in charge of licensed pilots.

On the other hand, it is urged that the right to divert water in this way is essential for the development of our inland waterways.

Mr. Hughes finds that, although Congress has not directly authorized the diversion of water, it has conferred upon the Secretary of War the authority to regulate the diversion; and that it is under that authority that Chicago has acted. The entire control of the diversion, Mr. Hughes notes, remains with Congress. Therefore in Congress the

The restriction is a sound and reasonable one, and it will have its effect in discouraging "stunting" and "barnstorming" in favor of well-ordered and well-executed flying.

That the margin of safety in the air is growing is shown by a statement from the Bureau of Naval Aeronautics that, while there was one death to every 244,443 miles flown by naval airmen in the year ending July 1, 1924, there was in 1927 up to the same date one death to every 868,484 miles flown. It is facts like this that make air-accident insurance under reasonable conditions now