premises at prices which are far below actual values, thereby depriving the mortgagors of their entire equities.

Another equally disreputable practice, among cruel and avaricious lenders of money, is the loaning of money upon chattels, such as household furniture, or store fixtures, receiving for the loans bonuses which are often, in fact, usurious, and foreclosing their liens at the first technical defaults in the terms of the agreements.

Still another, and a still more heartless proceeding -an evil which has occupied the attention of well-disposed legislators and judges, though apparently in vain-is that of selling to working people implements of trade, such as sewing-machines, etc., to be paid for by instalments, with agreements, in the form of leases, such that the implements may be taken away from the purchasers upon the slightest failures or delays in paying the instalments. After considerable portions of the purchase prices have been paid, the vendors, taking advantage of slight defaults, often take from poor and needy purchasers both the sums of money which they have already paid and the implements with which they had hoped to better their miserable circumstances.

And in like manner the pawn-shops, which are considered to be necessary for the welfare of large communities, and which, in consideration of the relief which they are supposed to afford, the risks which they are supposed to assume, and the restrictions which are supposed to govern them, are allowed by the law to receive rates of interest which otherwise would be usurious, are thought by many persons to be legalized evils which ought to be done away with.

It is not to be denied that such hard and grasping methods, when employed by shrewd, greedy, and generally unprincipled persons, will often return large profits for considerable periods of time. Nor is it to be denied that for such persons there will come times when reputations in exact accordance with their despicable characters will be established. Humanity will proclaim them heartless. They will be called birds of prey, sharks, ghouls. Everywhere they will be shunned and avoided, like things of terror, like pestilences.

Their occupations will be gone. And if, perchance, in dire necessity, they shall plead for generous treatment at the hands of others, how can they escape that relentless answer which pervades not only justice but nature" With what measure ye mete, it shall be measured to you again!"

Surely no price will be able to compensate experiences like these. Fortunate indeed is it that such experiences need fall to the lot of no one that a generous heart may, by judicious management, be easily reconciled to a life of regular business methods - that a kindly nature is by no means necessarily a commercial failure. While carefully guarding our own rights and interests we should, whenever possible without injuries to ourselves, be generous and lenient towards those who are under obligations to us, undertaking, to the best of our abilities, to fulfil to the letter the immortal simile, so beautiful because divine: "Be ye therefore wise as serpents, and harmless as doves."

A

CHAPTER VII

BONDS AND STOCKS

THEORETICALLY perfect government, could such exist, would, in its simplest economic conception, be so conducted that its regular income, from taxes and other sources, would be always and exactly sufficient to pay all its necessary expenditures; or, in other words, a government would be in a financially perfect condition if it could be, at all times, entirely free from debt, and without unnecessary surplus in its treasury. If such happy conditions were possible of realization, governmental functions would indeed be reduced to the ideal, and the often importunate burdens of citizenship would be all but obliterated. But nations and other governments are in fact far removed from the ideal, in this as in other important respects.

Nations are, unfortunately, subject at all times to bad and injudicious legislation with regard to direct taxation, imposts, tariffs, internal revenues, and general dealings with other nations. These agencies, together with the often incompetent or dishonest characters of public officials, are unceasingly at work, increasing the balances upon the wrong sides of the world's accounts of receipts and expenditures. In addition to such considerations, others, by far more formidable, are the wars to which nations must be liable, and the preparations for war, or precautions against war, which are necessary to the very existence of nations.

To provide regularly, by direct taxation, for such contingencies would evidently be the means of bringing financial ruin to almost every citizen and to almost every nation. The

nations of the earth are therefore compelled, at certain times, to borrow immense sums of money in order to meet these extraordinary expenses.

In a similar manner, though on much smaller scales, and indeed with much less of good reason, states, cities, counties, and even villages, throughout the civilized world, are continually compelled to run into debt, in order to supply the numerous public improvements and conveniences which the people demand, and for which the ordinary taxes and receipts are not at all times adequate.

It is a statement not to be doubted that, in a majority of the nations, states, and cities, and even perhaps counties and villages of the civilized world, serious indebtednesses not only continually exist but continually increase. An attempt to compute the actual aggregate of the world's public indebtedness would be a task practically of impossible proportions; and the amount of such indebtedness, could it be properly expressed, would not fail to startle the intelligent citizen, by reason of its stupendous magnitude and the mighty consequences which eventually must be involved. It has been

estimated that the combined money of the entire world would go but a little way towards the payment of the world's public indebtedness.

In a work of this description, there appears to be neither necessity nor propriety for an attempt to discuss, at any length, the probable outcome of such a state of affairs; but the state of affairs itself is, at least, apposite for remark, because of the effect which it must at some time have upon the values of the public securities (so-called) which are about to be considered.

For the purpose of securing, or of appearing to secure, the repayment of the loans which are made necessary by the expenses which have been suggested, nations, states, cities, counties, and villages commonly issue written or printed evidences of indebtedness, called bonds. These bonds are solemn obligations, by which the borrowing governments, by the signatures and attestations of their properly qualified officers, promise to pay the amounts stated in the bonds at

certain specified times, and with certain specified rates of interest. Attached to bonds of this description are commonly series of coupons, corresponding to the regular intended payments of interest. When certain interests are due and payable, the corresponding coupons are torn from the bonds, by the bondholders, and deposited in the banks for collection, or are otherwise collected.

By reference to the general principles of investment which have been expounded in the preceding chapter, it will be apparent without difficulty that the conditions which are necessary for the safety of investments will not be fulfilled by Government or municipal bonds. Such bonds do not in general furnish real and ample securities for the funds which are invested, because the actual securities are nothing more than the good faith and credit of the particular geographical divisions of country by which the bonds are issued. Moreover, the securities are not within the control of the individual investors, since they depend, not only upon the action of the bondholders generally, but also, in many cases, upon the action of citizens who are not bondholders.

In the application of these principles, however, a clear and perfect exception must be made in the case of the bonds which are issued by the Government of the United States. Such an exception must be consented to without objection or hesitation because (in the order chosen from a standpoint of utility), first, we are compelled to depend, for all security, not only of property, but of life and limb, upon the laws and government of our country, and therefore we can find no better reliance than its untarnished faith and credit; and second, because it is the highest duty of an American citizen to offer to the flag of our country, and to all that it represents, a loyal and an uncalculating devotion.

Similarly, it may be suggested that citizens should depend upon the faith and credit of the States in which they reside, and extremists may include in the list of territorial divisions which thus claim the fealty of their citizens, even counties, cities, etc. But this doctrine of patriotic reliance must not be carried beyond the limits of real safety or the requirements