Indianapolis Times, Volume 35, Number 86, Indianapolis, Marion County, 19 August 1922 — Page 3

ATJG. 19, 19TZ

ONE MINUTE TALKS on BANKING

By C. Milton Kelly, Treasurer and Mgr. Bond Dept., City Trust Cos.

ThU i the flfth of a series of ‘One Minute Talk* on liankinr" by prominent hank officials, which will run each Satorday In the Times during the month of August. Safe Investments

Among the important instruments of modern commerce, coming n?xt to bank credits in their usefulness as a

medium of exchange are "negotiable securities." The term "negotiable securities” is applicable in a general sense to many forms of com* mercial paper, including drafts and bills of exchange, but is usually employed in speaking of share capital of corporations and the bonds of such c o rpora-

tions, together with the obligations of local, state and national governments. There are several types of this security, but broadly speaking, they may be classified as follows: Bonds issued by National, State and local governments. Bonds and stocks of public utility, transportation, financial and industrial corporations. There are two distinctions that run through this classification. First: that between the bond and the share of stock; Second: that of the legal and economic status of the issuer;— A Bond, in simple terms, is the note of the issuer calling for a certain sum of money to be paid at a definite time with lnt .-rest. In the case of a private corporation it is usually secured by a mortgage on specific property or the pledge of certain securities for the repayment of the loan: in the case of a government agency, by the pledge of certain of its revenues. In buying a bond you are simply loaning your money to the issuer. When you buy a share of stock you become a partner in the business: you are a joint owner in the ratio your stock bears to the capital of the company. The bondholder's claim is superior to the stockholder, but the bondholder has no voice in the management of the enterprise. From this distinction in their legal status arises a distinction in their claims upon the earnings of the company. The bond calls for a stipulated interest return payable at stated intervals which the company cannot refuse to pay without subjecting itself to foreclosure and bankruptcy. The share of stock, on the other hand, is only a claim upon the surplus earnings of the company after Its legal obligations are met and a division of these surplus eArn.ngs rests entirely with the controlling powers of the company. Governmental agencies, ‘n the main, issue only one form of negotiable securities—a bond —and while a government bond is merely the promise of the government to pay, without security, yet so well has our government protected its credit there has been coined a phrase to represent the acme of safety, “As safe as a government bond." Bonds of counties, cities, towns and other government agencies are Just as safe. They are backed by the good faith and credit of the municipality, but are further secured by the pledge of certain revenues derived by taxation. The neogitiable securities most useful as an auxiliary to money and banking credits are the bonds of these various governmental agencies and the bonds of public utilities —transportation and manufacturing companies such as are regularly quoted cn the Exchanges. They comprise in large measure the investment of banks, insurance companies and estates. The purchase of these securities, however, is not limited to large financial interests: many individual investors have become acquainted with this manner of saving and are laying these securities away in their strong boxes against a day of greater need. The Federal Government has played a large part In educating the public in the value of bonds as an Investment through Its five Liberty loan drives. Get the Facts First—Then Invest There are three fundamentals In making an investment that every one should consider. First: You should be reasonably certain your principal will be returned to you in full at some certain future time: your peace of mind depends upon that; Second: You should select a security that can be converted into cash before maturity, if necessity should require, without great loss. Third: Naturally you will select that investment paying the best income consistent with safety and convertibility. Income should always be a secondary consideration. Banks are realizing more and more the economic necessity of helping their depositors find suitable Investments for surplus funds. Most of the larger banks have established investment departments where they buy and sell high grade securities. The drain that is annually made against the resources of our people by unscrupulous stock and bond salesman (socalled) has reached such proportions it is staggering. Many States, including our own, have established securities commissions in an effort to curb this evil, and while much has been accomplished, a great deal more should be done. I am certain our banks are willing to help in any way they can to conserve the resources of our people. •

ROW OVER SPITE FENCE One Man Is Wounded In Leg, Another Beaten in Row. NEW YORK —Krection of a spite fence was the cause, according to the police, of the shooting of Joseph Collorllo, 22 years old. of 437 Lincoln road, Brooklyn. He Is In Kings County Hospital with a bullet In his left leg. and Michael Nallarfransekesco, 52, of 481 Lincoln road. Is In the same Institution with lacerations about the head. Ha says ha was assaulted with a slob.

II Looked Like The Chance of a Li i eti me. 07? WILSON, a young widow, had just collected her insurance check and, as II MJ ! * s usua l> she was that same day given the chance to “double it,” “the j) chance of a lifetime,” as the stnooth-tongued stock salesman told her. Fortunately, she hesitated. She came to an officer of one of the banks in the list below for information about the corporation which offered her the “chance of a lifetime.” Upon careful investigation the stock proved to be of no value. The officer suggested a sound investment. The banker’s advice had saved her thousands. Some people can afford to speculate just as they can afford a yacht or a box at the opera. Speculation is a luxury. But is it one that you can afford? If a chance is offered you to “double” your money and you desire information about the company or security offered, don’t hesitate tt> consult one of the officers of these banks. He will gladly advise you and this service is without any charge or obligation. Consult your banker before making investments; let him be your counsellor. He wants to work with you. You will find that he will not discourage your plan if it is a sound one. But he can work with you effectively only if you go to him frankly and “lay all the cards on the table.” Investing money is a science. There are certain dependable forms of securities which you can buy with the assurance of safety and reasonable profit. This method won’t make you rich quick—but it will pay you in the long run. Just remember that nearly a billion dollars was lost during 1921 by people who did not take the trouble to The extensive facilities of these banks for securing accurate informa- daffik /K tion regarding investments are at your service along with all the other advantages that result from having a sound banking connection. Consult Specialists in Finance First City Trust Cos. National City Bank Commercial National Bank The Peoples State Bank Fletcher American National Bank- Security Trust Cos. Marion County State Bank J. F. Wild State Bank Washington Bank & Trust Cos. f This is the fifth of a series of advertisements, published by the several banks above, to cultivate a better understanding of banking and bankers and to promote mutual understanding and co-operation between the two largest factors in the city’s prosperous expansion—the public and the banks.

THE INDIANAPOLIS TIMES