CORNELL UNIVERSITY LIBRARY GIFT OF Finance Laboratory Cornell University Library arV12885 Non-taxable incomes 3 1924 031 290 020 olin.anx Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924031290020 on-taxable In>Gom>asn> A Book of Important; iRfomeAion/fcr Investors TheGeiger-Jones Co. Investment Bankers CeoitoB.Obio % This document Is f!m prcp.T.-r y of the Cornel! University finor-ie Laboratory in GoWwin £r,-i;lh ilall, Room 269, It must net be taken from that room. First Edition copyright 1909 Second Edition copyright 1910 Third Edition copyright 1911 Fourth Edition copyright 1911 Fifth Edition copyright 1912 Sixth Edition copyright 1913 by The Geiger- Jones Company Pref&Ge to Sixth Edition^ T IS but a little over four years since the first edition of this book was published and in that short time we have grown from a small business to the largest investment house in the Middle West. This growth and success we attribute largely to a strict adherence to the principles laid down in this book. When you deal with The Geiger- Jones Company you will find everything open and above board. We not only have nothing to conceal, but we will go out of our way to give our customers intimate knowledge of the securities they buy, both by furnishing financial statements and by giving them opportunities for examining the manufacturing plants back of the securities so that they may see the tangible evidence of the safety of their purchases. PREFACE TO SIXTH EDITION Our methods and the success of our business have come to be so well known that some of the very strongest cor- porations in Ohio are now seeking our financing services. We aim to consider only such enterprises as have behind them extreme merit, and after a careful culling from a list of many really meritorious propositions we are able to offer our clients stocks which are bound to command favorable attention from the conservative investor who is seeking the largest income obtainable from un- doubted security. INTRODUCTION We realize that it is not easy to give you a clear impression of our policy and methods of doing business, but we hope that you may find what we say in this book of sufficient interest to read it through. We have given it the title of "Non-Taxable Incomes," because that is one of the most attractive features about our securities. The first part of the book is devoted to an explanation of the conservative character of our securities and the man- ner in which we protect the investors' interests. There are also chapters on the corporations and their rights, on preferred and common stocks and bonds and a glossary of business and corporate terms, which will be of gen- eral and practical value. The Geiger-Jones Company. Non-t&xAble Incomes [EN one is offered an invest- ment that will yield 6£% to 7% income, free of tax, the first thought which comes in- to his mind is that there must be something undesirable about it, because many people are told and hence feel that conservative investments in these days should not yield more than 4% or 5%. That this notion is not al- ways correct will be readily shown, and those who adhere to it rigidly are mak- ing the problem of getting satisfactory returns from investments needlessly difficult. The constantly lowering rates of interest and dividends on mortgage loans and listed railroad stocks and bonds, in many cases, are eliminating this class of commonly accepted secu- rities from consideration. The crux of the whole situation lies in the two words "commonly accepted." NON-TAXABLE INCOMES Some of the best known business men in this country today will confess to fol- lowing, as a rule, the recommendations of friends or business acquaintances in making important investments, rather than trust their own judgment in such matters. The great financiers of New York— not the gamblers of Wall street —decide that certain stocks and bonds in which they are interested, directly or indirectly, are worthy the name "Con- servative Investments," as in many cases they undoubtedly are. These men have an immense following among peo- ple all over the country. Their every act is watched through the telegraphic columns of the daily papers and through private sources of information. When J. P. M. & Co., of New York, buy United States Steel 2nd Mortgage Bonds as an investment the followers of J. P. M. & Co. decide that these bonds are good enough for them, too, as of course J. P. M. & Co. have inside infor- mation and would not invest for them- selves were it not a safe thing to do. 10 NON-TAXABLE INCOMES The comparative ability of J. P. M. & Co. to stand a loss on such an invest- ment does not enter their minds. Yet these bonds in this way come to be known as a conservative investment. Some other well known house and its followers put Union Pacific in the same class and thus a considerable list of so- called conservative investments is made up. After a while, by a natural evolu- tion of mind, people come to think that these are the only safe and conservative securities. The demand for them in- creases. Prices rise enormously. Net returns to investment purchasers fall off, and the problem of income becomes a difficult one. The foregoing will explain why there are so comparatively few "commonly accepted" conservative securities and why the prices for them are becom- ing prohibitive to the ordinary in- vestor. It is merely because people will not investigate for themselves and rely upon their own common sense to judge the merits of an investment proposition. The fact that some leaders 11 NON-TAXABLE INCOMES of business thought do not happen to be familiar with conditions surround- ing certain very excellent bonds and stocks, and that their followers have not created an extraordinary demand for them, so that they can be bought on an exceptionally favorable income basis, does not change their intrinsic value in the least, and if they happen to be in a class which, so far as the individual owner is concerned, are exempt from taxation they become more especially desirable. This little book will treat of some of the most conservative securities to be found in this country today. They are not included in the "commonly ac- cepted" list simply because they are not so universally known. For this very reason they may be bought on a basis to yield 6£% to 7% net income to the pur- chaser and they - are tax exempt in Ohio.* The laws of the State of Ohio provide for the payment of a so-called "per- sonal tax," upon the personal property owned by the resident. No tax return •See Page 72 12 NON-TAXABLE INCOMES need be made, however, on the shares of stock in corporations organized under the laws of this State, because the cor- porations themselves pay this tax. Therefore this non-taxable feature of our securities is especially satisfying to the conscientious man who does not want to evade taxes unlawfully, but feels that the burdens of taxation are unequally distributed. "Tax-day" has no worries for men and women of Ohio who have their money invested in Geiger-Jones securities, for they can list their stock-holdings at full face value, and have a perfectly clear con- science in knowing that they are within the law while escaping taxation en- tirely. The Federal Income Tax, just going into effect with the publication of this edition, also exempts from taxation the incomes from our securities because the corporations themselves pay the tax. Thus our non-taxable investments are now given a double value. IS NON-TAXABLE INCOMES T will be readily understood that the banking facilities in many cities where there are numerous large manu- facturing institutions are inadequate to meet local financial re- quirements. The manufacturers must therefore secure capital from outside sources. For example, in the city of Canton, Ohio, the home of the late President McKinley, with a population of about 55,000 people, are located approximate- ly 265 manufacturing establishments, whose annual output of iron and steel, with their allied products, is enor- mous. Some of the best known articles of staple use are made here. What farmer, for instance, is not familiar with the plows, harrows, cultivators and other farm implements manufac- tured by The Bucher & Gibbs Plow Company, a pioneer in this particular field. Similarly the sheet metal ware, metal' roofing, eave troughs, metal studding and lath, lanterns, oil cans and pumps made by the Berger Manufac- 14 NON-TAXABLE INCOMES turing Company, of Canton, are recog- nized as standard goods from one end of this country to the other. The Dueber watch, made in Canton, is a timepiece known the world over. Many other products from the mills and factories of Canton might readily be mentioned to illustrate the importance of this busy city as a manufacturing center. And this is no mushroom growth* springing up today to fade away tomorrow. Some of these industries have been doing a profitable business in this very spot for nearly half a century. Canton banks cannot finance the legitimate needs of all these business enterprises. Capital necessarily must come from other localities where bank- ing conditions are reversed. The United States Steel Corporation met its capital requirements through the banking house of J. P. Morgan & Company, of New York City. So have other large railroad and industrial cor- porations. In great centers of capital like New York City numerous firms and individuals make it their business 16 NON-TAXABLE INCOMES to act as fiscal agents in arranging for the financial needs of manufacturers who are unable to get the proper assist- ance from their local banks. Certain corporations which have made satisfactory statements of their business and proved their worthiness, have secured additional capital by the sale of their securities through The G-eiger-Jones Company, a Canton in- vestment house, whose facilities and reputation are such as to command capital for legitimate enterprises, over a wide territory outside of Canton. Please note the words "have proved their worthiness." Just what does this mean 1 ? The answer to this question is the keynote of the success of The Geiger-Jones Company. From its be- ginning this house has been imbued with the fact that the bases of wealth in this country are manufacturing and farming; that the securities of a cor- poration which is contributing to the basic wealth of the nation are intrinsic- ally valuable if the corporation's busi- ness is governed by wise policies and 16 NON-TAXABLE INCOMES directed with intelligent regard for eco- nomic principles ; in fact that, under such conditions, no securities could be more safely recommended for investment. With this creed as a starting point and the further belief that its success and permanency would depend largely on the satisfaction it would be able to give its clients, The Geiger- Jones Com- pany decided to specialize in industrial securities. It determined at the start, and has lived up to its determination, not to offer any securities to clients which did not have back of them a firmly established business "governed by wise policies and directed with intel- ligent regard for economic principles." It so happened at the time that cer- tain manufacturers were in need of new capital to meet the demands of growing business. The Geiger-Jones Company undertook to finance their needs. Be- fore agreeing to do so, however, the busi- ness under consideration was, in each case, subjected to drastic investigation. The examination covered the period from the company's beginning. Was it 17 NON-TAXABLE INCOMES properly organized in accordance with the laws of the state, so that its stock- holders were assured of their rights? Was the property it owned held by clear title ? Were the processes used its own and not an infringement on the rights of others ? Were the policies of the company and its methods of ac- counting such as to inspire faith in its securities as a conservative investment ? Were the nature of the business and its management such as to warrant a be- lief in the permanency of its success? These were the questions that had to be answered, and only the answers of ex- perts were acceptable to The Geiger- Jones Company. For this purpose the best legal talent was engaged and ex- pert accountants were employed to examine the books and accounts in de- tail. Every possible question which might arise was gone into exhaustively. When the investigation was com- pleted, and it appeared that the securi- ties of the company were a safe and conservative investment, protected by values from three to four times their amount, the result was submitted to The 18 NON-TAXABLE INCOMES Geiger- Jones Company's bankers and only after their approval would this house consent to offer the securities to its clients. A contract was then drawn up between The Geiger-Jones Company and the corporation by which the con- servative and protective policies then in force were to be maintained and any necessary requirements as to accumu- lating a reserve fund to insure the reg- ularity of dividends were made part of this contract. The story of this investigation is the story connected with every security handled by The Geiger-Jones Company, with the exception that each year seems to develop increased efficiency in the company's selective methods, through the natural evolution of experience and a conscientious desire to give clients the utmost protection at all times.* In addition to the care with which they are selected, there are other rea- sons why the securities sold by The Geiger-Jones Company may be looked upon as "conservative" investments. •See Page 72 19 NON-TAXABLE INCOMES I. In the nature of things these in- vestments can never be "speculative." By distributing them in small lots over as broad a market as possible and among people who are accustomed to buying for investment only, there is not a possible chance for them to get into the hands of manipulators. There- fore the market value remains firm with a gradually rising tendency. Every dollar of par value of these securities represents an original investment of one hundred cents. Then, too, the preliminary investiga- tion must show an earning capacity not only sufficient to pay dividends upon the stock in the most prosperous times, but large enough to set aside a surplus which will insure dividends during dull times, without impairing the value of the stock. In this connection it may be stated that no client of The Geiger- Jones Company has failed to receive his dividends regularly on stock bought from this house. II. Securities sold by The Geiger- Jones Company, with the guarantee of 20 NON-TAXABLE INCOMES careful inquiry back of them which goes with all securities handled by this house, are infinitely safer than stocks and bonds offered by an industrial com- pany directly to investors. The Geiger- Jones Company stakes its future suc- cess and reputation upon the care with which it looks after the interests of its clients, while the sale by an industrial company of its own securities directly to the investor is made with the one idea of securing funds for its needs. III. The Geiger-Jones Company for a number of years has been specializ- ing in the securities' of Ohio corpora- tions which, so far as the Ohio investor is concerned, are non-taxable. Just think what this means. Add to all the care in selection, which guarantees the conservative character of the stock, the additional value of non-taxability and you have a high grade investment,, with all speculative features eliminated, yielding a net tax-free income of 6J% to 7%. If you loan your money on mort- gage you have to pay out a large per- centage of your income for taxes and 21 NON-TAXABLE INCOMES this only leaves you about 4% net on your investment. Besides, you often have to wait for the interest until long after it is due. These non-taxable se- curities are absolutely safe and will net you almost twice as much income. Most banks are safe and reliable, but they only pay you 3% or 4%. In order to pay you this rate of interest the banks themselves must net 6% or 7% on their investments. If it's safe for a bank to make 7% it's just as safe for the de- positor to invest in the securities offered by The Q-eiger-Jones Company, con- sidering the extreme care with which they have been investigated. As a general rule bankers are most trustworthy advisers. In order to en- joy the confidence of the community which is so necessary to their success in business, they are called upon to exhibit sound judgment on many questions which are put up to them from day to day pertaining to the financial welfare of their customers. Naturally, however, a local banker is prejudiced against any investments 22 NON-TAXABLE INCOMES which will draw money out of his bank. He would have no scruples about ad- vising against the purchase of an out- side security, which he might truly say he knew nothing about, when he could recommend highly a mortgage investment which would simply mean a transfer of credits in his own institu- tion. In telling his customers that 4% or 5% interest was all he should expect, with proper regard for the safety of his capital, he might truly think that only such accumulations of capital as a bank is possessed of could be invested to bet- ter advantage. However, the contrary is true. The question will come up, "Why should a prosperous manufacturing concern be willing to sell its securities at a price which will net the investor 1% when, if it is the successful concern it is said to b§, it could readily borrow any money it needed from the banks at 5J% to 6% V The answer is that the better class of manufacturers prefer to pay a higher rate of interest on the capital if by so doing they gain permanency. 23 NON-TAXABLE INCOMES That is to say, by placing their stock over a wide territory in the hands of permanent investors they avoid the un- certainty of bank loans which might be called for payment at an inoppor- tune time.* Another thought arises in connection with The Geiger-Jones securities. Can an investor dispose of them readily at fair prices if occasion demands % When The Geiger-Jones Company sells to a client it presumes that it is but the be- ginning of a growing business with that individual extending over a period of, perhaps, many years. Manifestly then the interests of this customer become identical with those of The Geiger- Jones Company. It is the policy of this house to be just as zealous in helping one of its customers to dispose of his stocks and bonds to advantage as it is to make him a profitable sale. Experience proves that this is a wise policy in that it is another factor in promoting the lasting friendships which mean so much in a business of this character. The Geiger-Jones Company has always been •See Page 72 ^ 24 NON-TAXABLE INCOMES able promptly to re-market its securi- ties for clients who desired to sell and almost invariably at advanced prices.* In view of the fact that increasing familiarity with the methods of this house in selecting its investments is cal- culated to promote an ever-growing demand for these investments, it is rea- sonable to assume that the matter of re- selling its securities for clients who, for some reason, may have to part with them will be much more simple in the future than it has been in the past.* As has been said before, one cannot be too careful in finding out everything possible about an investment house from which he is contemplating pur- chasing securities that may be his sole means, or at least partial means, of sup- port for the rest of life. The Geiger- Jones Company wants no one to take anything for granted and courts the fullest possible investigation. Any of the people of Canton, where the com- pany has been actively engaged in busi- ness for many years, will tell you that its reputation is most reliable. In par- •See Page 72 25 NON-TAXABLE INCOMES ticular, reference is made to any bank in Canton, Ohio, to Bradstreet and R. G. Dun & Company, commercial agencies. The publisher of one of the oldest and most conservative farm journals in the United States, whose name will gladly be given on request, has made a care- ful investigation of the business and methods of The Geiger-Jones Company. He says: "We believe The Geiger-Jones Com- pany to be reliable in every way and that before they offer any stocks they take great pains with their thoroughly matured system to ascertain beyond a doubt that the conditions are in every way sound and as represented. They handle no new concerns, only well es- tablished manufacturing enterprises that are already successful and under management of experienced men of high business character. Prom all in- formation we can obtain, we can cor- dially recommend to careful investors the manufacturing securities that they offer." Corporations Kinds *jid Powers Corporations Kiads ana Powers CORPORATION is an arti- ficial person, created by law or under authority of law Jgttj from a group or succession liEL-i of persons and having a con- tinuous existence, irrespective of that of its members ; and having powers and liabilities, different from those of its members. A corporation can be created by or under legislative enactment, and by that alone. A Charter is the instrument, which creates the corporation. In England it was first granted by the King, but sub- sequently, by separate act of Parliament for each charter. GENERAL LAWS. In this country practically all State Constitutions now require the legisla- tures to pass general acts, whereby in all possible cases, persons may form a 29 CORPORATIONS corporation, simply by filing the pre- scribed document, without in any man- ner applying to the legislature. Such general acts or laws prescribe what the document, so filed, is to contain, and also specify the powers of the corpora- tion. HOW ORGANIZED IN OHIO. In the State of Ohio, corporations may be formed for any purpose, for which individuals may associate them- selves, except for carrying on profes- sional business. Any number of per- sons, not less than five, a majority of whom are citizens of this State, may be- come incorporators, by subscribing and acknowledging articles of incorpora- tion, which must contain : 1. The name of the corporation, which shall begin with the word "The", and end with the word "Company". 2. The place where it is located. 3. The purpose for which it is formed. CORPORATIONS 4. The amount of its capital stock, and the number of shares into which the stock is divided. The Articles shall then be filed with the Secretary of State, who records the same, and issues a certified copy there- of, which becomes the evidence of the existence of such corporation. Acceptance of a charter by the cor- poration arises from merely acting un- der it. The domicile, residence and citizen- ship of a corporation is in the State where it is incorporated. The Powers of the corporation are given by the charter and these powers are "Express or Implied". The Express Powers are those which are expressly specified in the charter, or, the statute under which the company was incorporated. The Implied Powers of a corporation, are those which naturally arise from the nature of the business. For instance, a corporation has implied power: 31 CORPORATIONS To buy, hold and sell necessary real-estate and other property in its corporate name. To sue and be sued in that name. To do business in its corporate name, without rendering its stock- holders liable as partners for its debts. To govern its officers, agents and business by by-laws. To issue transferable certificates of stock to its stock-holders. To have its business managed by directors, instead of by the stock- holders, as in a partnership. To continue business, although its stock-holders die, or sell their stock. To borrow money and give bills, notes and acceptances. To issue negotiable bonds and to assign for the benefit of the credit- ors. BY-LAWS. A Corporation by its By-Laws may provide for — 32 CORPORATIONS 1. The time, place and manner of calling and conducting its meet- ings. 2. The number of stock-holders or members constituting a quorum. 3. The time of the annual election for Directors or Trustees and the mode and manner of giving notices thereof. 4. The duties and compensation of officers. 5. The manner of election or ap- pointment and the terms of office for all officers, other than the Agents or Directors. Rights of Stock-Holders The rights of stock-holders are : 1. To meet at stock-holders' meet- ings. 2. To participate in the profits of the business. 3. To participate in the ultimate distribution of the assets of the corporation. 33 CORPORATIONS 4. To request that the corporate property and funds shall not be diverted from their original purpose. 5. To receive certificates, evidenc- ing their interest in the cor- poration. 6. To sell the same and have it transferred on the company's books. 7. To inspect the books and rec- ords of the company. stockholder's liability The personal credit and property of the holder of the fully paid stock of an Ohio corporation are not liable for the payment of the debts of the com- pany as would be the case in a partner- ship if the assets of the company proved insufficient. Stockholders of all na- tional banks, and of other corporations in some states, have a double stock liability. Shares of stock are personalty and not realty. This distinction is of ex- 34 CORPORATIONS treme importance in matters of taxation and in the administration of estates. For instance, the laws of Ohio give the Widow one-third of the personal prop- erty but only give her a life estate in one-third of the income from real- estate. KINDS OF CORPORATIONS Corporations are divided into Public, Quasi-Public and Private. Public Corporations are all govern- mental organizations; municipal, state or national. Quasi-Public Corporations control most public utilities and generally oper- ate under state or municipal franchises. Private Corporations, owned by pri- vate individuals and operated by private capital, include the vast ma- jority of industrial or manufacturing corporations. Quasi-public corporations include practically all public utility corpora- tions, such as railroad, traction line, street railway, electric light, water, gas, 35 CORPORATIONS heat, water-power, drainage and irriga- tion companies. In the case of such public-utility cor- porations the terms and conditions of the franchise are of vital importance. The powers may be broad and liberal and the operations may result in satis- factory earnings. The present govern- mental tendency to restrict franchises, however, has resulted in turning the in- vestor to the fruitful field of industrial corporations. Private corporations include indus- trial corporations, organized for the manufacture of commodities; financial corporations, such as banks, trust companies, insurance companies, and underwriters ; development corpora- tions, such as mining, oil, gas, and quarry companies; which, through in- telligent organization, systematize the production and marketing of their wares, thereby assuring the most effi- cient results for the investor. Their success or continued prosperity does not depend upon a shifting public senti- ment, as evidenced by the franchise 36 CORPORATIONS granting powers. On the contrary their basis is the manufacture or sale of a commodity, which is in constant de- mand by the public. In place of a franchise, the determining factors as working for ultimate success are, first, management; second, economy and adaptability of situation. Either of these factors may enlarge the margin of profits, and correspondingly increase the rate of the dividends. It is not at all unusual for industrial stocks to pay dividends which would average from 10 to 20% over a long period of years. And this return is not had at the expense of the security of the investment. It is self-evident that in any business where the capital stands for something tan- gible and real, as real-estate, buildings, machinery, raw material and finished product, the security of the investment is far more evident than where the chief value of the assets lies in a fran- chise or right, which is bound to be terminated at some time or other and is subject to the varying whims of politicians. 37 Corporate Securities Preferred and CommonStocfa Bonds CorpomteSecurlties Preferred and Common Stocks Bonds RIGINALLY stock of cor- porations was but one kind I now known as common stock. The bond was a later de- I velopment for investors who were willing to furnish capital but who did not care to assume any of the risks or responsibilities of operating the busi- ness. The common stock took all the risk and enjoyed all the profits except the small rate of interest paid to the bond-holders. Preferred stock was a later development for investors who were not satisfied with the small income from bonds but who did not desire to engage actively in the conduct of the business. The preferred stock may be termed a compromise between the com- mon stock and the bonds of a corpora- tion and has frequently superseded bonds altogether. 41 CORPORATE SECURITIES A Bond of a corporation is an instru- ment, executed under the seal of a cor- poration, acknowledging a loan, and agreeing to repay the same, upon terms set forth therein. It may be merely the personal contract of the company, or it may be a lien on specific property, created by a mortgage, which usually takes the form of a deed of trust to an individual or trust company, for the benefit and protection of the bond- holders. Upon default in the payment of interest or principal, it would be the duty of such trustee to foreclose the mortgage, for the benefit of the bond- holders. The owner of a bond is secured in preference to the stock-holders, but in return for this security, his rate of in- terest on the bonds, will average less than the rate of dividends payable to the stock-holders. Furthermore all Ohio bonds, unless exempt by special legislation, are taxable. The investor should inform himself as to the provisions made to assure pay- ment of the bonds at maturity. A sink- 42 CORPORATE SECURITIES ing fund is sometimes established for this purpose by setting aside a definite part of the yearly profits to accumulate with a view to payment of the bonds as they mature. In cases where the busi- ness is staple, where the productive assets are not diminished, but remain unimpaired, even after years of opera- tion, it is quite generally the rule to refund the debt represented by the ma- turing bonds. In event of liquidation the holders of the bonds are first entitled to the pay- ment of the same, out of the proceeds resulting from the sale of the assets cov- ered by the trust deed ; the general cred- itors of the corporation are next; then follow the payment of the principal and interest to the preferred stock-holders and the remaining assets are divided ratably among the common stock- holders. Preferred Stock is a portion of the stock of a corporation which has been given rights as to dividends and assets not enjoyed by the remaining stock. The amount of the preferred issues and 43 CORPORATE SECURITIES the rate of dividends thereon are usu- ally limited by statute. Preferred dividends, in case they should be omitted at any dividend paying period, usually accumulate so that all such unpaid divi- dends must be paid before any divi- dends can be paid on the common stock. The preferred stock is then known as cumulative preferred stock. In Ohio precedence is given to the preferred stock not only as to dividends and dis- tribution of assets in case of liquida- tion, but frequently other safeguards are thrown around it by special con- tract. The G-eiger-Jones Company always designate such special safe- guards and provide that they be made permanent by being incorporated into the company's charter by amendment.* It has been made clear that a dis- tribution of assets, first liquidates the rights of the bond-holders, but it is also evident that in cases where the assets have the proper proportion to the issue of bonds, preferred stock and common stock, the preferred stock is practically certain of liquidation and it stands first •See Page 72 44 COKPOKATE SECURITIES in the distribution of assets when the contract under which it is issued pro- vides that all bonds shall be retired. The careful investor would in such case have the more reason to invest his money in preferred stock, rather than in bonds, in order to obtain advantage of the higher return on his investment, without in any way sacrificing the se- curity of the same. Common Stock in many cases has re- sulted in being of more value to the in- vestor than bonds or preferred stock, due to the fact that the surplus profits remaining after the payment of the fixed interest charges on the bonds and the fixed dividend on the preferred stock is always divided among the hold- ers of the common stock. There are many instances where corporations pay 4% or 5% on the bonds, 6% or 7% on the preferred stock and 8% or more on the common stock. "Where only one stock has been issued, instead of the preferred stock and com- mon stock, the holders of the same are entitled to a ratable division of the 45 CORPORATE SECURITIES assets after the payment of the bond- holders and general creditors. Numerous industrial corporations now doing a profitable business, if they should go into liquidation would dis- tribute assets many times in excess of the original capital contributed by the stock-holders. A Gloss&ry of Co rpor^i e Fin, a.n. c i &.1 and B usiness Terms A Glossary of Financial Corporate &/i«* Business Terms ^Vv ACCOUNT — A record of money transactions be- tween two parties showing the debits and credits. ACCRUED DIVIDENDS — Dividends unpaid to date of purchase. When stocks are sold with "ac- crued dividend" the buyer reimburses the seller for the proportion of the next dividend which the seller has earned by holding the stock from last dividend- date to date of sale. This payment of dividend is in addition to the regular price per share of the stock. ACCRUED INTEREST— The interest owing on a bond or note to a given time. Accrued interest is always independent of the price of the bond or note, or of whether the same is bought at a discount or at a premium, and it must be paid in addition to the purchase price. ACTIVE SECURITIES— Those which are traded in and quoted on nearly every business day. AGENT — One to whom another, designated as principal, has delegated authority, verbal or written, to transact certain business. AMORTIZATION — A process whereby sums are set aside in stated amounts and at certain intervals for the reduction or extinction of a debt maturing at some future date. In a bond bought at a premium or a discount, it is necessary to consider amortiza- tion before the exact net yield can be determined. APPRAISAL — The placing of a current cash value upon the various items contained in inven- tories. ARBITRAGE — Buying securities in one market and selling them in another where the price is 49 A GLOSSARY higher. Any price-differences which may exist on a certain security between one city and another, or one country and another, may be taken advantage of by this method. ASSESSMENT — Payments called for by a cor- poration on stock which has been subscribed but not fully paid for. The term is also used to designate a call made, on behalf of creditors, over and above the par value. This last named assessment can be made only on order of the court and only in states provid- ing for double stock liability. ASSETS — Credits or property of a company; that is money owing to it and all property owned by it. ASSIGNMENT — The transfer or signing over to another of one's title or interest in or to a property right. AUDIT — An examination and verification of all the assets and transactions of a company. A peri- odical audit by men having no connection with the corporation whose affairs are being audited, made in the proper manner, furnishes valuable information to the investor for safe-guarding his interests. BANK CHECK — A written order upon a bank with which the maker is presumed to have a deposit, to pay a specific sum to payee or order, or to bearer. BANK DISCOUNT— A deduction from the value which a note will have at maturity as a payment for cashing or buying such note before it is due. BEAR — A stock exchange term for a dealer who endeavors to make the price of stock go lower. BILL — A memorandum of the price and terms of a sale of merchandise given by the seller to the buyer. BILL OF EXCHANGE— A written order from a debtor to a creditor drawn on a third party for pay- ment; usually from one country to another. BILL OF SALE — A written transfer by one, of his interest in chattels, to another. 50 A GLOSSARY BLANKET MORTGAGE BOND— A bond having for security several properties, on all or certain of which previous mortgages have been given. It may therefore be secondary as to security. BOND — (1) A form of negotiable instrument is- sued by corporations, or by a city, state or national government, requiring the payment of a specific sum on a specific date, and sometimes secured by mort- gages, reserve or sinking fund. (2) The written obligation of one to pay money to another either ab- solutely or upon expressed conditions. BUCKET SHOP — An office where nominal sales are made based on fluctuations of stocks, grain, etc. Actual sales are not made and the transactions are virtually bets. In most states declared illegal. BULL — A dealer who endeavors to make the price of stock go higher. A stock exchange term. BY-LAWS — The rules of action in accordance with which corporate affairs are conducted. By-laws can be made only by the stockholders at a meeting called for such purpose, unless this power is dele- gated to the directors. CALL — The declaration of the corporate authori- ties that the whole or a specified part of the sub- scription for stock is required to be paid. CALL MONEY — Money borrowed usually at a low rate of interest subject to payment upon demand or "call." CAPITAL — The fund with which a corporation transacts business. It embraces all the property whether real estate or personalty. It therefore in- cludes with the capital stock all profits or increment which have been added thereto. CAPITAL STOCK— The sum fixed by the cor- porate charter as the amount paid in, or to be paid in, by the stockholders for the prosecution of the business of a corporation. CERTIFICATES OF STOCK— The written ac- knowledgments by the corporation of the interest 61 A GLOSSARY of the shareholders in the corporate property, being merely evidence of the owner's rights. They are not negotiable but may be assigned. CHATTELS— All kinds of property, excepting a freehold estate. All movable and personal property. CHATTEL MORTGAGE— A written transfer of personal property to the mortgagee, subject to re- demption, under the terms therein expressed by the mortgagor. CLEARING — The process of delivering securities free from any claim or encumbrance. CLEARING HOUSE (Stock Exchange)— A sys- tem which expedites the delivery of securities bought and sold by members of a stock exchange. Items are "cleared" against each other, differences adjusted, and balances arrived at without the neces- sity for a great deal of detail work and duplication of effort which would occur in the absence of such a system. CODICIL — An addition to or an alteration of a will. COLLATERAL — Stocks, bonds or other securities deposited with the note of the borrower to be held for the purpose of guaranteeing the payment of the note. COLLATERAL TRUST BONDS— Bonds having for security stocks, or other bonds or mortgages, de- posited with a trustee, authorized to sell the same, in case of default in the payment of interest or prin- cipal, of the bonds. COMMON STOCK— Stock which entitles the own- er to an equal part pro-rata division of profits, if any there be, after the payment of dividends to the pre- ferred stockholders. CONSIDERATION — As applied to contracts, is the inducement for making them. Examples of suf- ficient consideration are: The payment of a sum of money or the transfer or delivery of property or anything of value or a promise to do some particular act. CONTRACT — An agreement between two or more 52 A GLOSSARY persons to do or not to do a certain thing, for suffi- cient consideration. CONVERTIBILITY— The salability of stocks or bonds on the market. CONVERTIBLE BONDS— Bonds issued by a cor- poration, which grant to the holder the option to convert the same into stock, but such option must be exercised within a reasonable time, if the option itself contains no limit. A CORNER — A control of the market on a cer- tain stock by those who compel the bears, who have sold short and cannot borrow the stock, to buy it to fulfill their contracts. CORPORATION— An association of individuals into a body politic, under the terms of a franchise established by law, and having such powers and rights as its charter expressly or incidentally gives it. COUPON BOND— One that has coupons attached, usually in the form of promissory notes, to pay an amount of money equal to the annual or semi-annual interest on bond. Similar coupons for interest are frequently attached to mortgage notes. CREDIT — Time allowed for payment of a pur- chase. CUMULATIVE PREFERRED STOCK— Stock on which the dividends, if not paid each year, accumu- late as a charge against the profits, so that the total of unpaid dividends for several years, must be paid, before the common stock can receive anything. CURB — An outside market where securities not recognized by the official stock exchange are dealt in. Transactions are therefore in unlisted securities and the market is not organized as is the Stock Ex- change. Mining and oil stocks are usually dealt in "on the curb." DEBENTURE BONDS — Bonds having for secu- rity the general credit of the corporation. They are not secured by mortgage, and therefore the holders rank only with the general creditors of the company. DEBIT — A charge made for a purchase on time. DEED — A written unconditional assignment or 53 A GLOSSARY transfer of a specific or definite interest in real es- tate, between living persons. The party making the transfer is called the grantor. The party to whom the transfer is made is called the grantee. DEFERRED STOCKS OR BONDS— Those upon which the payment of dividends or interest is ex- pressly postponed until some certain obligation or liability of the corporation is satisfied. DEFICIT— The amount that the liabilities includ- ing the capital stock exceed the net assets; the ex- cess of expenditures over income. The opposites of surplus and profit. DENOMINATION — The face or par value of a bond; i. e., $100, $500 or $1000. DEPRECIATION— The reduction in value of property, machinery, tools, inventories, etc., on ac- count of loss, wear and tear, obsolete styles, etc. DISCOUNT— The amount less than par for which stocks or bonds are purchased; for instance, a $1000 bond is bought for $900. In this instance the return on the investment is larger than the rate specified in the bond. DISSOLUTION— The process of converting the assets into money, and the distribution of the net assets, after payment of all debts, among the several stockholders. This process may be wholly voluntary, by assignment, for the benefit of the creditors, or by bankruptcy proceedings. The final step is the sur- render of the charter and the termination of the corporation. DIVIDEND — A payment out of the profits by the corporations to its share holders. DOWER — The right to possession and use for life by the surviving wife or husband in the lands owned by the deceased husband or wife at his or her death. DRAFT — A written order from one person or firm, on another person or firm, for the payment of a certain sum of money on a debt or contract. 54 A GL0S8AET DRIVE — A sudden aggressive movement on the market designed to force prices lower. DUE BILL — A paper signed by one person ac- knowledging indebtedness to another named therein. It does not contain a promise to pay the sum in question and is not negotiable. DURESS — Compulsion or constraint by which one person is illegally forced to do or is prevented from doing some act. EMBLEMENT — The removal or sale of a crop by the one who sowed same, after his vacation of the land. EMINENT DOMAIN— Authority given by gov- ernments or states to cities, counties, and public service companies to appropriate private lands for necessary public uses in return for a reasonable compensation. ENDORSEMENT — The writing of one's name on the back of a note, draft, check, etc., by the payee thereof, transferring the ownership to another. The endorser becomes liable to pay the instrument when due if the maker fails to do so, or if it is protested, unless he writes' above his name "without recourse." If an endorsement be made hy one, other than the payee or the holder, he also becomes liable as above. EQUIPMENT BONDS— Those having for security a mortgage on personal property, such as machin- ery; usually on railroad equipment. EXCISE — An inland duty imposed upon the manu- facture or sale of a commodity within the country, such as the Internal Revenue tax upon liquors, to- bacco, etc. EX-DIVIDEND — Without the current dividend. A stock quoted "ex-div." is offered with the under- standing that the dividend declared but unpaid shall belong to the seller. EXEMPTION — Certain property, whether real or personal, which is protected by law or exempted from levy and sale under execution for debts of the owner. 55 A GLOSSARY FACTOR — A commission merchant to whom goods are entrusted by the owner for sale on commission. FEE — A valuable compensation paid for service. FEE SIMPLE — An absolute estate in perpetuity, being the largest possible estate one can have in lands. FISCAL AGENT — An agent who provides the ways and means and formulates the policies of finan- cing a corporation. FIXED CHARGES— The determined annual ob- ligations of the corporation such as interest on bonds and loans, dividends on stock, taxes and insurance. FORCED LIQUIDATION— A selling of securities made necessary by pressing and immediate demand for their value in cash. FULL STOCK— Shares of $100 par value. Shares of $50 are termed "half -stock" ; $25 "quarter-stock," FULLY PAID STOCK— Stock paid for at par in cash, or in property, or in services to the full equiva- lent of the par value; but this latter form of pay- ment must be expressly permitted. GENERAL MORTGAGE BONDS— One having for security a mortgage on all the properties of the corporation. GOLD BOND — One providing for the payment of interest as due, and principal at maturity, in gold coin. GRANTEE — One to whom a grant is made by an- other. GRANTOR — One who grants to another. GROSS EARNINGS— The total earnings of a company, before the deduction of expenses. GUARANTEED STOCK— Stock issued by a cor- poration which guarantees payment of principal or dividends, or both, by another company — for which the guaranteeing corporation has assumed a legal responsibility. The most usual form of guaranteed stock is that of a large railway company guaran- teeing the securities of its leased lines. 56 A GLOSSARY GUARANTY — An agreement by one to answer for the debt, miscarriage or default of another. GUARDIAN — One having the care of the person or property, or both, of an infant or person of un- sound mind. The father or mother is termed the natural guardian, or guardian by nature of minor children. HOLDING COMPANIES— Companies formed for the purpose of holding or owning shares of another company; an arrangement whereby financiers may indirectly control operating companies through the ownership of their capital stock. This in effect con- solidates a number, of companies. HYPOTHECATE— To place on deposit collateral as security for a loan. INACTIVE SECURITIES— Those which are in- frequently on the market and do not appear in the daily quotations. INCOME — The interest on the investment; the amount received for the use of the capital, without impairment of the principal. INCOME BOND— A bond on which the interest is paid only when and if earned. Therefore a bond which is practically unsecured. INCORPORATORS — The individuals upon whose application a corporation is created. They organ- ize the corporation, and thereupon their function ceases. INDORSEMENT— See "Endorsement." INDUSTRIAL SECURITIES — Securities issued by manufacturing companies, such as preferred stocks, common stocks or bonds. INFANT — One still under the term of years pre- scribed by the law as the age of majority or adult age; a minor. INSOLVENCY — The condition of one who is un- able to pay his debts as they mature, or in the ordi- nary course of business. 57 A GLOSSARY INTEREST— A charge for the use of money. Rates of interest and penalties for illegal charges are generally prescribed by state laws. INTERSTATE COMMERCE— Commerce between persons or companies in one state with persons or companies in another; a term usually used in con- nection with railroad traffic. INVENTORIES— Itemized statements of the as- sets of the corporation. Naturally in industrial cor- porations they are of very great detail, involving tabulated statements of machinery, raw material, fin- ished product, promissory notes, mortgages, real es- tate and other investments. INVESTMENT BANKER— A dealer in invest- ment securities who buys for his own account in large amounts and then resells or retails to his cus- tomers in smaller amounts. LAND-GRANT BOND— A bond secured by land owned by the borrowing company — usually a rail- road. At maturity it is redeemed by proceeds of the sale of the land. LEASE — A conveyance of land to another for a definite period for a consideration. LIABILITY — A legal obligation; a responsibility. Liability arises from or under a contract, either ex- pressed or implied, or may accrue through a tort or wrongful act. LIABILITIES — The obligations of a company, such as bills payable, accounts payable, mortgages or bonds. LIBEL — Libel is a malicious defamation of an- other by writing, printing, picture or effigy, which tends to injure or disgrace him. LIEN — A claim by one on the property of another by which such one can hold said property as security. LISTED SECURITIES— Securities listed on a recognized stock exchange, and therefore having, to a certain degree, the approval of that exchange. LIQUIDATION— The process of winding up the business of a corporation; settling its accounts and distributing its assets; usually through a receiver or trustee. 58 A GLOSSARY LONG PURCHASE— A purchase of stock in the expectation that it will rise in value. MANIPULATION— Dealings in a security to put it to an artificial price. "Matched orders" and wash sales" are the commoner methods whereby an appearance of activity is given, and the price-level altered — generally to a higher one. MARGIN — Transactions "on margin" are those in which the customer buys or sells through his broker by depositing a "margin" — usually about 10% — of the money involved. The broker carries the securi- ties for him, being protected from sudden breaks in price by the cash margin deposited. In a pure mar- ginal transaction, no transfer of the securities is made on the books of the'company; or, if transferred, it is transferred "in blank," or to the broker — not to his customer. It therefore becomes collateral for a loan. If the market varies so much that the amount of cash put up by the customer is wiped out either by a rise or fall in price, he must put up more "margin" or lose the amount originally advanced. Marginal trading is therefore opposed to the buy- ing and selling of securities outright, and is the de- vice which makes large operations in stock-gambling possible. MATURITY — The date at which a note or a bond is to be paid, in accordance with the terms stated therein. MINOR — One under age of majority or legal age; an infant. MORTGAGE — Any conveyance of property as se- curity for the payment of a debt. MORTGAGE BOND — A bond secured by a mort- gage on certain property or properties specifically named in the bond. A Second Mortgage Bond or Third Mortgage Bond would indicate prior liens upon the property — in, of course, the First Mortgage Bond. MUNICIPAL — Relating to municipalities or cities. 59 A GLOSSARY NEGOTIABILITY— That quality of a security by which it can be transferred from one person to an- other either by directly passing from hand to hand, as money or checks made payable to "bearer," or by endorsement as in case of note, check, or draft, pay- able to the order of a specified payee. NON-ASSESSABLE — Not subject to assessments of any sort which are legally enforceable. NOTE — A promise made in writing by one per- son to pay at a certain time and place a sum of money to a designated person, or his order. ODD LOT — A purchase of listed stocks or bonds in a quantity smaller than the 100 shares of stock or $10,000 (par value) of bonds, which is the usual stock exchange unit. OPERATING COMPANY — A company operating its own business, but controlled or owned outright by another company which indirectly manages it. OPERATING EXPENSE— The total cost or ex- pense of operating or maintenance of a plant ex- clusive of the so-called fixed charges. OPTION — The privilege, bought from another person, of buying and selling stated securities or property within a given time at prices fixed in the agreement. A "put" gives the holder a right to sell stock as above; a "call" gives a similar right to buy. OVERISSUE — Any quantity of stocks or bonds issued by a corporation which is in excess of the amount it is legally entitled to put out. OVER ISSUED or SPURIOUS STOCK— Stock issued in excess of the full amount of capital stock authorized by the charter of the corporation. Such stock is void, even though issued in good faith. PAR — The face value, as distinguished from the market value, of a security. The usual "par value" of shares is $100, though other amounts are by no means uncommon. PARTITION — A division of a common property among those having joint interest therein. 60 A GLOSSARY PARTNERSHIP — An association of two or more persons, under a contract to conduct a business for tne benefit of all; all profits or losses to be shared. A partnership exists until dissolved by mutual on- sent, or by the death of one of the partners, or by a i " nitatl °n in the contract, r F.j.y^ENT — The act of discharging a previous . PERJURY — A false statement concerning a mate- rial matter made in pursuance of some law by one n ?i e u °l th or affirmation to tell the truth, punish- m r or im P risonni ent or both. POOL — Any number of individuals who form a group to buy and sell a particular security or group of securities. Operating as a unit the pool has a great influence upon stock-market prices. POWER OF ATTORNEY— A written instrument by one to another granting to the latter the power of agency therein set forth. No particular form is essential. A power of attorney need not be wit- nessed, or acknowledged, unless the power granted is to do an act, which would require acknowledg- ment and witnesses on the part of the grantor, such as to execute a deed or mortgage. But it is pref- erable in any case to have it witnessed and acknowl- edged. PREFERRED STOCK— Stock which entitles its owner to dividends out of the net profits, before or in preference to the holders of the common stock, and in general means a preference in the distribution of the net assets on the dissolution of the company. PREMIUM — The amount above par for which stocks or bonds are purchased; for instance, the purchase of a $1000.00 bond for $1250.00. The pay- ment of a premium results in a smaller return than the percentage stipulated in the bond. PRINCIPAL — The face value of a security, not tak- ing into consideration interest, premium, or dividend. PROFIT — The excess of the receipts over the dis- bursements; the net earnings. PROMISSORY NOTE— See "Note." 61 A GLOSSARY PROOF OF CLAIM— A written sworn statement of one's property right or claim, in or to specific personal property or rights of action, therein set forth. PROXY — A formal written authorization of a stockholder to another person which delegates voting rights on such stock as he holds to that person. QUICK ASSETS — Such as may be realized upon without delay, or such assets as have a ready mar- ket. QUIT CLAIM DEED— A deed or release by which some claim, share or title in an estate is conveyed to another. REAL ESTATE BOND— One having for security a mortgage on specific real estate. RECEIPT — A written acknowledgment of the pay- ment of money, or of the receipt of something of value. REFUNDING BONDS— Those created to pay and cancel a maturing issue of the bonds. Sometimes they supply additional capital at the same time. REGISTERED BOND — One whose negotiability by delivery is temporarily withdrawn by a writing on the bond that it belongs to a certain person, and by a registry to that effect, at an office specified by the company. REPLEVIN — An action for the recovery of cer- tain chattel property, which may include damages for the wrongful detention. RIGHTS — The privilege given by a corporation to its stockholders or bondholders of record to subscribe to a new issue of securities at prices lower than current market prices or the company's old stock or old bonds of tEe same denomination and value. Rights are bought and sold very much as stocks and bonds are. SALE — A transfer of property rights from one to another for a consideration in money or other prop- erty. SCRIP DIVIDEND — A dividend not in cash or in stock but in scrip, which resembles a memorandum A GLOSSARY of credit or a due bill. It has no voting power, but often is convertible into stock at some specified date. SECURITIES — Forms of investments, such as are represented by stocks, mortgages, bonds, etc. SHARES OF STOCK— A right which the owner has in the management, profits, and ultimate assets of a corporation. SHORT SALE— A sale of stock which the dealer does not possess, but which he expects to purchase later on, at a lower figure, thus fulfilling his contract and making a profit by the decline. A Board of Trade term. SINKING FUND— A definite part of annual profits set aside for the payment of bonds, or for the redemption of a certain stock issue, or other obliga- tions, at a future period. SOLVENCY — Having sufficient assets to pay all just debts. SPECIE — Usually gold or silver money, or coin, as distinct from paper money. STATEMENT— The items of an account given in detail. A statement, in common practice rendered at the end of each month, shows the debit or credit balance. STOCK BROKER— One who buys and sells stocks as an agent for another, who is called the customer of the stock broker. STOCK DIVIDENDS— Stock paid to share holders as dividends, when an amount of money or prop- erty equivalent in value to the full par value of the stock so issued has been accumulated and added to the capital of the corporation. STOCK EXCHANGE— A place of business where those who make up the membership of the exchange, buy and sell stocks and bonds. STOCKHOLDERS — Those who contribute the capital. They elect directors, start and continue the business, and keep in operation the powers of the corporation. 63 A GLOSSARY SUBJECT TO SALE— Securities are generally offered subject to sale, and a customer ordering after the quoted items have been sold cannot enforce de- livery of duplicate lots at quoted prices. SURETY — One who becomes responsible for the performance by another of some act in favor of a third person or pledges some security therefor; or bondsman. SURPLUS — The assets of a corporation in excess of the debts and its capital stock issued. SYNDICATE — A group of persons, usually finan- ciers, who combine to carry out some business, or financial enterprise. TENANT — One who occupies the lands or tene- ment of another under a lease. TENDER— To offer money in payment or satis- faction of a demand or obligation due, in order to save a penalty or forfeiture. TITLE— The evident proof of the right to prop- erty of all kinds, or of ownership thereof. TRADE DISCOUNT— A deduction allowed from a listed price, or from the face of a bill, to those engaged m similar lines of business. Usually a fixed price is the base of value of a certain commodity and when a change in price is necessary the discount is changed, leaving the base price unchanged. •TRANSFER BOOKS— Books in which a record of stockholders is kept and on which stock is trans- ferred from one name to another as it is bought and sold. When a dividend is paid the books are "closed" so that a correct list of the stockholders at that particular time may be made. No transfer of stock can be effected on a company's books until they are again "opened." TREASURY STOCK— That part of the author- ized capital stock, which has not been sold, but is retained by the treasurer of the company to be sold from time to time on the order of the directors as the necessities of the corporation warrant. 64 A GLOSSARY TRESPASS — Any forcible interference with the property rights of another. TRUST — (1) An obligation resting upon one, called a trustee, to apply certain property in a par- ticular manner for the benefit of himself or others, or both. (2) A combination of concerns in similar or allied industries, or branches of an industry. Trusts are formed to increase production, lower over- head and factory costs, avoid duplication of proc- esses, eliminate waste, and control prices, so far as they may. They are so called because the earlier combinations were formed by turning over the shares of properties represented to a governing company "in trust." UNDERLYING BONDS— A term used to express the precedence in security of one issue of bonds over another issue. UNDERWRITER — One who guarantees the sale of an issue of securities and who under certain conditions purchases the issue; usually a company or a syndicate. UNLISTED SECURITIES— Those which are not listed on any stock exchange. They are generally inactive. VENUE — The place where an act was done or something occurred, or is to occur. The venue of a case is the county in which is located the court wherein it is pending. VOTING TRUST— A body in whose hands is placed the voting power, for a certain definite time, of stock owned by stockholders. The voting trust has no interest in or control over the stock, further than voting power. VOUCHER — A receipt or written evidence of money expended, with the explanation of the pur- pose for which it was spent. WAIVER — A relinquishment of an acknowledged right. A waiver requires a valuable consideration. WARRANTY — A representation upon the part of the vendor, at the time of sale, made as an induce- ment to such sale ; or a guarantee on the part of the 65 A GLOSSARY seller as to certain representations contained in the instrument of sale. WATERED STOCK— Stock which is issued as fully paid up, when in fact the whole amount of the par value thereof has not been paid in. WILL, LAST WILL AND TESTAMENT— A legal declaration of a man's desires, as to the dis- position of his property after his death. The one making the will is called the testator. The one to whom the will gives the property is called^the bene- ficiary. A will should be reduced to writing either by the testator or by someone else in his presence, or with his assent thereto and should be signed by two witnesses. WORKING CAPITAL— That portion of the prop- erty of a corporation which is used in the active operation of production or distribution. 66 INDEX (Figures in Italics indicate that the term is denned on that page of the "Glossary".) Account, 49 Bond, Equipment, 55 Accrued Dividends, 49 Genl. Mortgage, 56 Accrued Interest, 49 Gold, 56 Active Securities, 49 Income, 57 Agent, 49 Land Grant, 58 Fiscal, 56 Mortgage, 59 Amortization, 49 Real Estate, 62 Appraisal, 49 Refunding, 62 Arbitrage, 49 Registered, 62 Articles, See Corporation Underlying, 65 Assessment, 50 Bradstreet, 25 Assets, 50 Broker, Stock, 63 . . Quick, 62 Bucher & Gibbs Plow Co., See Also Liquidation 14 Assignment, 50 Bucket Shop, 51 Attorney, Power of, 61 "Bull," 51 Audit, 50 By-Laws, 51 Bank Discount, 50 Call, 51 Bank Check, 50 Call Money, 51 Banker, Investment, 58 Canton, Ohio, 14, 15, 16, Banking Facilities, 14, 15 25 "Bear," 50 Capital, 51 Berger Mfg. Co., 14 "Foreign," 14, 15, Bill, 50 16 of Exchange, 50 Working, 66 of Sale, 50 Capital Stock, 51 Blanket Mortgage Bond, Certificate of Stock, 51 51 Charges, Fixed, 56 Bond, 9, 41, 42, 43, 44, 45, Charter, See Corporatwn 51 Chattel, 52 Listed, 9 Chattel Mortgage, 52 Blanket Mortgage, Check, 50 5 1 Claim, Proof of, 62 Collateral Trust, 52 Clearing, 52 Convertible, 53 Clearing House, 52 . . Coupon, 53 Codicil, 52 ...Debenture, 53 Collateral, 52 ...... Deferred, 54 Collateral Tr. Bond, 52 67 INDEX Conservative Investments, Discount, Bank, 50 9, 10, 11, 12, 13, 18, 19, Trade, 64 21 Dissolution, 54 Consideration, 52 See Also Liquidation Contract, 52 Distribution of Securities, Convertible Bond, 5S 19, 23 Convertibility, 53 Dividends, 19, 20, 42, 43, Corner, 53 54, 63 Corporations, 29, SI, 53 Accrued, 49 Articles of Incor- Scrip, 62 poration, 29, 30, 31 Stock, 63 By-Laws, 32, 51 Dower, 54 Charter, 29, 31 Draft, 54 Earning, Power, 20, Drive, 55 37 Dueber Watch, 15 Holding Company, Due Bill, 55 57 Dun, R. G. & Co., 26 Incorporators, 57 Duress, 55 Organization, 29, _ . „ , „ gg 3i Earning Power of Corpo- ' Powpr* Endorsement, 55 Coupon Bond, 53 Equipment Bond 55 Credit, 53 Exchange Bill of, 50 CU S?o U ck tiV / S P r 6 f C r r 6 d ix-Di e vide 5 nd, 55 Curb, S3 * Exemption, 55 ■^ , ^ Factor, 56 Debenture Bond, 53 p ee gg Debit, 53 Fee ' simple, 56 Deed, 53 Fisca ] Agent, 56 ...... Quitclaim, 62 Fixed charges, 56 Deferred Bond, 54 Forced Liquidation, 56 •••• •• St ° ck > 5 * Full Stock, 56 Deficit, 54 Denomination, 54 General Mortgage Bond, Depreciation, 54 56 Discount, 54 Gold Bond, 56 68 INDEX Grantee, 56 Lien, 58 Grantor, 56 Liquidation, 43, 44, 45, 58 Gross Earnings, 56 Forced, 56 Guaranty, 57 Listed Securities, 58 Guardian, 57 "Long" Purchase, 59 Half-Stock, 56 Manipulation, 59 Holding Company, 57 Margin, 59 Hypothecate, 57 Market Value of Securi- T „ j ties, 9, 10, 11, 20 Income Bond, 57 Maturity, 59 Income from Investments, Minor 59 4, 5, 9, 11, 12, 21, 23, Morgan, J. P. & Co., 10, 45, 57 15 Incorporators, 57 Mortgage, 9, 21, 23, 42, Industrial Securities, 17, 59 36, 37, 57 Chattel, 52 Infant, 57 Mortgage Bond, 59 Insolvency, 57 Municipal, 59 Interest, 58 Accrued, U9 Negotiability, 60 Interstate Commerce, 58 Non-Assessable, 60 Inventory, 58 Note, 60 Investigation of Securi- odd Lo t, 60 ol S o b / Buyer ' 3 ' 5 ' 10 ' Operating Company, 60 ' , „ . , Expense, 60 by Geiger- Jones Option, 60 Co., 17, 18, 19, 20, 25, Overissue, 60 , 26 , Overissued Stock, 60 Investment Banker, 58 Investments, Conserva- „ ar '.?? tive, 9, 10, 11, 12, 13, lotion, CO 18 19, 21 Partnership, 61 Investment Securities, 5 Payment, 61 Perjury, 61 Land-Grant Bond, 58 Pool, 61 Lease, 58 Power of Attorney, 61 Liability, 58 Preferred Stock, 61 of Stockholders, 34, Premium, 61 85 Principal, 61 Liabilities, 58 Private Corporation, 35, Libel, 58 36 69 INDEX Profit, 37, bl, 45, 61 Promissory Note, 61 Proof of Claim, 62 Proxy, 62 Public Corporation, 35,! Purchase, "Long," 59 Quarter-Stock, 56 Securities, by Geiger-Jones Co., 17, 18, 19, 20, 25, 26 Listed, 58 Market Values, 9, 10, 11, 12, 20 Negotiability, 60 .Railroad, 9 Quasi-Public Corporation, Remarketing, 24, 35, 36, 37 Quick Assets, 62 Quit Claim Deed, 62 25 Sold Direct to In- vestors, 20, 21 Taxation of, 6, 12, 21, 42 Unlisted, 65 See also Investments Share, 68 "Short" Sale, 63 Sinking Fund, 42, 63 Solvency, 63 Specie, 63 Statement, 63 Stock Broker, 63 Railroad Securities, 9 Real Estate Bond, 62 Receipt, 62 Refunding Bond, 62 Registered Bond, 62 Remarketing Securities, 24, 25 Replevin, 62 Reserve Fund, 19 Rights, 62 Rights of Stockholders, Stock Exchange, 63 33, 34 Stocks, 41, 45 Capital, 51 Safety of Investments, 3, Certificate of, 51 4, 5, 20, 21, 22, 37, 44 Common, 41, 43, 44, Sale 62 45, 52 Bill of , 50 Cumulative Pre- "Short," 63 ferred, 43, 44, 53 Scrip Dividend, 62 Deferred, 5U Securities, 63 Dividends, 63 Active, U9 Full, 56 Distribution of, 19 Fully Paid, 56 23 Guaranteed, 56 Inactive, 57 Half, 56 Industrial, 17, 36 Listed, 9 37, 57 Over-Issued, 60 Investigation of , by Preferred, 41, 43, Buyer, 3, 5, 10, 22, 23 44, 45, 61 70 INDEX Stocks, Quarter, 56 Treasury Stock, 64 Share of, 63 Trespass, 65 Spurious, 60 Trust, 65 Treasury, 6k Voting, 65 Watered, 66 TT , , . „ , „ r Stockholders, 63 Underlying Bond, 65 Rights, 33, 34 Underwriter, 65 Liability, 34, 35 Urn? 11 , Pacific, 11 Subject to Sale, 64 Vn * ed States Steel > 10 - iSrplu's, 6 45, 64 Unlisted Securities, 65 Syndicate, 64 Venue, 65 m t, , t, Voting Trust, 65 Taxation, Personal Prop- Voucher 65 erty, 12 Taxation of Securities, 6, Waiver, 65 12, 21, 42 Warranty, 65 Tenant, 64 Watered Stock, 66 Tender, 64 Wealth, Basic, 16 Title, 64 Will, 66 Trade Discount, 64 Working Capital, 66 Transfer Books, 64 Yield — See Income 71 SPECIAL CIRCULARS FOE FREE DISTRIBUTION THE foregoing pages cover in a general way the business of The Geiger-Jones Company. For those who desire to go into the company's methods in greater de- tail, we have prepared a series of circulars, each of which discusses the particular subject comprehen- sively. We give a list of these cir- culars below and will be pleased to send any or all of them to those who are interested, on request. Why Ohio Stocks Are Non-Taxable The Selection of Investments Why Do Corporations Pay Seven Per Cent Instead of Five or Six Remarketing Stock for Clients The Evolution of Preferred Stocks Otb|«? circulars are being pre- pared*nd v?e hope soon to be able to send on request a complete dis- cussion of any particular phase of our business that may be of special interest to a client. The Geiger- Jones Company