^70 The War Book State of Vermont State Board of Education Pass J3 S'U) Rnnk ,V'^ The War Book Clyde M. Hill Supervisor of Junior High Schools and John M. Avery Legislative Reference Librarian State of Vermont n State Board of Education 1918 p< The publication of this Bulletin is authorized by the State Board of Control D« of D. APR 22 1918 MONTPELIER CAPITAL CITY PRESS 1919 s\' r INTRODUCTION. ^^^^^ANY of our homes must furnish their young men ^ "It yr ^ for the army and navy. This involves a large ^ JVj_ ^ sacrifice and we may depend upon such homes ^ ^ to do all that they can to assist their boys in OJ^^^EQ accomplishing a victory. Everyone, however, must be led to be equally willing to sacrifice for the country's welfare. This can only come about when our boys and girls and their parents come to understand and appreciate the fact that this war is not the concern of any class or group. When we are called upon to endure inconveniences in order that we may save food or fuel it is not for the purpose of helping a food or fuel administrator whoma}^ be located in Washington or in our state capital. It is, first of all, to assure that Vermont boys and others who have been called to the colors shall have proper food and sufficient equipment, and then to assist in preventing the starvation of those people who are fighting with us in this great cause. It is therefore necessary for everyone to know how our armies are raised and cared for. We should also understand why we must produce and conserve every possible bit of food and fuel. This book has been written for the sole purpose of furnishing this information to Vermont boys and girls. The State Board of Education wishes to express its obhgations to Mr. Charles F. Lowe for the careful reading of manuscript and for valuable suggestions in reference to the sections dealing with savings banks; to Mr. Fred A. Howland for the reading of the manuscript and for important suggestions relative to the sections dealing with investments; to Mr. Frank C. Williams, Bank Commissioner, for valuable suggestions in reference to investments and banking; to Captain Stephen S. Cushing of the Adjutant General's ofiice and to Mr. Charles Mitchell of the Naval Recruiting Station at Montpelier for suggestions relating to the army and navy; to the State Fuel Administration for suggestions relating to the fuel situation; to Miss Bessie Bacon Goodrich and Miss Mary 4 INTRODUCTION Maud Patrick for help in connection with the sections dealing with teaching methods. Free use has been made of the publica- tions of the National Security League, the American Bankers' Association, and the United States Committee on PubHc In- formation. M. B. HILLEGAS, Commissioner of Education^ Montpelier, Vermont, January 28, 1918. WHY AMERICA FIGHTS. The outbreak of the European War in August, 1914, came as a complete surprise to the American people. It had always been our pohcy to refrain from participation in the August, aifairs of Europe, and the rumblings of the war 1^^^- clouds that had been hovering over Europe for the years im- mediately preceding had not reached our shores. The presi- dent immediately issued a neutrality proclamation calling upon all Americans to refrain from partisanship. ''Every man who really loves America will act and speak in the true spirit of neutrality," he said, 'Svhich 's the American spirit of impartiality and fairness and friendliness Neutrality to all concerned .... .It will be easy to excite pas- sion and difficult to allay it." Notwithstanding America's firm pursuit of a course of strict neutrality, the German Imperial Government, through its in- sidious spy system, spread a network of intrigue and conspiracy throughout the United States which culminated in countless explosions in factories and destruction of bridges and industrial plants. Disregarding the rights of American citizens traveling on the ocean, German submarines attacked and sunk ships on which there were passengers. On May 7, 1915 the r^^^ Lusitania was torpedoed without warning and 114 Lusitania American lives were lost. In response to urgent and earnest attempts on the part of our government to secure reparation and promises for the discontinuance of such illegal submarine warfare, vague and indefinite assurances were made by Germany, only to be altogether broken and finally disregarded, when the German ambassador in this country handed to Secretary of State Lansing on January 31, 1917 a note announcing an un- restricted policy of destruction of merchant ships within the war zone. Almost immediately there resulted the breaking of diplo- matic relations with Germany, the exposure of the Breaking off rapidly developing machinations of the German Diplomatic spy system in this country and Mexico serving but to increase the growing tensity of the situation. 6 WHY AMERICA FIGHTS On the second dsij of April, 1917, President Wilson read to Congress in ^^^ Congress, assembled in an extraordinary session, Special pursuant to executive proclamation, his message, ession. from which the following extracts are quoted: ^'Gentlemen of the Congress: "I have called the Congress into extraordinary session be- The Presi- cause there are serious, very serious, choices of dent's Mes- policy to be made, and made immediately, which ®^^^* it is neither right nor constitutionally permissible that I should assume the responsibility of making. ''On the 3rd of February last I officially laid before you the extraordinary announcement of the Imperial German Govern- ment, that on and after the 1st day of February it was its pur- pose to put aside all restraints of law or of humanity and use its submarines to sink every vessel that sought to approach either the ports of Great Britain and Ireland or the western coasts of Europe or any of the ports controlled by the enemies of Germany within the Mediterranean. That had seemed to be the object The Sub- of the German submarine warfare earlier in the war, marine^ but since April of last year the Imperial Govern- Gampaign. jj^ent had somewhat restrained the commanders of its undersea craft, in conformity with its promise, then given to us, that passenger boats should not be sunk, and that due warn- ing would be given to all other vessels which its submarines might seek to destroy, when no resistance was offered or escape attempted, and care taken that their crews were given at least fair chance to save their lives in their open boats. The precau- tions taken were meager and haphazard enough, as was proved in distressing instance after instance in the progress of the cruel and unmanly business, but a certain degree of restraint w^as ob- served. ''The new policy has swept every restriction aside. Ves- sels of every kind, whatever their flag, their character, their cargo, their destination, their errand, have been ruthlessly sent to the bottom without warning and without thought of help or mercy for those on board, the vessels of friendly neutrals along with those of belligerents. Even hospital ships and ships carry- ing relief to the sorely bereaved and stricken people of Belgium, though the latter were provided with safe conduct through the prescribed areas by the German Government itself and were distinguished by unmistakable marks of identity, have been sunk with the same reckless lack of compassion or of principle. WHY AMERICA FIGHTS 7 ''I was for a little while unable to believe that such things would in fact be done by any Government that had hitherto sub- scribed to the humane practices of civilized nations. Interna- tional law had its origin in the attempt to set up Interna- some law which w^ould be respected and observed tional Law upon the seas, where no nation had right of dominion Shattered. and where lay the free highways of the world. By painful stage after stage has that law been built up with meager enough results, indeed, after all was accomplished that could be accomphshed, but always with a clear view, at least, of what the heart and conscience of mankind demanded. ''This minimum of right the German Government has swept aside under the plea of retaliation and necessity and be- cause it had no weapons which it could use at sea ^ Warfare except these, which it is impossible to employ, as Against it^ is employing them, without throwing to the Mankind. wind all scruples of humanity or of respect for the understand- ings that were supposed to underlie the intercourse of the world. "I am not now thinking of the loss of property involved, im- mense and serious as that is, but only of the wanton and wholesale destruction of the lives of noncombatants, men, women, and chil- dren, engaged in pursuits which have always, even in the darkest periods of modern history, been deemed innocent and legitimate. Property can be paid for; the lives of peaceful and innocent people can not be. The present German submarine warfare against commerce is a warfare against mankind ''The challenge is to all mankind. Each nation must decide for itself how it will meet it. The choice we make for ourselves must be made with a moderation of counsel and a temperateness of judgment befitting our character and our motives as a Nation. We must put excited feelings away. Our motive will not be revenge or the victorious assertion of the physical might of the Nation, but only the vindication of right, of human right, of which we are only a single champion .... "With a profound sense of the solemn and even tragical character of the step I am taking and of the grave responsibilities which it involves, but in unhesitating obedience to what I deem my constitutional duty, I advise that the Congress declare the recent course of the Imperial German Government ^ to be in fact nothing less than war against the Has^ade Government and people of the United States; that War upon it formally accept the status of belligerent which the United has thus iDcen thrust upon it; and that it take im- States. mediate steps not only to put the country in a more thorough 8 WHY AMERICA FIGHTS state of defense, but also to exert all its power and employ all its resources to bring the Government of the German Empire to terms and end the war ''The world must be made safe for democracy. Its peace must be planted upon the tested foundations of political liberty. We have no selfish ends to serve. We desire no conquest, no dominion. We seek no indemnities for ourselves, no material compensation for the sacrifices we shall freely m.ake. We are but one of the champions of the rights of mankind. We shall be satisfied when those rights have been m_ade as secure as the faith and the freedom of nations can make them ''It is a distressing and oppressive duty, gentlemen of the Congress, which I have performed in thus addressing you. There are, it may be, many months of fiery trial and sacrifice ahead of us. It is a fearful thing to lead this great, peaceful people into war, into the most terrible and disastrous of all w^ars, civilization itself seeming to be in the balance. "But the right is more precious than peace, and we shall fight for the things which we have always carried nearest our hearts — for democracy, for the right of those who submit to authority to have a voice in their own Governments, for the rights and liberties of small nations, for a universal dominion of right by such a concert of free people as shall bring peace and safety to all nations and make the world itself at last free. "To such a task we can dedicate our lives and our fortunes, everything that we are and everything that we have, with the pride of those who know that the day has come when America is privileged to spend her blood and her might for the principles that gave her birth and happiness and the peace which she has treasured. "God helping her, she can do no other." On the sixth day of April the House of Representatives passed the following joint resolution which had already been passed by the Senate : "Whereas, the Impej'ial German Government has com- mitted repeated acts of war against the Government and the people of the United States of America; Therefore, be it "Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the state of war between the United States and the Imperial German Declaration Government, which has thus been thrust upon the of War. United States is hereby formally declared ; and that the President be, and he is hereby, authorized and directed to WHY AMERICA FIGHTS 9 employ the entire naval and military forces of the United States and the resources of the Government to carry on war against the Imperial German Government; and to bring the conflict to a successful termination all the resources of the country are hereby pledged by the Congress of the United States." Why America is fighting Germany is the question here answered by Secretary of the Interior Lane: ''W^hy are we fighting Germ.any? The brief answer is that ours is a war of self-defense. We did not wish to yy^y the fight Germany. She made the attack upon us; not United on our shores, but on our ships, our lives, our rights, States our future. For two years and more we held to a ^i^^ts. neutrality that made us apologists for things which outraged man's common sense of fair play and humanity. At each new offense — the invasion of Belgium, the killing of civilian Belgians, the at- tacks on Scarborough and other defenseless towns, the laying of mines in neutral waters, the fencing off of the seas — and on and on through the months we said: 'This is war — archaic, uncivil- ized war, but war! All rules have been thrown away : all nobility ; man has come down to the primitive brute. And while we can- not justify we will not intervene. It is not our war! ''Then why are we in? Because we could not keep out. The invasion of Belgium, which opened the war, led to the in- vasion of the United States by slow, steady, logical steps. Our sympathies evolved into a conviction of self-interest. Our love of fair play ripened into alarm at our own peril. "And so we came into this war for ourselves. It is a war to save America — to preserve self-respect, to justify our right to live as we have lived, not as some one else wishes us to live. In the name of freedom we challenge with ships and men, money, and an undaunted spirit, that word 'Verboten' which Germany has written upon the sea and upon the land. For The Spirit America is not the name of so much territory. It of America is a living spirit, born in travail, grown in the rough Must Live. school of bitter experiences, a living spirit which has purpose and pride, and conscience — knows why it wishes to live and to what end, knows how it comes to be respected of the world, and hopes to retain that respect by living on with the light of Lincoln's love of man as its Old and New Testament. It is more precious that this America should live than that we Americans should live. And this America, as we now see, has been challenged from the first of this war by the strong arm of a power that has no sympathy with our purpose and will not hesitate to destroy 10 WHY AMERICA FIGHTS Us if the law that we respect, the rights that are to Us sacred, of the spirit that we have, stand across her set will to make this world bow before her policies, backed by her organized and scientific military system. The world of Christ— a neglected but not a rejected Christ — has come again face to face with the Avorld of Mahomet, who willed to win by force ''America speaks for the world in fighting Germany. Mark 'on a map those countries which are Germany's allies and you will mark but four, running from the Baltic through Austria and Bulgaria to Turkey. All the other nations the whole 'globe around are in arms against her or are unable to move. There is deep meaning in this. We fight with the world for an honest world in which nations keep their word, for a world in which iiations do not live by swagger or by threat, for a world in which men think of the ways in which they can conquer the common cruelties of nature instead of inventing more horrible cruelties For the to inflict upon the spirit and body of man, for a Common world in which the ambition or the philosophy of a Man, j-g..^, shall not make miserable all mankind, for a world in which the man is held more precious than the machine, the system, or the state." That the history of the United States made certain the entry AIM- Investment an essential element of thrift. A thritty young man is an Essen- or woman seeks to invest his savings because it is ^^^}J^^^}P^^^ 1 1 11- 1 of Thrift. safer than to keep them at home and also in order that they may produce some income. On account of their inex- perience young investors are strongly tempted to make unde- sirable investments because they profess to yield large returns. Such opportunities are always available but many perfectly safe investments are also open in every community to small investors. The advice of bankers, reputable brokers, and business men of high standing and broad experience in investments should be sought by young investors until they have had sufficient ex- perience to avoid serious mistakes in exercising their own judg- ment as to the value of the investment. The importance of this suggestion and the protection afforded investors in this state are at once indicated by the following warning issued to the public by Frank C. Williams, State Bank Commissioner: ''There is a heavy penalty for selling or negotiating for sale in Vermont, — without a license from the bank commissioner, — of any lands situated outside the state, any stocks; BankCom- bonds or other securities of any kind or character missioners except the following: Bonds of the United States; Warning to State of Vermont; m^unicipalities of the state; notes the Public. secured by mortgages of real estate in this State ; obligations given by individuals who are citizens or legal residents of this State; bonds, stocks or notes of corporations vvdiich have been approved by the Public Service Commission, or other Governmental au- thority of any State or of the United States. Before the invest- ment law was passed, hundreds of thousands of dollars of poor and worthless securities were annuallj^ sold in Vermont. Proba- bly the sale of such securities has not been entirely prevented b}^ the law, but I am convinced it has been very greatly reduced, and may be entirely stopped by cooperation of the people of the State with the Bank Com.missioner. Do not buy any of the securities which require a license for their sale, of any one who is 48 INVESTMENTS not able to produce a certificate from the Bank Commissioner showing that he has a Hcense to sell them. Inform the Bank Commissioner of any cases coming to your attention of attempts to sell such securities by unlicensed people. If not familiar with the character of securities offered, which you contemplate buying, advise with some banker in whom you have confidence. The Bank Commissioner does not recommend the securities offered by people to whom he grants a license, but he does inves- tigate all companies licensed and supervises their business to a certain extent, and is always ready to give the people of the State all the facts of which he has knowledge relating to the securities offered by such companies; their standing and business history. Some good business men who have had no experience with in- vestments outside a narrow line make poor advisers. Study investments yourself. Do not take the chance of losing your hard earned money by investing in some schem^e which looks good on paper or promises large dividends. Deal only with responsible people who are authorized to do business in Vermont." The importance of warning the public concerning certain present bad practices in investment is emphasized by the wide publicity which is being given by the Investment Bankers' Association of America to the following schemes of fraudulent advertisers : ''The reason that so many millions of dollars annually are sunk in worthless securities is that the sellers of such so-called investments make alluring promises of great profits to be derived from a few dollars. If deliberate misrepresentations and reck- lessly loose statements are eliminated from advertising and cir- cular matter, get-rich-quick operators will not be able to make their fraudulent schemes pay. 'Tn investments one does not get something for nothing any more readily than in any other branch of merchandising. Present ^^ ^^ entirely misleading, therefore, to use statements Bad which will lead investors to believe this to be possi- Practices. ble, such as the following taken from one piece of copy advertising a promotion that failed utterly: 'The best investment ever offered to the American public' 'Immense profits on small investments.' '1,000,000 a month profits.' 'You take no chance.' 'Golden Harvest.' "Some of the other more dangerous bad practices which in- variably mislead are the following: Trading on reputation or earning power of another company, such as implying that a new automobile company will be as successful as the Ford Motor INVESTMENTS 49 Company, or using a name which sounds similar to a well known trade name to imply that the well known person or corporation is interested in the new company. Offering securities where the corporation has not a well defined financial plan calculated to carry the company through poor times, as well as good times. Giving undue importance to the name of the banks acting as trustee or registrar, and implying thereby that these banks in any way are responsible for the securities. The fee for such services paid to banks or trust companies is very small, and the services do not insure safety of securities. Offering to let peo- ple in on the ground floor. Stating that securities are as safe as Government bonds. The use, by a dealer concern, of a name which implies that it is a bank or trust company when it is not such. Using the w^ord guarantee as applying to the security when no guaranty exists. Playing up subheads in copy on one subject matter in such a way as to make it appear that the sub- head emphasizes the security, such as a guaranty on a part of an automobile by a manufacturer as implying that the stock for sale is guaranteed by that manufacturer etc. Offering to give ''Liberty" bonds away with so many shares of suspicious stock." The successful investor must know what opportunities for investment are available, he must know how^ to distinguish between good and bad investments, and he must know how to go about making the investment which seems to him to be the most desirable. There is hardly a community in this country remote from a savings bank or a bank having a savings department. Such institutions receive on deposit small sums of money Savings which draw interest at a moderate rate. The rate Banks. varies som-ewhat in different banks as it is determined by the local institution. The law governing the payment of interest on savings accounts in Vermont is : Sec. 5429. A savings bank shall, immediately before mak- ing each interest payment to savings depositors, reserve from the net profits accumulated since the preceding interest pay- ment not less than an eighth of one per cent of the average amount of deposits during such period, as a surplus fund, until such fund amounts to ten per cent of the amount Vermont's of deposits and other liabilities, except surplus. Saving Bank The accumulation toward such fund shall be set Interest Law- 50 INVESTMENTS aside and held intact and, when the fund amounts to such ten per cent, it shall thereafter be maintained and held to meet losses in its business from depreciation in securities or otherwise and, if at any time it falls below such ten per cent, reservations from net profits shall in like manner be renewed until such fund again reaches the ten per cent requirement. Sec. 5430. A savings bank may pay interest on deposits, not to exceed one and three-fourths per cent semi-annually, until half of the ten per cent fund described in the preceding section shall be accumulated, after which, so long as such ac- cumulation does not fall below half of such ten per cent fund, the rate may be not to exceed two per cent semi-annually, until such ten per cent fund is accumulated. The trustees, so long only as such surplus fund equals or exceeds such ten per cent, MAY DECLARE, AND PAY SUCH INTEREST ON DEPOSITS AS IN THEIR JUDGMENT THE EARNINGS AND RESOURCES OF THE CORPORATION, JABOVE SUCH [SURPLUS FUND, WARRANT. Sec. 5431. Savings banks shall triennially, if the net profits above the ten per cent surplus fund amount to one per cent of the deposits which have remained in such savings banks for one year then next preceding, divide the same among the depositors whose deposits have remained therein for at least one year then next preceding, in proportion to the amount of interest on such deposits which has been declared during the three years next preceding. Savings banks in Verm.ont may adopt by-laws for their government not inconsistent with law hence there is a slight variation in the rules regulating the payment of interest and the withdrawal of savings deposits. The following regulations taken from a bank book of a local savings bank and trust company are typical of this state: Deposits made on or before the 5th day of the month draw interest from the first, and those made after the 5th will draw interest from the first day of the following month. (If the de- Savings posit is made before the 10th of January or July Bank De- it draws interest from the first of the month). In- posits and terest will be credited to depositors on the first day Interests. ^^ January and July of each year, at the rate of 4 per cent per annum, and this interest will draw interest from \he date of said credit, if not withdrawn, but no interest will be INVESTMENTS 51 allowed or paid on any sum withdrawn for the time which may have elapsed since the date of the last credit of interest. The above rate is paid, free of taxes, on all deposits. All depositors shall be subject to the regulations and by- laws of this institution. The trustees may refuse a deposit at their discretion, and may also at any time return all or part of a deposit. Interest or dividends will be credited to depositors only on the first days of January and July, and this interest, if not with- drawn, draws interest from the date of such credits, compound- ing twice every year. Depositors, ordinarily, will be paid on demand, but the bank reserves the right, when it so desires, to require a notice not longer than thirty days for withdrawals. A depositor must always present his Bank Book when de- positing or withdrawing funds. If not presented personally an order properly signed and witnessed must accompany the Bank Book in case of withdrawals, i^e^ osits, however, may be evidenced by certificates containing tie terms of payment. Every effort will be made to protect depositors against fraud, but payment made to a person presenting a Bank Book shall be good and valid on the account of the owner, unless the Bank Book has been lost and notice in writing given to the Treasurer of the bank before such payrrent is made. When a Bank Book has been lost the Bank shall prescribe the conditions on which a new book may be issued. If a book of deposit be assigned or transferred by the de- positor, it shall be the duty of the person to whom such book has been transferred to notify the bank thereof at once for its approval. If payment be made on a deposit book after it has been assigned, without notice of the assignment, the corpora- tion or its officers will not be liable to pay the same to such assignee or holder, but will be fully discharged therefrom. Instead of sending a check to the depositor in payment of interest due him he is simply given credit for the amount of the interest just as if he had deposited an equal amount of money. This interest draws interest the same as his other Compound savings. If one has on deposit $600 on January 1, p^^^^l^*" ^^ 1916 and the bank pays 4% semi-annually he would Savings receive credit for $12 interest on July 1, 1916. If he Banks. makes no deposits or withdrawals he would be entitled to interest on $612 from July 1, 1916 to January 1. 1917. His deposits at the 52 INVESTMENTS bank then would be 1624.24. Of this amount $624 will draw interest for six months more, the cents being disregarded and interest being paid on dollars only. Even if no new deposits except the interest are made the interest each time is computed on a larger principal and hence is more than the preceding interest. When interest is paid on principal and interest in this way it is called compound interest. Money drawing compound interest grows with astonishing rapidity. In the following illustrations the interest is com- pounded annually. The results are even more amazing when the interest is compounded semi-annually. ''There are two kinds of compound interest. Two illus- trations may best explain them. One dollar deposited in a savings bank that pays four per cent annually will amount to $2.19 in twenty years. This is simple compound interest. One dollar, deposited every year for twenty years in the same Simple and bank at the same rate of interest, will become $30.97. Progressive This is progressive compound interest. To get Compound the full and beneficial results of compound interest Interest. ^^^ ^j^jy must you begin to save but you must keep steadily at it. When you see the effects of progressive saving you find out just how valuable it is to get the thrift habit. ''With humble sums impressive ends may be gained. Nearly every human being can save five cents a day. This amount, saved each day ($1 . 50 a month) and deposited in a savings What 5 bank that pays four per cent interest will amount Cents a Day to $182.50 in ten years. It will earn $40.06 will do in interest, making its total value at the end of that ten Years. ^^^^ |225 . 56— rather a surprising result of the setting aside of a single carfare every day. "Take ten cents a day, which means a deposit of three dollars every month, and put it through the same process. In ten years you will have saved $365, which will have earned $80.36 interest, making a total of $445.36. This is the result of simply saving Ten Cents ^^® price of an ordinary cigar a day. As you in- a Day will crease the sum saved each day the value of steady Amount to saving is only strongly im.pressed. Fifteen cents $445.36 in a day, or four dollars and a half saved each month Ten Years. ^^-^^ compounded will amount to $668.18 in ten years. Of this sum $120.68 is interest earned. Twenty cents a day or six dollars a month will amount to $890.99 of which $160.99 is interest. These sums saved would scarcely be missed INVESTMENTS 53 from the purse of the average man. If you are able to put aside twenty-five cents a day or seven dollars and a half a month, at the end of ten years you will find $1,113.75 to your credit. If you are able to make the daily saving thirty cents or nine dollars a month you will be worth $1,336.59. Forty cents a day or twelve dollars a month will roll up the tidy sum of $1,782. 16, of which $322. 16 is interest; while fifty cents a day or fifteen dollars a month will amount to $2,227.73, of which $402.73 is interest. Hence it is much to your profit to ''despise not" the saving of small sums. ''Now let us see what the systematic or rather progressive saving of a dollar a week can do. In one year the fifty-two dollars saved will earn, at four percent, seventy-eight cents in interest, making a working principal of $52.78 at the start of the second year. At the close of the second year One Dollar you will have $107.67; at the end of the fifth year a Week at $285 . 86 ; at the close of the tenth year $633 . 65. In f ^^^J}'"''^^" fifteen years this steady savings of a dollar a week Amount to would show a total result of $1,056.79. At four $2,197.92 in per cent this alone would yield a return of $42.27. 25 Years. At the end of twenty years this kind of saving would total. $1,571.59, while the first quarter-century would find you worth $2,197.92. This sum, if you then stopped saving, at four per cent would earn $87.91 a year. If you kept up the saving of a dollar each week for fifty years you would accumulate $8,057. 16. "Looking at the saving of a dollar a week from a different angle, you find that at the end of thirty years every one of the fifty-two dollars that you had at the end of the first year had increased about fifty-eight times. "It has been figured out that a man who has deposited five dollars a week, every week, in a savings bank that pays four per cent can, at the end of twenty years, draw out six dollars a week and still leave his wife at his death all the money that he had originally deposited. "If a man or woman is able to save a dollar a day the results are big. This amount, put into a savings bank that pays four per cent annually will amount to $1,967.98 in principal and in- terest at the end of five years, and $4,455 . 74 at the end of ten years. "Fifty dollars put into a savings bank each j^ear will amount to the following sums at the end of twenty years; $50 Saved at three per cent annuallv it will aggregate $1,383.38; Each Year at three and a half per cent it will roll up $1,463.42; ^nfo^nT^to at four per cent it will amount to $1,548.46; at four $i,383.38 in and a half per cent annually the total will be 20 'Years. 54 INVESTMENTS $1,639.15, while at five per cent annually it will mean a total of $1,735.96. ''This figuring out of compound interest returns might be continued indefinitely. Sufficient results have been given, however, to show two very important things that the average man or woman who wants to attain a competency must bear in mind, and they are: first, that money will earn more money; second ,that the only way to share the result of this kind of labor is to begin to save and then keep constantly at it. ''It might be helpful, in this connection, to see some practical applications of the benefits of compound interest and saving. One of them is what might be called an automatic pension. It has been calculated that if a man whose income remains the The Benefits same year after year will deposit one-third of that of income each month in a savings bank that pays four Compound per cent, he will be able to retire at the end of Interest. thirty-five years, and thereafter he or his heirs will receive the full amount of his income. If he will steadily deposit a quarter of his income in the sam^e way he will be able to retire on full pay at the end of forty-one years. A fifth of his income, saved and deposited in this way, will enable him to stop work on full income saved at the end of forty-six years, while a deposit of one-tenth of his income will retire him at the end of sixty years. "To be able to retire on half income as a result of this kind of steady saving is easier. This can be achieved in twenty-four years by the deposit of one-third of the wages in a savings bank each month; in twenty-eight years by the deposit of one-fourth of the wages; in thirty-two years by the deposit of one-fifth of the income, and forty-five years by the steady saving of one-tenth of the wages. "What is the depositor to do if he needs a sum of m.oney urgent- ly just before an interest payment? There is a very simple way out of it and in the explanation is a helpful lesson. Let us as- sume that the depositor has put $1,000 on deposit in a savings Savings bank that pays four per cent interest, with payments Bank Book January 1, and July 1. His first interest date is may be used July 1, and this means that he will get $20 in in- as Collateral terest if his thousand dollars is still on deposit. i^ecuri y. j^^ emergency arises that makes it imperative for him to have $800 for twenty days on June 10. If he draws this out of the savings bank he will lose the interest on it for the six months. What is he to do? He can take his savings bank book to a commercial bank, use it as collateral, and borrow the INVESTMENTS 55 Assume that he is charged six per cent interest on this money. This means that it will cost him about $2.60. Now, if he had drawn the $800 out of a savings bank he would have forfeited $16 in interest. This means that by fol- lowing the plan just outlined he paid only about $2.60 for the use of the money. Thus he not only practiced economy but maintained the integrity of his savings account. Therefore, it is important for the savings depositor to. know just when the interest payments in his bank are made, and not to withdraw money at times when the interest might be forfeited. This, combined with steady savings, is the only way to obtain the big benefits of compound interest." From Saturday Evening Post. Many people prefer the government's guarantee to repay their savings to that of banks. They deposit their savings in postal savings banks and receive interest from the government at the rate of 2% a year. When the deposit is $20 postal or more it may be exchanged in multiples of $20 for Savings Batiks 24% government bonds. According to the govern- ment regulation an individual shall not have interest bearing deposits in excess of $1000. He may deposit larger amounts if he wants no interest upon them. No one may deposit less than $1 . 00 but for ten cents he may purchase a card upon which he may accumulate ten cent stamps until the whole amounts to one dollar. The card then may be exchanged for a savings certificate. Deposits may be made at any of the larger post offices. One of the most widely used means for the investment of money in small amounts is furnished by the life insurance com- panies. The life insurance company in return for Life the payment by the insured person of a fixed annual Insurance. sum called the premium, agrees to pay to the insured at the ex- piration of a certain number of years a definite sum of money. If the person insured dies before the time for the payment by the company is reached, the insurance company pays the agreed sum to another person called the beneficiary, named by the insured in the poHcy, or agreement by which the insurance is purchased. This form of life insurance is called Endowment endowment insurance and commonly is written for Policy. twenty year periods although it may be written for other periods. 56 INVESTMENTS The endowment policy is not however the only form of life insurance which the companies issue. A person may buy a policy according to the terms of which he pays a fixed sum each year throughout his hfe, and at his death the amount named in the face of the policy is paid to the beneficiary. This form of policy is called the ordinary life or whole life policy. When the whole life policy is paid for by a fixed number of annual pay- ments it is called a limited payment policy. Still another form of insurance is that under the weekly insurance policy by which payments of a fixed sum, as ten or twenty-five cents, are made weekly to a collector of the insurance company. This form of policy is generally wTitten for amounts under five hundred dol- lars and is payable to the beneficiary at the death of the insured. Its prime object is to provide a sum sufficient to pay funeral expenses. The premiums for all forms of life insurance policies are determined by the companies by means of exact mathematical calculations. These calculations are based on tables which show the num.ber of people who die at various ages. These mortality Computa- tables are made up from records of the dates of birth tion of and death of large numbers of persons and owe their remiums. accuracy to the law of averages. While it is im- possible for an insurance company to tell at what time a particular individual will die, it can tell at approximately what time ten thousand persons will die. The premiums charged by life insurance companies and printed in their rate books vary slightly as do the privileges con- tained in their policies, but the differences are not important. Below are examples of insurance premiums as computed accord- ing to the mathematical tables above referred to. Twenty Year Endowment Policy for $1,000. Payable at Death or at the End of 20 Years. ige Rate Age Rate 20 43.55 24 43.77 21 43.60 25 43.83 22 43.66 26 43.90 23 43.71 27 43.98 INVESTMENTS 57 The purchaser of an insurance policy may have two objects in view. He may desire to provide a means by which his family or dependents are insured means of liveHhood if he should die or he may wish a convenient method of investing insurance his surplus earnings. To aid the person thus desiring as^Protec- to secure protection for his fam.ily the policies of • ^ insurance frequently provide that the face of the policy will be paid to the beneficiary in monthly payments beginning at the death of the insured. This provision may be in either an en- dowment or whole life policy and is called the monthly income feature. It has the advantage of relieving the beneficiary, who may not be familiar with business matters, from the task of in- vesting a large sum of money as would be the case if the payment was all made by the company in one sum. The endowment poHcy is particularly adapted to the person who desires a convenient method of investment and at the same time wishes to provide protection for his family. Endowment It practically compels a person to save a definite insurance sum each year as the premium comes to be consider- ^^nt!*'''^^^" ed as something which must be paid. His savings made by the purchase of an endowment policy and the payment of premiums thereon are invested by men whose business it is to know all about investments. Moreover the business and in- vestments of the company are carefully supervised and inspected by public officials. By the purchase of an endowment policy a young man or woman may, by regular annual payments, provide a substantial sum which will be available at the end of the en- dowment period either for investment in business or the purchase of a home or for any other purpose. In considering the value of an endowment policy it must not be forgotten that in addition to the lump sum which will be paid to the insured at the end of the period, the pohcy holder is also insured of the fact that the face value of the policy will be paid to his beneficiary should he die before the expiration of the endowment period. One of the most common forms of investment is buymg land and houses, i. e. real estate. This form of investment is desirable because of its comparative safety, the possibility of 58 INVESTMENTS using the property as a home and the tendency of wisely selected property to increase in value. When one invests in real estate he must take into account the expense of maintaining the property- repairs, taxes, insurance, as well as its liability to depreciate in T> » T. ^ value. Real estate is often difficult to sell readily Real Estate. . . ,, , ,^^^ . , ^ . , , ' at its lull value. When money is loaned with real estate as security the prudent lender limits the loan to about 60% of the value of the property. He receives a promissory note secured by a written document signed by the owner. This document is called a mortgage and it guarantees the payment of the note. If the conditions of the agreement are not met the creditor through a process of law may secure payment of the note with interest including the cost of suits and clerk's fees. If the mortgagor does not pay the sums ordered by the court the mort- gaged property may be turned over to the mortgagee to satisfy the debts. The owner also guarantees to keep the buildings insured and in repair, to pay taxes when due, etc. Frequently two or three men desire to invest money in a small business enterprise. In such cases they usually form a partnership and share their gains and losses according to the amounts they invest. If one man invests SI 000 and another invests $2000 the first owns 1-3 of the property hence he shares 1-3 of the profits or 1-3 of the losses while the second man shares 2-3 of the gains or losses. In case of failure each partner becomes responsible for the entire debt of the firm after the firm A Partner- assets have been exhausted no matter how small his ship. interest may be. In a partnership the evidence of ownership is contained in the partnership agreement. The men who actually conduct the business and share in the profits are called real partners. Sometimes members of the firm are not publicly known and take no part in the management of the business. Such members are known as silent or dormant partners. The money, merchandise, buildings, land, equipment, etc., invested in a commercial enterprise is called the capital. If a large capital is required or many partners are interested in the „ .^ , business a partnership is not desirable. In such a Capital. ,^ ^. . , , . , , case a stock company is organized and incorporated INVESTMENTS 69 according to the laws of the state. It will be seen later that the advantages of a corporation are : 1. Each stockholder is financially responsible for the par value of his stock and no more. 2. Stock is easily transferred and bookkeeping incident to computation of dividends and transfers is simplified. 3. Small investors are enabled to participate Advantages in great business enterprises. of aCorpor- 4. It makes possible a great expansion in ^ ^^^' capital and organization. 5. An opportunity is afforded for one to acquire an interest in a business where he would not be quahfied to assume direct control. 6. The firm name may be perpetuated and the benefits derived which come from its established reputation. 7. One of the main reasons why a corporation is more desirable than a partnership is that in a partnership the death of any partner dissolves the firm. 8. It affords an easy method for borrowing m.oney for the extension of the business. The following procedure is necessary in the organization of a stock company: (1) Three or more men in a community come together and decide to organize a corporation for carrying on a business such as a creamery. (2) These men solicit sub- scriptions for the stock, i. e. they seek to interest other men in investing money in the business. These investors are called stockholders. They agree to buy a certain number jj^^ ^ stock of shares of the stock. (3) It is decided that a Company is certain amount of money is needed to be used in ^s^^*^® erecting and equipping a plant and for operating the plant. This is called the capital stock. Three or more persons agree to buy and actually pay for 50% or more of the proposed capital stock. When the stock is paid for, the purchaser receives a stock certi- ficate showing the amount of the capital stock, the par value of each share and the number of shares owned. (4) All the sub- scribers are then called together for the purpose of forming a permanent organization. At this meeting articles of association 60 INVESTMENTS are drawn up, blanks being furnished by the Secretary of State. These articles of association give the name of the company, its purpose, the location of the principal office of the company, the amount of the capital stock, the number of shares and the names and addresses of the subscribers. If a cooperative company is formed in Vermont special articles of association are required. (5) When a copy of the articles of association and a certificate of paid up capital are filed with the Secretary of State he issues a charter to the corporation showing that it is legally organized and ready for business. (6) The corporation is managed by not less than three directors who are elected for one year by the stockholders. The directors elect officers from their number and the organization is complete. The directors elect a manager and provide the necessary Par Value equipment. If all of the stock has not been sold it is usually may be disposed of at the value originally agreed $100 a Share ^^^^ usually $100 a share. This is the value of each share as recorded on the books of the company and is known as the par value. After the enterprise has been in operation for a year there may be profits in excess of the cost of operation. These profits are to be divided among the stockholders or to be Computed carried to the surplus account. Let us assume that on the Par the capital stock is S10,000 and the profits are $1000. There has been a gain of 10% and each stockholder will receive as his share of the profit 10% of the par value of the stock that he owns. Suppose a man owns 5 shares at a par value of $100 a share or a total value of $500, he would receive as his share of the profit 10% of $500 or $50. Cooperative corporations in Vermont must ''set aside annually not less than 10% of the net profits of the corporation for a reserve fund until there is accumulated a fund of not less than 30% of the paid up capital stock." When the creamery has been in operation Value of several years and the reserve fund is fully paid up Stock lY^Q business may have developed until there will be ^^*^^* a net profit of $2500 or 25% of the capital stock. INVESTMENTS 61 The actual value of each share is the original value of the share ($100) plus the reserve fund ($30). In addition to this the fact that a dividend of 25% is declared increases the value of the share. Investors are glad to receive 8% or 10% on their money. They would be more than willing to pay $250 for a share of stock which pays an annual dividend of $25 (25%^ on the par value of $100). This price which the share would bring if offered for sale on the market is called the market value of the share. The market value varies as the prosperity of the business varies but the par value does not change and upon it the percent of profit is always computed. It is seen that while a dividend of 25% is declared on the par value of the stock a man who pays $250 for a share of stock is receiving only 10%, on his investment. In this discussion of dividends we have assumed that there is no stock upon which a certain rate of interest is guaranteed. In some instances a part of the stock is sold with the guarantee that a definite rate of interest will be paid. When the ^ Definite corporation has been in existence for some time and R^^t^^^/^ ^'" there is a desire to increase the size of the plant or to Guaranteed make improvements in it, additional stock is fre- g^^^^^^^^^^^ quently offered for sale which does not share in the profits but upon which the corporation agrees to pay a certain rate of interest. Such stock is called preferred stock and interest upon it must be paid before there is any division of profits. It is frequently the case that a larger rate of interest is paid on common stock. Suppose our creamery company decides to buy additional ground and increase the size of the plant at an ex- penditure of $1200. They may issue 10 shares of preferred stock with a par value of $100 a share but which they can sell for $120 a share because they agree to pay 6% interest. Let us assume that our creamery makes a profit this year of $1560. They must first pay the 6% interest on the $1000 of preferred stock or $60. This leaves $1500 to be distributed among the common stock- holders the par value of whose stock is $10,000. Since $1500 is 15% of $10,000 a dividend of 15% is declared on the common stock. A man who owns one share of preferred stock receives $6 interest because he receives 6% of $100, the par value of the 62 INVESTMENTS share. He actually paid $120 for the share and since he receives $6 on an investment of S120 he receives only 5% on the money invested. If a stockholder desires to dispose of a part or all of his stock Transfer of in a small, purely local company like the one we Stock in have described he is usually able to find a buyer. panics is In this case he indicates in the space provided on Simple. ^]^g stock certificate that the stock has been trans- ferred. The certificate may be taken up by the secretary of the company and a new one issued in its place to the new owner. The transfer of stock in a large corporation like a railroad is a much less simple matter. Sales of stock in such corporations The Stock are- naturally made in the larger cities, in many of an^A^socia*-^ which there are associations of business men for the tionofBro- purpose of facilitating the transfer of shares of Purpose of ^ stocks and bonds. One of the most notable of these Facilitating associations is the New York Stock Exchange in f e/of ^'^Ust- ^^^^^ Street. It is an association of men called ed Stock." brokers who buy and sell stocks and bonds. The building in which they meet for the purpose of making these transactions is also know^n as the Stock Exchange. In order that these exchanges might become stable they found it advisable to list for sale stock which had proved value. Before a company's stock can be listed the officials of the exchange must be satisfied that it has a paid-up capital, that it is in good financial condition, and that it is a legitimate enterprise. In many instances very undesirable stock is 'listed stock" but this is due to a decline in its value after it was first admitted to the exchange. Only members of the stock exchange are permitted to buy The Price ^^^ ^^^^ stock on its floor. The membership is of a Mem- limited to the number who can easily care for its the^ Stock business hence the price of a membership or a seat Exchange is in the exchange is very high. The lowest price in *^ * many years in the New York Stock Exchange was $20,000 and the highest, in 1905 and 1906, was $96,000. These seats can not be purchased outright. The man must be elected to membership by the members. INVESTMENTS 63 The daily Stock Exchange value of stocks and bonds may be found by consulting the daily papers. There are so many conditions aside from the real value of the securities which enter into the determination of the stock quotations in daily papers that they give little actual information concerning the value of the stocks and bonds as conservative investments. Judging an If one wishes to determine the real value of securities Investment. the Investment Bankers Association of America recommends that he secure the following information: ''What constitutes the property? Is it actually built? Where is it located? What is real appraisal value of property by competent, intelligent appraiser, audited by certified public accountants? W^hat is value of property for the purpose of operation? Is property in operation? If so, how long has it proved successful? What is output? Does company own or lease property? ''What are actual earnings as audited by certified public accountant? What are detailed earnings over a period of years? Are earnings estimated instead of actual? If estimated, by whom? Estimated should not be vague, but should be definite and calculated on some basis, else they are value- E^rnin^s less. They should not be made essentially on the basis of earnings of other very prosperous companies in the same line of business, for different managements will not operate with equal success? "Is the goodwill all in prospect, or has it been valued on definite earning power? Goodwill should not be valued pri- marily on the earnings or goodwill of other sue- ^_. .„ r 1 • • ,1^ ^ 1- c ^ ' Goodwill. cessiul companies m the same Ime oi busmess. "What dividend or interest is paid on securities offered? If income is being paid or promised, who has audited the books of the company? The payment of the dividend Investment implies that it has been earned. Grave harm can Income. be done by representing securities as dividend payers when pay- ments are made from capital. "Securities of dangerously financed companies are generally offered in small par value so as to appeal to people of small means. This is especially true in the sale of stock. If the par value of the securities oifered is $10 or less, an in- Price of vestigation is desirable; if it is below $1, this in- Securities. vestigation is imperative. It is bad practice to offer securities for sale with a statement that the price will be advanced on a 64 INVESTMENTS certain day. This statement implies that the value has increased to the extent of the increase in price; as a matter of fact, the in- crease in price may not mean this, and usually it is only a plaus- ible selling scheme. One good test of this is to ascertain at what price the advertiser will buy back the same stock he is offering. ''Any statements mentioning figures should be susceptible of proof through an income account and balance sheet, audited by a certified public accountant. These two accounts should be given as of one date, because it is possible to cover up inaccuracies if the balance sheet is given on a date different from that of the income account. Any company offering securities for sale which will not, if requested, submit an income account and balance sheet subjects itself to the suspicion of fraudulent practice. The financial statement of a company should be as of the date on which the securities will be outstanding, and the balance sheet Financial should, therefore, show the securities as liabilities. Statements. From these statements can be calculated the tangible net assets per share of stock of the value of property securing bonds. If these figures fall materially below the selling price of the securities, the risk is considerable, and requires a detailed explanation. Great care should be taken that the promoter does not glibly promise future growth to explain away any dis- crepancy, or represent that goodwill is of sufficient value to take care of it. Where a company is showing real earnings with very little property, it is, of course, legitimate to capitalize these earnings to a reasonable extent." The ordinary investor has little occasion to use the stock exchange. Most investments made through the exchange are Brokerage speculative in their nature. When stock is pur- rvi^^^ ?h chased through a broker he will charge a fee of a Broker (usually) 12 J cents or $1-8 a share. This fee is for buying called brokerage. If a share is quoted at 89 it Stocks and means that the market value is $89 a share but if Bonds. yQ^ should purchase it through a broker it would cost you $89 1-8 a share. If you sell your stock through a broker he will deduct his fee or commission or brokerage from the amount he receives so if you sell stock at 89 you will receive all of this amount except $1-8 which the broker retains or you will receive $88 7-8 a share. The amount a broker may charge for buying or selling for others is regulated by the rules of the exchange hence is uniform. In reading of the stock exchange one frequently INVESTMENTS 65 reads of the operations of the ''bulls" and ''bears'\ The ''bulls" are men who buy stock because they expect to sell in the future at a higher price and are so called because of the tendency of a bull to elevate everything with which he comes in *'Bulls and contact. The "bears" sell because they expect Bears." prices to decline in the future. There is much stock bought and sold which is not listed in the Stock Exchange. Such buying usually takes *'Curb" place on the sidewalk near the Stock Exchange and Trading, is known as "curb" trading. The newspaper quotations are inserted in order that pupils may learn how to read them. They may be used as the basis for problem material. NEW YORK STOCK MARKET. Saturday, December 22 The following is a summary of today's transactions on the New York Stock Exchange to 12M: STOCKS. Opening High Low Dec.22 Dec.21 Alaska Gold li 1| H U ^ Alaska Jun. Gold 1^ H H H ^ Am. Can 34f 34| 34 34 34i Am. Can. pf 87 87i 87 87i 86 Am. Car. & F'dry 63 63i 62| 62 62i Am. LocomoVe 491 49i 49 49 49 Am. Sm. S. pf(A) 90i 90i 90J 90 90 Am. Sug. Ref. pf 106 106 106 106 105i Am. Tel. & Tel 99i 99i 99 99 98| Bait. & Ohio 41 41 40i 40i 40i Bait. & Ohio pf 50J 50|- 50i 50 5Ci Bethlehem St'l 69* 69i 68* 68i 69 Beth. St'l pf. ret 94i 94f 94f 94 94 Beth. Steel(B) 69i 69| 68f 69 69^ Canadian Pac 129* 129* 129* 129i 129| Chi., R. I. & P. 6% 36| 36i 36f 36i 36i Ch. R. I. &P. 7% 45 45 45 44i 44* Erie 13| 13| 13i 13f 13| Erie 1st pf m m 19i 19| 19* 66 INVESTMENTS Opening Gen. Electric 123 Interboro Con 6 Interboro C. pf 41 Intern'! Paper 23i Int. Paper pf . sta 54 Lehigh Valley 52 Liggett & My 161 Maxwell Motor 21| Miami Copper 25f Nat. Biscuit 90 N. Y. Air Brake 114 N. Y. Central GSJ N. Y., N. H. &H 27i Ohio Cities Gas 33| Pullman 109^ R. Iron & Steel 74} R. I. & Steel pf 90i Sears Roebuck 128 Western Union 79 ^^Closing Bid._^ High Low Dec.22 Dec.2l 123 122* 122* 122 6 6 6 6 41 41 41 41 23i 23* 23 23} 54 54 54 53* 52 52 52 52 161 161 161 155 m 21i 21* 21f 26 25f 25f 25f 90 90 89 89 114 llOt 110 113 63i 63} 63} 63* 27} 27} 27* 27* 33^ 33i 33} 33* 109i 109* 108* 74} 74 73f 73^ 90i 90 89i 90? 128 128 127 127* 79i 79 78* 78} NEW YORK CURB PRICES Saturday — Close. Bid. Asked. Aetna Explosives 7^ 7} do. Certificates 8 Big Ledge li . If Boston & Montana 37c 39c Butte Copper & Zinc 6} 6* Butte Detroit -^ } Calumet & Jerome yf 1 Canada Copper l-f l-J-g- Jumbo Extension 12c 14c If a man who owns a farm or other property is in need of Bonds are money he may borrow 60% of its value, give a Classified f "[ . '"^ ,, ' % ,, According promissory note and secure the payment ot the to the Kind hqIq by giving a mortgage on his property. Similar- as Mortgage ly, if a corporation desires to borrow funds for the Bonds and promotion of its business it may give notes secured Debenture I ^ .. xi, T r xi Bonds. ^^ by mortgages or hens on the assets oi the company or a part of its assets or it may give promissory notes under the INVESTMENTS 67 seal of the company. The^e notes are usually of $100 denomi- nation and are called bonds. If secured by mort« interest is gage they are called mortgage bonds, otherwise P^M^^^^ they are called debenture bonds. Just as the man who mortgages his farm must pay interest to the man from whom he borrows the money, [the corporation- must pay interest to the man from whom it borrows money and to whom it gives a bond as evidence of the loan. In order to facilitate the collection of interest some bonds nave small interest certificates attached. These certificates or small notes specify the time when certain amounts of interest are due and upon or after that date they may be cutoff the bond and presented for payment. Usually any bank will cash these certificates, called coupons, for its customers. Bonds bearing coupons are called coupon bonds. Coupon Government bonds are often issued without interest R^g^tered coupons. They are made out and registered in the Bonds. name of the owner and are payable to him or his assigns. These bonds are called registered bonds and the inter- est is sent to the registered owner or to his attorney as it becomes due. Bonds and stocks are bought and sold in the market in exactly the same way. News Paper Quotations of bonds for December 22, 1917: Railroad and Other Bonds. High Low Baltimore & Ohio 5s 74 74 Bethlehem Steel 5s. 1936 77 76f Bethlehem Steel funding 5s &7 87 Brooklyn Rapid Transit 5s. 1918 91 91 Central Pacific 1st 4s 78 78 Chesapeake & Ohio conv. 4|s €6 66 Chesapeake & Ohio cv. 5s. 1946 73 72§ Chicago & West Indiana 4s 64 64 It will be observed from the bond quotations given above that certain abbreviations are used. Bethlehem Steel 5s. 1936 are bonds bearing 5% interest issued by the Bethlehem Steel Co. 68 INVESTMENTS and due in 1936. Central Pacific 1st 4s are bonds bearing 4% interest, secured by a first mortgage, issued by the Central Abbrevia- Pacific Railroad. The high and low prices for the tions are ^g^y ^j.^ quoted. Chesapeake & Ohio cv 5s 1946 Bond Quo- $100 bonds were bought for $72i or including the tations. brokerage $72f. The highest price of these bonds during the day was $73, with brokerage $73|. If one buys a 4% bond at $73| he receives 5% on his investment. The variation in the market price of bonds is due to causes similar to those which affect the price of stocks. Corporation bonds have ahvays been popular. They afford an opportunity for the corporation to borrow money without giving outsiders a vote in the management of the Bonds are business. As an investment they are popular Often Good because of the certainty of the income. Of course Investment. . it, , / , , .» , bonds like stock may be worthless if the company has no assets but if the company has assets its first obhgations are to the bondholders who are preferred creditors. The interest on bonds must be paid before dividends can be paid on either preferred or common stock. The bonds pay a small rate of interest as a rule but a company is indeed in a bad state of affairs if it can not pay interest on its bonds. In addition to the corporation bonds, the kind we have con- sidered thus far, there are bonds issued by states, counties, towns, etc. These bonds are issued for the purpose of financing . . , public improvements and are considered the highest Municipal . and Govern- grade of security and the safest possible investment ment Bonds j^g^t to government bonds. We are most interested make very ° . . Desirable at the present time m government bonds. When Invest- Q^p government desires to undertake some large public work like the building of the Panama Canal it borrows money from the people and issues them interest bearing bonds. In the newspaper quotation of government bonds for December 22, 1917 given below, the Panama Canal 2s 1938 are bonds issued by the United States Government for financing the Panama Canal. They bear 2% interest and are due in 1938. INVESTMENTS 6^ On December 22, 1917 $96 ($4 below par) was bid for a $100 Panama Canal bond. Government Bonds. Saturday, December 22, 1917. Dec. 22 Dec. 21 Close Close Bid Asked Bid Asked Registered 2s 1930 96i 97* 96i 97i coupon 96 J .... 96i .... Registered 3s 1908-18 99 99f 99 99f coupon 99 99i 99 99f Registered 3s 1946 80 .... 80 coupon 80 .... 80 .... Registered 4s 1925 103i 105 103i 105 coupon 9 I03f 105 103f 105 Panama Canal 2s 1936 96 ... 96 Panama Canal 2s 1938 96 .... 96 Panama Canal 3s 1961 80 .... 80 In meeting the enormous cost of our war, Congress may tax us directly or the government may borrow money from us and give us as security government bonds upon which J/^^ Govern- interest is paid. As a rule national government ment Bond bonds are the safest of investments and for that ^^P^^f^^ T , upon tiie reason pay a low rate of interest. The safety,^of;^a ^Stability of government bond depends upon the stabiUty of the ^ ^ rn- government. At the present time (December, 1917) ment. one would scarcely care to invest in bonds issued by the Bolsheviki government of Russia. The following clippings from the ''Official Bulletin" published by the National Committee of Public Information give first hand information concerning the safety of government Liberty Bonds: GOVERNMENT BONDS RANK HIGHEST OF ALL SECURITIES. In connection with the liberty-loan campaign, the publicity department explains that, in a very general way, bonds are divided into five different classes: 1. Government. — ^A Government bond is issued by the National Government. It is secured by the wealth and taxing 70 INVESTMENTS power of the country issuing the bond and is issued to provide funds for the maintenance of the Government, to equip the army Government and navy, build waterways and public works of all Bonds Rank gorts, and in timios of war to provide for increased Highest - ' ^of all needs. Security. 2. Mu7iicipaL — A municipal bond is issued by a city, town, or village. These bonds are issued to get money for building schoolhouses, waterworks, sidewalks, fire-depart- ment stations, or other public improvements voted by the muni- cipality. 3. Railroad. — ^Railroad bonds are subdivided into too many classes to be gone into briefly. They are issued by a railroad company to build new lines, buy cars and engines, and to keep the roads in good condition. 4. Public utility. — Public utility bonds are issued by cor- porations owning and maintaining public-service utilities — gas, electric light, street railways, and other such service required by the public and not owned by the city in which they are located. 5. Industrial. — Industrial bonds are issued, as the name implies, by corporations manufacturing on a large scale various sorts of products. Under this class come the bonds of steel companies and other big industries. Necessity requires a briefness which does not permit further subdivisions of these five headings. Government bonds as a class rank highest in market value. The bonds of our Govern- ment have a higher rank than those of any other country be- cause the credit of the United States is now the highest of all civilized countries. HOW THE UNITED STATES LIBERTY BONDS MEET ALL THE ESSENTIALS OF A GOOD INVESTMENT. The publicity bureau of the second Liberty loan, Treasury Department, authorizes the following concerning the bond issue: 1. Security of principal. — The wealth of the United States is back of the bonds issued by the Government. Since the present organization of the United States in 1790 no debts have ever INVESTMENTS 71 been repudiated. The money borrowed has always been re- paid. The United States has the lowest per capita debt of any great nation. 2. Security of income. — The return upon the How the principal invested is the income or interest. The United interest on these bonds is a part of the Govern- erty Bonds ment's expense. Should the power of our Govern- 5^eet all the ment fail, not even cash would be of value, so high is of a Good our standing. Investment. 3. Fair income return. — Four per cent for such high-grade security is a fair return. But in addition these bonds bear the privilege of convertibility into a higher rate of interest if the Government has to borrow more money at a higher rate. 4. Marketability. — The United States bonds are very active in the open market. Those offered for sale find a purchaser more quickly than any other securities. Bond houses and banks handle them as readily as cash. These bonds can be sold at any time and in any bank or trust company throughout this entire country. 5. Value as collateral. — They have the greatest value as collateral of any security, because the credit of the United States Government is the highest of any Nation. Banks or individuals will readily loan money on such security. 6. Tax exemption. — The Government bonds of the second Liberty loan are exempt as to principal and interest from all taxation by the United States, any State or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) United States graduated additional incomie taxes, commonly known as surtaxes, and excess profits and war profits taxes. The interest on an amount of bonds and certificates authorized by said act, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (b) above. 7. Freedom, from care. — Bonds can be registered in the name of the holder and the interest thereon will be sent them every six months direct from the Government. 72 INVESTMENTS 8. Acceptable duration. — The period of time over which a loan continues is in the case of the Liberty loan bonds of great advantage. If bought by a young person the repayment will probably be made within his or her lifetime; if by an older person, the money will be repaid to his or her heirs. 9. Acceptable denomination. — These bonds are issued in denominations of $50, SlOO, $500, $1,000, and m_ultiples of $1,000; therefore they meet the requirements of small and large investors. 10. Potential appreciation. — There is every reason to be- lieve that these bonds will increase in value after the war is over, to judge by the fact that in the past war bonds did increase in value at the close of the Vvar. In the event of the war ending within a short tim.e these bonds would increase in value be- cause of certain tax exemptions. Therefore people of wealth will want to invest in them and small holders will probably be able to sell at a profit. In the event of the continuation of the war over a long period a higher rate of interest will have to be paid, and this maintains the value of the bond. BONDS, COUPON AND REGISTERED. Technically a bond is a promise to pay. A person buys a bond; that is, he lends his money to an organization and in return he receives an engraved paper receipt called a bond. Apart of this bond bears the terms of the loan. It states that $50, $100, $500, $1000 or m.ore has been borrowed from the buyer of the Bonds Cou- bond for a stated period of years at a certain rate pon and of interest, this interest to be paid on dates stated egistere . -^ ^j^^ bond. The interest is usually paid twice a year. Attached to the bond are the coupons. These represent the interest. Beginning with the first date on which interest is due, these bear the date and the amount of money to be paid. If the bond was issued June 15, 1917, for $100 at 3| per cent, the first coupon would state that on December 15, 1917, $1 . 75 would be paid to the bearer. This coupon could be deposited or cashed at any bank. INVESTMENTS 73 If a bond is registered the owner receives a receipt for his money, the bond is held by the organization issuing it, and the interest is paid to the owner by check. Coupon bonds are pay- able to bearer and should be kept in a safe deposit box because they are almost the sam.e as cash. The registering of a bond relieves the owner of the responsibility of taking care of it; though he must take care of his receipt. LIBERTY BONDS PREFERRED STOCK. Likening the United States to a great corporation with more than a hundred million stockholders and with capital stock and resources of m.ore than $250,000,000,000 and an annual income of $50,000,000,000, each American citizen is a stockholder in this great corporation. Even those whose only assets Liberty are their earning capacity own shares in our public f^^J^^^^« |/^^Jj^ domain and property and are working on a profit- sharing basis, with a vote and a voice in the management of the corporation and with the right to acquire m.ore stock at any time. A Liberty Loan Bond may be hkened to a share of pre- ferred stock in this gigantic corporation. Like preferred stock in other corporations, it may not return, at times, so large a dividend as common stock, but the dividend from it is certain and sure. It is stock that pays 4 per cent dividend, and while in some years crop failures may decrease the farmer's dividend from his land to less than nothing and various causes may lessen or destroy dividends from all other sorts of property, the divi- dend from the Liberty Loan Bond is certain and sure, subject to no failure. The owner of a Liberty Loan Bond holds written tangible evidence of being a preferred stockholder in the United States, the greatest, the most glorious, the m.ost honorable, and the most successful corporation in the world. He holds the certificate of being a citizen wilHng to support his Government and to lend money to his country when it needs and calls for it. OUR OPPORTUNITY— W. S. S. In the preceding chapters we have learned how the great war came to America; something of what America's part is to be in keeping alight the fires of liberty for the future generations, and in preserving our Christian civilization victorious over a culture founded on brute force and dedicated to the exaltation of an earthly prince. What is required of us in man strength and what is being done in the actual raising, preparation and training of an army and navy has been referred to; the tremendous task of supplying and equipping not only our own forces but those of our allies has been touched upon; and brief reference has been made to the humane work of relief so nobly performxed by the Red Cross and other agencies. The miere money cost of it all, the staggering totals of millions, of billions, has brought home again to us the hugeness of the task that lies ahead • and has brought to us strongly the lesson that by thrift alone can these material requirements be m.et. Reference has been made to the peace time power of thrift and to the ordinary investments open to man for the laying by of their surplus earnings. And now remains the task of applying the lessons of thrift to the work before us. For the government has made it possible for each one of us, each individual man and woman, each boy and girl in the United States to aid effectively in the prosecution of our war upon the German Imperial Government. Congress has pro- vided that there shall be loaned to the government the sum of Tr j^i. two billion dollars. This money is to be loaned bv Vandethp 1,1 r ^ on War the people through the purchase by them of war Savings savings stamps. In an interview printed in the Saturday Evening Post, Frank A. Vanderlip. chair- man of the War Savings Committee, describes the war savings stamps as follows: 'They are designed to give every man, woman and child in the United States the opportunity to aid the Governmient in financing the war. The unit is five dollars; but instead of leaning the Goveiiiment five dollars and getting a semi-annual interest'- return of ten cents a much better plan has been de- vised for the ^mall investor: Beginning December 1, 1917, the OUR OPPORTUNITY— W. S. S. 75 Government will offer a war-savings-certificate stamp, which it vdil sell in December, 1917, and in January, 1918, for $4.12. This obligation is in effect the Government's note for five dol- lars, falling due January 1, 1923; and the buyer who, during the coming December or January, purchases for $4.12 one of these five-dollar war-savings certificates is virtually discount- ing the Government's note for five dollars — discounting it at four per cent interest, compounded quarterly. In other words, Uncle Sam says to the citizen: Tend me $4.12, Uncle Sam and in return I will give you a stamp which is my and the promxise to pay. I will use your $4.12 to prosecute Citizen. the war and meet the expenses of Government, and will pay you four per cent interest, compounded quarterly. Thus, when January 1, 1923 rolls round, I will hand you back the money you helped me out with, plus the interest; so that — speak- ing approximately, and ignoring, in our liberal American way, the few odd cents — for every four dollars you lend me now, w^hen I need it, I'll give you back five dollars five years hence.' '''But,' we can imagine the citizen saying to Uncle Sam, 'don't you want me to lend you more than $4 . 12?' " 'Of course I do!' says Uncle Sam. 'I want you to let me have all you can spare throughout the coming year.' " 'Indeed I will!' says the citizen. 'I can let you have $4.12 in Decem^ber, 1917; $4.12 more in January, 1918; $4.12 more in February, and — ' " 'No,' says Uncle Sam; '$4.12 is all right for December and January, but on the first of every month after January I shall have to raise the price of the stamps one cent. They will cost you $4. 13 each during February, $4. 14 during March, $4.15 during April, and so on.' " 'There's only one question that troubles me,' says the citizen; 'I don't quite like the idea of tying up my savings for five years. Suppose I need some of this money between now and January 1, 1923?' " 'That's all looked after,' says Uncle Sam. 'In the event of your having to use the money which you will have loaned me you can go to any post office and get back the amount you have paid, plus one cent a month, for each stamp you have bought. I'll only ask you to give the post office ten days' notice so that funds may always be on hand to meet any demands made. Aside from this, you are free, if it becomes necessary, to draw your money from any one of my ten thousand money-order post offices.' " 76 OUR OPPORTUNITY— W. S. S. If a person has not at hand the money to buy a savings stamp he may purchase thrift stamps. These stamps cost Thrift twenty - five cents each. With the purchase of Stamps. ii^Q gj.g^ thrift stamp he receives a thrift card on which are sixteen spaces for affixing the twenty-five cent thrift stamps. When by the purchase of additional thrift stamps he has his card filled out at a total cost of four dollars he may take it to a post office and exchange it for a war savings stamp. For this stamp he gives his thrift card and an additional amount representing the difference between the current value of the savings stamps and four dollars, the value of the thrift card filled out. In January 1918 this difference is twelve cents, in February thirteen cents, in March fourteen cents and so on. It must not be forgotten that an investment in a war savings An Abso- stamp is absolutely safe. It can be taken to a post lutely Safe office and registered and if one loses it he will then be given a duplicate. Its value is constantly in- creasing and is printed on the face. It is the only government security which the law^ says shall positively increase in value. While we say that the government needs our money it might better be said that the government needs the things our money will buy. For this there are two essentials, it must have the money and we must not buy the things the government w^ants. Every time we spend money for a purpose not necessary for goods or service, we are compelling the government to compete with us. If laborers and manufacturers are busy supplying our needs, the needs of our soldiers must be neglected. We must not pur- chase what we do not absolutely need. With the money thus saved we can buy thrift stamps and war savings stamps and thus twice serve our country. Boys and girls of Vermont: The United States is at war. At war with an enemy ruthless, relentless and merciless. An enemy who will fight to the utmost, disregarding all neutral rights, mindful of no feelings of humanity. Its every re- OUR OPPORTUNITY— W. S. S. 77 source must be exhausted, its last man drawn into the swirling vortex of war, the ultimate strength of each human unit made to yield to a superior force, the only god the imperial German government knows, before peace will come. Upon such an undertaking has our nation entered. The ultimate victory must be ours, but it will not be ours until by sacrifice we shall gain the right to be called vic- tors. Money and material are but the least that must be given. The blood of our best young men, the promise of American life, must freely flow on the fair fields of France ere democracy, through the supreme sacrifice, is made secure. You have learned how the war came to America, why America fights, the real problems of raising an army and navy, of manufacturing and furnishing them supplies and of helping supply our allies, of building a fleet of merchant and transport ships sufficient to balance the toll of the deadly submarine, of producing and conserving sufficient food to insure that not only our allies but we ourselves may be kept free from the pangs of hunger and threatening starvation. How the mere money cost of it all must be met by each individual's saving, thrift and doing without has been explained in the account of the war savings stamps and thrift stamps by means of which every man and woman, boy and girl may become a real enemy of the German kaiser, an actual defender of Am- erican liberty and American right, a fighter in the cause of democracy. Never before in the history of our country or of any country has there been offered to every citizen, even our school boys and girls, an opportunity such as is now laid before you. Yours is the privilege of practicing the home- ly virtue of thrift, of doing without the unessential things, of saving your nickels and your dimes for the purchase of war savings stamps. By your sacrifice our armies can be 78 OUR OPPORTUNITY— W. S. S. equipped and the forces of our allies supplied. In the victory that must be ours you will have nobly done your share. Boys and girls of Vermont, sons and daughters of a state that has never yet failed our nation in time of need, lead on to victory! A TEACHING PLAN MAIN PROBLEM. Does a Vermont boy or girl who invests his savings in gov- ernment savings stamps and bonds show good business judg- ment as well as a keen sense of patriotic duty? (A) As a Patriotic Duty Minor Problems 1. What is America fighting for? 2. How are our government's war needs sup- plied? 3. Our personal responsibility and opportunity. (B) As an Investment Minor Problems 1. What opportunities has one with a limited income in our communit}^ to make investments? 2. How may we determine the value of an in- vestment? 3. How does the purchase of government sav- ings stamps and bonds compare with other available investments? (A) As a Patriotic Duty Minor Problem num^ber 1. What is Am^erica fighting for? 1. Reasons assigned by Congress when war was declared. 2. Our war aims: (a) As stated by President Wilson in the following papers: Messages to Congress, Reply to the Pope's Peace Pro- posal, Message to Russia, Flag Day Address, June 14, 1917. (b) As stated by members of the President's cabinet and members of Con- gress, notably Sec. Baker, Sec. Lansing, and Sec. Lane. 3. War aims of the Central Powers. 4. What failure to win the war would mean to Vermont boj^s and girls. 5. Conclusions. 82 A TEACHING PLAN Minor Problem number 2. How are our government's war needs supplied? 1. Soldiers and sailors. 2. Munitions and army supplies. 3. Hospitals, surgeons, nurses, supplies. 4. Ships. 5. Food for ourselves and our allies. 6. Fuel for ourselves and our allies. 7. Money. (a) Amount needed. (b) Raised by (1) taxation and (2) borrow- ing (Bonds, Loans). 8. How England, France, and Germany have supplied these needs. 9. Conclusions. Minor Problem number 3. Our personal responsibility and opportunity. 1. Why and how our government came into ex- istence. (a) What it does for us. (b) Our obligation in return. 2. Need for united effort in order to preserve our national ideals — our government. 3. Our responsibility as compared with that of older citizens. i. Aggregate importance of small loans and con- tributions. 5. Our opportunities to render patriotic services. 6. Conclusions. General conclusion as to the desirability of our making the investment as a patriotic duty. (B) As an Investment. Minor Problem number 1. What opportunities has one with a limited income to make investments in our community? A TEACHING PLAN 83 1. Savings Banks, Postal Savings. 2. Real Estate, live stock, etc. 3. Borrowing from bank for investment. (a) Promissory note. (b) Security. (c) Interest. 4. Types of life insurance. 5. Stock in stock companies, corporations. Bro- ker, brokerage. 6. Corporation, municipal, state bonds. 7. Government bonds and savings stamps. 8. Conclusions. Minor Problem number 2. How may^we determine the value of an investment? 1. Safety. 2. Net income from investment. 3. Regularity of income. 4. Expense connected with making the invest- ment. (a) Brokerage, Commissions, Fees, Bonus. 5. Ease of making the investment .und collect- ing the income. Kinds of bonds, coupon, registered, etc. 6. Daily market value as quoted in daily papers. 7. Conditions which cause the value to fluctuate. 8. Conclusions. Minor Problem number 3. How does the purchase of govern- ment savings stamps and bonds compare with other avail- able investments? 1. Conclusions from minor problems one and two. 2. Comparisons. 3. How may they be purchased. General conclusions. Note to teachers: The general conclusions should involve definite plans of action as well as desirability of investment. SUGGESTIONS FOR TEACHERS. The fundamental purpose of this curriculum is to give pupils an understanding of bonds and related subjects and to create an intelligent interest in the purchase of government savings stamps. The subordinate purposes are: (1) to teach pupils how to in- The Plan vestigate and organize a subject of study; (2) to and its bring about a proper correlation in several school Purposes. subjects dealing with different phases of the same subject; (3) to show the proper place of numerical problem solving in the treatment of such a topic in the arithmetic class; (4) and in short to furnish a teaching plan worthy of imitation in the various subjects of study. The subject is to be approached and the material organized The around an appealing problem — one that appeals to Problem. ^^q pupils as their problem and one which they desire to study. An interest in the problem is usually aroused in a preliminary discussion where the subject is introduced and the pupils are free to express their opinions. The following principles should be observed: (1) The subject matter must deal with present day interests of the pupils. It must be intimately related with what they may hear, see and talk about outside of the school room. (2) The pupils must be dominant partners in the business of selecting the problem to be studied. (3) The careful wording of the problem is most essential thTprob^ both for clearness of understanding of what they are lem. trying to do and because upon the wording fre- quently depends the kind and amount of interest aroused. The judgment of the pupils themselves can be relied upon in this selection. (4) The manor problems showing upon what knowl- edge the solution of the main problem depends should be de- termined by the pupils under the direction of the teacher. The pupils are entitled to see the subject from end to end in order that they may know v/hy they are required to get certain in- formation. (5) In this type of work so many interesting ''side issues" will arise that the teacher and pupils must con- SUGGESTIONS FOR TEACHERS 85 stantly guard against being led away from the point under con- sideration. It is valuable training for pupils to select those things which are vitally related to the topic of study and to reject all else. Interesting problems suggested for future study should be recorded. (6) Pupils must come to definite conclusions and they should go on record by stating them clearly and concisely. Much otherwise good teaching is ineffective because teachers and pupils assemble facts but they arrive at no new conclusions. The children fail to see what it is all about. Teachers should bear in mind that it is just as important to finish a subject well as to start it well. The conclusion is really the most important part of the study. The foregoing curriculum is given for illustrative purposes. Pupils will be much more interested in one they prepare in their own class. If teachers follow this one they should j^^^ ^^ ^^^ study it with the pupils in its entirety before making the Gurri- a detailed study leading to the solution of the prob- ^" ""^' lems. A pupil will do much more systematic and effective work if he sees the entire field and knows the relation of each day's work to the general subject under consideration. Our main problem, ''Does a Vermont boy or girl who invests his savings in government savings stamps and bonds show good business judgment as well as a keen sense of patriotic duty?" was selected by the seventh and eighth grade ^ pupils in the Montpelier schools. It is divided into pianation two main parts: (1) the purchase of bonds as a ^ftheTeach- • • 1 1 /r>x 1 1 f 1 1 i^S Plan. patriotic duty, and (2) the purchase oi bonds as an investment. The first part of the subject should be dealt with in the civics or current history class while the other is being taught in the . arithmetic class. The minor problems which must be solved before it is possible to solve the main problem are : (A) Patriotic Duty, 1. What is America fighting for? 2. How are our government's war needs supplied? 3. Our personal responsibility and opportunity. 86 SUGGESTIONS FOR TEACHERS (B) As an Investment, 1. What opportunities has one with a limited income to make investments in our community? 2. How may we determine the value of an investment? 3. How does the purchase of government savings stamps and bonds compare with other available • investments? A preliminary study is made of each minor problem and points to be investigated are noted. This work should be taken up by the class in order that they may appreciate the whole problem and to arouse an interest in it. Assignments are not made as so many pages of text. A minor problem the Pupils ^^ ^ P^^^ ^^ ^^ ^^ assigned. The pupil is to use the with the index in order to locate in the text such material as pfan, ^^ needs. To facilitate such work marginal notes are given which indicate the content of the para- graph. The pupils will be studying a definite subject rather than certain pages or paragraphs in the book. It is hoped that teachers will see the value of such assignments of work and make a more general use of it. It will be noted that much of the material may be used Use Material ^^ English classes and a study of European geo- in English graphy will help to clarify many points in the minds Classes. ^^ ^^^ ^^^-^^^ In the following suggestions the Roman numerals refer to the minor problems, the Arabic to the subdivisions. (A) As a Patriotic Duty (Civics or Current History) I. 1. Power of congress to declare war. Discuss Detailed reasons assigned for declaring war. 2. Careful for^Minor*^^ study of President Wilson's reasons for recommending Problem AI. declaration of war. Summarize the causes. Parts of the President's message are well worth com- mitting to memory by interested pupils. Compare the causes as stated by the president with those stated by others. 3. Compare the war aims of the central powers with the war aims of America. Contrast attitude INVESTMENTS 87 of the Kaiser and the President. Democracy vs. Autocracy. 4. Probable results if Germany should win. Brief study of freedom of our school system as compared with that of Germany. (See ''Century" for Dec. 1917). Emphasize fact that interest is personal not simply a problem for grown- ups. 5. Each pupil should state in his own words an answer to the question, ''What is America fight- ing for?" Discuss these in class and let the class adopt an answer to the question. We are at war in a good cause. We must succeed. A II. Our needs are great. How are they to be supplied? Detailed 1. Requirements for enlistment in various de- Suggestions partments. The draft law^ its purpose and how it Problem operates. A democratic army. (See Ladies Home ^ ^^• Journal Jan. 1918). 2. How the government is supplying munitions, etc. Congressional investi- gations. Use of private plants. Drafted men as- signed to work in munition plants. Work of women. Clothing and other supplies for soldiers. A fully equipped soldier. Needs of a million men. How paid for. 3. The government's provision for hospitals and medical supplies. The Red Cross — what it is, what it does — and how it is supported. Y. M. C. A., Y. M. H. A., K. of C. Other agencies. 4. The need for ships. The building program. Transportation problems. Government operation of railroads. Coal and sugar shortages. How can we help? 5. Production and conservation. Mr. Hoover and his work. America's responsibility and our part in it. 6. Dr. Garfield and the fuel problem. The "Cut-a-cord-of-wood" movement. How can we help? 7. Power of congress to raise money. Kinds of taxes. (Direct, customs duties, excise, income, etc.) Loans. Little opportunity to borrow from other countries. We are the lenders in this war. The government must either tax the 88 INVESTMENTS A III. Detailed Suggestions for Minor Problem. A III. people or must borrow from them. Bonds evidence of loans made to our government. Use of bonds by corporations, towns, states, etc. (This work is paralleled in the arithmetic class by additional study and problem solving for illustrative purposes. See suggestions under B. I. 6.) If we lead up to the use of the word ''bond" in this way the pupils have a back ground for appreciating its purposes and nature. Examine a bond. 8. What we may learn by the experiences of. our allies. How they have shown their patriotism, etc. 9. A concise definite statement in answer to the question, ''How our government's needs are supplied?" 1. Am^erica's aim.s now and in 1776. Recall pre- vious study made of what our government does for us and our obligation in return. 2. "Of the people, for the people, by the people." Frank- lin's advice to colonists concerning unity. En- tente AHies plans for united effort. Every citi- zen's war. 3. See A, I, 4. Our responsibility just as great, our cooperation just as important, our aid just as valuable as that of our elders. 4. Why Secretary McAdoo and others prefer a large number of small bond holders to a small number of large bond holders. Number of people subscribing to liberty loans of 1917. Amount of loans. Amount to be raised by sale of savings stamps. $20 a person — man, woman and child. As an illustration of aggregate importance of small contributions call attention to results of efforts of Green Mountain Guards. 5. List opportunities for patriotic services which are open to Vermont boys and girls. Emphasize purchase of savings stamps. 6. Require each pupil to state with reasons his conception of his own responsibilitj^ and opportunity in helping to finance the war. INVESTMENTS 89 As an Investment (Arithmetic class work.) (B) No new mathematical principles are involved in this work. The pupils should be made thoroughly familiar with the business setting which gives rise to the problem. The solution of actual numerical problems is incidental and reinforcive and affords an opportunity for the pupils to apply the mathe- matical principles with which they are acquainted. Much of the best class work in arithmetic in these subjects will not concern itself with numerical problem solving but will prepare the way for an intelligent interpretation of the problems. If the pupil understands just what the problem means its solution is easy. Types of problems in texts in rather general use in the state are referred to. Select such problems from the lists as pertain to the phase of the subject under consideration. It is very desirable to get the problem material from Proper Use of local, present day situations. Use newspaper Problems. quotations and by substituting present day prices, etc. modernize the problems given in the texts. Solve many new problems dealing with recent bond issues, government saving stamps, etc. All of this work will be very real and meaningful if presented as a live issue of the day. 1. Savings banks in the community. How in- B I. terest is computed. Have pupils bring savings bank books to class and audit them. Compare savings bank deposits with postal savings. Note advantages and disadvantages, income etc. *See W. & S. pp. 383-388, E VI pp. 34-41, W. pp. 18- 20, S-B pp. 233-239, H. pp. 213-215, 227-231, T. & B. p. 54. 2. Money needed for real estate investments. *W. & S. — Wentworth & Smith Grammar School Arithmetic, Ginn & Co. S-B,— Silver Burdett Arithmetic, Book III. H. — Hamilton School Arithmetic, American Book Co. T. & B. — Teller & Brown A First Book in Business Method, Rand-McNai/y & Co. E.— Every- day Arithmetic, Book III, Houghton-Mifflin Co. W. — Walsh-Suzxallo Arithmetic, Business Practice, D. C. Heath & Co. 90 INVESTMENTS How interest is charged on easy payment plan. See W. &. S pp. 434-435, E. VI pp. 41-46, W. p. 140. 3. Borrowing money for investment. Security needed, personal, collateral, mortgages, etc. Notes, interest, rates, how computed, etc. See W. & S. pp. 393-396, S-B 240-245. H. 231-238. T. & B. pp. 77-82, 98-102, 223, 226. E. pp. 59-70. W. pp. 140-153. 4. Kinds of life insurance. As an investment. Advantages and disadvantages over savings banks. How do these compare with postal savings, sav- ings stamps, etc.? Insured must pay for the pro- tection in case of death if he purchases an endow- ment policy, See W. & S. pp. 429-431; S-B pp. 210-212; H. pp. 186-187; E. pp. 78-79 and 144- 145; W. pp. 98-99. 5. Study a local stock company. Are there part- nerships in community? Advantages of stock company over partnership. Read Vermont in- corporation laws. Form stock companies. Is any stock for sale? How would one desiring to pur- chase stock in a local company go about it? Why would he desire to own stock? How is his amount of earnings determined? Preferred stock and com- mon stock. Evidence of ownership. (Have stock certificate at school for pupils to examine.) Sup- pose you desire to invest in stock of a large rail- road company, how would you make the purchase? What opportunity has the broker to get informa- tion concerning stock for sale which you do not have? How does he charge for his services? Can you learn of the stock market daily? (Newspaper quotations should be studied and problems de- rived.) See W. & S. pp. 437-445. S-B pp. 217- 227. H. pp. 248-255. T. & B. pp. 190-191, 182- 190. E. pp. 44-50. W. pp. 184-198. 6. How may a man who owns property but needs INVESTMENTS 91 money raise it without selling property. (Mort- gage.) Compare with bonds issued by corpora- tions, etc. Rate of interest. Convertibility etc. See W. & S. 442-445, S-B pp. 217-227, H. 255-258. T. & B. pp. 223-231. E. pp. 50-53. W. pp. 199- 202. 7. Government bonds and stamps compared with corporation bonds. Lending money to govern- ment at a certain rate of interest. See E. p. 51. Solve many problems based on Liberty Loan Bonds, War savings stamps, etc. 8. During this study constant comparisons should be made. The pupils should list opportunities for investment in their community. 1. Upon what does the safety of an investment B II. depend? Compare the safety of government bonds with other bonds, stocks, etc. See W. & S. pp. 429-231. W. p. 138. E. VI pp. 35, 54, 56, 152. 2. Income computed on par value but rate of income on investment determined by purchase (market) value. Probability of change in market value of government bonds. Examine quota- tions on government bonds. How can one invest in government bonds? 5. Make clear the ease with which they may be purchased. No brokerage, or commission. No taxes. See W. & S. pp. 439- 441 and 444-445; S-B pp. 217-227; H. pp. 255-257; T. & B. p. 192. E. VI pp. 44-52. 6 & 7. Study newspaper quotations from day to day. Note Detailed variation in price. What conditions contribute to f^JJ-^lunor^^ fluctuation? See W. & S. pp. 444. T. & B. 185- Problem. 193. E. VI p. 51. 8. Summarize ways for de- termining value of investment. See E. VI pp. 54-58. W. p. 1, 18, 138; E. VI p. 57. 92 INVESTMENTS B III. From conclusions in B I and B II classify avail- able investments as to desirability. Explain fully the savings stamp plan or purchase of government bonds. State fully and clearly your conclusion to the General . , , Conclusion, mam problem. INDEX All About W. S. S. What are They? They are War Savings Stamps; They are of two kinds: United States Thrift Stamps (25c. each). United States War Savings Stamps ($4 . 12 each). Sixteen United States Thrift Stamps plus 12 cents in cash in December, 1917, or January, 1918, may be exchanged for a War Savings Stamp which, when affixed to a War Savings Certifi- cate, is a Government obhgation to pay the holder $5 on Janu- ary 1, 1923. War Savings Stamps are as safe as the United States. Why Should I Buy Them? Because — we are at war; Because — the more we save, the more labor and material will be available for the use of the Government and for the support of our Army and Navy; Because — we must have dollars as well as men in the fight for freedom ; Because — they establish the soundest and simplest basis of saving, which is the key to individual success, Because — War Savings Stamps increase each month in value. How Can I Buy Them? As simply as buying postage stamps. Any man, woman, or child who can save 25 cents can obtain at any post office or bank a United States Thrift Stamp and a Thrift Card to which to attach it. Where Can I Buy Them? At the Post Office, Bank, Trust Company, and many other author- ized selling agencies. When Shall I Buy Them? Buy them now, because they cost one cent more every month after the 31st of January, 1918. The sooner you buy them, the more you save. The price of War Savings Stamps is as follows: Jan. $4.12 Apr. $4.15 July $4.18 Oct. $4.21 Feb. 4.13 May 4.16 Aug. 4.19 Nov. 4.22 Mar. 4.14 June 4.17 Sept. 4.20 Dec. 4.23 Every Stamp helps to save a life. Every Stamp will help to end the war. INDEX A A Abraham, Father, 40. Advertising bad investments, 48-49, Airplanes, 25. American Library Association, 31. America's motive, 7-8. Ammunition, 33. Amusements for soldiers, 31. Arizona, 15. Arms, 33. Army, organization, 17; raising, 17. Articles of Association, 60. Austria, 10, 15. Aviation, 25. Ayer, Massachusetts, 22. B B Bagdad, 15. Bank, commissioner's warning to public, 47; savings, 49: by-laws, 50; postal savings, 55. Baker, Secretary of War, 10. Baltic, 10. Bankers, 47; Investment Association, 48. Beef, 27. Belgium, 9, 11, 30. Beneficiary, insurance, 55. Berlin, 15. 96 INDEX B Bonds, abbreviations, 68; classes, 69-70; corporation, 68; coupon, 67; debenture, 66; government, 46, 48-49; government, as an investment, 68; government, quotations, 69; government, safety of, 69; industrial, 70; interest paid on, 67; liberty, see Liberty Bonds; liberty loan, 44; mortgage, 66; municipal, 70; municipal, as investment, 68; public utility, 70; railroad, 70; railroad quotations, 67 ; registered, 67, 72. Books, 31. Bread, war, 26. Brokers, 47, 62, 64. Brokerage, 64. Bulgaria, 10, 15. ''Bulls and Bears", 65. Cantonments, 21. Capital; 58. Capital stock, 59. Certificate, stock, 59. Classification, draft law, 18-19. Clothing, 33. Coal, 27. Commissioner, bank, 47. INDEX 97 Common stock, 61. C Compound interest, 51; benefits of, 54; grows rapidly, 52; progressive, 52. simple, 52. Congress, extra session of, 6; declaration of war, 8. Corn, 27. Corporations, 59; cooperative, 60; directors, 60; how organized, 59. Crowder, 18, 19. Curb prices, 66. Current History Magazine, quoted, 24, 45. D D Dairy products, 26, 27. Danger to United States, 11. 13. Debenture bonds, 66. Declaration of war, 8. Democracy, 8, 10, 16. Dependents, caring for, 33, 34. Deposits, in savings banks, 50, Destroyers, 33. Devens, Camp, 22. Diplomatic relations, breaking, 5. Directors, 60. Dividends, 60, 61. Divine right, 13. Draft law, 17. Duty, patriotic, 44, 46. E Earnings, 63. Economy, widespread, vital, 46; wise, 46. E ^ INDEX E Edelsheim, Baron Franz Von, 13. Emergency Fleet Corporation, 25. Endowment Insurance, 55; as an investment, 57. England, sugar shortage, 27. European war, 5. Exports, 26. Extravagance, 34. Farm tools, 27. Fertilizers, 27. Fish, 27. Food, administration, 27; administrator, 26; control law, 27; need, 26, 33; public concern, 26. Ford, Henry, on thrift, 39. France, sugar shortage, 27. Franklin, Benjamin, 40, 42. Fuel, administrator, 27; control law, 27 ; needs for army and navy, 27; shortage, 27. G G German aviators, 11. German designs on America, 14. German war aims, 13, 15. Goodwill, 63. Grain, 26. Great Lakes, 22. INDEX 99 H H Habit, how formed, 35; investment, 44. Halifax disaster, 31. Hill, James J., 38; idea of thrift, 39. Hospitals, 29. Hoarding, 27. Hoover, Herbert, 26. I Imperial ambitions, 15. Insurance, as an investment, 57; endowment, 55; for protection, 57; life, 55; soldiers' life, 33, 34. weeldy, 56. Interest, compound, 51; paid on bonds, 67; progressive compound, 52; savings bank, 49, 50; simple compound, 52. International law, 7. Investments, advertising, 48, 49; advice on, 47; an absolutely safe, 76 ; bad practices, 48, 49; chapter on, 47; corporation bonds, 68; element of thrift, 46, 47; essentials of good, 70, 71; government bonds, 68; 100 INDEX I Investments, income, 63; judging value of, 63; municipal bonds, 68; poor, 47; safety of, 70-72. Investors, protection of, 47; young, warning to, 47. Ironcrosses, 12. J K Japan; 15. Kaiser, proclamations of, 13. Knights of Columbus, 29, 31. Kniffen, W. H., quoted, 36. Knitted goods, 29. L Labor shortage, 28. Lane, Secretary of Interior, 9. Lansing, Secretary of State, 11. Lauder Harry, ten thrift rules, 44. Liberty Loan Bonds, 44; amount sold, 33; as an investment, 70, 73 ; will sell at premium, 45. Libraries, 31. Licensing, 27. Listed stock, 62. Living, promote better, 41. Louvain, 11. Lusitania, 5. INDEX 101 M M Mare Island, CaL, 22. Market value, 60. McAdoo, Secretary of Treasury, 33; urges self-denial, 45. Meat, 26. Merchant marine, 33. Mexico, 5, 15. Mexico, German attempts in, 15. Militarism, 10. Money, amount needed, 32; borrowing, 32, 33; how expended, 33 ; needs of nation, 32; raised by taxes, 32, 33. Mortgage bonds, 66. Mortgages, 47; as an investment, 58; definition, 52. N Navy organization, 22. ^ Navy training stations, 22. National army, 17, 21. National guard, 17, 21. Needs, government, 32, 34; how supplied, 34; of a million soldiers, 23. Neutrality proclamation, 5. New Mexico, 15. Newport, R. I., 22. Norfolk, Va., 22. Notes, secured by mortgage, 47. Nurses, Red Cross, 29. o O Official Bulletin, quoted, 44, 69, 70. Ordnance, 33. Orphans, war, 30. 102 INDEX Partners, dormant, 58; profit-sharing, 58; real, 58; silent, 58. Partnership, 58; compared with corporation, 59. Par value, 60; profits computed on, 60. Patriotic duty, 45, 46. Patriotism, 46. Paying for the war, 32. Policy, insurance, 55; endowment, 55; limited payment, 56 ; ordinary life, 56 ; whole life, 56. 'Toor Richard," sayings, 40. Pork, 27. Postal savings banks, 55. Postal savings stamps, 55. Preferred stock, 61; liberty bonds as, 73. Premium, computation of insurance, 55 ; on liberty bonds, 45. Premiums, insurance, table of, 56. President, see Wilson, Price fixing, 24, 27. Proverbs, Father Abraham's, 40. Puget Sound, 22. R R Real estate, as investment, 57, 58. Red Cross, emergency work. 31; INDEX 103 Red Cross, Con.-^ R hospital bombed, 29; nurses, 29; reconstruction work, 30 ; recreation, 29; recuperation camps, 29 ; supplies, 30; surgical dressings, 30. Registration, 18. Regular army, 17. Resources, 41, Responsibility, personal, 10, 11. Revolutionary war, 10 Roumania, 30. Russia, 30. Ruthless warfare, 7. 15. Saturday Evening Post, quoted, 74. Saving, certificates, 33; definition, 38; for future, 44; stamps, 33, 46. Savings Banks, by-laws, 50; compound interest paid, 51; deposits, 50; interest, 49, 50; postal, 55; Vermont Law, 49 ; withdrawals, 50. Schemes, fraudulent, 48. Secretary of interior, 9. Secretary of navy, 22. 104 INDEX S Secretary of war, 10, 17. Security, bank book as collateral; 54 ; price of, 63. Selective draft, 17-21. Self-denial, practice, 45. Serbia, 15, 30. Service, 42, 43. Share of stock, 59. Shipping board, 24, 25. Ships, 24; German, 25; steel, 25; wooden, 25. Soldier, earning power, 34. Soldiers, needs of a million, 23. South America, 16. Spy system, German, 5. Stamps, see war savings and postal savings stamps. Statements, financial, 64. Stock, certificate, 59; common, 61; ''Listed," 62; preferred, 61; transfer of, 62. Stock company, 59; cooperative, 60; how organized, 59. Stock exchange, 62; membership in, 62; New York, 62. Stockholders, 59. Stock, quotations, 65. Submarine, and food supply, 26; chasers, 33; warfare, 5, 6, 7, 11, 25. INDEX 105 Supplies, 23. , • g Sugar scarcity, 27. Suggestions to teachers, 84, Taxes, exemptions, 72; 84. v/ar, 32. Teaching plan, 79. Texas^ 15. Thrift, antidote for worry, 37; definition, 35. 36; driving power of, 42; Ford on, 39; habit, 35, 37; Hill, idea of, 39; importance of, 35; investment element of, 46; learn it early, 39; makes for strength, 37 ; proverbs, 40; rules, 36, 38; rules, 36, 38; what it is not, 36; what it will do, 38. Thrift stamps, 76. Training camps, 21. Treasury, secretary of, 33. Turkey, 7, 15. . Value, market, 60; par, 60. VanderHp, Frank A., 74. 106 INDEX W • w Wants, its causes, 41. War aims of United States, Baker, 10; Lane, 9; Lansing, 11; ,,'l in 1776, 10; Wilson, President. 8. .. ,. .;j War bread, 26. i •/'wi Warning to investors, 47. ;^; , i War savings certificates, 33. War savings stamps, 33, 74-76. War tax bill, 32. War taxes, 32. Waste, costly habit, 37. West Indies, 27. Wheat, 26, 27. William II, 13. Williams, Frank C, 47. Wilson, President, flag day address, 15; message to Congress, 6-8, 17 ; neutrality proclamation, 5; on cost of war, 45; organizing for war, 17. Women workers, 34. Y. M. C. A., 29, 31. Y. M. H. A., 29, 31. Youth's Companion, quoted, 42. Deacidified using the Bookkeeper process Neutralizing agent: Magnesium Ox Treatment Date: j/j^y PreservationTechnologiej A WORLD LEADER IN PAPER PRESERVATIOr 111 Thomson Park Drive Cranberry Township, PA 16066 (724) 779-2111 LIBRARY OF CONGRESS 007 690 991 A