and special uses of buildings, as relating to real estate financing. Loans on vacant property. Standards of real estate values. Deter- mining building costs. Valuation computed on cubic feet of build- ing; on income from property. Contents of application form for real estate loans. Review of and check on the loan. Real estate Vice-President, First Trust and Savings Bank, Chicago Survey of the history of the agricultural credit situation prior to the passage of the Federal Farm Loan Act of 1916. Conditions prevailing which made legislation seem advisable. Organization and operation of the Federal Farm Loan System: Federal Land banks; Joint Stock Land banks. Discussion of investment characteristics. Intermediate credit bank bonds. An act provid- ing machinery supplementary to the Federal Farm Loan System, Assistant Manager, Sales Department, Harris Trust & Modern investment banking a recent development. Volume of security issues of 1924 an indication of importance of investment business. Types of investment banking houses: underwriters do- ing only wholesale business, underwriters combining wholesale and retail business, houses doing only retail business. Buying department of an investment banking house. Sales department. Trading department. Accounting department. Numerous ser- vices rendered the investor by the investment banking house. Investment banking groups that function in buying securities. Selling groups, syndicates. Functions of various syndicates. In- vestment Bankers Association of America, its organization, pur- terest, 1900 years ago, would equal $563,404,100,000,000,000,- XVIII GOVERNMENT REGULATION OF SECURITIES By WILLIAM L. Ross President, Wm. L. Ross & Company, Inc. Beginnings of "blue sky" laws. Wide variations among state acts. XIX 349 INVESTMENT TRUSTS By ROBERT STEVENSON, JR. President, Stevenson, Perry, Stacy & Company Definition of investment trust. Foreign financing as cause of INDEX 362 379 I THE HISTORY AND ORIGIN OF INVESTMENT By EUGENE M. STEVENS Vice-President, Illinois Merchants Trust Company, Chicago Definition of the term "investment" in its financial sense. Investment distinguished from speculation and gambling. The early history of investment. Credit and economic development. Business organizations. Partnerships. Rise of the corporate form of business. Changes in forms of ownership. Characteristics of an investment. Pure interest and payment for risk. Fixed capital investment. Rise of investment banking business. THE term "investment" has several other meanings than the one which will be considered in this book. The derivation of the word makes its literal meaning "to clothe in or to clothe with," and this is its literal application when one is invested with the robes of authority. There is a significance in this derivation, however, which is peculiarly applicable to the subject we have in mind, as the suitable investment of capital clothes it with authority and with power to work for and bring gain to its owner. Money could be locked up in a safe deposit box and, in a practical way, be absolutely safe from risk or loss. But that would not be investing. The basis of investment of capital, at least in its modern sense, is interest. Interest is simply the rent or hire for the use of money. It is the measure of the earning capacity of capital employed. Every dollar has a certain earning power. As we put it to uses in which it exercises that earning power with safety and regularity of return we are investing. But if we lock it up in a safe deposit box, a part of it-its earning power-is lost and will remain lost as long as the dollar is left in idle safety. Interest, or the hire or rental for money, in its present use is comparatively modern. Likewise, the term "interest" is 3 |