Executive. They believe that side by side. with his work in this capacity he has been the most tremendous speculator in the United States for the last ten years. They believe that his influence has been against the lowering of railroad rates throughout the West. They believe that he has used his power and his wealth to purchase legislation and to stifle the processes of law both East and West. They believe that his attack upon Mr. Fish was inspired by a personal malice as deadly as any other that has ever been exposed before the eyes of the public.

Against these firmly established beliefs in the minds of the people, what has Mr. Harriman said or done in his own defense? He has gibed at the Rock Island because it bought from him the watered stocks of the Alton, watered in order to produce millions of profits for the Harriman syndicate. He has refused to answer all questions tending to show that he has exploited the Union Pacific treasury for his own profit. He has passed by with silent contempt the public accusation that he has been a great speculator in the Wall Street market. He has never said a word to the public with regard to the political activities of the Southern Pacific in California, nor yet with regard to his own political methods in New York. With regard to rates, he assumed before the Interstate Commerce Commission an attitude which said as plainly as could be: "You must prove that our rates are higher than they ought to be. How are you going to do it?" He has defended his action with regard to Mr. Fish by endeavoring to show to the public that Mr. Fish was guilty of acts, as president of the Illinois Central, which render him liable under the law.

A lame defense, indeed! At no single point has Mr. Harriman made his position clear. His cynical sneer with reference to the Alton reorganization is as clearly a self-indictment

States. He, therefore, continues to represent the State of Utah in the Senate, with his powers unimpaired. The finding of the Senate Committee is practically nothing more than a repetition of the well-established principle that membership in a religious organization does not debar a citizen from the Senate, no matter what that religious organization may be. There was no charge of immorality nor of personal wrong-doing against Mr. Smoot.

The objection against him, in fact, appears on the face of it to have been one of those sentimental, if not bigoted, outbursts, which must be expected in a democratic country, where all men meet together on an equality so far as religion is concerned. If Mr. Smoot were himself a polygamist, the outbreak would be justified. Since he is merely a Mormon, practising no code that is itself defiant of the law, we may congratulate ourselves that this little tempest in a teapot has passed into history.

The exoneration of Senator Bailey by the Texas legislature is quite another matter. The first impression that one gets from reading it is that the people of Texas must be very easily satisfied if they are content with the alleged investigation carried on by the Texas legislative committees. We do not believe that any foreign critic could take up the records in this case and conclude from them that the public accusations against Senator Bailey have been completely refuted. Technically, Senator Bailey goes back to Washington cleared of the imputation that he sold his influence to great financial powers; and there is a general confidence in the honesty of his vanity. But he would probably find a cloak of political oblivion a much more comfortable covering for the future than he will find this legislative acquittal. Yet what other state has even called any Senator to account for such a cause?

RAILROAD CONSTRUCTION IN AFRICA

regard to the Union Pacific is equally damaging in the public mind. These things must be cleared up or Mr. Harriman will become to the United States as black a figure as was Jay Gould in a former era.

presents a forecast with reference to the general development of Africa in the future. The part of the article dealing with railroads is of great interest. Through an omission caused by Mr. Verner's absence, an important railroad in Africa was left out, the English line from Mombasa to Uganda. This railroad is about 500 miles long and is entirely completed. It will form one of the links in the TransContinental Trunk Line from Matadi, at the mouth of the Congo, along the main stream of

the Congo to Stanley Falls, thence across to the great lakes, connecting with Lake Victoria, and thence across British East Africa to Mombasa. Mr. Verner has indicated in the article that all his forecast is merely a summary of probabilities. It will be interesting fifty years hence to compare the actual conditions in Africa with this forecast.

The United States has had, thus far, little part in the civilization of Africa. Our own

vast, undeveloped territory, our insular problems, and the investment opportunities in Mexico, Canada, and Latin-America, have kept us from engaging in enterprises so distant. But it is now evident that American capital and American energy are to become powerful factors in the upbuilding of the African continent. This fact will undoubtedly help to hasten the fulfilment of many of the predictions made by Mr. Verner.

ST

IDE by side with the glaring advertisements of the new mines of Nevada, Alaska, and the Cobalt region, one may find in these days the equally enticing advertisements of various small industrial companies, concerns organized to exploit and finance some new invention. In almost every case, the promoters of these corporations seek to interest the investor of very small means. The stocks of the new companies are made in small shares-$1, $10, or some other small denomination- so that even the poorest of the savers may participate in the buying of the stocks.

Yet the small investor is the very last person who should go into such corporations, because the element of risk is very great. It is well, perhaps, to analyze a few recent offerings of this sort in order to arrive at fairly definite facts upon which to base this conclusion.

In the Sunday editions of three great New York daily papers of recent date, the following companies published alluring invitations to investors:

A company to build a new place of amusement at Coney Island.

Two companies offering shares in rubber plantations in Mexico.

A company to build an electric air-line from Chicago to New York.

A wireless telegraph company, A Brazil banana-growing company. A company with a new steel-making process. Two lumber and development concerns. There were many others but these will serve to illustrate the dangers to which the small

investor is exposed if he reads the Sunday papers with any small degree of faith in the wares which they offer for sale.

THE AMUSEMENT ENTERPRISE

The promoter of the Coney Island enterprise is moderate in his claims. In fact, he promises little that may not, in time, be fulfilled. He offers his stocks at a discount. The lure is an expressed belief that the stocks will pay from "50 per cent. to 70 per cent. dividends in time." in time." There is no definite promise of such dividend, but it is held out as a possibility. Meantime, the stock is offered as a good investment." On another page of the same paper which prints the advertisement, the reader may find a full-page "write-up" of the new concern, professedly a news story, describing the first work that has been done toward the erection of this "giant attraction." There are many alluring references to the success that has followed Messrs. Thompson & Dundy, with their Luna Park, their Dreamland, etc.

The offer is very enticing. The thing that is not told, however, is that not more than one out of every ten such companies begins to pay profits until it has passed out of the hands of the builders and into other hands through process of bankruptcy. Not so long ago, it was told in the papers that when Luna Park was opened to the public, the money actually in the hands of the builders and promoters was down to the last seven dollars. There were debts piling up every minute. It was a very narrow squeak. The venture was a gamble until the very last moment, and only

extraordinary ability saved it from complete failure. The present venture must be built in four months to get the full season of 1907. That means an immense amount of money to be spent, all at once. The selling of stock is to get the money. If not enough stock can be sold, the probabilities are that the whole concern will change hands before it opens, and the original stockholders will be "frozen out," as usual.

PLANTATION AND WIRELESS VENTURES

If a man whom you did not know came to you and said: "I am going to start a store down in Mexico, and I want you to put in some money!"-would you do it?

Yet that is the very thing the two rubber plantation men and the banana-plantation man are asking you to do. These concerns are as purely business concerns as are the stores on the streets of Mexico City. Their success depends upon a great many elements. First, their property must be real rubber-property or banana-property; second, their titles must be flawless; third, their capital must be great, because rubber and banana trees, artificially planted, take a long time to grow to bearing age; fourth, their markets must be assured; fifth, the men who are running the company must be honest, and must also be conversant with the rubber business or the banana business.

In the prospectus, all this will be answered, of course; but who can believe a prospectus unless he also knows personally the men who write it? There have never been printed in the United States more glowing prospectuses than those which offered to the public the stocks of the Texas oil companies five or six years ago but where are those companies now? You will often find, in the list of directors or officers of these concerns, the names of men of whom you have heard. It may be an ex-Governor of Connecticut-it was in the case of several of the worst frauds ever perpetrated-it may be merely the cashier of your local bank, it may be your own Congressman, or even your Senator. Don't trust it. Before you even think of taking any stock, write to the man whose name you know. If he does not reply, don't invest. If he does reply, but in vague and uncertain tones, write him down as not to be trusted, and go your way. If he openly and fully endorses the concern, then go further, and investigate both him and the company. At any rate, don't buy stocks in

these companies until you know, of your own knowledge, that they are both honest and efficient.

How many thousands of people in the United States are now treasuring the stocks of wireless telegraph companies, bought within the last six years at prices from 200 per cent. to 600 per cent. higher than they are to-day? It began with the Federal, floated about six years ago with the most extravagant promises. Men who put $10 into that stock may now, perhaps, if they know how the Curb Market in New York works, get out of the investment a net result of seventeen cents. It has run, of late years, through at least five other companies, not a single one of which can be trusted. Two years ago, the flotation of these stocks was going on at a tremendous pace all over the country. The men who bought can now get out of their stocks at, in some cases, 25 per cent. of what they paid. In other cases the present value is below 10 per cent. The whole business of selling these stocks has been permeated with fraud of the most transparent kind. While one company was offering its stock at $5, the same stock could be picked up in the Curb Market for $1. A Philadelphia broker actually bought a lot of it and offered it, with a 5 per cent. guaranteed dividend, lower than the company itself was selling it without any dividend.

TRACTION AND LUMBER COMPANIES

The project of an electric air-line from Chicago to New York is being extensively advertised. Thousands of people have turned over sums of money to the promoters, and actually hope that in time they will ride along this fanciful road, which so skilfully dodges every large town along the intervening country. The prospectus and the advertisements are skilfully worded, and the "steady rise in price" promised at the outset has been realized. You cannot buy the stock from the company as cheaply to-day as you could six months ago. That is what the promoters call a "rise in price." What it really means can only be judged from an attempt to sell the stock you bought six months ago, at the prices quoted to-day. Try it and see!

When you are going to buy stock in a railroad from Chicago to New York-or between any two cities, for that matter-demand, first of all, satisfactory legal proof that the company owns terminal rights in both cities. It is costing

the Pennsylvania, roughly, $100,000,000 to get a terminal in New York. At the prices obtainable for the stock of this electric company, it would take between $300,000,000 and $400,000,000 of stock to buy such a terminal alone, let alone build its line from Chicago to New York. If this company, or any other company, has secured a right-of-way between these cities, demand to see the deeds of property, or at least demand satisfactory proof that such deeds exist. They may tell you that they have "options" on the property, which they will exercise when they get enough money. Don't believe it. Promises are cheap, but fulfilment costs a lot of money.

The lumber and development company may be perfectly honest, or it may not. The records of such companies are bad. Before you can afford to invest a dollar in such a company, you must get an investigation of the company from independent people. You cannot take the prospectus at its face value. The two companies to which particular reference is made are formed to open up tropical forests in Central America. Of its very nature, this is an industry that should be handled by private firms, not by corporations. The risks are enormous, the amount of capital needed immense. The markets for the product are exposed to the most flagrant manipulation, and even the perfectly honest concern may be hard put to it to get any profit from the exploitation of the business. It is easy to sit down in New York and figure out the profits on a million feet of mahogany lumber, but to get the lumber to market and sell it is quite another matter.

SOME INVESTMENT FALLACIES

It is strange, almost uncanny, the unanimity with which the small manufacturing companies pin their faith to the success of the Bell Telephone. When the Federal wireless concern was floated six years ago, the most alluring thing in the prospectus was the statement that the Bell Telephone stock bought for $50 could now be sold by the buyer for $100,000. The same statement, in different forms, decorates the pages of at least one out of every five prospectuses offering new inventions to the public for subscription. The statement is based upon a strange mathematical computation, whereby the small original capitalization of the Bell Telephone Company of America is credited with all the property of the present

"Telephone Trust," without allowance for all the money that has been put into it since.

Whenever you happen to meet with a prospectus in which this fact is stated, be sure that the promoters are trying to make you think that every $1 which you put into its stock has a chance to become $2,000. Apply to the statement the simplest kind of multiplication, and see where it lands you. Just multiply the par value of the company's stock by 2,000. In the case of a concern with a capital stock of $1,000,000, it means that this stock may be worth $2,000,000,000. Then remember that an industrial company should earn from 5 per cent. to 10 per cent. on its market value, and you will see that the earnings would have to amount to, in this instance, nearly $200,000,000 before the claim could be made good. When you have analyzed the statement in this way, it cannot help but strike you as preposterous. Then throw the prospectus away and forget about it.

Recently, an investment company, so-called, has been offering to the public an alluring bait. You pay $10 for one share of "guaranteed 7 per cent. stock" of a company which will manufacture a new invention, and you receive with it another share of common stock, which is not "guaranteed" but which will, say the promoters, pay dividends of "35 per cent. to 50 per cent.," as soon as the concern is under full headway. In the prospectus these pertinent questions are asked:

"Why let your money lie in the savings bank, which pays you only 3 per cent. while the bankers make from 6 per cent. to 10 per cent. out of it?

"Why buy bonds that give you only 4 per cent., while the men who get your money make 25 per cent. out of it?

"Why not get a sure 7 per cent. with us, with a good chance to make over 50 per cent. ?" Every small investor throughout this country should get clearly fixed in his mind the replies to that insidious series of questions. The answers may be set down briefly:

"Because the law of my state safeguards the money I put in the savings bank, investigates that bank at intervals to look out for my interests, and prescribes exactly what the bank can and cannot do with my money.

"I buy bonds because, if I select them carefully, they are as safe as the savings bank, and they are drawn as legal instruments and safeguarded by the full power of the law.

"I do not buy your stock, because the guarantee, so-called, is no good unless your company should turn out to be good. A guarantee is only needed when the company fails, and your failure would destroy the guarantee itself immediately. The law does not safeguard me in such a speculation, because it is rarely a business venture. With you, I should be a blind partner, exposed to your dishonesty, to your risk, with no redress in case of failure. The record of industrial companies is against you."

THE WORLD'S WORK is not opposed to industrial companies, nor to investment in industrial companies of established reputation by even the very small investor of limited knowledge, nor to such investment in new companies by business men. But it is un

alterably opposed to the investment of savings by inexperienced people in new, untried, poorlybacked or wildly-financed enterprises of a commercial nature. It believes that the evils of speculation on margin in Wall Street and in all the markets of the United States are not one-quarter so disastrous to the investors of the United States as are these wholesale exploitations of new inventions on the savings of the people. For every small investor in the country who has been fleeced by the bucket shops or the Exchanges-with no lack of appreciation of the real functions of the real Exchanges implied in the phrase-there are a hundred who have lost their savings by the purchase of small industrials and mining stocks. This is the real danger to the small investor, and it cannot be too strongly stated.

M

TR. CHARLES W. MORSE belongs to that class of keen Americans who can swap anything with anybody and make a profit. Being a native of the Maine coast, he took naturally to ice and ships. His business career began when he was nothing but a boy, although the story of his selling candy on one of the Maine steamship lines. gives a wrong impression of his start in life. His father was one of the influential men of Bath, Me., the founder of the towing business on the Kennebec River, and until his death in 1887, in control of it. He sent his son Charles to the public schools in Bath, and later to Bowdoin College. Shortly before Morse entered, in 1873, he became bookkeeper for his father at a salary of $1,500 a year. A third of this sum he paid to another young man to do the bookkeeping. The remaining $1,000 a year paid his college expenses and gave him enough money to start in business for himself.

While he was still in college he formed a partnership with his cousin, Harry F. Morse. They bought ice from the firms that harvested it on the Kennebec River and sold it in New York, delivering it there in vessels which they

built in the shipyard now occupied by the Hyde Windlass Company. On one of his first visits to New York, while he was still in college, he signed a contract with one of the wealthiest brewers in the city for 50,000 tons of ice. When he asked the brewer for a reference, he was sent to a bank which he found belonged to his customer, who had two large breweries and was worth between $8,000,000 and $10,000,000. When young Morse returned, the brewer said:

"Young man, you had better give me a reference. I don't know you."

Morse had to confess that he did not know anyone in New York. "But," he said, "if you will telegraph my father in Bath, he will tell you all about me."

The answering telegram read: "We don't know where Charlie is or what he is doing, but will back him in anything he does."

The firm made $50,000 on this one contract. It is commonly reported that Morse had made $500,000 before he left college. It is certain that, for that time and place, he was a rich man on the day of his graduation, and rich through his own exertions.