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MONG the peoples of the world. Americans hold the reputation of being a nation of spenders. It is a reputation due not altogether to the lavishness with which American tourists spend their money abroad. Our immense concentrations of capital, the magnitude of our industrial and commercial enterprises, the high wages paid in the United States compared with the low levels prevalent in other countries, the high standards of living, and the readiness of Americans in every walk of life to acquire as necessities what are unattainable luxuries to the average foreigner-all this goes to create the impression abroad that the United States is a land where money is easily made and freely spent.

To the foreigner "American" has become synonymous with "Capitalist." We may smile at this notion, but in a measure it is the truth. A very large and quickly growing number of Americans are "capitalists" in the sense of investors. By "investors" I mean those who put their money into securities. Despite the fact that the American people because of their higher standard of living spend more lavishly than the peoples of other countries, investment has nevertheless reached the proportions of a National habit in the United States.

We have always had investors among us, but until a few years ago they included only a few hundred thousands out of the total population. The World War changed in this respect the habits of the American people. Millions of them, through the purchase of Liberty Bonds, were for the first time aroused to the advantage of buying high-grade securities which regularly and conveniently paid interest on an investment as small as $50, and which in addition were readily convertible into actual cash.

The Liberty Loan campaigns broke down the obstacles which existed in the minds of ordinary Americans against investing their money in securities. They have since put to good use the education acquired in the schoolroom of the Liberty Loans, and they have in this way

not only advanced their own interests, but they have also added to the security and stability of American industrial institutions.

Let us consider the actual figures by which this growth may be measured. Compared with the few hundred thousand who formerly constituted our investing class, there are to-day over 15,000,000 persons who own securities. In 1917 individuals with incomes of In 1917 individuals with incomes of from $1,000 to $5,000 received only 91⁄2 per cent of the total dividends paid on stock.

Four years later persons in this same income group received $562,000,000, or 22 7/10 per cent of the total paid in dividends. It is estimated that 53 per cent of all dividends paid to-day goes to people with incomes of less than $20,000; the amount paid to those with incomes below $5,000 has been increasing; that paid to those with incomes of from $5,000 to $20,000 has not shown much change since 1916; while the amount going to the so-called wealthy class-those with incomes above $20,000-shows a substantial decrease.

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Safety in Ownership

ROM time to time alarm is expressed concerning the menace to this country of certain radical doctrines that have proved disastrous in practice elsewhere. Proprietorship is erecting safe defenses against such a menace. When we consider the ease and the celerity with which this country made its readjustment from the abnormal conditions of the war, a readjustment that was effected with little hardship to the workers of the country; when we contemplate the growth of the security-investment habit, particularly the increase in the stock-ownership of industrial enterprises by employees, we need not be apprehensive on this count. The mind of the man who enjoys a measure of proprietorship, who has the chance of obtaining something more than the bare necessaries of life, whether it be ownership of a bond, a deposit in a savings bank, an insurance policy, or an

automobile for the enjoyment of his family, is little apt to be fruitful soil in which to propagate an impracticable communism. The institutions by means of which that man is enabled "to have and to hold" are the institutions by which he will stand.

"To have and to hold" is possible to a greater proportion of the people in the United States than it is in any other country. The partial ownership of large corporations by small investors has shown a remarkable increase within the past few years. It has always been a truism that corporations are owned by the investors. At one time, in the case of some corporations, the investors were limited to a few wealthy individuals. But to-day the investors are the general public. Thus the assumption that corporate wealth represents the intrenched power of a small class is a fallacy. Corporate wealth is to-day the investment power of the American people; in many cases the small investors are the principal owners of our great industrial enterprises. Industry throughout the country has adopted a policy of encouraging its employees, and in many cases its customers also, to become stockholders and thus participate in ownership of the industry. Among the small investors are hundreds of thousands of employees of industry who through the ownership of securities have become partners in the enterprises which give them employment. This gives a new significance to the term "big business." Industry nowadays is "big" in the sense that it is enlightened, and it is "big" also in that the number of its owners has grown from small groups to great armies.

Figures available for eight groups of industries disclose the striking fact that the number of their stockholders has approximately doubled in the past six years. These industries include great railroad systems, street railways, gas, electric light and power companies, telegraph and telephone companies, packing companies, oil, iron and steel, and manufacturing enterprises. In those groups

alone the number of stockholders has increased since the war from 2,500,000 to more than 5,000,000. Of the increase, over 300,000 are employees who bought securities of the companies, more than 800,000 are customers of these enterprises, and above 1,300,000 are investors from among the general public.

The plan adopted by corporations to encourage their employees to become stockholders has in most cases permitted the purchase of the securities on installments. For example, 20,000 employees of Armour & Co. recently completed purchase of stock of the company on a deferred-payment plan. The company offered additional stock at an advantageous figure on a weekly-payment basis, and the amount offered was so largely over-subscribed by Armour employees that subscription for lots of more than one or two shares had to be cut sixty per cent. Of some 80,000 stockholders of Armour & Co., nearly one-half are the company's own employees.

Last winter the New York Central Railroad tendered 35,000 shares of its stock on a deferred-payment plan to its employees. More than 40,000 New York Central men grasped at the chance to become part owners of their company

and offered to take almost $10,000,000 of stock, or more than twice the amount proposed. It was found possible to allot about 68,000 shares to the subscribers, who represent one-quarter of the company's entire personnel, and who include all classes of employees from executives to dining-car waiters and track laborers. The number of New York Central stockholders was thereby increased from 36,500 to 78,000, and now more than half of the stockholders are employees.

In 1912 the American Telephone and Telegraph Company had 50,000 stockholders, in 1920 it had 139,400, and today it has 348,000. More than 62,500 employees of the Bell system are stockholders of the American Company and some 165,000 employees are now buying stock on the partial-payment plan.

Both the employees of the Consolidated Gas Company and its customers are large holders of its stock. Of the company's 60,000 shareholders, 25,000 are customers and over 11,000 are employees. Nearly half the company's workers have bought its securities.

The Pennsylvania Railroad's stock is owned by 146,797 stockholders, and out of about 200,000 employees, some 40,

1 Based on data of the summer of 1925.

000 have become part owners of the system.

These are significant illustrations both of the great diffusion of corporation ownership among the general public as well as of the increasing ownership of enterprises by their own workers. Occasionally, too, there jumps into the news the announcement that the head of a concern has decided to turn over the business to his workmen another indication of the tendency of business and industry to recognize that its working personnel should be part and parcel of the ownership.

It would be going too far to draw a Utopian picture of all American industry entirely owned by the workers. But it is apparent from the great readiness of employees to seize the opportunity to become "partners with the boss," as well as from the widening corporate invitation to workers to "come into the firm," that employee ownership is going to be an influential force in the industrial affairs of the country. And we may be sure that it will not be a destructive force. The enlarged financial interest of employees and of the general public in industry will have its effect in counteracting demagogic attack and in creating

intolerance for unwise legislative restrictions.

Another evidence of the greatly widened distribution of securities is furnished by the transactions of the New York Stock Exchange. Dealings on the Exchange disclose that the small investor is a big customer for securities. When we realize that there were upwards of 300,000,000 shares of stock and almost $4,000,000,000 worth of bonds sold on the Exchange in 1924, and that a substantial part of this daily business of the Exchange originates in orders for small lots of stock-"odd lots" they are called in the language of the market-we will fully appreciate the importance of the smaller purchases.

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The Odd Lot Market

T is essential that "odd lot" transac

tions be understood by the public. Although the total volume of "odd lot" business indicates a growing appreciation of the value of the Exchange by smaller investors, the Exchange figures in the popular mind chiefly as the market-place for the big investor. The public must come to realize that the Exchange is not a financial octopus, but a financial center whose functions they have never thoroughly understood.

Business of every description gravitates to a center. In any large city you will find a center of retail shopping and a center of wholesale business where the great bulk of the city's trade is conducted. These centers are built up by natural processes. They exist because from the earliest periods of history mankind has found it most convenient to transact business at established market-places.

What applies to the business of a city applies on a larger scale to the business of a country and to the business of the whole world. Chicago has become the National center of the automobile industry and New York the principal financial market of the country, all by an evolutionary process. Were the Chicago grain and foodstuffs market suddenly obliterated by some catastrophe, it would be necessary to re-establish it, there or else where, and with the utmost speed, too, in order to continue its clearing-house facilities, which are vital to the conduct of that business. These great National market-places are indispensable, and are established by the necessities of business at locations determined solely by convenience and force of circumstances.

Thus the New York Stock Exchange has become the central market-place for the securities of the Nation's business enterprises. It exists as a great reservoir from which industries draw the capital

necessary to finance their undertakings. It has rules and regulations which are strictly enforced for the protection of those who invest in the securities admitted to its list. Particularly does it strive to facilitate the purchase of small amounts of shares, to protect the small investor and to place him on exactly the same plane as the large investor. Every one of the protective rules of the Stock Exchange applies as well to the purchase of 10 shares of stock as to the purchase of 10,000 shares.

The unit of trading in stocks on the New York Stock Exchange is 100 shares. An "odd lot" is any number of shares less than 100. In order to make possible purchases of small amounts of stock "odd lot" dealers operate on the Exchange. They are either partners or representatives of firms that make a business of trading exclusively in "odd lots."

Suppose an investor desires to buy 10 shares of a certain stock listed on the Exchange. He places his order with a Stock Exchange firm or with one of its representatives throughout the country. The firm receiving the order places it in turn with an "odd lot" firm, which executes the order, making, of course, a small charge for the service. This charge is in most cases 8 point above the price at which the next full 100 shares of the stock are sold after the "odd lot" dealer accepts the order. But in the case of some less active stocks the charge is 14 point.

The "odd lot" dealer may own the 10 shares he furnishes, but if he does not, he must buy 100 shares in order to furnish the small lot. He may, however, receive other small orders for the same stock and eventually will be able to dispose of the 100 shares he buys. But there is an element of risk when he purchases 100 shares, due to the fact that his "small lot" order for that stock may not be sufficient to enable him to dispose of the full 100 shares speedily. On account of risk due to price changes, he is entitled to make the charge of 1% or 4 point. He also requires more clerical help in his operations than firms dealing in full lots, which adds to his expense of doing business.

This is not the complete picture of the technicalities entering into "odd lot" transactions, but it illustrates in the main how a small investor is enabled to buy limited amounts of Stock Exchange securities through reliable brokerage houses.

The tragedy of the small investor is that often he does not know that Stock Exchange securities can be bought in small lots from reputable firms. All too

frequently he listens to the beguiling talk of slick peddlers of catchpenny certificates and parts with his money for a batch of highly decorated but otherwise worthless "stocks" or "bonds."

In the same measure that investment by the small "capitalists" proves to be a public benefit, speculation by the same class of persons proves to be a public detriment. Speculation by large investors serves a useful purpose in keeping the securities market at levels warranted by business conditions. But men of moderate means, with small, and to them important, sums of money, cannot afford the risks of speculation. Loss is to them a calamity, and they must be protected against inviting calamity to overtake them.

Defeating the Bucket-Shop

HAVE often been asked what position a Stock Exchange house should take toward a man with a small amount of money-$100 or $200-who wishes to speculate. My advice is that he should either put his money into a bank or else buy outright a share or two of good stock. If he wishes to buy stock, no Stock Exchange firm should refuse to secure it for him, even in the amount of one share. Only in this way can dishonest dealers and the bucket-shop crowd be circumvented.

Because the Stock Exchange is a market-place in which hundreds of thousands of shares, often a million or more shares, are bought and sold daily, it performs yet another function in safeguarding the small investor: it provides him with securities which are readily marketable. The small investor must not be allowed to buy little-known bonds or unlisted securities, even though these may have real value, which he cannot dispose of at will. He must invest only in securities which have, in case of emergency, a free and open market.

The New York Stock Exchange is that free and open market. Its "odd lot" transactions provide the means whereby small investors may obtain, through legitimate brokerage firms, the same securities that millionaires purchase, with full assurance that these securities have a recognized market value and a ready market in which they can be sold again.

The continued growth of our country, the greater distribution of purchasing power among our working people, and the development of the saving habit combine to make the small investor a factor of increasing financial importance. Every effort to direct his investing power into safe and legitimate channels demands the utmost support.

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EXT to "playing the stock mar

ket," the biggest sucker trap in the United States is the Patent Office at Washington, with its lure of false hope and its guaranties that protect nobody. Ever since its establishment in 1795 it has been fooling the ingenious and packing the pockets of lawyers. The patents it issues represent nothing beyond an opinion given by some examiner. They have no value until tested by the courts. Uncle Sam is not on the square, and never has been since he proclaimed the right of man to life, liberty, and (the pursuit of) happiness. I bracket the reservation cunningly inserted by the old cuss, because it is usually overlooked by the unthinking, who believe he insured happiness. He did not any more than he insured life and liberty. You insure yourself and liberty has become the property of the Anti-Saloon League.

Only two patents were granted in 1795. One of these begot direful consequences and was a source of no profit to its inventor, Eli Whitney, an ingenious inhabitant of Connecticut, who had observed that the glutinous seed of cotton adhered so closely to the fiber as to make it difficult to separate the two, thus rendering the value of the product negligible. His device mechanically cleaned the floss thoroughly and rapidly. It

brought about a world revolution in the textile industry, and, above all, in American agriculture, with the effect of reviving African slavery in the South, where it was on its way out as unprofitable; it cost the Creeks, Cherokees, Choctaws, Chickasaws, and Seminoles the "Five Civilized Tribes"-their lands, bred the "Florida War," and paved the way for the greater one between the States.

The idea was simple and easily copied. This was widely done. Whitney received but small reward for his pains, and took to manufacturing firearms near New Haven. Whitneyville, Connecticut, perpetuates his name, and one of his grandson's died lately, leaving $1,250,000, increment from the gun factory. The family got a handsome return making rifles in 1861-5 that were used to shoot the descendants of the planters who had pirated Eli's invention.

It was one of the ideas of Henry George that no patents should be granted. He held that thus to hamper the adoption of a utility was wrong from the standpoint of public interest, and of little real value to the inventor. I should say that he was sound in both instances. He was right in a number of his theories, some of which are in practice to-day.

The largest industry operated by an individual in the world is Henry Ford's

automobile factory. There is no patent on a Tin Lizzie. Any one who thinks he can make the machine cheaper or better than Henry is welcome to try. Some have done so, but without making a dent in the invincible industrialist of Dearborn.

To recite the long and costly story of

patent litigation is not possible. A study of cases and delays, of brazen thefts and wrongs to inventors, proves the point made at the beginning. The inventor is not protected, nor is the public served. Take the case of the Selden patents, so vital to motor-makers. Long litigation, great legal outlays, a verdict for millions set aside. That is the full story. Selden should have outfooted Ford had he been given his rights.

Henry George's notion was that no man had a right to establish a monopoly merely because he invented something that saved him work. I have always believed that laziness and greed, not necessity, was the mother of invention. There is such a prejudice against laziness that the world refuses to do justice to its merits, and these are many.

James Watt saw how tiresome it was to pump out a mine by hand, and invented the steam-engine. James Hargreaves, a weaver, who worked fast at his hand loom, had difficulty in keeping him

self provided with yarn, and so devised the spinning jenny, which replaced the wheel, just as the wheel had displaced the ancient distaff, thus ending much female drudgery. It was left for Richard Arkwright to begin the capitalizing of invention. He had been a successful wig-maker and a shrewd buyer of human hair. When he saw that Hargreaves had provided a means of making cotton yarn plentiful and cheaper--he invented the power loom, and from its use built up what was the greatest of eighteenthcentury fortunes, £500,000 sterling. He also perfected wage-and-mill slavery at the same time. The hand spinners and weavers were at least their own masters. They now became the property of others, and so remain.

Toilsome work with eye and needle were done away with when Joseph Marie Jacquard invented the silk loom. Again

the hand worker went out, and with her the rich embroideries, to make room for figured silks.

Elias Howe redeemed women from retail slavery with the needle and made it wholesale with his sewing-machine, from which capitalists made all the money, while the sweat-shop in due season replaced the home-worker.

Supplementing laziness and greed in their perfect work came the Patent Office, with its parasite lawyers to urge "inventing" as a means to wealth. It was no longer left to lazy folks to fill its files or crowd its shelves. The first great wave of effort back in the forties was the delusion that a "perpetual motion" device could be perfected. Hardly a rural village escaped some genius who was sure he could solve the problem. My greatgrandfather lost a neat pot of money backing a chap out in Melmore, Ohio. This "inventor" was ably assisted by his wife. As my grandmother once put it, "The machine ran all right until the woman quit turning it."

THE

HE flood has never ceased. I believe washing-machines lead the procession. None was successful until electric power became handy. Prohibition has probably stopped the pressure to provide a non-refillable bottle, for which a rich reward was promised from the distillers of popular brands. Yankee ingenuity has manifested itself in about a half-million ways. Marvelous conceptions have been created, all vying to outdo that most wonderful of all machines, the human hand. Simplicities, rather than complications, have, however, been the big win

ners.

Down in Norway, Maine, where I lived as a boy, Stephen Cummings, a local character who kept bachelor's hall,

burned his fingers repeatedly on the hot handle of the old-fashioned iron teakettle that was part of his housekeeping equipment. Having a rude notion of the heatretaining qualities of metal, he substituted a wire coil for the solid handle, and ceased to blister his digits. Somebody ceased to blister his digits. Somebody paid him fifty dollars for the idea. The coil handle came into universal use. Millions of them were made. Stephen

and he did not propose spending another cent on it until the money came back. It came about fivefold, before the double matrix case was added to its merits. Then it was my device, and not the screw! Something like fifteen years had passed before the arrival of this millennium. I had no standing in the Patent Office or anywhere else.

stable. On the other hand, a Brooklyn man conceived the notion of attaching a small sphere of wood to a few inches of rubber elastic. It became a pet plaything with the children as the "return ball." He made $500,000 out of it, and would have piled up more had not a stepson, to whom he behaved harshly, killed him.

THE just grievance of the inventor

against the practices of the Patent Office is that when a patent is issued it becomes a liability instead of an asset. It must usually be defended from the start. Men were allowed to file "claims," which always turned up if an idea proved worth anything. The late Robert Hoe, press builder, had reams of these stowed away to baffle any man who tried to improve upon his rotary printing machines. I recall that George Smith, an intelligent pressman in the "World" office, perfected a tension pulley that doubled the friction surface on the control of a roll of paper. His "patent" was ready to issue when Hoe filed a notice of interference. The attorneys asked $1,200 to fight the claim. Smith did not have it. Then Hoe refunded the fees Smith had paid the "Scientific American" Bureau and took over the clamp. He put it into regular use on all his presses. Smith never received a cent.

Something of the sort happened to me. In the early stage of the Mergenthaler typesetter it became necessary to change all the matrix holders late at night to substitute an agate face for nonpareil. It occurred to me that there might be a double case built that would shift with a lever and do away with handling. The drawings were made, and again as the patent was ready to issue notice of "interference" was received and a demand for $1,200 to fight it. The linotype company was the complainant. I interviewed Philip T. Dodge, its president. He produced a drawing showing an elevator worked by a clumsy screw that involved more waste of time than the hand method. Mine was instantaneous, so I could not see the "interference."

Mr. Dodge was quite plain about it. He said $3,000,000 had been spent putting the Mergenthaler on the market,

printing during the last decade has been that of machine-printed photogravure. This was developed in the United States by Charles W. Saalburg, under a series of patents granted by the United States. He has been utterly unable to defend his rights against invasion from Germany, and at least forty American infringers of these are active and prosperous. The United States, after proper search, gave him a certificate of priority that brought the inventor nothing but lawsuits. The burden of proof is upon him, as in all other cases, and not upon the Government.

There should be a radical change in the patent laws. They should be made. to mean something. They should be honest. When the Patent Office puts its seal to a patent, that should be the endnot the beginning of a long and costly journey through the courts. Certainly, with its vast information and plentiful resources, the Patent Office should be able to decide definitely whether or not an inventor has really invented something. thing. Either we should have letters patent that are firm and behind which there can be no doubts, or we should come to Henry George's theory and issue none at all.

Inventions would not cease, but more of them would probably be operated in secret. There are hundreds of these now guarded, whose wise owners preferred not to trust their ideas to all outdoors. Can secrets be kept? The world has yet to learn how "Russian" leather and "Russian" iron are made.

We hear so much about "responsible" government, yet nothing is so irresponsi ble, especially in the United States. The Government cannot be sued, it cannot be made to keep its currency at par or preserve the value of its bonds against daily. fluctuations, and its patents are not good until proven so in court. Claims against it have to be urged in a court of its own choosing that may settle them in a century or two, but not often enough to establish a precedent.

This is not a proud position for the strongest and richest nation in the world to place itself in. Uncle Sam should reform. The best place for him to begin. is in the Patent Office.