Part 4

“Richard,” interrupted Ethel, “do you have to make yourself out so simple?”

“My dear, you forget that I said I should invent nothing, but should keep myself to actual experiences. The part of my story that is coming now is one where I should be very glad to draw upon my imagination.”

“Mr. Beverly now ran his finger up and down various columns. ‘Here again,’ said he, ‘is a typical trustee bond, and nets you a few thousand dollars more at present prices. New York Central and Hudson River 3 1-2’s. Or here are West Shore 4’s at 113 5-8. But you see it scales down to pretty much the same thing. The sort of bond that a trustee will call safe does not bring the owner more than about three and one-half per cent.’”

“‘Why, there are some six per cent bonds!’ I said; and I pointed them out to him.”

“‘Selling at 137 7-8, you see,’ said Mr. Beverly. ‘Deducting the tax, there you are scaled down again.’ He pencilled some swift calculations. ‘There,’ said he. And I nearly understood them. ‘Now I’m not here to stop your buying that sort of petticoat and canary-bird wafer,’ continued Mr. Beverly. ‘It’s the regular trustee move, and nobody could criticise you if you made it. It’s what I call thoughtless safety, and it brings you about 3 1-2 per cent, as I have already shown you. Anybody can do it.’ These words of Mr. Beverly made me feel that I did not want to do what anybody could do. ‘There is another kind of safety which I call thoughtful safety,’ said he. ‘Thoughtful, because it requires you to investigate properties and their earnings, and generally to use your independent judgment after a good deal of work. And all this a trustee greatly dislikes. It rewards you with five and even six per cent, but that is no stimulus to a trustee.’”

“Something in me had leaped when Mr. Beverly mentioned six per cent. Again I thought of Ethel and October, and what a difference it would be to begin our modest housekeeping on sixty instead of forty thousand dollars a year, outside of what I was earning. Mr. Beverly now rang a bell. ‘You happen to have come,’ said he, ‘on a morning when I can really do something for you out of the common. Bring me (it was a clerk he addressed) one of those Petunia circulars. Now here you can see at a glance for yourself.’ He began reading the prospectus rapidly aloud to me while I followed its paragraphs with my own eye. His strong, well-polished thumb-nail ran heavily but speedily down the columns of figures and such words as gross receipts, increase of population, sinking fund, redeemable at 105 after 1920, churned vigorously and meaninglessly through my brain. But I was not going to let him know that to understand the circular I should have to take it away quietly to my desk in Nassau Street, and spend an hour with it alone.”

“‘What is your opinion of Petunia Water sixes?’ he inquired.”

“‘They are a lead-pipe cinch,’ I immediately answered; and he slapped me on the knee.”

“‘That’s what I think!’ he cried. ‘Anyhow, I have taken 20,000 for mother. Do what you like.’”

“‘Oh well,’ said I, delighted at this confidence, I think I can afford to risk what you are willing to risk for your mother, Mrs. Beverly. Where is Petunia, did you say?’”

“He pulled down a roller map on the wall as you draw down a window-blind, and again I listened to statements that churned in my brain. Petunia was a new resort on the sea coast of New Hampshire. One railway system did already connect it with both Portsmouth and Portland, but it was not a very direct connection at present. Yet in spite of this, the population had increased 23 and seven-tenths per cent in five years, and now an electric railway was in construction that would double the population in the next five years. This was less than what had happened to other neighbouring resorts under identical conditions; yet with things as they now were, the company was earning two per cent on its stock, which was being put into improvements. The stock was selling at 30, and if a dividend was paid next year, it would go to par. But Mr. Beverly did not counsel buying the stock. ‘I did not let mother have any,’ he said, ‘though I took some myself. But the bonds are different. You’re getting the last that will be sold at par. In three days they will be placed before the public at 102 1/2 and interest.’”

“I was well pleased when I left Mr. Beverly’s office. In a few days I was still more pleased to learn that I could sell my Petunia sixes for 104 if so wished. But I did not wish it; and Mr. Beverly told me that he should not sell his mother’s unless they went to 110. ‘In that case,’ said he, ‘it might be worth while to capitalise her premium.’”

“I liked the idea of capitalising one’s premium. If you had fifty bonds that cost you par, and sold them at 110, you would then buy at par fifty-five bonds of some other rising kind, and go on doing this until--I named no limit for this process; but my delighted mind saw visions of eighty and a hundred thousand a year--comfort at least, if not affluence in New York--and I explained to Ethel what the phrase capitalising one’s premium meant. I showed her the Petunias, too, and we read what it said on the coupons aloud together. Ethel was at first not quite satisfied with the arrangement of the coupons. ‘Thirty dollars on January first, and thirty on July first,’ she said. That seems a long while to wait for those payments, Richard. And there are only two in every year, though you pay them a thousand dollars all at once. It does not seem very prompt on their part.’ I told her that this was the rule. ‘But,’ she urged, ‘don’t you think that a man like Mr. Beverly might be able to get them to make an exception if he explained the circumstances? Other people may be satisfied with waiting for little crumbs in this way, but why should we?’ I soon made her understand how it was, however, and I explained many other facts about investments and the stock market to her, as I learned them. It was a great pleasure to do this. We came to talk about finance even more than we talked of my writings; for during that Spring I invested a good deal more rapidly than I wrote. The Petunias had taken only one-twentieth of a million dollars; and though Mr. Beverly warned me to rush hastily into nothing, and pointed out the good sense of distributing my eggs in a number of baskets, still we both agreed that the sooner all my money was bringing me five or six per cent, the better.”

“I have come to think that it might be well were women taught the elements of investing as they are now taught French and Music. I would not have the French and Music dropped, but I would add the other. It might be more of a protection to women than being able to read a French novel, and perhaps some day we shall have it so. But of course it had been left totally out of Ethel’s education; and at first she merely received my instruction and took my opinions. It was not long, however, before she began to entertain some of her own, obliging me not infrequently to reason with her. I very well remember the first occasion that this happened.”

“We had been as usual talking about stocks, as we walked on the Riverside Drive on a Sunday afternoon in May. Ethel had been for some moments silent. ‘Richard,’ she finally began, ‘if I had had the naming of these things, I should never have called them securities. Insecurities comes a great deal nearer what they are. What right has a thing that says on its face it is worth a thousand dollars to go bobbing up and down in the way most of them do? I think that securities is almost sarcastic. And have you noticed the price of those Petunias?’”

“I had, of course, noticed it; but I had not mentioned it to Ethel. ‘I read the papers now,’ she explained, ‘morning and evening. Of course the market is off a little on account of the bank statement. But that is not enough to account for the Petunias.’”

“‘Ethel, you are nervous,’ I said. ‘And it is the papers which make you so. The Petunias are a first lien on the whole property, of which the assessed valuation--’”

“‘What is the good,’ she interrupted, ‘of a first lien on something which depends on politics for its existence, if the politicians change their minds? Did you not see that bill they’re thinking of passing?’ I was startled by what Ethel told me, for the article in the paper had escaped my notice. But Mr. Beverly explained it to me in a couple of minutes. ‘Ha!’ he jovially exclaimed, on my entering his office on Monday morning; ‘you want to know about Petunias. They opened at 85 I see.’ He then ran the tape from the ticker through his clean strong hands. ‘Here they are again. Five thousand sold at 83. Now, if they go to 70, I’ll very likely take ten thousand more for mother. It’s all Frank Smith’s bluff, you know. He wants a jag of the water-works stock, more than they say they agreed he should have. So he’s shaking this bill over them, which would allow the city to build its own water-plant, and of course run the present company out of business. Not a thing in it! All bluff. He’ll get the stock, I suppose. What’s that?’ he broke off to a clerk who came with a message. ‘Wants 500 preferred does he? Buyer 30? Very well, he can’t have it. Say so from me. Now,’ he resumed to me, ‘take a cigar by the way. And don’t buy any more Petunias until I tell you the right moment. Do you see where your Amalgamated Electric has gone to?’”

“I had seen this. It had scored a 20-point rise since my purchase of it; and I felt very sorry that I had not taken Mr. Beverly’s advice and bought a thousand shares. It had been on a day when I had felt unaccountably cautious, and I had taken only two hundred and fifty shares of Amalgamated Electric. There are days when one is cautious and days when one is venturesome; and they seem to have nothing to do with results.”

“‘They’re going to increase the dividend,’ said Mr. Beverly, as I smoked his excellent cigar. ‘It’s good for twenty points higher by the end of the week. I had just got mother a few more shares.’”

“I left Mr. Beverly’s office the possessor of two thousand shares of Amalgamated Electric, and also entirely reassured about my Petunias. He always made me feel happy.”

“His keen laughing brown eyes, and crisp well-brushed hair, and big somewhat English way of chaffing (he had gone to Oxford, where he had rowed on a winning crew) carried a sense of buoyant prosperity that went with his wiry figure and good smart London clothes. His face was almost as tawny as an Indian’s with the outdoor life that he took care to lead. I was always flattered when he could spare any time to clap me on the shoulder and crack a joke.”

“Amalgamated Electric had risen five more points before the board closed that afternoon. This was the first news that I told Ethel.”

“‘Richard,’ said she, ‘I wish you would sell that stock to-morrow.’”

“But this I saw no reason for; and on Tuesday it had gained seven points further. Ethel still more strongly urged me to sell it. I must freely admit that.” And the narrator paused reflectively.

“Thank you, Richard,” said Ethel from the sofa. “And I admit that I could give you no reason for my request, except that it all seemed so sudden. And--yes--there was one other thing. But that was even more silly.”

“I believe I know what you mean,” replied Richard, “and I shall come to it presently. If any one was silly, it was not you.”

“I did not sell Amalgamated Electric on Wednesday, and on Thursday a doubt about the increased dividend began to be circulated. The stock, nevertheless, after a forenoon of weakness, rallied. Moreover a check for my first dividend came from the Pollyopolis Heat, Light, Power, Paving, Pressing, and Packing Company.”