UNLESS an investment is safe, strong, secure, it is utterly futile for a person to go any further with it. This point should be passed upon competently first of all. Then it is time to consider other things.

Next to safety comes high income and the question of whether it is possible to realize upon one's purchase in case of need. With many people high income is the more important. With others, and especially with business concerns or institutions, which may need large sums of money in a hurry, quick marketability is the prime requisite. But with most individual investors there is a desire for as large an income as is compatible with safety. They want their money to earn as much as possible without impairment of the principal.

Most persons who purchase an occasional bond or mortgage, or a few shares of stock, already have a bank-account, which of course is the most marketable investment in the world. If they need money for illness or a business emergency it lies ready in the bank, or they may have health and accident insurance to help them out.

Now the question of getting a high return on one's money and still maintain the integrity of that money, is one of the most difficult and complex in the whole realm of finance. There is such a word as anticipation. If a stock pays from forty per cent. to eighty per cent. a year, risk is anticipated in the high return. The principal is being paid back in what superficially appears to be big dividends. This is often the case with mining and oil stocks. But most investors would rather have something a little steadier. They would rather have a lower rate of interest and be fairly sure of getting their principal back as well.

It is one of the oldest and most common sayings in the business world, that the lower the rate of interest, the safer the security, and the higher the rate of interest the more risky. As a big broad generalization this may be true. Certainly it is true in countless instances. But there are many circumstances in which the rule is misapplied. It is by no means an iron-clad rule of thumb, and if it were applied rigidly by investors generally, the result would be an enormous waste of capital. The best issues of securities do not always bear low rates of interest.

The truth is that high income is a sign of insecurity under certain conditions only. Without any further theorizing, let us see under what circumstances a high income may be compatible with safety.

A great amount of capital is sluggish, lazy, almost indifferent; or more strictly speaking its owners are. They do not want to take the trouble of investigating. Now for them there are plenty of safe investments at low rates of interest. It may be laid down as a fundamental truth that more inquiry and investigation are necessary to obtain high income with safety than low income with safety.

General, wide-spread public knowledge concerning the merit of a bond or stock always tends to raise the price and lower the interest return. A concern may be safe actually, but only a few people have yet discovered that fact. Here lies the opportunity for both safety and high income. A bond or stock may be unfamiliar and consequently to be had at a low price.

Often an issue of bonds has not been thoroughly distributed among investors, even in cases where there is no question as to their merit. If bankers have to carry a large amount of bonds, instead of the entire issue being owned by ultimate investors, it is often possible to get them much cheaper than later on when they have been distributed.

In the great financial centers, Boston, New York, Philadelphia, Chicago, and in the older sections generally, capital is plentiful and interest rates are low. Rates are much higher in newer sections, and especially in those sections which are rapidly developing. Not only are certain parts of the West and South away from the great reservoirs of accumulated capital - accumulated ever since the days of the early whaling trade at New Bedford and even the Colonial shipping trade - but they are, as it were, off the route of capital, if I may use such a phrase.

Florida, for example, has many sound industries, and it is possible with a little care and discrimination to obtain eight per cent. on first mortgages in that state. But the great streams of capital have not somehow as yet gone in that direction. Thus Florida industries have to bid high, for capital, like human beings, goes where the rush is, "follows the crowd." People in the West and the South have a pretty well fixed idea that a six or seven or even an eight per cent. mortgage in their country may be just as safe as a five per cent. loan in New York. Of course the eastern investor must purchase these high yield mortgages only through dealers who can prove that none, or very few of the mortgages he has selected have ever defaulted. It is also necessary to place money through a dealer who will look after the details of collection, insurance and taxes. It is very expensive to hire a lawyer at long range to collect interest. Five per cent. with certainty is better than eight or nine per cent. if one has to go after it with a sheriff.

In sections of the far West street improvement and assessment bonds are to be had to pay seven per cent. In selecting these the joker to look out for is the danger of financing a boom suburb. If such bonds represent work on business or permanent residence streets of a substantial city, they are perfectly good.