"Investment"

by Hastings Lyon '01. Houghton, Mifflin Company, Boston, 1926. Professor Lyon's knowledge of, and twenty years' experience in, law, corporation finance and investments are reflected in a lucid fashion in this bcok—a distinct contribution to textbooks in the field of investments. The author preserves a balance between the legal and economic viewpoint seldom found in books of a similar character written by those trained in the law and experienced in finance.

The author recognizes at the outset that one cannot learn how to invest by reading a book. What, then, is to be gained by reading or studying a book on Investments?. Simply this: such a study can indicate the nature of the facts to be considered and, at the same time, point out the elements of strength and weakness of particular classes of securities. For example, equipment trust bonds issued under the Philadelphia plan are in a strategic position because of the nature of the investment contract. This is the type of thing stressed by Professor Lyon.

This book follows the usual orthodox treatment of the subject. Government, state and municipal bonds, real estate and farm mortgages, public utility and industrial securities receive due attention. In addition, there are chapters devoted to such subjects as, to mention a few, investment and taxation, diversification and its limitations, making an investment, and sources of information. Moreover, the author, recognizing that stocks may have an investment status, devotes considerable space to a discussion of this class of securities, much more than is to be found in the ordinary textbook of a similar sort.

Some of the chapters are unusually good, partly because of clearness in exposition and partly because of the subject matter they contain. The chapters dealing with the financial risk and the investment contract, the railroad map, valuing the tangible asset, municipal securities and government bonds, for example, are the best the reviewer has ever read.

Another good feature of this book is what it omits. There are no dreadful and wearisome pages giving the tax rates of various states on farm mortgages; there are no huge tables embodying financial statistics out of date before the book comes from the press; there is no long list of cities which have defaulted or repudiated their bond issues; there are no lengthy explanations of how certain types of securities came into being. Rather, and wisely, too, the author confines his attention to an explanation of the significant facts and principles of investment.

An excellent index and a rather comprehensive bibliography, suffering a wee bit from some slight inaccuracies, add to the usefulness of the book.

April 30, 1926.