This book is not written to tell men how to succeed in private business where private capital is concerned. I am interested, in writing this book only in what might be called, to use a rather long word, vicarious investments. Thus, we say, John Smith not only owns his business but he has some investments besides.

What I mean is this: where a man goes into a business he knows all about and puts in not only his money but his time, brains, skill and executive ability he expects large returns. That is not the kind of investment we are considering. That is not a subject which any one book can begin to cover. But most young people nowadays can not invest directly in an enterprise which they can manage or take part in. What they can do and what I humbly hope I am telling them something about, is how to divest themselves of the direct care of money, how to give it to others to work with, how to loan it out to earn an income, without actually having to know all about the business itself.

In a sense any placement of money in any business is an investment, but it is not so in the strict sense we generally mean when we use the word. This is clearly a case where there are no words to express exactly the meanings that need to be expressed. But my readers all know what I have in mind. In these days when countless thousands of persons must loan money to others to work with, that is, invest vicariously, there has grown up a science of investment of this indirect sort.

Now perhaps the one most frequent cause of loss is that people fail to make this intangible and perhaps difficult but very real and vital distinction. They fail to perceive that when they contribute nothing but money, no brains and skill and time, they can not expect the same returns as when they contribute everything. If you give money to others to work with they must earn not only enough with it to pay you a moderate income but something over for themselves.

And where you give money to others to work with, don't give it to one man. That is too dangerous, unless you know all about the business, and then it is not investment at all in this sense. What you are trying to do is to make money work for you, not work yourself, and to do that safely you must place it where it will be used by conservative and experienced men - not by one man - where it is subject to the care of a composite organization.

Many enterprises are essentially suited to the employment of private capital and should not receive the reservoirs of savings from countless small investors. Your common sense will tell you which sort of enterprise should be left to private capital, if you only stop to think about it, and I will add something to your own native sense from my special study and experience.

What you want is some safeguard, some bulwark, between the countless vicissitudes and fortunes of the business world and your own hard-earned, hard-saved money. Don't make the mistake of blundering into business when what you really mean to do is to make a safe conservative investment.

Don't speculate when what you should be doing is to invest. Perhaps this is only another way of saying what has already been said. Now the great difference between investment and speculation is that in the former one gets a minimum of profit and risk in return for a maximum of regular, steady income. What the investor asks is regular income, not profit. But the speculator is willing to forego income in return for a profit later on. Remember:

Investment means income. Speculation means profit.

Now it is important to note that the investments of to-day were almost always the speculations of ten or twenty years ago. There could be no investment without there first being speculation. First comes risk with the hope of large profits, often unrealized. Then comes certainty with moderate income. If a project proves successful then the speculators, the enterprisers, the risk takers, are likely to sell at a profit to investors, who when the once uncertain venture has become a settled industry take virtually no risks.

Now this financial burden of translating the speculation of to-day into the investment of tomorrow is a tremendously important one. But it is a highly hazardous business and it should fall upon shoulders strong enough to bear it. Are your shoulders as strong as that?

"But," say some people, "one really luck venture is worth a life-time of labor and years of what you call investment, which is nothing more than putting money into depositories for funds and is a very cold, abstract, impersonal, distilled sort of thing anyway."

Let us see about that. How about compound interest? Where does that come in? The truth is that a regular four, five, six or seven per cent. interest, year after year, is really just about as profitable as a speculation that pays no re-turn for several years and then rushes up with a bound. In six months' time alone a steady going, five per cent. bond is just as profitable as a two and a half point rise in the stock market. I know a concern that has been selling stock for ten years without paying dividends, and the owners think that some day they will be rich, but they seem to forget that their stock will have to rise from seventy to eighty dollars per share merely to equal the income from an ordinary five per cent. bond.

But this is not all. The sort of investment which one associates with the idea of interest is pretty sure to be a safe, steady, stable, regular paying one. No one would ever suggest compound interest at all if he did not have that kind of investment in mind and did not know that lots of them are to be had. But how about the speculations that never "pan out" at all? I suppose about three-quarters of so-called speculations never amount to anything. Thus the investor is no worse off than most of the speculators who win and he is certainly better off than the seven out of ten speculators who lose.

Of course there is the one good thing which makes a thousand per cent. But even the most financially unsophisticated person knows how rare they are. The millionaire who buys thousands of different securities is pretty likely to strike one of these "gold mines." The law of chance is working for him. But how does the law of chance work, I hardly need ask, when the man of small means takes a single throw at the gambling table?

Don't try to make money with a leap and a bound. Proceed quietly and slowly. Don't try to get rich quickly unless you are prepared to put everything you have into the game - money, skill, education, training, physical strength, time and experience - and even then don't you realize that many, many people who give all of that and more fail in the end?

Don't put everything on one throw of the dice, unless you know they are loaded - in your favor. Read what Bruce Barton, editor of Every Week, has to say on this subject: