14

of  purchase.  In  that  case  only  two  out  of  the
three  cardinal  points,  contained  in  the  rule  we
have  just  set  out,  were  followed.  The  capital
was  evenly  divided  over  three  first-class
stocks  ;  the  prices  of  these  stocks  were  identical
in  width  of  fluctuation  ;  hut  they  were  all
subject  to  the  same  market  and  trade  influence ­
  ;  in  other  words,  they  were  all  subject
to  the  general  investment  conditions  obtaining
on  the  London  Stock  Exchange  as  well  as  to
the  general  trade  conditions  ruling  in  Great
Britain  ;  for  all  Trustee  stocks  are  alike  in
this  respect,  that  they  are  almost  solely  held
in  this  country.  This  one  defect  was  sufficient
to  nullify  the  rest  of  the  precautions  which  the
investor  had  taken.
In  this  case  the  loss  was  due  to  the
disregard  of  the  same  essential  to  sound
investment  as  is  neglected  in  all  investments
which  consist  exclusively  of  British  stocks.
And  this  same  defect  is  responsible  for  all
the  losses  which  are  made  in  investments  of
this  type.
Now,  having  detailed  the  dangers  which
assail  capital,  we  will  next  consider  the  risks
attendant  upon  the  safety  and  regularity  of
income.  Income  is  paid  out  of  revenue.  In
the  case  of  Government  and  Corporation  stocks,
revenue  is  derived  from  rates  and  taxes  raised