OPPORTUNITY USA

[Music] mother and child what does a mother think about that she looks down at her child she wants her child and comfortable with all her heart she hopes that her baby will have enough to eat we'll have warm clothes and a good roof overhead these things are all part of security we all want for our children where do they come from what does it take to produce food clothing shelter what makes us comfortable and secure this woman is the wife of a farmer already she knows a great deal about how things are produced let's go outside and look around nature supplied the land but it took the farmer to active this farmer saved and embed in the land in these buildings he had to save and invest in that truck too in all the tools the capital goods modern farming really became productive with the internal combustion engine with tractors and trucks with electricity and all modern tools that multiply the productivity of man how about that you've got quite a lot of you're saving these buildings and equipment sure but it pays off i just been over the other side of town with the load of calves take me half a day to get over there and back with a team of horses and all day if you had to walk yeah i guess it would how'd you like to farm the way your grandfather did you mean with no truck no tractor no electricity could you do it no not not alone i couldn't i'd have to have a couple of hard hands even then i don't know as i could handle this much land then modern tools make a big difference well i doubt if we could feed 155 million people without him i suppose your wife feels the same way yeah i guess she does why don't you go ask her well thank you we will pardon us we're trying to find out something about the importance of tools in modern life that sewing machine for instance i couldn't live without it are you fairly self-sufficient on a farm like this well i what do you mean your husband could butcher a steer oh yes but could either one of you make a pair of shoes out of the hide shoes well i doubt it could you shear a sheep wash the wool cart it spin the thread and weave cloth for say a wool shirt i don't know any woman today who could how about food could you get along without your modern kitchen without refrigeration you salting things pickling smoking and so on well i suppose i could but i wouldn't want to go back to that kind of life i'll take my kitchen and plenty of hot water and electricity and all that goes with it makes all the difference in the world thank you in other words for both men and women tools multiply what we can do and push us closer to a better more comfortable life this is true anywhere we look with modern tools the modern farmer can supply food and fiber for fifteen workers away from the land the workers who built that tractor equip the kitchen or do the important jobs in medicine or education you're looking at a capitalist he may not think of his tools as capital goods but that's what they are the only reason he saves and invests in capital goods is because he expects them to pay for themselves in use he wants to make a profit that's his privilege in this country in some countries the state owns all the tools of production and the people do what they're told or else in this country we have the great gift of freedom and most of our capital goods are privately owned you realize what a difference tools make when you know that pioneer miners with hand tools couldn't put out a ton of coal in a long working day even today european miners using some machinery put only up to two tons on the surface contrast this with what we can do with better tools on the average american miners put out seven tons and with really modern tools some mines produce 10 to 15 tons for each man each day let's take another example in 1839 william underwood made ten canisters by hand he could turn out about six an hour they were so expensive that they were saved and reused many times today one automatic machine can produce more than twenty thousand per hour and they cost so little they're used by millions it's this kind of progress that provides us with the rising standard of living which makes us the envy of the world let's put it this way hand tools are better than no tools at all animal power is better than no power at all it's slow and laborious but saving and investing is slow and laborious too yet that's where new and better tools come from in the first forty years of this century we improved our tools and each man hour per year produced two percent more since 1939 we've improved our tools faster and have increased our real income almost three percent per man hour per year capital goods include anything that helps us do more with less effort hand tools machine tools power tools you have to include the buildings the mills the factories you have to include the barn the silo the roads and highways you include things like the wires that carry electricity the telephone system all the public utilities the street the sidewalks you have to include school buildings too the playground all the necessary facilities a great deal of money had to be saved and invested just to supply us with so much in the way of capital goods just look down any street and you can see a hundred examples of what we're talking about public projects private enterprise wherever you look but where do they all come from can anybody get in the act or is it the special privilege of the few well let's see in order to have capital goods there must be savings if we used up everything we produce if we spent every dollar we got hold of then there would be no savings but most of us don't do that this is one of many institutions where people put their savings you can go in here if you want to and start a savings account or a checking account and because in every community there are so many savers their savings are pooled and available for use these savings may be loaned to this farmer for a car load of steers to finance a new tractor to build a new corn crib all across the country the savings of many other individuals are accumulating and made available to help a merchant with his inventory to meet a payroll at a factory and while this is going on people are saving through other institutions most life insurance policies for example include a savings feature and this is only one instance of a great many kinds of thrift plans four out of five of us save in one way or another and our accumulated savings are invested in public projects and in private enterprise some of us have an adequate life insurance program we have a rainy day fund in a savings account and still have some surplus funds where do we put these funds we want to be paid for their use and we want them in a sound useful or productive investment for instance a widow of a successful businessman the chairman of a pension fund a dentist a skilled workman a successful farmer who needs and who will pay for the use of their savings well a typical example would be an electric light and power company they face a growing demand for current within a few years they must supply more electricity than their present plants and equipment can furnish so they need funds to meet the growing demand funds that will become capital goods a gas company needs to finance a new pipeline an oil company needs a new cat cracker a steel company needs to expand if they can't save all the money out of earnings where will it come from from time to time cities need money to build a new bridge or enlarge the waterworks a city will need money for the new hospital where do new streets or highways come from let's see how people do find the funds to invest in capital goods sometimes they do it themselves this is just a one-man shop i didn't have to borrow from anybody i used to be a carpenter but i don't like to work for other people so i start this little business on my own you saved your own money well i borrowed a little from a friend on a note but i paid it off thank you ed and i met over in the pacific during the war we're both pretty good mechanics so we just pooled our dough became partners and went to work you haven't had to borrow money nope not yet but we are figuring on expanding i think we can raise the money right around here without much trouble thank you it's easy to see how the savings of individuals friends and neighbors get into productive use but how about the larger plan that needs the savings of many individuals if they're successful there comes a time when they need further funds for expansion here's a good example a successful business here is mr gray who is considering this typical problem well this is the first time we're raising money by selling securities to the public we've had some discussions with an investment banker and i'm about to dictate a letter to him do you mind if we listen in not at all there is bradley our company is considered the plan you outlined to raise money for our expansion through the sale of common and preferred stocks we would like to discuss ways and means with you at your earliest convenience usual would you mind explaining how you expect to raise this money certainly not here on the one hand there are millions of savers and over here is our company we need the use of some of these savings we want more plant they want to invest and we're willing to pay for the use of their savings this calls for a specialist someone who can funnel these savings into our plant and into other useful projects the middle man the specialist is called an investment banker well how is an investment banker different from a commercial bank well a commercial bank is a bank of deposit place where we may uh keep our savings and uh have checking accounts it accepts funds for safe keeping and may lend me money to meet my payroll or for some other temporary use a short-term lender yes that's right but an investment banking house is not a bank of deposit it's concerned with long-term investments you know securities stocks and bonds investment bankers are merchants they buy the securities of a corporation needing funds for expansion for additional tools or other business purposes the corporation thus gets the funds immediately then the investment banker sells the securities to investors if you want more information about this why don't you ask an investment banker thank you mr gray we'll do that right now why yes i'm an investment banker my name is bradley there's no mystery about securities let me see if i can give you a very simple explanation why do people buy them because they want a higher return than they can get through other sound uses of savings in general there are two types bonds and stocks now here are some bonds these are something like a promissory note a bond is simply a legal form representing a loan for a fixed length of time at a fixed regular income called interest the money paid for these bonds went into a municipal waterworks it might have been for any similar project anybody can buy this or any of the other securities we handle if you're a saver and want to lend your money this way you buy a bond and get interest or you may want to become part owner of a business in which case you can buy stock stock is another legal form it represents a share of ownership of a business and through dividends a share in the profits so you see you can become either a lender or a part owner of a business through owning securities if you own stock you actually only share the facilities the capital goods and this type of ownership may be of two kinds the preferred stock is entitled to a stated dividend which must be paid before any dividends are paid on the common in contrast dividends on the common can fluctuate with the times if you're investing your money you want to be paid for the use of your money but the type of investment you make varies depending on your objective your aims and requirements thank you mr bradley through these securities bonds and stocks you supply the long-term investment funds that are needed by government to build the bridge or by industry to expand the plan yes now mr gray's company is a fine example of private enterprise needing funds can anyone any business say come to you for funds certainly and if it's a sound organization we'll do everything we can to help there's an element of risk and everything how do you determine a sound investment i think i can show you better than trying to tell you take this example at hand mr gray here's how we approach it this job calls for specialists and here's the way the men in our buying department go to work we have a considerable staff of experts in this department our first step is to find out if the new securities would represent a sound and desirable use of funds in other words these men are asking themselves is this a good investment we check the firm's reputation it's credit standing we study financial reports and other statistics we visit their plant and study their record over a period of years we appraise the management and once we get enough information we put it on the table and talk it over we're very thorough and very careful we have a responsibility in buying and merchandising any securities if we feel justified in going ahead we will so notify in this case mr gray and then we really go to work we review the quality of the management the history of the company the physical assets the location of the plant and the plant itself the character of the products the market and how they stand against competition how about labor relations public relations and goodwill how about their financial statements for a period of years how about their current earnings future outlet prospects and so forth our investment and industry analysts check the facts on this particular company and make comparisons with other corporations in the same industry we try to estimate not only present but future needs in making our appraisal we call in public accountants attorneys industrial engineers and other specialists we make comparative earnings statements check balance sheets look into maintenance charges and depreciation it all adds up to a report like this which gives us a comprehensive analysis of this particular company we know enough now to recommend in this case that the company go ahead and issue the securities at a stated price and we agree acting as principles to purchase the new securities or as we say to underwrite this issue next we file a registration statement on these securities with the governmental agency the securities and exchange commission they examine it and not until they declare the registration effective may we sell these securities to the public then we give our check to the corporation which means the funds can be put to work at once this means expanded facilities new jobs and our national productivity will soon be increased by just this much of new manufacturing power in the meantime we're in this position you might say that we've bought these securities wholesale but we still have to sell them where do you get the money for this purpose we've invested our own funds and we may have borrowed money on a short-term loan from a commercial bank now it's up to us to sell the securities to investors our customers you can begin to understand our deep feeling of responsibility which will last as long as the securities exist there are other investment bankers and security dealers hundreds of them scattered in the principal centers around the country we may share the offering with others sometimes national distribution is desirable sometimes it doesn't matter we may sell them locally in underwriting an issue that is in buying securities we're acting as owners or principals then we turn to our sales securities to sell them to savers who may be looking for just this kind of an investment it is a sales department that links the users of funds the individual company on the one hand and the many investors on the other the problem of securing distribution of initial placing the bonds or stocks in the hands of investors calls for expert training high professional standards and a thorough knowledge of this important subject character integrity and a realistic working knowledge are all necessary for this kind of selling each individual investor has his own special needs and problems it's up to us to help in any way we can with information with analysis with prompt and practical service as he decides to buy or sell securities i bought these stocks about five years ago but i'm building a home i want you to sell them for me they pay dividends right along but i need the money oh yes we'll be pleased to sell these for you i'll take care of this right now it was so nice of you to come out to the house again why i'm glad to do it we were all shocked to hear about your husband yes i told him to slow down but he just couldn't it was his heart you know yes i know sam would want me to consult with you about the problem of investing my money you see with the insurance i have quite a sum that ought to be invested suppose we begin with an estimate of your requirements we'll have to think about your plans for your children let's see well bill is married but tommy's still in school uh-huh well you'll probably want to keep the house until tommy finishes oh yes of course after all the mortgage is small yes i'm chairman of the pension fund of this corporation we're looking for a well-diversified list of high quality bonds and some common stocks they must be high grade and they must fit into our basic plan i've been practicing for about five years my office is clear and i'm out of debt and i'm all right as regards and so on but i'd like to start an investment program that'll grow and will take care of me when i get ready to retire the future looks good at the shop my house is almost clear my insurance is in good shape i'd like to start making some investments this is the first time i've ever had money i didn't need on the farm so i thought i'd like to invest in some good business and get some outside income i don't want to work all my life and there are always individuals and institutions with surplus funds looking for sound remunerative employment it's our job to locate the savers who provide the funds to judge the soundness of the investments we handle public or private and to bring the savers and the users together through buying and selling securities do institutions buy securities one of the biggest markets we have for bonds is with life insurance companies part of the premiums they receive represents the savings of millions of policyholders to a great extent these savings are used to buy bonds from us in this way we provide the machinery through which safe funds become useful productive things capital goods thank you mr bradley distributing these securities is essentially a simple but an indispensable process as citizens of the united states we have the privilege the asian to take part in the process of underwriting america's future and through the investment banking industry we can invest our savings vitalize our industrial plants and continue to give ourselves the steadily rising level of goods and services we all want for ourselves and children this is the freedom that has made our economy the most productive this is opportunity us