Page:Hints About Investments (1926).pdf/122



the investor turns from public debts to enterprise, he walks out of a mist into twilight. We have seen how much guesswork and obscurity surrounds the question of the solvency of a Government or a public body, and how much faith and sentiment is needed by those who put money into the debts of the best of them, in the hope that it will be safe for twenty years or so. When we come to examine the question of the earning power of a company, we are faced by the baffling cryptogram of the balance-sheet, more interesting as a puzzle than informing as a statement of fact, and the apparently more illuminating record of the profit and loss account, which, however, merely tells us what the directors, usually in the best of good faith, think that the company has earned. But profit, as Mr. Wells says, "is the economic riddle that still puzzles us to-day."

Concerning the efficiency of balance-sheets