The less money lying idle the greater is the dividend

The less money lying idle the greater is the dividend

Walter Bagehot, a renowned economist and journalist, is often credited with the quote, "The less money lying idle the greater is the dividend." This statement encapsulates Bagehot's belief in the importance of efficient allocation of capital and resources in order to maximize returns for investors and shareholders.

Bagehot was a strong advocate for the efficient use of financial resources, arguing that idle money does not generate any returns and therefore represents a missed opportunity for investors. In his seminal work, "Lombard Street: A Description of the Money Market," Bagehot emphasized the importance of keeping money in circulation and ensuring that it is put to productive use in order to stimulate economic growth and generate dividends for investors.

According to Bagehot, idle money sitting in bank vaults or under mattresses does not contribute to economic activity and does not generate any returns for investors. Instead, he believed that money should be actively invested in productive assets such as businesses, infrastructure, and innovation in order to generate dividends and create wealth.

Bagehot's emphasis on the efficient allocation of capital is particularly relevant in today's fast-paced and dynamic financial markets. In an era of low interest rates and increasing competition for investment opportunities, investors and companies must be vigilant in ensuring that their money is not lying idle but is instead actively deployed in ways that generate returns and create value.

By following Bagehot's advice and putting money to work in productive investments, investors can increase the likelihood of receiving dividends and achieving long-term financial success. This principle holds true for individual investors, institutional investors, and companies alike, as the efficient use of capital is essential for driving economic growth and creating wealth.