The Democratic press. [volume] (Ravenna, O. [Ohio]) 1868-1901, 1871-03-09
:tFrona the \. Y, independently
Some Questions Ansuered.

I
To the Commercial Editor OF. The In
dependent:
Having a few thousand dollars that
shall not need in my business. and
| being naturally desirous of obtaining
an investment which will produce the
| greatest income consistent with en-
tire safety, L am led to ask you the fol-
lowing questions, which / shall be
glad to have you answer, either pri-
yately or through the columns OF HE
INDEPENDENT: --..
L. Do you think that, as q rule,
| first mortgage railroad bonds are de-
slrable investment? In what do they
differ from a first mortgage on ordi-
nary real estate?
2. notice you recommend North
ern Pacific seven-thirties. Why do
! you regard them as unusually secure /?
3. Is the Government pledgad to
the payment of these Northern Pa
cific bonds?
4. 1 notice they are selling at par.
Isn't this too high? Cannot good
railroad securities be bought cheaper !?
B. hold a few fve-twenties; do
you believe the Government will soon
call for their surrender?
g. What assurance have investors
that Northern Pacific seven-thirties
will not hereafter depreciate below
the price at which they are now sold,
compelling those who wish to realize
ON them to do so at loss?
To the a6oce The Independent an
s1reTs:
l. Thus far the first mortgage
| bonds of American railways have
| proved to be among the safest securi-
ties. In proportion to the amount,
they have probably shown a smaller
! percentage of loss in interest and prin-
cipal than any other investment that
has been accessible to the people,
Such has been the history of railway
securities. Of course there have been
exceptional cases of mismanagement
and loss; bnt far oftener have imper-
feet titles. lapsed insurance policies,
and shrinkages of value rendered real
estate mortgages a bad investment
There is living principle underlying
railroad bond, which applies to very
few if any other securities. This:
l. Usually the solvency of rail-
road depends mainly upon its traffic
and, as a rule, that traffic steadily in
creases as the road grows older and
the population along its route becomes
richer and oenser. In word, the in
come of railroad (and hence its
debt-paying ability will ordinarily
keep pace with the growth of popu-
lation. - r.,
2. A railroad, once built, rapidly
creates business which is to render
it profitable. 1t decezopes carrying
trade which did not before exist, and
which grows much faster than the
tributary population increases in num-
| bers. @
3. A railroad usually has back of it
strong corporation of capitalists
and shrewd, energetic business men,
whose profits. financial standing, COM
mercial reputation, and official posi-
! tions depend upon the solvency and
! success OF the road with which they
are Unidentified. This powerful COM
bination of private interests consti-
tutes a living power whose efforts
tend constantly to increase the profit.
ableness and soundness of the enter
prise in whose interests they are en-
| listed.
4. Finally, after a railroad is built,
every dollar expended in making inn
provements and extentions, adding
new facilities for doing business, and
in securing valuable alliances with
connecting lines, adds to the security
of its first mortgage bonds, by aug
menting the productiveness and val
ue of the property on which these
bonds are based. it is in this way
that a second mortgage may increase
the safety of the first. With mort
cages that rest upon improved real
estate in our midst the security stead
lily deterierates with time, as the i'm
provements become less valuable
Railroads groao better and more pros
perous aoith age, and furnish a con-
stGaatly increasing security for the debt
created an thei7. construction. 1t is
for these reasons that first mortgage
bonds are among the very soundest
securities that can be had.
II. The Northern Pacific Railroad
has a three-fold solidity, which rem
ders it finally impregnable. 1. 1t
has for its broad and firm foundation
real estate endowment of more than
Twenty-Five Thousand Acres of fer
tile Land to each mile of track-or an
unencumbered farm of 500 acres Gn
addition to the ordinary and ample
security of the road and its traffic. to
secure each $1,000 bond bought by
the public. 2. 1t has awaiting it a
business which we believe as certain
to render it self-sustaining from the
first, and to give it large surplus at
an early day. 3. It is in the hands of
men of acknowledged integrity whose
financial standing, whose business sa-
gacity and thorough experience, fur
nish complete guarantee that econo-
my, energy, and fidelity will charac-
teriZe its management.
I'll. Government does not in form
guarantee the payment of Northern
Pacific seven -thirties !; but it indirect
ly insures their payment by donating
unreservedly to The company suffi-
cient productive lands to pay them
twice over. The belt of country in
which this superb domain is situated
admirably combines the three ele-
ments essential to successful farming
viz: naturally rich soil, mild cli-
mate the latitude being about two de-
grees below Paris, and six below Lon
don,) and sufficient rainfall.
Nv. When there is no difference in
point of safety the comparative mar
ket value of various securities is
mainly determined by their profita- |
bleness. In this view Northern Pa
cific gold -thirties, selling at par
in currency, are by far the cheapest !
investment of which we have knowl-
edge. Regard as source of income,
they are cheaper at par than six per |
cent. gold bond. at 81, and cheaper
than six per cent. currency bond at |
7411Iz. In other words, one hundred
dollars invested in Northern Pacifics |
mr. 6JIn n 1ar
than the same amount invested in
six per cent. gold security at 80.
that a large portion of the present
holders of Government bonds will be
to give them up within a
paratively short time, and accept
tharafnr cash Davment or q new five