The evening Argus. [volume] (Rock Island, Ill.) 1861-1871, 1871-03-08
From the Ne.c York Independentl
Some Questions Answered.


Having u few thousand dollars that shall not
need In my business, and being naturally dcsir-
Gus Of obtaining al investment which will pro-
duce the greatest income consistent with entire
safety, am led to ask you the following ques'
tlon., which will be glad to have you answer,
either privately or through the columns Of the
Independent:
/. DO you think that, as rule, first mort
gage railroad bonds are desirable Investment?
10 what do they differ from first mortgage on
ordinary real estate
3. l notice you recommend Northern Pacific
seven -thlrtios to investors. Why 10 you regard
them as unusually secure?
,. Is the govern N mt pied geo to the pay ment
Of spc Northern Pacific bonds?
1. I notice they are selling at par. Isu'tthis
too high? Cannot good railroad securieties be
bought cheaper;
.. hold a few Eve -twentes do you believe
the Government will soon call for their surren-
der
6. What assurance have investors that North
err Pacific even-thirties will not hereafter de
preciato below the price st which they are now
sold, compelling those who wish TO realize on
them to DO :, a. loss 2
To THE Above TEE INDEPENDENT Answers:
|. Thus far the first mortgage bonds of
American railways have proved to be among
the very safest securities, In proportion 10
amount, they have probably shown a smaller
per centage of loss in interest aud principal
than any other investment that has been ac'
csssibe to the people Such has been the
history Of railway securities. OF course
there have been exceptional cases of mis>
management and loss; but far oftener have
imperfect titles, l9psed insurance policies,
and shriukages Of value rendered real estate
mortgages bad investment. There is a
living principle underlying u railway bond,
which applies to very few if any other secu.
rites. This:
!. Usually the solvency of a railroad de-
ponds mainly upon it's traffic; and, as a rule,
that traffic steadily increases IS the road
grows older and the population along its
route becomes richer aud denser. In word
the income Of q railroad land hence its debt.
paving ability will ordinarily keep pace
with the growth Of the population.
.. \ railroad once built rapidly cysateS
business which ia to render it profitable. 1t
dcrelopes q carrying trade which did not be-
fore exist. and which grows much faster
than the tributary population increases in
numbers.
g. A railroad usually has back of it
strong corporation Of capitalists and shrewd
energetic business men, whose profits, finan.
cisl standing, commercial reputation, and
official positions depend upon the so!vency
and success of the road with which they are
identified. The powerful combination of
private interests constitutes a living power
whose efforts tend constantly to increase the
proftableness and soundness Of the enter
prise in whose interest they are enlisted.
A. Finally, after q railroad is built, every
dollar expended in making improvements
and extensions, 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 value Of the
property on which those bonds are based.
Ii is in this way that n second mortgage
may increase the safety Of the first. With
mortga es which rest upon improved req
estate IN our midst the security steadily de
teriorates with time, rs the improvements
become less valuable. Railroads qrolr bet
ter and more prosperous with age, and fur
Hish a cOHstartiy increasing security t0r tie
deJt created in their construction. 1t is tor
these reasons tina, first mortgage bonds are
among the very soundest securities that car
be had.
III. The Northern Pacific Railroad mas a
threefold sOldity, which renders it hnanci
ally impregnable. /. 1t has for its broad
aud firm Foundation q real estate endow
ment of more than Twenty-Five Thousand
Acres Of fertile land to each mile of tracl
or an unencumbered farm of 500 acret
lin addition 20 the ordinary and ample
security of the road and Its traffic. TO secure
each : 900 bond bought by the public. 2
1t has awaiting it a business which we be
lieve is certain to render II self-sustAininl
from the first, and to give 1t large surplus
at an early day. 3. 1t is in the hands Of
men of known and ackno wledged integrity
whose financial standing, whose business
sagacity and thorough experience, furnish
q com plete guaranty that economy, energy
and fidelity will characterize its manage
ment.
III. Government does not in form guar
auty the payment of Northern Pacific seven
thirtles but it indirectly insures their pay
ment BY donating uure. eryedly to the com
yanv sufficient productive lands to pay them
twice over. The belt of country IN which
this superb domain is situated admirably
combines the three elements essential tt
succeasful farmlng-viz: a naturally rich
soil, q mild climate the latitude being abOu
two degrees below Paris, and six below
London and sufficient rainfall.
". When there is no difference ia point
OF safety, the comparative market value Of
various securities Is mainly determ ined b.
their proftsoleness. la this view Nor shern
PacIbo gold seven thirties, selling at gar IL
currency, are by far the chespestinvestment
of which we have knowledge. Regarded as
q source of income, they are cheaper at pal
than six per cent gold bond ut 81, and
cheaper than six per cent currency bond
ct 745 In other words, one hundred dollar,
invested in Northern Pacifcs at par will
produce a larger income than the sans
amount invested IN q six per cent. goit
security at 80.
V. We regard it as highly probable tina
large proportion Of the present holders o
Government bonds will be compelled to Civ
them up within comparatively short time
aud accept therefor cash payment or a ne
i've per cent. bond Everything now ind
Gates that the Government will soon be abl
to fund the bulk of its fve-twenties at
lower rate of interest. Hence. We have mn
formly advised our subscribers to conver
their Government bonds into soma FRA
class railroad security, having equal ssfet
and greater permanence and productive
ness.
VI. OF course, all securities, even thos
of the United States, are liable to slipt
fluctuations in current price-the result ,
outside circumstances, and not of any chang
in real value. But the same causes whic
now render Northern Pacific seven-thirsi,
az exceptionally siroRga and desirable securi
WIN naturally sustAin them in the mark
10 thA' those who wish ooonvsrt the