Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1871-03-03
(Fron, the New York independently
SOME QUESTIONS ANS WERED.

produce the greatest income consistent with
entire safety, am led to ask you the follow
ing questions, which shall be glad to have
you answer, either privately or through the
column of the INDEPENDENT
/. Do you think that, as a rule, first mort
gage railroad bonds are a desirable invest
ment? In what do they differ from first
mortgage on ordinary real estate?
2. notice you recommend Northern Pa
cific seven-thirties to investors. Why do you
regard them as unusually secure?
3. Is the Government pledged to the pay
ment of these Northern Pacific bonds?
4. notice they are selling at par. Isn't
this too high? Cannot good railroad securi.
ties be bought cheaper?
g. | hold a few five twenties do YOU be-
lieve the Government will soon call for their
surrender?
6. What assurance have investors that
Northern Pacific seven-thirties will not here
after depreciate below the price at which
they are now sold, compelling those who wish
to realize on them to do so at a loss?
l. Thus far the first mortgage bonds of
American railways have proved to be among
the very safest securities. In proportion to
to amount, they have probably shown a
smaller percentage Of loss in interest and
principal 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 mis-
management and loss; but far oftener have
imperfect titles, lapsed insurance policies, and
shrinkages of value rendered real estate mort
cages bad investment. There is living
principle underlying a railway bond, which
applies to very few ifany other securities. This ::
/. Usually the solvency of railroad de-
M re n z 81
that traffic steadily increases as the road grows
older and the population along its route be-
comes richer and denser. In a word, the in
come of a railroad (and hence its debt paying
ability will ordinarily keep pace with the
growth of population.
9. A railroad, once built rapidly creates a
business which is to render it profitable. 1t
developes carrying trade which did not be-
fore exist, and which grows much faster than
the tributary population increases in numbers.
3. A railroad usually has back of it a strong
corporation of capitalists and shrewd, energetic
business men, whose profits, financial stand
ing, commercial reputation, and official posi-
tons depend the solvency and success of the
road with VIII ich they are identified. This
powerful combination of private interests con-
sttutes living power whose efforts tend con-
stantly to increase the profitableness and
soundness of the enterprise in whose interest
they are enlisted.
4. Finally, after 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 augmentng the
| productiveness and value of the property on
| which those bonds are based 1t is in this
way that second mortgage may increase the
safety of the first. With mortgages which
rest upon improved real estate in our midst
the security steadily deteriorates with time,
as the Improvements become less valuable.
Railroads grow better and more prosperous
with age, and furnish constantly increasing
security for the debt created in their construc-
ton. 1t is for these reasons that first mort
gage bonds are among the very soundest Sc
curities that can be had
III. The Northern Pacific Railroad has a
threefold solidity, which renders it financially
impregnabe. /. 1t has for its broad and firm
foundation real estate endowment of more
than Twenty two Thousand Acres of fertile
Land to each mile of track-or an unencum-
bered farm of 500 acres Gin 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 bust
ness which we believe is certain to render it
self-sustaining from the first, and to give it a
large surplus at an early day. 3. 1t is in
| the hands if men of known and acknowledged
| integrity, whose financial standing, whose
| business sagacity and thorough experience,
| furnish complete guaranty that economy,
energy, and fidelity will characterize its man
agement.
Ill. Government does not in form guaranty
the payment of Northern Pacific seven
| thirties; but it indirectly insures their pay
ment by donating unreservedly to the COM
mfr oi Ian dc m fbap,
twice over. The belt of country in which
this superb domain is situated admirably COM
bines the three elements essential to success
full farming-yiz: a naturally rich SOIL
mild climate (the latitude being about two
degrees below Paris, and six below London),
and sufficient rainfall.
". When there is no difference in point of
safety, the comparative: market value of va
rious securities is mainly determined by their
profitableness. In this view Northern Pacific
gold seven-thirties, selling at par in currency,
are by far the cheapest investment of which
we have knowledge. Regarded as a source of
income, they are cheaper at par than six
per cent. gold bond at 50, and cheaper than a
six per cent. currency bond at "A l-2. In
other words, one hundred dollars invested in
Nothern Pacifics at par will produce larger
income than the same amount invested in
six per cent. gold security at 50.
V. We regard it as highly probable that a
large proportion of the present holders of
Government bonds will be compelled to give
them up within a comparatively short time,
and accept therefor cash payment or new
five per cent. bond. Everything now indi-
Gates that the Government will soon be able
to fund the bulk of its fve-twenties at a
lower rate of interest. Hence we have uni
formly advised our subscribers to convert
their Government bonds into some first-class
railroad security, having equal safety and
greater permanence and productiveness.
vi. Of course, all securities, even those of
the United States, are liable to occasional
slight fluctuations in current price the re-
suit of outside circumstances, and not of any
change in real value. But the same causes
which now render Northern Pacific seven
thirties an exceptionally strong and desirable
security will naturally sustain them in the
market so that those who wishto convert their
bonds into cash can do so at any time without
loss. Indeed, with their superabundants ecu-
rity their high rate ofinterest, and the provi-
sion that they will always be received at ten
per cent. premium in payment for the Com