The St. Cloud journal. [volume] (St. Cloud, Minn.) 1866-1876, 1871-03-09
s. LF|oss dk Ns,o York Independently
S04E QUESTIOHS ANSWERED.
To The Commercial Editor Of The Independ.

asVlng 1eW Cn0o690o dollars that
shall not need in my business, and be-
insna turally desirous Of obtaining an in.
vestment which will produce the great
est income consistent with entire safety,
am led to ask you the following uues-
tons, which I shall be glad to have =
you answer, either privately or through
the columns Of the Independent:
l. Do you think that, as rule. f,s.
mortgage railroad bonds are a Desirable
Investment? In what d, they differ from
q nrst mortgage on ordinary real e.
tate?
z. notice you recommend Northern
Pacific seven thirties to investors. Why
do you regard them as unusually Sc.
cure?
3. Is the Government pledged to the
payment of these Northern Pacific
bonds?
4: l notice they are selling at par. :
isn't this too high? Cannot good rail-
road securities be bought cheaper?
o. l hold few ive-twenties do you
believe the Government will soon c,ll
for their surrender?
o. what assurances 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 sbove The Independent An,ue,.:
l. Thus far the first mortgage bonds
OF American railways have proved to be
among the very safest securities. In
proportion to amount, they have prob
ably shown a smaller percentage of loss
IN interest and principal than any other
Investment that has been accessible to
the people. Such has heen the history
OF railway securities. Of course there
have been exceptional cases Of misman-
agement and loss ; but far ofteuer have
imperfect titles, ]apsed insurance poll.
cies, and shriukages of value rendered
real estate mortgages bad investment.
There is living principle underlying
. railway bond, which applies to very
few if any other securities. This:
1. Usually the solvency of railroad
depends mainly upon its traffic; and, as
rule, that traffic steadily increases as
the road grows older and the population
along its route becomes richer and den.
ser.. In a word, the income of rail-
road (and hence its debt-pa5ing ability
will ordinarily keep pace with the
growth of population.
z. A railroad, once built, rapidly.
creates a business which is to render it
profitable. 1t developes a carrying
trade which did not before exist, and
which grows much faster than the trib-
utary population increases in numbers.
8. A railroad usually has back of it a
strong corporation of capitalists and
shre"d' energetic business meu, whose
profits, financial standing, commercial
reputation, and official positions depend
upon the solvency and success of the
road with which they are Identified
This powerful combination of private
interests constitutes a living power
whose efforts tend constantly to increase
the prcftableness and soundness of the
enterprise 10 whose interest they are en-
listed.
4. Finally, after railroad is built,
every dollar expended in making i'm.
proVemcnts and extensions, adding new
facilities for doing business, and in se-
curing valuable alliances With connect.
ing lines, adds to the security Of its first
mortgage bonds, by angmenting the
productiveness and value of the prop
erty on which those bonds are based
Its in this way that second mortgage
may increase the security of the first.
> With mortgages which rest upon improv-
ed real estate in our midst the security
steadily deteriorates with time, as the
impro> ements become less valuable
Railroads groa0 better and more pros
> porous aoits cge, and furnish can
3 stontly increasing security for the deb,
created III their construction. It is fol
!; these reasons that first mortgage bonds
are among the very soundest securities
that can be had.
y II. The Northern Pacific Railroad
has three-fold solidity, which renders
it financially impregnable. l. It ba!
t for Its broad and firm foundation rea
estate endowment of more than Twenty
+ two Thousand Acres of fertile Land te
each mile of track-or unencumbered
. farm of 500 acres Gin addition to the
+ ordinary and ample security of the roac
: and its traf6c) to secure each $1,000
! bond bought by the public. 2. 1t ha.
awaiting it business which we believe
{: is certain to render it self sustaipins
r from the first, and to give it large sur
; plus at an early day. 3. It is ia tht
hands of men OF known and acknovl
; edged integrity, whose business sagacity
J and thorough experience, furnish .
! complete guaranty that economy, ener
~: and fidelity will characterize it
management.
III. Government does not in form
guarantee the payment of Northern
Pacific seven-th,rties; but it indirectly
a iusures their payment by donating un'
}, reservedly to the company sufficient
productive lands to pay them twice
over. The belt of country in which
5 This superb domain IS situated admira
bly, combines the three elements essen.
! tial to successful farming-viz: nat
D n.o11v r;oh eo;l a mild cl,n.fo (fha 1.<