Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1871-02-27
From the New York independent
Some Questions Answered.

Having few thousand dollars that | shall
not need in my business, and being naturally
DESTROYS Of obtaining an investment which will
produce the greatest income consistent with
entire safety. am led to ask you the following
questions. which shall be glad to have YOU
answer, either privately or through the columns
ofthe independent
!. Do you think that, as u rule, first mort
gage railroad bonds are 4 desirable investment?
In what do they differ from first mortgage OH
ordinary real estate ?
, notice you recommend Northern Pacific
seyen-thirties to investors Why do you regard
them as unusually secure ?
,. Is the Government pledged to the pay
| ment OF these Northern Pacific bonds?
+. | notice they are selling at par lsn' this
| too high ? Cannot good railroad securities be
bought cheaper?
). | hold few tive-twentles do you believe
the Government will soon call for their surren-
| der?
6. What assurance have investors that North
cru Pacific sevcll-thrtics will not hereafter de-
preciate below the price at which they are now
sold. compelling those who wish to realize on
them to do so at a loss
TO the above The Independent answers:
|. Thus far the first mortgage bond or Amer
lean railways have proved to be among the
very safest securities. In proportion to amount
they have probably shown Il smaller percentage
of loss in interest and principal than any other
| investment that has been accessible to the peo-
ple Such has been history of railway securi.
ties. Of course there have been exceptional
cases of mismanagement and loss {: but Tar Of
tencr have imperfect titles, lapsed insurance
policies and shrinkages Of value rendered real
estate mortgages bad investment. There Is
living principle underlying railway bond,
Which applies to very few ifany other securities.
This:
|. Usually the solvency Of Il railroad de-
ponds mainly upon its traffic and, us Il rule,
that traffic steadily increases rs the road
grows older and the population along its
route becomes richer and dcnscr. In Il word,
the income Of Il railroad land hence its debt
paying ability will ordinarily keep pace with
the growth Of population.
>. \ railroad. once built. rapidly crrat'~ Il
business which is to render it profitable. 1t de-
reIopcs carrying trade which did not before
exist. and which grows much faster than the
tributary population increases in numbers.
3. \ railroad usually has back of it Il strong
corporation Of capitalists and shrewed, energetic
business men, whose profits, financial standing,
commercial reputation, and official positions de.
| pcnd upon the solyency and success OF the road
with which they are identified. This powerful
combination of private interests constitutes u
living power whose efforts tend constantly to in
crease the proiitableness and sounduess Of the
enterprise in whose interest they are enlisted:
! +. Finally after railroad is built, every dol
lar expended in making Improvements and eX-
tensions. adding new facilities for DONG bllsl-
ness. and in securing valuable alliances with
connecting lines, adds to the security of its first
mortgage bonds. by augmenting the productive
| I r. i.,h th,,Sa
| bonds are based 1t is in this way that a SecOnd
mortgage may increase the safety Of the first.
| With mortgages which rest upon improved real
estate in our midst the security steadily deter
iol;tcs with time, rs the improvements become
less valuable Ruiiroaeks grOr brtf'r art mare
pros,,r,nus mih oge and fnniM " co"stn"hyM-
c,4riwng security forM r Mhd c,rnfnl IN tier con-
arncti"". 1t is for these reasons that .h'A mort
care bonds are among the Very Sollndrst sccllr-
ties that can be had.
II. The Northern Pacific Railroad has L
thrccfold solidity which renders it financially
imprcgn,hlc. !. 1t has for its broad and firm
| ioundatona real estate endowment Of more than
Twenty-Five Thousand Acres Of fertile Land to
each mile of track-or an uncmcunIbered farm
of 800 acres (in addition TO the ordinary and
ann pie security OF the road and It's traffic! to
secure each $ 900 bond bought by the public
.
IS cr.,inin to render it selfsuslaining from the
first, and to give it large surplus at an early
day ;. 1t is III the hands Of linen Of known and
acknowledged integrity, whose financial stand
Ing, whose business stlgaclty and thorough ex-
perlence. furnished 4 complete guaranty that
economy, energy, and fidelity will characterize
lis management.
III. Government does not in form guaranty
the payment of Northern Pacific sevent hirties
but it Indirectly insurcS their payment by donat
ing. unreservedly to the company sufficient pro
ductive lands to pay them twice over: The belt
of country in which this superb domain Is sltua-
ted admirably combines the three elements e;-
scntial to successful farming-yiz: naturally
rich soil. mild climate (the latitude being about
two degrees bellows Paris, and six below Lon
don and sufficient rainfall.
". When there is no difference in point of
safety, the comparative market value Of various
securities is mainly determined by their profit
ableness. In this view Northern Pacific gold |
scven-thrties selling at par in currency, are by |
far the cheapest investment Of which We have
knowledge Regarded rs a 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 IA. In other words,
one hundred dollars invested IN Northern Pa
ciics at par will produce 4 larger income than
tllc Stllllc aiHount IlNeAicu III SiA lci Sehe.
gold security -.
Y. We regard it as highly probable that
large proportion Of the present holders OF Gov
eminent bonds will be compelled to give them
up within comparatively short time, and ac-
cept therefor cash payment or new five per
cent bond. Everything now indicates that
the Government will soon be able to fund the
bulk of its fve-twenties at lower rate of inte-
rest. Hence, we have uniformly advised our
subscribes to convert their Government bonds
into some first-class railroad security, having
equal safety and greater permanence and pro-
ductiveness.
VI OF course, all securities, even those Of
the United States are liable to occasional slight
fluctuations in current pricc-thc result Of out
side circumstances. and not of any change in
real value. But the same causes which now
render Northern Pacific scven-t hirtles an er,
H. ,,.J Jo,,.,IJ, will