Western Reserve chronicle. [volume] (Warren, Ohio) 1855-1921, 1871-03-15
SOME QUESTIONS ANSWERED.
To the Commercial Editor Of Net
York Independent

Having a few thousand dollars this
l shall not need in my business, an
being naturally desirOus OF Obtainin
an investment which will prOduc
the greatest income consistent wit
entire safety, am led to ask you tn
following questions, which / shall b
glad to have you answer, either prI
vately or through the columns of tn
Independent
l. Do you think that, as a rule, frs
mortgage railroad bonds are a desira
BILE investment? In what do the
differ from a first mortgage on ordina
~ real estate?
2. l notice you recommend North
ern Pacific seven-thirties to investors
Why do you regard them as unusually
3. Is the Government pledged e
the payment Of these Northern Pacific
4. notice they are selling at par
Isn't this too high? Cannot good
railroad securities be bought cheaper?
5. l hold q few five-twenties do
you believe the Government will soon
call for this surrender?
8. What assurance have investors
that Northern Pacific seven-thirtles
will not hereafter depreeiate below
the price at which they are now sold,
compelling those who wish to realize
on them to do 30 at loss?
To the above the Independent an
sWers:
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
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.
or course there have been exceptional
cases Of mismanagement and loss; but
far oftener have imperfect titles,
lspsed insurance policies, and shrink
ages Of value rendered real estate
mortgages a bad investment. There
is living principle underlyinga rail-
way bond, which applies to very few
IL any other securities. This:
l. Usually the solvency of railroad
depends mainly upon its traffic; and,
as rule, that traffic steadily increases
as the road grows older and the pOpu-
latiOn along its route becomes richer
and denser. In a word, the income
Of railroad land hence its debt-pay-
ing ability will ordinarily keep pace
with the growth Of population.
.. A railroad, once built, rapidly
creates a business which is to render
/ it profitable. It develops a carrying
trade which did not before exist, and
which grows much faster than the
tributary population increases in
numbers.
8. A railroad usually has back of it
a strong corporation Of capitalists and
shreWd, energetic business men, |
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 con-
stitutes a living power whose efforts /
tend constantly to increase the profit I
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 i'm
provements and extensions, adding
new facilities for doing business, and
in securing valuable alliances with
NC-ASNNAA6 4AlG1n daAn " AAAE 6EEuEAEN
Of its first mortgage bonds, by aug
menting the productiveness and value
Of the property on which these bonds
ore based. It is in this way that a
second mortgage may increase the
safety of the first. With nOrtpa0es
which rest upon improved real estate
in our midst, the security steadily
deteriorates with time, as the i'm
provements become less valuable
RditrOdds gTOt0 better and more pros
porous NTH age, and furnish con-
StdS1tLy increasing security for the debt
created IN their construction. 1t is ,
for these reasons that first mortgage
railroad bonds are among the very
soundest securities that can be had.
II. The Northern Pacific Railroad I
has three-fcld solidity, which rem ,
ders it financially impregnable. /. It
has for its broad and firm foundation I
> real esIate endowment Of more than !
twenty-five thousand acres of fertile {
land to each mile of traek-or an un- \
farm Of 500 acres lin ad-
1itiOn to the ordinary and ample /
Of the road and its trafficl to Z
'ecure each 81 900 bond bought by the
public. 2. It has awaiting it a busi- +
hess which we believe Is certain to a
'ender itself-sustaining from the first, \
md 70 give il a large surplus at an \
;arly day. 3. 1t is in the hands of II
nen Of known and acknowledged in q
egrity, whose financial standing, il
whose business sagaeity and thorough Il
furnish a complete guar v
Inty tnat economy, energy and fidel- Y
ty Will characterize its management. n
NLnrr~rrT = a. 4 -
the payment OF Northern s.
'acife seven thirties; but it indirect z
y insures their payment by donating e
lnreservedly to the company suffi- p
lent productive lands to pay them Ii
vice over. The belt of country in n
Thieh this superb domain is situated V
admirably combines the three ele- b
nents essential to successful farming, ii
TiZ: a naturally rich soil, mild eli L
nate (the latitude being about two d
legrees below Paris, and six below /
Jondon) and sufficient rainfall. In
~. When there is no difference in fl
'oint of safety, the comparative mar
ret value of various securities is main b
y determined by their profitableness. f,
n this view, Northern Pacific gold Ii
even-thirties, selling at par in eur "
ency, are by far the cheapest invest d
1ent of which we have KNOWLEDGE Il
regarded as q source Of income, they Il
re cheaper at par than a six per cent. ei
old bond at 50. and cheaper than a el
TX per cent. currency bond at III n
n other words, one hundred dollars v,
invested in Northern Pacifics at par Is
Ttll produce larger income than the b,
anne amount invested in a six per III
ent. gold security at 50. ii
V. w e regard it as highly probably le
lat a large portion of the present Il
olders of Government bonds will be M
to give them up within a n;
short time, and accept in
lerefOr cash payment or a new five OF
er cent. bond. Everything now in di
ieates that the Government will soon Y,
e able to fund the bulk of its five &C
Tenties at q lower rate sf interest," VI
Ience, we have uniformly advised "a
1r subscribers to convert their Gov af
rnment bonds into some iTst-class fu
abroad security, having equal safety bI
nd greater peTmanence and prOduc- OF
veness. bf
VI. or course, all securities, even dC
hose of the United States, are liable cl
occasional slight fluctuations in th
lrrent price-the result of outside eS
and not of any change Ill
! real value. But the same causes tb
-hich now render Northern Pacific DC
,ven-thirties an exceptionally strong az
Ild desirable security will naturally tr