Bellows Falls times. [volume] (Bellows Falls, Vt.) 1856-1965, 1871-03-03
From the New York Independent.
Some Questions Answered.

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shall not need in my business, and being
naturally DESTROYS of obtaining an invest
ment which will produce the greatest in
come 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
of The Independent:
/. Do you think that, as a rule, first
mortgage railroad bonds are a desirable
investment? In what do they differ from
a first mortgage on ordinary real estate
2. notice you recommend Northern
Pacific seven-thirties TO investors. Why
do you regard them as unusually secure
8, Is the Government pledged to the
paymentof these Northern Pacific bonds ?
4. notice they are selling at par.
Isn't this too high ? Cannot good rail-
road securities be bought cheaper?
5. | hold few fye.twenties do you
believe the Government will soon call for
their surrender?
8. What assurance 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 ABOVE THE INDEPENDENT AN
SWERs:
|. Thus far the first mortgage bonds
OF American railways have proved to be
among the very safest securities. In
proportion to amount, they have proba-
bly, shown 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 mismanage-
ment and loss; but far oftener have i'm
perfect titles, lapsed insurance policies,
and shrinkages of value rendered real es-
tate mortgages bad investment. There
is living principle underlying a railway
bond, which applies to a very few if any
other securities. This:
1. Usually the solvercy of railroad
depends mainly on its traffic; and, as
rule, that traffic steadily increases as the
road grows older and the population
along its route becomes richer and dens-
er. In word, the income of railroad
(and hence its debt-paying ability will
ordinarily keep pace with the growth of
population,
2. A railroad, once built, rapidly ere
ates business which is to render it profit
able 1t DEVELOPS carrying trade
which did not before exist and which
grows much faster than tributary pop
ulation increases in numbers.
3. 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
constitutes living whose efforts tend
constantly 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 i'm
provements and extensions, adding new
facilities for doing business, and in secur-
ing valuable alliances with connecting
lines, adds to the security of its first mort
gage bonds, by augmenting the product
iveness and value of the property on
which those bonds are based. 1t is in
this way that second mortgage may in
crease the safety of the first. With mort
cages which rest upon improved real es.
tate in our midst the security steadily de-
teriorates with time, as the Improvements
become less valuable. Railroads grow
better and more prosperous with age,
and furnish constantly increasing Sc
curity for the debt created in their con-
struction. 1t is for these reasons that
first mortgage bonds are among the very
soundest securities that can be had.
ii. The Northern Pacific Railroad
has threefold solidity. which renders it
financially impregnable. /. 1t has for
its broad and firm foundation real es.
tate endowment of more than Twenty
two thousand Acres of fertile Land to
each mile of track-or an encountered
farm of 500 acres Gin addition to the or.
binary and ample security of the road
and its traffic. tosecure each 81 900 bond
bought by the public. 2. 1t has await
ing it business which we believe is GER
tain to render it self-sustaining from the
first, and to give it large surplus at an
early day. 3. 1t is in the hands of men
of known and acknowledged integrity,
whose financial standing, whose business
sagacity and thorough experience fur
nish complete guaranty that economy
energy and fidelity will characterize its
management.
III. Government does not in form
guaranty the payment of Northern Pa
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