The Fremont weekly journal. [volume] (Fremont, Sandusky County, Ohio) 1867-1877, 1871-02-24
From the New York Independent.
zon1s QUESTIONS Answered

lent which viii prouQce INC gteAlett income
...n-ssteat with entire safety, am led to ask
rou the following questions, which shall be
5lad e have yoH answer, either privately or
hiouqh the colams Of th5 Independent -s
/. Do you think that, ss rule, first mort
gage railroad bonds are desirable Investment
In what do they differ nom q frst mortgage
on ordinary real estGteT
2. notice you recommend Northern Pacific
seven-thirties to investors. Why do you re-
gard them as unusually secure?
3. Is the Government pledged TO the pay
ment Of these Northern Pacific bondsF
4. notice they are selling at par Isn't
this too highS Cannot good railroad secorlIies
be bought cheaper gi4
s. I hold few ive-twenties; do you i.ssii;is=Fs
the Government will soon cal for then sur
renders $500
8 What assurance have investors that Nor
thern Pacific seven-thirties viii not hereafter
depreciafe below the price ct which they are
| now sold, compelling thossr who wish to Tea-
lie on them to do 50 at loss; u IL
To the above the Independent an
sEers:
I. Thus far the 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 securi-
ties. Of course there have been ex-
ceptional cases of mismanagement
and loss; but far oftener have'imper-
feet titles, lapsed insurance policies,
and shrinkages Of value rendered
real estate mortgages a bad invest
ment. There is living principle
underlying a railway bond, which
applies to very few if any other secu-
rites. Thus: .4t s1L
l. Usually the solyency of a rail
road depends mainly upon the traf-
ic; and, as a rule, that traffic steadi-
| ly increases as the road grows older
and the population along its route
becomes richer and denser, In a
word, the income of railroad land
hence in debt-paying ability will
ordinarily keep peace with tie
/ growth Of population.
2. A railroad, once built, rapidly
creates a business which is to render
it profitable. 1t deoelopes 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 strong corporation of capitalists
and shrewd, energetic business men,
whose profits, financial standing,
commercial reputation, and official
positions depend upon the selvency
and success of the r pad with which
they are identified. This powerful
combination of private interests con
stitutes a living power whose efforts
tend constantly to increase the pro
ftableness and soundness of the en-
terprise in whose interests they are
enlisted.
4. Finally, after a railroad is built,
every dollar expended in making
improvements and extensions, adding
new facilities for doing business, ana
in securing valuable alliances with
connecting lines, adds to the Fsecuri-
ty of its first mortgage bonds, by
augmenting the productiveness and
value Of the property on which these
bonds are based. It is in this way
that q second mortgage may increase
the safety of the first, With mort
cages which rest upon improved real
estate in our midst the security
steadily deteriorates with time, as
the Improvements become less valu-
able. Railroads lgrOl0 better and
more prosperous scitk age, and fur
niSk a coStaunty iacred&nq security
for the debt created In their coastgac-
tion. 1t is for these reason that first
mortgage railroad bonds are among
the very soundest securities that
can be had. .e5.at- iaJiaJ- as li
ii. The Northern Pacific Railroad
has a threefold solidityWhiehrenders
1t financially imp egnable. & 1. Ii has
ior its broad and firm foundation a
real estate endoWmeHtOfs more than
twenty-five Thousand Acres of fer
tile Land to each mhenof track-or
an uneneumbered farm of 500 ;acr, 5
lin addition TO the ordinary and
ample security Of the road and its
trattic) to secure each $H00O4bond
bought by the public. t2.h5It has
awaiting IL a business. whiehc we he
lIeYe is certain to render it self-sus
tanning from the first, and to give it
Il large surplus at an early day. g..
Ii Is In the hands of men Of known
and. acknowledged integrity, who sc
financial standIng, whose business
sagacity and thorough experience,
furnish a complete guaranty that
economy, energy, ana fidelity viii
characterize It's management. as
Ill. Government does not In form
guaranty the pal menti of Northern
Pacific -IhirtIes; but it indirect
ly insures their pay men5 by dona
Jlng unreseryedly To the company
sufficient productive lands to paI
them twice over The belt of coun-
try In which this superb domain is
situated admirably combines the
three elements essential to successful
Isrmlng-Yiz: naturally rich soil, a
mild crimate (the latitude being
about two degrees below Paris, anu
six below London, and sufficient
rainfall. 5- hH-sue
~. When there is no difference in
point of safely, the comparative
market value of various securities is
mainly determined by tneif profita
bleness. In this view Northern Pa
cifc gold seYen-thirties, selling at
par in currency, are by far the cheap
est investment of which we have
knowledge. Regarded as a source Of
income, they are cheaper at par than
a six per cent. gold bond at 81, and
cheaper than a six per cent. currency
bond at 744. In other words, one
hundred dollars invested in Northern |
Paciiics at par will produce larger |
income than the same amount inves- |
ted in a siXiper cent. gold security |
at 81. -7
V. We regard it as highly proba-
ble that large portion Of the pres
snt holders of Government bonds
viii be compelled to give them up
within a comparatively short time, |
and n,.ror,A L.. -. = = |