The herald., 1897-08-19
OFFICE OF THE HERALD.
Los Angeles. Aug. IS, 1897.
'"There is no particular danger ina man S
smile if you are not indebted to him."

smile If you are not indebted to him.
Some corporations have issued and 9TH
ers are planning to ISSUE interminable
bonds, and it becomes the duty of the
investor to consider carefully the ad-
vantages and disadvantages Of this form
of security. American Investments says
upon this subject: Governments have is
sued them for many years, and no bonds
are considered better securities than con
sols.' The question arises whether the
perpetuty, which, with or without reason,
we concede to powerful government
can be achieved by any business corpora
tion. viii the low interest rate resulting
from the prospect of an indefinitely long
investment be large enough to insure the
principal against chance of loss in some
crisis, ten, twenty or fifty years from now?
And further than that, is the property upon
which the bond is a lien of such a character
that it will not diminish in value? These
questions each investor must answer in
the light of such information as he can
secure.
From the point of view of a corporation
issuing such bonds, the advantage is, of
course, in low interest, and also in added
strength to resist financial disturbances,
since it can never be compelled, in the
midst of season of depression and panic,
to pay or refund its loan. These consd-
erations have weight, since anything that
strengthens a corporation makes its bonds
better investments
The chance of loss by depreciation of
property and final insolvency is the great
est risk. This chance will, of course, de-
pend upon the character of the corpora
tion. If it's business be manufacturing or
transporting goods or intelligence, it is
easy to see how in the course OF years, not
ten or twenty. perhaps. but fifty or
seventy-five, the progress of invention will
have made welnigh useless the perfect
appliances of today. Does the business
earn enough to keep its plant up to date.
even if expensive alterations are needed?
If not, an interminable bond issued against
such security must be regarded as risky
investment
On the other hand, there is no more per-
manent form of value than land. Bonds
issued in any direct or indirect way against
good realty ought to bring their face value
ization still exist. The land must, how
ever, have good earning power in order to
pay interest, and there is where the only
chance of loss appears. Land which may
be earning today may be without power to
produce a. dollar fifty years from today,
through loss of fertility, shifts in popula-
tion. changes in fashion in cities and many
other causes. 1t is easy to see that even on
land as a basis, interminable bonds, in
order to form a permanent security must
be issued with much discrimination.
Such bonds as those mentioned, to-
gether with bonds whose time of pay
ment is postponed for one. two or five
hundred years, put a load of debt and
interest upon posterity. Succeeding gem
erations may be unable to carry the bur-
den thus laid carelessly upon them, and
the long life of the securities may be the
cause of the corporations destruction. In
dividuals who would do an honorable busi-
ness pay as they go. If they borrow, it is
for some length of time commensurate
with their lives. Should we consider cor
poration perpetual because its charter con-
tains no time limit? There are so few
fixtures in this world that death and taxes
are popularity supposed to comprise the
list. Why should it be necessary to create
an imaginary immunity from change in a
property in order to mortgage it? 1t is
not necessary If the mortgage is for an
ordinary term, and it should be no longer
without good reason plainly set forth.
4 4 4
The San Francisco real estate market
is thus summarized by the Circular of that
city. which says: The impression begins
to prevail that real estate prices have
touched bottom. One would suppose that
prices of the most of city properties had
fallen sufficiently to justify this belief, but
no one can yet say whether prices have
passed the lowest notch or not. One thing
is especially noticeable just now, and that
is that no reduction seems heavy enough to
suit buyers. If prices are reduced 20 per
cent the buyer demands reduction of &c
per cent; if the price is reduced 80 per cent
then a reduction of 40 per cent is asked; if
reduced 40 per cent then still further cut
is demanded. We do not know--no one
indeed, yet knows-whether prices have
touched the lowest point or not; but
whether they have or not, one thing is GER
tain, that present prices Justify purchas-
ing, If there is to be a city here of even
half the size and Importance that reason
The demand for good business properties
paying well, is still very fair. All of the
savings banks have far more money on
hand than they can lend. All good stocks
and bonds are very high, and will be al
most certain to come down as soon as there
is larger demand for money in general
business and real estate. A reduction OF
the rate of interest to per cent a year
the lenders paying the mortgage tax, is
still expected but has not yet been made
4 4 +
The industry of counterfeiting cents ap.
pears to be in moderately f1ourshing con.
dition. Last month out of 4100,000 cents
received at the New York sub-treasury
3245 were found to have been the ingenious
product of private manufacture.
Good will Is property. and stock may bt
issued for 1t, according to an interesting
decision just rendered by the United States
circuit court Of appeals at New York. The
question TO which an affirmative answer
was thus given was raised in proceeding
instituted by a firm of wall paper manu-
facturers which had gone into the Natona
wall Paper company, to have the charter
or the company revoked on the ground
that It's stock had been improperly ISSUED
for the good will of companies whose
business ws acquired and whose factories
were afterwards closed. All the stock o.