The Washington herald., 1914-03-21

newspapers every day at IS to Sc. In
answer to his letter of protest. the broker
told him that the bonds should not have
been registered. as il was impossible to
convert them back into the coupon form.
and the broad daily market is for the
coupon bonds and not for the registered
bonds, which regularly sell from one to
two points below the coupon bonds
The merchant in giving his order was
following an oId-fashioned tradition lie
had an idea that bonds ought to be reg
istered for the sake Of greater safety.
He did not know that the market was
any different for registered bonds than
coupon bonds. In his order, therefore. he
made two mistakes. first in getting reg
istered bonds at all, il there was the
slightest chance of IL being necessary to
sell them again, and second, II he had
TO have registered bonds, in not instruct
ing his broker 10 buy bonds that were
already registered, instead of buying cou-
pom bonds and having them turned INTO
registered bonds
The difference is a very great one Cou-
pom bonds do not have anybodys name on
them as owner. The bearer is not only
entitled to present the bonos for payment
when they become due, but Is also en-
titled to cut of the coupons and present
10 sign any papers. execute any instru-
uents. or 20 through any red-tape what
ever in making 4 sale of the bonds Tne
coupon bond is. therefore, very hlshlS
negotiable instrument, Thoroughly adapt-
G Die to everyday uses of money for in
terest The registered bond, on the con-
trary. stands in the name OF the owner on
the books Of the corporation or mu-
nicipaIity and cannot be sold until 1t is
a. ND =
dorsement is accepted by the buyer or his
REPRESENTATIVES. The registered bond is.
therefore. as rule. not usually so ne
gotiahle as the coupon bond and conse-
duentIy il commands a lower price in the
market Therefore, it is very rarely ad-
visable for any one to go and pay the
price of a coupon bond and then convert
il into a registered bond, II he cares the
least little bit either for marHetsbility
or for market value.
A banking house in New York pub
Iished a story 10 illustrate an even worse
trouble into which the registration OF
be nds led an investor. These bonds were
bought many years ago by woman
who had them registered in her name.
She died without a will. leaving her
whole estate in the hands Of her son.
He was legally appointed executor. Then
he sent the old registered bonds to his
broker in New York for sale. This was
last May.
The broker asked the railroad whether
the bonds were negotiable. When the
railroad people learned that the owner
Of the bonds had died without a will.
they asked for three additional instru-
ments TO accompany the bonds: first. a
waiver from the state controller stating
that the inheritance tax on the bonds
had been paid; second, certihed copy
of the courts appointment of the client
as executor. and third. waiver OF the
controller of the State in which the rail-
road is incorporated showing that in
heritanCs tax had been paid there u
took nearly Eve months 10 get these
vapers completed. When the bonds were
sent through for sale they were worth
.93 When they were actually sold they
were worth 81 This incident. told as a
matter Of fact is probably not. by amy
means. an isolated incident of this sort.
The practice Of registering bonds has 10
come obsolete. II was good ana use
full practice in the old DAYS when safe
places to keep securities were scarce and
hard 10 find II You intend to keep bonds
in a tin box under the raftCrs OF inc
house, or hidden between mattresses OF
the bed, or in any other simple nut NOT
very secure hiding place. where an en-
terprising burglar. or an ordinary nre.
might take the bonds away from you. II
ia hy all means advisable TO have them
registered: for a registered bond can be
replaced il IL is lost or destroyed with
less trouble and expense than any other
form of bond, and, therefore, does not
have to be kept so carefully. a coupon
bond on the contrary. II II is lost or
stolen or destroyed. entails a host of
trouble on the owner before he can pro-
tect his interest in the bond. If. how
ever, he has a safe deposit box in which
TO keep his securities the coupon bond is
infinitely preferable from every point of
view.
There arc some securities. of course.
that only come in the form Of regis
tered bond. II any one wants to buy the
bonds of the city OF Buffalo. for instance.
he must take registered bonds or nothing.
This is true of a good many municipal
issues and of few corporation bonds. but
not many II is an old-fashioned practice
which seems to be RAPIDLY disappearing,
and in the course of time a bond that Is
only a registered bond and nothing else
will probably disappear. As time has
gone by. there has been a tendency TO
make this matter of registration much
simpler and to avoid as far as possible
the small and petty dangers into whicn
the buyer of registered bonds is apt to
fall.
Thus a good many of the more recent
issues of bonds are what is called in
Interchangeable. This means that man
may buy a coupon bond and have II
registered in his name. If he should de-
sire to sell 1t. all he has to do is 10
send 1t or take II to the company or
municipality which issues it. and have II
changed back again into a coupon bond
Thus the bonds of this class enjoy all the
advantages of a coupon issue. together
| with the advantages, such as there arc
Of a registered bond. The bonds. when
they have been exchanged back into cou'
pom bonds, are just as good delivery as
J before.