Evening star., 1915-11-14
Bonds on the Bargain
Counter
BY ALBERT w. ATWOOD


and this has driven down the price
of high grade investments the world over.
One school of economists believes prices
will go still lower; another disputes the
contention. But we know that prices
have already fallen, and in general this
is one of those periods when fall in bond
prices goes along with a rise in stocks.
Bonds of a company may decline, while
stocks of the same concern may soar.
which is explained by the fact that inter
est payments on bonds are strictly limited
in most cases to Il fixed amount, while
stock dividends are rarely so fixed.
This is not the first time that "gilt
edged" bonds have swung far down in
their course, and if history repeats ITSELF
the upward curve is sure to follow the
other. Even taking the most extreme
pessimistic view, such investments as this
article contemplates never rise or fall
more than few points over long period
of time.
Curiously enough and yet not unnat-
urally, the strongest securities have suf-
fered most. | refer to what might be
called the aristocrats of the investment
world They are the gilt-edged railroad
bonds, old, seasoned, well established,
and we'll known. They are listed on the
stock exchanges, and any bank will loan
money upon them Most of them are
regular, legal investments for savings
banks. They have been known to the
public SO long that at present they enjoy
Il quick and accurate market They are
securities of the largest railroad systems
in the country. They are sure in the
long run to benefit by awakening prosper
ity. Lastly the bonds | now write about
are 50 close to the actual property upon
which they are secured, that is, are so
near to being real first mortgages, that
almost no future conceivable business
depression will threaten them. These
bonds may go still lower but they are al
ready in many cases close to their bot
tom records through no intrinsic demer-
it's, but because Europeans are selling
them. 1t must be remembered that a
foreign investor can not sell at the pres
ent time little known American bonds
Every now and then, a man will say to
me that he wants bond which is abso-
utely safe, and that he is not particular
as to the interest which it pays as long as
it is readily salable This article is writ
ten for that particular person, with this
addition, that he can buy the same safe
bonds to-day to pay so, that only few
years ago were considered reasonable at
little over 40.
Take as an illustration the first bond
in the subjoined list, Baltimore & Ohio
prior lien 312&o. This particular issue
will be paid off in 1925, or in ten years.
The price at this writing is S94, or $S92
for bond which will be paid off ten years
from now at $1,000. 1t pays 3129o, or
S35 year interest. This figures out a
net return upon the investment. if the
bond is held until it is paid off, of 47s%o.
The following bonds may be regarded
as being entirely beyond question as to
their complete safety, in every case enjoy
II good market, and are well enough
known to be available collateral for loan:
Baltimore & Ohio prior lien 312@o, 10
years before coming due, at current
prices pay 47seo. Also B. & o. 40, due
l94s, to pay 1900, at prices S914 and
$50.
Northern Pacific go, due 2O47, pay
about 4.S5@o at price g.
Kansas City Southern go, due 1850,