Audubon Republican. [volume] (Audubon, Iowa) 1894-1925, 1920-02-26
INVESTING FOR
PROFIT AND SAFETY

PhOFIt AND SAtEII
Chapter VII.
There have been great many
| changes in the last few years in the
I investment world In past years,
the eastern part of this country has
| been the great field for bond in
vestment, and as development went
on in the rest of the country, the
money for this development was
! generally secured in the east but
with the shifting of the wealth of
! the country and the amassing of
capital, the investment in bonds has
grown enormously and received a
gigantic impulse and educational
progress from the experience of the
country in the investment of Lib
erty Loans. Millions of people
who never bought bonds before, or
knew anything about them, are now
very well posted about bond invest
ment, and what it means.
About a decade ago, a great
change began to take place in bond
investment. Up to this time, the
railway bond occupied the premier
position as railway credit was at it's
high point, and the bond of the rail-
road was considered absolutely Sc
cure, and it generally paid higher
rate of interest than the municipal
bond The public utility bond,
that is, bonds of companies supply
ing cities with light, heat and
transportation, was also in high fav-
or and were generally more popular
than the first mortgage real estate
bond, largely because people had
been educated more thoroughly by
bankers issuing those securities.
But times have changed. The
credit and earning power of our
railroads and public utilities have
fallen sadly in value and volume.
On the other hand, the first mort
gage real estate bond has come to
the front, for the interest rate on this
bond has been very satisfactory, us
ually percent or more, and it has
been demonstrated that on account
of the way these bonds have been
issued and secured and their divi-
dends assured by the earning power
of the improvement back of them,
that they are security of the very
first class. Consequently, they
have advanced enormously in invest
ment favor, and today, are consider.
ed the very highest type Of conserv.
alive security, and are purchased by
millions of private investors, institu'
tions, estates and trusts.
Literally, billions of dollars worth
of them have been issued without
loss Of one dollar of principle or in.
terest to any investor, and this
form of financial cooperation has
made possible the up-building of oul
large cities. the majority of build
ings in Chicago, for example, hav
ing been financed in this manner.
Chapter VIII.
The companies, or investment
banking houses, who have specialize
ed on the first mortgage real estat,
bond, have rendered a very grea
service to the country, making posi-
BILE, as they have, through their or
ganization of capital, the building o
our cities, and furnishing to tn,
small investor, an absolutely sound
safe place to put his money, with {
satisfactory rate of interest to him
self.
Just few words about the meth
cd pursued by these companies. W.
will suppose that an owner of prop
erty desires to erect building.
may be an apartment house, an of
flee building, a warehouse, COLI
storage plant, hotel, theater. H,
comes to the Investment Banking
Company to negotiate his loan. The,
have a trained staff who investigate
and study and appraise his PROPOSE
ton from beginning to end. Nothing
ing escapes their careful scrutiny
for please remember that they are
investing the money of their house
in this security, if they decide t.
make the loan, and if 1t must BIZ
good enough for their own money, II
must be so good that the bonds is
sued can be sold to the public, bear
ing as they do, their own recommen
dation, and having back of them the
moral responsibility of their house
In the first place, ii must be abso
lutely demonstrated that there is 8
demand for this building, and that il
can be rented on leases to RESPONSE
BILE pople, and show return suffi-
cient to pay interest taxes, insur.
ance, and all expenses, and leave 9
surplus which will pay off the loan
within a limited number of years,
usually ten or twelve. with proper.
tionate percentage payable annually
or in what is known as serial form
The bonds issued are serial, that is
some of them mature every year
and the owner of the property must
pay to the banking houses on the
first of every month, the amount OF
principle and interest due that
month.
His contract includes this, and
gives the loaning company control
l nf W ND a
its interest has been finally paid so
that the investor is carefully safe
guarded. He looks to the loaning
company for the payment of the
coupon which he clips from his
bond, and for the collection of his
principle and this is the service they
render the bond investor for the pro-
fit they have made in purchasing the
issue wholesale, ana selling it retail.
In other words, he pays them reas-
onble percentage for all the work
they have gone to in securing for him
a secure investment, work which he
could not do himself.
Chapter TX.
The first mortgage real estate
bond offers to the private investor a
safe, easy way to invest his earnings
All the work has been done for him.
He has no investigating to-. do. He
has not other bother about collect
ing principle or interest. 1t is paid
punctually on the date it is due. He
has no more thought about it, and
he knows that with the security of
a first mortgage on inside income
producing property in a prosperous
city back of his bond that there is
no possibility of loss, especially as
his bond is endorsed and usually
| ranrasaptc nnn hipad waaItb eavaraJ