The Bridgeport times and evening farmer., 1920-07-03
CLASSIFYING OF
 BONDS DESCRIBED BY SALES EXPERT

The classification of bonds permits of quite an extended analysis, due to the many ways in which bonds may be classified and the very considerable number of subdivisions possible un- der the various classifica tions. Of necessity only the most outstanding points can be touched upon in the present article.
 Our first classification may be based upon the Identity of the obli- gor issuing the bonds. On this basis bonds fall into two main divisions, governmental bonds and corporation bonds.
 The term governmental bonds is used in a broad sense to include not only the bonds of sovereign states but also those of administrative and civic sub divisions of such states. In addi. tion to Liberty bonds and all other bond issues of the United States and It's dependencies and of the various states, the term would also cover the class of obligations known muni cipal bonds, which, in a strict sense, consist only of obligations of incor- porated cities and towns, but which. in the broader and more generally
 used application of the term, include, in addition, the bonds of the counties. parishes, townships, boroughs, pre-
 
 Until within the last few years, foreign governmental bonds were largely unknown to the American in- vestor, but during the war and since a number of issues both of foreign soverign states and of foreign muni- cipalities have been placed in the American market.
 The term corporation bonds cover practically all bonds outstanding other
 
 different classes of corporation bonds may be made-as there are classes of corporations; three main sub divisions are commonly made, however, viz: railroad bonds, public untility bonds and bonds of industrial and miscella- neous companies.
 Under the name of public untility bonds come obligations of street and interurban railways, gas companies, electric light and power companies, telephone companies, water companies etc.
 A second general classification of bonds has for it's basis the security behind the bonds.e In this aspect, bonds are usually spoken of as be- ing "unsecured' or "secured"; the former being merely simple promises to pay, while the latter are promises to pay, reinforced by pledges of property. It must not be thought that "unsecured' bonds are less safe than "secured" bonds. The obligor issuing unsecured bonds often has
 such high credit that it Is quite un- | necessary to ask for pledge of spec | fife assets. Governmental bonds are practically all unsecured. There are exceptions, of course, such as special assessment | bonds which are given lien on the property benefited by the improve
 ments, and bond issues of certa,~ | governments secured by pledge - | specific revenues
 1 The real security behind govern
 mental bonds consists of the taxing | power of the governmental agency 1 and the integrity of the people conn l posing it.
 | Unsecured bonds have also been | issued to some extent by corpora | tions. Such bonds are known in this country for the most part deben- 1 lures. Although debentures are not | secured by pledge of property, 1t is l usually provided that if any subse- quent mortgage debt is issued, the
 debentures shall be equally secured | by the same mortgage.
 | Secured bonds have lien either on | personal property or on realty Cor on
 both). Those bonds which a lien | on personality consisting of bonds | notes, stocks, etc., are called colla- teral trust bonds. They have an in- l direct lien on property; the nature
 of the lien can be ascertained only by analysing the mortgage incidence
 of the pledged securities.
 Another class of bonds secured up
 on personally are the equipment
 trust bonds, secured as they are bJ
 lien on railway rolling stock-wnicr
 has been adjudged personally under
 the laws of most of the states. Our other division of secured bond:
 consists of those which have a Her
 on realty, in which term are included
 railroads, street-car lines, etc. Int
 priority of the lien of a particulal
 bond issue can really be ascertainet
 only from a detailed study of thu
 mortgage securing the issue It vii l not do to rely the name of tht
 issue, for not infrequently are sucf | names more or less misnomers, ant
 more frequently are they devoid o
 any connotation which would giv, | accurately the lien of the bonds st
 named. In the case of a compan, l with a complicated corporate struc l ture, the lien of bond may var. | from first mortgage to say a fifth | how could a name be chosen wficl l would express this fact and also in
 dicate which of the various liens wer
 the more important?
 | Those bonds which are purely frs
 mortgage issues may have a frs
 mortgage on all the property of tn
 company issuing them, or on onl
 a part of the property the latter
 the case more among railroad an
 public utility bonds than among in
 l dustrial bonds.
 Large railroad and public utilit
 companies generally have a mortgag
 which makes provision for the re
 | tirement of all prior lien bonds, tn
 | construction and acquisition of ne
 | properties, etc. To bonds issued UT
 der such mortgages various name a are applied, such as General, "Un
 fying," ''Consolidated," .'Refunding.
 etc.
 d Receivers certificates are ob1igs
 tions authorized by order of a cou