New-York tribune., 1921-06-03
Safety of Southern Rail Bonds

Cuestion--About a year ago you sn
rrevsd Of an inves,nnent made for a
yeu said, were at all speoua,ive they
being ten shares OF southern Pacific aud
such snalli part. that they did not en-
danger the whole Those two have turned
cut satisfactory. although we know now
II we had sold the southern at iis and
ahead OF the game. Among those were
ten shares Of Ceirral Leather do not
AZ that time. 1t WAS the management
that has put IL where II is Yesterday
srSker ,sc, adyissd mo TO exchange i for
Just passed the common dividend. and his
only argument was that they had sur
pau ptes 20 pre- psr'sst s this prefsrrsd m and Gen
exchange under the circumstances or
under their last. statement? DO you ad-
Bush Terminsl Building Co. sinking fund
oonc per cent or the 61s new Great
5hnnhs. nor,hsfn surlington bond? have
4, due in SIS, and Kansas City g. DO
rnn,, you 5aink ps they are safer Or, arc Grand
Trunk Western 4s better?--J, Nj. s.
Answer-If you can afford to hold
your Central Leather you may be re-
warded. Now seems a poor time to
sell, We think that you would make
considerably safer investment, how
ever, to buy either a Bush Terminal
sinking fund 5 per cent bond or one
of the new Northern Pacific Grea.
Northern bonds secured by the deposit
of the Chicago, Burlington &. Quincy.
The Bush Terminal Building bonds are,
in our opinion, high grade. If you
buy the Northern Pacific, Great North
ern 632s we would advise you not to
exchange at present for either the
Northern Pacific or the Great Northern
bonds, into which they are convertible.
There is great difference in our
opinion between the Southern Railway,
Mobile & Ohio collateral trust As, due
September l, 1888, and the Kansas City
Southern first mortgage 3 per cent
bonds, due 1850, and in the light of the
uncertainty of the present railroad sit
uation it is worth while studying this
difference. The Southern 4s are Sc
cured by the deposit of S9.500,000
Mobile g. Ohio general per cent mort
gage bonds. These Mobile G. Ohio
bonds are secured by fourth mort
gage on less than 500 miles of road.
This is long way from the rails. The
Kansas City Southern first SIS are Sc
cured by first lien on 38S miles of
road and by first collateral lien on
900 miles aQQlLlOnsl. ! ne total amount
outstanding is s30,00o,000, or at the
rate of little over $4,000 mile on
the S23 miles of road on which they
are first mortgage. We think that
the Southern Railway has a good
future ahead of it and believe in the
growing prosperity of the South. But
assume that something unforeseen
turned up and there should be wide
spread railroad bankruptcy which would
include, for the sake of argument. both
the Southern Railway and the Kansas
Southern. In q reorganization the
Southern Railway Mobile & Ohio As
would be in comparatively weak posi-
tion, whereas the Kansas City Southern
first IS would presumably dominate
the Kansas City Southern reorganiza-
ton. We consider the Kansas City
Southern 3s safe investment. Until
the full text of the agreement be
tween the Grand Trunk and the
Canadian government has been made
public, we would prefer not to express
an opinion about Grand Trunk Pacific
IS of 1868 and Grand Trunk & West
ern As.