New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-08-07


lollowing standpoints: l. security of prin-
cipai 2. appreciation in market value:
. long maturity; 4. value as collateral;
oliity OF income; s, care required-L C. G.
Answer-To get full description of
the security back of each of the bonds
you name we would suggest that you
60 TO your broker or to the public
library and look up each one in Poor's
Manual of Railways, Industrials or
Public Utilities. These manuals will
give you all the facts, and we give you
our opinion, explaining only where it
seems necessary it's relation to the
facts Pennsylvania Water and Power
hrst mortgage 5s are safe. St. Louis
San francisco prior lien, Series a, 4s
sre safe as to principal, as are also Pere
Marquette first mortgage, Series A. 5s.
Seaboard Air Line first mortgage As
are not perfectly safe, in our opinion.
There may seem to be a contradiction
mere between saying that the principal
OF the Frisco and Pere Marquette first
mortgage bonds is safe, whereas the
principal of the Seaboard Air Line is
not safe. This is an opinion based IN
part on the character of the territory
served by the Frisco and Pere Mar
quette contrasted with that of the Sea-
In character, in part, of the interests
which have financed the three roads.
The Western Maryland first mortgage
Is are safe as to principal, in our opin-
ION. The road is an essential coal road,
and although it has not fulfilled the
hope OF the Rockefeller interests. who
bought 1t some years ago, nevertheless
1T has been managed conservatively,
has been improved, and its first mort
gage bonds have a security which it is
hardly conceivable could be disturbed.
The Birmingham Tidewater Railway,
which is in the hands of a receiver, is
one en- which we are not fully compe-
tent to pass judgment. The first mort
gage IS on thirty-three miles of electric
railway. To form an authoritative
mortgage bondholders would require
intimate knowledge of the property
itself, and, secondly, a. good knowledge
OF the strength of the various financial
interests concerned in the reorganiza-
ton. We think that the Chesapeake &
Ohio general mortgage a Us are safe as
to principal, but would wish to qualify
that opinion by giving our reasons.
The bonds are secured by first mort
gage on 419 miles of railroad, and are
subject to divisional prior liens and the
f1rst consolidated mortgage on impor-
tant parts of the rest Of the main line
of the company. The Chesapeake &
Ohio has top-heavy funded debt, but
the general mortgage bonds, which are
secured by closed mortgage, are so
think it hardly likely that even in a
reorganization they would be disturbed.
We do not think that the City & Sub
urban Railway of Washington first
mortgage 5s, or the Seattle Electric
first mortgage 6s, are as nearly abso-
lutely safe in principal as the bonds
we have mentioned above. We could
conceive of some circumstances arising
under which the holder of either one
of these bonds would be asked and
forced to accept something less than
$1,000 in gold. For instance, with the
Seattle bonds, the mortgage does not
cover the hydro-electric plant supply
ing power, and there might arise
with. notwithstanding the fact the
mortgage does cover some steam gen
Grating plants. We think that the
Kansas City, Fort Scott & Memphis 6
per cent consolidated mortgage bonds,
which underlie the refunding Is of
1885, are safe. We think that the Ia
coma Railway & Power first mort
gage 5s, which are secured by first
mortgage on the entire street railway
system in Tacoma, are safe. The Bal
tmore & Ohio Southwestern division
and the Baltimore & Ohio first mort
gage 31As are safe as to principal. The
Mississippi Power 5s, secured by a first
mortgage on the hydro electric plant at
Keokuk, which plant supplies ST. Louis
and East ST. Louis with electric power,
are safe, in our opinion. We think
that the Baltimore g. Ohio-West Vir-
ginia & Pittsburgh first mortgage as
are safe as to principal, but before ex-
pressing final opinion we would like
to know the amount of the traffic that
is brought in by this branch line and
know something about the mining con-
ditions along the line. The first mort
gage is on 177-mile road which
branches off from the main line at
Clarksburg and runs down to Rich
wood. The bonds are due IN 1890, and
If the Baltimore e. Ohio should ever
have to go through a drastic reorgan-
ization, such as that of the Missouri,
Kansas & Texas, the principal of these
bonds would be paid in full only if the
branch line was necessary to the sys-
tenn. We believe the Consolidation
Coal AIS to be safe as to principal, but
do not nave flrst hand knowledge of
the coal properties on which they are
secured. In your list you rate income
return as sixth in your requirements
and stability of your income as seventh.
This is in striking contrast to most of
the letters which we get, which put
safety with highest obtainable income
as the first requirement, and all too
often end by showing a strong inclina-
tion on the part Of the writer to buy an
8 per cent bond. Going by the order in
which you name the points desirable in
the six bonds, we would suggest Atchi-
son. Topeka g. Santa Fe general Is, due
1895, which sold at 1041s in January,
1905, and which, in our opinion, would
sell at par or above if money rates
should 60 as low as they were in Janu-
airy, 1906. The second requirement.,
appreciation in market value. is some
what of speculative matter. In the
highest grade bonds, such as we are
picking out for the six that you ask for,
the market value depends largely on
the price of money, but you will notice
if you study the price of high grade
bonds and the price of money back
over series of years that the high
grade bonds drag along considerable