Funds And Their Uses; a book Describing the Methods, Instruments, And Institutions Employed in Modern Financial Transactions

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all of wliicli are first liens upon real estate appraised at not less than twD-and-one-lialf times the par value of buch securities." A schedule or list of securities deposited with the trust SALES OP LONG-TIME PAPER 181 company is indorsed on the back of each bond. The de- bentures of financial companies are regarded as first-class ii"i vestments.
Railroad companies issue a form of bond called a "de- benture " which is quite different in character. These bonds 10. Railroad "^^rj often have no
...security for the payment of debenture interest ; many times the principal also is unse- ""■ *■ cured. The payment of interest is dependent on the surplus net earnings of the road. Instead of being a first lien on the properties and incomes of the road, they are a last claim, and stand in a rank inferior to all other bonds of the company ; they are in some respects inferior to the unsecured short-time credit obligations of the road ; they lack the advantage of paper maturing at an early date, and have little or no advantage from contracts of security.

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