Modern Business; The Principles and Practice of Commerce, Accounts and Finance Volume 7 (Paperback)

This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1911 edition. Excerpt: ...now barely 20 per cent of the whole remains in an independent position. Everywhere has been a knitting together of lines, so that as a result of this movement the railways are now a homogeneous body, and destined to become even more compact before another ten years shall have passed. The community of interest movement of ten years ago unfortunately developed some abuses of railway credit, so that its aftereffects were the signal for widespread legislative and political attacks during the past three years. Conditions are now rapidly righting, and this movement against the railroads has about spent its force. Their credit is more firmly established than ever; their physical condition is being developed and improved, and strong financial and traffic alliances are being consummated every short while. 136. Value depends upon type or form of the obligation.--Railroad bonds vary in security not only with the strength of the issuing corporation, but also with the form, or type, of the obligation. One railroad may have bonds outstanding of different merit. Many railroad bonds are very similar to real estate mortgages; that is, they are secured by a mortgage or lien on certain property. Some bonds are merely promises to pay and are unsecured. The value of a bond depends primarily upon the margin of the security over the amount of the mortgage securing the bond. In real estate, if a piece of property is worth $100,000, a $25,000 mortgage secured by that property is a pretty safe investment. And so it is in railroad bonds, though there is more to the matter than the mere value of the property, because in the case of railroad bonds value is pretty largely established by the earnings of the property, whereas this is not at all the case in a real estate...