Bonds

“ They form a class quite distinct from railroad bonds or public-utility bonds.
I. Safety of Principal and Interest. The safety of industrial bonds, in common with the safety of all forms of investment, depends upon the margin of security in excess of the amount of the obligation. In the case of industrial bonds the amount of this margin is not always easy to determine. Even when determined, the rule is difficult of application because a margin which may seem insufficient from the point of view of physical valuation may be satisfactory when considered as the equity of a working concern. ”

“ A widow, or a trustee, or other long-time investor, would prefer to buy bonds which guaranteed a regular yearly purchasing power over subsistence, rather than those which merely promised a given sum of money of uncertain value. ”

“ Every night I've dreamed of my mother and every day I've bamboozled the public and sold bonds that weren't worth the paper they were written on, and paid big dividends that were just some of their own money returned. ”

“ A discussion of the valuation of serial and short terminal bonds, or those carrying more than one rate of interest, or those redeemable by lot at various times, is beyond the scope of the present work. ”

“ Imagine yourself by nature versed in the arts of finance, capable of playing with sums of money in the forms of stocks, certificates, bonds, and cash, as the ordinary man plays with checkers or chess. ”

“ These bonds, as you know, are a very desirable investment, running thirty years from the date of issue, with every guard and security that has been given to any bond of the United States, and we think as safe and desirable as the securities of any other nation. It is probably the bond into which all the debt of the United States will in time be converted. I hope you and your associates will be able to engage with me to place this bond on the market when $200,000,000 of the four and a half per cent. bonds have been sold. ”

“ But every one of us who holds a policy in a life insurance company, or whose house or furniture is insured against fire, or who has a deposit in a bank or savings institution, or who has a national-bank note in his pocket is as much interested in the value of our National bonds and in a certain sense as much a bond holder as the owner of a bond himself; for if the value of the bonds is attacked and impaired the security of your investment goes, to that extent, by the board. ”

“ The operation of such a system can be very easily traced. Whenever there should be so much currency in circulation that it would be worth less than four per cent., the surplus would at once be invested in the four per cent. interest-bearing national bond; and when business should revive and the demand for money to transact it should make money worth more than four per cent., then bonds would be converted into currency again until the equilibrium should be re-established. ”

“ We may distinguish three different bonds by which a man may be bound to a lord, a personal bond, a tenurial bond, a jurisdictional or justiciary bond. But the language of Domesday Book is not very patient of this analysis. ”

“ So much of United States bonds, as being strong, and so much in bonds of the better individual States, which can be got at a discount now, and will be about par by the time the heir is to receive them. ”

“ But we think, that this construction is not necessary or unavoidable. The words 'such bond or bonds' are fully satisfied by referring them as matter of description to bonds for the payment of duties, whether then payable or not. The description is of a particular class of bonds, viz. for the payment of duties, and not of the accidental circumstance of their time of payment. ”

“ The only ways in which the money price of a bond or salable debt can vary at all are by variations in the rate of money interest and by changes in the degree of certainty of payment. Only so far as these features are affected by the changes in the volume of money will the value of bonds be affected. ”

“ Bonds may be issued for cash or property, as in the case of stock. Unless there is evidence to the contrary, when bonds are issued for property they are brought onto the books at par value, the courts holding here as with stock that the parties to the transaction (usually the corporation’s directors) are in a better position to judge the value of the property taken over than anyone else. ”

“ Instead of the borrowing power being restricted to a small percentage of the total capital, as in European countries, most of the railway mileage of America has been built with borrowed money, represented by bonds, while stock has been given freely as an inducement to subscribe to the bonds on the theory that the bonds represented the cost of the enterprise, and the stock the prospective profits. ”

“ Thus, capital stock and long-term bonds are grouped together at the top for comparison with the fixed assets; the remainder of the net worth—surplus and reserved profits—must be shown at the end. The group of all net worth items together compels a general scheme of logical grouping from current to fixed. ”

“ The issues of bonds thus authorized were of three descriptions: one payable at the pleasure of the Government after ten years from their date, and bearing interest at the rate of five per cent.; one so made payable after fifteen years from their date, bearing four and a half per cent. interest; and one in like manner made payable after thirty years from their date, bearing interest at the rate of four per cent. ”

“ There were dollars galore that stood to that name in various financial institutions, and when one is a dealer in the commodities known as stocks and bonds, one must not let the smallest chance slip by to cement a friendship outside which might prove to extend itself into the business world. ”

“ But practically, as an economic matter, both represent the alienation of control, on faith, to a small group of men, and practically, too, the difference between preferred stocks and bonds is often very slight. ”

“ But if only a portion of the bond issue be sold, the amount earned by the Company according to the proportion aforesaid shall be paid to the Company, partly out of the bonds in the hands of the Government, and partly out of the cash deposited with the Government, in similar proportions to the amount of such bonds sold and remaining unsold respectively ; and the Company shall receive the bonds so paid, as cash, at the rate at which the said partial sale thereof shall have been made. ”

“ As it is desirable to make payment of called bonds in the mode that will least disturb the market, you will draw from the depositary banks the proceeds of four per cent. bonds only when required to make payment of called bonds, and in proportion from the several depositaries to the amounts held by them, as near as may be, in sums of $1,000. Money in the treasury received from four per cent. bonds should be applied to the payment of called bonds before such drafts are made. ”

“ That a man perhaps buys bonds for business considerations, I can understand, but I myself couldn’t do it without thinking that my $50 or $100 might perhaps buy the explosive which American accomplices of the allied plunderbund might throw on the house of my mother. ”

“ Only so can the investor take advantage of its appreciation in value. In order for the improvement in security to be reflected in market price and thus add to the principal invested, it is necessary that a bond should possess a fairly active market. For this reason the industrial bonds which hold out the greatest promise of appreciation [73] in value are the larger, more speculative issues, which possess the greatest convertibility. The purchase of such bonds frequently results in substantial profits. ”

“ Based upon the foregoing considerations it is of interest to inquire what degree of safety really attaches to the average industrial bond? How far does it meet the foregoing requirements? The question is difficult to answer. Industrial bonds vary greatly in point of safety, some issues possessing great strength and others being highly speculative. No general conclusions can be depended upon, and the investor is forced to consider each issue upon its own merits. ”

“ Where a company or a community defers payment for its purchases, it is said to issue bonds, which are simply formal notes, usually with attached notes, or coupons, for interest at stated times, issued by qualified officers under specific legislation. These are so easily understood and tested for their quality as to become a part of the general credit of the country. They gain a well understood market value, and pass from hand to hand with greatest readiness. ”

“ Our merchants and bankers owe unsettled balances or accounts, and large amounts of our securities are held there—National, State and municipal bonds, bonds and stock of our railroads, street railways and industrial corporations, and even mortgages on city property or farms, placed there by loan companies. ”

“ Since buying bonds and taking out circulation most of the time shows some theoretical profit over loaning direct, presumably if there were no other consideration, most of the time our bankers would keep outstanding all the notes they could. ”

“ The service of bearing options is itself a part of the yield, and is itself capitalized, in their case. Two 5% bonds, each equally secure, but one of which has a wide market, while the other has a restricted market, will have a very unequal value. ”

“ For the balance sheets of savings banks, insurance companies, and other investment concerns, scientific valuation of bonds with the attendant amortization up and down of discounts and premiums is not only theoretically correct but practical considerations, in a market such as prevails in a time of marked but temporary depression, demand that it, or some approximation to it, be used. ”

“ Those who have loaned money to this Government since 1861 have already received nearly as much in the increased value of their principal as in interest, and all the probabilities are, in respect to the four per cent. thirty-year national bonds now being negotiated, if they are redeemed in gold, that more profit will be made by the augmentation in the value of principal through interest. ”

“ To register bonds is to enter particulars of them in books kept for the purpose. Coupon bonds are bonds with interest coupons or certificates attached to them, and bearing no name, but payable to any person who presents the coupons at the treasury at certain times. Registered bonds are bonds bearing the name of the person who receives them, and payable to that person or any person to whom he may sell or transfer them. ”

“ After the bonds are paid, then the company shall have the right and shall be obliged to purchase all said superstructure at the full appraised value first made, and shall give in exchange for the same stock of the company for the full amount. ”

“ Besides the regular line of bonds and mortgages growing out of debts due us on our real-estate sales, and against which we had issued the debentures and the guaranteed rediscounts of the Grain Belt Trust Company, the factories, stock yards, terminals, street-car system, and most of our other properties were pretty heavily bonded. ”

“ A great cry has been raised against the holders of bonds. They have been denounced by every epithet that malignity can coin. During the war our bonds were offered for sale and they brought all that they then appeared to be worth. ”

“ More often, the stocks and bonds will be used as collateral for a loan with which to pay the dividend, or the real estate will be mortgaged for the same purpose, thus effecting a borrowing of funds, a discussion of which has just been given. ”

“ Now, supposing our National bonds were still in the hands of those who originally bought them, can you fail to remember that when bonds were sold for forty cents on the dollar—and the quantity so sold was not large—the life of the Nation was threatened by a monstrous rebellion ”

“ Any holder may have liberty to fund his greenbacks in bonds, as he may desire; so that, as coin increases, they will be merged in the funded debt, and the currency be reduced in corresponding proportion. ”

“ Gold for silver: old lamps for new: stack your capital in the bank that in the end pays cent for cent—the bank of human kindness, where the bonds are charity, help to the broken-down, sympathy with the bust-up, protection to the weak-kneed, encouragement to the forlorn, etc ”

“ The operation is carried on between a nation and a banking corporation. The nation, through the channel of its members, exchanges a thing called credit, reduced to the form of bonds or notes for the payment of money, with the corporation, giving a boot, profit or difference, of about eight per centum per annum, which the bank bond, note or credit, is arbitrarily made by law to be worth, beyond the national bond, note or credit. ”

“ Since it is more convenient to have the bonds in even hundreds of dollars and the interest in dollars some adjustment from the theoretical amounts are usually made but such that the annual payments will be near the theoretical. ”

“ All other payments were made in bonds bearing interest at eight per cent. per annum till redeemed. Strenuous reductions were made in the public expenditure, the utmost care was exercised over the collections, and in twelve months' time enough cash had been accumulated to pay off the whole of the new paper debt, besides meeting the ordinary expenses of government. ”

“ When the people got the bonds, they put them carefully away, for the sake of the interest that would accumulate upon them; but when they got the bluebacks, they were at first at a loss to know what to do with them. ”

“ These bonds are secured by a mortgage or deed of trust on all the property of the corporation they represent.
To redeem these bonds, when due, the company annually sets apart a sum, known as a "Sinking fund," for their redemption.
Such bonds are far safer than any form of the company's stock, for they bear interest that must be met, whether or not dividends are declared.
As with a real estate mortgage, the property pledged in the bond should be defined.
RAILROAD BONDS Every railroad in the country has been built and equipped by the sale of its bonds. ”