How to Invest Money. English-only reading by default; switch among English, Chinese, and Spanish, or compare languages side by side.
This chapter examines II. Railroad Mortgage Bonds, using the author’s early-twentieth-century investment framework to explain how investors were expected to judge security quality, income, risk, and market conditions. It opens from the chapter’s own discussion: A railroad bond is an obligation of a railroad company (usually secured by mortgage upon railroad property) which runs for a certain length of time at a certain rate of interest. It is apparent, from this definition, that the price of a railroad bond, as distinct from its value, is affected by two accidental conditions quite apart from the five determining qualities described in the preceding chapter.
Readers studying financial history, investment education, and the chapter’s specific subject—railroad mortgage bond, mortgage lien, basis—will get the most from this section. It is not suitable as a modern trading or investment checklist.
Read this chapter as historical investment education. The market rules, disclosure practices, securities, commissions, interest-rate conditions, and investor protections around railroad mortgage bond, mortgage lien, basis may differ sharply from modern markets.