girder rail. The surface and adjustment of tracks are very good, showing constant attention and care. The pavements adjacent to the tracks and between them are, as a rule in good condition upon each of the lines. The lines extending to the suburbs are paved, and exceptionally cared for. The new 9 inch girder rail, recently laid upon Street, became necessary owing to increased traffic. Several of the lines will, the coming season, be laid with this heavy "section."

Real Estate Car Shops and Cars.

The car repair shop upɔn

Street, was found in permanent condition, and the outfit there is quite complete. Nearly all repairs are made there, and all cars equipped, some 1,600 in number. The change from horse power to electricity, upon the 24 lines, was made from May, 1891, to September, 1894.

The company owns 42 parcels of real estate, upon each are located, with few exceptions, car houses, stables, shops, transfer stations, etc. Each of the buildings was examined and fourd well cared for, and of good construction, a number being of stone and brick. The areas of the above parcels range from 1,895 square feet to 2,961 square feet. This class of property is generally closely watched and maintained, as its great value deserves. In round numbers, this company has 800 closed and 800 open cars. The general condition of the cars was found very good. The motors' running parts and cars proper, receive daily inspection, and repairs are made whenever needed, without delay.

Dummy Lines.

The dummy lines were inspected and found in good condition as regards track, roadbed and the like. Your inspector was informed, that these lines will, in the near future, be modified to electric power. Calculations show that the power stations are together capable of operating 425 miles of single track, with all the cars required, which will not be less than about 1,650 per day, without laying another brick or any other work, excepting perhaps, the addition of 4 engines, 8 batteries of boilers and 6 generators, the foundations for which are already erected and provided for.

In conclusion, your inspector would say that the whole system, in its financial and physical conditions, shows economical management, intelligent maintenance, modern construction and proper safety of the various track surfaces.

Corporation Stocks-Common and Preferred.

Usually the par value of a share of capital stock in a railroad and other corporations, is one hundred dollars.

Sometimes the shares are fifty dollars each, and in some cases less. Frequently two kinds of shares are issued. Their printed form is substantially alike, but they have different rights and privileges. The higher grade is called preferred stock or preferred shares, the subordinate grade, common or ordinary stock. The rights these shares severally enjoy, and the maximum amount of each that may be issued, are set forth in the articles of incorporation, and this limit cannot subsequently be exceeded without formal consent of the parties in interest.

The only difference in the form of a certificate of common and preferred stock is that one is marked Common and the other Preferred.

Many railroad companies have more than two classes of stock. The relation they sustain to each other and to the property is determined by the peculiar circumstances that necessitated the diversity of interest.

The Grand Trunk Railway of Canada has five classes of stock, viz.: Ordinary Stock; Ordinary Stock, new issue of 1873; First Preference, Second Preference, and Third Preference. It has, besides, various kinds and grades of bonds.

The Chicago, Milwaukee and St. Paul Company's preferred shareholders are entitled to an annual dividend of seven per cent. before a dividend can be paid on the common stock.

The preferred shares of the Lake Shore and Michigan Southern Railway are entitled to an annual dividend of ten per cent. on their par value before the ordinary shares can receive any return. No. dividend can be paid on the common shares of the Northwestern road during any year, out of the receipts of such year, until the seven per cent. has been divided among the holders of preferred shares.

When a company in poor credit is compelled to raise money, the best terms attainable are accepted. Sometimes mortgage bonds are created; sometimes new shares are issued (at a large discount, perhaps,) which shares, by consent of the holders of existing securities, frequently take precedence. It is in ways such as these that different classes of shares and bonds are brought into existence. The rights enjoyed by holders of preference and common shares, on different roads, are rarely the same.

When there are two classes of stock, preferred rights usually extend no further than a division of net earnings. Or, in other words,

while the holders of a preferred stock may be entitled to a certain return before inferior shares can receive anything, still, in the event the property is foreclosed or sold, the surplus, after satisfying the mortgage and other debts, is divided equally among all classes of shareholders. In some cases, however, the rights of the preferred shareholders extend to a division of the property.

Mortgage Bonds.

The amount of the bonds issued in the United States with which to build and equip railroads is called Funded Debt. A mortgage is an absolute lien and, in the event the interest or principal is not paid as agreed, may be foreclosed and the property sold to the highest bidder. Bonds representing the funded debt are commonly signed by the president and secretary and countersigned by the trustee. The latter is a contingent agent of the bondholders.

Bonds vary in amount from one hundred to one hundred thousand dollars.

When there is more than one mortgage upon a property, the relation of the mortgages to each other is indicated by their designation, as first, second, third, and so on. It frequently occurs that a mortgage will be a first lien upon one piece of road and occupy a secondary place elsewhere. Each bond recites upon its face the property it covers and the rights its holders possess.

Owners are called bondholders.

Sometimes a company sells its bonds directly to investors, but frequently through brokers. In the latter case a commission is usually paid. Bonds run for various periods, from one year upwards.

To enable bondholders the better to protect their interests they are sometimes allowed to vote at annual and special meetings the same as stockholders. Such a course naturally insures a very conservative management, as it is the interest of bondholders to divide as little of the surplus as possible among stockholders, and expend as much as possible in improving and building up the property, every dollar thus expended adding, of course, so much to the security of the bondholder.

The necessities of a company are sometimes such as to compel it to mortgage its surplus income-i e., the balance left after meeting existing obligations. The securities thus issued are called Income Bonds. Specific articles of property, such as a building, bridge, en gine, car or piece of machinery, are also sometimes separately mort

gaged. Mortgages of this character, as well as those based on income, generally run for a short period only.

The extent to which a road may be properly encumbered depends, of course, upon its net receipts. Great conservatism is usually exercised. The multitude of properties that have passed into the hands of receivers represent, generally, risks well understood from the start.

There are sometimes as many as five distinct mortgages upon a piece of property. A fifth mortgage does not seem to be a very valuable security; yet it may be preferable in every way to a first mortgage in another case. Its obligations may be promptly met and it may command a premium in the market, while a first mortgage in another case is discredited. The various mortgages on a property represent its different stages of progress and are usually evidences of prosperity. The objection to a mortgage on a railway is its lack of flexibility. It makes no distinction between a property destitute of value in itself and one requiring only time to build it up. Many of the mortgages that have been foreclosed and the properties sold at a deplorable sacrifice, would ultimately have been paid in full with interest if the owners had been compelled to wait. For this reason a mortgage is too rigid, too exacting, to meet the exigencies of the situation. Instead of protecting its holders it may be made the means, under false representations, of frightening them into sacrificing their investment.

Every mortgage provides for one or more trustees, whose duty it is, if the interest and principal are not paid when due, or within a specified time thereafter, to advertise and sell the property, if called upon by the holders of the bonds. The manner and form of action are prescribed. The minimum amount of bonds required to compel action upon the part of the trustee is also indicated. This amount is commonly made so small as to protect all the holders. In the event of default the trustee may, of his own volition in many cases, go ahead and foreclose without being called upon by holders. He is supposed to act always in their interests.

Mortgages take precedence according to their dates. Thus, the foreclosure of a third mortgage does not affect those of a prior date. But the foreclosure of a first mortgage invalidates all others; but if there remain any surplus over and above the amount required to satisfy such mortgage, it must be divided among the holders of the next succeeding mortgage, and so on until it is exhausted. In the event of the foreclosure of a first mortgage, or of any mortgage, the holders of the next succeeding mortgage usually redeem the property if its worth justifies.

Debenture stock is a favorite form of security in Great Britain. It has a fixed rate of interest and is a positive lien upon the property, but there is no trustee, no definite form of procedure involving the whole issue in case of default. A holder can, if his interest is not paid, levy upon the company's property wherever found and place his name upon it and hold it until his claim is satisfied. Co-operation with other holders is not obligatory and the sale of the property proceeds no farther than is necessary to reimburse the disaffected holder.

In some portions of the United States, mortgages must be recorded upon the books of the recorder of deed or other designated officer for each county in which the property is located. In other cases it is only necessary to record the mortgages at the state capital. An unrecorded mortgage has no value as against a recorded mortgage or the judgment of a court.

Attached to every mortgage bond issued by railroad companies are diminutive notes of hand called coupons. Each installment of interest covered by a bond, whether annual, semi-annual or quarterly, is represented by one of these coupons. The number of coupors attached to a bond is sometimes very great. A coupon when due is in

the nature of a sight draft on the company issuing it.

Every bond specifies on its face where the interest and principal are payable; also in many cases the form of payment.

Registered bonds are somewhat different from coupon bonds; both principal and interest are payable to order. A registered bond can only be collected by the person in whose name it is registered upon the books of the corporation; this name is inserted in the body of the instrument. No coupons are attached to registered bonds. When interest matures it is forwarded to the address of the person in whose name the bond is registered. The expense and annoyance of transferring registered bonds when they change hands detract somewhat from their marketable value. They are, therefore, never issued except upon request.

The bonds of railroad companies and those of the government are much alike in form. The manner of paying interest is also much the same. The interest on different issues of bonds does not all fall due at the same time; no rule save the convenience of the company or of the proposed purchasers of bonds is followed in fixing the date and place for paying interest. In some cases interest is paid only once a year; in some cases quarterly, the general rule, however, is to pay it semiannually.

Interest on bonds constitutes a separate item in the income or