Evening Star Newspaper, April 17, 1926, Page 25

REAL ESTATE. BABSON TELLS HOW TO PURCHASE SAFE BONDS FOR INVESTMENT First Mortgage Issues Safest of All, But Concern and Trust Company are Factors That Cannot Be Overlooked in Buying Securities. BABSON PARK, Fla., April 17.— Bonds are the things to buy when you don’t know just what to buy and the thing in which to invest when you don’t know in what to invest In a previous article 1 stated that loeal mortg s probably present the best combination of security and vield, but explained that considerable care 'is necessary in connection with the loaning of money on mortgages 1 referred to the examination of the title preparation and recording of the papers, watching insurance policies and other details. Furthermore, it is often difficult to secure good mort- & in sn.all amounts. To make it unnecessary for individual investors {0 bother with these details, and at the same time to enable them to get £ood mortgages in the denomination of §1,000, the following plan was de- vised some 75 years ago. Instead of mortgaging direct to the lender, the borrower pledges his property to a o which acts as a third 3 er and vari- ous lenders, st company ex- amines the title, prepares the legal papers and does all the other work. It then, as trustee, divides the mort. gages into pieces of $1,000 each. which are sold as “bonds.” 1f, for instance, the mortgage to the trust company is the trust company would es or bonds for a " ch, so that the of one of these bonds would * 1-100 interest .n the mortgage the trust company holds as trustee for all the bondholders. Bonds vs. Bonds. idea underlying a bond issue | olutely sound. Like other good | however, the idea been ‘investm o der the bonds which would never be recog nized by the founder of the idea. In addition to the first mortgage bonds, | which we kind originally party b » are | e of | n: company, but the standing of the company issuing the bonds (I refer, of course, to the borrowing corpora- tion and not to the trust company) is more important than the kind of bond. This is due to the fact that character is of primary importance in all busi- ness transactions, and a bond which is not a first mortgage bond, but put out by good people is better than a regular first mortgage bond put out by irresponsible promoters. Careful invest- ors are giving more and more atten- tion to the character of the companies to whom they loan and the bankers from whom they buy securities. Owing to the fact that there are so many poor bonds on the market today, it is important to buy bonds only through established bond houses whom your |1ocal banks recommend and with whom they themselves trade. This is the first rule for selecting good bonds. Government and State Supervision. Although character is the greatest asset in business, yet too much de- pendence cannot be put on the pret- ent management of a corporation when purchasing a bond that does not come due for 50 years. Although men make values, yet men die and no one can foretell who their successors will be. Therefore it is well to pur- chase bonds of a company Wwhich is compelled to publish its earnings and {s supervised either by the Interstate Commerce Commission or some other Federal or State body. Although such supery no gu Mr. Arthur M. Connor is now associated with planned, now are second mort- gage bond: olidated mortgage | bonds, which are part first and part | second: collateral trust bonds, where the trust has no mortgag but holds unsecured by mort. a debenture bond of Railroad Co. s | age bond of | X X0 T , but when considering only one company the | first mortgage bonds are the safest, | the consolidated mortgage bon ome | next, the collateral trust bonds come | and the debenture bonds last| than one should strive bonds of a You Are Invited N. E. Ryon Co., Inc. Main Office 1423 F St. —in the Exchange and Mary- land Property Depts., where he will be pleased to see his many friends and clients. to Inspect These Beautiful Designed Homes— One Block West of 16th St. SAMPLE HOUSE 1725 Webster St. BUILT BY MAX SUGAR OPEN Daily and Sunday Until 9 P.M. You Can Deal Direct or With Any Broker MAX SUGAR 1905 Kenyon St. N.W. Phone Adams 546 What Could Be An Old World Chateau ' With 20th Century Improvements More Unique? THE EVED NG STAR, WASHINGTON, D. C. SATURDAY, ik 17, 1926. AT L lnnlee the safety of a bond issue, it idoes give an advantage to the small investor who cannot supervise such things himself. Another indirect ad- vantage of such supervision comes about as follows: The State only wishes to supervise the accounts of corporations having a monopoly. Thus, when purchasing honds issued under the authority of a Federal or State commission, one s more apt to get bonds which are secured by a monop- oly of some kind. Such corporations are freer from loss by competition than are ordinary corporations. When you are the only manufac- turer of a product which people want your bonds and stocks are perfectly good; but when other corporations start in to manufacture the same product your troubles begin. petition may the “lLfe of trade,” but it does not make for profit. This means that the bonds of a railroad, a public utility, or some other corpora tion having a natural monopoly and regulated by a State commission are better than the bonds of some manu- facturing, mercantile or mining cor- poration which has neither a monop. oly or State regulation. Now, when it comes to the purchase of common stocks this rule does not apply. Per- sonally, 1 should dislike very much to have the State control my own busi- ness, and had rather take a chance with' competition than with govern- ment interference. 1 am now writing, however, on the selection of bonds, and not of common stocks. second rule in selecting good bonds is to purchase bonds of some corporation with a natural monopoly, whose capi- talization rates and general actlons lations. Watch the Age of Your Bonds. Corporations are similir to people, corporations are merely made up of people. When a corporation is first Miller Designed Open For Inspection Every Afternoon Evening and Al day Sunday. Roo 1119 17th St. N'W. com- | | Hence the || are subject to Federal or State regu- || and this is not surprising, because || formed, there is no telling what it || NEAR THE BUKCAU Ur D Attractive Prices will turn out to be. Like children, a very large percentage die in their early years. Thus it is unwise for the small investor to buy bonds in a company which has just been formed. Wait until the new company has learned from experience just what it can earn. Rather than buy securi- ties on estimated earnings, it is bet- ter to wait until the property has been completed and operated for two or three vears. This is a very good pre- caution when purchasing bonds on hotels, apartment houses and other buildings. It is better to wait two or three years and pay a little more If ity, 'gas, etc.. Large | E Open 9 AM. to ——— R | 919 15th St. | NW. ML ER-RUILT English Architecture Semi-Detached and Detached Brick and Stucco—$12,950 to $14,500—Tile and Slate Roofs Convenient Terms Six and Eight Rooms—Side and Center Hall. ms of Unusual Size and Charming rangement—Every Closet Lined With Cedar. To Inspect Means to Purchase W. C. AND A. N. MILLER Builders—Realtors I?;ea:téful De'tachea Home $9,950—Easy Terms 1433 Newton St. N.E. Six large rooms, tile bath, hot-water heat, electric- porches, throughout. Very large lot, shrubbery, grape arbor. A real bargain. Inspect today. Drive out Rhode Island Avenue to 12th St. N.E., thence West to Newton and North to property. EALTDRS BUILDERS thtRthththth Deponghire Dotons 1ANDARDS one wishes to play safe, although, of course, every one can't do this. But, as the death rate is heavy among young children, it is also heavy among the aged. In the same way, It is un- wise to hold bond issues too long. Be- cause a bond lssue was once good is no sign that it will always be good— In fact, this is almost a reason why some day it won't be good. Prosperity ruins corporations, as it does familfes. The Bible statement, “Pride cometl before destruction and a haughty spirit before a_fall,” applies to railroads, public utllities and other corporations, as well as to men and women. For | | | | | excellent condition with lots of trees, flowers, 6 P.M. Sunday Miller Controlled Just North of Cleve- land Park at Wis- consin Avenue and Van Ness Street. Ar- 27 727 2 7 2 —between 16th St. and 14th St. You'll like them for their many exceptional features and the excellent neighborhood of which they are the dominating note. Only two left of these Impressive Homes , in the Exclusive Sixteenth Street Zone— 1406 Varnum St. N.W. is the Exhibit Home 22 this reason, it is desirable not to in- definitely hold one’s bonds but to have a housecleaning once in a while. 1f one buys five bonds a year, it is a very good practice to likewise sell five bonds a year, selling those which he has held, say, 15 years or 20 at the outside. Of course, in following such a custom one shouid not sell dur- ing a panic but only in good times, when bonds are in demand. When, however, such a good time comes and you decide to sell the bonds which you have held for a certain period of, say, about 15 years, be sure to sell all ‘that come In that class and not Exceptional New Home Values In REAL ESTATE. simply the good ones. The man who sells only the securities which show him a good profit is automatically selling his good holdings and keeping his poor holdings. This is especlally true of small investors, who are con- stantly trading their bonds with brok- ers who know little more about them than do they themselves. Such in- vestors are llke the man who traded the horse for a better cow, the cow for a pedigreed calf, the calf for a handsome rooster and the rooster for a jack knife. Hence the third rule when buying bonds is to select those Cleveland Park and Chevy Chase— Each of these remarkably de- sirable homes contains eight spa- which have demonstrated their earn- ing capaeity, and companies which are running on their own generated power and not on their momentum. It i well to buy an automobile which ha< a good reputation. but remember th the car will not run on its reputatic ss confinues very steady, registering by the Babsonchart 10 pe: cent above normal. (Copyright. 1926.) 3102-3118 Rodman St. NW. (One Block West of Conn. Ave.) cious rooms and bath, hot-water heat, garage—either built-in or on Alleys are being paved at cost of builder. rear of lot. 3519-3521 35th St. N.W. (Corner 35th and Porter) 4103-4111 Legation St. N.W. (Two Blocks West of Conn. Ave.) $14,950 Attractive Terms _ W———— Open Daily for Inspection J. DALLAS GRADY 904 14th St. N. W. Realtor Main 6181 On that wonderful plateau overlooking the entire city. We’ve Built What You’ll Want i Homes of comfort—you can enjoy—at a comfortable price — you | can afford to own. Just come and inspect them—and contrast what is offered with how you are living now—and you’ll be impressed to the point of purchasing. It’ll be the best investment you ever made. A new type of Bungalow at Z / — Bladensburg Road at L Street N.E. It’s a very remarkable group of most extraordinary Homes— the equal of which have never been built in Washington. Comfortable and roomy—with large rooms, handsomely tiled bath—a perfect dining room- kitchen combination; hardwood floors; a heating plant that al- most rmmlll itself. p\::k pretty lawns, ted with shrubs. Street now being improved. *5,375 3122-3146 Monroe St. N.E. signed—locat hood of detached Homes that is most select. Rooms are very spacious and living room and dining room uniquely separated by paneled partitions, with built-in book- cases; large bedrooms; elegant- ly tiled bath; fine hardwood floors; etc. Lawns all around— grassed and planted with shrubs. Price 7 Rooms that are very large— 2 Luxurious Baths— 2 Splendid Porches— Built-in Garage— *5,675 5,975 With terms you can conveniently handle Open every day and evening, including Sunday 15th St. cars to 16th and H Sts. N.E—changing to Bladensburg Bus. Or it's but a short two blocks to walk from 16th and H Sts. N.E. 6,650 —and very easy cash and monthly terms Have you seen the one we have for sale on Blagden Avenue near the entrance to Rock Creek Park? Of gray stone with steel casement windows, it stands rather aloof, but once bevond the grilled entrance door, words are inadequate to the charm of its spacious rooms. The wide entrance hail with 1ts broad steps and carved hand rail, the beautiful liv- ing room with its sky-blue tinted ceiling, crystal chandelier and ornate sculptured fireplace; the dainty reception room with its French doors to the dining room beyond, and from which a decorative but nevertheless thoroughly practical con- tory can be seen—all convey the impression of gracious ality. Please note the tasteful decorations; the artistic polychrome electric fixtures; the convenient outside pantry; the highest grade of hardwood floors; the model kitchen; laundry and servant’s toilet, and hot-water heating plant, with instantaneous heater and Only $14,250 Which is a very remarkable price for a Home in this section. Open every day and evening, including Sunday. ¢ Take G St. cars at Treasury to Rhode Island Ave. and Monroe St. N.E, and then a short walk to the right. If motoring, come cut Rhode Island Avenue, turning into Brent- wood Road—leading to the Bungalows at Monroe St. hosp: The second floor has four farge beautifully decorated Dedrooms and two marble floored baths in perfect harmony with the rest of the house. Financed Conveniently Open from 9 AM. to 9 P.M. Take 16th St. bus or 14th St. car. Or we will send our auto. On the top floor are the servants’ quarters and bath. A tilliard room and library, a three-car garage, laundry and furnace rooms, oil heater and automatic electric hot-water heater are on the basement floor. JOS. A. HERBERT & SONS Exclusive Agents 1013 15th St. N.W. Main 4590 Built, Owned and For Sale by Harry A. Kite Incorporated Member Washington Real Estate Board 1514 K Street v e 8