This section is from the book "Money And Investments", by Montgomery Rollins. Also available from Amazon: Money and Investments.
A promissory note secured by stocks, bonds, mortgages, or other securities. A " collateral note," of course, may be given by an individual, firm, or corporation. (See " Collateral.") It is quite a common form of borrowing among many of the railway companies, as evidenced by the Cincinnati, Hamilton & Dayton Railway Co. issuing, in 1905, $15,000,000 41/2% "collateral notes." To secure these notes there was deposited with the Central Trust Company of New York, as trustee, the following securities, which had an estimated market value, at the time, of $24,000,000.
$15,000,000 Cincinnati, Hamilton & Dayton 41/4% Consolidated Mortgage Gold Bonds.
$6,700,000 Cincinnati, Hamilton & Dayton 5% Preferred Stock.
$1,073,000 Cincinnati, Hamilton & Dayton 4% Preferred Stock.
$375,000 bonds of constituent companies.
7,501 shares Southwestern Construction Company stock.
Ascertain the value of securities held by the trust company as collateral security for notes of this description, and what their nature is and how important to the company issuing the " collateral notes."
 
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