Theoretically the name of a corporation bond secured by a mortgage on the entire property formed by the consolidation of several smaller properties. Such a mortgage may be a first mortgage upon the property so consolidated, or it may be subject to earlier mortgages issued by one or more of the several companiesconsolidated. In the latter event, it would not only be a " consolidated mortgage bond," but, likewise, a "general mortgage bond." (See " General Mortgage Bonds.") The name "consolidated mortgage" is used to distinguish such an issue, in the case of a railway company, from "divisional bonds;" that is, mortgages upon the separate properties consolidated.

In practice, the names given to different bond issues, railway issues especially, are often technically incorrect, and frequently a "consolidated mortgage bond " differs materially from this definition.

A very common use of the term is for an issue created to take the place of - refund - other issues having a prior lien to it, but which are not yet due; the new debt being intended to eventually consolidate the funded indebtedness of the company. In a case such as this, the new issue is usually large enough to retire the prior indebtedness and furnish funds for needed improvements. An equal amount of the consolidated issue is always left in the hands of the trustee to take the place of the underlying bonds as they mature, and it is also proper to allow for an increased issue of the consolidated bonds from time to time for further improvements, a restriction being generally inserted in the trust deed that bonds so issued shall be up to only a certain percentage of the actual cost of the improvements.

1 Any one wishing to study more fully into the interesting methods of conducting the business of this exchange, will find an excellent treatment of it in " The A B C of Stock Speculation," by Nelson.