See "First Mortgage," meaning the same in reference to bonds. See also " Prior Lien Bonds."
This is taken as an example of an issue of bonds bearing, apparently, two names. It is impossible to take the amount of room necessary to describe every possible combination of names of this kind which may be used in the designation of a mortgage. The Norfolk and Western Railway Co. has an issue of 4% bonds bearing the above title. It is a " first lien; " that is, a " first mortgage," on approximately 200 miles of road, but upon 1,592 miles of the railroad there are other mortgages which would come ahead of this particular mortgage, and, therefore, upon that portion of the road it is a "general mortgage," so-called. It will be seen that the part of the road upon which the issue is a "first mortgage" is comparatively small.
(Read "Mortgage.") There are sometimes several mortgages placed upon the same property. The one having the prior claim to or preference over the others is known as the " first mortgage." This will be better understood by reading the next subject and also the matter under " Second Mortgage."
This is a form of a " collateral trust bond " (to which subject the reader is referred), and by which it will be seen that under certain conditions a bond of this nature may be indirectly a first mortgage. A " first mortgage trust bond " is, therefore, one secured by a deposit of other bonds which are in themselves secured by a first mortgage. An issue of this nature is that of the Louisville & Nashville Railroad Co., which is secured by a deposit of the first mortgage 5% bonds of the Birmingham Mineral R. R, Co., and the first mortgage 6% bonds of the Owensboro & Nashville Ry. Co.
See "Set of Exchange."
The English term equivalent to our "first preferred stock."
See " Preferred Stock."
First mortgage bonds.
Another name for a " paying teller "
This is an example of the wilful misusing of the title of a bond, and was so used by a banking house to designate an issue, the proper title to which was "First Mortgage and Collateral Trust." Evidently there was a dislike to the " collateral trust " idea, and, therefore, " trust mortgage" was used in lieu thereof. " Trust mortgage " is a very vague wording and hardly proper under the circumstances.
The attention of the reader is again called to the necessity of not only a careful consideration of the exact and proper title of any security, but is advised to possess himself of information giving the exact status of such security in relation to other obligations of the same company; and is likewise strenuously advised to read with great care all the printed matter appearing upon the face of a bond, or its coupons, and to pursue a like course in relation to every security to be purchased or loaned upon.