This title has taken the place of the old, but now disliked, " blanket mortgage." Secured by a mortgage upon the property of a corporation and subject to earlier mortgages placed upon parts or all of its property. This is a very common method of borrowing money on the part of railway companies, and has been necessitated in this country by its remarkable growth and development. The railroads, which at the time of their early construction provided inadequately for the enormous demands upon their capacity for handling traffic, as since developed, issued bonds covering the property at the time of its construction, many of which have not yet matured. The enormous increase in business of such a railway has demanded tremendous enlargements to its road and equipment, and, as the value of such property is largely in excess of the original mortgage or mortgages placed upon it, a " general mortgage," so-called, is issued, representing, in part, the value of the property in excess of the earlier mortgages. When such a " general mortgage" is issued, it is usually made large enough not only to provide for the needs of the company at the time of its issue and possibly for future extensions under proper restrictions, but to set aside in the hands of the trustee of the mortgage sufficient bonds to be later disposed of to replace the earlier mortgages as they fall due. This automatically results in a "general mortgage" eventually becoming a " first mortgage."
The investment value of the above depends upon the standing of the company, - its net earnings available for interest charges upon the issue, etc., - the amount of underlying liens, and, in short, what equity there is in the property above the general mortgage issue. In this connection read also " Consolidated Mortgage Bond."
George Smith's Money. A condition existed in the early days in the West, when many of the then recently created Territories were suffering from a deficiency in metallic money, and the lack of a proper system of "banks of issue." In 1839 two Scotchmen, George Smith and Alexander Mitchell, created a new form of money in Wisconsin by obtaining from the legislature of that Territory a charter for a Marine and Fire Insurance Company, under which charter, although it contained a special restriction against banking privileges, notwithstanding, the company advertised to "receive money on deposit and transact other moneyed operations." "Certificates of deposit " were consequently issued in sums ranging from $1 up to $10, and were much in the form of bank bills. As there was a great popular need for something of this nature in the form of money, these certificates were soon in circulation through many of the adjoining Territories. They were redeemed in specie at the central office at Milwaukee and at agencies in other Western cities in New York exchange, at the then current rate.
Gilt-edged. Highest grade; most conservative class of investments; those in which loss to the owner is least likely to occur. One writer indefinitely defines " gilt-edged " securities as "those suitable for the investment of trust funds."