Funded Debt

A funded debt of a corporation is a debt usually running some years and represented by one or more issues of bonds. It is distinguished from floating debt chiefly by its relatively permanent character. While a floating debt may represent capital which has been borrowed for permanent uses, yet a funded debt nearly always represents this. Funded debt is also a term used for the liabilities of the British government, such as have been issued in the form of permanent or longdated securities, as distinguished from the floating debt, which is in the form of exchequer bonds and treasury bills, and is regarded as temporary. This distinction, however, is not always clear, as the English War Loan issued in 1900 and payable in 1910 is called a floating debt, but should be rated as funded debt.

Gold Bonds

A bond which is specifically payable, principal and interest, in gold. In the days before 1896, when there was much doubt in the minds of investors as to the probability of the United States maintaining the gold standard, corporations found it necessary to insert what was called the gold clause in the mortgages they issued. Otherwise investors would not so readily purchase the bonds and it was difficult to float any issues which did not include the gold clause. The reason for this was that in the event of the currency system of this country going on a silver basis the principal and interest of the bonds would have been payable in this depreciated currency, and the investor would therefore lose possibly one-half of his principal. At the present time the gold clause is, of course, unnecessary, as there is no doubt whatever about the permanency of the gold standard in this country.

Granger Railroads

This is the Wall Street name which is given to the railroad systems of the west, like the Chicago, Burlington and Quincy, Chicago, Milwaukee & St. Paul, Chicago & Northwestern, Chicago & Alton, Rock Island, etc. These railroads are called granger roads because many years ago a wide agitation was carried on by the State Granges in the particular sections where these railroads run. The grange agitation was of such national interest and for so long a time affected the position and earning of these particular properties, that they came to be known as the granger roads, and have carried the name ever since. The mere fact that they carried grain had nothing to do with this particular appellation, as there are many other roads which nowadays carry as much, if not more grain than these systems and which are not included among the grangers.

G. T. C

When these letters are used with an order to buy or sell stock or commodities, they mean that the order is good till countermanded or good till cancelled.

Guaranteed Bonds

A bond, the payment of the principal and interest of which is guaranteed by another corporation. When a railroad leases another railroad it frequently guarantees the principal and interest on the bonds of the leased road. Sometimes this guarantee is shown by endorsement on the bond itself and sometimes is simply provided for in the lease.

Guaranteed Stock

A stock the dividends on which are guaranteed by a company other than the one which issued the stock. When a railroad leases another road it frequently guarantees the dividends on the stock of the leased road.

Holding Company

This is the same as a security company. That is, a company which owns the securities of other companies and depends for its income upon the interest and dividends yielded by these securities. It frequently issues bonds as well as stock itself. The most notable example of a holding company in the railroad field was that of the Northern Securities Co., which, however, was dissolved as being illegal by the United States Courts. It planned to hold the stocks of the Great Northern and Northern Pacific Railroad companies and possibly of other companies also. A holding company is frequently also an operating company. For instance, the Pennsylvania Railroad is both a holding company and an operating company. It operates several thousand miles of railroad and in addition holds a majority of the stocks and many other securities of a large number of other railroads. On the other hand, the Pennsylvania Company of Pittsburg, itself controlled through stock ownership by the Pennsylvania Railroad, is a pure holding company, and simply holds the stocks and certain other securities of the various Pennsylvania lines west of Pittsburg and Erie. The New York Central Railroad is a holding company as well as an operating company. This is also true of all the large systems such as the New Haven, the Union Pacific, Baltimore & Ohio, Illinois Central, etc. The Reading Company on the other hand, is simply a holding company, and holds a majority of the stocks of railroads like the Philadelphia & Reading, New Jersey Central, as well as the stocks of certain coal and iron companies in the anthracite coal fields.