Page:Hints About Investments (1926).pdf/178

 any mortgage whatever on the property, and they were subject to a great mass of other obligations of prior security. And yet they were a far higher grade investment. . . than hundreds of first mortgage bonds of various other railroads throughout the country."

Then there are the income bonds or income debentures, a form of security that is rare and generally unsatisfactory because it is usually nothing but a preference share trying to look impressive by calling itself a bond. On them interest is paid if it be earned during the year or period for which it is due. On bonds and debentures it is nearly always the rule that interest, whether earned or not, has to be paid somehow sometime; it cannot be "passed" and forgotten.

But one of the most important things that an investor has to learn and to keep remembering always is not to take the names attached to securities at their face value; not to think, for instance, that because a stock is called a first mortgage bond or debenture it therefore necessarily is a first charge on the property that has issued it. If he jumps to this conclusion and acts on it he may find when it is too late that the stock once carried