TIMBER BONDS 43 



independent preliminary investigation results in bearing out the 

 statement furnished by the company that has made apphcation 

 for the bond issue. 



"Every timberland bond issue handled by us must conform 

 to the following high standard of security. 



" (a) The company issuing the bonds must be well estabhshed 

 in high credit; its officers and managers must be thoroughly 

 experienced and in good standing among lumbermen. 



"(b) The lands must be well located, contain timber of good 

 quality, the amount thereof to be in every case determined by 

 capable, well-known timber estimators, employed by us to cruise 

 the timber which, in every case, must have a cash market value 

 of at least 50 per cent in excess of the bond issue. 



" (c) The titles to the lands must be carefully examined and 

 approved by our own legal counsel. 



" (d) The mortgage securing the bonds must contain strict 

 provisions which operate to insure the regular deposit of an 

 agreed amount per thousand feet for all timber cut sufficient to 

 retire all of the bonds when about one-half of the timber is con- 

 sumed ; these deposits to be applied to the payment of the prin- 

 cipal of the bonds as the several serials, semiannually or annually, 

 become due. The mortgage makes provision for keeping careful 

 check upon the cutting of timber and accounting for the same to 

 the mortgage trustee." 



If the statement of the company is satisfactory, a detailed 

 examination is made, including a thorough estimate of the 

 standing timber and other property; a study of the efficiency of 

 the operation; cost of production and sales; inquiry into the 

 shipping facilities, and all other factors that may influence the 

 operation and profits of the business. This examination is made 

 by men trained especially for the work because it requires a wider 

 range of knowledge than is possessed by the average timber 

 cruiser. 



The expenses incident to a bond issue are borne by the party 

 who desires to secure the loan. They include an audit of the 

 books, a timber cruise, legal charges for examination of titles, 

 drawing the deed of trust, drafting the text of the bond, charges 



