CHAPTER IV. 



THE UNDEEWEITEB. 



The difference between timber bonds and in- 

 dustrial bonds has not always been realized by 

 those issuing timber securities. Again tim- 

 ber bonds have been brought out by some houses 

 in the same manner in which they would issue 

 real estate or land bonds. The errors have re- 

 sulted in some defaults. Such houses are re- 

 sponsible for the prevailing notion that only 

 the bond dealer who specializes in timber secur- 

 ities can handle them with perfect safety. 



This idea hurt timber bonds and narrowed 

 their market. It founded the feeling amongst 

 many bankers and bond dealers that timber 

 bonds were good things to avoid. These men 

 did not have the time to study timber and allied 

 industries and they invested their funds in 

 paper they understood or could easily learn all 

 about from a reliable source. 



The prejudice thus created also hurt the tim- 

 ber owner and forced him to put up security out 

 of proportion to the money loaned him. It 

 caused him to pay heavy sinking funds and high 

 interest rates, and to sell his bonds at a big 

 discount. The inherent value of the timber 

 bond alone saved it from being driven out of 

 existence by the ignorance and greed of * ' Tim- 

 ber Experts" and other interested parties. The 



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