CHAPTER XI 



STYLE OF BONDS. 



The serial bond is tlie only safe form uuder 

 which to write a loan en an active Inmbering 

 property. The loan is made for the specific 

 purpose of enabling the ])orrower to deplete the 

 security. Every day the plants operate, the 

 amount of standing timber is reduced. The 

 mills, railroad and logging equipment are use 

 less as security for a timber bond wlien the 

 stumpage is exhausted. Logging equipment, 

 railroad, sawmills and pulp mills are merely 

 t]ie bridge over which the tree travels to mar- 

 ket. Such a bridge stripped of traffic is eco- 

 nomic waste and has only a scrapping value 

 as security for a loan on cut off timber land, 

 The bridge must be a toll-bridge and collect 

 for the loads that cross. The loan must be re- 

 tired as rapidly as the timber is milled or man- 

 ufactured into merchantable products. A sink- 

 ing fund payable annually to be held until ma- 

 turity of the bonds is not sound financing in 

 timber or allied securities. These sinking 

 fimds call for the payment of a certain per- 

 centage of the face of the loan to be deposited 

 annually with a trustee or the treasurer of the 

 company. This percentage is an amount usual- 

 ly estimated to be sufficient to pay off the loan 

 when all the timber is cut. The fate of sinking 



333 



