334 TIMBER BONDS 



funds is notorious. The vicissitudes of com- 

 mercial life are well known. Trust companies 

 fail occasionally. Stock ownership changes 

 hands with passing time. Managers die or re- 

 tire and thus vary the policy over a period 

 of twenty or thirty years. The group of men 

 who contracted the debt that runs over a gen- 

 eration or a life time rarely expect to be pres- 

 ent at its payment. 



In a timber loan, where the property grows 

 less valuable each operating year, the debt 

 should mature in time to leave a safe margin 

 of timber behind it. Bond dealers and trustees 

 should not risk being forced to operate a mill- 

 ing or pulp property in order to pay out the 

 loan. Dividends should not be declared nor pro- 

 fits paid while the property has a bonded debt. 

 The principles applied to a railroad bond, 

 where the values usually enhance with age, 

 cannot be used in connection with a timber or 

 coal property where each working year means 

 less security under the mortgage. All serial 

 bonds are not safe. Today there are outstand- 

 ing serial timber bonds that are very risky. 

 The security has been over valued, the timber 

 over estimated or the sinking fund providing 

 for semi-annual serial payments improperly 

 based. The era of high finance in timber bonds 

 is hovering around and to ward it off the ut- 

 most care is necessary. In timber bonds as in 

 other attractive investments there are the get- 

 rich-quick concerns and the highly speculative 



