DEBENTURE, There are two kinds of documents to which this term is applied, which may be described separately.
Excise General D.—This is a certificate authorizing the exporter of certain classes of goods to receive a drawback equal in amount to the excise duties which had been paid on them. The object of the document is to certify two things—first, that the excise duties bad actually been paid; and, second, that by a certificate from an officer of cus toms the goods bad been shipped, and bona fide exported to foreign parts, and not relanded in Great Britain. This kind of D. is executed by an officer of excise (inland revenue); it is partly printed and partly written on a sheet of stamped paper, for which the exporter pays. As concerns the export of beer, there is an excise D. slightly dif fering in form: Railway D.—This is the term applied to a deed of mortgage given by a railway com pany for borrowed money. By virtue of acts of parliament constituting, and giving additional powers to, a railway company, the company is authorized to borrow a speci fied sum (see CAPITAL ACCOUNT, also RAILWAYS, Legislation and Management). The deed by which the loaf is effected is simple in its appearance and nature. It consists of a sheet of paper duly stamped; and its contents, embraced in a single page, are partly printed and partly written. All expenses connected with it, brokerage included, are borne by the company. At the head of the deed is the name of the railway company, in large letters, with the words Mortgage, No. —, and the amount in figures. It then proceeds: "By virtue and in terms of an act, etc. [the act or acts being recited], We, the — railway company, in consideration of the sum of , paid to us by mortgage the said undertaking, and all the tolls and sums of money aris ing by virtue of the said acts, and all the estate, right, title, and interest of the company in the same, to hold unto our said assignee, , until the said sum of together with interest for the same, at the rate of for every hundred pounds by the year, payable as hereinafter mentioned, be satisfied. And it is hereby stipulated that the said principal sum shall be repayable, and the said company are hereby bound to repay the same on the [here date of repayment is inserted]. But if
the parties hereto shall mutually think fit, the same shall thereafter remain as a loan to the said company, for such further period, and at any such rate of interest, as shall be mutually agreed upon by a minute indorsed hereon to that effect, and signed by us and our said assignee, or . And in respect of the interest to become due on the said principal sum at and prior to the said [date of repayment], the said company shall pay to the bearer of the interest-warrants herewith issued, the several sums contained in such warrants, at the times therein respectively specified. In witness whereof, these presents written, in so far as not being printed, on the face of this sheet of stamped paper by [here follow the name of secretary of the railway company, the name of place, date, and the signatures of three directors, with the signatures of witnesses]." Such is a railway debenture. Along with it are given warrants for the payment of interest at the periods specified, which are paid on presentation. These interest-war rants, which are Sometimes called coupons (q.v.). are small slips of paper bearing the sum, date, and signatures. The object in giving them to the debenture-holder is to sava him all trouble. They are paid to any one presenting them.
Brief, simple, and effective, a railway D., with its accompanying interest-warrants, is perhaps the most convenient deed of mortgage ever invented. In few and une quivocal words, it pledges the whole railway for the loan, and it must necessarily be redeemed before any shareholder can claim a dividend from the undertaking—each D. ranking according to its number. Railway debentures are, therefore, reckoned a safe form of investment, and are eagerly taken up by individuals who have sums of a few hundred pounds to lend for several years at a stipulated rate of interest. These deben tures possess the further advantage of being salable, and through the agency of stock brokers they pass front hand to hand. In the event of neither interest nor principal being paid, the holder is entitled to enforce the mortgage. Similar debentures are issued by various public trusts under statutory authority, and by joint-stock companies, in virtue of contracts pledging the credit of the undertaking. w. C.