Industrial.— Under this heading are grouped the bonds of nearly all corporations except railroads and public utilities, as, for ex ample, the United States Steel Corporation.
Designation, How Secured, etc.— Munici pal bonds usually bear a designation indicating the purpose for which they were issued, as for example, water works bonds school building, refunding, etc. Bonds issued by corporations also usualy bear a designation, as for example, first mortgage, refunding mortgage, general mortgage, etc. The body of a Municipal bond in addition to acknowledging receipt of the face amount of the bond, and the promise to repay that amount on a certain date, contains a reference to the law under authority of which the bond is issued, the purpose of issue and a statement that it is one of a certain number of bonds aggregating a certain amount. It states the time and place of payment of the principal and interest. The bond is ordinarily payable to bearer and the coupons attached representing the interest payments (usually semi-annual) are also payable to bearer. The bond is of course signed the proper officials and bears the seal the municipality. A fully registered bond is one which, instead of being payable to bearer, is payable to the designated owner. No in terest coupons are attached to a fully registered bond, the interest being payable by check to the registered owner. Bonds are also sometimes registered as to principal only,o the bearer interest coupons being left attached to the bonds.
Bonds issued by the railroads and other cor porations are also usually in the denomination of $1,000 in coupon form payable to bearer, al though in many cases provision is made for issuing bonds fully registered or registered as to principal if desired by the holder.
Bonds issued by corporations are usually secured by a mortgage on the property of the company, a trust company being named in the mortgage as trustee for the bondholder. For example, the board of directors of a company which does an electric light and power busi ness may authorize an issue of $50,000,000 5 per cent bonds to be secured by mortgage on its property. Perhaps $5,000,000 of the bonds will be issued and sold, the remaining $45,000,000 bonds being held unexecuted and unissued by the trustee. The mortgage may provide that additional bonds may be issued, for example, to cover 75 per cent of the cost of future addi tions and extensions to the property usually with certain conditions that no additional bonds may be put out unless the company is earning a certain surplus over and above its interest charges. If in connection with the growth and development of its business, the company later on expends, for instance, an additional $1,000, 000 for new construction and its earnings have met the requirements of the mortgage, the trus tee on presentation of the proper certificates would certify an additional $750,000 bonds and deliver them to the company to be sold to its bankers.