Bonds are issued against all conceivable kinds of securities. Not only are properties of many kinds used to issue bonds upon, but many kinds of bonds are often issued upon the same properties. This is especially true of railways, where mortgages of various kinds often lap and overlap in almost endless confusion.
SINKING FUNDS
Money set aside by a municipality or corporation to sink a debt at a certain future time is called a sinking fund. For instance, if a city should issue twenty-year bonds for $100,000 to secure money for street improvements the entire debt would fall due in twenty years, but to avoid having such a large amount fall due in one year, a proportional sum is set aside each year as a sinking fund—that is, to sink, or reduce, or wipe out the indebtedness when the bonds mature. Bonds are not paid in advance of maturity.
INTEREST COUPONS
Most bonds have interest coupons attached. These are cut off and presented for payment as they mature. For instance, a four per cent. bond for $1000 would draw $40 interest yearly. This sum would be paid in two instalments of $20 each. If the bond were for twenty years there would be at the date of issue forty interest coupons, each calling for $20 and collectable at intervals of six months.
X. TRANSPORTATION BY RAIL
THE GROWTH OF OUR RAILROAD SYSTEM
A railway map of the United States shows that most parts of our country have a thickly woven net of railroads. The mileage of our railroad lines is now 184,000 miles, the actual length of track on these roads being about 245,000 miles. The significance of these large figures becomes more manifest when a comparison is made between the length of our railroads and the length of those of Europe and those of the world. The railroads in the United States comprise over four ninths of the total railway mileage of the world, and are considerably longer than the railroads of all the countries of Europe combined. The facts are shown graphically by the following diagram: