Author Description

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1909 Excerpt:...and regular occurrences with us.". '"' John P. Ryan.; CONVERTIBLE BONDS. By Robert W. Speir, Manager Bond Department of Knauth, Nachod & Kuhne, New York..4 September 22, 1908. The first time my attention was called to the possibilities of a Convertible Bond was in October, 1892. A friend who held some 7% bonds of the Chicago, Milwaukee & St. Paul Railway, which were about to mature on January 1, 1893, inquired about their payment. I found that they were first mortgage bonds,on one of the divisions of the railroad issued thirty years before bearing 7% interest, and,tha,ti jthey contained the option, to the holder to convert thern ujjtp'hje preferred stock of-the Railroad at par. Under the terms of the bond this optipn recurred twice a year for a period of ton days after the payment of the dividend on the stock. The las/t such period in the life of the bond was closing--in just four days, in, fact, after which the bond would become a simple time contract with three months to run, worth, we will say, par and accrued interest. The owner was entirely unaware of the conversion privilege thus accidentally brought to his notice, the discovery being worth about $2,000 to him on his $7,000 of bonds, as the preferred stock was selling at about 129'at the time. This incident is cited as an illustration of the great value which the convertible feature of a bond has proved many times in the past history of railroad securities, and of the possibilities of value;--beyond strict investment value--in many of the present issues.' Briefly stated, a convertible bond is the absolute "promise, to; pay" of the issuing corporation of a definite sum of money, say $1,000, at the end of a definite term of years with interest at a definite rate of interest,...