sumers of money. Midwinter and midsummer in the north
are usually periods of comparative stagnation in the money market. All
these things affect rates, and the successful banker is he who from
observation and large experience shows the most skill in timing his
money supply.

V. COLLATERALS AND SECURITIES

TWO DISTINCT CLASSES OF SECURITIES

There are two distinct classes of mortgage securities--one class based
upon the actual value and the other upon the earning value of the
property. When a man lends money upon a dwelling-house he bases his
estimate of security upon (1) the cost of the property, (2) its
location, (3) the average value of adjoining properties, and (4) the
general character of the locality; that is to say, the value of the
property is the basis of the security. On the other hand, the lender
of money upon railway mortgages, for instance (that is, the buyer of
securities known as railway mortgages), considers the general earnings
of the road rather than the cost of building and equipping the road as
the correct basis upon which to estimate the value of the security.
These two classes of securities differ in other particulars. The value
of the mortgage upon ordinary real estate is constant and the security
itself is not so likely to change ownership, while the value of the
railway mortgage may vary with the success or failure of the road, and
the security itself is in the market constantly as a speculative
property. The whole property of a railroad company, considered simply
as real estate and equipment, is usually worth but a small fraction
of the amount for which it is mortgaged. The creditors, as a rule,
depend for the security of their money upon the business of the
company.

We have already learned that collaterals are mortgages, stocks, bonds,
etc., placed temporarily in the hands of lenders as additional
security for money borrowed. The student will note, further, that the
borrowing value of such securities depends very largely upon the
character of the property represented.

MORTGAGES AS SECURITIES

A MORTGAGE is a conveyance of property for the purpose of securing
debt, with the condition that if the debt is paid the conveyance is to
become void. A mortgage in form is really a deed of the land, with a
special clause stating that the grant is not absolute but only for the
security of the debt. It is usual for the debtor at the time of
executing the mortgage to execute also a bond or promis