nds are issued to take up and put into one fund all previously
issued mortgage bonds, the new bonds are sometimes called CONSOLIDATED
MORTGAGE BONDS. Holders of previously issued bonds are not obliged to
exchange them for any new securities.

INCOME BONDS are usually secured by a mortgage on the earnings of the
corporation issuing them. Interest on such bonds must be paid before
dividends are declared to stockholders. It is customary when such
bonds are issued to set aside a percentage of the earnings as a
sinking fund to meet the bonds at maturity.

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

[Illustration: Specimens of 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