Within the past year there has been a good deal of uninformed comment about the safety of railroad bonds. Before the era of popular agitation and governmental antagonism, railroad bonds enjoyed a large measure of public confidence; but it can not be denied that some part of this confidence has been shaken as a result of the recent exposures. Even clearheaded men have exaggerated the importance of the developments; and too often railroad officials, who should have insisted upon the soundness and stability of their properties, when they elected to talk for publication, have given way instead to dismal and unwarranted forebodings. There is no mystery involved in determining the safety of railroad bonds. Any man of business experience, keeping in mind the general principle which measures the value of all obligations, can easily determine, with the aid of two documents, the degree of safety which attaches to any particular railroad bond. The general principle to be observed is that the safety of any obligation depends upon the margin of security in excess of the amount of the loan; and the two documents to be consulted are the mortgage or trust indenture securing the bonds, which describes the property mortgaged, and the last annual report of the railroad, which shows its financial condition. Confining the analysis, for the present, to mortgage bonds upon the general mileage of a railroad, the following points should be considered: (1) _Rate per mile at which the bond is issued._ Applying the general principle indicated above, it must be learned what proportion the bonded debt of a railroad bears to the total market value of the property. It is much easier to make this comparison on a per-mile basis. In determining whether the rate per mile is excessive, reference must be made not so much to the particular bond in question as to the total bonded debt per mile of the railroad, and to the relation which that figure bears to the total market value of the property per mile. The total market value per mile is obtained by adding the market value of the stock per mile to the par value of the bonded debt per mile. A single issue of bonds varies all the way from $5,000 to $100,000 per mile, according to the location of the railroad. Total capitalization per mile--stocks and bonds at par--varies in about the same proportion, from $35,000 to $300,000. The average for all the railroads of the United States is $67,936 per mile. The actual cost of the railroad, as shown by the balance-sheet, must be taken into consideration, and also the estimated cost of duplicating the property. Physical difficulties of construction must be weighed, for a railroad through a flat, sandy country should not be bonded for as much, other things being equal, as a railroad through a mountainous country, where much cutting, filling, and bridging are required. The section of country in which the railroad is located must be considered, for $35,000 per mile on a single-track line