No discussion of real-estate mortgages would be complete without allusion to the guaranteed mortgages which have been placed upon the market in great quantities within the past few years. Guaranteed mortgages are real-estate mortgages guaranteed as to principal and interest by substantial companies having large capital and surplus. In addition to the guaranty, the companies usually search and guarantee the title, see to it that the taxes, assessments, and insurance are paid, and perform the other services of a real-estate broker. Their compensation varies somewhat, but probably averages 1/2 per cent--that is, for example, they loan at 5 per cent and sell guaranteed mortgages to the investor at 4-1/2. The value of the guaranty may be considered from two points of view--first, in the event of a general decline in real-estate values, and, secondly, when a fall occurs in a particular piece of property or in a particular locality. If a severe decline in real-estate values takes place, affecting all localities, it might become necessary for the holders of guaranteed mortgages to test the value of their guaranties. In such a case the question would arise how far the capital and surplus of the guaranteeing companies would extend in liquidating the mortgages which they had guaranteed. This would depend entirely upon the proportion between the capital and surplus of the companies and the total amount of outstanding mortgages guaranteed. Ordinarily the capital and surplus do not exceed 5 per cent of the mortgages, so that the average guaranty is good for about 5 per cent additional equity. On a piece of property worth $100,000, upon which a guaranteed mortgage of $60,000 exists, the guaranty would be worth $3,000, and would margin the property down to $57,000. This additional equity is of little value. It is probably unlikely that a 40-per-cent depreciation in value will take place, but the guaranty is not needed unless it does, and if it should occur, the depreciation is quite as likely to go to 50 per cent or more as to stop at 43. From the second point of view the value of the guaranty is much greater. The distribution of risk, as in the case of fire-insurance, protects the holder against loss in the event of a fall in the particular piece of property upon which he holds a mortgage, or even in a particular locality. It can not be said, however, that the records are yet sufficiently complete to form a conclusion as to what is a safe proportion between capital and surplus and outstanding mortgages. Further than that the guaranteeing companies, generally speaking, have been operating since their inception upon a rising market, so that their success hitherto has not been remarkable. Allowing for these drawbacks, however, the private investor, unless so situated as to give personal attention to the details of his investments, will probably do well to purchase his mortgages in guaranteed form. V INDUSTRIAL BONDS