Municipal bonds--_i.e._, the bonds of cities, counties, and townships--are indirectly a first lien upon all taxable property in the municipality, and take precedence of every form of mortgage or judgment lien. This lien is enforced through a tax levy to meet interest and principal, and this tax levy the courts will compel in the rare cases in which a municipality attempts to repudiate a valid bond. This priority of the tax lien is the foundation of the prime position of municipal bonds. The case rarely occurs where a bond held valid by the courts proves uncollectable if sufficient taxing power existed when the bond was issued to provide for its redemption. It is only when the municipality itself diminishes in population and taxable property to the vanishing-point that such a default can occur. An investor can judge for himself as to the likelihood of such a catastrophe in any particular community, and can feel sure that his bond, if valid and protected by a sufficient taxing power, is as secure in its principal and interest as the municipality which issues it is secure in its continued existence. The following are the chief points which should be considered in the investigation of a municipal bond: (1) The proportion which the total debt of the municipality bears to the assessed valuation of the property subject to taxation. Usually a maximum rate is fixt by constitutional provision which rarely exceeds 10 per cent. (2) The purpose of issue. This must be a proper and suitable one. (3) The proceedings under which the bonds were issued. These proceedings, the form of bonds, their execution, and their legal details must be in full compliance with the law. If these points are found to be satisfactory, the investor may rest content that no other form of security is so greatly safeguarded and that his bond ranks upon a substantial equality with government and State obligations. The rate of income to be derived from investment in municipal bonds varies in accordance with the obligations selected. Like other forms of security, municipal bonds are controlled by market conditions, and their price is determined by the relations of supply and demand, and by adjustment to prevailing money rates. While differing only moderately from one another in point of safety and income return, municipal bonds may be divided into two distinct classes in accordance with the degree of convertibility which they possess. Some municipal bonds possess great convertibility; others almost none. The feature which chiefly determines the activity or inactivity of a municipal issue is the size and importance of the municipality, together with the amount of bonds which it has outstanding. The bonds of large and important cities, whose outstanding debt reaches considerable proportions, usually possess great activity. They are constantly traded in and command a broad market because dealers are willing to buy or sell them in blocks at prices within a fraction of 1 per cent apart.