he had a good profit. Buying market securities at the very low and disposing of them at the highest point is pure luck and not so much a matter of good judgment. While the railroads of the country are today suffering under the burden of high labor costs and a decrease in travel and freight transportation these conditions will not continue to exist. The investor who today will select the better class of railroad bonds whose security is unquestionable is bound to profit by his investment not only by a future increase in the value of the bonds but a high interest yield which, in a few years to come, will be a thing of the past.

The following securities are worthy of the reader's consideration, both because of their security and excellent return on the investment over a period of years:

The Pennsylvania Railroad ten-year 7 per cent secured bonds, dated April 1, 1920, and due April 1, 1930, selling at about 10034, to yield 6.90 per cent, is attractive at this price. This issue is limited to $50,000,000, face value, and is not redeemable before maturity. If interest rates should drop, the holder of this bond can be assured that the company cannot call the bond out of his possession by paying a small premium. In other words, one can be assured that their investment would not be disturbed for nine years, which is a valuable feature. These bonds are legal investments for savings banks in the States of New Hampshire and Rhode Island and are legal for insurance companies in New York, Massachusetts, New Jersey, Pennsylvania, and Illinois and many other States having restrictions. The excellent record of the Pennsylvania Railroad Company for operating efficiency and earnings since its organi

zation, its high credit standing and its unbroken dividend record since 1856 have made its securities much in demand by conservative investors.

The Hocking Valley Railway Company five-year 6 per cent secured gold notes, due March 1, 1924, at 911⁄2, to yield over 7 per cent, are a good purchase for a short-term investment. This issue of $7,500,000 is secured by a deposit of $9,600,000, face value of 6 per cent general mortgage bonds, Series A, of the Hocking Valley Railway Company, maturing January 1, 1949. The line of the Hocking Valley Railway Company forms the outlet to the Great Lakes at Toledo, Ohio, of the Chesapeake and Ohio Railway Company, which owns more than 80 per cent of the $11,000,000 capital stock of the Hocking Valley Railway Company. They are redeemable in whole, but not in part, at the option of the company at 60 days' notice at 101.

The $1,500,000 issue of the Western Maryland Railway Company 7 per cent equipment gold notes, issued under an equipment trust agreement, dated March 1, 1921, are exceptionally well secured, and the bonds which mature serially from 1922 to 1933 can be bought on a basis of 6.75 to 7 per cent, depending upon the maturity; the longer term bonds, 1931 to 1933, selling on a 6.75 basis. These notes are issued in payment of approximately 50 per cent of the cost of 40 Consolidation freight locomotives constructed by the Baldwin Locomotive Works. The title to this equipment remains vested in the trustee until the payment of the notes in full. This is a preferred series. Following these notes are $1,500,000 notes of a junior series which were taken by the United States Government maturing at the rate of $100,000 per annum.

Holders of the preferred series are entitled to preferential rights and interests in and to the equipment and in and to the payments to be made in accordance with the equipment trust agreement. During the entire life of the notes the preferred series will have an equity of at least 50 per cent as represented by the junior series and an ever-increasing margin of safety as represented by the excess of the actual value of the equipment over the unmatured equipment notes during the life of the trust.

Among the public utilities one of the most attractive investments at the present time is that of the first mortgage twenty-year 7 per cent bonds, Series A, of the Northwestern Bell Telephone Company, selling at about 99, to yield over 7 per cent. These bonds can be purchased in denominations of $1,000, $500, and $100 and are redeemable at the option of the company as a whole and not in part, on any interest date upon 60 days' notice at 1061⁄2 and accrued interest. The Northwestern Bell Telephone Company now has outstanding behind these bonds capital stock of $42,150,000, which is entirely owned by the American Telephone and Telegraph Company. These bonds are issued under a mortgage, covering as a first lien its entire physical property. After deducting all Federal and other taxes and providing for adequate depreciation and obsolescence, the property now being operated by the company shows net earnings for the year 1920 (partly estimated) amounting to $3,738,000. For the past five years net earnings have averaged $3,661,000. The appraised value of the plant of the company is largely in excess of the book cost, which book cost, covering only real estate and plant, and exclud

ing working assets, amounts to over $73,000,000.

Another issue worthy of consideration is that of the Pacific Gas & Electric Company first and refunding mortgage gold bonds, twenty-year 7 per cent Series A, due December 1, 1940, in denominations of $500 and $1,000 each. The amount of this issue is $10,000,000. Pacific Gas & Electric Company is recognized as one of the large, wellestablished and successful public service corporations in the United States. The electric business of the company or of its predecessors has been in continuous and successful operation for more than 40 years and the gas business for more than 65 years. than 65 years. The mortgage provides for a semiannual sinking fund at least equal to the excess, if any, of 1⁄2 per cent of all outstanding bonds of the company over the then current underlying sinking-fund requirements, to be utilized in the acquisition or redemption and retirement of first and refunding mortgage bonds. A large fund is also provided annually for the maintenance and replacement of the properties. From January 1, 1906, to December 31, 1919, more than $79,474,000 was expended for capital purposes on account of which the company's funded debt increased but $51,671,000. This mortgage is a direct first mortgage on the entire properties of the Mt. Shasta Power Corporation which has joined with the Pacific Gas & Electric Company in the execution of the mortgage and is also a direct mortgage on the entire properties of the Pacific Gas and Electric Company now owned and hereafter acquired subject to the prior liens of underlying mortgages. Its gross earnings in 1920 were $34,586,508 and net earnings $11,782,023. Due to the fundamental importance of electric

energy in the continued growth of this district and the variety of uses in which this power may be employed under prevailing local conditions, the business field of the company presents a most attractive opportunity. The company is subject to the jurisdiction of the Railroad Commission of the State of California, which in its decisions has repeatedly recognized the essential character of the public service industry and the necessity of companies engaged therein being maintained in a sound financial condition in order that they may properly supply the demands of a growing population.

As an industrial bond the Anaconda Copper Mining Company secured 7 per cent gold bonds, Series B, due January 1, 1929, is not only well secured but selling at a very low price, 931⁄2 to yield about 8.15. Copper today is cheaper than it has been for many years. Markets abroad are almost depleted, which of course is reflected in the price of the security. As the denand for copper increases so will the market price of this bond rise. These bonds are direct obligations of the Anaconda Copper Mining Company and secured by a pledge with the trustee of stocks of constituent companies valued in excess of $100,000,000. It is the largest producer of copper in the world, and its mines are located in one of the greatest known mineral belts, the Butte District, in Montana. During the past 37 years the group of mines now owned

by the company has produced and is now producing more copper and more silver than any other district in the world. During the last 10 years the company has been paying dividends aggregating more than $125,000,000. This company has outstanding capital stock in the sum of $116,562,500, which at recent market quotations indicates. an equity of considerably over $120,000,000. The company has pledged with the trustee all of the shares of stock owned by stock owned by it in nine of its subsidiary companies. These pledged stocks are valued in excess of $100,000000. The company also covenants to pay to the trustee $1,500,000 as a sinking fund, payable semiannually, beginning July 1, 1921. The trustee is to apply the sinking fund money to the purchase and retirement of such Series A and Series B bonds as may be tendered on the most advantageous terms. To the extent that bonds cannot be purchased at prices to yield 6 per cent or more per annum, the unexpended monies shall revert to the company.

If any readers of this column should like to make further inquiries about the above securities or any other securities of any character whatsoever, we shall be glad to either answer the same in the next issue or by correspondence if so requested.

Our sole purpose is to be of assistance to our readers, and no charge is made for any help we are able to give.

PART I.

General Policies.

1. Authorization.-Under the military policy provided for in the National Defense Act, as amended by the act of Congress approved June 4, 1920, the organized reserves are the principal war component of the Army of the United States, and are raised, supported, and employed by the United States under the power given to Congress by the constitution "to raise and support armies." Extracts from existing law applicable to the Organized Reserves are contained in Appendix I.

2. Components of the Army of the United States. The military policy provided for by Congress contemplates the organization of our military forces into one harmonious, well-balanced, and effective army, the Army of the United States, consisting of the Regular Army, the National Guard when in the service of the United States, and Organized Reserves, including the Officers' Reserve Corps and the Enlisted Reserve Corps.

3. Missions of the three components.-The missions of these three components may be stated as follows:

a. The Regular Army.

(1) To provide adequate garrisons in peace and in war, for our oversea possessions.

(2) To provide adequate peace garrisons for the coast defenses within the continental limits of the United States.

(3) To provide personnel for the development and training of the National Guard and the Organized Reserves.

(4) To provide the necessary personnel for the overhead of the Army of the United States, wherein the duties are of a continuing

nature.

(5) To provide an adequate, organized, balanced, and effective expeditionary force, which will be available for emergencies, within the continental limits of the United States or elsewhere, and which will serve as a model for the organization, discipline,

and training of the National Guard and the Organized Reserves.

(6) The Regular Army is the first component of the Army of the United States in peace and in war.

b. The National Guard.

(1) In time of peace, to provide an adequate, organized, and effective force, which will be available in minor emergencies for employment within the limits of the United States, by the States or by the United States.

(2) In time of war or major emergencies, when Congress has authorized the use of troops in excess of those of the Regular Army, to provide an adequate, balanced, and effective component of the Army of the United States for employment by the United States without restrictions.

(3) The National Guard is the second component of the Army of the United States in peace and in war.

c. The Organized Reserves.

(1) To provide a trained, organized, and balanced force which may be readily expanded and developed into an adequate war component of the Army of the United States to meet any major emergency requiring the use of troops in excess of those of the Regular Army and the National Guard.

(2) The Organized Reserves are the third component of the Army of the United States. (3) The Regular Army and the National Guard may be employed separately or together in minor and in major emergencies, but the Organized Reserves constitute purely a war force and can be employed only in the event of a National emergency declared by Congress.

4. Development of the components.-A clear understanding of the missions of these components and a spirit of mutual support and cooperation between them is essential to the development of one harmonious army. A well-defined mission for each component having been definitely established, no reason exists for the interference of one with another or for the development of one com

ponent to conflict with or retard the progress of either of the others. It is the policy of the War Department to develop the Regular Army and the National Guard to the full strength provided by law and for the present to maintain the tactical units of the Organized Reserves as cadres only, with complete officer personnel and with the enlisted personnel including only those non-commissioned officers and specialists necessary to make the organizations capable of rapidly assimilating the numbers of men required to bring them to war strength.

5. Basic peace organization. The basic peace organization of the Army of the United States provides for all of the essential elements for a complete and immediate mobilization for the National Defense in the event of the National emergency declared by Congress. (See section 3, National Defense Act, as amended by the act of June 4, 1920.) The first echelon will be composed of the Regular Army, the National Guard, and the Organized Reserves. The strength of the initial, or first, echelon is prescribed by the War Department, taking into account the war plan considered.

6. Tactical organization.-The Army of the United States shall be organized so far as practicable into brigades, divisions, and army corps; and, whenever the President may deem it expedient, into armies. (See section 3, National Defense Act, as amended by the act of June 4, 1920.) Tables of Organization prescribe in detail the organization at peace and at war strength of field armies, army corps, divisions, and subordinate units thereof, and of the auxiliary and special troop Basic Tables of Organization applicable to the Organized Reserves are the same as those adopted for the Regular Army (war strength).

7. Territorial organization.-The principal territorial command within the continental limits of the United States is the corps area and in the oversea possessions the department. The primary functions of the corps area are the organization, training, and mobilization of troops. The present system of corps areas is based upon the military population available, and normally each corps area is capable of developing an approximately equal number of troops.

8. Allotments to departments and corps areas. As a general rule each corps area will contain one or more army corps with certain auxiliary and special troops, composed of troops of the Regular Army, the National Guard, and the Organized Reserves. The allotment of quotas to departments and to corps areas is the function of the War Department. The quota in the Organized Reserves normally allotted to each corps area will include three infantry divisions and a proper proportion of corps, army (including cavalry), auxiliary, and special troops. This normal quota will be varied to accommodate differences in the number and character of population between the several corps areas and in the strength of the other two components of the Army.

9. Localization of units.-Allocation to the States, Territories, and the District of Columbia of units of the Organized Reserves within departments and corps areas will be made by department and corps area commanders in accordance with a general distribution approved by the War Department. Based on the military population, each corps area should be subdivided into division areas. As a general rule the subdivision of division areas is not necessary or desirable except where they comprise more than one State, Territory, or the District of Columbia. The location of units entirely comprised within the limits of any State, Territory, or the District of Columbia will be determined by a board, a majority of which shall be reserve officers. (See section 3a, National Defense Act, as amended by act of June 4, 1920.) So far as practicable, each administrative unit will be organized within the limits of a single State, Territory, or the District of Columbia. The law above referred to also provides that the names, numbers, and designations of divisions and subordinate units thereof that served in the World War between April 6, 1917, and November 11, 1918, shall be preserved as such as far as practicable. Designation of units will be made by department and corps area commanders from the names and numbers placed at their disposal by the War Department, in accordance with the complete plans of allocation, except in the case of units entirely comprised within the limits of any State, Territory, or the