The Vancouver independent. (Vancouver, W.T. [Wash.]) 1875-1910, 1878-01-24
Will the Next be @ Bond Panic q?

IuVcStulcnt III BONUS, anu Tue OeuihHu lOI
this class of securities has undoubtedly
had much to do in stimulating the issue
of bonds. Capital has great influence
upon Legislative bodies, and those having
authority to plunge the public into debt
The ease with which school districts,
villages, townships, counties, cities, and
States could issue bonds and raise money,
has operated to produce an extravaganza
in expenditures for all classes of public
Improvements which has no precedent in
the worlds history. The amount Of
bonds now held by capitalists is truly
alarming, and the indebtedness Of cities,
villages, States, counties, townships, and
school districts is strongly suggestive OF
bankruptcy and Reputation. Statistics
bearing upon this subject are of the most
startling character, and capitalists are be-
coming alarmed. The Indebtedness of
1870 cities of the United States now ag-
gregates $1,000,000,000. The debt Of
many cities equals one-thirt of the as
sessed valuation of their property.
Under the practice of issuing bonds,
not only extravaganza in public improve
ments has grown up, but the number of
ficers has been greatly increased, sala-
ries have advanced, and current expenses
have more than doubled in nearly every
department of local government. The
current expenses of the 1870 cities referred
to amounts, in the aggregate, to $220,-
0OO,0O0 per year-wi:hin SAC, 100000 of
the current expenses of the United States
Government. For the past ten years, the
<,f oil ri huS in
creased at the rate of $50, O0O, 900 per
year. Hard times has not operated 10
check this great tide of public extrav =
gance, but in many instances has doubt
less had the effect to increase its volume.
The pressure of capitalists for their IA
vorite securities, the opportunities OF
contractors, the private interests OF men,
bers of Councils and Others in authority,
have all combined to swell this public in
debtedness. Prudent business men,
burthened with enormous taxation and
alarmed at the reckless manner in which
bonds have been issued without reason
able prospect of ability to meet them at
maturity, have urged State Legislatures
to materially contract the power of local
authorities to incur Indebtedness, but
these tfforts awaited little, and there has
been no perceptible check to the issue of
bonds.
During all this period of extravaganza,
capital has Stunned business investments
and the farmer and manufacturer have
found it difficult to borrow money at less
than twelve per cent. The capitalist
preferred bonds bearing from four to seven
IN ~. RI Il
ties NJ eight and ten per cent, and few In
deed could be induced to take stock in
any business enterprise. Business gener-
ally has suffered severely through the
Withdrawal Of capital from mercantile
and manufacturing pursuits for invest
mcnt in bonds, and thousands of failures
have occurred on account of the inability
of business men to obtain money ut fair
rates of interest.
All extravaganza must have an end,
and thoughtful business men and capt.
talists think the bond extravaganza must
soon terminate in q bond panic. 1t
seems scarcely possible that the interest
upon the bonds now issued can be paid,
and the time is near when there must be
AN end to the payment of interest upon
old bonds by the issue and sale Of new
bonds. Capital is beginning to turn
away from bonds and seek other invest
meuts. Savings Banks and men having
] rye sums Of money To invest, are al
ready beginning to turn bond negotiatois
aaay with the remark that I'VE have all
that class of securities desired, and would
rather sell what we have got than buy
more" This certainly looks like the be-
ginning of the end of the bond flood.
Ii there is no market for bonds, there
must be an end to the issue N that class
OF securities, and when bonds cannot be
sold to raise money for The fragment of
interest which cannot be raised by taxs-
ton, what must the result bef
As we have always said, capital is be-
ginning to avoid this class of securities
and many holders of bonds are unload
ing to escape the effects of panic, which
is generally regarded rs certain to occur.
Many think it must come soon, while
others are disposed to believe that the
crisis will he averted for few years. All
agree that it must come, sooner or later,
when bonds issued by local authorities,
instead of being in demand, AS hereto
fore, will be at such a discount as to pre-
vent their issue.
While this condition of things must re-
sui, in heavy taxation, it cannot fail to
enforce rigid economy on the part of mu-
nicipal authorities and cause capital to
seek investment in real estate and bust
ness enterprises. When business men can