St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1890-05-25
MARKEr FOR BONDs.

"''N 'D''"9l~c- ---- 81
MARKET FOR BONDS.
The demand for bonds and invest
ment securities of all sorts continues to
be active in spite of the bullish stock
market. These two things, in the super
stition of the brokers, are supposed to
contradict each other. When there is a
great deal of money available for specu-
lation, the bond dealer does not expect
to find ready sale for his wares. But
when men are distruStful of new enter
prses and the talk of the street is dis
couraged in its tone, bonds and mort
cages of one kind and another are dis
posed of at good prices because money
can not lie idle, and those who have it
think that they see margin of safety
in something the interest Of which is
assured Oh its face.
Inpoint of fact, there is nothing which
is substantial or real in this feeling, if 1t
exists at all. The class of bond buyers
always exists, and is quite distinct from
the class which puts its money in COM
modities or property the return from
which is looked for, not in the shape OF
earnings, but in enhancement Of value.
The plunger who buys railroad stocks is
not guided in his selection by the like
lihood of receiving dividend from the
company, even if he makes an outright
purchase and does not operate on a
margin. The probability of dividend
is of importance to him only because it
may improve the market for his stock
and help him to get rid of it at an adj
vanced price. In the same way the
man who carries unimproved real es-
tate for year after year knows while he
is doing so that it is paying him moth
ing, and that his capital elsewhere
might bring 6, s, or even 10per cent. But
if the town in which he has bought
grows, land he ultimately sells orimproves
he will realize his profit all at once. If
there has been mortgage on his land
during this time, the man who has held
it has been getting his return In interest
payments every six months, perhaps
but when his lien is finally discharged.
there is no increment attached to the
amount he has received. He has got
his profits by installments. One man
makes in one way, and the other in an
other, and both men are always in any
community. They supplement each
other, and make each other possible.
Personal temperament and education
count a good deal in determining
whether any Individual will prefer to
own commodity or lien on COM
modify. Some people like to take the
initiative in things, and to be busy
about their conduct and develop
ment. Others are timid or uninter-
ested in the details of enterprises,
and had rather entrust their capt.
tai to the management of those who en-
Joy and are capable of handling it. The
former will be projectors and owners of
industries. The latter will be bond
and mortgage holders. The latter will
advance the money and take security
for it, if in the shape of some sort Of
lien. The former will see that it earns
enough to pay interest and afford them
selves profit in addition.
The ranks of the bondholders' class
is enormously large nowadays, and con-
stantly growing. Those who are so
rich that they do not want to work, but
want to have the earnings of their cap
ital support them; women in whose
hands money is locked up under our
laws giving even married females con-
troll over their own property, and who
cannot engage in trade; institutions
for savings, insurance and trusts, the
investments of which the legislatures
creating them limit to narrow lines
of securities, and all of which have to be
of the contemporary Understanding
and convertible character-all these
sorts Of capitalists are very numerous,
very powerful and very eager in their
demands for safe forms of investment
which will pay prompt profits IN the
shape Of interest. They are not going
to grow fewer in number or less capable
of absorbing what comes in their way.
Everybody who has property of any
kind, which is productive and gives
reasonable promise of continuing so,
can always feel sure of the co-opera-
ton and assistance of outside capital
lists who will want to share in his
profits.
The great criterion by which to
measure the value of bond is it's
simplicity. A bond of fourishing
city, issued under authority of special
act of the legislature, sells perhaps
more readily than anything else. This
is not because it carries high rate of
interest, or because its payment can
be easily enforced. On the contrary, 5
per cent is high rate for even small
town, and there is no debtor so hard to
coerce as a municipality, if it takes it
into its head to repudiate. But mu-
niclpaI bond issued under special law
requires no explanation or inveStiga-
ton. Anybody can read the law, and
anybody can measure the security by
looking in the gazetteer and comparing
the population with the outstanding
bonded Indebtedness. In the same way,
a water works bond will sell almost as
readily as that of public corporation.
You can bond water works in town of
10000 people for 20 per cent more than
their actual cost, and yet find ready
market for them. This was not always
so, but at the present time investors
know about enterprises like these.
The interest is usually guaranteed by
the city in the shape of hydrant
rentals, and knowing the size of
the town one can feel almost sure that
they will pay, and that they will be
honestly and properly managed, be-
cause every man who uses the water
is detective to ferret out neglect, and
a martinez in his demands for good
service. But if a security is novel or
complicated it goes begging for buyer.
The newest securities on the market
from this Western country are irriga-
ton bonds. A very large issue has
been made from Utah, and we are told
successfully marketed. But the St. Paul
dealers have not, as yet been able to do
much with them. And yet they are
very safe and very promising forms of
investment. By the laws of the states