The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1896-06-15
Is MONEY IND 70 SPARE
INCOMES ARE REDUCED BY THE
COMPETITION OF LENDERS.
Bonds and Their -Refunding
Figures - Through the World -
American Opinion.


The returns upon safe investments
have fallen so low, as to become SER
ious matter to persons relying for
their income upon invested capital.
In the next ten or fifteen years most
of the railroad bonds issued years ago
at 6 and Z per cent interest fall due.
and as they are abundantly secured
they will be extended at a greatly re-
duced rate of interest Two such
cases are before Philadelphia invest
ors at the present time. The first
mortgage per cent bonds of the
North Pennsylvania Railroad Company,
a perfectly safe investment, are be-
ing extended at per cent. The first
mortgage Z per cent bonds of the
Pennsylvania and New York canal and
Railroad company are being replaced
at Az per cent. Both these issues
were put out thirty years ago and
now the new holders have their in
comes cut down from 35 to 43 per
cent. Other instances can readily be
found Twenty years ago the consol-
idated mortgage 6 per cent bonds of
tn Pennsylvania Railroad sold at par;
within few months the company has
sold bonds secured by the same mort
gage at 3Ka per cent
l., Dat
lsh consols have lately sold up to III
per cent. They bear pa per cent in
terest, which is to be reduced to ~.
per cent in 1908, while the bonds are
absolutely payable twenty years there
after The rate OF interest is falling
throughout the civilized world. This
has been in course for thirty years,
and there is no reason to suppose
there will be any change. The wealth
of the world is increasing every year
at wonderful rate. Every invention
that tends to conserve energy, to aug
ment production and to facilitate bus
mess is one more influence that aids
in the creation of wealth. Never was
the human intellect SO busy as now,
so ingenious, SO well supported. And
with every year the pressure for good
investment increases. The supply is
not at all equal to the demand, nor
can it be. 1t is still possible to secure
investments that yield per cent in
terest, but they are not ordinarily
benefciaries. A risk must be taken.
And even these opportunities are not
as numerous as they were a few years
ago. The truth must be recognized
that we have no longer a frontier,
country is developed, all the best
favored spots are occupied, and ther
is no longer a necessity for good bor-
rowers to pay per cent for morey.
From these conditions it seems tl,ai
q further fall in interest rates is in
evitable. Railroads that now borrow
money at 3R per cent will be able
to borrow at before long. The stocks
of sound dividend corporations will
rise In price. But there will be one
important result from this condition
that will affect our career as n ma
tion. AS the pressure for good invest
ments increases our capitalists will
reach out for foreign countries just as
England has done. We have Cuba
and South America at our doors ant
we have the carrying trade of the
world before us. 1t is morally certain
that our adventurous capitalists viii
reach out for these new fields. They
will retard the declining tendency O
income for time, but they cannot
stop the inexorable law of commerce
A generation hence the rates of inter
est now paid, which we consider eX
traordinarily low, will seem to oul
successors to be exceptionally high.