The herald., 1897-08-29
OFFICE OF THE HERALD,
Los Angeles. Aug. 2s. 1897.

is small showing as compared to sales
since the national election, the total for the
Two weeks of this Augustus nearly as large
as that OF the sales for the entire month
of August, 1896
There were 104 different issues sold during
the past fortnight to S5 different bidders.
Sealed bid offerings for the rest of the
month at this date include 6S additional
issues, footing up s., $50, $50 to be sold This
list will undoubtedly be largely added to
from day to day, so that a total of sales ag-
gregating fully eight and probably nine
millions for the month may be confidently
anticipated.
There is little question that all the is
sues of unquestioned legality will be dis
posed of, for the demand for municipals
for investment is reported from all sides
to be very strong and active. Many of the
leading houses, says the Bond Buyer are
buying largely from others to supply their
personal clients, and we hear of many
orders to buy for account of investors of
the issues now advertised for future sale
The boom in nunicipals is confined to no
particular section, but the encouragin re-
ports come from the large dealers in every
city.
4 y \
Mr.. John Farson of Chicago a member
of the big bond house of Farson, Leach
& Co.. read an excellent paper on the
subject of Municipal Bonds" at the late
session of the American Bankers Conven-
tion at Detroit. The following condensa-
tion of the most important portions of the
discussion will be read with interest:
Mr.. Farson says: BY g. Municipal Bond"
I mean not only strict city obligation,
but a security issued by quas-municipali-
ties as well, such as counties, towns and
school districts. When it is considered
that in a single month there are issued
in the United States over $40, 600 of such
securities, almost all of which are handled
by banks the Importance of the subject
to this organization may be realized. That
an obligation, based primarily upon the
faith and credit of the people, and second
arily upon the taxable valuation of the
property of the municipality, is the safest
security that can be issued, is generally
conceded. Prejudice and ignorance limit
but education and experience widen and
therefore where municipal securities are
best known, there they are most highly
esteemed
Our Eastern states have may admirable
Savings Bank laws, and these provide for
the investment of a large part of the assets
of such institutions in securities of mu-
inequalities. For illustration: in the State
Of Connecticut the Savings Banks hold:
Deposits .$l40, ,OO0 900
Number of depositors s............ 800 900
Average deposit about. ut............ 10000
This money, belonging to the man of mod
crate means, is invested in municipal bonds
to the extent of about 100000 OO0, or one
fourth of the entire amount
In New York State a similar condition
exists for the Savings Banks of that state
hold:
Number of depositors ............ 1,75O 600
Average deposit, about t......... 10000
Amount invested in municipanl bonds,
about $3.50 OOO, 0OO or one-third of the en-
tire amount.
And right here let me remark that in
many places the rate of interest paid by
Savings banks is too high, and the amount
of deposits which may be received from any
one individual is too large, for the reason
that the Savings Bank should be essen
TALLY the custodian of the funds of the poor
man and not of the affiuent-and no fund is
more sacred. Paying large rate of inter-
est prevents the investment of the funds
in as high class of security would
otherwise be obtained In many cities the
man of means divides his funds among
the different savings banks to their limit
of deposit from any one depostor, that he
may realize per cent thereon. The bank
cannot pay this rate of interest and in
vest its money in such large amounts in
hgh-grade municipal securities, and is
therefore driven into other and less safe
lines. IT, therefore, the limit of deposits
received from any one individual should be
reduced to, say. $500, and the rate of in
terest reduced TO 2ls or 9 per cent, the OBJ
ject of the Savings Bank namely, the con-
servation of the savings of the man in
moderate circumstances would be full
filled.
The issuance of municipal bonds tends to
develop our country in a remarkable de-
gree. A citizen in the far west-the west
is alike the workshop and the home of the
ambtious-sends his children to a school
built and equipped by the loan of the mu-
ncipality, extending over period of years
and paid by general tax levy, affording
him therefore the advantage of raising his
family in an environment equal to that
in the older parts of the country. If it
were not for such opportunities the de-
velopment of the west would be greatly re-
tarded, and consequently the issuing of
these securities brings the sections of our
country into closer touch and is large
factor in the progress of civilization.
4 \ 4
In fine: municipal bond is desirable:
First-Because its payment comes from
a large number of people, rather than from
q single Individual as in the case OF a
mortgage. 1t is obvious that security eX-
tending over a period OF years and spread
upon large tax levy the burden OF which
must be taken care of with comparative
ease, especially when issued for 9gti-
mate corporate purpose. where value re-
ceived has been obtained and an improve
ment made that is for the benefit of all
Second-Convertib being readily
transferred, eagerly sought for if placed
upon the market and desirable as colat-
eral. This is an excellent feature not
only to the individual holder, but 10 the
corporate institution as we'll which, dur
ing times of financial stringency, finds it
necessary to realize upon quick assets, and