The herald., 1897-04-08
OFFICE OF THE HERALD.
Los Angeles. CAL, April

The decline In the rate of interest Is
topic upon which a great deal has been
written of late. and, being matter OF
such prime Importance, not only to cap
italists who loan money. but also to
those who borrow 1t, the Views Of a rec
ognized authority on the subject are
worth quoting. Matthew Marshall says
in the New York Sun in part as follows:
The undertaking. by a syndicate OF
foreign bankers, to market, within the
next six years. $50,000000 Of Lake Shore
railway bonds bearing the low interest
Of sh per cent per annum. proclaims.
more emphatically than words, the ex-
listing dearth Of good investments and
the growing demand for them. The
success of the unNertaking will go long
way toward establishing 31s per cent as
the maximum rate of interest obtainable
from frst-class securities. Barring the
contingency of war. all the conditions in
Europe are favorable to a ready sale,
there, at least, of the new Lake Shore
bonds. Taking London as the controll-
ing center we find that in 1t less than
from capital invested without risk OF
loss The ga per cent British consols
bring 106 municipal corporation 8 per
cents command, according to the
length of time they have to run. from 101
to 113; irredeemable per cent railway
debentures are quoted at from 109 to 116.
and those bearing higher rates at
higher prices in proportion, the Metro
politan District railway 6's, for example.
selling at 214. That bond of a borrower
like the Lake Shore Railway company,
promising 3k per cent per annum for
100 years, should. therefore. be taken
willingly by British investors at pre-
MUM of 21s per cent or more is in every
way likely.
American investors are not yet quite
ready to accept 31s per cent per annum as
the standard rate of interest. but they
are gradually coming to 1t. Executors,
trustees. savings banks and other care
full fid'uclary agents have, for some
years, been lending money on city rea.
estate with a safe margin at per cent.
Railroad bonds OF the first class cannot
be bought so as to yield quite Az per
cent, and guaranteed railroad stocks.
Central. the New York and New Haven
and the Pennsylvania railroad COM
panies are selling very nearly on a per
cent basis, and some of them on one of
less than per cent Even New York
and New Haven railroad stock. which
at present pays per cent per annum,
without any assurance that 1t will main
tain that rate. brings It's. netting upon
hot fA hos Il.
ever AZ per cent. Lake Shore stock,
which now pays per cent. and which 1t
is expected will be able, as result of
reducing its interest charges when the
conversion of its bonded debt now be-
ginning shall have been effected, to pay
8.per cent. Is already selling at ITO, and
New York Central. now paying per
cent, with the expectation OF per cent
when. like the Lake Shore. the company
shall have refunded its present and 7
per cent bonds. stands over par.
The decreasing rates of income OBJ
tainable from investments in this coun-
try and in Europe prove that there is
at present in these two quarters of the
globe an annual surplus of capital cre-
ated for which there is no demand, or. at
least, a demand insufficient to consume
1t. Production has outrun consump-
tion, and the profits of the machinery
of production already in existence are
so small that nobody desires to add to
1t. We have more railroads than the
business of transportation requires, more
cotton factories. more steel mills and
more coal and iron mines than can be
fully employed. while our land produces
more cotton, wheat, corn, pork and beef
than can find a ready market. Corn
upon distant farms is burned for fuel,
and horses have so multiplied on the
western prairies that they are killed for
their hides alone. Last autumn millions
of bushels of apples. too. rotted on the
ground because they could not be sold
for enough to pay for gathering them
and sending them to market.
Among the speakers at the approach
Ing Bankers convention to be held in
this city, 18th and goth instants. will be
Ex-Governor Markham, Bank Commis-
sioner Magee, ]. Z. Baker, cashier Of
the bank of Alameda; Frank A. Gibson
cashier OF the First National Bank of
Los Angeles; G. Altschul manager of
the London, Paris and American bank;
John j. Valentine and Benz. c. Wright
Of San Francisco. Arrangements have
been made with the railroad people for
round-trip tickets at one and one-third
fare. A special sleeper will be attached
to the train leaving San Francisco on
the 18th for accommodation of those who
wish to go to the convention.
Prof. Van Buren, Denslow lectured be-
Sore the Brooklyn Philosophical society
recently on the present banking needs
Of this country, and in his address he
brought out some interesting views. He
oontended that there has been no sound
system Of banking In the United States,
20 far as the note Is concerned, since
1884. and there cannot be until we have
free competition in the issue Of the note
BY all the banks that may exist, whether
national. state or private. He COM
mended the popular banks in operation
In Germany since 1S49 which are known
~ the Schulze and Raiffeison banks.
They number about 1000: the nearest
approach to them here being the build
ing and loan associations which only,
imperfectly represent the principles
involved in the German institutions.
He said money is obtained by the banks
at low rates of interest fromlthe rich and
lent with marvellous safety, and at a
very cheap rate to the poor. The two
systems are now Ioaning inward NJ