The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1903-06-08
DEMAND
FOR BONDS
BradStreet View of
the Eastern
Market.
Better Grade Securities
Are on Constant
Call.
Two Per Cent Seems to Be the
Lowest Rate fer Industrial
Bonds.

Now that Hawaii is to enter the
ranks of borrowers the general condi-
tions of the market for bonds in the
United states interest the government
and ~inanciers. The following is from
Bradstreets:
AS already noted in these columns.
some Improvement has been shown in
the condition of the bond market. as
reflected. not only by an increased de-
mand for the better grades of income
yielding securities of tina class, but by
the somewhat higher range of prices
which they command in the market.
The liberal applications for the new is
sue of New York city bonds this week
was an example of this tendency. This
is an entirely natural occurrence, and
reflects the lowering of the market rate
for both call and time loans. When
money on call was quoted at around six
per cent, and when there was a pre-
MUM for time loans at the same fig
ure. it was natural that large corpora-
tions, such as insurance companies,
which are among the heaviest investors
in the market, as we'll as individual
capitalists with considerable amounts of
money at their command, should prefer
TO lend out their funds instead of buy
ing bonds. The easing off of the loan
rates has, therefore, caused a renewal
of demand from uch quarters, and al
though prime investments of this char
acter and what are termed gilt-edged
bonds have by no means regained the
level at which they stood a year ago or
even in the early autumn of 1902, there
is still an appreciable difference in their
favor, as is shown by the current stock
market quotations.
At the same time a good deal of dis
cussion is going on in financial circles
about the position and prospects of
bonds of railroad and well-established
Industrial corporations considered in
the light of investments. 1t is argued
in all seriousness that four per cent.
constitutes at present the minimum
which will be acceptable TO conserva-
tive interests, except in cases where the
legal limitations placed upon trustees
and others acting in a fiduciary p
city. virtually compels the acceptance
of a slightly lower rate. Furthermore,
it Is urged that a private investor who
has no such restrictions upon his choice
is likely to consider the probabilities
that money will command higher inter-
est returns during the coming autumn.
and that for bonds which cannot be eX-
actly ranked among the first-rate in
vestments a return of AZ per cent. or
higher will be expected.
It is certainly a matter of Importance
TO the investment market that leading
officials of New York savings bank in
situations should have declared, as they
recently did, their opposition to any
further relaxation of the state laws
which permit investments by savings
banks in the bonds of different railroad
corporations. In this respect the policy
of thoughtful savings bank officers evil
IDENTIFY takes the direction of maintain
ing the present limitation and obviatinS
any of the difficulties which might arise
if outside Influences were used to widen
the field Of such investments in favor
of the bonds of other specified corpora
tions apart from those which can al
ready be held for the purpose of secui-
ing savings bank funds.
The plethora of new bonds, Of which
so much has been said, while undOu5t-
eddy a factor in connection with the
market for such securities, does not,
however. obscure the fact that due con-
seryatism is being observed in connec-
ton with high-grade Investments, the
action of the savings ban authorities
referred 10 above being very significant
in that direction. Nor does it lessen the
weight of the argument that accumula-
ton of funds for investment, which has
been going on steadily during a period
of activity in trade and like
the present one. is to create
increased demands for h~igh-grade in
vestments. or at least those of a reliable
and safe character, even though the
public has learned by experience TO
eschew new issues of doubtful charac-
ter founded upon exaggerated
of value and earning power, or repre-
senting merely the equities which may
be furnished by the operations of in
duStriaI combinations.