New-York tribune., 1907-06-29
CITY BOND SALE FAILS
INTEREST RATE TOO LOW.
abnormal Money Conditions to
Blame, Says Controller.

u
The attempt of the city yesterday to sell SO ooOao
per cent fifty year bonds was exceedingly disap-
pointing The aggregate Of the bids was g ELSA
For the first time in Il generation the city s per
cents were unattractive TO the bond buyers. Eart-
Gus bond houses are offering city bonds of the la
issue at less than paid for them on February
Controller Metz is going to raise the interest
rate. He will the city's finances as long as he
can. turn some of the nav bonds into tie Sinking
Fund. and by holding up expenditures will tide
things over until September !. when he Will try
again to sell the bonds.
When the Controller was asked about the sale
yesterday he said. Our failure to sell is due to
the abnormal condition OF the money market. The
market is glutted with bonds paying better tnan /
per cent. There is nothing the ma tter with he
citys credit. We shah Try again sell these bonds
when things look better among the bond buyers.
The money raised from the sale to-day viii last
us few weeks. ana there is a good deal of money
IN the Sinking Fund available for the purchase Of
these very bonds We con get along all right till
September l. If the law would permit ne. [ could
sell several millions OF dollars Of these bonds over
the counter. hGr III 1t nethod is occ1iSsirlr.
We shall not increase tjl.. interest rate It wolId
denora!ize the bond market and he unfair TO pur-
chasers Of city bonds bearing St2 and per cent
II viii he better to advertise the bonds
three times and fail rather than TO raise the in
terest rate. 1t is easy increase the interest rate,
but very difficult to lower il aHerward."
The city on February last sold about $50 o"lo"o OF
per cent bonds at an average price Of l0ol3a. Al
mat TIME the twenty wear water bonds #ece not
bid for.
The average price yesterday was 100 ea1 for the
1851 stock an income basis Of o94 per cent while
the average price Of the assessment bonds was
l",-"2 an income basis of about 9s7. The highest
offer was l-5o. by Delano +. Farr but he wanted
only $500 worth of the fifty year stock
stock market values suffered an abrupt decline
after four hours Of strength following the an
nouncenenr OF the failure OF the city bond issue
In local bond houses regret was expressed over
ire outcome of the sale. and they argued that in
the event of offering at A higher rate the
loan a success
There will he released to-day $500 coo New York
CITY bonds that have been held as security against
government deposits in national banks. The Secre-
larH OF the Treasury recently recalled $3oo'oooo
government money from 3opositary Institutions
ana Ihe withdrawal Of this increase
IN me amount Of bonds in the market Of from Sl5
"S"o 10 $50 9ae}o, representing securities other
posts
AT one Of the leading hanks il was said yester-
day that officials had been arvroarbed by man
trying 10 form a syndicate among the ci1 banks
10 take the municipal bonds and that ne g,laran-
teed me Controller would. if the bonds We're taken,
!eaNe ~ per cent Of the money with the suhsCrib-
ing banks fOr six months. which Of course. would
be profitable operation for the lending institu-
tons as they would be receiving interest the
honds from the city and I'm the mean' time would
have half Of the money out in loans AT high in
antee did not bear the Controllers Endorsement
The banks turned down the proposition.
IN some quarters II was thought yesterday that
the refusal cf houses in position bid the
ponds was in the nature Of a strike and reflected
their intention to compel the Controller to seek
authority from the sinking fund commissioners 10
offer bonds higher rate Of interest.
Wall street bankers advised Controller Metz not
20 make an offering OF bonds this time. and they
feel that had he waited for time. adopting some
temporary expe1ient If the situation demanded i,
he would have had trouble in disposing Of the
entire issue. One banker suggested that the city
should borrow money short time notes. and the
suggestion also made that Controller Metz
enter into tentative negotiations with under
writing syndicate which would permit wide aGyer-
tising Of the bones and encourage bankers to md
q market for them. Secretary Sherman In floating
his resumption loan pitted two syndcates against
each other. letting the highest bidder win
Henry Cle0vs yesterday suggested a way o
the difficulty that the ctT should short term
notes similar 70 those issued ny nc railroads The
worst feature Of the ciry's attempted bond issue"
said Mr.. Clews lis that It would add the al
ready congested condition of the bond market II
these bonds which are free from all taxation.
which makes them equal 10 ordinary 5i2 Per
cent railroad bond. cannot be sold how can any
expect 10 sell bonds at prices corresponding
10 the city bonds. The conditions in the bond
market here are not unlike those in London. whore
English consols are now selling At the lowest price
on record, owing 70 ovcrsupply"
The Controller announced the allotment of the
bonds follows:
CORPORATE STOCK OF THE CITY OF NEW YORK