The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1910-05-30
MARKETING OF BONDS.

The people of this city arc vitally
question, so far as it relates to the
marketing of bonds. The Board of
Education of this city received only
a single bid short while ago for its
issue of $700,0o0 in bonds authorized
by the vote of the people, and that bid
was so low. so distinctly disadvanta-
geous to the city, that 1T was inconti-
nently and properly rejected.
The state of the financial mark ct
undoubtedly had a good deal to do
with this low bid. The city of Pbila-
delphia offered ss,000,0o0 OF per cent
bonds recently, and received bids for
only about one-tenth of the proposed
have to raise the interest rate to float
these bonds at par or above. New
York had to raise the rate above 4
per cent on its recent issue.
No doubt the heavy export of gold
to Europe TO settle our deficient trade
balances on which we have heretofore
had a tremendous credit prior to the
passage of the new tariff law, has de-
pleted the money market to such an
extent as to have a material influence
on the marketing of bonds. There is
another influence, however, quietly at
work, which may also cut a material
figure in the same direction. This is
New York Journal of Commerce and
Commercial Bulletin;
The difficulty in floating bonds. no.
tlons, at the rates of interest that seemed
to have been fairly established a few
years ago. is mainly due to the rise in
commodity prices and the increased cost
substantially permanent investment yield
ing fiXed income. While income from
bond investments made years ago Is
fixed in its amount reckoned In dollars
the expense 1t is intended TO meet has
not been fixed. but has advanced, so that
the dollars will not go so far In meeting
expenses. The result is that the actual
yield in the means of living has dimin
lshed, and as consequence the market
price OF the bonds has declined So long
as prices remain high the value OF these
years ago, will continue 10 be low, and
so long as there is apprehension that
prices may continue TO advance purchas-
ers of them Will he chary.
When new bonds are offered the rate
OF interest must be Increased so that
the investor OF $1,000 may get an income
from ii such as he used TO get, not mere
" in money, but in what money Will buy.
and that requires an advance in the rate.
What really determines it is not what he
used TO get with the 4 per cent rate or
less. but what he can get now by some
other equally safe form Of investment.
Returns from other capital tend 10 rise
with the general rise in prices, and the
return from bonds must do the same il
they are 10 be sold without discount
them in money or to restore it in means
OF living, Is 10 raise the rate OF interest
In another aspect. buying bonds is equiv
alent to loaning capital, and the rate
to be paid upon it is determined by what
capital will bring used In other ways.
with due allowance for risk Rising
prices stimulate the use OF capital in
other WAYS and draw it away from fixed
rate bonds.
Doubtless the reasons given by our
New York contemporary are factor
in the difficulty of marketing bonds at
this time; and that factor Joined to
the depletion of our money market,
may fairly be counted sufficient to ac-
count for the depression of the market
and the low and restricted bids for
bonds. And if these are the real
causes, as they seem to be, there is
not likely to be relief for some time
to come, as there does not appear to
be any prospect of mitigating the
causes mentioned, in the way Of re.
lief for the people