The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1912-06-12
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Investors Like so Year Bonds,
Refuse 80 Year Ones.
New York State Issue Sells at
Premium.
SOME LESSONS IN FINANCE
Might Be Learned in Deal by
PujO Committee.
Holland Argues Against Exist
ence of Money Trust.

New York. June 12-within the past
| ten days there have been financial
transactions calling for large amounts
of money. Some of these transactions
| might serve as a basis for inVestiSa-
| ton bv the committee of the Pujo in
vestigating committee if that subcom-
mittee could remain in New York long
enough to take the testimony which
would be essential.
On last Thursday the state of New
York offered for sale nearly twenty
six million of four-per-cent gold bonds,
Had these bonds been sold at par, the
purchasers would be entitled to receive
| a net income at four per cent, since
the bonds are untaxable. A month
earlier the city of New York sold a
much larger amount of bonds, and
there were so many subscribers to the
issue that the amount was oversub-
scribed a I'ttle over three times. The
New York city bonds, if sold at par,
would yielC to the purchaser four and
one-quarter per cent net income These
bends. however. were marketed at an
average price above par which would
make the net income to original pur-
chasers four and twenty one-hundreds
a year.
In view of the great demands which
are made upon the public by those
who are offering bonds for sale. state,
municipal railroad and industrial,
there was natural curiosity to learn
whether the state of New York had
approached the money market at a
favora BILE time. Moreover the state
bonds yield only four-per-cent inter-
est and that is not a very tempting
rate to individual investors.
On the whole, the Offering of the
state of these twenty-six millions of
bonds, round numbers, has resulted
satisfactorily to the state officers al
though we hear some careful, almost
covert, comment by those familiar
with money market conditions, indi-
eating that the sale could not be re-
garded in the highest degree as salts
factory. Yet an examination of the de-
tails of this sale seems not to justify
this quiet criticism. These state bonds
were divided into three classes One
raise the money for the payment of
improvements upon the enlarged Erie
canal and the highways. Another was
for five millions, to pay for the con-
struction of the necessary canal ter
n1inals and principally the one to be
esta blished at Gowanus bay, at the
west end of Long Island. A COMPARE
lively trivial offering of nine hundred
and fifty thousand dollars of bonds
was for the purpose of raising the
reservation. the state having taken
over Saratoga Springs.
OF these three issues the first one
was handsomely oversubscribed. Nine
million more than the twenty-rniIlions
offered was subscribed. The bankers
have no doubt that this nine millions
was subscribed in good faith. 1t has
not always been possible to say that of
oVersubscriptions to New York city
bond offers. Some of these have been
undoubtedly speculative.
A Good Test.
Apparently therefore, there was
tWenty-nine million dollars so anxious
to be converted into state bonds bear
ing four per cent that these offerings
with few exceptions, were at a prem-
ium above par. Many of the premiums
We're very slight, the average being
only sixteen one-hundredths above par.
There could be no criticism of a sale
of this kind. The credit of the state
so far as this test is concerned, is
standardized at about four per cent or
tribe under. The criticism must
therefore been made directly ar tba
test which the offering of five millions
in bonds for a barge canal terminal
made possible. This Offering was NOT
oElyA oversubscribed, but was not fully
accepted.
So there would seem to be some dis
elimination affecting the credit of the
state Yet the reason is not difficult
to find The state bonds which were
cversubscribed run for fifty years. The
state bonds which We're undersubscrib-
ell run for over thirty years II 10 on
parent, therefore, that those who vere
ready to bid upon this Offering We're
anxious to secure the longtime bonds
There is always a difference in favor
of longtime bonds behind which
Stahds hlgh credit as compared with
ponds which contain the same quality
of credit, but have a shorter term to
run.
For the PujO Committee
The Pujo committee can put it's finger
upon a concrete fact should it under
take to discover how these bonds are
financed and what proportion of them
the national banks have taken. OF the
amounts apportioned to the uIuder-
for the first class of bonds, Is were in
favor of banks of New York city There
were some apportionments to banks ir,
other parts of New York state, to one
bank in Philadelphia and to one in
Cleveland. A little over millions Of
bids from the larger banks of New
York city were accepted by the state
comptroller. One of million made by
the National City bank and another OF
million made by the American Ex-
change National bank were among the
largest offered. The Pujo committee
might ask the officers of these and
other banks if they bought these bonds
as investments for the banks to be
listed under the general head of loans
for loans they are to the state of
New York-or whether they were
bought for customers This committee
could, also, probably discover on in
vestigation that the greater part of this
20 millions will be used as collateral
security for the obtaining of loans from
the banks with which to pay for sub
scriptions.
The incident will illustrate what is
called the concentration of banking
capital and resources and the utiliza-
ton of that by brokers for the pur-