Evening star., 1913-10-31
DECLARES BONDS
SWAMP COUNTRY
James J.. Hill Says Issues Must
Be Limited by Mod
GRAFTON.

Hill addressed the Bankers Investment
Association last night. He said:
IF the true story of all municipal in
debtedness, now concealed behind va
rious temporary makeshifts. so as to
maintain an ostensible credit and help
push out the annual crop of new or re-
funding bonds. could be told, 1t would
shock the country and give pause even
to the advocates of unlimited expenditure
for public purposes
''The situation with regard to bonds
generally spoken Of as 'industrials' is
worse. The field is SO large and SO di-
verse as to defy statistical tabulation.
Hundreds of millions of bonds have
been issued to promote consultations,
these securities being part of the pur-
chase price of the smaller concerns to be
united in one big corporation. Other
against property still to be developed.
such as mines, timber lands. irrigated
lands and even ordinary real estate,
where many separate buildings are
combined in the hands of an active
selling or developing concern. These
are Of varying degrees of soundness;
from the bond with property be-
hind it that would fetch face value at
forced sale at any time, to more specu-
lative holdings of a future realization or
increment that is little better than a
guess. Finally, there is the enormous
mass, recorded only locally and beyond
any reliable estimate in amount, OF bonds
that are not, in view of the himsy or
insufficient security behind them. en-
titled to be called bonds at all.
Mr.. Hill said the place Of the share OF
stock has changed little.
Rule for Issuing Bonds.
Continuing his criticism of bonds, he
said: Formerly and always in any
properly financed undertaking the limit
of bond issue is the total cash value
of tangible property in possession; not
its value for the uses to which it is being
or is to be put, but it's value as an asset
for immediate conversion by forced sale
at any time into cash. Under this rule
the investor might rest secure. The
worst that could happen to him would
be to have to take over this property, in
case of receivership, wind up the busi-
ness and get back his money.
Criticism, or even a proper understand
ing of the situation. calls for discrimina-
ton between the classes into which bonds
are divided. First are those of public
bodies; the government. states, counties.
cities and sometimes villages. Here q
frightful imitation is going on. An old
fashioned public aversion to debt still
holds the nation, and, to some extent, the
ter evade it by marketing certificates of
indebtedness which differ from bonds
only In the shorter time they have to
run and the inferior weight Of the sane
tion behind them.
'.The country is waterlogged with
bonds Confidence cannot be restored
until the name bond has won back some
thing of it's old standard. And that can
not happen until issues are limited by
moderation, conformed to the value of the
<zE
safety and the form of credit for which
the bond was originally designed"
Only Year of Subsistence.
In the beginning of his address Mr..
Hill said: LESS than years subsistence
stands between man and starvation. That
is the measure of his accumulations Six
and a half bushels of wheat per capita
is low estimate for consumption and
seed. The 97.OOo0OO people living. ac-
mording to the census estimate, in the
United States in 1913 would require ESQ.,.
10000 bushels to keep their stomach and
fields in condition for year. That IS a
little less than the crop of 1911 and . lit
tie more than the crop of 1912. Subtract
our total exports of domestic whea. and
flour for the last three years from our
total wheat production, and the ayerage
surplus retained for home consumption
is less than 600 100000 bushels per annum.
What is true of our bread supply is
more than true of most other necessaries
that we consume and produce. We could
live for a few months only on our saw
ings Immense as seems the total of
accumulated wealth, most of it is not
available for consumption. Even the in
come from 1t must be transformed into
things to eat and drink and wear. and
tools to work with; into capital for future
production, without which not only the
machinery of industry but the human
machine itself would presently cease to
operate, and a dead world remain the
monument of defeat in that economic bat
tie which man has waged with nature
from the beginning"