The Birmingham age-herald., 1914-10-01

summer. The city owed $Se, ,0o0 to creditors across the sea. which was the amount it has received for the sale of short-time notes. The eity's credit is unimpaired. it's resources are great and yet 1t could not find the means by which negotiable funds could be secured with which to liquidate this debt. At last. by agreement with J. P. Morgan as the head of a syndicate, the city undertook to is- sue new series of notes which are to bear per cent interest and are to be serial, those of the longest time having three years to run.
 The credit of the state of Tennessee is now and has been for years excellent
 Had it not been for the financial dis turbance Tennessee could easily have re- funded notes aggregating s1, ,40o.oo0 which were to become due on october l. The amount is trivial one from the point of view of important financing In ordi-
 nary times, any one of dozen banking
 institutions of New York would gladly
 have financed the renewal of this issue
 upon favorable terms.
 But there is perhaps no more striking
 evidence of the partial chaos which still
 characterized the money situation than
 the fact that this state, as enterprising
 as any in the union, growing rapidly in
 population. rapidly and wisely utilizing
 her natural resources, scrupuously loya
 to her credit, found it difficult to ap- proach probably the only market where the assistance needed could be obtained that is to say, New York city. In fact the situation seemed so perilous and iron one point of view so grotesque that the Secretary of the Treasury, MT. McAdoo thought 1t expedient to refer 10 it in 3 recent public statement. MT. McAdo' learned that these Tennessee state note: could be extended provided the agreement was made to renew them at the rate O 1 8 per cent.
 At a superficial reading this does seen almost like a Shylock bargain. But thert are two features of the proposition whicl were discussed when the subject was
 mentioned in the financial district. These are worth reporting at this time because l they throw some light upon the curious | and difficult features which still char acterize the financial markets First l there was no disposition to refuse to ex- l tend credit to the state of Tennessee The proposition was not declined. But l it was proposed that if such credit be ex- 1 tended Tennessee should pay at the rate of s per cent. This rate was not fixed upon for the purpose of taking advantage ] of TennesseeS embarrassment. It was 1 fixed upon because it represented the general maintenance of credit above nor ] nal levels.
 Some of the Precedents
 | New York city, few years ago, al the time of severe financial strain, was
 compelled to pay interest at the rate o | 41a per cent so that the financing of its obligations could be accomplished. Tha high rate represented the great strair
 which was upon credit and money marke conditions. Recently and coincidentl, | with the embarrassment of Tennessee l New York city was compelled to marke | a new issue of notes at the rate of pe cent, and there was some doubt at th' 1 time this agreement was made whether
 the syndicate which agreed to underwrit, 1 the transaction would be able to marke
 them. Fortunately. it has done so, bu
 the transaction as a whole amounts pIac l tically to this-New York city Is com | pelled to pay at the rate of 8 pei cent including the commission.
 The incident does not reflect in anywa. upon the credit of the state of Tennes
 see It does to some extent tell tn story of money market and credit condi
 tions At time of dangerous money ten 1 sion and stringency a man who possesse'
 such unimpaired credit as the late H. H l Rogers was able to obtain much-neede | funds only after an agreement to pay per cent and in addition to his persona
 indorsement of the notes to furnish guilt | edged securies. part of which consisted o | Standard Oil certificates. Recently on | of the leading American railway com I panies of very high credit and abundan l resources, capable, as it's recent actio l showed, of paying it's regular dividends
 was nevertheless unable to finance an is