Ashland tidings. [volume] (Ashland, Or.) 1876-1919, 1914-08-31
THE BOND MARKET.

Securities markets throughout are
off. Neither bonds nor commercial
paper are being absorbed by credit
centers.
1t is no reflection on Ashland
bonds that no bids were received.
Portland bonds offered last Wednes-
day failed for a bid.
Inquiry among banks at Frisco last
week revealed two reasons for the
lack of interest in securities:
First. the uncertainty of the effect
the opening of the national seseve
banks will have on banking houses
in large credit centers.
Second, general temporary unrest
occasioned by the European war.
On October first government re-
serve banks will open for operation.
After that it will soon be demonstrat-
ed just how many country banks will
remove their balances from the large
city banks and place them with the
reserve banks. Country bank depos-
its amount to about twenty-five per
cent of the total deposits in the large
city banks. If all country banks
change their accounts to reserve
banks when they open the credit CEN
ter banks will lose twenty-five per
cent of their deposits through the
transaction. AS a result the large
banks find ii necessary to build up
their reserves to meet that possible
emergency. Therefore, the banks of
the large cities are making no new
loans, but are calling every loan as
it falls due to meet the emergency.
While the country has produced
immense crops this year, the Eu-
ropean war created such hazard to
shipping on the high sea that no in
surance can be had on European car
goes. That stopped the shipping.
Now our produce is piling up at the
port centers awaiting a chance to get
away. The opinion among bankers
at San Francisco is that Europe must
have our foodstuffs within sixty days
and that all foreign countries will
open up accounts at American sea-
ports so that they can purchase I. o.
b. American ports and take their own
risks on the high seas China and
Japan are already arranging accounts
at Frisco. So, the opening of the re-
serve banks on October first and the
opening OF the world markets to our
products within sixty days will result
in great activity and general business
renewal in this country. BY that
time the crops of the middle west will
have been mostly moved and the
banks in those sections will be full
OF money.
The opening OF the government re-
serve banks will not lily affect coun-
try banks. II will help them by ia
cilitating liquidation. A country
bank will be enabled to realize cur
rency from the reserve banks or
short notice and on security not here.
tofore considered flexible enough foI
bank purposes. Municipal bonds are oi
this class. Country banks in the past
have dealt little in municipal bonds
but now conditions will be so changed
under the new banking law as tC
create a lively and entirely new mar,
ket for this class OF securities. for the
country banks will become large in
vestors in municipal bonds. Thii
new market will create a brisk de
mand for municipals and will brini
the interest rate down.
Heretofore all large municipa
bond issues have been first purchases
in a block By large bond houses
backed by large banks in credit cen
tiers, AMI have been offered to tn
ultimate investor at an interest rat
ranging from three and one-half t
four and one-half per cent, netting
fine profit to the original purchasers
Uncertainty attendant upon tn
opening OF the reserve banks ha
closed the regular channels for mt
nicipal bonds. Regardless OF tn
bond OF the rate. those heretofor
bidding for original issues, /. e.. tn
bond brokers. are out OF the marke
for lack OF funds. occasioned by theI
backers-large banks in credit Ger
ters-refuslng funds to the end thG