The Birmingham age-herald., 1914-01-13
COMP MPTROLLEROF
NEW YORK PLANS
LARGE BOND ISSUE
To Run for Fifty Years and
Bids Must Not be Less
Than Par
RECENT EXPERIMENT
IN FLOATING ISSUES
Believed Sohmer Would Not Offer
These Bonds Now Without As
surance That They Would
be Taken
by HOLLAND

wednesday of next week SOL. 100000 of az
per cent gold bonds, the life of which is
to be 50 years.
Anybody can bid for these bonds and
the offering is therefore really a public
auction. 1t will test the ability or willing.
| ness of the people to invest their savings
| in such high grade security as is surely
| and behind which stands the state OF
| New York. All of the bids must be nj
| least at par value of the bonds. The state
| comptroller will pay no heed to any bids
| below par Either money or certified
check for at least per cent of the par
value of the bonds must accompany each
| bid.
Presumably the state comptroller would
not make this Offering now unless he had
some private or informal assurances that
the issue would be marketed But If he
has assurances of that kind they must
have come to him, informally doubtless,
from those who control large resources
or from some of the great banks or saw
ings banks. If Comptroller Sohmer has
what he can fairly regard as a reasonable
assurance of this kind, then he must real
ize that the issue is one sense underwrit-
ten. The public of New York may bid
higher than any bank or underwater sees
fit to do and there undoubtedly will be a
good many bidders for bonds of the de-
nomination of S100 at such premium that
the comptroller will feel compelled to ac-
cept these small offerings.
Just at this time when so much asita-
ton in FAVOR of the direct marketing of
large blocks of securities, railroad or IN
dustrial, is in progress and when the ar
gument in favor of such transaction is
fortified by statement tending to show
that If the railroads would market their
securities directly with the public where
by saving bankers commissions or bo-
muses. there would be no real ground for
asking the interstate commerce commits
sion to grant an increase of rates, the
Disclosure which will follow the Offering
of this issue of state bonds will be very
interesting and pertinent.
The comptroller of New York city, Viii
liam A. Prendergast, VINO is now begin
ming his second term is not strongly I'M
pressed with the arguments advanced by
those who are persuaded that there are
economy and wisdom in Offering securi-
ties directly to othe public MIR. Prem
dergast apparently bases his opinion upon
| his own experience lie has recently said
| that in spite of countrywide advertise
ment the most recent New Yorok bond
sale failed to prove, through the bids Of
fered that the sale had been popularized
to cry extent. He referred to the sale OF
Philadelphia bonds through the instru-
mentality of Mayor Plankenburg, where
by an Offering of $1,000. 600 at per cent e.
suited in a sale of only little over $4,000,
COO $l,000,000 of which was successfully
lid for by banks and trust companies
Mr.. Prendergast feels that the fact that
of that Offering only sl,91O.000 was &C.
cepted through popular subscription, tho
totaf Number of subscribers being only
SCI, tends to throw doubt on the state
| ment made often that if the public
only had the chance it will gladly accept
offerings of securities, especially bonds.
The City of st. Paul's Experience
Recently there has been much publicity
give nto the successful sale by the city
of st. Paul of its bonds directly to the
public. But MIR. Prendergast wonders
whether the fact that James j. Hill really
stands behind this transaction through
a board of trustees which becomes respon-
sible for the payment of the bonds and
whether the promise that the Northwest
ern Trust company will refund upon de-
mand the amount subscribed and paid any
person did not facilitate this highly in
teresting st. Paul experiment..
Mr. Prenoergast has also called atten-
ton to the second bond sale in the sec
ond administration of President Cleveland
There were $100,000.000 of these national Sc
orrities offered and the Offering was
widely advertised When the bids were
open the transa cton seems to have been
abundantly successful. Bids come from
every state and territory, and it was an
nounced that the Offering had been over
subscribed very handsomely since the ag-
gfegate subscriptions were $AS6,O00OO0
there having been4635 individual BIDS. And
yet when these bids We're scrutnized II
was found necessary to reject most OF
them. Only SIS bids We're finally accepted
and the total amounted to only $62, 100000
round numbers. Nearly one-half of this
amount was awarded to syndicate
which overbid the great mass Of these
subscribers.
President Cleveland''s Comment
When commenting upon this compara-
tive failure President Cleveland said
when the smallest fraction of a cent
may determine the success of an offer
the nthose who are accustomed to the
niceties of financial calculation are apt
to hold the. field to the exclusion of many
who, unaided, dare not trust themselves
IL the haze of such intricacies.'
Comptroller Prendergast is in ful
agreement with Col II. J. Prout now q
prominent American manufacturer, but
some years ago of international reputa-
tion by reason of his service in Egypt and
ties are now convinced that the Amer
lean people need to be educated so that
they will fully appreciate the value OF
the securities of their own cities, then
state and the nation. This education
they agree, should be extended TO railroad
securities. 1t will not be easy to edu-
cate the American people Years must
PASS. Mr.. Prendergast thinks, before the
plain people can be prevailed upon to
change their habits with respect to the
investment of their savings That habit
with most of the people has led to the
placing of surplus income for savings in
savings banks, partly because the rate
of interest is good. partly because these
banks are regarded as safe and partly
because the people know that they can
get their money whenever they make
application for it. The best opinion IN
this city, and presumably all over tho
country, is that while 1t may be possible
at the present time and for some years to
sell to some extent railroad securities al
rectly to the public. it is Improbable that
, dispense at least for many years entirely
with the services of the bankers
Undoubtedly the interstate commerce
commission. will hear sorce Testimony
bearing upon both sides of this PROPOSE
ton with intent TO influence the commits
sion in reaching its decision whether OF
not to permit the eastern railways to in
crease rates. t.E
A few days ago Colonel Prout stated
that ne WAS convinced that American
railway companies would continue to ex-
pertinent and study the highly important
question of the popularization OF railway