Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1915-07-06

But as between about three and a
half per cent and any higher rate Of in
terest paid anywhere there Is a margin
which represents imperfect credit in
some form or other special conditions
affecting the value of the securities Of
fered rather than the worth Of money.
BY finding out what this margin is and
whether or not 1t has increased or de-
creased one may determine whether
credit has been strengthened or weak
ened as to any class of securities. That
is exactly what was done in the rate
case.
Now it was found that the average
Eactual yields on western railroad
bonds, computing as to 45 representa-
tive issues, ranged from 3.9 per cent to
40 per cent.
Carrying the computation farther, it
was found that the coefficient of rela-
tive credit between the government
and municipal bonds on the one hand
and the western railroad bonds on the
other ranged from 77.2 per cent when
they were at highest price to S3.S per
cent. In other words. the pure money
rate at one time was 77.2 per cent of
the railroad bond rate and at another
time it was S3.S per cent. The margin
between that and 100 per cent repre-
sented the credit of the railroads. This
credit margin ranged from 22.S per
cent to 1862 per cent.
Slight Variation in Rates.
The variation in the pure money rate
ran along by years as follows, COM
mencing with 1900 and ending with
1914: 800, SOL, sos. sos, 2.17. s11. 3.22,
3.42, BAT, 3.41. 3.54. s.55, $50, $50. 3.77.
The variation in the railroad bond
rate was: SO. So SO. Al, Al, SO, 40,
"a. 4.3, Al, 4.2, AZ. 4.3, 4.6. As.
There was an increase in the pure
money rate, not steady, but generally
upwards. during all the fifteen years.
There was like increase in the rail-
road bond rate in the same time.
During the period 1900-1914 the ap-
proximate pure money rate increased
from 3.O2 to 3.77, an increase Of 24.S
per cent, as com pared with an increase
in the yield. representing a. decline in
the prices on western railroad bonds
amounting to Is per cent. In other
words, the price of railroad bonds has
not been advancing as rapidly as the
price of representative government and
municipal bonds. Higher rates Of in
terest are being paid by the railroads
but the increase has not been as great
as on other forms of securities.
Railroad Credit Increases.
There was an effort made to have the
record show that the price of munich
pal bonds mad remained steady during
the past fifteen or twenty years; but
the analysis of prices and interest rates
showed that as to municipal bonds the
price had actually declined 81 per cent.
The increase in yield says Mr..
Thorne, "or the decline in the price on
the government bonds Of the United
States, England, France and Germany
amounted to over II per cent. The
Northwestern group of railroad bonds
increased in yield Is per cent during
the same time In other words, the de-
cline in the price in these railroad
bonds has been at less rate than the
decline in the price on government
bonds or those of the twenty largest
cities in the United States. This proves
that the credit of these companies has
increased substantially since 1907
by this statement I do not intend
to say that the northwestern group of
railroads has a better credit than the
United States government. or the
twenty largest cities in this nation. On
the contrary, securities of that char
acter will probably always have a bet
ter credit than private companies. That