New-York tribune., 1918-03-10

rates were higher. in the West than
in the East. The demand for capital
exceeded the supply and industrial
and municipal expansion was pro-
crossing at an astonishing rate. The
Coast therefore came East to her
row, and millions Of dollars worth
of California states, Oregons, City
of San ranciscos, Los Argeleses
Oal)a" =, Portlands and Seattles
were placed with New York and
New England savings banks, insur-
ance companies and investors.
About two years ago conditions
gradually began to change. Ihc
West commenced to make more
money than it could spend in oil, ag-
riculture and war industries. The
effect was to stimulate an inquiry
for home investments to such de-
gree that the bid on the Coast vas
higher than replacement values in
the East, and every mail saw large
quantities Of Coast securities pur-
chased in the East going back home
for investment, in addition to the
local absorption Of practically all of
the new production.
Midwest
Situation
Of more recent origin is the Kan
sas situation. Kansas in the nast
was never any very large taker Of
her own securities, and many Kan.
sas City, Kan; Atchison, Wichita,
Fort Scott, Leavenworth and such
issues were placed among the East
ern banks and insurance companies.
Kansas Cities and Wichitas are still
2 legal investment for New York and
some New England savings banks
and are still highly regarded by
them, but the prosperous year the
state has had in agriculture has
brought about such an accumulat on
of local buying that at the present
time Kansas securities are ruling at
q generally lower yield than those Of
any other state in the Union. Wichi-
tas and Kansas City are worth a 4.4O
to AZ per cent basis and bonds of
even the smaller communities are
considered attractive at AGO to Az
per cent basis. Here is a case where
g combination of local tax laws and
local prosperity has played an I'M
portant role.
Similar conditions exist in Georgia,
although here the situation is more
interesting on account of the absolute
baroness of the market. Practically
nothing in any reasonable block can
be obtained in the line of Georgia
state bonds or the bonds of the larger
cities of the state. Dealers in The
state have never known such keen
demand with so little to satisfy it.
New production is Of a most limited
nature and there are dozen or more
buyers eager for every new loan.
Georgia states are on a Ais basis.
Tax laws in Pennsylvania have al
ways made better market for Penn
sylvania municipals within the state
itself. Few local issues are ever
permanently placed outside of the
home market. Occasionally Phila-
delphia will sell large block of
bonds to an outside syndicate, which
may succeed in placing a consider
able portion outside the state. This
happens only in the case Of large
loans, where local money is not suf-
fcient to absorb it all at one time.
1t is truth, however, that gradu-
ally these bonds sold outside gravi-
tate back again to buyers within the
State of Pennsylvania on the grad
ual accommodation OF idle funds.
The present situation in the Pkila-
delphia market is one that readily
absorbs all Of the local tax exempt
productions around a Az per cent
for the larger cities to a 4.40 per cent
basis for the smaller boroughs, and
Of a dozen or more recent sales such
as Harrisburg, Erie, Altoona,
Mount Union, etc, the bonds have
hardly been in the purchasers hands
twenty-four hours. The 4-mill tax
means that a taxable on a 4.4O basis
yields only 4 per cent after tax pay
ment.
Tax Laws Are
Controlling Factor