The sun., 1919-05-20

Canadian borrower, Government or
municipality since the pre-war DAYS.
Inc fact that the issue was awarded
IN cioss bidding TO the United Financial
corporation. the recent Indignation of
aoah interests represented by C.
Meredith q Co., Ltd, and American in
.erests represented by the Guaranty
ruM Company indicates the strong
PROBABILITY that the bonds will be placed
with American Investors. Actualiv the
apparently high price secured by New
brunswick Is only relatively high when
allowance IL made for the premium Of
S,ose 70 per cent. on New York ex-
Tho New York eouiva,.n, uo,,a =.
about $40, and viewed as n nnrcto se
ny New York syndicate the transac-
uoh could De said to be on n basis Of
ABOUT per cent. OF course a1lowanca
Is 10 be made for the fact that issuos
oi tnis KIND being made payable IN New
YORK as well as In Canada the continv.
ance or nigh exchange rate wonId In
crease the nominal cost OF the borrowing
oo'h IN the premium that must be maid
n ln,erest remittances to American
investors and also In the premium
that might have I'd be pais or thn
return OF the principal at maturity
wnnln shorter period than three years
however, there is every reason 70 ~
iieve that exchange should be back on n
normal basis. Then gold sbinr,an,s
would adjust Inequalities when thsS
reached as much as Ave sixty-fourths ~
per cent premium either way.
Newfoundland Bond Sale.
similar conditions prevailed in nm
oeHer important bond transaction Of tho
t, .ne SAFE OF 100000. 51a per cent.
ssweny year ponds OF the Government OF
newfoundland. While not n Canadian
transaction in the strict sense oS ,h.
word the fact that Newfoundland
financial requirements have recent,v
been looked after by Canadian bond
houses and that the high premium on
New York exchange at Montreal was a
large factor In the sale Of the issue
placed It among the events OF the weel,
Oh interest TO Canadian investors A
year ago Newfoundland had to issue gu,
per cent. ten year bonds to attract T.,
vestment funds These bonds. offered =,
the public at par. have risen TO
premium OF over points. This with
the changed conditions of the money
market generally since the end of the
war made II possible for the Goyern-
ment to fund maturing obligations at
New York with long term 6h Der
cent. bond. sold at 100.5so, Montreal
terms or s7.7l. New York terms The
successful tender for this loan was
entered by Wood, Gunday q Co OF
Toronto. q house with large American
connection.
The scarcity OF older issues and the
comparatively small output OF new
securities continues to give the bond
market a very strong tone. Institu-
tional Investors like the insurance COM
panies, which constantly have an ac-
cumulation OF funds seeking profitable
employment in high grade securities, are
not only bidding against one another for
such offerings as come on tho market
but they are competing against New
York buyers who have the exchange
rate in their favor. 1t has been pointed
out in this connection. for instance, that
in the case of the New Brunswick issue
the whole price paid in Canadian funds
represented rate of little moro than
per cent. in New York funds 1t repre-
scented slightly better than 6 per cent.
Higher Telephone Rates.
The most important corporation
financing in Canada in some time was
announced this week in a circular of
the Bell Telephone Company of Canada.
offering S4,b00,00o new stock to share
holders at par. The outstanding issue
is s1S,0o0,o0o. with a market value of
$3.50 a share. This price. which had
been nominal owing to the fact that 1t
Montreal Stock Exchange, became n
reality when the Dominion Railway
Commission announced during the week
that the company's appeal for higher
rates was we'll founded ana ordered an
Increase averaging about 10 per cent in
existing rates.
This Judgment was followed by
I..-fal 4 IL
and on top OF II. with the price Of the
shares up couple OF points, the COM
pany came out with its circular an
nouncing the new stock issue. AS the
rights to the new Issue would be worth
about So a share on the basis of a
market quotation OF $3.50 a share. a fur
Their demand sprang up for the stock.
More than half OF the capital stock OF
the company Is owned by the American
Telephone and Telegraph Company
When the parent concern takes up ita al
lotment OF stock II will mean a further
inflow of American capital into the
country, with the American subscription
benefited by the exchange rate.
The statement of Canadian Cottons.
Ltd, for the year ended March 81,
Issued the other day, reflects the great
prosperity OF the cotton spinning In
dustry in the last few years. Profits
for the year amounted to S1,365.10S.
against s926,615 n year ago and S5s3.-
272 two years ago. After increased
deductions for depreciation. renewals
and improvements the balance avail
able for the common stock represented
earnings at tn crate of per cent,
against the 9 per cent. distributed in
dividends.
An interesting feature OF the balance
sheet is the showing that despite the
high prices of cotton goods to-day the
company was carrying at the end OF its
fiscal year an inventory valued at only
y1,34S,077 against s2.4e6.S09 a year
ago. II Is an instance OF a rather gen.
eral characteristic In corporation state
ments now coming forward. namely
that stocks of goods In the hands of
manufacturers and merchants are low,
making a solid basis for future expan-
sion in business.