Great Falls daily tribune., 1920-06-27

that is necessary to know is that the
debt is In proper proportion to the as
sessed valuation; that the population
is sufficient and of a character to give
the community pre- eminence and stabil-
ity, and that the territory of the coun-
ty. city or school district is of such
kind that the inhabitants can make a
living and will not move away. After
these points are determined, before the
purchaser finally closes his purchase, he
should ste the opinion, which every
dealer is ready to furnish, Of a first
class attorney who is specialist in
municipal law, stating that the bonds
are a legal, valid and binding obliga-
ton of the issuing municipality and a
should be left with the purchaser at
the time the bonds are delivered to him,
and always kept with the bonds.
Under the heading of public utility"
bonds come the securities Of water,
gas, electric and hydro-electric company.
The securities of street railway COM
panies are also included in this general
classification. A properly issued, Wen
secured public utility bond affords one
of the best investments in the world,
and yet you will today hear bankers
soy, II won't buy public utility bonds"
In he general denunciation the good
suffer with the bad. Little effort
seems to be made to differentiate be-
tween them; all are cast out into utter
darkness.
Public Utilities In Bad.
The Generalization of the street rail-
way companies that has taken place in
the last few years has been so great,
and the sore spots caused thereby so
many, that the cause of the trouble in
this particular field of investment has
been overlooked and Mr.. Banker has
simply refused to consider any public
utility bonds at all.
Good bonds represent the most liquid
investment in the world. They can be
turned into cash quicker than any other
investment. but bear in mind that bond
investment is q triangle one side of
which is always open; that never in any
investment under ordinary circum-
stances can you have the three sides.
which are safety, rate of interest and
marketability.
If bond is absolutely safe and i'm
mediately marketable, then the rate is
low in comparison with others.
If a bond bears high comparative
rate of interest and is Immediately mar
ketable, then the security is low.
If bond is absolutely secure and
bears high rate of interest. then it
has no immediate marketability and a
buyer must be found for it,
Never All Three.
Never can you find investments car
rying all three of these characteristics.
whether the standard money rate is 4
per cent or per cent.
Another thing, there is no such thing
as permanent interest rate. Some years
ago the so-callcd wise ones in New York
came out with a series of interviews,
that the United States had permanently
gone on 3 per cent basis. That s
absurd.
Inc demand for money fluctuates just
as the demand for any commodity
When the demand is great interest
rates are high, as at present; when
there is no demand the interest rates
are low, and usually the low interest
rates are in the periods Of the great de
preston in business. The lowest rates
for money that we have ever known
in this country were in 1894, follow
ing the panic of 1898. The very best
municipal bonds were selling at from a
275 per cent to a 200 per cent basis,
because people were afraid to buy any
thing else. Railroads were going into
the hands Of receivers, business houses
were failing.
On the other hand. now that money
is in very great demand, the best mu
nicipal bond is selling at from 4% per
cent to 5la per cent basis. The security
was no greater then than it is today.
The price Of the well secured bond,
as we'll as the net yield, is determined
absolutely by the demand for money.