New-York tribune., 1922-04-09
Estimate Canada
Must Raise Loan
Of $40O, 200, 900
$1OO,O ,OOO,O Issue Expect
cd Here This Spring; Rest
Will Have To Be Obtained
Through Internal Bonds
specta, Ftrono.a, corr,spon1enes

tOrfS5pOFGehCS
TORONTO, April 7-There Is
much difference of opinion among
bond dealers as to now much money
the Dominion government can OBJ
tain in Canada this year by popu-
lar loan. Despite the very consider
able reduction in the main estimates
for the fiscal year 1929, it is be
lieved that the government will need
to borrow not less than $400, 900, 900.
Probably a Canadian issue of si0o,-
100000 will be offered in New York
this spring and domestic loan will
have to be issued next fall to raise
whatever balance is repaired for vari-
Gus purposes, including repayment OF
that portion of the fourth war loan,
amounting to almost s195, 900 900, which
natures December !, 1922. No details
have been decided as yet, but local
bond dealers would not be surprised If
the nominal amount Of the offering in
Canada were put at s250,0oo. 900, with
the government reserving the right TO
accept all the money offered.
Capital expenditure by the Dominion
adm inistration this year will be mod
erate-the main estimates provide for
less than $4,000, ,o0O-but deficit Of
between s6O,oo0,Ooo and s76,ooo,ooo on
the Canadian National Railways must
be met, besides which the government
H.
banks and provide for redemption or
refundlng Of the maturing bonds. The
return of the Canadian chartered banks
as of February %, 1922, showed loans
represented by Dominion and Provin-
clal government securities TO the
amount Of s213,767s20, as compared
with only S123,734.576 on the CORE
spending date in 1921.
Requires Preparation
The loan in the United States can be
arranged with one or several of the
New York financial houses in a few
hours, but the domestic issue will re-
quire careful preparation. Some bond
dealers look for an organized cam
paign such as those Of 1917 and 1913,
but the government as yet has not
indicated its plan. At least few Of
the bond houses declare frankly that.
now the war is over, they will decline
to interrupt their regular business and
give the services of their organiza-
tions, without compensation, for the
Notation Of a Federal government is
sue. They point out the the govern
ment has to pay for other services and
should deal with the bond houses or
the same basis.
Although the amount required this
will ho
scribed to either the first or second
Victory loans, conditions are far from
being as favorable. Industrial com
panles which subscribed largely IN
1917 and 1918, not for the purpose of
investment but with the idea OF dis
posing Of their bonds as soon as thew
could be absorbed by ultimate inves
tors, will not be able to subscribe this
year to anything like the same ex-
tent The small investors can be count
ed on to take moderate amount, but
money is not SO free this year and, be-
sides, the fact that the Federal gov
ernmcnt issues went to a considerable
discount after the last bond-selIinr
campaign is certain to have some ef-
feet.
Many who bought small amounts in
the previous campaigns In the expec-
tation of the bonds quickly going to
a premium will decline to subscribe
this year. Insurance and trust COM
panies will subscribe generously again
this year. The probability is that the
banks will be expected to stand be-
hind the loan, but that the government
VIII hope to obtain sufficient subscrip
tlons from applicants other than the
banks, SO that no allotment need be
made to the latter.
The rate and terms, Of course. will
depend on the market, and will not be
determined until shortly before the
prospectus is announced The longer
term Issues appeal most strongly to
the large institutional investors. and
at least a part Of the loan will be of
hfteen or twenty year term. Ifmonev
rates continue to recede the bonds
may be made to bear interest at
per cent and offered slightly below par.
Spurn Local Issues
AS further development conae.
Quent upon default by certain West
srn communities, number of the
Canadian bond houses are refusing
now to have anything to do with bonds
Of municipalities or school districts
IN Saskatchewan, and even "regard
with disfavor" dealers who list such
issues. The situation In respect of
IHe oepenCufes or municipalities and
school districts in Alberta is not as
bad, but many of these issues also
are under suspicion, and much the
same conditions obtain as in the
nelghboring province.
Bond men tell many incidents which
Indicate how principles of sound
financing have been disreCarded. One
small municipality wishing to make a
presentation Of $1,000 in gold to an
esteemed citizen who was moving away,
included the amount along with GER
tain other items which were financed
by an issue of twenty-year bonds. Such
unsatisfactory financing conditions,
however, are not unusual in pioneer
municipalities. Unfortunately they
are found sometimes in old and we'll
established communities as we'll.
1T was not so many years ago that
moderate-sized city in Quebec
financed the laying of plank sidewalks
with life Of not more than i've or
Six years-by an issue of forty-year
debentures. Such unsound financial
practices are impossible under present