Idaho County free press. [volume] (Grangeville, Idaho Territory) 1886-current, 1922-08-03
BABSON SAYS
Bright Outlook for
Municipal Bonds.

Wellesley Hills, Mass, July al
While discussing the opportunities in
the present bond market, Roger w.
Babson, the statistician. made the fol-
lowing statement regarding the future
of municipal issues.
''The past few years have been hard
Tor cities and towns desiring to borrow
money. During the war an unwrit-
ten ban was placed upon municipal
borrowing and unnecessary public
building. Directly after the war, money
was scarce and rates were hugh. 1t
has only been within the last few
months that cities and towns have
been able 10 secure what money they
have desired at fair rate Municipal
fathers, contractors, and investors are
now wondering whether the present
decline in rates is temporary or will
extend over several years.
WILL BORROW WITH EASE.
''Study of the situation leads me to
believe that the present decline in in
tersst rates will continue and that
cities and towns will be able to bor-
row freely during the next few years.
it even looks as if city fathers viii
soon be solicited by bond houses for is
sues to sell. Up to the present time,
city officials have been obliged to
hunt up banks to buy their secrities.
The time will soon come when the
bankers will be sending buyers
throughout the country to hunt Up
bond issues that they can sell. The
next few years will see a scramble for
bonds on the part of the dealers far
greater than any previous scramble
for money on the part of the cities
and towns. The law of business cycles
still operates. AS we have had years
of advancing interest rates we win
have years of declining interest rates.
Moreover, these cycles cannot be sus-
pended or changed any more than we
can suspend or change the tides of
the ocean.
"In addition to the law of business
cycles, the tax situation is very much
in favor of municipal borrowing. Be-
fore the days of income taxes and
surtaxes, bonds of our best cities sold
on a 31a percent basis, and even bet |
ter. Now, when wealthy men are
obliged to pay surtaxes of from 30
percent to so percent, these tax ex-
empt bonds of cities and towns should
be in great demand. Some of my as
sociates even state that many of
these bonds may go np until they |
are on 215 per cent basis, or less. !
IF course, this also applies to the |
government bonds, although the gov
bonds are rather short time
and therefore not so attractive to the
investor. Cities and towns will tempor-
arily be greatly benefited in their bor-
rowing by any amendment to the con-
making all bonds taxable. If
such legislation is attempted there
naturally will be lot of tax exempt
bonds put on the market just preced-
ing such legislation. Some feel that
such a flood of securities would de-
press the price, but others believe that
f they are TO be the last of tax ex-
smpt securities, the market will alb
serb easily all they offer Whichever
IS the case, cities and towns will have
no difficulty in disposing of their Sc
,urities during the next few years,
md the interest rates should steadily
md continually decline.
CIVIC IMPROVEMENT
''This means that municipalities
should Immediately adopt civic plan
ming schemes, and probably lshold
make during the next five years. such
as they ordinarily would
make in ten. The time to make hay
s while tine sun shines, and the time
Continued on Editorial Page