Mohave County miner and our mineral wealth., 1922-07-21
Es}s -- 2' IQABS0N, ststistieian taRGes IU on Business Conditions
BRIGHT OUTLOOK FOR
 MUNICIPAL BONDS

MUNlClfAL DONDC Roger Babson, the statistician has public borrowing on 21a9S basis, ad- vises purchase of municipal bonds at present levels.
 While discussing the opportunities in the present bond market, Roger w.. Babson, the statistician today made the following statement regarding the future of municipal issues.
 "The past few years," says MT. Bab- son, "have been hard for cities and towns desiring to borrow money. Dur ing the war an unwritten ban was placed upon municipal borrowing and unnecessary public building. Directly after the war money was scarce and rates were high. It has only been within the last few months that cities and towns have been able to secure what money they have desired at a fair rate. Municipal fathers, con- tractors, and investors are now won dering whether the present decline in rates is temporary or will extend over several years.
 Study of the situation leads me to
 believe that the present decline in interest 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 will soon be solicited by bond houses for
 issues to sell. Up to the present time city officials have been obliged to hunt up banks to buy their secur- ities. The time will soon come when the bankers will be sending buyers turnout 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 sy- cles still operates. As we have had years of advancing interest rates we will have years of declining interest rates. Moreover, these cycles cannot be suspended Or changed any more than we can suspend or change the tides of the ocean.
 "In addition to the law on business cycles the tax situation is very much in favor of municipal borrowing. Be- fore the days of income taxes and sur- taxes, bonds of our best cities sold on 31a % basis, and even better. Now, when wealthy men are obliged to pay sur-taxes of from 309o to 50% these tax exempt bonds of cities and towns should be in great demand. Some of my associates even state that many of these bonds may go up until they are on a 2141o basis, or less. Of course, this also applies to the Govern ment bonds, altho the Government bonds are rather short time and there fore not so attractive to the investor. Cities and towns will temporarily be greatly benefited in their borrowing by any amendment to the Constitution making all bonds taxable. If such a legislation is attempted, there natur- ally will be lot of tax exempt bonds put on the market just preceding such legislation. Some feel that such a flood of securities would depress the price, but others believe that if they are to be the last of tax exempt se- curities, the market will absorb easily al they offer. Whichever is the case, cities and towns will have no difficult ty in disposing of their securities dur ing the next few years, and the in terest rates should steadily and con- tinually decline.
 "This means that municipalities should immediately adopt civic plan ming schemes" continued MT. Babson, land probably should make during the next five years such improvements as they ordinarily would make in ten. The time to make hay is while the sun shines, and the time to borrow money on long term loans is when money rates are low. Hence, cities and towns should not only borrow during the next few years for their current needs but should borrow large sums and in vest the same for use for years to come, especially during the next per iod of unemployment.
 "If cities operated in business way | they would borrow their money at l times like the present, stow it away, :, and then spend it when the next per iod of unemployment comes. By spending it at such times, they not only could get the work done very much cheaper, but they could perform a distinct service to the people of the community. The general custom followed is the reverse. Cities now do their construction work when it is easy to get money, which is when labor is fully employed and when everyone else in building. This is all wrong. When the period of unemployment comes it is very difficult to borrow money for construction work because