The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1922-07-22
CITIES AND TOWNS OBTAINING
MONEY AT A FAIR RATE-RATE
DECLINE WILL CONTINUE
SEVERAL YEARS.
Tax Exempt Securities May GO Up Un1n
They Are On - all Percent Basis
It Is Believed.

Wellesley Hills, Mass. July IL
While discussing the opportunity IN 'he
present bond market Roger W. Baoson'
the statistican today made tae iolio"
ing statement regarding the future OF
municipal issues
The past few years" says MT. ban
son. have been hard for cities ana
towns desiring 20 borrow money. Dur
ing the war an unwrittcn ban was Nac-
cd upon municipal borrowing ana IN
necessary public building. Directiy
after the war money was scarce ana
rates were high. II has only oeeh
within the last few months that citea
and towns have been able. TO secure
what money they have desired at ia'i
rate Municipal fathers, contractors S@
investors ara now wondering 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 IN
tcrest rates will continue and that cit'cs
and towns will be able To borrow freely
during the next few years. II even
looks as II city fathers Will soon DC
solicited by bond houses for issues "
sell In 10 the present time C!'E o.
fcials have been called 10 hunt up
hanks 10 buy their securities The time
will soon come when the bankers Will
he sending buyers throughout the
country to hunt up bond issues that
they can sell. The next few years Will
SEQ n scramble for bonds on the part
Of the dealers far greater than any
prcvious scramble for money on the
mart of the cities and tOwnS the Ia"
or business cycles still operates. AZ we
have had years OF advancing interest,"
rates we will have years or dccI'hinH
interest rates. Moreover, these c9c''S
cannot be suspended or changed an!
more than We can suspend or 'h'hTe
the tides Of the o"rcan.
Tax Situation.
"In addition To the inw or business
cvClcs the tan situation IS very hiuCh
in favor of municipal borrowing Dc
fore the days Of income taxes ana sur
taxes. bonds Of our best cities sol"
on 81 percent basis, and even better
Now. when wealthy men are Obliged |"
r,.o sur-,aXcs Of from 30 percent 10
80 pcrccnt these tax exempt bohds Oh
cities and towns should he IN great ue-
mand Some Of my associates even
stat that many Of these bonds may so
I'D until they are on @'s percent pasis'
or less. OF course, this also apFI'eS |"
;hc Government bonds. although inc
Government bonds are rather short Tune
ana therefore not so attractive 10 the
investor. Cities and towns will tenor
arIly he greatly benefited in their Dor
rowing by any Amendment L" the Io'i,
stitution making all bonds taxable IL
such LEGISLATION is attempted. there
naturally will be lot or tax exempt
bonds put on the market JUST preSeu
ing such legislation. Some ieel lh"l
such A flood of securities would deprcSS
the priCc, but others believe that II thSS
are to be the last Of tax exempt SeCur
tiles the market will absorb easily al
,hcv offer. Whichever Is the case cites
and towns will have no difficulty III
dis,osinR Of their securities during the
reyt few wears and the interest rates
should steadily and continually oecl'he'
This means that municipalities
should Immediately adopt civic plan
ming schemes" continued Mr. Baosoi'
and probably should make during the
next five years. such improvements as
they ordinarily would make In ten. tn"
time TO make hay is while the sun
shines. and the time 10 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 invest
the same for use !or years 10 come
cspccially during the next period or un-
employment.
Don't Follow Business Plan.
If cities operated in a business way
they would borrow their money al
times like the present, stow II away,
and then spend 1t when the next pcr!od
of unemployment comes. BY spending
IL at such times, they not only could
get the work done very much cheaper,
but they could perform a distinct serN-
ice To the people OF The community,
The general custom followed Is the re-
verse. Cities now do their construction
work when ii is easy 10 get money.
which is when labor Is fully employed
and when everyone else IS building.
his is all wrong. When the period OF
unemployment comes T. Is very diff
cult TO borrow money for construction
work because money is then tight ami
the citizens feel poor Hence, under
the present system IL IL Impossible 10
do much to relieve unemployment when
L comes II an ice man attempted 10
follow the same system in his business
as the city officials follow, he would
wait until summer to cut his ice,
For investors th" means that tax
exempt securities, and town bonds
should now be purchased even though
they have already gone up some Ii
rrice Those who contemplate buying
should buy at once before they go up
still higher When buying tax exempt
Issues seek the long term ones as these
will show the greatest profit. All rf
this should be specially encouraging tc
the contractors and builders. as #
means that q great deal OF public work
will be done during the next few years.
City water plants will be extended,
more sewers will h" constructed, new
public buildings will lee erected, and
The good road movement will continue
TO grow This should hc welcome IN
formation" concluded the statistician.
TO those who handle contractors sup
plies and building materials. and espe-
Cially all such materials as are used by
cities and towns
General business as reflected In th>
index figure of the Babson char is 10
ner cent below normal. This IS an i'm
movement Of 4 per cent over last week
and Is 10 per cent above the activity
Of the some week a year ago. Smaller
failures are helping matters consider
ably and further Improvement should
Nc reflected during the next few weeks.