The Key West citizen. [volume] (Key West, Fla.) 1879-current, 1937-01-01
BORROWINGS
| SET RECORD
in YEAR 1886
RATES SINK TO NEW Low;
MANY CORPORATIONS OBJ.
TAIN LOANS ON LONG
TERM PAYMENTS
BY FRANK MacMILLEN

NEW YORK, Jan. Money
was offered almost for song in
1886 and there were plenty of
corporate borrowers to take it
while the price was right.
More money was borrowed by
corporations at long term in the
past year than at any time since
1880. The rates were more reason
able, probably, than for any SIM
liar period in the country's his
tory, and certainly were the low
est in modern times.
For that reason corporations
by the score redeemed ortstand-
ing bonds on which they were OBJ
ligated to pay relatively high in
terest rates and replaced them
with others conforming to the
state of the money-glutted invest
ment market.
Lands Halls Change
The situation was given succinct
expression by Chairman James M.
lands, of the Securities Exchange
Commission, when he said in De-
cember:
"Only two years ago our con-
Germ lay with the absence of cap
ital issues, sagging markets and
a frightened and embittered pub
lie. Today one thinks in terms of
wholly reversed situation-rap-
idly RISING markets, expanding
volume and an apparently insat-
liable demand for capital issues"
The plethora of funds seeking
profitable Quiet was heaped
ever higher during the year by
the inward flow from Europe,
much of it refugee money" seek
ing haven from war threats and
disturbances. abroad go.
Banks Swollen With Reserves
So great was the money current
Americawards, that reserves held
by the banks in excess of their
legal requirements with the fed
eral reserve system late in 1886
toppd $2,O00,00O,000. The huge
total, while well below the more
than $3,000,O0O,00O of the early
part of the year stood despite a
SO per cent hike in reserve re-
quirements whcih went into effect
in August by reserve board order.
Long term obligations of cor
porations f,oated during the year
amounted to $3,500,000,000 or
more. Of this, better than ST.
100000 was OF refund out
standing paper and over $700,000,-
900 was additional borrowing. The
year before, roundly $2,000,00O,-
900 was borrowed, and less than
$500, 100000 was new capital.
Government Benefits
One of the chief beneficiaries
Of the loan-hunger of investors
was the federal government. 1t
wound up the main part of the
years program with $700,00O,-
900 offering, maturing in Is to
IT years, at interest of 21s per-
cent, the lowest in the govern
ment's history for an ordinary
long term issue.
With money heaped up in the
hands of bond buyers, especially
banks and insurance companies,
most of the statistical series of
price averages of high grade bonds
reached record peaks.
Railroad bonds showed percent
age gains in the bond market, be-
cause of improving traffic, and be-
cause they had been most depres-
sion-hit. Industrials, which staged
their big uprush earlier in the re-
covery, were relatively slower.
Utilities, in the shadow of IVA
and holding company decisions
from the courts, progressed slow
ly. Foreign government issues ex-
hibited mixed trends, with the
Europeans held down in many
cases by the war menace, and
Latin Americans responding rath-
err well late in the year to inn
proved economic conditions to the