76 THE FISCAL PROBLEM IN MISSOURI

It may be concluded that during the period in question
Missouri was able to dispose of its debt obligations under
circumstances that resulted in a very moderate cost of
money. Market conditions were favorable during most of
the period, and the tax exemption feature helped to keep
down the cost of money. The most significant factor, however,
 was the excellent credit position of the state, together
with the fact that in floating the highway bonds ample provision
 was made for the receipts necessary to meet interest
and principal payments, which carried an assurance that
the high credit standing of the state would be maintained.

INTEREST RATES oN LocaL Bownbps
It is to be regretted that the cost of money analysis as
applied to the receipts from the sale of state bonds cannot
be used in the case of bonds issued by Missouri local governments.
 Such an analysis would unquestionably be most
instructive, but the requisite information concerning sales
prices and maturities is not available. However, information
 concerning the coupon rates of interest borne by local
bonds issued is accessible, and in lieu of an analysis based on
actuarial computations of the cost of money, Table 26 was
compiled. This table, while indicative of the cost of money,
cannot be used to draw conclusions of so definite a nature as
those arrived at in the case of state bonds. If it were assumed
that the coupon interest rates on local bonds are adjusted to
market conditions so that on the average they will be disposed
 of at par, the average rates as given would be the
approximate cost of money expressed as a percentage of the
principal sum, but such an assumption is perhaps too liberal,
and for that reason the discussion will be confined to coupon
rates as such.
The average coupon rate of interest borne by bonds issued
by Missouri local governments during the years 1926 to
1929 was 4.35%,. The highest average rate in any year was
4.539, for 1929, and the lowest was 4.189, for 1927. The
average rates are influenced by several factors, the most important
 of which perhaps are bond market conditions and
the credit position of the issuing governments. Except in