The Sun.
London, England, 1861-07-15 00:00:00

THE TRENTENARY BONDS.

The Constitutionnel replies at some length to the
objections brought forward by the Siecle against
the trentenary bonds. The following is a portion
of the reply :—" We have answered by anticipation
many of the arguments of the Siecle. The points at
issue are the competition which these bonds will
cause to the 3 per Cent. rente, and the superiority
of a perpetual loan over one repayable within a
determinate delay. In the special case which now
occupies our attention—the execution of extraor-
dinary public works—we persist in thinking that
resources, also extraordinary, are the best of com-
binations. We are well aware that the issue of
perpetual rente presents an advantage of a parti-
cular kind over the issue of bonds ; that is, to
allow of a speculation in which every one may
take part, and which consists in selling rente for
the account and purchasing the loan. That spe-
culation is not practicable with bonds which are
a security for investment, and which almost abso-
lutely escape the operations of pure speculation.
But this is not an objection which can be opposed
to the State, and the Siecle itself certainly has not
thought of making use of it. There remains there-
fore to be considered the injury which can be
done to the perpetual rente by, bonds issued at
the net rate of 432 fr. 77c., a price corresponding,
after all profit has been deducted, to the 3 per
Cents. at 64fr. 91c. ; the Siecle states that it is
equivalent to the 3 per Cents. at 60fr. 05c., or
the 5 per Cents. at par. The error of the Siecle
is flagrant and absolute, and can only be ex-
plained by a carelessness which is deeply to be
regretted in such a matter. The author of the article
pretends that he has found this calculation in the
Temps ; we have sought for it there, but in vain.
The temps admits with the Minister of Finance,
with us, and with the four rules of arithmetic, that
the rate of 432 f. 77c. for bonds, exactly corresponds
to the 3 per Cents. at 64f. 91c. Our contemporary
perhaps wished to take into account the premium
of reimbursement attributed to each bond, and which
is 67f. 23c., payable in 28 years. We must be
allowed to remind him of very simple and really
primitive ideas in financial matters. What does
this premium of reimbursement represent ? Nothing
more than the surplus which the subscriber may
hope for on his capital if he placed it in rente,
and which it is just to give to him in return
for a reimbursement at a fixed price. The
loans of the year 1855 were issued at about
nh t ed
64fr. or 65fr. ; and yet one year after the 3 per
Cents. had reached 72fr. and gave to the subscri-
bersa profit of 7fr. or gfr., or the eighth p
part
their capital. In 1859 the loan was
issuedas at 70fr ,
:frCen_ts.,
.but
.with a
60fr. ; in four months after the p
and the subscribers gainedpel.
peerp3etual rente. In reality,
by the premium of 67fr. 23c. given n that th ry
- averagee was
sta blis h e d , led to bonds, and it may be, therefore, see ey are
little less advantage, tonce the profit is limited,
their capital. This is precisely.whra°itenteoistwthrheeeptrsreixesaetsu
simplythwhe
which
honi
it
iss r not
assimilatedbfou
rs r the to
ea
b 1
e at 500 fr. represent the 3
per Cents., redeemable at the fixed price of 75fr. In
State
teoaeft thene a t afterlto har
ene
58fprriceof 68fd
• 57c., an
9
or with a premium in favour of subscribers of 9f.
25c. for 3f. of rente, whichis much more than that
granted to the trentenary bonds. We hope that
re-
purchases rbeya fund,l
ther a t
these observations will calm the tardy excitement
tl
the
e 59
sinking the
of the siee/e."