The daily Gate City. [volume] (Keokuk, Iowa) 1855-1916, 1864-08-06

Government Securities as an Invest.
ment.
There is one view of investments 10
Government stocks which has not been
generally taken. If taken by shrewd
capitalists and spectators, it has not been
generally considered by the people. 1t
is this: When, after long suspension,
specie payments are resumed, all stocks
and all prices immediately and largely de-
cline, but Government stocks do not ma
terially decline. This fact we assert on
the ground of historical experience.
1t is true that in the War Of 1925
Government stocks fell, at one time, to
20; but most of the banks were then sus
pended or bankrupt, and there was CON-
paratiyely little currency in the country
to buy stocks with. But suppose the
gold value of Government stocks were
this day 10 Che lowest they were ever
till now sold at, the market value at the
present rate of gold would be 1876, while
in fact the stocks are selling below l05.
Surprising, then, that the market price of
Government securities were, by the re-
sumption of specie payments, to go down
to 10 in July, the decline would be 50
on los, equivalent to S35 per cent, while
the decline on a railroad stock would be
nearly or quite equal to the whole present
difference between gold and paper. A
common railroad stock, selling now at los,
would decline to So, or, in the best sup
possible case, to 60. This is illustrated
by the history of every suspension OF
specie payments we have had, and
there are many business men who
will recollect what the prices of produce,
stocks and salable commodities we're after
commercial revulsions of 1897 and 1899.
40. In 1871. '42 and '43, prices were
reduced to a degree now scarcely credi.
BILE. But Government stocks did not fall
materially. On the contrary, it is set
tied principle, deduced from all expert
ence in England and this country. that
Government funds do not fuctuate to the
same extent as other kinds of property
There is good reason for it. The time.
rate of interest and security are all fixed
and permanent. There may be some va
riatons in the market price, owing to the
greater or less bulk of the entire currency
but there can be none in the intrinsic val
ne; and hence it is, that historically the
fluctuations in the value of Government
stock have been comparatively small. In
all the recent commercial fluctuations of
England Tin some of which there has been
complete prostration of all other pro.
perty,) the variation in British consols
has not been over five or six per cent
This Cannot be said Of any other kind Of
stock. Of railroad and bank stocks the
great variations and at times wonderful
depreciation are notorious. Sudden COM
mercial revulsions have reduced these
stocks to one half their price. Suppose
then, that with gold say at 80 now. and
Government stocks at los, there should
be a resumption of gold payments ia one
year, land this is a supposition which
may become fact, what would be the
relative effect on three kinds of stock
say Government at los, bank at lis
and railroad at l20? In all human pro.
liability the resumption OF gold PAYMENT.
In year would bring them to these 70.
lative prices. viz: Government, 90: hank.
85; railroad, 20.
Judged by historical experience this
would be nearly the relative result. The
consequence, then. is that the Govern.
ment funds depreciate Is per cent, the
bank rs, and the railroads SO. It is more
probable, if this statement be thought
erroneous, that the actual results would
De much more in favor of Government,
But We merely give this as an illustration
OF q general historical truth, that on the
resumption ofspecle payments, or On the
occurrence of great commercial copyul.
sion, the fell in Government stocks vii,
be far less. relatively, than the fall l. .nv
other kind of stocks. The practical Il.
ference from this is plain. The purchase If
Government stocks being made for inve.s.
meat, il is far safer and more profitable
investment, for the failure, when gold psv
ments will be resumed. thao any other.
M. nahod~ o~~ 4. a.