Prescott journal. [volume] (Prescott, Wis.) 1861-1871, 1864-08-20
Gorernment securities As an investment.

Government Securities as IN Investment.
There is one view of investments in Gov
ment stocks which has not been generally ia
ken. If taken by shrewd capitalists and
spectators, 1t has not been generally consid-
cred by the people. 1t is this: When, after
long suspension, specie payments are re-
sumed, all stocks and prices Immediately and
largely decline, but Government stocks DO NOT
materially decline. This fact we assert on the
ground of historical experience. 1t is true
that in the War of lsl2-15 Government
stocks fell, at one time, to 10; but most of
the banks were then suspended or bankrupt,
and there was comparatively little currency
in the country to buy stocks with. But sup
pose the gold value of Government stocks
were this day 40, 1.-THE lowest they were ever
sold att the market value at the present rate
of gold would be 135, while in fact the
tocks are selling below los. SuppOsing,
then, that the market price of Government
securities were, by the resumption of specie
payments, to go down to 20 in July, the de-
cline would be 30 on los, equivalent to 335
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 suppos-
able case, to 60. This is illustrated by the
history of every suspension of specie pay
ments we have had, ana there are many bus
mess men who will recollect what the prices
of produce, stocks and all salable commodi-
ties were after the commercial revulsions of
1887 and 1839-40. In 1S41, 40 and '43
prices were reduced to a degree now scarcely
credible.
But Government stocks did not fall material
ly. On the contrary, it is settled principle,
dedueed from all experience in England and
this country, that Government funds do not
fatctudte 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 varia-
tons in the market price, owing to the great
er or less bulk of the entire currency, but
there can be none in the intrinsic value and
hence it is, that historically the fluctuations in
the value of Government stocks have been
comparatively small. In all the recent COM
mercial fluctuations of England lin some of
which there has been a complete prostratiOn
of all ether property 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 railway and bank stocks the
great variations and at times wonderful de-
probation are notorious. Sudden CONNER
cial 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 resumption
of gold payments in one year, land this is
superstition which may become faet,) what
would be the relative effect on three kinds of
stOck-say Government at los, bank at lis,
and railroad at 100? In all human proba-
bility the resumption of gold payments in a
year would bring them to these relative
prices, viz: Government, 90; bank, So
railroad, 20.
Judged by historical experience this would
be nearly the relatiue result. The conse-
quence, then, is that the Government funds
depreciate Is per cent, the banks %, and
the railroads so. 1t is more probable, if this
statement be thought erroneous, that the ac-
tual results would be much more in favor of
the Government. But we merely give this
as an illustration of general historical truth,
that on the resumption of specie payments
or on the occurrence of great commercial
CONFUSION, the fall in Government stocks will
be far less, relatively, than the fall in any
other kind of stocks. The practical Inference
from this is plain. The purchase of Govern
ment stocks being made for investment, is
far safer and more profitable Investment, fo,.
tie future, when gold payments will be resum-
ed, than any other.
Now nobody can doubt that the War THAT
is, the great bulk and expense of the War
will be over in year or so; and when that
occurs, there aciH come a gold standard J; and
then, when others are lamenting over the fall
OF stocks, the holder of Government loans
will have no fall to lament. He will, in fact,
profit by that change which Injuries the hold
ers of other property.