The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1876-04-14
Can the Five-Twcnty Skies he He
funded "a Four Per Cents

of the six per cent bonds has stood at a dead
halt. The law gives him authority to sell
three hundred millions of four per cent bonds
not redeemable until fifteen years after the
date of their issue; and, seeing that purchas-
ers of the various classes of our national
bonds at current premiums will realize but
about four per cent on their investments it
would seem practicable enough to negotiate
four and half per cent loan if the Secre-
tary Of the Treasury would take hold of the
task with the requisite energy and skill.
Instead of acting he has stood still, appar-
emily awaiting some further legislation by
Congress. What he asks is that the
time of the four and half per cent
bonds be extended from fifteen years
to thirty, and that the authorized
amount be increased from three hundred
million dollars to five hundred millions.
Inasmuch as tho transactions of the stock
market indicate that the credit of the govern
ment has nearly, if not actually, reached
four per cent basis there is very little to be
said in favor of either Of these recommends
tons of the Secretary. So long as capitalists
60 daily to the Stock Exchange and buy
bonds redeemable in 1881 at a premium
which makes them only equal to four per
cent investment there should be no diff
Guilty in disposing of four and half per
cent bonds not redeemable until 1891 for
the ten years longer date is equivalent to an
enhanced price, the rate of interest remain
ing the same, or to a lower rate Of interest.
If bond having five years to run sells ut
more than par bond having fifteen years
to run will sell great deal above par at the
same rate Of interest, investors always pre-
ferring the long bonds Of government in
good credit Four and a half per cent
bonds having fifteen years to run ought to
be readily salable in the present condition
Of the money market At any rate, we see
no reason why Mr. Bristow should not try
the experiment; the result would at least
show, by practical test, whether he needs
any new legislation to enable him to con-
time the work of refunding.
We of course do not undertake to main
tain that four per cent bonds could be sold
to any considerable amount unless they had
long course of years to run. The moro
distant the period of redeemability the
greater would be their value, and if Con-
gress would authorize four per cents to run
forty or fifty years we have little doubt that
they would find market. There is at least
no harm in throwing out this proposition
for discussion, and when the public shall
have an opportunity to see oil that can be
said against as well as for it an Ineligible
opinion can be formed as to whether it is
practicable We are as ready to admit into
our columns arguments by competent finan-
ciers on one side as the other, for we have
no dogmatism on the subject and only de-
sire to aid sound conclusions rs basis for
energetic action. 1t is discredit to our gov
ernmeht that it continues to pay war rates
for the use of money eleven years after the
close of the war, and we are only anxious to
see the public burdens alleyiated by a
speedy end of this wasteful imbecility.
Whether four per cent or four and half
per cent be the lowest practicable rate let
us have the question debated and decided
ESQ far rs such question can be decided
without actual trial), IND then let our gov
eminent act with vigor on the conclusion
which is reached, and take advantage of the
present exceptionally favorable condition Of
the money market before the opportunity
slips away.
Any government in good credit is able
to borrow, IN time Of peace, at much
lower rates than the commercial community.
The government of the United States
ought to possess this advantage in
4. o&l,. xr.x
single exception of Great Britain, which
pays only three per cent on its national
debt. Surprising the ordinary commercial
rate to be six per cent our government
should be able to borrow Mt four per cent on
bonds of comparatively short date, for the
reason that such bonds, unlike other forms
Of property, are exempt from taxation. The
average rate of municipal taxation in this
country is not less than two per cent, and a
taxable six per cent property yields no more
net income than a non-taxable four per cent
bond. This great advantage of exemption
from taxes must not be left out of the
account in estimating the Suitability Of gov
eminent bonds bearing low rate OF interest.
Another decided advantage possessed by
government bonds ever other forms of prop
erty is the fact that they serve most of the
uses of ready money, and, at the same
time, yield steady income. Money kept
on hand to meet emergencies earns
no interest, but the owner of bonds
can always convert them into money with
out loss, or hypothecate them for loans to
nearly their full amount. A man who locks
up his capital in real estate, machinery or
merchandise has not this easy command of
his resources, and cannot use them at once
when opportunities arise for highly favorable
investments. This circumstance of imme-
date availability is worth at least differ