The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1876-04-26
Popular Government Loans.


breaches sound doctrine on this important
subject from mischosen text. The substance
o. its argument entirely accords with the
views on national loans which the HERALD
has of late been pressing on public attention,
and we welcome so able an ally, notwith-
standing its inadvertence in using correct
reasoning on an occasion to which it does
not apply. The Sun arraigns as blum
der" Secretary Bristow's advertisement for
the sale of s5.SS3,00O five per cent
gold bonds to pay the judgments
of the Commissioners of the Alabama
claims; the blunder consisting, as the Sun
thinks, in limiting the bids to slots of not
less than one-half million of dollars With
regard to this particular transaction our
contemporary is in error, but its reasoning
would have admirable pertinence and force
if applied to Mr.. Bristow's general manage
ment Of public loans instead of this limited
sale Of bonds for specific purpose. We
insert the main points of the Suns argument
before proceeding to point out its misappli-
CATION
The Secretary has committed serious error because
IL PLAYS into tho hands OF combination OF foreign CAPT
tasts and excludes all competition at home except IN
limited circle.
Tho great success OF the French loans due 20 the
fact that they were taken among the people oil France
in small sums. The whole nation thus became inter-
csted preserving the public credit, and WAS hardly
affected even BY change IN the dynasty or revolution
that upturned society.
ar ,ristow has entire discretion, under the law. to
regulate the method OF dsposing Of the loan, and he
las exercised against the Judgment OF many OF inc
most enlightened bankers and business IN way
do the very object he seeks TO serve. The
gold ITS equivalent to pay interest on bonds
the United States held abroad one OF the hardest
to bear, because this money IS oil spent out OF the
country
To exclude the people Of small from subscrib
ing for national loan or TO turn them over 10 syn
d,caie OF large spectators who have no interest 70
promote their profits is ndeiensble on grounds
of public policy and this is exactly what Mr. Bristow
has done IN the present case
The Sun seems to confourd the five per
cent bonds, in which the Geneva award was
invested by direction Of Congress, with the
new loans authorized Tor the refunding of
the national debt, otherwise it could not
have said that 'sMr. Bristow has entire dis
erection, under the law, to regulate the
method of disposing of the loan" He has,
in fact, no such discretion in relation to the
particular bonds in question. The amount
of the Geneva award Fifteen million five
hundred thousand dollars) was paid by
Great Britain few days before the expira-
ton of the year allowed for that purpose,
and in pursuance of the act of March 3,
1878, it passed into the Treasury and was
debt. The act further provided that 'the
amount equal to the debt SO redeemed shall
be invested in five per cent registered bonds
of the United States, to be held subject to
the future disposition Of Congress- A por-
ton of these bonds was required to be sold
to procure means Of paying successful
claimants, and has been disposed of to the
highest bidder. 1t would have been absurd
to receive bids for these bonds in such
small sums as would permit "people
of small means" to become compel
itors. The task of deciding which
bids should be accepted would be
endless on such a plan. Moreover, the
claimants are to be paid in gold, and the
people at large have no gold and no motive
to acquire it for SO doubtful an operation as
making bids which might be rejected. There
are other conclusive practical objections to
distributing and frittering the sale of these
particular bonds as, for example, the diff
Guilty of ascertaining whether the multitude
of small bids were made in good faith and
by responsible parties. The Sun assuredly
did not intend to advocate anything so i'm
practicable. The whole tissue of its article
proves that what it had in mind was the new
loans, not the sale of the bonds in which the
Geneva award was invested.
When applied to the new loans for refund
ing the six per cent bonds the reasoning Of
the Sun becomes relevant and cogent. Mr..
Bristows purpose to effect the conversion of
the public debt only through syndicate is
really open to all the objections which our
award bonds. Nothing could be more in
point, as applied to the larger operation,
than the reference to the popular loans of
Napoleon Ill, who was truly sagacious
statesman in internal affairs, and was ruined
only by mistakes in his foreign policy.
Our own financial history furnishes
an example of the same kind,
although its success was not quite so brill
liant as the famous popular loans of the
French Emperor. which excited the surprise
and admiration of Europe. The wonderful
sales of United States six per cent bonds in
1868 afforded a signal proof of the value of
the popular method of disposing of govern
ment loans. In April and May of that year
beginning had hardly been made in dis
posing of the FIVE hundred million loan.
The method Of offering it in small amounts
to the people at large was adopted, when
the loan suddenly began TO be taken
at the amazing rate of nearly two mill
ion dollars o day, and was exhausted in
the following January. We copy the follow
ing authentic statement from Spaulding's
Financial History of the War":-"The loan
became very popular and was extensively
taken by farmers, mechanics and laboring