The Stark County Democrat. [volume] (Canton, Ohio) 1833-1912, 1876-05-25


Cent Basis-The Hoarding OF Colo
-Interconvertible Bonds Decried.
From the, regular Correspondent OF the tribune
WASHINGTON, May 5.-The Commit
tee on Ways and Means has before 1t
very interesting statement made by Mr.
Hatch of the firm of Fisk * HATCH oanK'
ers of New York, who, at the suggestion
of Mr.. Wood was short time ago IN
yited to give his views in regard to the
provisions of the Sherman bill. Mr.
Hatch said that it seemed to him that the
issue of $500, 900, 900 in thirty year bonds
at Al per cent for the purpose OF fundihg
would amount in effect to an underoid'
ding by the Government otits own cream
as it stands to day. His reason tor THIS
opinion was; that the credit ofthe Gov
ernment, when combined with anything
ike respectable degree OF permanency'
is already on basis Of per cent The
three great qualifications, he sald' OF a
loan for the class Of capital thatlnvests IN
Government bonds, are perfect safety,
negotiability, and durability In regard
TO the first two elements, the bonds OF the
United States have no equal in the world
OF the last qualification, almost the en-
tire Government debt ofthe United States
is fully devoid. None of our bonds, eX-
cept the currency 6s issued in aid OF the
Pacific Railroads, have any fixed time to
run beyond FIVE years. Notwithstanding
this, he added, and the consequent un-
certainty which attaches to the time tor
which they may run, nearly all our Coy
ernment issues are selling on basis oil 4
per cent on investment.
Mr.. Hatch agreed that during the war
when the Government borrowed at hlgn
rates of interest; the issue OF optional
loans which the Government could con-
troll at pleasure was undoubtedly wise
policy. But now, he said, the Govern
ment is in a position to dictate mini
mum rate Of interest, and being able to
do that, it can afford to make its bonds
lang enough to impart to them an ele-
ment that will compensate for the low
rate of interest. Mr.. Hatch entered into
some computation to show that at the
market rate at whic our bonds are selling,
both in New York and in Europe, they
Weld only about four per cent interest on
the investment.
In answer to the question what amount
of four per cent bonds he thought his
firm. with the assistance of friends, form
ing an American syndicate instead OF a
European one, could negotiate within the
next twelve months, he said that was
very difficult thing to estimate. He
thought probably as large an amount OF
long bonds could be negotiated at four
and a half per cent, with this exception,
perhaps, that If Mr.. Rothschild and his
Syndicate stand ready to take and pay
for sc, 900, 900 to day, we might not find
any American house or syndicate ready
to take like amount of faur per cent
bonds at orce. Referring to the Resump-
lion act, Mr.. Hatch said that he did not
think it had any practical effect upon the
market value of United States bonds:
The reason is that the resumption acthas
not been much believed in. Anything
which would make the people believe
that within a short time gold would de-
cline materially, would have the effect Of
reducing the currency pnce otour bonds,
but of increasing the gold price, and the
latter is the true measure Of the growth of
the Government credit. Touching the
existence of sinking fund law, he said
that the consequence of putting 1t into
operation was the beginning of the eleva-
ton of our Government credit all over the
world, and he thought it was an element
which it would be very unfortunate to
destroy.
The effect of the accumulation of gold
for the purpose of redeeming greenbacks
was discussed by Mr.. Hatch, His opin-
ion was that during the process of the
accumulation, the fact that gold was be-
ing made scarcer for its legitimate uses,
would increase its price so that up to
certain pointgold would rise. He thought
that when the accumulation reachedv very
near the point at which it would be con-
sidered that the Government could re-
sumo, it would decline, Notwithstanding
its scarcity, because of the fact that the
Government could at any time make it
par.
The following interesting colloquy in
regard to Mr.. Kelly's 36s interconver-
tibility scheme took place during Mr..
Hatch examination:
Mr.. Hill-You say that there is a great
demand for investment in these perma-
nent securities of the United States, which
l can perfectly understand. Suppose we
pass law authorizing the funding ofthe
greenback currency into sos bonds, what
effect would that have?
Mr.. Hatch-The effect of it would be
for the Government to pay interest on
class of its debt which the public is per-
fectly willing now to hold without inter
est.
Mr.. Hill-Would it not retire the cur
rency?
Mr.. Hatch-Yes; retire it at muir
derous rate. If you want to wipe every
thing out, do that.
Mr.. Kelley-Suppose these bonds were
interconvertible.
Mr.. Hatch That is another thing.
Mr.. Hill-Suppose they are intercon-
vertible at the pleasure only of the hol-
der.
Mr.. Hatch-That is what understand
by interconvertible.
Mr.. Hill-Would not that be in effect
to make it a permanent investment, so
far as the holder is willing to have it
such?
Mr.. Hatch-Yes; but the objection to
that is that it makes the Government a
mere sewer and convenience to pay in
terest on money. that it does nodwant, and
that nobody else wants.
Mr. Kelley-Suppose the law that au-
that required the Secretary of
the Treasury to avail himself Of these
funds first for the purpose OF supplying
the Treasury with any sum of currency
appropriated by Congress beyond the
receipts from the sources of currency re-