The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1877-06-23
The New Four Per Cent. Loan.

The importance of the negotiation Just ef
icctcd with the new syndicate for the four per
cent. thirty years loan of the United States
can hardly be overestimated 1t will attract
attention throughout the financial world, de.
monstrating MS il does the high point to which
our government credit has attained, in effect
ing saving Of one third in The interest on
its loans, as compared with six per cent. at
which so many hundred millions had been
previously negotiated. This loan is taken
now absolutely to the extent of $4,000, 900
at par in coin by the syndicate, in addition
to which they have a contract running for six
months with the Secretary Of the rrnasury
for any additional amount of the loan upon
the same terms-thnt is, they will take fur
ther amounts rs they find they can place
them. Meantime, however, the public will
be free to subscribe direct to this loan, the
aggregate Of which is S7O0,0O0,OO0, within
thirty days after notice shall have boon given
at any time by the government of It's readi.
ness 10 receive subscriptions This is u
feature not in connection with any Of the
other late negotiations, and is calculated to
so popularize the loan as to bring the money
Of small investors into il. The six months
privilege for the whole loan enjoyed by the
syndicate may or may not be awaited Of
The philadelphia Ledger, in m interesting
article on the subject, says.
"Iho new contract appears TO leave TO the
syndicate the control Of the whole 700 million
of four per cents. The a per cents are now
securities of the past, and command hand.
some premium. The per cents now come
to the front and offer themselves to investors
rs the final bond of the United States. They
have thirty years 10 run before the treasury
can exercise the right Of calling them in at
par, and this fact, with their present author
iZcd amount of 500, 900. which is likely
TO be increased TO the fall amount of all out.
standing at higher rates ofiutcrest, makes
them the most desirable of investments for
all who wish long dates, the best security and
freedom from taxation. The national baks
alone hold not much less than 800, 900, 900
Of the United States bonds at this date. in
Guiding temporary investments and the $685.,
1885, 900 which they had on SATURDAY on
deposit with the treasury. II is the interest
OF the banks to make considerable exchanges
of their present holding for the per cent.
loan, and thus get their bonded investment
into shape that shall be free from disturb.
ance, The saving banks throughout the
country hold largely Of United States bonds,
and for the most part count them in their
assets at market value; they have, therefore.
a lively interest in buying the / per cents,
because they will thus get the maximum of
principal aud the minimum Of premium. an
important consideration in view of the nc,1.
table advance of their currency deposits to
par N gold. The new loan, administered in
the spirit IN which 1t is opened, leads the
way to the resumption Of specie payments
aud TO the unlicHtion Of the public debt.
The law concentrates the permanent use as
currency of $500, 100000 of legal tender
notes, while the national banks are left free,
as they have beeu for three years, TO expand
or to contract their circulation as the wants
OF their business may suggest. The sale of
the new loan will bring upon the market large
amounts OF the older issues, discarded by in.
stitutions that held them on u currency basis.
ia the meantime the withdrawal OF 81, OuU,.
900 monthly in gold and legal tenders will
gradually cause enough of u vacuum in the
market to insure the retention in this country
OF our own product of gold, if not TO bring a
certain amount of gold from abroad. The
advantages Of the loan are manifest the rate
OF interest being n saving of une.thrd on the
q per cent. bonds, which will be retired, and
the bonds running for II long term An inn
portant matter IN connection with this new
arrangement-it gives; Us is believed, a quic.
tus to the mischleyOus aspect of the SILVER
question. IL utmpu-lrAitS tUAt Whatever may
be done By Congress toward the reconciliation
Of silver will not extend 50 far as to make
that metal u medium for paying our national
bonds The syndicate would not have con.
tractcd to take the = per cent bonds withou,
n satisfactory guarantee that they will not be
paid IN silver coin OF the present standard
A contract to pay several hundred millions
in coin at time when no coin but gold is a
legal tender for sums greater than five dollars
is unquestionahly contract to pay gold.
Upon all grounds therefore, the best results
may be hoped for the credit and business Of
the people of the United States from the
successful beginning OF the sale Of the four
per cent loan.
1t will be recollcctcd that the syndicate
have, in accordance with the request of the
Secretary ofthe Treasury, given up the right
10 caN for the last SlOJ,ODO,OJO of the $780,.
100000 Of q per cents covered by their op.
ton expiring on the 30th instant. 1t is sup
posed that the secretary will sell for gold
outright, from time to time, Of the one hun.
bred millions of ~ per cents withdrawn from
the old syndicate, convert the coin into legal.
tenders and make such disposition Of the
latter as his Interpretation OF the resumption
act of 1915 permits.