Northern tribune. [volume] (Cheboygan, Mich.) 1875-1885, 1878-08-17
An Encouraging Indication.

tiOuS TO the new tour prr cent. loan av-
eraged between 100000 and 100000
daily. Thus far the present mouth this
average has been exceeded. and the pros
poets are that by the close Of The mouth
tie subscriptions will be several million
dollars in excess of those for July. So
far as the government is concerned.th there
are so many bonds which are redcemable
ut its pleasure in coin that this tour per
cent. subscriptions can hardly come in
too fast. On the 3lst of July, when the
last public debt statement was issued.
there was In round numbers $450000,000
of SIX per cent. which could be redeem
ed ut any time when the government was
able. and this sum is sufficiently large to
permit of daily subscriptions to the four
per cent. averaging nearly one million
dollars for every working day for a year
and half. or until the close of January
1880. After the available six per cents
are taken up and redeemed-if this
should happen during 1SS0-the govern
ment has outstanding about $l95.000,000
of fives. which can then be redeemed
BY the proceeds of the sales of four per
cents. In 1881 the remaining six per
cents. amounting to 2S3000,000. are
PAYABLE or redeemabe. and at the same
time the five per cent. funded loan,
amounting to S50S.000OO0 can be taken
up as the government procures the
means.
The transfer Of six per cent. bonds into
four per cents. which is practically what
the sale of the four per cents amount to.
will. undoubtedly increase rapidly as 1t
becomes apparent TO the present holders
of tie bonds bearing the higher rate OF
interest that it will be only a short time
when those bonds will be called in and
redeemed. The fact that the subscrip-
lions are coming i'm so freely will have a
tendency to induce the holders of skies.
which are among the first to be called to
subscribe themselves in order to secure a
safe investment, even at a much lower
rate of interest. When this force gets
fairly into motion, producing a competi-
ton between the invested capital i'm
bonds aud the surplus capital locking
for investment. we look to see great i'm
petus given TO the -four per cent. bonds.
The success Of the four per cent. loan
can only be regarded with feelings OF
unmiXpd satisfaction and is productive OF
good i'm a multitude oe ways. In the first
place each million of dollars subscribed
means an annual saving to the country
i'm interest of $4,000. Then the fact that
the great bulk of United States bonds
are now held at home is of unusual
value, because by reason thereof the
ravment of the SKIES does not render
necessary transfer of part of the surplus
capital of this country TO Great Britain
or Germany. and does not diminish to
any noteworthy extent the surplus i'm the
United States tor private Investment. 1t
also facilitates the sale and purchase OF
bonds. But If the bulk of the skies were
held in Europe, the subscriptions i'm the
United States TO the four per cents.
would 90 from the treasury 10 the for
eign holders and the stock of specie in
private hands would be largely depleted.
With the skies to be redeemed held in
this country. The gold received for their
payment remains here, and after one call
has been made the money then received
can 90 back and forth dozen times, and
there is no d:ain of any kind. If the
payments went to Europe fresh gold
would have to be found for every fresh
would reap the enefit of the eduction in
intel est, it would be accompanied with
some drawbacks.
liAS iDOSJ 'OilSNAtt
alton in connection with the movement
in four per cents. is to be found in the
reduction. as relating 10 all unemployed
capital, it makes in the standard rate of
interest. 1t may be accepted as an axiom
that in any well governed country the
interest which the gOyernm mt pays rep
resents the highest credit in that conn
try. and that the rate of interest in gen.
~ IL lit tx> &F,nf .x-1i ah
the government pays. When the gov
ernment is in the market as borrower
at the rate of six per cent. per annum,
the private borrower must compete
against the rate, and must paw a higher
rate of interest, varying according to the
security which he can offer. When gov
ernment securities find ready sale at four
per cent. it shows not only TINT there is
a surplus of capital. but indichtes that
the private borrower, with equal good
security to that which he formerly had.
can procure loans on much more favora-
bic terms,
To put the case little differently, as
Indicating the probable effect of sue
cessful four per cent. loan upon business
and industrial enterprise. There is a
large surplus of capital in the country.
Formerly the choice was offered it OF be-
ing locked up in six per cent. bonI or
of taking the chances in private enter
plises. Now the scale of competition has
been changed greatly to the benefit of the
industrial classes. So far rs the great
source of investment offered by the gov
eminent is concerned, the induceme
held out are four per cent. or itllcness.
and it is against four per cent. which pri-
vate enterprise must offer a better re-
muneratiOn. A reduction in the rate OF
Interest which the government pays has
the inevitable tendency, therefore. of en-
couraging business and industrial aciivi
ty.-DetrOit Free Press.