The sun. [volume] (New York [N.Y.]) 1833-1916, 1879-01-30

The plethoric condition Of the money mar
ket and the low rates of interest which pre-
vail in general commerce have no doubt,
had much to do with the large and con-
tinued demand for Government four per
cent. bonds. We do not refer to the pho
nomenally large subscriptions since Jan. l.
These do not represent II normal market,
but are directly due to the facilities OF one
or two banks for making enormous profits
in n short time and without risk, under
JoHN SHEBMAN's more than patornal favor
About eighteen months ago tho Bowcry
Savings Bank reduced the rate of interest
on its mortgage loans from seven to six per
cent. The Mutual Life Insurance Company
followed suit, and since then all its mort
gage loans have, rs we understand been
made ut six per cent. which may be consid-
cred at present the current rate for sound
loan on city real estate. Other insurance com
panies have, as rule, made no reduction IN
the rate Of interest, and still insist on seven
per cent on new loans. Naturally, the
choicest loans have been secured 10y the SIX
per cent. lenders, companies, estates, aud
individuals.
Never before in the financial history OF
the country has there been so great an
amount Of accumulated capital at this cen
tire seeking investment as to-day. Call
loans are two and three per cent on stocks
and one and two ON Governments. Sixty
and ninety day loans are made at three per
cent on stocks and at one and half aud two
per cent. on Government bonds. Prime mer-
camille paper is discounted at three and n
half TO five per cent, according to date Of
maturity. Money Is flowing into New York
banks at rate which is anything but Hat
tcrng to the abilities OF its owners. The
aggregate deposits ON the 18th OF January
1879, show an increase of S7.sl0,O00 over
those of the corresponding date in 1878.
1t is very questionable whether in the
present era OF small profits and low prices
borrowers can afford to payas much for the
use Of capital as they once could. The
annual taxes. national. state. and local, are
fully triple the amount they were twenty
years ago. This is charge ON the net
earnings Of the agriculture, industry, and
commerce Of the country. and must very
sensibly reduce the profits Of business.
Our chief capitalists are scli-madc men,
familiar with the various modes Of employ
ing capital actively, in railroads steam
boats, building, manufactures, trade and
speculation. These men are not likely to be
satisfied with four per cent. as n permanent
rate of interest. Much money invested
temporarily in the Government four per
cent bonds merely awaits opportunities for
permanent profitable investment, or for en-
ployment in industrial and commercial ven
lures. The risks Of lending money have been
| greatly diminished, and are more easily as
certalnable than formerly. The number Of
! firms with ample capital and established
credit has largely INCREASED, while the weak
ones have, in great measure. been weeded
out. Because OF these diminished risks. and
other kindred circumstances. the lender can
afford TO accept lower ratio OF interest.
Government four per cents will no doubt
be sought after as u safe investment for the
surplus accumulations OF the rich and the
savings OF the poor. We have in this coun-
try very considerable and growing class
IN the enjoyment Of modest fortunes, each
yielding support To one or to a few persons,
and not readily available for the ordinary
forms OF business investment. This class,
wishing safe Investment, and willing 10
accept a very moderate income from il, are
| investing in Government fours. large
amount Of capital held in trust for widows,
orphans, minor heirs, and others, very
properly seeks the new loan. II Is favor
ite investment with trustees and executors.
sure Of their principal, aud sure Of realizing
on it with little trouble whenever needed.
So-callcd good old-fashioned seven per
cent. investments" are very scarce.