New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1879-04-19

ance that a very large amount of unemployed
capital was seeking investment IN Government
bonds. The contrast between the imam
cial condition in this and Ill most
other countries is very sharp. In Orca'
Britain, chief anxiety is i'll regard To the
possible recovery of some part OF the money
loaned i'm the enormous advances to Egypt
or Turkey, or South American governments
I'm Germany and in France, and III nearly al
Continental countries. there Is surplus oi
funds for investment, because no proi-
liable avenue for the employment OF
money there appears. The most absurd mis-
take made by those who have commented
uuon the recent success of the Government
in refundng has been in the supposition that
the large subscriptions for -four per cent bonds
represented condition of stagnation III IN
dustry and commerce here. This mistake
made by some who ought to know better IN
this country, will cause the recent operations
to be regarded with even greater surprise
abroad.
The success of the refunding plan has not
been mainly due to any surplus OF available
capital in this country. The operation has
been entirely understood only by few Of
those bankers whose assistance and enterprise
have contributed so largely to the success oi
the Government They have seen, from the
first, that the problem was wholly one OF subsu-
tuition. Whenever the Government has Oh
tered for sale a low-prlced bond, with
view of retiring bonds bearing higher rate OF
interest. if the public demand for the low
priced bond has been sufficient to start it, there
has been a certainty that the whole loan would
be speedily taken. Money formerly invested
i'm Che xix per cents, as soon as 1t was displaced,
or was apprchcnsiye that it would be displaced,
sought investment III other Government bonds
of lower rate. 4 prospect that the Govern
mcnt would sell $1OO,O0O,G00 has therefore
been equivalent, to all holders of old bonds,
to the prospect that they, to the extent Of
500 900, goo. would be compelled to seek
new investments. Thus every offer to
sell has produced It's corresponding de-
sire to buy. On this simple principle
those banks have acted which have been most
successful and on this principle the opera
tions of the Secretary of the Treasury, 80 bril-
liant and so beneficial to the Government,
have been based.
Few understand how large a proportion of
the holders of the old loans have been
virtually forced to take new bonds, rs FIST
as they were offered. over $Ij0,000,0OO
of the outstanding bonds are held by
National Banks. They are compelled to
hold Government bonds of some class,
and cannot, without sharp reduction of their
surplus. exchange such bonds as may be re-
deemed for other bonds at prices materially
above par. In consequence they are
compelled to purchase the four per cent
bonds. 4 similar necessity exists with
insurance companies, trust companies and
savings banks. The enormous amount OF
bonds held by such Institutions, if retired,
must in the main be replaced by other bonds
of the highest security which represent with
equal certainty market value at least
equal to their par value. In addition, many
millions are invested in Government bonds
by trustees of estates, or under orders Of
courts pending results of suits or settlement
of estates. Also large number Of pri-
vate holders, not engaged in active
business, are reluctant to invest the
funds which give them support in any other
than the safest possible securities, and from
them Il demand for four per cent bonds is
nearly or quite equivalent to the amount OF
six per cent bonds held by them and re-
deemed. Thus it will be seen that IN effect
every offer of the Government to sell new
bonds has caused nearly corresponding de-
maud, independently Of any new investments
of capital
The loan being now closed, and it being
certain that no other four per cent bonds
than those now outstanding can be purchased
until 1850, it Is with reason expected that
the price of these bonds will readily
advance. The difference which has hitherto
prevailed between British and American
rates of interest will not always continue
The use Of the telegraph has virtually oblit-
Grated National lines with respect to invest
ments. All surplus capital that may at
any time be III London, or Paris, or
Frankfort, is equally and instantaneousy
available in New-York or any other city
which can be reached by telegraph. The
question of security has come to be the
only one which governs investors, where
the terms upon which interest is paid
are equally convenient. If there Is surplus
capital anywhere, with rigid integrity this
country can make the whole of II available
for any emergency here. All Of that surplus
capital that we can employ will be drawn to
the support of our industry by strict fidelity
to all obligations, public and private.
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ICE H4JNT non T. NOTHING"