New-York tribune., 1879-05-19
PERuAYEGT VALUE Of THE FOUR PER


The following letter states a question when
has been raised within the past month by
many thousands besides the writer:
10 the Editor OF the TrtbHHs
SIR; AS THE TRIBUNE has always appeared fav-
orably impressed with the new Government four per
cent oan wish to make one inquiry respecting it as
permanent investment As trade revives, aud values
assume about the proportion of before the Civil War; s
II not probable that the market value OF the four per
cent bonds will shrink considerably below par Respect
fully yours, J' W. hISAAN'
Berlin, Wis, May /, 1879.
The belief that four per cent bonds will fall
below par is based upon the impression that
the prevailing and ordinary rate of interest,
in loans of unquestioned security and on long
time, will presently go above 6 per cent again.
For tho United States bond, being exempt
from taxation which averages over per
cent on other forms of property, will
probably command par, with per cent
interest, as long as the rate of interest
on other loans of the best security and on
long time does not rule much above per
cent. There are two reasons for believing
that such condition of the money market as
to warrant more than 4 per cent interest on
untaxed bonds will not be seen again in this
country, except for short and uncertain periods.
]. This country has been accumulating sur
plus wealth at such a rate that, in spite of
payment of $500 100000 of foreign debt last
year, there appeared an increase rather than
decrease in the amount of idle capital at
home Those branches of industry IN which
capital is most required, especially manufac-
lures, mining and banking, have been compare
lively over-crowded. New establishments are
L. J,I ,rlo o,f nd
larger markets for those already existing. For
some years, apparently, the opportunities for
investment of new capital i'll such employ
ments will probably be inadequate even for
the amount of funds accumulated % by in
terest on past investments, and (2) by the
annual savings of the people. But, more
over:
ii. The general use of the telegraph, and the
extensive circulation Of bonds as a species of
international money for the ready transfer of
funds, have altogether changed the relations
of the money markets to each other. All the
available capital that is in London, Paris,
Frankfort or Berlin, at any time, is really at
the same time equally available at an hours no.
tice in New-YOrk. Sales Of Government bonds
take place every day in one market, the bonds
themselves being held and offered in the
other, thousands of miles away. Sales of rail-
road bonds or stocks are made in the same
way, as 100000 Erie bonds, held here, were
sold in London last week. by these and
many similar transactions, available and
loanablc capital amounting to many millions
can in an instant be transferred from any
one of the money markets TO any other where it
can gethigher wages. Underthese circumstances,
it does not seem that it will ever be possible
hereafter to hold the rate of interest here
permanently above that which prevails in
other countries. The tendency is toward an
international rate Of interest, based not at all
upon the worlds supply of currency, metallic
or other, but upon the worlds supply of avail
able and unemployed capital compared with
the avenues opened for its employment.