Morning journal and courier., 1880-12-29
aournal al1o Courier.
Wednesday Morning, Dec. 90, 1880
THREE PER oENT. BONDS.


The question whether large part of tn,
national debt can be refunded with thret
per cent. bond is naturally attracting mucI
attention. Those who think it can be bass
their opinion on the great quantity of money
seeking investment, the present and prospec
tive wealth of the country, its splendid
credit, and the success of the four per cents
When the matter is looked at from the
standpoint of Wall street 'tbull' it really
seems as if the proposed three per cents
would be fair investment at par, and g
credulous person might even begin to think
that a two and a half per cent. BOND would
find buyers. But there are good reasons to
doubt the wisdom of the three per cent
scheme. Secretary Sherman, who knows as
much as anybody about the matter does not
believe in lit. The four per cents, even in
this exceptional year, have not risen to q
price that will pay less than three and hall
per cent. The English three per cent con-
soils have been below par for nearly thirty
years, except for brief period last Novem-
ber. What the national banks will do if q
three per cent. bond is adopted must also be
considered. There is no profit for them with
four per cents at present quotations, or on
3.65 bonds at par.
Among the opponents of the three per
cent. scheme is the Boston transcript, and it
gives some reasons for its opposition which
are worth considering It says:
When, few years ago, the government
foated a per cent. loan at par, and it went
heavily at discount at first, the people had
withdrawn their money from savings institu-
tions and capital to large extent was idle
Now business Of every kind is prosperous,
and money accumufates gain with great rap
idity. According to the Massachusetts Savings
Banks Commissioners interesting report Just
issued, the 164 savings institutions in this
State earned $12 100000 the past year, or
$40 per cent. upon their total of assets.
"A glance at the commissioners report shows
that most of the savings bank money draws
at least per cent. interest, and that all save
eleven of the 156 dividend paying banks now
return per cent. or more upon their depos-
its. Are people to be expected to leave an or
dinarily secure per cent. return with an ad-
ditional division of profits and invest in gov
ernment per cents. at par We commend a
study of the Massachusetts, savings banks
commissioners report to the believers in 3
per cents. Money cannot be forced even by
the government below normal rate. This
is still new and only partially developed
country, and the avenues for safe and re-
munerative investment have not yet been SO
overcrowded as to depress the standard in
vestment rate below the lowest standard rate
that has ruled in England for twenty
seven years. British 3 per cent. consols
rule in London to-day at SO 3-16. For brief
period recently they touched par, and this
fact was commented upon as the first time in
twenty years they had reached this
price, and they had sold below so during the
present century. Now, British consols pos
sess an advantage to an Englishman that no
United States bond can possess to an Ameri-
can. The trustee of an English estate who
is responsible for the return of his principal,
can invest at any time in consols and be by
law exempt from this responsibility for the
principal of his trust. This makes large
class of compulsory investors in consols
which we have here represented only in part
by the national banks who are obliged to Sc
cure their circulation with a bond deposit.
Are English investors to sell or pass by con-
soils at 9S4 and buy American per cents at
100? Are savings bank depositors to sur
render A and per cent. and take per
cent. Is single house in Wah stree5 &C
override, for speculative purposes, the rec
ommendation of the head of the Treasury
department and secure the naming of per
cent. loan for its effect upon Wall street spec
ulations? This is, indeed, great country,
but it is in the bloom, not in the full flower
of its prosperity.
If three per cent. bond can ever be float
ed at par in this country now is the time, but
it is not at all certain that the attempt would
be successful. Would it not be better, al
things considered, for Congress to authorize
Secretary Sherman to exchange four per
cent. bonds at par for all outstanding five
and six per cent. bonds?