Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1886-07-10
STATE BONDS.
SOME EFFECTS OF THEIR PURCHASE
BY THE COMMONWEALTH.
"a Msmber'sn Objection to tho Policy Of
Purchase Considered and Answered.
SO, the plspatch.l

y
diior, who," he says, is doubtless
preparing the public mind for the first
grand monthly drawing out OF the Trea-
sury Of 800, 900 to buy Riddles which
have been issued to the brokers In ex-
change for peelers and other non-cou-
pon.bearing evidences Of debt bought
up by them at mere song"
IL is true that the Second Auditor
did furnish most Of the information on
which the greater part OF the article
was based and as it is criticised as
being an inspiration Of that officer, be
respectfully begs leayeto break lance
in its behalf. As - A Member has
not chosen to lift his vizor, his name
cannot be exposed in this reply though
bis mistakes will be. 1t is enough Tor
the purpose in hand to say that he is
coniectured to be a very intelligent man,
who was an original, active, staunch,
and leading Readjustcr; and is now
Democratic member of the House OF
Delegates, and a conspicuous member
of its Committee on Finance. 1t may
prepare the reader for some farther
mistakes Of "a Member" thus re-
lated to the question, to be informed
that not 100000, but $4,000 was
the sum that was reported from his
Finance Committee to be drawn monthly
from the Treasury for the purchase OF
new SIS.
The tone of his remark about the pur-
chase Of Riddleberger bonds appears to
indicate dissatisfaction with the Riddle
berger act. But it is to be remembered
that that act specifically prescribes the
exchange of the bonds it ordered to be
issued. for eight different classes OF Sc
curities regardless Of Who held them, and
what they might have cost the holders
Acts Of Assembly, lSS0r8l, page "a.
This act was passed by the party to
which &" A Member" then belonged;
and. so far as is known, without any
protest from him. Subsequently it
was adopted as their ultimatum by the
Democratic party in 1888, at the Lynch
burg Convention, where " A Member "
was one of the Committee on Resolutions
which so reported it and it has re-
manned q plank in the Democratic
platform ever since having been ap-
proved by the Joint resolutions of the
Legislatures of lSS3-'S4 and 1886,
and by the Democratic Convention of
1883. Does he object to that act?
Or does "A Member " merely mean
TO complain that the purchase of Rid
dleberger's by the State will put up the
bonds: If so, then the reply is one of
fact, and here it is For one month be-
fore the passage Of the act of March 8,
1856, authorizing the purchase of these
bonds, the price was 500. In the next
month, up to April 9th, the price had
risen to GA. In consequence OF the
right or purpose of the commissioner
to purchase q? Not at all for on April
9th, the Commissioners Of the Sinking
Fund decided not to buy; and in the
next week the bonds rose TO G54, and
have continued to rise ever since,
though in NAY and June the Commits
siopers still decided not TO buy.
What then kept them up? Why
these causes Now, as in all times of
great business depression, capital IS
withdrawn from productive enterprises
ard burrows in stocks and bonds for
safety. The best Of these at such
periods are aOon absorbed, atprices which
pay but low rates of interest; just as
at this time United States 3's are worth
leo. But some investors desire moro
interest, and seek for what will pay
il. In this case such search discov-
cred Riddleberger 3's--s3, 2G4, O4j AZ
in private hands-which at their present
price are now worth within fraction of
5 per cent. interest. These people see
that the State means to pay these bonds /;
and their assurance Of that fact, together
with the limited supply, puts up the
price, regardless Of what Wall-Street
and Baltimore and Lombard-Street
stock.gamblers may say. If the pro-
position Of the State to buy $50, 900 OF
them puts up the price at all, it is just
as an order from an individual to buy
so large a block would put them up ;
except, perhaps, that it might acCredit
them somewhat more for the State to
show her confidence in them by buying
and f,rHding large amounts of them
periodically.
"a Member" speaks of " the accu-
mutation Of money IN the Treasury for
the eight months past with the under
standing and fixed purpose of the
Board" ,of SinkiDg.Fund COmmis-
sioners) "to empty the Treasury of its
last dollar of surplus in the purchase
of Riddles But no matter what the
accumulation, nor how long 1t has been
accommodating, the Board is restricted
to $4,000 per month; and if every
dollar Of this should be invested, it
would only be 100000 per annum ;
being Just about the annual sum that
was spent in this way for the last two
yeaIs--an expenditure which, so far
from breaking the State, has left hel
with s2,077,743.G0 registered rs ii
the sinking fund, worth, at present
prices, sl,4G4,7l9.50, and showing q
gain on the average price paid OF about
= - per cent.
But as April, May, and June, three
months of the authorized operation Of
this law, elapsed without purchase o
; bonds, only $3.50, 900 can be spent thi:
, year, But there was in the Treasury
TO the credit of the Commonwealth OF
The 30,h of June a cash balance OIL
SG5S, 7S2.04, and on July 9TH casl
balance OF s73G,9253S, though larg,
payments had been made on the frs
: day of July, including July interest
r and the Auditor Of Public Accounts cal
n see no reason for any very great reduc
ton in this balance.
Surprising, therefore. that the present
plan Of purchasing shall go on from THU
+ time TO the LIST day of April, 1888, ant
that the price Of new 3's shall be, say
20 in round numbers, then the Stat,
n will have Of her own bonds
From purchases under prior
e 077,li3 81
- From July /. 1886. TO April /.
1ses both inclusive pre-
sent law 1,571,42s g.
lOthi's',.......s...,.s....... ., O4V,l12