The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1886-12-01
Under this head the Examiner saws

With the reduction of the national debt byi the
repeated calls for the optional bonds trust funds
invested in them have been involuntarily convert
ed into money, and the underlying mortgage
bonds of well-established railroad properties
have been substituted; so that the low rate of in
terest derived from investment securities dates
its origin from the commencement of the reduc-
tion of the national bonded debt. AS the rate of
interest has moved down, the premium on invest
market value of United States As in 1880 was
108, yielding an income to the investor of 334 per
cent per annum, while in 1885 the price has ruled
above 1877, and the interest from an investment
at that value is less than 212 per cent, In 1880
District of Columbia 3-65s sold at 90 and today
they are worth 121,
City of Cleveland, O.es, due in 1897 were avail
able at 108, yielding than 51a per cent interest;
now, six years nearer maturity, they easily com
per annum: The same ratio holds true with the
securities of Boston, Chicago, Detroit st. Louis
and other cities whose credit places their bonds
within the puryiew Of investment securities In
railroad bonds similar appreciation has taken
place, which can be no more plainly illustrated
than by calling attention to the fact, that in 1880
the per cent consolidated mortgage bonds of the
Maine Central sold at 107 yielding 5-8 per
cent interest, while now they are held at 1873 to
Tbee condons do no pay p per the cent Pas
small cities with the same force, or to bonds of
less prosperous railroads or securities of miscel-
The result of this is that fiduciary institutions
and individuals who have confined their invest
ments since 1880 TO what may be called strictly
profit by the rise in the value Of their holdings,
througn the decline In the rate Of interest to be
derived from quick assets; viii e others who have
regarded the absolute soundness and cOnVerti-
bility as secondary to the. rate of interest, and
have invested IN the bonds Of small cities and
countless bonds OF railroads of predetermined
promise and bonds OF corporations having only a
local reputation, have realized comparatively
nothing from appreciation Of the value OF their
securities
Assuming that the United States government
VIII continue the ratio of reduction of the ma
tlonal DEBT. until the $25O,0 0,0u0 Of 412 per
cent. bends maturing in 1891 shall have been
pald, ~ seems obvious that strictly Investment n
securities must continue to command hgn
premium wnlle perhaps those Just outside tldi
class may sell at very low price.
Inc investment money now absorbed in govern,
lnent securltes (being largely held by indlyldua
anu corporate trusts] will eagerly acquire lhe
nearest equivalent to United States bonds IN
Saiety and c0nvertlbity with little regard 10 ihe
low rate Oh interest TO be derived therefr0nl. a.
Inere are practically two kinds of money az VI.
present llme IN this country, viz: lnVesi@men @
money, demanding absolute security, anu Cum
meIclal money seeking profits. -, r.
Inc annual reports Of the Bank examiner ~, ioi
bne last lteen years demonstrate clearly llt. W
savings banks which have invested Their uep1slt'
Id the choicest securities have enjoyed tne nshss
uegree OF prosperity and are in cOnultiun .ous,
| 70 meet the emergency of a geneIal h.a.eia ~ q
crisis without danger Of disaster or loss W tneh
| creditors.
The losses which have been sustained nave gen gen
| erany occurred through Investments III hiooeha