Wichita eagle. [volume] (Wichita, Kan.) 1886-1890, 1888-05-13
THE BOND BIDS.
The Administration Going Back on tho
Proposition to Reduce tho Surplus by
Purchasing Outstanding Bonds.

The Administration Going Back on tho
Proposition to Reduce tho Surplus by
Purchasing Outstanding Bonds.
1t is quite evident that the Administra-
ton does not desire to employ any consider
able part Of the surplus for the purchase Of
bonds Having backed down from its for
mer position that the purchase Of bonds not
due was not authorized by law, bids for the
sale Of bonds to the Government were in
vited, received and opened. The offerings
aggregated $685., 600 of per cents and ST.
$4,000 of AZ per cents. The market price
of the per cents is 12475, and they were
offered to the Government at 124.70 to
125.75 The Secretary of the Treasury ac-
cepted $4,000 offered at 125 or less, and re-
jected the remainder. The market price of
the 412 per cents is 106. 3712, and the amount
named above was offered at 1071a to los. l2l2.
All the bids for these bonds were rejected.
It is well-estabIished principle of trade,
says the Cleveland Leader, that whoever is
forced to sell must expect to get some thing
less than the real value of his goods. The
corollory of this is that whoever is greatly
in need to buy what holders are not anx-
ious to sell must expect to pay little moro
than the current rate. That is the situation
of the Federal Treasury It has an enor
nous surplus, and is impelled by the ext
gencies of the situation and the demands Of
public sentiment to employ part Of this
money in purchasing bonds not due. The
Secretary had no right to expect under the
circumstances that there would he any con-
siderable offerings at the lowest market
rates, and it was his duty to accept all that
only slightly exceeded such rates. The ex
cess asked above the market price IN this
case was only about 81, 900 on the whole
amount offered, 81, S24, 900.
That it was to the interest of the Govern
ment to accept all the bonds offered can
easily be shown. The per cent. bonds
have nineteen years to run. Each $1,000
of these bonds will cost the Government
sl,76O in principal and interest if allowed
to run until maturity. They were offered
to the extent Of $685., 600 at an average Of
S1,255 for each $1,000. By accepting them
the Government could have saved 1906 on
each 81, 600 offered, or S320,G75 on the whole
amount, for it receives no interest on the
surplus accumulations. Figuring from this
time these $685., 900 of per cents will have
cost the Government 81, 176,0o0 at maturity.
1t could buv them now for s798, 925. Their
market price in New York recently was
sT92, 16S, difference or excess in favor of
the bidders, of 81, 562.
The Az per cents have three years to
run. Each 81 Zoo will have cost the Gov
eminent sl,135 at maturity. figuring from
this time. They were offered at an average
of S1,0T7.50. The Government could have
saved $3.50 on each $1,000 bond, or total
OF S5S, +02 on the whole amount offered. Their
market price recently was G,0137 rs. The
Secretary rejected every one OF these bonds
offered
The holders of bonds have learned that
the Administration is not any more anxious
70 buy than they are TO sell, and they Will
probably make few offers In the future. I'm
less there is stringency in the money mar
ket- The Administration VIII then say 10
Congress that II is unable to buy bonds at
fair price, and that theprotective tariff must
he ont oav--r,