New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1891-06-13
THE PUBLIC CREDIT.

TO the panic-mOngers who are trying to de-
strOy the credit of the Government in the hope
of partisan advantage few plain words are
proper. Among the shrewdeSt business men
and bankers in the world the market price OF
six per cent Government bonds having only
eight wears to run is 119. The market price
of four per cent bonds having sixteen years to
run is also 119. The deliberate Judgment OF
the most capable men is that the Government
promise to pay 6 per cent yearly for eight years
or per cent yearly for sixteen years is worth
10 per cent premium. 1t is not necessary to
figure out with the mathematical exactneSs OF
an actnary the rate at which buyers actually
invest money at these prices. On the face OF
things it is plain that men who can at any
moment make long loans on the best possible
real estate security at per cent. or even
more and who can buy the bonds OF some OF
the strongest and best corporations at pnces
Welding 5 per cent or more, are willing to pay
more than one per cent premium every year
for Government bonds yielding only per cent.
The Judgment of the whole business world
is absurdy at fault or the story of impending
bankruptcy for the Treasury is entirely 1aiSe'
Yet newspapers which have partisan reason
for assailing the public credit are solemnly dis
cussing the ability of the Secretary OF the Treas
urv to pav off about S54, 600 of four-and-
abaIf rer cent bonds which mature in Septem-
her and are trying to convince people tnat the
Treasury has no power to get gold if there
sbould he need. in order to maintain paper, sill
YER and gold on parity. There ought to be
sense of shame to prevent such efforts, but 1t
seems there is not.
So long as it is known that the Treasury has
ample power and intends to redeem It's legal
tender notes in gold, none of them will be pre-
scented for redemption. When Secretary Sher-
man began resumption he had at command only
about 500, 900 coo in gold, and the Treasury
now has more than S145, 900 not repre-
sented by certificates outstanding. The notes
were then distrusted, had been for many years
at a discount. and had iiuctuated wildly. Now
they have been for many years really better
than gold, and preferred by the people, because
more convenient The power of the Secretary
70 sell limited States bonds practically without
limit in order to obtain any amount or gold
that NAV be needed for the redemption OF notes
is as large and as absolute as it was on the Gay
Of specie resumption. The act comforting thai
mower has never been repealed The bonds
could be sold without difficulty now at
premium of 90 per cent or more WHICH "ou'u
not then have sold at par.
| In the light of these facts, it Is the very
climax of absurdity to argue that Government
cannot maintain gold redemption OF notes II 1t
chooses. But when all the business world knows
these facts no notes will be presented for pay
ment. and none are so presented. The keeping
If n great specie reserve is needful only 10
guard against any emergency, and 1t was the
maxim of the wisest English writer on finance,
Mr.. Walter Bagehot, that the only use OF
reserve was to be freely paid out when any
need appeared. In the same way the proper
use of any reserve in the Treasury is to protect
the public credit by prompt payment OF any
obligation of any kind that may fall due and
! be presented, and with an available balance OF
S145, OOO, 900 on hand Government will not
be 50 stupid as to destroy it's own credit by re-
fusing payment Of any of the four and-a-haf
ner cent bonds that holders may wish to have
paid.
All this partisan panic -mongering becomes
still more foolish, if possible, when it is known
that the strongest financial institutions in the
country stand ready to take nearly or quite the
whole of the S54 100000 outstanding bonds,
and to extend them at . per cent interest A
Government that has such an offer made to it
by men of great resources and shrewdnesS is
long way from bankruptcy. There is much
more danger that bankruptcy will be1all the
barty which stands in need of such devices.