Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1894-03-22
Why Bankers Want Bonds.

There are several reasons why ra-
tional bankers are so anxious at all
times to increase the bonded debt OF
the United States.
First, because bonds are SAFE in
vestmelt. 3. They furnish Il long
term investment. 3. There Is no
trouble in collecting lnterest-Uncle
Sam pays it over every three months
AID it goes to compromising. 4. The
interest is always high enough to make
them a paying Investment. D. The
money so invested escapes taxation.
6. The bank buying. say $4,000 of
bonds is entitled to. virtually. loan
of so, 0)) from the government at one
per cent per annum. The bank notes
are not subject to any other tax than
this one per cent and other small Incl
dental expenses, so that. as a matter of
fact. the 800 .0O) is free loan by the
government.
1t Is clear therefore. that the ma
tional bankers like bonds because they
find large and certain profits in the debt
obligations of the nation. Some one
whose sympathies are with the money
power may say, ':Show us where the
bankers profits come in on ) per cent
bonds. / never did believe half what
I've heard about the national bankers
bonanza" Inasmuch as such a person
would have more faith in the figures of
the bankers themselves on this ques-
ton, we will introduce their own testi-
monv. Last week A. W. Sherman,
cashier of the Gallatin National Bank
ofNew York city, made calculation of
the value of the 5 per cent bonds tor
banking purposes. He furnished the
bauk presidents of New York city
with the result of his calculations. Mr..
Sherman calculated on the basis of a
purchase of 1000. O0) of the bonds to
run for ten years and to be redeemed
at par at the expiration Of that time.
Here are his figures:
Cost of bonds at Iii, 223 81, 172 200
Amount of circulation constantly
outstanding, say -.-......--.-.-........ $50, 900
Money invested ...---..- So, 200
Income, ) per cent on 81 100000 $4,000
Less l per cent on circulation
outstanding .................-..... $500
Annual charge for sinking fund $4,000
Sundry expenses etc 500
Net income ACKNOWLEDGEMENTS. 27,7O0
The S27.700 equals SCI per cent on
the 1922. 200 net annual investment.
According to the bankers own fig
ures the per cent bonds. bought for
banking purposes, gives SCI pencent
returns on the investment While he
was faithful to name the 1 per cent tax
on circulation, annual charge for sink
ing fund, sundry expenses, and all the
expenses of the bankers, he has left
out of consideration three important
features of profit to the bankers.
Whether this was done Intentionally
we know not; but the people want the
acholc truth.
His first mistake is concerning the
amount invested. The cost of$1. O00.-
900 bonds at 117.223 is Slip, 200.
Mr.. Sherman subtracts $3.50, 900, sup
posed to be bank notes outstanding.
from the S1,172. 200, leaving 1922, 200
which he calls the Investment"
This, however, juggles with the facts.
for the government issues 5000, 900,
bank notes an the 81 900, 900 of bonds,
and 5000, 900, the amount the govern
ment returns to the bankers, subtracted
from the SLIP, 200, the cost of the
bonds, leaves an ..investrnent" of only
$272,200 instead of $322,200. The
government returns 100000 to the
bankers in bank notes, and If they
don't have but $S5O'OO0 outstanding it
cuts no figure in the investment. The
net income of $27,7OO, on an inves-
ment of 1912; 200 is fraction over 10
per cent.
Mr.. Sherman never made any calcu-
lation of the quarterly compound inter-
est. and did not mention the 2 per
cent of taxes saved by investing in
non-taxable bonds. When these things
are all taken into account it is clear
that the $40 bonds proposed to be is
sued by Secretary Carlisle furnish ma
tlonal bankers II per cent Investment
for their idle money. In addition to
that it broadens the foundation of the
national banking system, which rests
on the national debt, and is another
step in the direction of giving them
perpetual control of the finances the
country, whereas the government
should do this itself. directly, instead
OF turning over to selfish corporations
the most Important prerogative of gov
ernment.-Jonrnat Of agriculture.