The Providence news. (Providence [R.I.]) 1891-1906, 1894-11-14
THE BOND ISSUE.

Ihere can DC no DOUBT thaJ the issue
of new series of bonds 10y the Govern
ment at just this. time will greatly bene-
fit trade and general finance. The
Presidents reasons for Fastening the
issue, in defiance OF the judgment of the
Secretary of the Treasury, are also per-
ceived to rest upon very good ground
work of shrewd sense. No doubt Con-
gress would make bungle of the business
if il got any chance at it. and Mr.. CLEvE-
LAND has at least learned that his advice
to tire BrmUcrutic Congress rs h1tt m
very cheap esteem.
New Government bonds will furnish
employment for some of the idle money
now locked up, and entirely worthless
70 the business OF the country, and will
act as a regulator for speculative opera
tions to some extent, just at the time
when speculation begins to show signs
Of activity and there is the always pres
ent danger of foolish plunging. When
money has been damned backed for
period IT'S release into channels of ac-
tivity is often attended with freshet
features, very like the sudden release of
large body of water; while its gradual
dispersion enriches the soil of business,
its rush often leaves wide track of
desolation.
The benefit of the new issue to the
Government is likely to be much greater
than that Of The last issue, for the reason
that the President has learned that it is
profitable TO enlist the aid of the bank
ing interests when he wishes TO sell
bonds. The net gain of gold in the
treasury by the issue of the latest bonds
was only about three-fourths the face
value of the bonds, for the reason that
much OF the gold used in purchasing
them was withdrawn from the Treasury.
Now it is understood that by an
agreement regarding the terms
and method of subscription the
subscribing banks will use the gold in
their vaults TO pay for the bonds, and
will not demand gold in payment for
such bonds as they sell TO investors or
other banks.
This arrangement will result in n gain
to the treasury gold Of about the Face Of
the bond-issue with the premium added.
The premium will equal .. per cent. for
the time the bonds run, as thsy are 60
be marketed on 3-per cent. basis. If
the bonds run ten years, as is expected,
there will be, speaking somewhat loosely
and ignoring some items of expense not
easily TO be reckoned beforehand, 20 per
cent. above par. SO that the whole issue
ought TO yield gross return Of about
$50 10000 The $4,000 900 issue of
last February only neted the treasury
about 20 per cent in gold, because s,
much gold was drawn out to pay for the
bonds. This happened because the Gov
ernment had no understanding with the
banks that had gold, and took no pains
10 study the matter. 1t is not to be sup
posed that holders of gold will surrender
it TO the Government without equivalent
when it can be otherwise proit,bly en-
ployed.
Another benefit Of this method of
awarding the bond issue will be that the
marketing of the bonds by the banking
syndicate that takes them from the
Government, upon the basis of cheek or
currency payment, will tend TO break
mp money massed in safc-keeping, and
will have some effect in promoting n
freer use of funds long Withdrawn.
There will be no demand upon large
holders OF gold, nor upon the treasury,
except uron the first land purchasers,
aud they have more than enough of the
yellow metal g. effect their purpose that
they are willing TO part with.
Ifthere was any demand for more cur
rency for circulation the new bonds
might lie very profiiably used 10y national
banks as basis for new issues Of bank
notes, the 10 per cent allowed In excess
Of bonds deposited permitting ialgs