The herald., 1896-01-08
WEDNESDAY. JANUARY 8. 1896
FLOATING THE BONDS

It is very probable that the scheme
to float $100,000,000 in bonds by popu-
lar subscription will fail. The failure
may be because of one of two reasons,
or possibly because Of both. In the
first place it is very doubtful if as good
a price can be obtained for the bonds
if they are sold in small quantities as
they will bring if the entire issue is
disposed Of to syndicate. While it is
true that ordinarily prices at retail
rule higher than at wholesale, the prin-
ciple involved is not applicable to bond
transactions of the kind under consid-
Grafton.
The investing classes that the advo-
Gates of popular loans have in mind,
usually demand investments running
shorter time and bearing better rates
of interest than those which are ac-
ceptable to the people who make up
syndicates capable of taking $50,000,-
900 or $l00,000,000 in bonds in single
deal. People in the United States with
sums of, cay, $1,000 to $1,000.000, are
seldom content to invest in long time
bond, bond running over half the
average lifetime of individuals, and take
only or 81 per cent for their money.
As long as money can be safely invested
in real estate or corporation securities
running but a few years and paying
from to 10 per cent, there will not be
an abundance of people standing
around and waiting to bid for thirty
will net them only to 80 per cent.
A loan of the kind the government is
now floating is, however, exceedingly
acceptable to the great capitalists of
the world, the men who, because of the
abundance of the wealth they own or
Immediately control, are prepared to
enter into the formation of syndicates
to the tune of five, ten or twenty mill
ions each. With these people security
and permanence Of investment are
vastly more important than a high
rate of interest, and the latter is sacri-
feed to the two former essentials.
Hence it is likely that the government
will obtain gold on more advantageous
terms from syndicate, it is inmate
rial whether it is Morgan, Smith or
Jones syndicate, than from the people
at large. And that such is the case is
a cause for congratulation, as it indi-
Gates that the ordinary or small for
tune holder can find more profitable
opportunities in the common channels
of business than in government loans.
Again, the latest advices from Wash
ington indicate that the drain on the
gold reserve will not permit of tine de-
ley necessary to make popular sale
of the bonds. 1t is apparent that the
demands on the reserve have been aug
mented, whether by preconcerted ar
rangement to hasten the bond issue or
because of ordinary reasons it is i'm
material, and it can make no difference
in the view that the treasury officials
must take Their chief consideration
Ia the maintenance of the reserve and
il they cannot keep it up by selling
bonds in one way they must adopt
another. It would take few hours
only to close deal with small num-
ber of bankers, bat it may require the
full thirty days to close a deal with in
dividuals and bankers all over the
country. Before thirty. even ten, days
the treasury can be cleared of every
dollar of gold and thousands of note
holders clamor in vain for the metal
The obtaining of gold for the reserve
is business proposition, not a senti.
mental one, and it should be obtained
in the shortest time, consistent with
reasonable terms, whether it comes
from the vaults of five men or five
thousand. The government is not
floating bonds for fun or to please the
largest number of people possible, but
to get gold. As matter of fact, if it
gets it from the few that have plenty of
it, rather than from the many who
would have to scrape for it, the coun-
try at large will be better off. 1t is
about time for the American people to
ignore the buncomb of the street cor
ner financier and the slush of the
financial sentimentalist and look at
business matter in a business LIGHT