Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1897-05-06
"A PIVOTAL MOVEMENT"
How Bonds Are Affected by the Pres
emit Cnrrencv Sxafem.

emit Currency System.
The agricultural classes are not the
only ones who are called on to make
sacrifices to the gold standard. In fact
the great financial interests represented
in bonds and securities are beginning
to feel the process by which they are
compelled to surrender larger amounts
IF profits than the gold standard has
withdrawn from the producing classes.
This beginning was recently marked by
transaction of such magnitude as to at
tract the attention of the financial
world. This transaction is the refund
ing of the bonds of the Lake Shore rail-
way, amounting to $4,000, 900, on a
basis of 31s per cent. It is not ques-
ton as to whether the investors-the
holders of the bonds-are willing to
have their interest fund practically cut
in two; it is question of accepting
half or getting none. That is what the
refunding scheme means. Financiers
cover the scheme under the polite name
of ''refunding," but the transaction re-
mains the same. The road says to it's
bondholders: Il can pay you 3h per
cent. interest. You will have to accept
it or get none" The investors grunt,
and groan, and growl; but they are
compelled to accept. Their interest re-
turns are cut in two.
Bradstreet's weekly publication re-
fers at some length to this Lake Shore
transaction, and calls it "a Pivotal
Movement in Finance" But it must be
obvious to those who are familiar with
the financial events of the past few
years, that the pivotal movement
came when Mr.. Cleveland, contrary to
law and public policy, declared that the
obligations of the government are pay
able in gold alone. That was the pivotal
movement" and the cutting down of the
interest fund of corporations, which has
begun on so large scale, is simply one
of the many and far-reaching results.
1t is an easy matter for editors whose
opinions and views are nodded entirely
by their surroundings to mistake effect
for cause. The Lake Shore transac-
ton is just as pivotal" as the stupen-
dous fall in prices since 1892 has been,
no more, no less. 1t is an announce
ment that the holders of the bonds of
American corporations will hereafter
be compelled to content themselves
with half the rate of interest they hove
formerly received. Prices fell, and the
producers of the country have had to
content themselves with less than one
half their former returns; the rate of
interest has fallen and investors will
have to endure the consequences. All
these things, as the Constitution has
pointed out time and time again, are the
logical, the inevitable result of the cur
rency system which these investors
have caused to be established. When it
is fully and firmly established (should
that misfortune be in store for the
country the bondholders will discover
that the producers of the country will
not be the only ones to suffer. They will
find that they have practically killed
the goose that has been laying their
golden eggs.
The Lake Shore transaction calls re-
newed attention to the fact that during
the next four years 90 railway systems
of this country will have bonds matur-
ing to total par value of $223, 1000, 200
in round numbers. The larger proper
ton of these bonds bear interest at six
and seven per cent. The total annual
interest charge which the Companies
have to pay amounts to $14,500,0O0 in
round numbers. Between 1901 and 1908
30 other roads will have maturing bonds
to the amount of $262, 200, 900, on which
the annual interest charge is not less
than $16,OOO,OO0. In nine years, there
fore, railroad bonds amounting to $780,
OOO, 900, and calling for annual payments
of $50, 100000, will mature.
l. l. III .
lower rate of interest. If the reduction
in the interest rate is as large as that
of the Lake Shore operation, the held.
ers of the bonds will have to lose about
$14,0OO,O00 year. This, however, is
mere drop in the bucket compared with
other changes and developments at
tendant upon our present currency sys'
tem.-Atlanta Constitution.