The Providence news. (Providence [R.I.]) 1891-1906, 1898-09-01
"POPULAR" LOANS.


of over one billion dollars were received
The News took occasion to point out
that. from a business point OF view,
such a plan of bond issuing was not
altogether advantageous in that the
government lost the premium on its
bonds, and the expense of distribution
was enormously increased.
This view was by no means to be
taken as discouraging the popular loan
plan, since it Is very evident that there
is a deal OF satisfaction about 1t that
is worth some cost OF profit, and. mas
much as the people and the govern
ment are one and inseparable, IL the
former like the method there is no one
to complain.
1t Is interesting to find, however, I'm
the current issue of the Bankers Maga-
zine an article based on this same view,
which also suggests method for max
ing a future popular loan financially
more advantageous to an administra-
tion offering 1t, while hardly less
popular" The Bankers Magazine
calls attention to what is, of course.
true-that the S0,OO0Ooo people of this
country actually pay for the gift which
was received by the two or three hum
dred thousand holders of the popular
bonds in securing their bonds at par
when they today command premium.
the amount of the gift and the amount
the administration loses being repre-
sented by the premium. 1t considers
that II the American people generally
had better understanding Of finance
such policy as that pursued in the
war loan would be decidedly unpopular
rather than popular. IT, for instance.
in buying It's supplies for the army and
navy. the government should show
preference for those who offered the
supplies In small parcels--or. In other
words. the retailers--every one would at
once exclaim against such faulty.
When the government wants supplies
other than money 1t at once goes into
the wholesale market and takes them
at the lowest price offered. SO does
every state or municipality. and so does
every individual in private business.
There is no reason why the same
course should not be pursued when
money is wanted.
But the Bankers Magazine feels that
the experiment will not be without good |
results The American people are prone |
to reflection. This habit will in time
sift out the true inwardness of the So
called popular loan. The glamor which |
now seems to blind the eyes of the pub
lie in regard to 1t will be removed, and |
the disadvantages of paying an unnec-
sssary bonus to few of the people at |
The expense OF the majority will be re-
gealed to all eyes. Nor is the admins
ration to be blamed for adopting this
course in the present state of public
financial knowledge. 1t was very nec-
,ssary in the existing circumstances to
L
insure the success Of the loan at all |
hazards and to conciliate the elements
which might have worked against its
success. But now that the American
people can see what they have had to
,ay for wrong views on monetary ques-
ions it is not probable that popular
oan in this form will be repeated"
But IL another popular loan is pro-
ected, the Bankers Magazine suggests
rhat seems reasonable plan for Sc
uring TO the overnment--otherwis
he people-something nearer to the
eal value of its bonds instead Of only
ar. If new loan Is placed In popular
ashton. why could IL not be offered to
he highest bidder and yet give a
nance in the allotment to small in
ividual subscribers? This could be
one by dividing the loan into por-
ons. say. fifty millions to bidders OF
100 and under. fifty millions to bidders
, $1,000 and over $500, fifty millions to
Idders of $4,000 and over $1,000 and fifty
,illions to bidders over $4,000.
The result of the war loan has shown
nat there were enough bids OF $500 and
nder to take sioo,ooo,o 900. The competi-
on Of such an overbidding. were II
reviously understood that sc. 1000 900
ny would be allotted In this class, !
'ould most probably have secured n
spectacle premium on the whole $50. I,
$1,000. II would probably have been
10 sa mo in ALI the other ciasaes II A,