Barton County democrat. [volume] (Great Bend, Kan.) 1885-1915, 1899-12-15
BOND MANIPULATION.
How the Administration Shapes
Things to Help Out Specu-
lators.

For the first time in ten wears the gov
eminent is about to reduce its bonded
debt That is gratifying, of course, but
the circumstances under which the
operation is to be performed do not
speak very forcibly for the intelligence
of our financial policy, however elo-
quently they may tell of the astuteness
of the individuals who profit by it.
The secretary of the treasury has Of
fered to buy bonds to the amount of
25,000,000 to ease the money market.
He proposes to pay 112A for four. per
cents. of 1907, or Ill for five per cents. of
1904. That would release from $27, $780,
900 to S2s, 1S7, 500, if the bondholders
should avail themselves of the offer to
its fullest extent.
Looking at the matter merely with
reference to the present point of time,
| the secretarys proposition is advan-
tageous to the government The money
| is lying idle in the treasury, and by
using it in this way we shall save about
| 81, 200, 900 year in interest.
But how does that money happen to
| be in the treasury. 1t is there because
| this administration and its predecessors
| issued bonds for it. The four per cents.
| for which Secretary Gage is now offer
| ing 112A were originally issued at par.
| That is to say, the government proposes
| to pay back s., 12S, $50 for every 81 ,OOO,-
| 600 it received, after having already paid
| $SSO,OOO in interest.
| On some of the other loans the show
! ing is even worse. Four years ago Pres
| ident Cleveland sold S62, 315, 400 of four
| per cents. of 1925 to the Morgan-Bel-
mont syndicate at fraction over 1O4.
If the government should try to buy
| back any of those bonds to-day it would
have to pay 1907. 1t is not enough for
the government to buy or sell bonds
| whenever it suits the convenience of Mr..
Morgan and the interests he represents
it must also buy dear and sell cheap.
Suppose instead. of this clumsy bond
arrangement we had postal savings
bank with $1,000 100000 of deposits.
| Then, if the government had more
| money on hand than it needed, and
| wanted to get some of it into circula-
| ton, all it would have to do would be to
reduo the rate of interest. AS the in
terest went down the deposits would
| flow out. When the process had gone on
| long enough it could be checked by sim
| ply fixing the rate of interest at the
point at which deposits equaled with
| drawals.
Or suppose we had the interconvert-
| ible bond system. There would be NO
premiums then and no losses to the gov
eminent on purchases and sales OF
bonds. When money became SO scarce
| that it was worth more than the two
per cent. paid by the government the
holders of bonds would simply take
them to the treasury and receive notes
at par. When they had no further use
for the notes they would take them tc
the treasury and get bonds. Thus the
money market would always be easy
and the government would never be
forced to chatter for its own securities
The 81, 46,O4S, $50 of bonds we had
outstanding when Secretary Gage made
his offer cost US $40, 347, S76.sO a year il
interest. Under the other arrangement
the annual interest charge would b
less than $21, 0O0, 900 at the outside, an6
might run down to nothing, if the de
mand for currency were sufficient.
| What does the democratic party thinl
of currency reform as one of the issue:
of next years campaign? -N. Y. Jour
nal