The times., 1899-10-12
THE BOND PURCHASE PLAN.
Opinions of Financial Men Regard
ing the Project.

ing the Project.
The suggestion of a wveiii.-'known local
banker in The Times yesterday that the
Government relieve the, alleged money
stringency in New York and elsewhere by
buying its bonds in the market was the
cause of much discussion among financial
people. The plan met with favor in some
quarters and with disfavor in. others. The
general opinion expressed was that as a
temporary expedient in case money be-
comes tighter it would be efficacious, prob
ably the easiest and quickest relief that
could be offered. AS to the principle in
volved in the operation there was more
adverse comment.
The authority under which the Treasury
could buy the Government bonds is in
the sundry Civil bill of March 3, 1881.
Section of this law reads:
THAT the Secretary of the Treasury may
at any time apply the surplus money in the
Treasury not otherwise appropriated, or so
much thereof as he may consider proper
to the purchase or redemption of United
States bonds, provided that the bonds so
purchased or redeemed shall constitute no
part OF the sinking fund, but shall be can
celed.'
This section is found in the United
States Statutes at Large, vol xxi, page
457
The Treasury Department has no inten
tion, however, of buying bonds at the pres
ent time at least. Assistant Secretary
Vanderlip said yesterday on the subject:
The idea has been called to the atten-
ton of the department. We have no in
tention of buying any bonds. We see no
reason for doing so, and do not believe it
would be expedient. We sold per
| cent bonds year ago for par, and see no
reason why we should buy them back now
for 109"
In the particular case of the 5 per cents
of 1904 however the conditions are not
in the least similar to that of the per
cents. 1t is suggested that these bonds
have now less than five years to run, and
that the problem Of disposing of them will
come in short time under any circum-
stances. The Government is paying
high rate of interest on this ISSUE much
higher than it need pay with its present
credit. Financial people are of the opin-
| ion that it would have little trouble in
floating an issue at half this rate at the
present time 1t is urged by the friends
OF the plan that 1t would be simply a
good business proposition with some of
its surplus idle money to pay off some
of its debts as a business man would do
| and cut down It's interest payment. The
! fact that the plan would relieve the money
stringency may be considered simply as
another but not the main argument in its
| favor.
The issue of the 5s of 1904 is for
| $100,0O0,0 coo. The Government, by purchas
! ing this entire issue now in the market
| at 112 would save something like
| s12 1000 900 in interest. It. would dispose
! of SIP, 100000 idle money in the Treasury
vaults instead of paying within the next
/ five years $125, 100000 in principal and in
| terest.
/ a financial man who has thoroughly
studied the question of making such an ad-
| vance purchase of bonds said yesterday on
the subject: leM
LAS a matter of fact, the present i'm
mense surplus shows that the last bond
issue was too large by 500, 100000. 1t
should have been $4,000 600 instead of
$100, 600 greater. This sum has been
taken out of circulation and is lying idle In
| the Treasury vaults and the banks. The
| purchase of the 5s would correct this ex-
cess. The purchase Of any part of the issue
| would be a pToportionate good The pres
| ent interest prepayment plan is picayune
affair. 1t will not be taken up by the
| banks or other holders of the bonds 10 any
extent. Many of the bankers are dis
posed to laugh at it, in fact"
| The view of opponents of the plan is that
on principle it would not be good policy to
/ buy bonds now, when next year or few
| years from now the Government may need
money again and be obliged to put out
another issue. 1t is suggested that it would
not look we'll to continue the heavy war
taxes and at the same time be paying of
| bonds not yet due.