The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-07-09
THE CANAL BONDS
The Date Of Issuing Them May Be
Very Far Away.
THERE IS SURPLUS ENOUGH
Have Been Unsatisfactory to
the Authorities.

the Authorities.
From The journal Bureaw, Room 4s, Post
Building, Washington.
Washington, July 9.-Anyone who is
saving up his money for the purpose of
investing 1t in government bonds of the
$4,000, 900 issue authorized in the act
providing for an isthman> canal can safe
~ buy some other security temporarily,
for the date of issuing the next loan may
be still long way of. AS interpreted
by those who are most familiar with the
construction of special appropria ton acts
and acts authorizing bonds issues, the
secretary of the treasury is not called
upon to put out a single dollar in bonds
II he believes there is enough surplus
money in the treasury available for canal
purposes without It, AS &50,O00.00O is
specifically appropriated for the prelim-
mary work and the purchase of the Pan
ANA canal property and rights and an in
definite sum for the purchase of other
rights of way, etc., in certain contingent
cies, while the actual work of construc-
tion will not begin for a long time yet,
there is no telling when, if ever, the Sec
rotary will find it necessary to draw on
his reserved powers. The available sur
plus now amounts to more than 5000, 000-
600, thus exceeding by fifteen or twenty
millions the total outside limit of ex-
pense set for the Panama canal, and
equalizing, at least, the limit for the
Nicaragua canal in case the Panama route
be rot taken.
There is one feature of the bond provi-
sion in the canal act which encourages the
idea of a popular" loan like that of 1898;
but 1t will be noted that the phraseology
OF the act Of 1898 is followed only a part
OF the way. The act of 1898 required that
the bonds shall be first offered at par
as popular loan under such regulations
as will give opportunity to the citizens of
the United States to participate in the
subscription to such loan," and that Gin
plotting said bonds the several subscrip-
tfons Of individuals shall be first accepted.
and the subscriptions for the lowest
amounts shall be first allotted The ca
nal act provides that said bonds may be
disposed of by the secretary of the treas
Try at not less than par, under such reg
lations as he may prescribe, giving to all
citizens Of the United States an equal op-
portunity to subscribe therefor" This
Is mere permissiye provision, leaving
the secretary with discretion to supple
ment the law with such regulations as he
sees fit, keeping in view the obvious pref
erence of congress as indicated in the
context, where the denominations of the
new bonds are fixed at twenty dollars or
some multiple of that sum-; for it is
needless to say that the large investors
and spectators do not by preference buy
government bonds in twenty-dollar lots.
1t Is possible that this matter was left
open because of the failure Of previous
efforts to popularize federal loans. The
most notable failure was Secretary Sher-
mans in 1879 with his refunding certifi-
oates. These were issued in denomina-
lions as low as ten dollars, for the pur-
pose of placing them in the hands of the
plain people" but with the proviso that
when a sufficient number had been COL
lected to equal the amount of a per cent
bend they should be convertible into such
bond, face for face. National banks, sub
treasures, postof11ces and other public
and semi-pGblic agencies were designated
as repositories, and handled the certif-.
Gates as between the treasury and the
people. The result was that most of the
people who obtained the certificates were
the very ones whom it was distinctly not
the purpose of the government to favor.
Long queues of s'subscribers'' stood for
days in front Of the windows and counters
where the certificates were sold, nearly
every person in line having $100 in cash
in his hand, that amount being the out
side limit of sales to single purchaser
The .queuus were made up Of newsboys,
bcotblacks, street Arabs Of all sorts, cor
ner louIgers - anybody, in short, who
could be drafted into the service by the
professional operators preparing to gobble
up the new issue of securities. cap
ttalist Or his broker would coolly stand by
While this humbug was going on, keeping
guard over his brigade of hired minions
to see that they did not get away with the
money in their custody. The fraud was
80 transparent that it became a public
scandal Almost all the bogus purchases
and speculative conversions occurred
within a month of the date fixed for be-
ginning the exchange, of bonds for Ger
rae nd 1,r
eight months after issue.
The bonds issued during the second
Cleveland administration were offered to
the people, but actually went to bankers
and other professional subscribers who
were willing to pay more for them than
the people were, and to take a larger re-
sponsibility in helping the treasury out OF
Its hole!' This brings US to the Mckinley
or Spanish war issue. y
It is NO secret In Washington that, al
though he loyalty executed the law in
both letter and spirit to the best Of his
ability, and gave all possible credit to the
enterprise in his official report, Secretary
Gage did not counsel, nor did his judg-
rnent approve, the popular loan issue. It
cost the treasury not less than S375 ,O0C
to float the $500, 900 900 loan. Of this
about $4,000 went merely as compensa-
ton for the temporary force of employees
whom, 1t beca me necessary to call in be-
cause Of the myriad of minute details
created by the small denominations ant
wide diffusion of the bonds. But the
waste did not end here. The treasury
might have been from ten to fifteen mil
lions richer by premiums had it not beer
laid down in the law that the sales should
be at par. OF course, as the par anG
Differentiation offers were the frs
considered, a multitude of spectators
went into schemes of straw subscriptions
as in the case of the refunding certifi-
Gates. A good marry of these, Secretary
Gage detected, and visited upon then
summary punishment to the extent thai
he could without the aid of special pena
legislation; but how many escaped detec-
ton will never be made known until the
Judgment day. AS it was, there is ex-
cellent evidence that the bulk of the
small bona ide subscribers took Their
bonds with a deliberate purpose Of sell.
Ing out again at an advanced price.
-. H. c. Stevens.
Visit Banff the Beautiful
Via the Soo-Pacific line, Hot Springs
Lakes in the Clouds and the grandes