The Washington herald., 1912-07-06
THE BUYER OF
LITTLE BONDS


tcopyisht isi2. By O n. Ksys. New Y0kl
In 1905. one Of our greatest railroad
systems, the Pennsylvania, had almost
reached the end OF its tether In the mat
ter of financing. Il had raised 50 much
money from the sale OF It's bonds In the
few preceding years to carry on its I'M
provements and extensions that the
American market was glutted. In this
extremity. one OF It's bankers made =
suggestion to the President.
IT." he said, you can make an issue
OF 100000 In bonds that are small
enough in denomination to enable the
little saver Of money to buy them, we
can arrange for the sale Of them in
France
Acting on this suggestion, the Penn
sylavania started negotiations through
its bankers and sold to French banking
houses 100000 francs OF three and
three-quGrter per cent bonds. These
bonds could be bought by the French
investor in denominations Of 500 francs.
or approximately 800. OF course. they
complied with the French laws in the
matter OF taxes and were issued in the
French denomination They were Of
fered all over France to the same class
of people who had been accustomed 10
buying little mortgage obligations, de-
bsntures, and French government bonds.
all of which are issued in France in
very small pieces. so that It Is as easy
for the French peasant or workingman
to invest SO as II Is for the American
workingman TO invest 5000 in good
solid standard securities
This loan was an immediate success.
There have been many other similar
loans on a small scale. Nowadays when
ever a substantial American railroad Is
issuing any big blocks Of new bonds, II
Is not at all uncommon to have a part
OF II split up in little bonds Of this sort
and shipped abroad, when II Is absorbed
quickly by the public.
OF course, in France and Germany this
matter Of little bits Of bonds IL carried
TO an extreme. The French government
bonds are issued In pieces as small as
two francs. that is, 70 cents. The aver
age French investor has less than $40 in
securities altogether. II is not surprising.
in view of these facts that almost every
body in France buys bonds and that the
kind OF gOld-brick games that are perpe-
trated on the small investor in this coun-
try are not. by any means, so easily
used in that country, where even the
smallest saver Of money Is trained to have
at least a speaking acquaintance with
sound investment securities.
II must not be drought that France
and Germany have a monopoly Of the
power to distribute high grade securities
in small lots. AS far back as 1851 the
small investors Of the United States
bought government bonds through the
banking house OF Jay Cooke & CO., Of
Philadelphia, to finance the civil war.
These bonds were distributed in little lots
.r practically every village in the North.
Almost every one who had any money
at all and who loved his country bought
the bonds, and there was a flood Of
money coming from the little people into
Washington. Again in 1898, there were
more than $4,000 subscriptions TO the
war loans OF that year in denominations
Of 500 or less. 1t is perfectly apparent
that II there is any particularly good rea-
son for a subscription Of this sort, tho
little people Of the United States will
rise to the occasion as readily as the
little people OF France subscribed for
the billion dollar indemnity loan OF ls71.
which was a patriotic loan to pay what
had 10 be paid to Germany as :hs result
Of the Franco-Prussian war.
Yet 1t is a fact that the little bond
in this country is apparently a rarity.
Ten years ago practically none of the
bonds that were being made for PUB
lie consumption were made in less than
81, 90 lots Gradually there has been q
movement in the direction OF the small
bonds, so that nowadays 800 and 800
pieces are quite usual. though they are
not, one would say. the rule.
Sometime, probably In the distant fu-
ture, when almost every one who has
money in the United States has learned
something about bonds. just as the
French, in the course Of generations,
have learned about them, It will be nee
eEsary 90 make nearly all American bond
Issues In little lots. In the meantime,
any good banking house can find q rea-
sonably good List Of $500 bonds, and there
is even a fairly good selection Of 800
Issues. These are simply pioneer issues
in a field not yet han open