Year: 1879

THE FUNDING SUCCESS


Barely three months ago everybody was
watching with some anxiety the results OF re
sumption. Suppose 1t had then been predicted
that all the redeemable six per cent bonds would
he called within three months; that the chief
bankers of Europe and America would be dis
putting early in April as to the division of the
last of the four per cent bonds sold for the re-
demptiOn of six per cents; and that the
Treasury would issue its first call for redemp-
ton of five per cents April 9-wouid he not
have been thought wild The impossible"
has come to pass-not for the first time
in the history of the public credit under Re
publican rule. Since January l, over $780,
OOO, 900 of four per cent bonds have been sold !;
the Treasury has refused subscriptions for
about $4,000, 900 more the Bank OF Com
merce has relinquished $4,000, 600 four per
cent bonds, for which it had subscribed, in
order to satisfy the claims of the Rotlischilds !;
and the Secretary of the Treasury has made
his first call for the redemption of five per
cent bonds.


This call, it is understood, is mainly in a.
vance of subscriptions accepted for four per
cent bonds. Mr. Sherman is obliged by exist
lng laws to give three months notice TO the
holders of called bonds before Their interest
can be stopped and the bonds called i'll for
pavment. If lie makes no call until funds are
provided by the actual sale OF new bonds, he
is compelled to pay double interest for three
months part of this he can avoid, when
ever it is proper for him to make calls for the
old bonds in anticipation of sales, and this,
probably, is the meaning of the call just
issued. The four per cent bonds now taken
are in exchange for the new so certificates,
of which the sale has considerably increased
since Friday last If sales OF these certlfi-
Gates continue at the rate of $1,00O,000 per
week, the proceeds will more than suffice,
before the maturity of the call now made, TO
redeem the bonds therein named. Hence,
even if Secretary Sherman should decide not
to offer any more of the four per cent bonds
at direct sale for two or three months. the
first call for five per cents would be amply
justified.


1t is presumed that the direct sale of four
per cent bonds by the Treasury will now be
deferred until permanent investors have had
opportunity to take the large amount re-
centytaken by bankers. A large number of
nelson's, who have held trust funds i'll the
six per cent bonds, have not yet made al
Taugements for a new investment of those
funds. Demand from investors of this class
Will of itself suffice, within few weeks, to
absorb all the four per cents remaining i'll
the hands Of dealers. Purchases of this
character do not depend upon the current
rate of interest, and are not checked mate
rally because the reserves of the banks are
low and or 7 per cent interest is offered for
loans on CALL With the best security money
is borrowed even now at lower rates on time,
and it is the general opinion OF bankers that
The current market rates Will not be long
maintained. Large sums which have been
drawn from the banks to make payments in
the country will soon return, as Is usual at
this season, and there will also be largo dis
bursemcnts by the Treasury during this
month and May TO increase the supply of
available funds in the market. Those who
have made heavy subscriptions to the four per
cent loan for which settlements arc to be
made in July, are doubtless right in expect
ing that there will then be an easy money
market, with money abundant at low rates.


Next TO the work of Chase in the midst of
the doubt and disaster Of tho civil war, the
financial management of Secretary Sherman
will seem, fifty years hence, more fruitful of
great results than any other part of the
fiscal history of the country since the days Of
Hamilton Its splendid success dazzles the eyes
of friends, and stimulates too sharply the
envy and the fear of foes, so that a correct
estimate of its merits can hardly be formed
at present Much of its success has been due
to the TACT that Mr. Sherman has taken coun-
sci, prior to every important step, with the
best informed bankers. Thus the objections
and difficulties pointed out by practical men
have been anticipated by the measures adopted.
But his plans have been essentially his own.
and the great victories he has won will be re-
membered as long as the victories at Gettys-
burg or AppomattOX.