| OCR Text |
Show THE NEW THREE PER CENTS. The proposed issue of threo per cent bonds br the Sccretn-' of tho Trcasuo' is anticipated on tho street, and a premium of two per cent is bid upon them, even before their issue. It has been said in financial circles that this issue of bonds would bo a fair tost of the strength of government .bond issues upon the market, since these bonds are made purolj investment bonds, in that thc3 arc douicd the use of being held 1)3' the banks as a basis for National bank circulation. The ad-fvancc ad-fvancc bids show that the government credit is still high. The impending issue of these bonds recalls the slipshod UKiuner in which tho extra session of congress of 1P.09 did its work. That waJ tho session which passed the bunko tariff law, and gave the Democrats their great -victor last year over tho Republican party. It is a law condemned and repudiated 03" the people, and that hasi no defenders, de-fenders, save those who speak for the special interests and monopolies. The authorization of tho issue of Panama canal bonds bearing three per cent interest in-terest was made in that bunko law. But even the friends of tho issue saw one fatal defect, from their point of view. The law, as passed, did not ypecif' that the .bonds were to bo gold bonds, and so,, at the regular session; of Congress next succeeding, Mr. Aldrich quietly worked through Congress Con-gress an amcndatoiy act specifying that the bonds should be gold bonds. Still there was a defect. There are outstanding upward of $750,000,000 of two per cent bonds. These bonds arc held mainly by the National banks" as a basis for their circulating notes. If the three per cent bonds wore allowed as a basis for bank circulation and placed on the market and sold about par, or with a small premium, the two per cent bonds would necessarily go bolow par. That would disturb the whole mass of National Lank circulation, circula-tion, would require the putting up of more collateral b3 all tho currency issuing National banks, and would be a demoralizing factor in financial affairs af-fairs all over the county. And yet, it was difh'eult to get that reactionary, standpat Congress to do anything for the relief of the situation. The long session of Congress passed without an3' change of the statufo, save only to make tho change that fixed tho bonds as gold bonds. The Secretary of the Trcasur3' declined to issue tho three per cents, as he foresaw that such issue would demoralize tho market ami unsettle tho whole financial aud currency foundations, lie insisted, as the President insisted, that; the Panama c:.nnl bonds must bo, excepted from tho function now filled b3r tho two per cent bonds, and tho currency basis privilege withdrawn from them. Otherwise Other-wise the Secretary would not have- issued is-sued any bonds at all, but would have depended upon treasury certificates to tide over tho deficits ' caused 1)3' the bunko tariir law. Aud ho tho stand-pat stand-pat reactionar3' Congress was finally made to see that something must be dono to repair its error, and the course insisted upon by the Secretary of tho Treasury was authorized. The new isBuc,;hcrcforo, will not carry tho cur- rencv- .basis privilege, and these bonds will simply take their chances upon the market for what they will bring. But thcro appears to be no reason to doubt that they will draw a premium. Alrcad3", as stated, a two-per (jent. promium is bid for them in advance oil their issue. But tho amount to ho Issued has not been dofinitel3" staled thus far. Since, however, tho Treasury noeds indicate a requirement of about. $60,000,000, this amount being far within with-in the aggregate advances made b3 the Treasury on Panama canal construction, construc-tion, and ao the common understanding understand-ing is that tho issue will bo of about that amount. Tho Treasury will then be put in a strong position, and the existing bank curronc3' will not bo interfered in-terfered with. ' Tho situation directs attention anew to tho tremendous importance attaching to the corporation tax, which has just boen declared valid by tho Supreme Court of tho United States. If that tax had boen invalidated .by tho court decision, tho Treasury would hnvo been strietl3' in a dilemma, and tho bond issue would necessaril3' havo been ver3r much greater than is now proposod. The bids for tho threo per cent, bonds show that the market is in fairl3' good condition, that mone3' is abundant for safo investments, and that threo per cent is an attraction to those who havo idle money to invest. |
