New York Stock Exchange Bond Prices.. Outside Market Bond Prices... Railroad Bonds and Guaranteed Real Estate Mortgages, II2 II2 THE BOND BUYERS' DICTIONARY PART I Government Bonds Government Bonds Representing Debts_and_Loans. — A study from M. P. P. Leroy-Beaulieu and other French economists, by Charles Bates Dana. States must borrow because they have no reserves, existing, as they do, only by very elastic revenues. They cannot reduce their expenses as easily as can an individual. A State is the only judge of its debts; it is imperishable,, and so can borrow in many different ways. It is bad finance to keep a great hoard in the nation's vaults in time of peace, because it restricts circulation and breeds extravagance. A home loan has both good and bad features, for, while it conserves economy among the common people, it takes from them that aggressive boldness which makes successes of international investors. The French are well known to be timid and fearful about an investment beyond their confines and which does not bear the stamp of the Bank of France as a certificate of its character. The Belgians are more enterprising in that they will accept a good foreign risk. One never hears of the Belgian government decreasing its available money supply by means of domestic loans. England has always been the lender of the world. She not only has great wealth, but she is proudly confident of her ability to make the best use of her stewardship. She has placed Turkey, Argentine Republic, Brazil, Portugal, and Greece on their feet, thereby winning their friendship, which has netted England greater returns than the heavy interest charges which have been paid into Threadneedle Street. When the United States is short of money the Secretary of the Treasury issues a loan through the agency of a syndicate of Wall Street bankers, which at once advances the required sum. The syndicate, through its agents at home and abroad, immediately receives subscriptions from various life-insurance and mercantile companies, or from private purses, and the loan is soon allotted. The syndicate realizes a handsome profit for its part in the transaction. Its work, though easily performed, because of our high credit, assures the integral and instant placing of the loan. Governments sometimes sell bonds in large blocks to the national bourses or to national banks, whose operations they direct. The latter is the French manner of floating government loans. International values are admittedly very uncertain quantities, but they are widely speculated in. Their great convenience lies in the fact that they serve as cash. France paid the greater portion of her 1871 debt at Berlin with international values. Her currency was little effected at the time because gold and silver did not leave the country. England's imports exceed her exports by many millions, largely because of the amount of foreign coupons she holds. French rentes are sold for a few francs, and therefore go into the hands of the poor, who are the real millionaires of that country. In the United States, the common people rarely buy government bonds because, with the exception of war issues, they are of large denominations. One One drawback about loans is that they facilitate wars. of their virtues is that in periods of danger they often save a nation, when taxes would not be effective because of the time required for their collection. Large sums can never be raised by taxes. England is very sensible in that she, in time of war, borrows about 60 per cent., and simultaneously raises the rest of the amount required by taxes. She paid two-thirds of her Crimean War expenses by means of loans. Since 1850 France has paid for all her wars by the sale of special bonds. It would have been quite a simple matter to have raised one-third of the necessary amount by means of taxes. England never borrows for her public works, as does France, but the British colonies frequently do. Other European countries than England cannot afford to emit public-works loans. England's debt is now less by one billion dollars than at the peace of 1815, when she was recovering from the Napoleonic wars, which cost her $4,067,232,245. The cost of the Boer War she will get back from the South African mines. During our Spanish War we issued two loans, which aggregated $500,000,000. At the same time new taxes were established, following the English precedent of combining the two systems, Our loans ran from ten to twenty years, which showed we were faithful to our own precedent. In many European countries it is customary to make short-term government loans perpetual, but the continent is gradually adopting our system of squaring up in two decades. |