156 



CONGRESS, UNITED STATES. 



cent per annum, and no less, would not com- 

 mand more than the par value." 



Mr. Bayard: "Would it interfere with the 

 Senator if I should make an inquiry ? " 



Mr. McPherson : " Not at all." 



Mr. Bay.-ird : " Would the Senator desire to 

 be understood as saying that it is not the fact 

 in financial arrangements that a bond payable 

 punctually and promptly at a short date, de- 

 sirable for a certain class of pecuniary arrange- 

 ments, can be negotiated at a lower rate of in- 

 terest than a bond more prolonged as to its term 

 of operation, and that, per contra, the bond 

 having the longest term to run, and the more 

 permanent for reasons connected with its own 

 nature, is also negotiable at the lowest rate of 

 interest, so that you have in this an illustra- 

 tion of extremes meeting? The short bond, 

 upon the payment of which punctually absolute 

 reliance can be placed, has its uses for certain 

 classes of loans and occupations of capital 

 which do not attach to a bond having a longer 

 time to run ; and a bond having the longest 

 time to run, offering a permanent investment, 

 has uses which enable it to be negotiated at a 

 low rate of interest which is not known to 

 a shorter date bond. Have I made myself 

 clear ? " 



Mr. McPherson : " Certainly ; I understand 

 the Senator." 



Mr. Bayard: "It is a fact perfectly well 

 ascertained and understood in the practical 

 dealings of men accustomed to large financial 

 operations, that you exchange in one case the 

 desirability of a short loan with absolute and 

 punctual repayment for the permanence of in- 

 vestment with a long loan, absolutely secure, 

 but only ultimately secure." 



Mr. McPherson : " The absurdity of the prop- 

 osition upon its face is so apparent that I am 

 really surprised that the Senator confesses he 

 has been deceived by it. I will admit the fact 

 that a bond bearing any rate per cent, even if 

 it be 1 per cent, can be used by speculators in 

 Wall Street profitably, who carry over vast 

 sums of money from one day to the other, and 

 any percentage that it bears is an advantage 

 to them ; but the market for bonds the world 

 over gives the preference to a long-time bond 

 bearing a fixed rate of interest. If the honor- 

 able Senator will place the four hundred mill- 

 ion issue of bonds that he proposes shall bear 

 3 per cent interest in Wall Street, where many 

 of them will go, perhaps all of them, and in con- 

 nection therewith the $300,000,000 of Treas- 

 ury notes, with the option of the Secretary of 

 the Treasury at any rate under 3| per cent 

 that he can negotiate them at, I wish to know 

 which of the securities will be sought first? 

 What difference will it make to a financier or 

 capitalist whether it is a bond having twenty 

 years to run, or a bond having ten years to 

 run ? He pledges the Government security for 

 a loan, a call loan if you please, and the quality 

 or value of the thing pledged determines the 

 sum the borrower will receive." 



Mr. Bayard : " If my friend will permit me, 

 I will say to him it depends altogether upon 

 the need and uses for which the money is de- 

 signed. If a man awaiting some grand specu- 

 lation or enterprise for which he has accu- 

 mulated, for instance, half a million dollars, 

 wants that money to be repaid to him at the 

 end of a year, but to keep it useful during that 

 year, and if he can buy the short bond which 

 is bound to be paid at the end of that time, 

 for a low market price, certainly it is an in- 

 ducement to him to affix certainty to his opera- 

 tion and to borrow the money for just the time 

 he wants it; whereas, on the other hand, if 

 there be some one seeking a permanent invest- 

 ment for the execution of a long-continued 

 trust, he will seek that bond which is not to be 

 disturbed by repayment and reinvestment when 

 he does not want it. Therefore, the whole 

 question is answered. It depends upon the 

 objects that the investor has in view. For one 

 purpose a short bond is more valuable to him ; 

 for another class a long bond is more valuable ; 

 and in the mean time the fluctuation that may 

 exist upon the long bond would be hurtful to 

 the man who wants to use his money but for a 

 year or two years, and the certainty of repay- 

 ment of value at a fixed rate of interest to the 

 man who needs the short loan is secured to him 

 better by the low class of bonds. Therefore 

 the whole thing speaks for itself.' 



Mr. McPherson : " A long bond, according 

 to the admission of the Senator, will serve both 

 purposes." 



Mr. Bayard : " No, because it is subject to 

 fluctuation." 



Mr. McPherson : " Why can it not subserve 

 both purposes? Suppose the honorable Sena- 

 tor to-day wishes to borrow a million dollars 

 upon a million dollars' worth of 4 per cent 

 bonds. He does not go to the Government to 

 make that loan. He goes into the financial 

 centers of the country; he goes to London, he 

 goes to Wall Street. Those bonds have a fixed 

 market value for that day's transaction. He 

 borrows the money from the capitalist ; he does 

 not borrow it from the Government." 



Mr. Bayard : " The Senator is in error " 



Mr. McPherson : " Therefore the 4 per cent 

 or the 3| per cent bonds have a value upon 

 which to loan or to borrow money, just the 

 same as the 3 per cent or the 3 per cent Treas- 

 ury note, and at the same time they serve the 

 additional purpose of affording an investment 

 for those who desire a permanent investment. 



" The bonds of the Government are in active 

 demand as investment by those who do not 

 wish to participate in the hazards of business 

 or speculation, but, without labor or risk, give 

 sure return with absolute security. 



" No other security can be compared to these 

 bonds. Behind them, and pledged to their 

 redemption, stand the whole wealth of the 

 nation. Taxation can not reach them, and, if a 

 registered bond, even the thief may be disap- 

 pointed. They are in demand in all the money 



