Financial fund

“ In other words, the reserve fund is already the property of the shareholders, and to convert it from reserve fund into capital, making them a present of new shares, which merely represent their claim to the assets held against the reserve fund, is as empty a gift as presenting a man with a piece of paper informing him that he is the owner of his own hat. ”

“ The Department of the Treasury is also acting to restore confidence in a key element of America's financial system by offering Government insurance for money market mutual funds. For every dollar you have invested in an insured fund, you'll be able to take a dollar out. ”

“ When, in the early times of public credit, the repayment of the capital was the chief object of the lender, a much more extensive fund was necessary than at present, when no more is required than the payment of the interest. As such funds never can be formed but from taxes, or general contributions from the people, the greater they are, the larger must the contribution be. ”

“ The disposable capital deposited in banks, together with the funds belonging to those who, either from necessity or preference, live upon the interest of their property, constitute the general loan fund of the country ”

“ A proportion of ten to one between capital and aggregate demand obligations would probably be justified by American experience. The present practice of fixing the surplus fund at twenty per cent of the capital would be justifiable if the capital fund were properly regulated in amount. ”

“ With the third method a permanent increase is secured in the capital funds available for use in the business. Financial policy, governed by the needs of the business and its markets, will always dictate the method to be used for extinguishing or contracting a debt. ”

“ I explained that a sinking fund is nothing but an obligation or promise, on the part of the government or an individual, to pay a certain amount annually of the principal of the debt in addition to the interest. ”

“ The fund will be invested safely, for it will be based upon the security which is the creator and conservator of all property and property rights, industrious and intelligent labor. The accretions to the fund, even at the moderate rate of interest of three per cent per annum, will add, probably, a thousand workers each year to the number of its beneficiaries, while the repayment and re-investment in similar ways of the original fund, will add several thousand more each year. ”

“ In 1930 it created, by an appropriate instrument, a fund to afford those for whom it acted the advantage of investing small amounts in securities at minimum expense and with opportunity of ready liquidation. ”

“ Practice varies as to the proper handling of the income and expense of the sinking fund. Sometimes they are treated as affecting—i.e., increasing or decreasing—only the sinking fund reserve and as having no place in the current profit and loss. ”

“ The reserve fund was created to meet the losses of bad years and equalize dividends when profits were small, the provident fund to take care of the sick, the disabled and the families of deceased laborers. After five years the manner of division was changed so as to yield 2 per cent, dividends on wages for every 1 per cent, on capital, and in place of a fixed per cent, for the special funds whatever was necessary for these purposes was to be paid out of gross profits. ”

“ To estimate, therefore, the total value, in any nation, of what is the object of taxation, we must go another way to work. The first article must be the annual income of all funds. By funds, here, I understand the capital wealth already made, in opposition to the produce of industry, which may be considered as the materials of which such funds are composed. The fund therefore is the accumulation of savings, which, not having been spent by the industrious, form 587a capital of a nature to produce an income, either from land, or from any other valuable thing. ”

“ Manufacturer, you have summarized the discussion upon credit remarkably well, I think.
Mr. Merchant: So do I, and I am sure that we all understand what constitutes the difference between the right and wrong basis of demand obligation—convertibility or non-convertibility—quick assets or slow assets—the commercial fund and the investment fund. If we keep this thought steadily in view it will help us amazingly when [Pg 193] we come to draw a banking bill demanding the recognition of this fundamental distinction. ”

“ The purchase money in every case has been advanced by the government, and is to be repaid by the purchaser in sixty-eight years with interest at three and one quarter per cent per annum. This sum represents two and one-half per cent interest upon bonds issued to raise the funds and three-fourths of one per cent for a sinking fund to meet the bonds at maturity. ”

“ The funds may be left for accretion in a savings bank; they may be used to purchase high-grade securities; or with them the very bonds which they are to redeem may be bought and canceled immediately, or allowed to run, the interest accretions going into the fund also. Securities for investment may be bought at a premium or a discount. Expenses will be incurred by way of commission or salary for the trustee, expenses of the trust, advertising, brokers’ commission, etc.; and income will be received by the trustee from the securities held and even from the unexpended balance of cash. ”

“ The fundholder, when paid off, would still desire to draw an income from his property, most of which therefore would find its way into productive employment, while a great part of it would have been drawn from the fund for unproductive expenditure, since people do not wholly pay their taxes from what they would have saved, but partly, if not chiefly, from what they would have spent. ”

“ If the income of any such fund in any year is more than a sum which, if annually added to such fund would, with the fund and its accumulations as aforesaid, retire the debt at maturity, the excess income may be applied to the interest on the debt for which the fund was created. ”

“ Now with this theory in view, our company gets to work and canvasses the country and it gathers together thousands of little, useless, insignificant, unproductive funds like yours and mine and joins them together into one vast, giant aggregate which we call a trust fund. ”

“ The taxing of evidences of debt would limit borrowing and would return to the people part of the interest fund. The rich would be compelled to invest their money in productive enterprises, where it would be of use and would take risks, leading to its wider distribution. ”

“ If your revenue is nine millions of dollars and your expenditure fourteen, you must borrow, you must create a new debt of five millions. But if two millions of that revenue are, under the name of sinking fund, applicable to the payment of the principal of an old debt, and pledged for it, then the portion of your revenue applicable to discharging your current expenditures of fourteen millions is reduced to seven millions; and instead of borrowing five millions you must borrow seven; you create a new debt of seven millions, and you pay an old debt of two. ”

“ This sum, together with government subsidies and other sources of income, will yield, we are told, a gross income of 438,000l.: a sum which it is estimated will not only pay working expenses and a handsome dividend to both old and new shareholders, but will yield a balance for a reserve fund, more than sufficient to lay a second cable in every two and-a-half years. ”

“ We wish you in the first place to get something to eat, drink, and wear; but when you are in any way comfortable, we wish you to pay that debt the next thing you do, and replenish the Fund. It is built upon a principle, if carried out properly, and the debts punctually refunded, to increase in wealth. The $5,000 that was sent for the poor four years ago this fall, if every man had been prompt to pay in that which he received, would have increased to $20,000. ”

“ While the number of units credited to investors does not accordingly account for the entire value of the 'fund,' the value of the units fluctuates as the value of the company's investment portfolio fluctuates in the same fashion as if they were shares in an open-end investment fund.↑ The surcharge is accounted for in the same way as that part of the premium gross income that does not go toward the crediting of accumulation units. ”

“ As this increase cannot be kept down by payment unless voluntarily made by the corporation, the next best thing has been done, that is to say, a fund safely invested, which increases as the debt increases, has been established and set apart to meet the debt when the time comes that payment can be required. ”

“ Where the revenue is 5,000 francs, they can accumulate a sum only equal to three times their annual expense, and for others the reserve fund should not be in excess of over six times the annual outlay. ”

“ And they are further authorized to apply, from time to time, such sum or sums out of the said fund, as they may think proper, towards redeeming, by purchase, and at a price not above par, the principal of the said stock, or any part thereof. And the faith of the United States is hereby pledged to establish sufficient revenues, for making good any deficiency that may hereafter take place in the funds hereby appropriated for paying the said interest and principal sums, or any of them, in manner aforesaid. ”

“ If there were no interest at all, he would have to put by from his income his entire old-age fund. If the rate were a hundred per cent per annum, taking a very small part of the fund out of the income of his active years would suffice, since the fund itself would earn the remainder. Is the income which is provided for the future to be treated as a variable amount in addition to some other income, or is it to be regarded as a fixed amount, which is needed for some definite purpose? ”

“ But when business is brisk and the prices of commodities are rising, more bills are drawn, and as the fund with which they are discounted is not limitless, it follows that the increasing demand upon that fund sends up the rate. ”

“ He shall see, too, that our first care has been your sister's interests. Six-sixteenths of the profits for fifty years are to be hers; three each we reserve for ourselves; the remaining four will form a reserve fund for casualties, a capital for future development, and a sum at interest to pay superannuations, with some other objects that you will find roughly jotted down here, for which, however, they will amply suffice. ”

“ We should not collect revenue for the purpose of anticipating our bonds beyond the requirements of the sinking fund, but any unappropriated surplus in the Treasury should be so used, as there is no other lawful way of returning the money to circulation, and the profit realized by the Government offers a substantial advantage. ”

“ They shall convert my said residue of property into money, which they shall then invest in safe securities; the capital thus secured shall constitute a fund, the interest accruing from which shall be annually awarded in prizes to those persons who shall have contributed most materially to benefit mankind during the year immediately preceding. ”

“ Banks organized under this act must put ten per cent of their profits into a surplus fund until said fund amounts to twenty per cent of the capital; must invest at least twenty-five per cent of their capital, if it is less than $200,000, and at least $50,000, if it is $200,000 or more, in government bonds; and may deposit said bonds with the Comptroller of the Currency and receive circulating notes to the amount of their par value, provided their market value is par or above. ”

“ Each bit of capital helps to create a particular utility, and the number of units of the fund that each subgroup contains is, as we shall see, so arranged as to enable the fund as a whole to do its utmost for the general good. ”

“ The diminution of taxes, though the ultimate is not, however, the immediate consequence of the operation of the sinking fund, the efficacy of which depends on the taxes being kept up to their full extent for a considerable time. =sic= The first effect of the fund is, that a large sum, annually expended, as revenue drawn from the subject, is reimbursed to the stockholders, and becomes capital. ”

“ Funded income arises from the possession of wealth or of claims on wealth, such as lands, railroad stocks, government bonds, etc. The income is "funded" because it corresponds to an abiding fund of wealth. The income arising from current labor is unfunded, because there is no permanent fund of accumulated wealth corresponding to it. ”

“ No sinking340 fund can be efficient for the purpose of diminishing the debt, if it be not derived from the excess of the public revenue over the public expenditure. It is to be regretted, that the sinking fund in this country is only such in name; for there is no excess of revenue above expenditure. It ought by economy, to be made what it is professed to be, a really efficient fund for the payment of the debt. ”

“ The Government thus applying a surplus fortunately in its Treasury to the payment of expenses not met by its current revenues is not at all to be likened to a man living beyond his income and thus incurring debt or encroaching on his principal.
It is not one of the functions of our Government to accumulate and make additions to a fund not needed for immediate expenditure. With individuals it is the chief object of struggle and effort. The application of an accumulated fund by the Government to the payment of its running expenses is a duty. ”

“ Revenues to be established for making good any deficiency. It shall accordingly be the duty of the commissioners of the sinking fund, to cause to be applied and paid out of the said fund, yearly, such sum and sums as may be annually wanted to discharge the interest accruing on the said stock, and to reimburse the principal as the same may become due, and may be discharged in conformity with the terms of the loan. ”