Daily union and American. [volume] (Nashville, Tenn.) 1865-1866, 1865-12-12
NO. 7.

retary with authority to dispose of bonds, il
the condition of the market will justify it, in
order TO anticipate the payment of those OBJ
| legations that must soon be provided for.
The following estimate of the time that
would be required TO pay the national debt,
| (if funded at five per cent. and at FIVE and
one-half per cent? by the payment of two
| hundred millions Of dollars annually on the
interest and principal, and also the diminu-
| tion of the burden of the debt by the in
crease Of productions, may not be without in
tereSt to Congress and TO taxpayers.
TILE AGGREGATE DEBT AND THE INTEREST
The national debt, dcducting moneys in
| the Treasury, was, on the 31st of October.
1865, S2,740,S54,750. Without attempting
| nice calculation of the amount it NAV
reach when all our liabilities shall be acca-
rately ascertained, it seems safe to estimate
it, on the lst of July, 1866, at $4,000 O00,-
000. The exact amount Of existing indebt-
edness yet unsettled, and the further amount
that may accre in the interval are not now
capable of exact estimation, and the revenue
of the same period can be only approxi-
mately calculated, but il will be safe to as
sumo that the debt will not exceed the sum
named.
The annual interest upon S3,000,OO0, If
funded at 81 per cent. per annum. would he
Sl65, ,OOO, 900, but if funded at ) per cent, it
would be S15O,0OO,O00.
Now, if $200000000 per annum should
be applied, in half-yearly installments of
Sl00,O00,000 each, in payment of the &c
cruing interest, and in reduction of the
principal funded at the higher rate of 81
per cent, the debt would be entirely paid in
thirty-two and one-eighth wears. 1T per
cent. per annum, it would be extinguished
by the like application of Sl00 0O0O00 every
six months, in a little over twenty-eight
years.
At the higher rate, the sum applied in
the first year in reduction of the principal
of the debt would he thirty-fve millions of
dollars; in the last, or thirty-second wear,
when the interest would be diminished to o
little over nine millions, about one hundred
and ninety-One millions of the uniform an
nual payment would go 10 the reduction OF
the principal.
On the assumption that the debt may be
funded at five per cent, fifty millions would
be applicable to the reduction of the princi-
pal in the first wear, and in the twenty-eighth
or last year of the period-the interest fall
ing to less than eight millions-one hundred
and ninety-two millions of the annual pay
ment would 60 to the principal
The annual interest accruing upon 8, 1885,
100000 of the debt on the 3ist Of October
last averages 6.62 per cent. A part of this
sum is now due another portion will be
payable next year, and the balance will be
due or payable, at the option of the govern
ment, in 1867 and 1865. If these 81, l,735,-
000,0 900 shall be funded or converted into .
per cents by the Dear 1869. the average in
terest of the whole debt will be 5,195 per
cent. In the year 1871, if the debt then
maturing should be funded at the same rate,
the average interest would be reduced to D.
10, and in 1881 to per cent, excepting the
bonds for S50000,000 to be advanced in aid
of the Pacific Railroad at 6 per cent, which
will have thirty years to run from their re
spective dates. The interest Of these bonds,
added TO the supposed 5 per cents, would,
in 1881, make the average rate of the entire
debt five and three One-hundreths of one per
cent. until the whole should be discharged.
In these calculations Of the average rate
of interest upon the funded debt the out
standing United States notes and fractional
currency are not embraced. Whatever
amount of these four hundred and fifty-four
per cent. per annum, will proportionally re-
duce The average rates of interest upon the
whole debt.
BY the terms and conditions Of some
portion of the debt, the interest on the
whole cannot be reduced to exactly five per
cent. unless the money may be borrowed, at
some stage of the process, at a trifle below
five per cent. A bonus of One-tenth of one
4 Al l.
cent. loans, would more than cover the ex-
cess, the probability of which fully Warrants
the calculation submitted rs to the payment
of the total debt at this rate.
1t must be observed, also, Il at the assumed
principal of the debt in July, 1906, must un-
dergo some dimunition before the funding in
1867, 1868 and '69 begins. If only $780,
00O, 900 shall be paid off in these three years,
the principal. thus reduced to $4,000 0O0-
600 would be extinguished by the process
already stated in 20 years, if funded at 81
per cent and, if at 5 per cent, in something
less than q years. And, it is well worthy
attention that 500 600 900 less principal, at
the commencement of the process OF pay
ment, will save, $l0O, 900, 900, III round num-
bcrs, in the end, if the rate is 81 per cent,
and S300,000,000 if ) per cent.
S200,000,O00 A YEAR To PAY TIE DEBT.
After careful reflection, the Secretary con-
cludes that no act OF Congress Except for
raising the necessary revenue) would be more
acceptable to the people, o~better calculated
to strengthen the national credit, than one
which should provide that two hundred mil
lions of dollars commencing with the next
fiscal year, shall be annually applied to the
payment of the interest and principal of the
national debt. The estimates for the next
fiscal year indicatethat amuch larger amount
could be so applied without an increase Of
taxes.
QUESTION OF TAXING GOVERNMENT BONDS.
In view of the fact that the exemption of
Government securities from State taxation Is,
by many persons, considered an unjust dis
elimination in their favor, efforts may be
made to induce Congress TO legislate upon
the subject of their taxation. OF course, the
existing exemption from State and muni-
cipal taxation of bonds and securities now
outstanding, will be scrupulously regarded.
That exemption is part of the contract un-
der which the securities have been issueG
and the money loaned thereon to the Gov
ernment and it would not only be unconsti-
tutional, but breach of the public faith Of
thenation to disregard it. Itwould also, in the
judgment Of the Secretary, be unwise for Con-
gress to grant to the States the power, which
they will not possess unless conferred by ex-
press Congressional enactment, Of imposing
local taxes upon securities Of the United
States which may be hereafter Issued. Such
taxation, in any form, would result in serious,
il not fatal, embarrassment 10 the govern
ment, and, instead of relieving, would event.
ually iniure the great mass Of the people,
who are to bear their full proportion Of the
burden Of the public debt. This is subject
in relation % which there should be no
difference Of opinion. Every tax payer is
personally interested in having the public
debt placed at home, and at a low rate Of
interest, which canROt be done il the public
securities are 10 be subject 10 local taxation.
Taxes vary largely in different States, and
in different counties and cities Of the same
State, and are everywhere 50 high that
unless protected against them, the bonds into
which the present debt must be funded can
not be distributed among the people, except
in some favored localities, unless they bear
a rate Of interest 20 high rs TO make the debt
severely oppressive, and to render the pros
pect Of Its extinguishment well nigh hope
less. Exempted from local taxation, the debt
can, it ia expected, be funded at an early
day at five per cent. if local taxation Is al
lowed, no considerable portion Of the debt
which falls due within the next four years
can be funded at home at less than eight per
cont The taxpayers of the United States