The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-05-03
THURSDAY. MAY Q, 1866.
Secretary McCuIIOch Proposed New Five
Per Cent. Loan.


ground TOR the belief that long five per
cent. loan may be successfully placed before
the country for the purpose of funding the
early maturing obligations of the Govern
ment. Those obligations, falling due within
the next three years, amount in the aggregate
to the large sum of over one thousand and
tWenty-one millions OF dollars.
The object OF funding this debt in a long
five per cent loan is, first, to reduce the rate
OF interest and secondly, TO throw the burden
of payment OF the principal, as we'll as por-
ton of the interest, upon the future. Eight
hundred and thirty millions of these obliga-
tions are now bearing the high rate Of interest
of seven and three-tenths per cent. per
annum. One hundred and seventy-three mil
lions bear interest at six per cent, com
pounded every six months, while some eighteen
millions bear simply six per cent. Granting
that this sum could now be funded in five
per cent. loan, the saving in interest over the
present rates would amount to the very
handsome sum OF over twenty millions Of dol
lars per annum.
The policy OF a long loan is evident the
moment we take into account the rapid in
crease Of capital in this country. During the
ten years from 1850 to 1860, the capital stock
of the country increased 15S per centum.
Allowing that Tor the next forty years the
increase should maintain anything like this
rat o, it is apparent that the principal of the
debt, when finally discharged, would be
but very tritlng proportion to the total
amount OF the national wealth.
The justice OF throwing portion Of our
heavy burden upon the next generation
cannot he denied. Gu, late war in putting
down the Rebellion was waged as much IN
the interest of posterty as in our own. In
preserving the unity and integrity Of the
country we preserved it Tor them. 1t is but
just Therefore, that those who are to share
in reaping the fruits OF tha tolls and sacrifices
Of this generation should also assist in the
liquidation Of the debt incurred 1t must be
remembered that the present rates OF interest
upon much of the public debt are exceptional.
They are above the ordinary rate of interest
IN times OF peace: they are above the rates
borne by State stocks. Before the war the
stocks of the United States were always above
RNA' ANY Wih uOuOblCoo uC 81 G3diu dS SOOu
as the financial condition of the country be-
comes more fully settled. Five per cent. is
above the European rates of interest on SINH
lar obligations, and foreign capitalists would
find our bonds, at those rates, a more prohta-
BILE source OF investment than anything
offered in their own countries.
To very large class of persons having
tundo fn boO
rate of interest, is preferable to a short one.
The investment, once made, is not liable to
be disturbed, and the expense and risk of
reinVestment are avoided.
But one of the chief recommendations Of
Government bonds is their freedom from tax
alton. State and municipal taxation is be-
coming so onerous, and is liable to such
further increase, that investments subject to
be reached by it are shorn of much of their
value. The rate Of municipal taxation in
many of our large cities has doubled within
few years; where it will finally stop depends
entirely upon whether the corrupt prodigality
so characteristic Of many municipal corpora
tions has yet reached its limits. The popu-
larity OF Government loans during the war
was owing in good measure to this freedom
from local taxation. 1t is worthy of consi-
deration whether, as a further iniucement
for subscriptions for a long five per cent
bond, it might not be good policy to
relieve it absolutely from all taxation
not merely as to the principals is now
the case-but also as to the national income
tax upon the interest. That the Govern
ment would largely save by doing so is appa-
rent. The saving of interest by funding the
eight hundred and thirty millions OF Seven
thirties into five per cent. loan would be
nearly twenty millions of dollars per annum:
while the income tax upon the intereso of the
SeVen-thirtles would amount to only some
three millions, being a direct saving to the
Government OF nearly seventeen millions per
annum upon this one description of bonds.
Absolute freedom from all taxation would be
novel attraction not only to Capitalists. but
also to that very large class of persops
having small amounts to invest. whose inAu-
ence in populGrt&ing loan was so signallv
shown in the sale of the SeVen-thirties.
In every point of view, then, it appears
desirable that long five per cent. loan, for
the funding of our present costly and early
maturing national obligations, should be
placed before the country. With a skilful
use OF the same means so successfully brought
to bear In the management and sale of for
mer loans, we have no doubt similar success
.ssuf.k I..a .E.s