The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1867-09-10
The August Debt Statement.

The August Debt Statement.
From the NJ. Y Com and Financidt Chrontcle.
II any persons have doubted whether Mr.
McCulloch has had settled policy in managing
the public debt an examination of the success
sive monthly schedules registering the move
ments of that debt will efiectually settle the
question. The policy adopted has not, per-
haps, in some of its minor details, been the
best possible, but there has been such a policy,
and that it has been pretty consistently worked
out, Mr.. McCulloch has given abundant proofs
during his two or three years of Office.
One of the great necessities which controls
this policy is, of course, the consolidation of
the debt. Money was borrowed during the
war by the issue of many different kinds of
securities. These obligations are either to be
paid of as they mature, or else they must be
consolidated into bonds. 1t is this process of
paying or funding which constitutes the chief
popular interest in the monthly debt state
ments. In that of August which is now
before u.s. we find that nearly thirty-seven
millions of Seven-thirties have been funded
into Five-twenties, while thirteen millions
more have been paid off in cash, together with
seventeen millions of compound interest
notes. This is the first point of interest in the
statement; second is the contraction of the
greenback currency to the extent of four mil
lions. This contraction, however is of small
immediate Importance in the existing plethora
of the money market.
Another important fact which has been
much discussed is the rapid depletion of the
currency balance, which has fallen to AZ mil
lions, and may perhaps go still lower. So
long as the Government has to pay eight per
cent. for money, it is deemed inexpedient and
contrary to sound economy to hold any larger
amount of idle currency than is absolutely in
dispensable, in the Golfers of the Department.
Itis evident that those who have most earnestly
contended against the policy of holding heavy
balances have overlooked the reasons which
forced that policy on the Secretary, and for
bade him until now to abandon it,
So far as the consolidation of the public
debt is concerned, we have just reached, and
have safely passed, what for two or three
years has been looked forward to as the most
critical and dangerous period in our national
finances. In the fall of 1865, as a consequence
of the disbanding of the army and the closing
of the war, we had vast sum due to Trea-
manded at almost any moment. There were
the call loans for which we were paying and
6 per cent. interest, the aggregate being over
106 millions of dollars; the one and two year
notes amounted to thirty three millions, aud
the one-year certificates to eighty-fve mil
lions, all of which were rapidly maturing.
The embarrassment produced by such
short loans were so severe when they were
from time to time paid off, that the greatest
possible anxiety was felt as to the other short
date Indebtedness, and the fact was pointed
out that such obligations fell due in the
autumn of the present year to heavy amount
In one month 300 millions of three year
Seven-thirties matured, and part of the I'll
millions of three-year compound interest
notes. The aggregate was variously estimated
from $50 to 450 millions, all of which, under
certain contingencies, might be payable in
cash. The inevitable result it was supposed
would be, that the Government would be
forced to issue an indefinite amount of legal
tender notes to extricate itself from it's en-
gagements.
Such were the sinister predictions of the
oroakers in 1868. The Treasury was sure to
have the greatest possible difficulty in meet
ing its maturing engagements, and to be kept
in perpetual embarrassment until at length
the trouble eliminated in further imitation of
the currency, with all the loss and derange-
ment to business which such mischievous
eXpedient would bring on the country. Mr.
McCulloch had at that time been for a few
months only at the head of the Treasury De-
partment But he had set in operation the
machinery for consolidating the public debt
and averting the predicted catastrophe, which,
if it had occurred, must have depressed Gov
ernment securities below par, besides intro
ducing an element of perturbation, incertitude,
and distrust into all commercial and financial
engagements
To see how this consolidation machinery
worked, let us pass ON to the fall of 1866.
During that interval of twelve months the
aggregate of the debt had fallen from 2S74 mil
lions to 2708 millions, the temporary loan Has
reduced to 45 millions, the deht-Ianua4s. =, -, %
had disappeared from theSelrs'.
and iftv 10 sonedule altoSeIner,
80 1lAtinUns of compound notes had been
fGhdrawn, as well as siXty-one millions OF
Seven-thirties. Such was the signal manner
in which the fears of financial trouble were
disappointed, and what was most important OF
all was that the greenback circulation, instead
of increasing was curtailed from S433, LOU, 5OS
on the lst September, 1865, to 1891, 6O3, ,592 on
the lst September, 1866.
In the report which has just been issued we
see the same policy carried one step further
The Temporary loans have been paid OIL, as
have all the short date securities which have
matured, with the exception of a small amount
of unclaimed clearing house certificates com
Mound notes, and seVen-thirtes, none o
which will cause the least anxiety to tn,
Treasury. The greenback currency has beer
reduced TO 365 millions, or about 100 millions
less than II was in 1864. The compound note
have fallen to 81 millions, none of which will
mature till October, when the per cent. re
serve certificates will, il necessary, be avail
able to pay them. In word, we have ALREADY
passed the severest test to which our nationa
debt is likely to subject the financial machinerl
of the country, and such is the force of tina
machinery, so great its elasticity and reeupe
rative power, that the whole of this giganti
task has been accomplished without a singl
Jerk or spasm being complained of in Tia
money market.
glance at the debt statement will show
4. 49, 4