The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1869-12-28
a New way to Fay Old Debts.

When Congress rcasscmblcs after the re-
cess, Mr.. Secretary Boutwells proposition to
fund the debt Of the United States, IN new
per cent. bonds, will come
sidcrcd, in I'LL probability, the whole sub
ject of contraction and expansion, and the
best means of avoiding or securing return
to specie payments.
Mr.. boutwell, proposes to create Joan Of
$1,000, 000,0 900, bearing fUnr-and-a-half per
cent. interest. principal and interest payable
in coin. and exempt FROM taxation. The
bonds known as the five-twcntics are 10 he
received in exchange for the new bonds, and
Mr. Boutwell, is reported TO have assured for
cign capitalists, that this exchange will not
be compulsory. It can be understood that
to compel the holders Of six per cent. bonds.
not yet due. 10 exchange them for four-and
a-half per cent. bonds would seriously injure
the credit of the government. There are,
however ut least 5000, 600, ,00o Of fvc-twcnty
bonds. which. upon their face, arc now re-
dccmablc by The government ut par. II is
true that the government may not, without
the consent of the holders, redeem these
bonds by giving the four-an'i-n-half per cent
bonds in exchange, but it can sell the now
bonds, and with tho proceeds pay Off the
six per cent honds. The solution of the
whole problem, therefore. depends on the
power Of the United States to negotiate the
now loan at a fair rate.
II may be admitted at the beginning. that
the credit of the United Stutcs is, at this
time, very high especially on the Cont
nent Of Euro?c. But unless The United
States can negotiate their new honds ut par
in coin, they will with one hand increase the
principal Of the debt Willie with the other
they reduce the percentage Of interest. In
other words, ii tho price of the four-nnd-a
half per capt. bonds is to he lower than the
price of the outstanding six per cent. bonds,
in the ratio of the capitalized value OF the
respective tcrminab.e annuity or annual i'll
tcrcst. the United States would gain very lit
tic, If anything, hy its new financial project
To make the project successful, the bonds
must be worth par in coin, and then the
country would save in interest eighteen or
twenty million dollars year.
But il appears 10 us that the new bonAs
could not be negotiated ut par, because the
outstanding six per cent. bonds bring only
par, and thoh is->no nluccment for the
holder of tho" Old bonds, yet undue, to give
up onc-foulth of his income by taking new
bonds. The new bonds must be bought
chiefly by the present holders Of American
Sc So, liz,
investment 81, 900, 900. 900 or 81, 200, 600, 900
of fresh brG.i'. And "hv shGnld the investor
pay orc 'uat|rai 6gllsls ior four-and-a-half
dosi', s.,sss9ssssa .s7sssssa a.t get six dollars
ss:sTf;ie same -ecact. .,.I ...o same price
Nor do We ,i;k that six per cent. is all ex-
crsslvn rate Of interest for the United States
to pay OH its bonds. In England the max
i'm of the "Iron Duke" that "a high inter
est is only another way Of expressing "bad
security" docs not induce capitalists to pre-
fer four-and-a-half per cent. American
bond 10 six per cent. American boad, al
though il may cause them to avoid Ameri-
can securities altogether. The fact that tho
English Government can borrow money ut
three, or even two-and-a-half per cent, has
no bearing upon the question. The French
three per cents. rcntes sell at about 72
Aud we contend that six per cent. is not too
high for the United States to pay, when the
character of The country and OF the people,
and its political and financial condition, arc
carefully and soberly considered. This, Mr..
Boutwell, will probably find out for himself
before he goes much further the more espc-
cially as it is broadly stated, that tho new
loan is already provoking angry opposition.