Evening star., 1869-12-06

I
making PROVISION fo- Eev loan. Tho FIVE.
/ twenty bonds. amuanting In the aggregate to
| Sl,tt2F.l 100, are either due or VIII NooH be
! come due, and il Is to this class OF the public
. te Z, AMI to this class alone, that attt tntion
should b. directed.
Uf this amount the sum OF sis4.7 sfa has
+ been purchased since March last, and the bonds
/ are now held by the Government Before any
measure for funding the fiye-twenty bonds can
| be con>ummated, the Government will be able
TO purchase at least s7t,eco 900 more. There
viii then remain, on the 1st OF July next about
/ Sl.45ei0a,ero of the fve-twenty hsnds in the
| hands o. the public creditors. OF the entire
| Indebtedness of the United States only the un-
payable previous to lST4.
Cnder these circumstances. it does not seem
to me to lie wise 10 authorize the funding of the
whole amount OF the five-twcnty hon,f- which
| as is now anticipated wiz he outstanding o.
/ the 1st Of July next, but that SlJO,c&.O0o at
least should be suffered 20 remain either for
purchase or redemption previous to 1874.
| Should the sum of s2Jo0s, ,Oo be left for that
/ purpose, the entire public debt would be in
/ CONDITION 70 he easily redeemed. Between 1874
! and 1871 the tels-fcrty boRds could be paid,
I and provision also made for the redemption
| OF the bonds which will become due in the
| year 1851. 1t NAV be wise to Reduce the pro-
/ iOsed loan 20 Sl.oco,9"."e. which would then
| leave tVr payment previous TO 1851 the sum of
| about St-0.OO0pp, hardly more than
| SoOyO00. zoe year. Assuming that the proposed
loan VIII he for an amount not exceeding
! three classes. OF S4o0, 600 100 each. The fir-t
class Of Sito.Noo ,O0a 10 be PAYABLE in fifteeu
years; and To be paid in twenty years. Tie Sc
cOi,d class OF 500 yntp too 70 be- payable i'm
twenty years, and to be paid in twenty five
years. The third class Of >iN. .~oU Ooe 10 be pay
allie in twenty-five years, and 10 be paid il
The essential conditions Of the new loan aI.-
pear to me to lie these:
1st. That tine principal and interest shall be
male payable in coin.
I'd. That the bonds krown a. the five-twenty
bonds shall be received in exchange for the new
bonds.
Sd. That the principal be payable ia this coun-
try, and the interest payable either in the Uni
ted States or Europe, a the subscribers to the
loan NAV desire.
ith That the rate OF interest shall not exceed
AZ per cent. per annum.
5tli. That the subscribers in Furore shall re-
ceiye their interest at London. Paris, Berlin or
Frankfort, they NAV elect.
9th. That the lsonts, 10th PRINCIPAL and inter-
est, shall be free from all taxes. deductions,
aIateIuents of any sort. unless il shall IL thought
wise to subie ct citizens of the United States to
such tax upon income from the bonds as il iin-
posed by the laws OF the United States upon
income derived from other money investments.
There are two reasons. and each seeigs to me to
be 4 controlling reason, why the bonds OF the
United States should be exempt from State and
local taxes. II not 80 exempt. the amount of
taxes imposed by the local authorities will be
added TO the interest the Government will he
required TO pay, and thrs the National Govern
n'ent will be compelled to provide for taxes i'm
posed by the local authorities.
Secondly. Inasmuch a. the ability to borrow
money may. under some circumstances. be es-
sential TO the preservation of the Government.
the power shOvld not, even in times of peace and
prosperity, be qualified by any concession to the
states OF the right to tax the means by which
TIE Nato Government l. maintained. The
right TO use its lawful powers free OF any cOndi-
ton. restriction, or claim Of another. is an es-
seniial condition OF sovereignty, and the Ma
tional Government should never surrender or
qualify it, power in this particular.
In Ofit ring the new loan, citizens and subjects
of other governments should receive the
strongest assurance that the interest and Irin-
cipal are 70 lie paid in coin. according To the
Z. ms OF tie bonds issued, ithoUt any deduc-
ton or stat. n ert whatsoever.
In Order to avoid the necessity of employing
agents for the negotiation of the loan. respect
fully recommend that liberal commission lie
allowed 10 subscribers, and that those Who first
subs srribc lie permitted to select the class OI
bonds in which their subscriptions respectively
shall bc made. i further recommend, in con-
nectiJn with the proposed loan, that the banks
established Gnder 1.-The act to provide national
currency" te required to substitute the bonds
that may he Issued under the proposed loan act
Tor those ncw deposited "a security Tor the
1ig-n1,tiprl OF their bills. Should any bank ic
INV Iliing IL accept the new condition. provision
>hould be made tor the surrender OF it, charter.
and authority given tor the organization OF rev
J:.nks 10 supply the deficiency thus created.
An cS-C z .iai condition to the success OF the
proposed new loan i, the}csntinuance OF the pres
ent revenue system. clief means by which the
ts.Tt holders of the nyc-tventy bonds can he
Induced u surrender them, and receive a bond
upon longer time and at a lower rate OF interest,
: the certainty furnished by the magnitude OF
the natcna! revenue that these bonds are soon TO
he redeemed. We must he prepared to offer them
the alternative either OF accepting the new bond
az a lower rate of interest, payment OF the
principal Of the existing tonds. When the five
twenty bonds shall have been fundedNtO the
amount or II GOO.C .0O0 81 60, 100 900. the
revenues can he reduced materially, and Yet
sufficient sums be raised to meet the ordinary
expenses OF the Government to pay the interest
on the public debt and also to Pay S.5 0Oe. 900 to
s>-,I,s go Cf the principal annually.
Should Our success in negotiating a new loan
he equal To my expectations. based uEon the
TACT FIAT the abilitv and dispos tion OF the peo-
pie CT the [ nited States 20 pay the public debt
are sufficient to Justify u IN assuming that the
bonds of the United States will command the
highest rates in the markets OF the world, We
shall then he in a condition 10 enter upon the
work Of reducing taxation az the commence
Inent OF the BeNt session OF Congress.
On the :c1h OF June 1S5S the amount Of out
standing three per cent. certificates and COM
pound inteI est notes convertible into three per
cent. certificates was Il.'oi,>sS- On the j0th
of June, l~'.'. the amount outstanding was
SI .g91 40. showing reduction of Sl6 6l3, 40
in that form of indebtedness.
ON the LIST of Decembrr. 1869. the amount out
staining still further reduced to SO IL, 100,
showing total reduction, in seventeen months,
OF 81 $3.50.
The three rer cent, certificates are o substi-
tutc. to q considerable extent, for United States
notes. being largely held by the banks rs POr
ton of their reserve, and thus indirectly, though
IOt TO their fall nominal value, they swell the
NO.tAiic oL
| recommend that provision te made for the
Tase Inpti1n of the three per cent. certificates
within q reasonable time and. rs q cOInpensl-
tirg measure Tor The reduction in the amount
of rUsrency (which would TINS be caused that
authority be given to grant charters for banks
iu the State. where tn" banking capital is less
than the share to which they would lie entitled.
10 amount not exceeding thirty-hvc millions
Of dollars in the aggregate. The redemption of
the three ps cent. cCrtiticateS and the additions
tH the barking canitai might be 10 arranged as
not tC produce a serious di>tuT bance Ia the fl
nancs-~ ar business Of the country. while adj
ticnal banking capital would be supplied to the
sections nov I'm need Of IL, and this without any
increase of the volume OF circulation.
There are two evils IN the present banking
et.i cient legislation. The first is the practice on
lc>i>ts. The effect of this practice is, that
news i'll the and> ot individuals which otherwise
mir rbt be loaned for regular mercantile and
ether business purposes are diverted INTO the
tody 81 banks. upon the idea that, III the security
j. not better, PAYMENT can he obtained at mo-
ment'> notice. Country banks, and others
mote fTCm the large centres of trade, having
received money deposit for which they paw
interest, anxious TO transfer such funds tO
other hanks from which they will receive an
equal or larger rate of interest in return. They
are stimulated also by the desire to place their
funds where they can be at all times COM
manded. Thus influenced, large sums are
placed on deposit with banks in the cities. es-
pecialiy in the city of New York, which is the