The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1869-12-07

| will be easy, II not unavoidable.
FUNDING THE PUBLIC DEBT.
On the LIST OF December, 1899, the PRINCIPAL or the
public debt OF the United States NOS deductng bonds
and cash on hand amounted TO 81. 605 49,, 7s9. 0i
@ By United States notes not bears
Ing interest. The larger part OF this Is needed
for circulation, but the amount can be reduced
from the ordinary revenue OF the country II Congress
shall consider 1t expedient to make provision for
sucn reduction. The fractional currency in clrcula-
ton was Us, and there Is no occasion Tor
any legislation IN reference to tins item the public
debt. There were outstanding, also, certificates for
gold deposited in the Treasury TO The amount OF
presentation. These three items amount In the az
gregae 10 $43l 1853: and in making provision for
the pubic debt they are not necessary 70 be consid
cred. or the loan OF January l, 1861, the sum Of
$7022 coo is outstanding and payable on the LIST OF
payable IN 1873 The bonds known as teniorty bonds
amounting TO $lo4, 567 300, are not payable until
1874 me SIX per cent bonds payable In 1851 amount
to $2sS, 677, o00 As the bonus known as 'Sls and
ten-fortles, amounting In the aggregate TO
s47s,2i4,9Oo, are not due and cannot be paid
previous to 1874 aud 1884, it Is unnecessary to con-
slder them In making provision for new loan, the
tve-twenty bonds, amounting In the aggregate to
soo2 81, 100, are either due or VIII become
this class Alone that attention should be directed.
Of this amount the sum Of 500 mas been pur-
held by the government. Before any measure for
funding the hvetwenty bonds can be consummated
SIS, 6oo, 900 more. There viii then remain on the
first Of July next about 400. 600 900 OF the five
twenty bonds IN the hands Of the public creditors.
OF the entire Indebtedness OF the United States only
the unimportant sum o. $l7,0oo0Oo VIII be due ana
payable previous to 1874.
Under these circumstances II does not seem to me
to be wise to authorize the funding of the whole
amount Of the ive-twenty bonds, which, AZ Is now
anticipated win be outstanding on the LIST Of July
next but that $780, 900 900 at least should be sur
Tered TO remain either for purchase or redemption
previous to 1874 should The sum OF $3.50 QUO be
lett for That purpose the entire public debt would be
III coalition 10 be easily redeemed. Between 1874
and 1851 the tenforty bonds could be PAID and pro
vision also made for the redemption Of the bonds d
wise to reduce the proposed loan OF $l0OO,0O1OOO,
which would then leave for payment previous to 1881
the sum OF about SOTO OO0,O O0 or hardly more than
$50, 900 year. Assuming that the proposed loan
Will be for an amount not exceeding 2O00 go,
recommend that it be offered in three classes, or
payable III fifteen years, aud to be paid IN twenty
years. the second class or s400 to be payable
and the third class OF $4o0 600 TO be payable IN
twentyf five years. and to be paid IN thirty years.
me to be these-Frst that the principal aud inter-
est snail be made payable In coin; second, that the
bonds known as tve-twenty bonds shall be received
In exchange for the new bonds third, that the prn
clpal be payable IN this country and the interest
payable either IN the United States in Europe, as
the subscribers to the loan may desire; fourth,
that the rate OF interest shall not exceed
four and hall per cent per annum; hitn,
tnat the subscribers IN Europe shall receive ave
as they may elect sixth, that the bonds both prn-
cipa and interest. shall be free from all taxes,
shall be thought wise to subject citizens Of the
United States TO sucn tax upou income from the
bonds as is imposed BY the laws Of the United states
upon income derived from other money Invest
mentS.
There are two reasons. and each seems to me to be
0 controlling reason, why the bonds OF the United
States should be exempt rom State and local taxes
II not 80 exempt the amount OF taxes imposed by
government VIII be required to pay, and thus the
national government viii be compelled to provide
for taxes imposed by the local authorities secondly,
fnog 00 ha rV m hnpr nn.tnr
some circumstances be essential to the preservation
OF the government tho power should not, even IN
concession to the States Of the rght to tax the
means by which the national government Is main
tanned. The right to use its lawful powers free OF
any condition, restriction or claim OF another, Is an
essential condition OF sovereignty, and the national
government should never surrender or qualify its
power IN this particular.
In offering tie new loan citizens and subjects OF
other governments should receive the strongest as
surances that the interest and principal are to be
paid In coin, according to the terms OF the bonds
Issued, without any deduction or abatement what
soever In order to avoid the necessity OF employing
agents for the negotiation OF the loan ! respect
fully recommend thar liberal COMMISSION be
allowed TO subscribers, and that those who
nrst subscribe shall pe permitted TO select the class
OF bonds in which their subscriptions respectively
shall be made. further recommend, in connection
with the proposed loan that the banks established
under the act 10 provide national currency be
CURED 10 substitute the bonds that may be issued
under the proposed loan ACT for those deposited
security FOR the redemption OF their bills Should
any bank be unwilling to accept the new condition.
provision should be made for the surrender OF Its
charter ana authority given for the organization Of
new banks to supply the deficiency thus created.
An essential condition to the success OF the pro-
posed new loan Is the continuance OF the present
sent holders Of the fve-twenty bonds can
be induced to surrender them and receive
ierest is the certainty furnished by the magnitude
OF the national revenue that these bonds are soon 10
be redeemed. We must be prepared to offer them
the alternative either OF accepting the new bond at
lower rate OF interest or payment OF the principal
OF the existing bonds.
When the fve-Iwenty bonds shall have been
funded to the amount Of S1,0OO.00o,0o0 or
81, 200, 100000, the revenues can be reduced ma.
teriay, and yet Sufficient sums be raised to NEE,
the ordinary expenses OF the government to pay the
interest on the puDllc debt and also to pay
s25 900 TO $4,000. 900 Of the principal annually
my expectations based upon the fact that the ability
and disposition OF the people OF the United States to
pay tae PUBLIC az, DEB. are SUFFICIENT Gle 70 Justify me
command the highest rates IN the markets. Of the
world, we shall then be in o condition to enter
upon tho work OF reducing taxation at the COM
mencement OF the next session OF Congress.
On the 50th Of June, 1868, the amount Of 0utstand
ing three per certificates and compound interest
notes convertible into three per cent certificates
1880; on the sofa OF June, 1859, the
amount outstanding was s5i.osi. 4lo, show,
indebtedness. On the LIST OF December 1869,
the amount outstanding was still further reduced to
s4s, i5e showing total reduction IN seventeen
the United sass Ssns largely held BY the banks sS as
portion OF tnelr reserves, aud thus indirectly,
though not to their null nominal value, they swell the
volume Of the currency / recommend that q pro-
vision be made for the redemption OF the three per
cent certificates within reasonable time, ana as
compromising measure for the reduction III the
amount OF currency which would thus be caused,
that authority be given to grant charters for banks
In the States where the banking capital Is less than
the share TO which they would be entitled
TO amount not exceeding f35, 100000 In
the aggregate. The redemption Of the three per
cent Certificates and tho additions to the banking
capital might be so arranged as not TO produce a
serious disturbance in the nnances business tho
country. while additional banking capital would be
supplied to the sections now la need or 1t, and thi3
EVILS or OUR bREsENr BANKING SYSTEM
There are two evils III the present banking system
which require remedy by prompt and efcient legls-
aton. The first Is the practice on the part OF banks
or allowing interest upon deposits. The effect OF
the practice IS that moneys IN the hands OF IndI-
vlduals which otherwise might be loaned