The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1869-12-28
New Way 10 Pay Old Debts.

4 New Way 20 ray Olu DcDi4.
When Congress reassembles after the re-
cess, Mr.. Secretary Boutwell's proposition to
fund the debt OF the United States, in now
four-and-a-half per cent. bonds, will come
up for discussion. and with it will be con-
sidered, in all probability the whole sub
ect of contraction and expansion, ard the
best means OF a~oiding or securing q return
to specie payments.
Mr.. Boutwell, proposes to create loan OF
81, 200, 900, 900, bearing four-and-a-half per
cent. interest, principal and interest payable
in coin, and exempt from ia: alton. The
bonds known as the fve-twenties are to be
received in exchange for the new bonds, and
Mr.. Boutwell, is sreperted to have assured for
eign capitalists, that this exchange will not
be compulsory. 1t can be understood that
to compel the holders Of six per cent. bonds
not vet due. to exchange them for four-and-
a-half per cent. bonds would seriously injure
the credit of the government. There arc,
however. al least $500, 900, 900 OF tiyc-twcnty
bonds. which, upon their face, are now re-
deemable by the government at par. 1t is
true that the government may not, without
the consent OF the holders, redeem these
bonds by giving the four-and-a-half per cent
bonds in exchange, but it can sell the new
bonds, and with the proceeds pay of the
six per cent. bonds The solution Of the
whole problem, therefore. depends on the
power of the United States to negotiate the
new loan at a fair rate.
II NAV be admitted at the beginning. that
the credit of the United States is, at this
time, very high. especially on the Conti-
nent of Europe. But unless the United
States can negotiate their new bonds at par
in coin, they will with one hand increase the
principal of the debt, while with the other
they reduce the percentage OF interest In
other words, if the price OF the four-and-a-
half Der cent. bonds is to be lower than the
price of the outstanding six per cent bonds,
in the ratio of the capitalized value OF the
respective terminable annuity or annual in
terest. the United States would gain very lit
tie. if anything, by 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 q year.
But it appears to us that the new bonds
could not be negotiated at par, because the
outstanding six per cent. bonds bring only
par and there is no induccment for the
holder of the old bonds, yet undue, to give
up one-fourth Of his income by taking new
bonds. The new bonds must he bought
chiefly by the present holders OF American
bonds. There is not open for this class OF
inyestmcnt 81, 900, 600, 600 or 81, 200, 900, 900
OF fresh capital And why should the investor
nav one hundred dollars for four-and-a-half
dollars year, when lie can get six dollars
with tine same security for the same price?
Nor do we think that six per cent. is an OK
cessive rate Of interest for the United States
to pay on 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" does not induce capitalists to pre-
fer Il four-and-a-half per cent. American
bond to six per cent. American boad, al
though it may cause them to avoid Amcri-
can securities altogether. The fact that the
English Government can borrow money at
three, or even two-and-a-half per cent, has
no bearing upon the question. The French
three per cents. rcntes sell at about y.
And 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 It's political and financial condition, are
carefully and soberly considered. This, Mr..
Boutwell, will probably find out for himself
before he goes much further. the more espc-
cally as it is broadly stated, that the new
loan is already provoking angry opposition.