The New York herald., 1870-06-08
The Tax Btll and Financial Questions
Before Congress.

At last Congress has begun to work earnestly
at the different measures relating to taxation,
funding the ma ional debt, the currency and
other money questions. One or the other
Of these questions is up every day and pretty
fully discussed. Still they are in such state
| Of chaos, there is such q wide difference of
| opinion about them, and the two Houses have
for the most part such separate and conflicting
bills, that we cannot yet see what shape legis-
lation will ultimately take. A great part of the
| session has been wasted on these measures.
There is not time now for any such compre-
hensive legislation on them as the country
needs, and there does not appear to be the
statesmanlike ability in Congress for that. We
must be contented, therefore, with the best
that we can get
The Funding bill reported by General Schenck
from the Committee Of Ways and Means diff
fers from the Senate bill and has been good
deal modified since it was first introduced
and went to the committee. 1t provides for
funding thousand millions of the debt at the
uniform rate Of four per cent interest. The
new bonds or consols will have thirty years to
run, and it is believed by Mr.. Schenck that the
holders of the fve-twenties and capitalists
will be willing to exchange their securities or
to purchase the new ones at par. 1t is thought
that the difference in interest between the ex-
pring or short time six per cents and the new
four per cents will find compensation in the
increased value of the thirty year bonds. Then,
with a view to bring them to par value, it is
proposed to exempt the new securities from all
taxation, and to cease paying interest on the
old securities as they become due unless the
holders surrender them to the government at
their par value. 1t has to be seen how far the
holders of the fve-twenties will voluntarily
change them for the thirty year bonds. The
reduction of one-third the interest makes q
great difference. But as the fve-twenties fall
due the holders of them will be compelled
either to take the new four per cents or pay
ment in money for their bonds at par value.
This is perfectly fair on the part of the
government, and, indeed, liberal, consider
ing that the bonds, which did not cost
over fifty or sixty per cent in currency,
are to be redeemed in gold. 1t is question
bondholders will take the four per cents at
par, and in that case there is reason to fear
the government will not be able to find the
gold to redeem such vast amount of securi-
ties. Would it not have been better, as the
Committee of Ways and Means have gone 80
far in proposing to reduce the interest, to
have adopted the more simple plan of chang
ing the whole debt into consols bearing
1856 per cent interest, and to have made
them convertible into money and recoverable
at the option of the holder?
Some of the other features of the Funding
bill are good enough. Authorizing the Secre-
tary Of the Treasury to use the gold in his
vaults to buy up and cancel the six per cent
debt, and providing for the cancellation of the
debt already purchased are proper provisions.
1t is doubtful, however, if the clause consti-
tuting the Treasury sort of gigantic bank of
deposit is either sound in theory or can be
practically carried out. This would make the
Treasury Department what it was never in
tended to be, would compicate its busi-
ness very much and would be a
doubtful and dangerous experiment. Then,
how is it that nothing is said about
the national banks being required to take the
new four per cent securities in this bill? It
was proposed that these institutions should be
be compelled 10 take the new bonds to
deposit as security for their circulation.
This would absorb three hundred millions Of
them, at least. Why are the banks thus
favored? Have the national bank interests
and lobby proved more powerful than the
Committee of Ways and Means or than Con-
gress? The whole interest on the securities
deposited by the banks is clear profit and
clear gift from the government; for they
get the profits on the currency supplied by the
government, and surely they ought to assist in
funding the debt at lower rate of interest.
The bill reducing taxation, which was
fought so desperately by the high tariff men,
is one of the best measures of the session
But it has yet to run the gauntlet of the Senate.
The reduction is on many articles Of prime
necessity aud to the estimated amount of about
fifty millions year. There might have been
greater reduction of taxes; for the revenue
of the country would have borne that, and a
large surplus income only leads to extrava-
gance and corruption; but this is
step in the right direction. There
is no time now to remodel at the
present session our tax and revenue system,
and we may be thankful for the best
we can get. Still the whole system is compli-
Gated and far too costly. We ought to raise
snff;cient income from a few articles Of luxury
and general consumption, as England does,
and this would reduce the army of office
holders and the cost of collection. One of the
best propositions that has been made in Con-
gress on financial and currency matters was that
of Mr. Randall yesterday to issue legal tender
notes in place Of the national bank currency.
This would save eighteen millions in gold