The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1870-06-08

thought of using il as an argument to prove
that our Government could borrow at a rate
nearly as low. For aught we can see, it
would have been Just as valid an argument
ten years ago as it is now. 1t certainly would
have been, unless it can be shown that the
credit of our Government has improved
during these ten years of deprecated cur
rency, financial disorder, and accumulated
debt. The lowest rate at which our Govern
ment was able to secure loans previous to the
war was five per cent. Itnever issued five per
cent. bonds, six having been the settled rate
but its six per cent. bonds rose, in 1860, to
121, and some of them were bought up at that
price by Mr. Buchanan's s Secretary of the Trea-
sury. Federal bonds we're never taxedby State
or municipal authority nor by the Federal
Government itself, so that in that respect the
ante-war bonds had the same advantage as
those now proposed to be issued. Their only
point of inferiority was in having a some-
what shorter period to run. In all other
points of comparison the advantage was on
the side of the ante-war loans. Our cur
rency was then sound, resting on specie
basis; all the transactions of the Government
were in gOld no great strain had been put
upon our resources; there had been no talk
of reputation; and the public expenses we're
less than one-fourth of what they are at pre-
sent. If the authors of the Funding bill can
explain to rs why the credit of the Govern
ment should be better now than it was ten or
twelve years ago, we are very willing to be
shown what we cannot discover.
The rate at whicn Government in good
credit can borrow must bear some proportion
to the ordinary commercial rate in the same
country. In England, the usual commercial
rate is five per cent; in this country it is
seven. The lapse of ten years has made no
difference in this respect in either country.
Previous to our civil war the rate on Govern
ment loans in each country was about two
per cent. less than its commercial rate due
allowance being made for the appreciation of
the United States six per cent. bonds. 1t
seems absurd to expect that our Government
can borrow now at three per cent less than
the ordinary commercial rate. The new
Funding bill therefore looks like piece of
Quixotic Congressional buncombe.
The theory on which this bill has been
framed is very obvious on its face, namely,
that the holders of the five-twenties would
prefer exchanging them four for long per
cent. bonds rather than have them paid and
be at the trouble of reinvesting the money.
The scheme therefore proceeds upon the idea
that its success depends upon the Govern
ment beginning to pay, or at least making
the offer to pay, the matured ive-twenty
bonds at par in gold. To make this begin
holders, it was necessary to provide, or make
a show of providing funds for this purpose
from other resources than the sale of the
new bonds Whatever ingenuity is exhibited
in the bill is in its kite-fying provision to
scare the bondholders into belief that the
Government will presently be ready to pay
them. The Secretary of the Treasury is au-
thorized, in his discretion, to use the
surplus gold in his custody in redeeming
cix n1c %
would be preposterous for him to do SO while
their deprecated market value enables him to
buy them at lower rate. The amount of
gold which the Secretary has at his disposal
is always easily ascertained, and it bears so
small proportion to the whole debt that the
bondholders would not feel much apprehen-
sion if he should announce purpose to pay
them. few of them would get something
better than the market price of their bonds,
and the amount of gold they would receive
would be too small to embarrass them much
in reinvesting it. The addition of the gold
interest on the sinking fund, which the bill
also permits to be applied to this purpose, is
a bagatelle too insignificant to be considered
as part of grand funding scheme.
But the last section of the bill attempts to
help out these lame resources. 1t makes the
Treasury sort of bank of deposit, to receive
and pay out gold; and on the same principle
that an ordinary bank can use a large part of
its deposits, it is proposed that the Secretary
of the Treasury may employ seventy-five per
cent. of the gold deposits for the payment of
bonds, retaining the remaining twenty-five
cent as a reserve for the redemption of the
certificates. This hopeful fetch is the novel
feature of the bill. But its ingenious trainers
are little sanguine if they expect that the
owners of gold will be eager to deposit it
with the Government on terms that would
preclude their recovery of it if turn of the
exchanges should create brisk demand for
its use Gold is freely deposited with the
Government now, because it all lies safe in
the Treasury subject to call. But when the
Government uses the greater part of such
deposits to pay its own debts, the feeling of
security will have vanished, and its owners
will be likely to prefer the custody of the
banks. If this bill passes in its present
shape it will be of no more practical account
than piece of blank paper.
SHOCKING AFFAIR IN CHICAGO.
Form the N. Y. Herald
a