The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-01-25
TIE UNITED STATES 81 KElG Fu.D.


Olives His Reasons Tor tho Ooiaiou-A Now
Chairmas Of the senate Finance Committee
wan,ed-Hew The sinking Fand Works.
Thc United States Pay, conlpsuud Interest
ON Its Ows Paid Up Dcbt-iJi~ssry OF "A
Million Doliars--A Needless Tax-waat tho
People wam mud What They Must Have
Congress. Attention !-Tac vis,vs ef n
statesman--Paciac Railroad Subsidy
Eonds-pown witi the Taxes!
wAsaIsGroS Jan. -, 1871
The sinking fund TO pay or our national debt
How many cope know What IL isf Not one In half
million. How many people really know whether
II IL a gricvous burden or national blessings Not
one in ten thousand.
Inasmuch efforts are being made In Congress
TO increase few facts showing its true character
and the extent OF the burden Il imposes upon an
overtaxod people, WILL know. 10 most acceptable.
IL Is popularity supposed that when the Secretary
OF the Treasury pays on million OF dollars OF our
national debt that the interest ceases az the date OF
purchase and that the peoples burden OF taxation
Is decreased exactly the amount or the interest or
the paid up debt. Exactly the reverse Is the case.
million dollars OF outstanding nve.twenty bonds
take $l2o, 900 in gold from the taxpayers treasury
account OF interest iu two years, while the same
sos the first two years II is in the sinking fund
and a very much larger burden annually thereafter
This burden Is exclusive OF thar imposed on account
OF the payment OF the principal.
niGh UNITED STATES TREASURY OFFICIAL
told me the other day that the sinking fund was a
'pious fraud.''
Another higher ana more out-spoken Official In
forms me that the United States sinking fund Il "a
d--d complicated piece OF noasense.r An ex-
chairman OF The Committee OF ways aud Means says
"lr is taking money ont OF pocket aud putting
1t into her,
Tie first named official is the nearcss right Leave
or the "pious'' and no hits it exactly. IL Is a
".raud," out and out 1t Is grlevous burden upon
the people, pretending all the while TO be bene
fcient measure OF relief. Look AT the plain facts.
THE BOOKS or THE UNITED STATES TREASURER
show that or tl3 Sl5s 2,6,S72 worth Of bonds pur-
chased by Secretary Boutwell,. previous 10 the LIST
of this month s5i,77915o was turned into the sink
Ing fund.-
The simple ana compound interest on s54 7,e $50
at six per cent in gold, compounded over and over
indefinitely, the premium on bonds purchased and
sundry other necessary expenses Is the exact
measure OF the burden imposed upon the people
At the present time it cannot be cent less than
FOUR million dollars per annum for compound
interest on the paid up portion of our national debt.
Our outstanding national debt bears simple interest
while the people taxed 10 pay compound interest
on that portion Of their debt that was paid years
ago. OF course this interest on the paid up portion
OF our debt goes eventually to pay Off other portions
but 1t increases the taxpayers present burdens most
previously, just at time they should be relieved.
PROPOSALS no INCREASE THE BURDEN.
| = It Is now seriously proposed by the leading
secretary into the sinking fund If this is done the
burden Will shortly amount to
TEN MILLION DOLLARS
per annum. exclusive Of direct appropriations for
the payment OF the principal Of me national debt
| ~
sinking fund cannot be less than ten million dollars
per annun with certainty ola very rapid increase
Are the people prepared for this addition TO their
| burdens?
senator sherman. chairman OF that mysterious
cabai, the Senate Finance Committee, thinks they
| are. He fears very much to reduce our taxes; says
that II the income tax is abolished some other must
the honorable Senator ignorant as he pretends
to be-. When the Senator says that we cannot nave
| totally UNIT for his place. Can't reduce taxes
| Why the entire Internal Revenue Bureau should be
one or two others that can be collected with little or
no expense. A reduction might also be made In GER
] tain customs duties. We should then have revenue
enough pay all necessary expenses of the govern
ment. There Will be a reconstruction OF Congress.
s0nal committees on the 4th of March next Let lls
| then have new chairman Of the Senate Finance
| Committee.
! HOW TT WORKS.
/ To show the exact operations OF the sinking fund
VIII give brief histor, OF the sl,o0o00o OF bonds
purchased by Mr.. Boutwell, on the 18th OF May,
1 1909.
On that day the Secretary OF the Treasury paid
Sl0oo0oo OF our national debt at a cost OF ST. i5,, 535
from the national Treasury. That certainly should
! have been the end OF the transacon but II was
not. The paid up bonds were "punched' and
amount OF 0o0, ooo bearing six per cent interest
IN gold, payable semannually, were issued to the
Secretary Or the Treasury in their stead, and stored
| also In the Treasury vaults.
on these paid up bonds the Secretary was obliged
cent IN % pay tns sx s
sums so taken from the Treasury TO be invested also
In bond making In facs the paid up deb Of the
] Ing required simple interest only.
| Every dollar put into the sinking fund. instead of
decreasing the peoples burden, actually increases
! 1t more than the amount OF the difference between
simple and compound interest. Follow the slooo,oo0
for example. Ii 1t had been left outstanding the iu-
terest dhe burden to the people would have been
exactly Sl2a0oo in gold TO May III 1871.
Here is how 1t stands under the operations OF the
compound on compound interest sinking fund:-
Premium paid on first purchase. l52 sos
Simple interest, first six months, paid into
Compound interest, second six months paid '''
Compound interest, third six months paid
Compound Interest fourth sixth months,
pad into sinking fund. ............... 32,1sl
Premium and two years. interest - s27a,o7s
me history OF lnls million dollars Is not however,
finished II the bonds had been lett outstanding IL
would nave been necessary to tax the people exactly
$l2o0oo to pay interest them for two years; but,
as they were pad, their two years. expense 10 the
10 pay the principal. 81 900 600
10 pay premium on purchase. ........... 49,, 565
TO pay interest as above stated ........ 1875 SOB
woss ~ Two ", Years ;, 2lsoI3
amount tilat ought 10 nave been pald..... 10000
Needless tax in two years. .Sl,15so73
A NEEDLESS TAX,
Here we nave q needless tax in two wears or
$l,i5s,013 ON account of a single million dollars
worth OF bonds purchased for that "pious fraud,
the sinking iund; and 1t must be remembered that
the entire hlnd Is Sb4 779,I5c, each million a which
Will, when II ~ TWO years Old cost as much as the
one whose history have given in detail.
And now we nave u proposition TO increase the
SINKING ItMd 10 Sl55O0o,0J0 at once by adding the
special fund to 1t, and to continue the increase by
compound interest and additional purchases IN
definitely.
IL Is all wrong. When dollar OF our na;onai
debt Is PAID the interest should stop there and then
the exact measure OF the burden or debt is les
terest Under the sinking faud plan our Secretary
.,i.a.s