The New York herald., 1871-02-28
Refundins the Dsb.-vho New loan.


The Secretary Of the Treasury will begin in
few days the experiment of refundng the
outstanding fve-twenty six per cents, which
form the bulk Of the national bonded debt,
into the new loan, which is divided into five
per cents, four and half per cents and four
per cents. We trust for the sake of the credit
OF the nation that the effort will prove success
full, butsin view Of the plain patent fact that
the six per cents which are to be redeemed by
exchange for the new issues are selling at less
than their par in gold, and as the new loan
may not be placed on the market at less than
its par in gold, it is difficult to believe that the
process of refunding will meet with other than
such temporary success as is promised 1t by
the few proposals already on file at the Trea-
sury Department.
plain If the whole plan fails; for he has se-
lected season most favorable for its en-
barkation. Money for week past has been
almost drug in Wall street at four per cent,
and before midsummer Is likely to be worth
less than three per cent Peace is assured in
Europe, and the political horizon looks par
ticularly bright for ourselves, what with the
Joint High Commission sitting in Washington
and special commission doing the pioneer for
our expansion into the rich islands of the West
Indies and Caribbean Sea. But silk purse
cannot be made of a sow's ear And certain
broad and inobviable obstacles confront Mr..
Boutwell's plan for transforming the debt. We
Say Mr.. Boutwells, because the bill for re-
funding the debt was the Treasury Secre-
tary's special suggestion to Congress, and was
the subject of his incessant solicitation with
the committees prior to its report to the two
houses, which at length passed it. For this
reason, should the new loan prove failure,
there will be less discredit TO the country.
People here and abroad will know that it was
the mistake of q man, aud not of the govern
ment.
or the obstacles in the way not the least
which will be encountered is the discrepancy
between the price Of the six per cents and the
price of gold. Last night the 1925, which
closed 1929 in Wall street. Deducting the
accrued interest, which is about two and a
quarter per cent, the bonds are worth l1O4,
with gold at 111a. In other words, six
per cents can be bought in the open
market for 1l0a, when Mr.. Boutwell,
offers five per cents for 1llA, and can
not sell. them at less. OF course there is
difference in the permanency of the in-
vestment, but not enough to make so great
a superiority in the five per cents as to render
them universally preferable or even desirable.
II this be the case with the five per cents
what is 10 happen with the four and half and
four per cents? So far some enthusiastic per-
sons have sent one hundred thousand dollars
of six per cents to Washington TO be exchanged
for the new FIVE per cents, and the host Of
bankers throughout the country have solicited
agencies for placing the new lean; but these
facts argue nothing Individuals will be pa
triotic, and bankers are professionally bound
to try and earn the commission promised for
disposng Of the new bonds.
In all this matter of refunding the debt we
have taken little heed of the experience of
history. The Secretary of the Treasury and
the Finance Committees in Congress should
have taken the pains to investigate what was
done by England, France and Germany in the
several centuries of their existence, when
they were from time to time forced to become
great debtors. England, with national obli-
cation as large as ours, pays only three per
cent. Why can We not borrow on as cheap
terms! Simply because we do not offer so
durable an investment. Should Mr.. Bout
wells present plan fail We suggest that loan
at 1866 per cent (Which would be popular
because OF the cent day interest on hun
dred dollars), running fifty to hundred years,
would gradually replace the present debt, with
its burdensome rate of interest
The Government Weather Reports.