The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1871-01-07
FUNDING THE DEBT.
From the NJ Y. Times.

From the N. Y. Times.
The Senate has passed bill changing the
terms of the funding act, by authorizing an
increase of the issue of five per cent bonds
from two to five hundred millions. The
measure was introduced at the instance of
the Secretary of the Treasury, who clings to
the belief that it is possible even now to
fund the public debt at rate lower than
the present. We take the change proposed
as a confession of inability to float four or
four and half per cent. bonds. But is there
any valid reason for believing that five
per cent. security will find a market, to any
considerable extent, in this country or in
Europe?
The Franco-German war was referred to
by the Secretary, in his report, as the source
of last years obstacles to the funding scheme
in Europe. Undoubtedly it engendered some
difficulties and aggravated others, but it by
no means explains the fact of failure. We
never regarded success as among the imme-
diate probabilities. Accepting the war, how
ever, as source of hindrance whose seri-
BUSINESS the Secretary admits, what ikeli-
hood is there of improvement for some time
to come! Whether the conflict between
France and Germany terminate soon or late,
it is evident that neither of those countries
will for some years be in a position to
absorb more foreign securities. Their finan-
.cial condition will be bad-in the case of
france II Will De ueplOTdDl6; Huu tu0
CAPITALISTS of both will have at home
ample scope for the use of all the means at
their command at rates above that fixed as
the maximum for the funding of our bonds.
In England their chance will not be much
better. The London Economist recently
showed that the greater part of the colonial
and foreign stocks and bonds owned in Great
Britain yield six or seven per cent; and the
culrent prices of most of them are fatal to
A. kIat Init faI
States bond can be sold there at par. Be-
sides, il is reasonably certain that the finan-
cial exigencies of England, consequent upon
the military and naval plans of its govern
ment and the distrust growing out of wide
spread international complications, will still
further diminish the marketability of five
per cent. American bond.
Is the prospect any better in this country?
Is it supposed that large amount of five per
cents. can now be disposed of in Wall street,
or that investors, large or small, in other
parts of the country will be content with that
rate of interest? We know that, practically,
money in the Atlantic and Middle States is
worth seventeen per cent, and that in the
West and South there is no difficulty in OBJ
tanning good security at twelve to eighteen
per cent. Look at the bonds now bein.
placed upon the Eastern markets. The ma
jority are seven per cent. in gold, or eigh
per cent. in currency; one, presented under
very strong auspices, yields 7'3O per cent. il
coin. The idea that with money at its pre-
sent value, a five per cent. security will b.
sought with the avidity which the Secretar
anticipates, seems to us delusive.
This is, in truth, confessed when the pre-
moters of funding propose to make the az
ceptance of the bonds by banks and othe
moneyed institutions compulsory. One argr
ment which we have seen in print suggest
not only that the national banks shall
compelled to take these bonds, in considers
tion of the removal of the tax on circulation
but that savings banks and other institution
of a kindred character shall also be r,
uuired to invest their surplus funds in then
Such an interference with the most popult
of provident institutions is utterly inexcl
sable; and the mere suggestion of it revea
the weakness of any plan of funding at IL
rates contemplated.