Worcester daily spy. [volume] (Worcester [Mass.]) 1850-1888, 1871-09-30

bonds to the amount of 100000. Within n
comparatively short time subscriptions were
made for about 100000, 900, chiefly by the ma
tioua banks, and by the first of August last
the subscriptions had reached S70,000,000.
At that time however, it became evident that
renewed efforts must be made for placing the
new loan. A proposition was received by Judge
Richardson, assistant secretary of the treasury,
then in London, from prominent bankers in En-
rope, which, after some modification, was ac-
cepted by the treasury department, The act of
July IA, 1870, for rCiunding the national debt,
provided that the proceeds of subscriptions
should be used for no other purpose than the
| redemption of outstanding 500 bonds, and also
that three months notice should be given to the
holders of such bonds, and that after its eX-
| piratiOn interest thereon should cease. This
| time was thought TO be necessary and proper to
| enable the holders of the bonds TO present them
| at the treasury department, and il would have
been manilestly unjust to stop the interest upon
| less notice than that giyen. These two pro-
visions of law involve necessarily a loss of inter
est to the government upon such subscriptions
as might he made, as the government would be
| obliged to issue the bonds upon payment of the
| par value of the same in coin, and hold the
money until the bonds called should mature
| To this undoubtedly there would have been
| slight exceptions, as some parties might be dis
| posed to present their bonds at an earlier date
| and accept payment and accrued interest; but
| the amount so presented would depend upon the
>
| times it could not be large as the holders of
| the bonds being sure Of their coin, and interest
! at the rate OF SIX per cent at the expiration of
| three months, would not be willing to accept it
earlier unless higher rates of interest with per.
feet security could be obtained in the market
The act establishing the national banks au-
thorized the secretary of the treasury to use
them as public repositories for all moneys cX-
cept receipts from customs. Thus authorized,
tue secretary of the treasury, on the 10th of
August last, issued a printed circular to each
national bank of the country, making the fol-
lowing proposals:
Banks making or obtaining subscriptions,
payable in coin, will be designated by the secre-
tary Of the treasury as repositories of public
| money, upon the usual condition of placing in
| the hands Of the treasurer of the United States
bonds of the United States for the security of
| such deposits.
AT the commencement of each month notice
will be given Of the redemption of an amount
of bonds equal to the amount of subscriptions
in coin for the preceding month, interest to
cease in ninety days from the date of such
notice.
| As the bonds specified shall mature, the de-
| posts will be withdrawn from the several banks
| proportionately.
In accordance with this circular, subscrip-
| tions have been made either by the national
banks or through them, to the amount of $780,
100000, covering with previous subscriptions
the $500, 000, 900 offered in March last In all
cases the bonds of the United States are held as
security for the subscriptions.
RESULT OF TIE LOAN.
1t is of course to be accepted as a fact that
| there is loss of interest to the government but
it is also true that the loss is due to the prOyis.
| ions of the act referred to- and is properly Incl.
| dent to the duty of the government to give no.
| lCeto the holders of the bonds of a future time
| when the principal will be paid and when the
interest cease. Congress thought that three
1 T1FF1 he ,Y,,1a1a 1
| doubt that the judgment of the country will
concur IN the propiiety of according that time
| to the public creditors
| The financial result to the government may be
| thus stated:
The new five per cent bonds have ten years to
run, although the probability is that they will
| not be paid in less than twenty years. as il will
be for the interest Of the country first to nav all
| bonds bearing higher rate of interest than five
per cent. But, assuming that they are to be
| paid in ten years, the saving on the issue of
| 5000 100000 in interest is $4,000 900. The in
erest upon the annual saving Accommodating I'M
| oil the expiration of the ten years would be So
! 100000 more, giving an aggregate saving of
$4,000 600 Against this is the loss of interest
for three months, at the rate of five per cent per
annum' on Sl3OOOO,OOO or 81 ,625,000, showing
| net gain To the country of S24,375, 900.
| This estimate assumes that the new bonds are
| to be paidin ten years. Should they remain nm
| paid for twenty years, the saving will be twice
as great. When all the details of these negofia-
| tons are completed, the new bonds issued and
the old ones redeemed, the way will be opened
for presenting 10 capitalists in this country and
in Europe other portions Of the loan, and with
| the prospect of complete success.
WHAT EVIL THE GRBENBACK POLICY WOULD
| HAVE WROUGHT.
| Nor should ii be forgotten that all This is dua
to the purpose of the republican party to accept
| the debt as a result of the war, and, without in
| quiry as to the consideration which the govern
| ment received for the bonds, to look only 70 the
nature of the obligation which the country had
assumed, and faithfully to perform it. If on the
| part of the republican party there had hecn anv
| hesitation if they had listened TO suggestions
that the bonds might be paid by the issue.of
| greenbacks, the public credit would have been
still further impaired, and the substitution of
| bonds at lower rate Of interest made imnoSsi.
| bic.
| A NOTEWORTHY FACT
1t is worthy of notice that the interest maid nv
the government on the public debt is the stand
ard for the rate of interest throughout the conn
| try, and to some extent throughout the world.
| for at the present moment the bonds Of the
United States are negotiable at more CONNER
| cial points outside of this country than fine
bonds of any other government This is due 10
the implicit faith of the people of other conn.
tries, inspired by the declarations of the repuh-
lican party, and sustained by the evidence gigen
in the daily reduction Of the public debt.
While the credit Of the country was impaired.
and while we were struggling to secure a fnan-
cial position which would enable us to nepotiate
bonds at lower rate of interest, heavy taxa
| ton and large payments on account of the pub
| lie debt were not only desirable but even neces-
| sary. 1t was important to demonstrate conclu-
sYely not only the disposition but the ability of
| the country to pay the debt Having reached
| that position, it is no longer necessary TO make
laT4e pay ments upon the principal of the public
deot merely for the purpose Of demonstrating
| our ability or our disposition: but II is nv onin
| ion that very considerable payments ou0bt 10 he
made for the purpose of reducing the debt re.
| lieving the labor of the country from tav hur-
| denS through mary generations, or even through
| centuries, and, above all, for the purpose Of
| placing the nation in such position that in an
eXigency large loans might be obtained at home
| or abroad.
REDUCTION OF THE PUBLIC DEBT.
| In my annual report for 1870 stated that the
public debt ought TO be reduced at least $50 O00 :
10Y year, and to that opinion adhere. And
| this can be accomplished with such reduction
| Of taxes as will meet the demands of business
and remove most of the objectionable features
of the tariff system. The amendments made to
the internal revenue system have relieved the
people OF most if not all of the taxes really bur
| denSOme. Under that system there are now but
| seven subjects of taxation: First, the income
tax of two and one-haf per cent on the excess
| OF income over $1,000 year, which expires I'M
less there is further legislation in the year 1872.
| Tie other subjects of taxation are stamps
banks gas, distilled spirits, tobacco and malt
liquors. From all these sources il is expected
that about S125,OOO,000 a year will be received !;
ana It cannot with truth he said that these taxes
Dear heavily upon the people, or that they are an
| embarrassment TO business.
| DEPRECIATION DUE TO WANT OF FAITH.
II is now manifest that considerable mart of
| the depreciation of United States notes was due
| TO the want of faith in the financial alilitv or
integrity OF the people Of this country, The inn.
| proycment of our credit at home and abroad
| has eliminated from the difference between roid
and paper all that was due to want of faith in
| the financial character of the country. Rut a
| difference still remains that difference can he
overcome by one or both of two means. One is
TO await the growth of the country until lis dc.
mand Tor money shall be equal to the volume
now furnished. But it is TO be taken into ac-
count that the increase of railroads and the
| facilities furnished by the telegraph counteract
the influence of the growth of the country, mas.
! much as such facilities render it practicable to
! do given amount of business with less vol
nme OF currency. There is also the additional
iact, that the practice of using checks and bank
balances in commercial transactions is constant
y Increasing, and the use of actual money
eIthel com or paper, is in degree, though not
ploPoruohalely, diminished. Still it is, no
uouoi, true that the present volume of currency