The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-07-15
The LsaR-Osr NasiesaI Finances and
Financial Experiments.

Finnuciai EXPERIMENT..
II will be remembered that the Secretary of
the Treasury was indcfatigable in his efforts to
get the Loan bill, to convert the various six per
cent securities into FIVE, four and a half and
four per cents, passed by Congress. He was
confident of succeeding in funding the debt at
these lower rates of interest. Some members
of Congress, with more financial knowledge
than the Secretary possessed, doubted the re-
sui, but as the matter was urged psrsistently
and with all the influence of the administra-
ton, they yielded. The bill was passed and
the creates. latitude given to Mr.. Boutwell, to
carry out his scheme. But the plan has
proved failure, and, after spending nearly
million of dollars in printing, advertising, agen-
cies and other expenses, orders have been given
to stop the printing of the new bonds. And
although the Secretary continues to spend
money unnecessarily in giving nice jobs to
the friends and officers Of the Treasury De-
partment, as in sending agents abroad, il is
evident he is preparing to abandon the
scheme.
The Loan bill was approved July Ia, 1870,
and the act in amendment January 20, 1871.
Notice was publicly given in February that
books would be opened in this country and in
Europe on the 9th of March for subscriptions
to the national loan. There were three classes
Of bonds provided for-namely, five hundred
millions bearing five per cent interest and
payable in ten years; three hundred millions
at four and half per cent interest payable in
fifteen years, and seven hundred millions OF
four per cent interest payable in thirty years
in all fifteen hundred millions. The Treasury
Department In this circular advertisement
announced that preference would be given to
subscriptions, first, for the five per cents to the
amount Of two hundred millions, then for
equal amounts of each class of bonds The
debt of the United States was not to be
increased by the loan, and, therefore, the out
standing six per cents, known as five-twenties
could only be exchanged for the new bonds at
their par value or for gold at par.
As an inducement for subscriptions to the
loan the interest was made payable quarterly
by the Treasurer Assistant Treasurers or at
other convenient localities to be designated by
the government and the new bonds. as well
as interest on them, were exempt from the
payment Of all dues or taxes to the United
States, as well as from taxation in any form by
or under State, municipal or local authority.
1t was supposed by Mr.. Boutwell, that this
exemption from taxation, quarterly payments
of interest and the length of time the new
bonds would have to run, would be equivalent,
or nearly SO, to the difference of interest.
Four months have passed since, to use
familiar expression, the new loan was put on
the market What has been the result? The
whole of the subscriptions do not amount to
seventy millions, and of these nearly all are
from the national banks, which are required
by law to take certain proportion of the new
bonds. A few millions only have been SUBJ
scribed for without compulsion and volun-
tarily by capitalists or the people. The loan
consequently is failure, aud the report that
it is to be withdrawn from the market is pro-
badly well founded. 1t is unfortunate that
the experiment was ever made and that the
government should have spent a million Of
dollars thereabout to little purpose. Mr.
Boutwell, can get along swmmingy when the
IcNcuuc pOuiS lutO uis COuSIS az Tue rate VI u
million or more day, and when he has sur
plus of hundred millions year over and |
above the expenditures of the government. |
He boasts Of this as being very creditabe to
himself and the administration, as if the money |
had been brought out of the earth by his magic. |
He and the partisans of the administration |
make great noise over the hundred millions
of treasure held all the time in the Treasury
and the hundred millions of debt purchased
year, as If he had extracted the gold from
rocks, when, in fact, an enormous revenue
flows into the Treasury in spite of his action,
and is forced unnecessarily from an over
taxed people by laws Of Congress. But when
good financial management is needed he fails.
He may be pretty good lawyer, may I'M
derstand Massachusetts, law very well, aud
be able to make good political speeches, but
be knows little about national finance, aud
hence the mistake he has made about the new
loan. 1t is the misfortune of the country
that few Of our public men understand great
financial questions, and that the Treasury De-
partnent is generally entrusted to those who
have no claim TO be statesmen.
Making investments in anything is strictly q
business operation. Men use their money
where it pays the best interest, other things,
such as security and convenience, being equal.
Money is worth much more than five per cent
in this country with the best security, and in
many parts it brings double or more that
amount of interest. Ours is comparatively a
new country and money is in great demand
everywhere to develop its valuable resources.
The accumulated capital with ms is not suff-
Gent 10 supply the demand for legitimate and
paying enterprises or business. How can we
expect, then, fifteen hundred millions, or
of hi of