The daily gazette., 1876-01-08
(From the Phi sde phia Press, January 4
LONG BONDS.

commentator That he De authorized
TO issue Al per cent. bonds running for
thirty yeaIs to rel lace the 9 per cent.
bonds as fast as they mature or be
purchasable at par. Two reasons are
given for this course, which are quite
different in character, and one of
them, we think. destructive of the
other. The lessened rate of interest
is obviously to save the Government
money in its annual outlay. But the
recommendation of thirty years
bond is clearly a proposal to prolong
the exceptional or interest outlay until
all that is saved by lessened rate
shall have been paid dozen times
over.
Mr.. Bristow says that n longtime
bond is nore desirable to investors
than short one, and the longer it has
to mature the less rate of interest will
be required to market it. But the as.
sumption that the only reason why a
long Investment is desirable is tho
feeling of permanence and relief from
anxiety which the holder of it can en-.
joy, if entertained at all, is not a sufli-
cient explanation. A long bond will
bear just that rate of interest which
inents over about the same period of
time. The cost of changing an invest.
ment is something; the commissions
and the time the money lies idle are
to be taken into account. As mere
matter of gain, any man who has any
sense will prefer guarantee of $500
year Tor thirty years to one Of $500
a year for twenty years, if his security
is ample, for one aggregates the total
sum of $4,000, and the other only
S12,0 600. To be sure, at the expiration
of the twenty years he will have tie
$4,000, which produced his income,
back to use again, but he has it with
out and guarantee of safety, and may
impair his property in the attempt to
replace it.
1t is cur Gus matter, too, that this
recommendation of Mr.. Bristow's fol
lows on the very announcement of the
success of the department in placing
$500, 600, 900 of 5 per cent. bonds, run.
ming twenty years. If this has been
successfully done, why can it not be
done again? The country ought stea-
Oily to improve in revenues as it does
in population, and our credit ought to
advance year by year. As rule, the
long bonds ought not to be resorted
to except under direct necessity. If|
no other reason could be alleged, in
this debtor and creditor adjustment,
whatever is avowedly to the advan-
tage of the creditor is to the disadvan-
tage of the debtor. Our bonds ought
not to be made one whit more desira-
Bile than is absolutely necessary. Wei
can better afford to pay heavier in
terest, and have the privilege of ter
minating our obligations as fast rs we
are able.
Interest accounts are the great in
cubus of business and of Governments.
We shall pay our war debt over three
or four times in interest alone before
we get through with it. And the
great bulk of this interest will go year
| by year, out of the country,a constant
| drain on the productive power of the
land, instead of remaining here to be
capitalized and enter anew into our
industries.
Suppose we go on payingG 6 per cent.
on the 81 ,000, 900, 600 of debt still held
at that rate "a needless supposition,
too, as the refunding in per cent.
bonds just acc pmplished proves) The
bu' den will make the people more anx
ious to increase the Sinking Fund ,and
so reduce the interest account, the
most proper way to do it. Say under
such circumstances we clear off that
amount of debt in twenty years, we
shal! pay a total of principal and in
terest in that time Of s., ,200, 600, 600.
On the even basis of d per cent,
bond for thirty years we should paw
total of So, 800, ,00O, 900, or $3.50, 600, 900
more than under the former plan. III
the interest be compounded in this
calculation, the difference will be i'm.
mensely in favor of the short bond at
high rates. 1t may be said, that it is
an advantage to have longer time TO
pay the debt in. That is doubtful.
| The quicker We get out of debt the
better. What 'e earn after our obli-
cations are liquidated stays at home
and goes to enrich ourselves. We can
sse no way of figuring by which it is
to our advantage pay an extra $780,
| U00, 600 unless we are nearer national
insolvency than we believe we are.
More than this, it is highly objection
able 10 hypothecate the revenues of
the country for a moment longer than |
Is necessary, and an interest account is |
a situ h, pOlhrcati, II becomes a |
first cain. 1t puts the entire country
under the feet OF its creditors, and the |
less of this kind of thing we have the
better. Why should our industry be
pledged beyond its power to rehase
itself 10 any men or class of men in the
world. IL is surrender of our iude
pendence that ought to be ventured
very cautiously and reluctantly.
We say these things with the more
freedom, because Mr.. Bristow's own
report seems in some of its aspects to
make his recommendation needless. II
he could be kept ut the Treasury De-
partment's head for the next ten years,
we are confident we should not need
TO popularize our bonds by extending
the time of their maturing. The course
for us t. adhere to is to reduce expen
ses rigidly, to increase the sinking
fund, to Stop leaks, to root rasc,s olt
of the service, and so increase our
credit that We can negotiate even "A