The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1876-04-06

The great problem of the period is o re-
duction of the taxes which weigh SO heavily
on all the industries of the country. That
class of politicians who masquerade as re-
formers are loud and obstreperous in pro-
Tossing wish to alleviate the burden of tax
alton, and if their methods were as wise as
their professions are noisy they would
deserve commentator. They have hit
the real tone of public feeling in
their clamors for lower taxes, for there is
nothing which the people SO earnestly de-
mand. But the small economies they pro-
pose in the expenses of the West Point cadets
and curtailment of the salaries of public Off
GERS would bring SO little relief that they are
hardly worth considering while Congress
neglects so obvious and practicable meas
ure as reducing the enormous interest on the
national debt.
We are still paying six per cent interest on
the greater part Of our public debt, while
Great Britain pays only three per cent upon
hers. 1t discreditable to those who control
our affairs that in the eleventh year after the
close of the war we are still paying war rates
for the use OF money. The possibility OF
borrowing at four and q half per cent is
officially recognized by the Secretary OF the
Treasury, who does not doubt that he could
refund the fve-twenty SKIES at that rate II
Congress would give him authority to issue
long bonds. We believe that the whole
debt could be refunded at four per cent with
proper legislation and a skilful admins
tration of the finances This belief is
founded on the fact that men are now buy
ing government bonds at such prices that
they get only four per cent for their money.
At the Stock Exchange yesterday the price
of United States five per cent bonds, re-
deemable in 1881, was 11S, the price of gold
yesterday being a shade less than 1l3
Now, supposing the currency to remain in
the same state as at present for the
ensuing five years, the government in
redeeming these bonds in 1881 would
pay the equivalent of 113 in currency
that is to say. it would pay 100 in gold,
which is the same thing as 113 in cur
rency. The present buyers at 11S would
therefore lose five cents in five years, or one
cent year on each dollar of the investment
Deducting this one cent from the five per
cent interest on the bonds it is plain that
the net interest on the investment would be
only four per cent AS people are found
willing to purchase bonds redeemable IN so
short period as five years at price which
barely reimburses the principal with four per
cent there ought to be no difficulty in dis
posing of bonds having forty years to run at
the same rate. We are, therefore, justified in
assuming that the national debt might be
refunded at four per cent if we had able
statesmen and fnanciers at the head of
affairs
The saving of interest would be sufficient
to defray the whole civil expenses OF the
government. BY the last debt statement,
published on the 1st of this month, it
appears that the public debt bearing inter-
est in coin amounts to S1,695, 037, $50, on
which the interest at four per cent would be
SGT, 600, 0OO The Secretary of the Treasury,
in his last annual report, estimated the
interest payable in the fiscal year ending
June 80, 1877, at S97, 1000, 900, so that if we
could reduce the rate on the whole interest
bearing debt to four per cent there would be
an annual saving of nearly $50, 100000.
There are various reasons why govern
ment in good credit is able to borrow money
considerably below the ordinary market rates.
Consols or government bonds combine the
advantages of productive fixed property and
ready money. Property in real estate, ships
or factories cannot be suddenly converted
into money without great sacrifices, but
there is seldom any difficulty in converting
government bonds at their market value.
The man who has government bonds locked
up in his safe finds them as good rs money
in an emergency, and yet, unlike money
thus locked up, they never cease to draw
interest. If large sums are wanted bonds
are easily convertible into cash; if small
surrs are wanted the bonds are unfailing
collaterals on which money can always be
borrowed in any ordinary state of the mar
ket. So convenient a form of property need
not bear high rate of interest TO make it
eagerly sought. Another reason why inter-
est on government bonds need not be high is
their exemption from State and municipal
taxation. Other property pays an average
of about two per cent in local taxes, and in
this city about three per cent. A person
here, who lends money on mortgage at seven
per cent and pays three per cent taxes on
his mortgages, realizes only four per cent
net on his investment, and mortgages are in
ferior to government bonds in ready con-
vertibility into money and as a collateral
security for loans.
1t is as shameful as it is wasteful for gov
eminent, in perfect credit like that Of
the United States, to be paying, in
time of peace, higher rates for the use of
money than private individuals. The very
form of the bonds proves that it was not ex-
pected, at the time of their issue, that the
government would continue to pay the enor-