The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1876-04-13

recognize so much skill that we desire to
add few words Of comment The writer
made one point whose force we admit in
contending that the present is a most favor
able time to push the refunding of the
national debt at lower rate of interest. We
have been of that opinion throughout, and it
| is because we felt that great opportunity
was slipping away that we have been so
urgent and persistent in advocating i'm
mediate action. Our correspondent thinks
that '.with revived business and restored
confidence the average value of money in
this country cannot in the future be less
than six or seven per cent, and the present
favorable opportunity for the government
to place its four and half per
cent bonds will then have passed" We
could indorse every word of this if he had
said four per cent bonds, and would indorse
it as it stands if convinced that four and a
half per cent is the lowest rate at which the
debt can be refunded.
We think the present prices of govern
ment bonds prove that the purchasers will
receive only four per cent on their invest
our correspondent, even if the fullest allow
ance be made for them, can change the
result of our calculations by only an insig-
nficant fraction. When Mr.. Hatch (of the
banking firm of Messrs. Fisk & Hatch)
argued this question before a committee of
Congress, short time since, he presented
various calculations founded on the market
prices of several descriptions of bonds, and
by each separate process of reasoning he
reached the same conclusion that the credit
of the United States is already a four per
cent credit. The varying premium on
gold and the uncertainty as to how
long the bonds will be permitted to run
after they become redeemable, render perfect
exactness unattainable in such computa-
tons but in Mr.. Hatch's argument before
the Congressional Committee he applied the
same reasoning, with the same result, to
class of bonds which are not affected by
these elements of uncertainty. He showed
eighteen years to run paid only four per
cent at their then current price Of
1875 49-100; those having nineteen years to
run paid only four per cent at their current
price of 1916 44-100, and those having twenty
years to run paid only four per cent at their
price of 1877 3G-1O0. We wish our very
intelligent correspondent would furnish an
estimate of his own showing the rate of in
come on these currency bonds, and give US
an opportunity of comparing his calculations
with those of Mr.. Hatch. The saving
to the government would be so great
between four per cent and four and
half per cent on the public debt that
our ablest fnanciers should be willing
to inform us, as nearly as they can, what is
the present value of the national credit as
measured by the rate of interest. If refund
ing at four and half per cent is the best we
can expect to do let that be done with rea-
sonable promptitudo and vigor; but the
country ought to have the full advantage of
it's credit.
Our correspondent replies to our sugges-
ton that if the six per cents were withdrawn
it would puzzle the receivers of the money
to find better investment than our four per
cent bonds of long date, by saying that lat
least three-fourths of the holders abroad
would take the gold and make new pur-
chases-for instance, five per cent French
and Prussians, which they can get at two or
three per cent over par" This statement
does not convince us. In the Paris Debats
of April l, just received, it is stated in tho
report of the Bourse that the French five
per cents sold the preceding day at
los 1900. This was, to be sure, the
result of speculative movement, the
prices advancing by sudden successive
coups de crayon a ren,ontf AT dessls de
105fr.") What would be the price of the
French five per cents under the speculative
impetus of an attempt to invest several
hundred millions of dollars in them rather
than take American four per cent bonds !?
They might advance to such figure that the
American four per cents would be quite as
good on investment. 1t is not an easy thing
to find safe and profitable employment for
seven hundred million dollars. If only one
foreign holder of our six per cents were paid
off he could, of course, easily reinvest in
French or Prussian five per cents at the cur
rent market rates; but an extensive calling
in of tho American six per cents would in
crease the value Of all safe securities by the
ordinary operation of demand on price.
Our correspondent misunderstanding us if
he thinks we intend any reflection on the
late Syndicate. We agree with all the
Secretary of the Treasury said in its
praise in his last annual report,
but we are very far from indorsing the
recommendation he made in that connec-
ton. He said, Taking into consideration
the fact that but little inducement is
offered in the amount allowed as COM
missions for placing the United States loans
compared with that paid by other govern
ments, it is thought important to extend
the time of redemption of such bonds (the