The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-06-11
The -Four Per Cent Bonds.


| will be inexcusable if they tolerate it.
The Four Per Cent Bonds.
The arrangement concluded on Saturday
between the Secretary of the Treasury and
the Syndicate is the most interesting and
gratifying event in our recent financial
history. It attests high and improving
national credit and the confidence felt in it
by the keen and calculating association OF
European and American bankers who COM
pose the Syndicate The contract is with
Messrs. August Belmont u Co., on behalf Of
Messrs. N NJ Rothschild Il Sons, and asso-
cates; Messrs. J. 4. w. Seligman 4 Co., for
themselves and associates; Messrs. Drexel,
Morgan a. Co., on behalf of Messrs J. S.
Morgan & Co., and Messrs. Morton, Bliss a.
Co., for themselves and associates. The fact
that this combination of great firms re-
spected throughout the world for financial
intelligence and forecasting sagacity, think
| that our four per cent bonds can be sold at
or above par, and are ready to stake their
| own money on the correctness of their judy
ment, is satisfactory proof Of the high
mark attained by the credit OF the United
States. This transaction is also eminently
satisfactory by reason Of its favorable bear
ing on collateral questions of great public
| interest.
In the first place, it gives quietus to the
mischievous aspects Of the silver question.
| It demonstrates that whatever may be done
| by Congress toward the reconciliation of
nj far ao n
make that metal medium for paying our
national bonds Of course this is not ex
pressed in the contract, but it is too clearly
implied to admit of doubt. The Syndicate
has not overlooked the silver agitation ands
the widespread demand in the West for the
| restoration of sthe old silver dollar" 1t is
certain that they would not have contracted
to take the four per cent bonds without
satisfactory guarantee that they will not be
paid in silver coin of the present standard.
If it be asked how Secretary Sherman could
give them such a guarantee the answer is
simple. The guarantee lies in the veto power.
AS our coinage and legal tender laws now
stand the bonds cannot be paid in silver.
which is o legal tender only forsums not ex-
ceeding five dollars The bonds cannot be
paid in silver without new legislation, and
President Hayes may be relied on to veto any
bill which would strike blow at the public
credit It is noteworthy circumstance
that Cabinet meeting was held on Satur-
day to consider the new contract with the
Syndicate. It goes without saying that the
understanding between the Secretary and
the Syndicate that the bonds are to be paid
in gold was clearly stated in the Cabinet
meeting President Hayes approval of the
contract with knowledge of this under
standing commits his honor and the filth
veto every bill which would change the
character of the bargain or undermine the
national credit. To be sure, the govern
ment merely contracts to pay the bonds in
coin but all contracts are governed by the
law as it exists ct the time they are made,
which is the meaning of the well-known
legal maxim that "the law is part of the
contract" A contract to pay several hun
dred millions in coin at time when nc
coin but gold is legal tender for sums
greater than five dollars is unquestionably
contract to pay gold. We may safely take
it for granted that 10 bill for the re.
mon etization of silver can escape on Execu.
tive veto unless it contains an explicit ex-
ception of the national bonds.
In the next place, this important transac.
ton has a bearing on the question Of
specie payments. The STABILITY at pal
of the four per cent bonds reveals an am
pie resource for the necessary accumula.
ton Of gold. The law providing for resump
ton declares that, Ito enable the Secretary
Of the Treasury to prepare and provide TO,
redemption, he is authorized to ISSUE sell
and dispose of, at not less than par in COIN
either OF the description of bonds described
in the act OF July IA, 1870" Without the
ability to sell the four per cent bonds at pal
this would be doubtful resource, and
without stopping the refunding of the five
twenties an impossible resource. The fv.
hundred millions OF five per cents were CLOSED
out long ago and the proceeds used in re-
funding. The five per cents are therefore
no longer available. The law of 1870 autho
rized only three hundred millions Of the toul
and half per cents, of which considera
BILE proportion has been already sold ant
devoted to refunding. But the ability t
dispose of the four per cents at par renders
il practicable to acquire the means of specie
redemption without arresting the process o
refunding the tive-twenty bonds. We con
graduate Secretary Sherman and the coun
try on the fact that he has the assured mean,
of resumption in 1879, and that pervers'
Congress cannot take them away.
Imposing ON Good Nature.
The Supreme Court had genuine sensa
ton last Saturday, the particulars Of which