The daily gazette., 1877-06-02

RsDEMP7ToA or THEsTA TIE BoNDS
To the Editor OF the wfLMINGros GA
BETTE. +S6: p &9 AF
Mr. Joseph q. lGsubb, theoritieal- III
nancier of the City of Philadelphia, has
seen nit, in a communication 10 the Phila-
| delphia Ledger, to raise the point that
our Legislature by the enactment of law
providing for the redemption Of the State
bonds were guilty of a breach of good
faith with the holders of the bonds, and
further, that such action was illegal
Having been in position to know the
| circumstances of the action of the Legis
| lature and the advice upon which they
| acted, desire in few lines to show a
justification of the Legislature in the pas
| sage of the bill. But first we must bear
in mind that the redemption of these
bonds will affect considerably the pock-
| cts of large holders, and we must not he
surprised to find many earnest protests
against it, charges of bad faith, and
threats of legal proceedings The bonds
were sold by the State at prices ranging
L think, from 90 to 90, or from 5 tol0 per
cent. below par The State has regularly
and promptly paid the interest, and now
proposes to pay off the bonds at par, or
from to 10 per cent. more than it re-
ceived. To candid man does there ap-
pear to be any bad faith in this But it is
said that the financial community under
stood thai fhau xuara not 10 hla fo ha call
ed in before Jan. 1St, 1885. Now take it
for granted that there is quite as much
intelligence amongst that class of busi-
ness men as any other, and the large fl
nanciers who fix or influence by their
opinions and actions the value OF the var
ious investment securities, scrutinizing
carefully all securities offered in the
market, and they would scarcely omit TO
notice that the Delaware bonds were paw
able ION OF before" certain date; indeed
comparison of the market values of
these bonds with any other good State
bonds will convince anyone that they
have understood all the time that Della
ware bonds might be redeemed at the
ware and the price has been affected by
this. Several of the most prominent prac-
tical financiers of Philadelphia have as
sured the writer of this that the discrep-
ancy in the market value of our bonds
compared with those of other States was
due TO the fact that they were not payable
at day certain, but might be called in al
any time, and they further assured the
writer that they did not consider the re-
demption of the bonds at this time an
act of bad faith TO the hondholders, but
the wise exercise of a clear right. AS to
the legal aspect ofthe matter it is only
necessary to say that the Legislature did
not act without the best legal advice
The assertion of the financial Editor of
the Phi hiladelphia Ledger, that even with
| the words con or before" in the bond the
| consent of both parties is necessary, can
hardly be correct-if correct, these plain
Englisa words mean nothing at all, but by
the consent of both parties the bonds
could be paid at any time, no matter what
the wording happened to be. 1t is true
that bond is a contract and it is Just as
true that the words "on or before" are in
the contract made between the State of
Delaware and her bondhol1ers. Now if
in good faith and legal, was not the ac-
ton of the Legislature wise? There was
a surplus in the Treasury which was con-
stantly increasing; the people of the State
were being taxed to pay the interest on
the bonds and would be relieved by the
appropriation OF the surplus to the re.
demption of the bonds, thus lessening the
Interest account. 1t was certainly the
duty Of the Legislature to lessen in every
way the burden upon the people. and TO
assist in this they passed the act referred
to- 1t is TO be regretted they did not 60
further ana issue five per cent. bonds and
take up allthe outstanding six per cents.
which would have been a very pre-
ceptible relief to the taxpaying people.
New Castle, June 9, 1877. T.