The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1878-11-30

Cost of the $1,000 new four-per- cent.bo $500
Thus making an eight per cent. invest
ment at present figures.
The market fluctuations OF the present is
sues of Virginia bonds would OF course be
SO relatively regulated rs not to hinder this
conversion into four-pcr-centS; for the ADJ
vance in tours would act as well upon the
skies as we'll rs the decline, and neither adj
vance nor decline could from the respective
funding amounts, prevent sucn CONVEX
sion-that is, the different bonds would so
adjust their market values as TO cause as
many to be funded when the bonds were
high us when they were lower, for all would
be similarly affected, and no holder OF either
taX-paying or non-taX-paying bonds could
hope to advance his interest by blocking the
course of q conversion of bonds based on
mutual interest. Thus, the bonds with tax
paying coupons would be in demand from
holders OF the other issues OF Virginia bonds,
but could not advance beyond the figure at
Which they would pay to convert.
Then, in order to assist in the conversion
OF siX-per-cent bonds with taX-paying cou-
pons into the iour-per-cents, allow dis
count OF say twenty per cent. upon all
licenses and taxes paid in currency prior to
July and january OF each year, together
with remission OF all fines Or penalties ill.,
CURED for non-payment after December
1st, rs under the present law. This would
tayc the effect to reduce the market prices
OF these siX-per-cent.ss taX-paying coupons,
and be additional reason for funding into
tours. To allow this twcnty-per-cent. re-
duction for payment in currency, the taxes
might have 10 be increased nominally to
| that extent, but this reduction would equal
| iZe it, and the operation would be to bring
in more money-more coupons-or to re-
| duce the market-yalde Of coupons so as to
aid conversion; either of which would
| benefit the State at no additional burden to
the taX-payers-the people. This would
work as follows:
The bondholder realizes say eighty per
cent. OF his interest by selling the coupons
that is, $4S a year on his 1,000-bond-and
| the taxpayer saves about twelve and half
per cent. of his taxes by using these cou-
pons. Now, if the Taxpayer can save
twenty per cent. by paying money, OF
course he will do it; and to compete with
this twcnty-per-cent. discount for cash, cou-
pons would have TO decline to seventy per
cent, at which rate the bondholder would
realize S42 a year on his $1,000, and per-
haps have to wait several months to sell out
his coupons. Now, from the four-per-cent.
bond he would get $40 a year in money,
paid when due; and when the present cost
OF these six-per-cent. bonds, with taX-pay-
ing coupons, is considered, say 500, ana
the cost OF the new four per cent, say S2o,
the latter is the best-especialiy when the
unvailabnity, the uncertainty, oil the princl-
pal is consideration it will, from its size,
be not available for taxes, and this principal
enters largely into the value Of all invest
ments. This view and calculation, [ SUBJ
NIT. should be conclusive between the two
classes Of bonds in favor OF the new fours-
more clearly SO il an inyio!Qte sinking fund
was set apart annually for the ultimate re-
demption Of the principal, aud if it was pro-
yided that upon non-pay at maturity
the principal farranged for convenient sub
diyision) was, like its coupons, made receiy-
able at par for all taxes, licenses, and de-
mands due the State, and both first lien or
claim upon its revenues. Let us see how
this twenty per cent. cash reduction would
operate as to the taxpayers. BPS tax now is
4 $50, which lie pays in coupons at S23 cents
cash, equal to $52.40-a saving Of S7.G0, or
twelve.and-a-half. per. cent. II he was al
lowed twenty per cent. off for cash pay
ments he could pay with S48 and save seven
and-a-balf per cent. more than he now saves.
f his tax was Increased twenty per cent,
with that discount for currency payments,
in no event could be pay more, by over
seven d-a-half per cent, than he is now
paying, and by using coupons he could
a percentage no doubt equal to what he is
now saying-in which latter case coupons,
| to compete with currency, would have to-
| decline to at least -72s cents to the
| tax-payer,i and the bondholder would
not realize over 70 cents-the differ
ence OF two-and-a-hali per cent. being
the usual profit for retailing and carrying
tsaid coupons made by the brokers dealing
| in them. Then, as there are only 81, zoo, 900
of these six-per.cent, tax.receiyable cou-
pons maturing each year, for which the
holders get nov, at eighty cents, $500, 600,
land they go to pay about one half the State
debt, it would follow that il the taxes were
Increased twenty per cent. and, currency