The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1879-12-31

funding:
TREASURY DEPARTMENT,
OFFICE OF SECRETARY,
WASHINGTON, Dec. II
Hon. Justin ). Mof77H, Committee on Finance,
U. s. Senate:
Slr-ln response to your verbal inquiries L
have the honor to submit the following obSer-
vations respecting the funding of the national
deDt: In aqdltion 10 tne $lo,4lo,0OO per
cent. bonds absolutely payable Dec. 81, 1880,
ana S949ooo payaDle July l, 1881, the follow
ing PONDS VIII become !eaeemapie within the
next year ana halI, VIZ:
May L, 1901, per Genus, SoOo, 44o,3oO; june
oo 1901, per cents, $Zo4,oil ,ooo making
total OF SI!z,loi,I wv the annual interest charge
on which is S4l ,3ol 1850. About one half OF
these are coupon bonds. having coupons run
nlng only TO the dates OF redeema6lllty, and II
they are not refunded or paid OIL the holders
Will nave 10 De supphed with adoltional cou-
pom sheets at the expense Oh the government,
ana at COST proDaply nearly as great as WouId
pay for an original issue OF loan
The Proposed Issue of New Bonds.
IT is manifest that these bonds cannot be
paid off in 1881, and [ therefore felt it my duty
TO recommend in nv annual report that ari-
thority be granted to refund them into per
cent. bonds, thus effecting saving in the an
nual interest charge of about ten and half
millions The present time I believe most adj
vantageous for such refunding, probably much
more favorable than anv future time and we
have at hand the per cent. conso, a bond al
ready we'll known and extremely popular. The
successful funding of so large portion of the
public debt into these bonds during the past
year was mainly due to the exceptionally fav-
orable state of our foreign and home trade,
and the resumption of specie payments, and it
is my firm belief that our wisest course is to
fund the remainder of the bonds bearing a high
rate of interest while this state of affairs con-
tinues
Fernando Woods Bill.
The hill introduced in the House of Repre-
sentatiyes on the Sd inst by Fernando Wood,
and which has been sent to me, provides as
follows: "That SO much of the authority con-
ferred upon the Secretary of the Treasury by
the acts of July IA, 1870, and January 20, 1871
to refund the public debt to the extent of
fifteen hundred million dollars as has not been
exhausted and executed, be and the same. is
hereby modified so as to limit the rate of in
terest upon the bonds yet to be issued, as au-
thorized by these acts, to rate Of interest not
to exceed three and one-half per centum per
annum.' This bill, if enacted into a law,
would perhaps be construed as prohibiting the
sale of bonds for resumption purposes at a
greater rate of interest than 81 per cent, al
though such is not probably the intent of the
bill. Aside, however, from its possible bear
ing upon the ability of Congress to maintain
resumption, believe that its passage would
be fatal to refunding, although / should Of
course be happy to refund the debt into 81 per
cents if it were practicable to do so. That %
per cent. bonds would not now sell at par / am
fully satisfied, and [ see no reason to expect
that such bond will be more favorably look
ed upon as an investment in 1881 than it would
be now. On the contrary, with the revival OF
industry, and great activity in manufacturing,
and signs OF which are already to be seen IN
an Parts vi '5ie country, anu eue coLs1ahs anu
tiicreasiis uoisnu III n.ooy ..,,;,ns eitolo
Toll II se9nis " nie W oe noo eoi.1ih 'nt'e we
Sinai Ineh 10 apie W ooiIoM aieely az even
pep cent PEI alu osto sS, VI
lnese views reserved .ne tto:e possl Nv assuI
LIVES uuiins iny tooome yIsi1 ~ Wv noi 90
years to run, were worth during the frst nall
OF this month lo2s net, at which price they
yield to the investor to carry to maturity
5000 per cent. per annum. ~ years % per
cent. bonds to yield the same income would
have to be purchased at ". Again per
cent; oonu 10 yleld put % per cent. per o annum
would nave TO De purchased at 1880. ana
therefore - per cent. bond cannot sell for
par until the 4 per cent. bonds are worth
1Oo.oo, with small supply IN the market; the
great bulk OF them having been ABSORBED as
permanent investments
The per cent. bonds are now selling LOT
nearly the best price ever obtained for them,
but 1t is not probable that this price can be
fully maintained against an additional issue of
any large amount, and L would remind you
that among the last refundlng operations sales
OF these bonds had TO be suspended more than
once owing to arrangements in the money
market and the unfavorable state OF the eX-
changes, these causing the bonds to fall below
par-at one time to 80 per cent. Fortunately
these arrangements were but temporary, and
after more or less delay the department was
able to resume sales.
Refunding in Per Cents.
As before stated think the present an ex
centionallv favorable time for refundine. and
a,, saf;s3;ad tbat tba fye ner cont and civ