The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1879-12-31
REFUND1Na g REASONING.
Secretary Shsrmaa's Letter to Senator
hOrrllI,O on the Rsiundluu Ofths Nation.
al DObt-HS Thlnks Fernando
Woods Scheme will Not
Meet With Success.

WASHINGTON, December SO.-Senatol
Morrill, makes public the following letter
from the Secretary OF the Treasury con,
cerning reiundinR:
TREASURY DkPARrNENT, |
WASHINGTON, Dec. 20.
To Hon. Il S. Morrill,, Committee Of Finance
u s. Senate:
sIR:-In response 10 your verbal en-.
qutries l have the honor 10 submit the
following observations respecting the re.
funding Of the National. debt. In addi.
ton to SlS,4l5,000, six per cent bonds,
payable December 3lst, 1880, and S945 Zoo,
payable July lst, 1881, the following
bonds Of the United States will become re-.
deemable within the next year and q
hall, viz: May lst, 1881, Eve per cents,
500, ,44O, $50; June 30th, 1881, six per
cents, S264, ,32l $50, making a total Of
SI72,276, l70, the annual interest charge
on which Is Sal 1881 ,24S 50.
About one half Of these are coupon
bonds, having coupons running only to
the dates OF the redeemability and il they
are not refunded or paid of the holders
will have to be supplied with additional
coupon sheets at the expense Of the gov
ernment, and at cost nearly as great as
would pay for the original issue OF the
loan. 1t Is manifest that these bonds can.
not be paid off in 1881, and l therefore
felt 1t my duty to recommend in my an.
nual report that authority be granted
TO refund them with 4 per cent bonds,
thus eHeCting the savings In annual in.
terest charges Of about ten and half mil.
lion dollars. The present time be.
lleye it to be the most advantageous for
such retunding, and we have on hand in
the 4 per cent Consol, bond already well
known and popular.
The successful funding OF so large por-
tlon OF the public debt in these bonds
during the past year was mainly due TO
the favorable 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 high rate OF interest
while this state OF affairs continues. The
bill introduced In the House OF Represen.
tatives on the Sd inst, by Fernando
Wood, Chairman OF the Committee OF
Ways and Means, provides as follows:
That so much Of the authority conferred
upon the Secretary OF the Treasury BY
acts OF July IA, 1870, and January %,
1871, to refund the public debt to the ex.
tent of 81 800 ono 900 as has not been ex.
hausted and executed, and be and the
same is hereby modified 80 as 10 limit the
rate OF interest upon bonds yet to be
issued as authorized by these acts, to
rate OF interest not to exceed )! per cent.
per annunl.
This bill, il enacted into law, would
perhaps be construed as prohibiting the
sale oil bonds for resumption purposes at
greater rate OF interest than 81 per cent,
believe its passage would be fatal to re.
funding, although l should OF course be
happy to erfund the debt into 81 per
cents, II It were practicable 10 do so. That
the 8! per cent bond would not now sell
for par. am fully satisfied, and l see no
reason to expect that such hond will be
more favorably looked upon as an invest
ment in 1881 than it would be now. On
the contrary, with the revival Of industry
and great activity in manufactures, signs
OF which are already to be seen in all
parts OF the country, and the constant
demand for money arising therefrom,
it seems TO me 10 be not at all certain
that we shall then be able to borrow free.
ly even at 4 per cent per annum, and OF
the correctness OF these views | have re.
celved the most positive assurances during
my visit to New York. With q small sup
ply in the market, the great bulk OF them
having been absorbed as permanent in.
vestment, the four per cent bonds are now
selling for nearly the best price ever OBJ.
tanned for them; but it is not probable
that this price can be fully maintained
against an additional issue OF any large
amount, and would remind you that
during the last refunding operations the
sales OF these bonds had to be suspended
more than once, owing to arrangement in
the money market and the unfavorable
state OF exchanges, causing these bonds 10
fall below par, at one time to 9S per cent. As
stated, think the presentthe exceptiona.
BILE favorable time for fefunding, and am
satisfied that the five per cent and six per
cent bonds, 80 soon to become redeemable,
can not be so safely and 80 proiitably
provided for in any other manner. 4
very large amount Is to be refunded prior
to July 9d, 1881, nearly eight hundred
lulllouoI COhelueIduIy III tNct6S OF tne
amount refunded in any one year, and l
respectfully submit that the time now
available is none too great for the pur.
pose. The passage OF the bill introduced
by yourself in the Senate and by General
Garfeldin the House, will, believe, en-.
able the Department to refund the entire
amount prior to the maturity OF the bonds,
but II it should not result in
speedily reiunding the whole OF them,
that clause OF the bill which renders
applicable provisions OF the act Of July IA,
1870, will enable the department to cali
such per cent and Q per cent bonds after
they shall have matured, and to redeem
them with the proceeds Of the sale OF 4
per cent bonds, so authorized, and such
proceeds would include, oi course, what.
ever premium the bonds may then sell for.
While 1t is not thought safe 10 assume that
upon resuming funding operations, with
a prospect oil an emission OF per cents,
about equal in amount 10 the present
issue, the bonds will remain at a price
not much, II any, above par, II is thought
that under the operation Of the proposed
bill parties may be induced to surrender
the bonds now held by them, upon pay.
ment OF the amount not to exceed the
difference In the interest between the
bonds received and those issued.
LSignedl Very respectfully,
JOHN SHERMAN,
. Secretary.