Belmont chronicle. [volume] (St. Clairsville, Ohio) 1855-1973, 1879-08-14
Has lhe Debt Increased ?

In his Lancaster speech Mr.. Ewing
said:
Mr.. Sherman claims great credit for
having successfully funded S847, 100000
of the public debt into five, four and a
half, and four per cent. bonds since
March 4th. 1t appears, however, by the
finance report, that the interest on the
public debt paid in 1877 was S97,124,000,
and last year $102, 100000, and this year
$1O5 100000. In other words, in 1878
and 1879 over $13,000000 more of inter-
est on the debt has been paid than When
Mr.. Sherman took charge Of the funding
operation. That large sum is what the
operation cost. 1t is made up of bonuses
in the shape of double interest, and of
commissions paid to the syndicate.
Meantime Mr.. Sherman has increased
the principal of the bonded debt $780,
100000. 1t will take the savings of IN
terest by refunding for eight or ten
years to pay off this increased bonded
debt, add the bonuses and double inter-
est, and get even on the entire operation.
The evening before Mr.. Ewing made
this statement in his speech carefully
prepared and printed in Washington
some days before its Spontaneous" de-
livery in Lancaster, Secretary Sherman
spoke at Portland, Maine, and as if an
ticipating the charge made by Ewing
made this clear and satisfactory expla-
nation of the apparent increase of the
Understanding debt and the double
interest" alleged to have been paid. He
said: il 3" i.t' i1fh 4
Sometimes complaint has been made
that, during this process Of refunding,
the amount of interest-bearing debt was
temporarily increased, and that interest
was paid on two sets of bonds at the
Same time This, from the nature of
things, was unavoidable under the pro-
visions Of the Returning Act Of 1870.
By the act, before any bond can be re-
deemed, notice must be given for the
period of three months. Before that
notice can be given, bonds have to be
sold and the money either collected OF
secured, and this process necessarily in
wolves the payment of interest for three
months, not only upon the bends sold,
but upon those to be redeemed. Ad-
vantage was taken of this fact to un-
Justly arraign the department for mat
ter beyond its control. A constant out
cry was made that the interest-bearing
debt was being increased. The debt
statement would necessarily show that
during the three months, two sets of
bonds were outstanding, but it would
show also that the money was in the
Treasury, and this being deducted,
would leave the balance Of the debt as
before. Thus, if you own $1,000 with
the right to pay it at your pleasure, and
borrow money for that purpose you will
have two notes outstanding at the same
time until you can apply the borrowed
money to the payment Of the first note
This is precisely the condition the
United States was in when borrowing
money to pay outstanding bonds. The
debt statement of July 1st shows as part
of the public debt the whole of the ten
forty bonds, and also the whole of the
bonds issued for their payment, but also
shows the money in the Treasury to
pay them In the next debt statement
the ten-forties will disappear, or such as
are unpaid will appear among the debt
bearing no interest. The cash in the
Treasury will also decrease accordingly.
/ thought the notice required by the law
was entirely too long, and in my annual
report to Congress, Democratic in both
branches, earnestly urged shortening
of the period to thirty days or less, in
order. to save this double interest, but
the recommendation was declined or ig-
nored. If anyone is to. be held RESPONSE
BILE for the double interest it should be
Congress. In justice to the department,
it is but fair to state that all the loans
negotiated for the last two years have
been on more favorable terms than any
loans ever made by the United States. |
They were generally made by popular
subscriptions by the people directly. |
The saving from the amount allowed for |
the expense of negotiating the loan is
over $1,100,000, and ths premium exact |
ed on AZ and per cent bonds amounts |
to 81 ,498,958.25. can say without fear |
of contradiction that no nation ever ne
gotiated its loans at less cost or on as
favorable terms The sales of the ia
nous three per cent consols Of England, |
when made. were on far lesa advantape-l |