The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1879-12-31
TREASURY DEPARTMENT.
OFFICE OF THE SECRETARY.

TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY !
WARRINGTON, ID. c., Dec. 81 1879.
Hon. JUSTIN S. MORRILL,, Committee Finance,
United States Senate:
SIR--In response to your verbal inquiries have
the honor to submit the following observations
specting the refundng of the national debt In adj
dtion to the slS.4i5.000 six per cent bonds abso-
lutcy payable December 81, $780, and S945 QUO pay
able July l. 1881, the following bonds OF the United
will become redeemable within the next year
and half. namely:-May. l. 1881. fvo per cents
$5os440350; June 80 1881 six per cents, $264 $780,
interest charge which il $41,3s1, 29S so. About
ono-haf of these are coupon bonds having coupons
running only to the dates of redeema ability, and il
they are not refunded paid off the holders will
have to be supplied with additional coupon sheets
at the expense OF the government and at cost.
probably, nearly great would pay for an orig-
nal issue of loan 1t is manifest that these bonds
be paid off in 1881. and therefore felt it to
be my duty to recommend in my annual report that
authority be granted to refund them into four per
cent bonds thus ehecting saving in the annual in
terest charge about 500 000 The present time
i believe to be most advantage for such refund
ing probably much favorable for the operation
than any future time, aud we have at hand in tho
four per cent consol bond already well 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 tho
exceptionally favorable state of foreign and
home trade and tho resumption OF specie payments;
and 1t is my Arm bolief that our wisest is to
fund the remainder of the bonds bearing high rate
of interest while this state of affairs continues.
The bill introduced in tho House OF Representa-
tivcs OH the 80 inst, by tho Hon. Fernando Wood,
chairman of tho Committee OF Ways and Means,
and which CHI, has been sent 70 me- provides as fol.
upon the Secretary of the Treasury by the acts
OF July, Il. 1870. and January 90 1871.
$l,5 900, 900 as has not boen exhausted and exc
outed. be and tho same is hereby modified to
limit the rate OF interest upon the bonds yet DO
issued authorized by these acts to q rate OF in
tcrest not to exceed three and one-haf per cent
per annum."
This bill. IL enacted into law, would perhaps BIO
construed prohibiting the sale of bonds tor re-
sumption purposes at greater rate OF interest than
fhraap fslu half al han.
ably tho intent of the bill. Aside. however.
from its possible bearing upon the ability
believe that its passage would be fatal to
refunding. although should of course DO happy to
refund tho debt into three and half per cents IL It
were practicable to do so. That three
snow" sell for par am fuiy satisfied. and see no
reason to expect that such a bond will be moro
favorably looked upon an investment in 1881 than
IL would bo now. ON tho contrary. with the
vval OF industry and tho great activity In manufac-
turing, signs of which arc already to DO in all
parts of tho country. and the constant
thcrcfrom, 10 to to be not at
oil certain that wo shall then be sbio to borrow
freely at even four per cent per snnum. and Of the
live assurances during my recent visit to New
York.
eight years I" run. were worth during the first half
OF this month 1919 net. at which price they yield
to the investor Ito carry TO maturity 1856 per cent
per annum. thirty years three aud a halt per
cent bond TO YIELD the same income would have to
be purchased al fyj 10 Again. four cent bond.
to yield but three and halt per cent per annum,
would have to be purchased at iOS.SS. and, there
FORE three aud half per cent bond sell for
par until the four per cent bonds worth l0s.SS,
with small supply in the market, the great bulk Of
them having been absorbed permanent invest
ments. The four per cent bonds selling for
nearly the best price obtained for them but 1t
IL not probable that this price can be fully main
taned against additional issue OF any
large amount, and l would remind you
that during the last rcfundng operations
sales OF these bonds had to DO suspended moro
thurf ntlg nNln N. finrnf it.
market and the unfavorable state of the exchanges
these causing the bonds to fall below par time