The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1880-05-14
Redemption of the Six per Cents.

The following letter has Just been sent by the
Secretary of the Treasury to Hon. Thomas L.
Bayard, Chairman of the Finance Committee OF
the United States Senate:
SIR: have the honor to acknowledge the
receipt of your letter of the Goth ult, trans
uniting the Senate bill to define the amount
and manner of purchase of public loans to be
made by the Secretary of the Treasury, and re-
luesting my views in regard thereto.
The bill in question requires the Sec
rotary of the Treasury to purchase
outstanding obligations of the United
States bearing interest at per cent. per
annum, to an amount not less than 20, OO0, 600
each week until he shall have purchased and
extinguished all such outstanding Obligations,
these purchases TO be made in addition to and
independent of any purchases OF outstanding
obligations of the United States made by the
Secretary on account of the sinking fund. The
bill also provides that all purchases of bonds
hereafter made shall be advertised i'll the pub
lie press on Monday of each week. and the pur-
chase of the amounts thus advertised for shall
be made by the treasury on Wednesday OF each
week.
In reply have TO state that the amount of
G-pt r-.ent Obligations now outstanding is about
S25U 600. 900, which, under the provisions of
this act, the treasury would be obliged to pur-
chase within the next fifty weeks. To accom-
pSh this purpose, surplus revenues within
that period must amount to the face of the
bonds and the premium paid thereon the pres
ent rate of which Is about per cent, or the re-
serve in the treasury accumulated for redemp-
ton purposes must be used or resort be had to
increased taxation.
The surplus revenues since the 1st Of Janu-
ary though larger than was expected, or can
be expected in future, have been only about
| Sit, 000, 900 month, but should they continue
at the same rate they will provide for payment
within the next fifty weeks Of less than one
half the bonds which this bill requires to be
purchased. With the Deficiency bill now pending
in Congress. and which will soon become law.
and the probable appropriations for the next
year, there is no probability OF having such
large amount of surplus revenues az stated.
There is at present of cash III the
treasury about $l52,000,0O0 above all
matured liabilities, excepting United
States notes. OF this amount there il Of frac-
tional silver coins and minor coins about S23-
600, 600, which would not be available for the
purchase of bonds, these coins being legal ten
ders only in small amounts. This would leave
of available cash in the Treasury about 1929,
600, which amount was accumulated to
large extent by the sale of bonds for resumption
of specie payments, and is little less than 40
per cent. of the amount Of outstanding notes.
Neither the law nor sound public policy seems to
permit any encroachment OH this fund. There
would seem, therefore, TO be no method Of carry
ing out the provisions OF the bin except by resort
to Increased taxation, and the proprety of such
increase for this purpose must be determined by
Congress. l deem the matter ef advertising in
advance the amount of bonds to be purchased
as madvisable. Such course would only enable
bankers and brokers to advance the price Of
bonds and to dictate terms to the treasury. I'm
der the existing method of making purchases it
is understood by all that the surplus of the
Government will be paid ont from week to week
in the purchase of bonds, bids for
which will be received up to noon Of each
Wednesday at the sub-treasury in New York.
The amount of bonds to be purchased is not
made public until after all bids III, thus pre-
venting any combination to compel the treasury
to pay exorbitant rates for bonds, and it is well
under stood that the department reserves the
right to reject all bids should prices be consd-
cred unduly high--a right which would be sur
rendered under the proposed bill
/ know Of no reason for making any pur-
chases Of bonds beyond the amount Of surplus
revenues and for this purpose the treasury al
ready has sufficient authority, while the present
method of making purchases is probably as adj
vantageous to the Government any that can
be devised. l am, very respectfully,
JOHN SHERMAN, Secretary.