The Valley Virginian. [volume] (Staunton, Va.) 1865-1895, 1880-01-29
y1s l.

lowing interesting statement Of the propo-
sitIons now before Congress for refunding
the public debt. Our readers should care
fully ,,sad the presentation and aequaint
tsSmselves with the methods being discussed
to preserve public credit. lessen taxation,
and establish financial policy for the Gov
eminent. Where the financial system is
right and healthy, all other policies must
necessarily work we'll that are In harmony
with i. And as the questions growing out
Of present views and plans may enter
largely into future public discussions, it Is
the duty Of all to iamiliarize themselves with
propositions which may divide parties. The
Press says:
Senator Morrill, does not concur with the
chairman OF the House Committee on Ways
and Means in the opiuion that United
States bond bearing Interest at the rae of
81 per cent. per annum can be sold at par.
He finds sufficient groundsssfor this belief in
the fact that the 1855 bonds OF the District
of Columbia are selling at 87} cents on the
dollar, with coupon, on which five
months interest has accrued, attached.
This makes the selling price about 85a cents
net. The payment of the interest on these
is guaranteed by the United States Govern
ment, which has also pledged its faith to
provide for their redemption. They have
nifty years to run, and, being guaranteed
by the Government, ought to sell at par, IL
any bond bearing less than per cent. in
terest can be sold at par. But the stubborn
fact remains that they are sold at Is per
cent. discount.
The selling of United States bond for
less than par is not to be thought of, and
the rate of interest must be fixed so as to
prevent any such stigma on the national
credit. II the rate should be fixed a frat
ion too high the Government will get the
benefit of it in the premium which the bonds
will command. On the other hand, il the
rate be too low the volume Of the debt will
have to be increased in order to make up
for the difference between the par value OF
the bonds and their selling value. Mr.. Nor
rill believes that Government securities
bearing lower rate of interest than 4 per
cent. can not be sold at par, although the
per cents. recently issued are now sold at
q slight advance on their par value. There
Is no telling how long the circumstances
which have carried these bonds above par
will continue.
Mr.. Morrill, cites historical facg which seems
to have escaped the notice of the financiers
who are clamoring fer the issue of 3.per-
cent. bonds; the percent. consols, which
form the bulk OF the public debt of Great
Britain, when issued were sold at heavy
discount. A 3-per-cent. loan OF &36, 000,-
900 (sls0, 900, 000) was issued IN 1916, which
the people we're induced to take by giving
them ETA 10 3per-cent. stock for e100 in
money and E10 in 4 per- cent. stock as an
additional premium. The debt of Great
Britain has been swollen to its present en-
ormous proportions by the devices resorted
to at various times to induce the money-leE-
ders to invest ia her PERMANENT securities.
She raised money on her 3-per- cent stocks
BY paying such premiums as a pawnbroker
would scarcely think of exacting.
The American policy ia to issue bonds
bearing such a rate Of interest as will keep
them at par or above par, and fixing time
ct which they be called in, at the option of
Government, before the date of final pay
ment. II through change in circumstances
and commercial conditions bond bearing
lower rate Of interest can be sold at par,
those bearing higher rate can be called in
and refunded. The whole public debt of the
United States was made subject to optional
resumption after the bonds had run one
fourth OF their time, and the wisdom OF the
plan has. been abundantly demonstrated. MIR.
Morrill, does not believe in irredeemable
bonds. Says he. mortgages which are nev-
er to be paid are millstones on the necks of
the people," All debts, whether national or
individual, ought to be paid off as speedily
as circumstances will permit. As between
long loans and short loans he favors the lat
ter. An 100000, 900 loan at three and-a-
bali per cent. for fifty years would be far
more expensive that the same loan at four
per cent. for thirty years. In the one case
It would take 81 400, 000, 900 to pay the in
fAa Nd {v,f ha Af hos Nil aQG0
would be- required for this purpoee.
The provision OF Mr.. Woods for compell-
ing the national banks to exchange the
bonds, now deposited In the Treasury as
security for their circulation, for bonds
bearing 81 per cent. interest finds no fay
or with Mr.. Morrill,. Many OF these insti-
tutions have already surrendered their char
tiers because they yielded no profit to the
stockholders. II they are required to de-
posit 3s-per-cent. bonds, of course they
must increase the amount in order to make
the note-holders entirely secure; that is they
must invest more capital and get less re-
turn from it. In view Of the heavy local
taxation to which they are subjected, If the
Interest on their invested capital is cut
down to three and ene-half per cent, many
more will wind up and 60 out Of business.
In fact, the whole national banking system
might be practically destroyed by such a
measure as this.
Mr.. Morrill, argues that the rate of inter-
esr must necessarily be higher in America
than in Europe, just as it is higher in Du-
luth and Leadville than in Philadelphia or
New York. "The rewards of labor and the
profits Of trade, as well as the rapidly.in-
creasing value OF real estate, justify the ex-
treme terms offered in new settlements by
borrowers who take the risk of blanks along
with numerous prizes" A low rate OF in
terest is not an iufallible test OF prosperity,
and frequently is an indication that capital
cannot be probably employed and that in
dustry Is depressed. ''Long may it be-"
exclaimed Mr.. Morrill,, ''before We reach
that era of decadence when capital finds no
more profitable employment in Cincinnati
and Ch;oo oo tho N or Ganca and Venica ,,