, 1880-02-27
THE NEW NATIONAL coNsoL BoN1

THE NEW NATIONAL CONSOL bVNu
1t is understood at Washington that when
the bill matured by the Committee Of Ways
and Means to provide for an issue of 81 per
cent bonds maturing forty years after date, anu
payable at the option Of the Government al
any time after twenty years, is taken up TOT
action; an amendment will be offered making
the bonds permanent, and bearing only : per
cent interest 1t is intended that the Govern
ment shall dispose OF these bonds from time
to time to take up all the outstanding bonds OF
the United States. This is practically to put
our debt into the shape Of the British nation
al debt, subject to such reductions as may be
made annually by the purchase in the open
market Of outstanding bonds, the purchase
to be made from the surplus revenue.
There are many considerations that may be
urged in favor Of this scheme, and many
that may be urged against it. The most
serious objection that can be presented IS the
uncertainty whether a 8 per cent bond can
be sold at par. English consols range IN
price, according to the condition Of the
money market, from 90 to 81 cents, but
rarely if ever do they reach par. Now, can
the United States sell per cent bond at
par when this is found to be impossible even
in England? # in England, where there is
so much surplus capital, and where so much
money is permanently invested, per cent
bond cannot, even when money Is abundant
and easy, command par, is it possible for
such q bond to be sold in this country at
par? It is not likely that the people Of this
country will consent to the sale Of any bonds
at less than par and thus add to the public
debt. Unless, therefore, there Is an assur-
ance that this bond can be sold at par there
will be no economic reason why it should be
issued in preference to the SO per cent bond,
as proposed by the Committee Of Ways and
Means.
On the other hand, it is argued that
permanent bond, redeemab1e only by the
consent of the holder, will have a market
able value much greater than bond which
the Government may recall ct any time
after twenty years. This permanency Of the
bond, however, equally pertains to the
English consols, which are not redeemable
at the pleasure Of the Government, and can
only be purchased by the Government in
the open market. The amount to be issued
during 1880 and 1881 is about $500, 600 900, but
the total sum Of outstanding bonds proposed
to be replaced by these 3 per cents is about
S., ,600, ,eo0,0 600. It may be that few years
hence, when another batch Of the outstand-
ing bonds fail due, 8 per cents may be
foated at par, but the present indications are
that they cannot be now sold at such price.
The bill prepared By the Committee OF
Ways and Means proposes 4 bond bearing 3113
per cent interest, and payable in 20 10 years
after date. All the bonds sold by this Gov
ernment, with the exception Of a few per
cents, have contained this provision Of being
payable at the option of the Government after
specified date. This was the case in the
$40 bonds, in the 1910 bonds, and in the 1880
bonds. Under this option the Government
has been able to replace 6 per cent bonds fall
ing due with 5, ~, and 4 per cent bonds.
Recently, the French Government ex-
perieneed the disability of being un-
able to take up q large portion Of
its debt because Of a want of this
option. It could readily sell new bonds at
low rate Of interest, but it had no authority
to call in the bonds bearing higher rate of
interest. Its only recourse was to purchase
the bonds, which were at large premium, In
the open market
The American theory is that permanent
National debt is not such a blessing as to be
desirable, and hence the universal agreement
that all public debts should be contracted for
a given time and the privilege Of paying it at
an earlier day retained. It is not likely that
this policy will be abandoned until there is
some certainty that q per cent bond can
De sold at par, and thus offer such an In
ducement in the liberal reduction Of the rate
Of interest as will compensate for the change
Of policy.
l711Ic Sanrota1.,r of fla C4aino