The Valley Virginian. [volume] (Staunton, Va.) 1865-1895, 1881-08-25
Funding the Public Debt.

-eei Funding the Public Debt.
On the second day of the meeting of the
Bankers Association at Niagara Falls, last
week, the following paper was read from
Hon. VIM. Window, Secretary Of the Treas
ury, who could not be present to address the
Association in person The statements it
contains should be carefully read by every
one who desires to understand the financial
condition of the country, and the methods by
which it has been placed SO faVorablv for
the people. The whole subject is comprehend
ed and smplified in this very perspicuous, yet
comparatively brief letter. Its reading will
prove interesting and instructive
Treasury Department, Office of the Secretary.
Washington, Aug. 8, 1881. Geo. Marsland.
Corresponding Secretary AnaerScan Bankers
| association, NadgdTa Falls, N. 7.
SIR II have to acknowledge the receipt of
your letter of June 30, 1881, inviting me to be
present at the annual convention of your
association, to be held at Niagara Falls, the
10th, 18th and 18th inst, and to give to the
convention sketch OF the funding operations
| of the Government since the incoming of the
present administration regret that circum-
stances will not permit me to accept your in
vitation to be present, and as the funding op-
erations to which you refer are not quite COM
pleted, no precise statement of the transac-
tons can yet be given. 1t may be stated,
however, that when entered upon the duties
OF nv present position, in March last, found
| that of the bonded Indebtedness of the Govern
| ment there were five per cent bonds, red eem-
able at the option of the Government after
May /, 1881, to the amount OF $3.50 1920. $50 of
which the amount Of $14610 900 was repre-
scented by coupon bonds and of six per cent
bonds, redeemable at the option of the Gov
eminent after July 1, 1881, the amount of
sented by coupon bonds. Only the coupons
for the quarterly interest falling due on MAY 1,
| 1881 remained upon the coupon five per
cents, and none upon the coupon six per
cents, the next semi-annual interest on
which would fall due on July 1, 1881 The
Refunding act, by which it was proposed to
retire all of these bonds and to issue therefor
| bonds bearing a lower rate of interest with
several years to run before the Government
had the option of payment, after having re-
ceiyed much consideration by Congress during
| the last session, had failed to become law,
| and the only resources of the Government to
| meet the maturing obligations were the sur
| plus revenues and the amount of $104,652 200
! four per cent. bonds, being part of those au-
thorized by the acts Of July IA, 1870, and Jan
uary 30, 1871, and remaining unissued.
| These resources were not sufficient to pro-
| vide for all the maturing bonds, ana owing to
the length of time which such four per cent
bonds had to run before maturity, it was not
| deemed advisable to issue more of the loan if
such issues could well be avoided.
| While there was no imperative necessity of
providing for the registered bonds of the ma
| turing loans, some plan was needed to meet
| the interest payments on the coupon bonds,
| and there seemed to be no practical method of
| meeting these payments without considerable
expense to the Government as well us to the
holders Of the bonds
Finally, to meet the demand of public credi-
| tors and at the same time to avoid the calling
ofan extra session of Congress, which seemed to
be the only alternative, the plan was matured
which has been put in operation and proved
successful.
Under this plan, on April 18th, there was
called for absolute payment on July LIST, 1881,
the small loan of 1858 200, bearing per cent
| interest, and known as the Oregon war debt,
and at the same time for payment on the same
date the six per cent. loans, acts of July 18th
and August 9th, 1861, amounting to $14O,544-
$50, and act of March Sd, 1868, amounting to
$50, AS ,750; but to the holders Of the bonds of
the two latter loans permission to haYe their
eminent, with interest at the rate of 81 per
centum per annum, provided they should so
request, and the bonds should be received by
the Treasury for that purpose on or before
the 10th day of May, 1881, and in case of cou-
pom bonds, registered stock of the same loan
should be issued therefor. The six per
cent. bonds to be continued were prompt
ly received in large amount and new regis
tered ones issued therefor, with the fact of
continuance
but 1t was subsequently deemed advisable to
extend the receipt OF the old bonds to May 90,
| 1881. 1t was also found that foreign holders
| of the six per cent. bonds were inclined to dis
| pose of the investments rather than to send
them to the Treasury tor exchange, and the
| immediate payment of so many bonds abroad
| being likely to cause drain of coin from this
country and to disturb business, an agency for
the exchange of the bonds in London was
established.
| This plan of continuing the SKIES has proved
entirely satisfactory, there having been pre-
sented in due time for continuance at 81 per
cent. interest the amount of SITS, 055 $780, leav-
ing to be paid of from the surplus revenues
| 1874 211 400, for which the Treasury had am
pie resources. Having succeeded in disposing
of the six per cents. on May 18th, the De
partment gave notice that the coupon
bonds Of the loan of July IA, 1870, and
January 20, 1871, would be paid on July l,
| 1881, with like privilege of continuing the
| bonds at 81 per cent. to such OF the holders as
might request and at the same time the Treas
ury offered to receive for continuance in like
manner any of the uncalled registered bonds
| of that loan to an amount not exceeding $3.50
100000, the remainder of the loan being re-
served with view OF its payment from the
surplus revenues.
The continued 81 per cent. bonds having
market price slightly above par, the five per
cents in question were rapidly presented, and
it became necessary to extent somewhat the
limit fixed for the amount of registered bonds
to be accepted for continuance.
| On July LIST a notice for the payment on
October LIST, 1881, of the registered tives not
continued was given and the resources of the
| Treasury will be ample to meet their pay
| ment.
| The transactions concerning the 5 per
| cents are, as before stated, not quite COM
| pleted.
| Probably there will be continued in all
about $500, 000,0 0 of this loan, leaving to be
paid $39, 7OS, $50, the remainder of the loan
having already been paid from the surplus
revenues under calls previously made.
By this plan the Department has been not
only relieved from the embarrassment for the
payment of the coupon interest but has reduc-
ed all the six and five per cent. loans OF the
Government to loan payable at the option
of the Government, and bearing interest at
the rate Of 81 per cent per annum, and this
with the trifling expense to the Government
ofpreparing the new registered bonds, of pay
ing the actual expenses of the London Agen-
cy, at which only three persons have employ
ed for few weeks, issuing about $44,500,000
of the continued bonds.
The saving to the Government through the
continuance of these bonds is very crafty
ing.