The weekly clarion. [volume] (Jackson, Miss.) 1863-1882, 1881-05-19


the only honest and logical course for hil
to pursue Is to follow Mr.. Hayes in recon
mendIng the emasculation of greenback
II they are not money no man shout
! be longer compelled TO receive them as
IT legal tender for his debt. They should n
? longer be received on redemption of ban
n notes, and above all. if money can not b
d made Of paper the debt notes of Nationa
e banks shocld no longer be legal tender t
n and from the government.
Y But this would disturb values and nigh
a bring financial trouble again on the coun
5 try In 1869 We were prosperous On
II Army and Navy had been paid off Gu
go bonds were above par though payable il
{ greenbacks, and could have been rapid,
[ paid. Our annual revenue was about 500,
4 0O0, 0U. The government had no occasion
; TO borrow money and there was no apparent
/ necessity for making our credit strongel
when the act to strengthen the public credi
! was passed. This act and the funding act
| of 1870 which followed, discredited the
greenback. 1t was no longer regarded as
money and was not to be received for the
new bonds.
The resumption act followed and the de
struction of greenbacks preparatory t.
resumption began Their volume was then
$3S2,0O0,000 aud So, 900, 900 were to be
destroyed before the government dare offer
to redeem them in coin. The contraction
commenced and with it came a cry of
financial distress which elected Democratic
Congress and stopped the destruction of
greenbacks when about S36. O00. 900 had
been destroyed.
Mr.. Secretary Sherman who once before
had changed his mind about greenback
money, now changed il again and believed
| he could offer 10 redeem 1916 900 600 as
easily as he could $500, 900 He pushed
! forward his purchase of gold for resumption
/ purposes with as much vigor as il he believed
gold would be demanded of him for green
/ backs when resumption was attempted.
/ lie has the credit of having performed a
wonderful feat in financiering, but we will
never know whether he did not bring on the
! troubles he claims to have cured.
Some of his transactions were of such
| questionable shape as 10 call down on him
the following criticism of Mr.. Fernando
Wood, in the House of Representatives,
The Secretary appears to be somewhat
confused ia his statement of the amount of
bonds sold for resumption purposes. In his
| annual report of 1878 he fixes the sum at
$95, SOC, 900, which is reiterated in an official
letter to me dated January IL, 1880. This
is nearly $4,000, 900 less than the amount
as stated by him in his letter to the Senate
OF March o. 1879, above quoted, i'll which
he gives in detail the several amounts OF
bonds sold for this purpose.
But this Is not the most serious error of
the Secretary, as exposed in the extract
above quoted. 1t will be seen that on the
9th of June, 1877, contract was made with
a syndicate composed of the First National |
Bank OF New York City and others for the |
sale at par in coin of t per cent bonds. I'm
der this contract SIS, 496, $50 were sold at |
par. On the 18th of April, 1878, ten months |
later he sold to the same parties 50,000,- |
600 of Al per cent bonds at l J per cent. pre-
MUM, less of per cent. allowed for com
mission, which LETT but $4,000, 900 tor pre-
MUM, thus increasing the rate of interest |
of per cent, making difference of inter
est against the Government upon the
amount sold of s.. 900 per annum for
the whole period that the bonds bad to run,
which, being about fourteen years, made a
net loss to the Government of $50, 900, 600
Under the funding acts of 1870 and 1871,
by which authority to fund is conferred upon
the Secretary, it may we'll be questioned
whether, after the minimum interest of 4
per cent. had been reached, any higher
bond could be subsequently issued
Another yet more remarkable fact in con-
nection with this sale of AZ per cent. bonds
is that at that time, April, 1878, these bonds
were selling in New York in the open mar
ket at 1913, being , per cent more than the
syndicate procured them for from the Gov
making profit on the transaction
VI PlV1OpOJOOU. lie IOuI per CGnLS were dL
the same time over par in the same market.
For the prices of these bonds for the year
1878 see table A in Appendix.
1t may be said that the fifty million Al !
per cents. were sold under authority of the {
resumption act, which expressly gives the I
secretary authority to sell any class of !
bonds authorized under the act of 1870. | !
1eny that this or any other act can be con-
'srued to empower that officer to sell bonds =.
or a less price than they are worth on the
market, or that he can issue Al per cent.
pond at any rate of premium when the low !
r rate of per cent. can be sold at par. 1t t
Gould not have been intended by Congress |
hat he could fix the rate of premium by ,
which he should dispose of these securities.
Such discretion, if abused, could be made 9
% impose upon the people a high bearing
ate of interest debt for the whole period of
line that the law authorizes the bonds to be I
ssued, and there would he no recourse by |
which the evil could be repaired.
But if the legal power exists tn raise the !
interest upon the bonds from 4 to ~ per d,
'ent., it does also to per cent; and thus !
nay that officer of his own individual OPP l
ion increase the national obligations at |
pleasure.
In the case referred to, the only reason s
,iven by the Secretary is that recognizing {
he duties imposed upon the Secretary of the
Treasury to prepare for resumption in coin '
# United States notes on January l, 1879,
entered into contract April ! /, 1878 with
he parties of the previous contract for the
ale of $50, 100000 A per cent. bonds for re- 5
umption purposes" etc. No reason is given S
or having raised the rate of interest Of l
yer cent, it being matter apparently of a.,
Tot sufficient importance to require expla-
lation. He had sold between June and
July g. 1877, SIS, 1876, $50 (by popular sub
cription, the syndicate being the contract |
rs) Of bonds bearing only per cent and
,et on April 18th 1878, he disposes of $780, |
100, 900 of bonds bearing a per cent. inter !
st to the syndicate without popular sub
cripton. The conditions of popular sub
CT iption for 80 days which had been requir-
d in the per cent. syndicate contract were
united on the Al per cent. contract and the
nd more valuable bond" [