Daily globe. [volume] (St. Paul, Minn.) 1878-1884, 1881-01-11
THE NEW REFUNDING LOAN,

There is no diversity OF opinion as to the
necessity of funding bill of some sort,
but the members are at sea as to the rate
and the length of time they should
run. Some insist that bond drawing
less than four per cent. interest could
not be negotiated at par, and the banking
interests encourage this idea. That the
banks are not wholly disinterested advis-
ers will be seen by all, for these institu-
tions are probably the largest holders of
United States securities in the country,
and it is to their interest to obtain as
large return for their investments as
possible. There are others, however, who
profess to believe that the credit of the
government is SO high that it
can float bond bearing but two
and half per cent. interest, and cite the
success of the English government in
procuring loans by the issue of consols
for two per cent. interest. There is a
great difference, however, between Great
lish consols are permanent loan, and nc
one expects that the principal will ever
be paid. The interest, however, Is good
for all eternity. Our bonds are but tenn
porary obligations at best, and the varied
industries that arc springing up as aids to
the development of the country offer fa1
greater promise of return than is pre-
sented by national bond bearing so low
rate of interest. There are, besides,
scores of railroad bonds that are paying
all the way from four to ten per cent
interest, that are almost as secure as the
government bonds. State, county and
municipal bonds are also to be had in
every market, the interest upon which
varies from five to twelve per cent,
and these also are safe, the
interest being paid with clock like
regularity. The only disadvantage they
possess is the fact that they are not as
readily negotiable as the government
bonds, and are subjectto occasional, fuc-
tuations. But as investments their safe
ty is not to be questioned. 1t is a matter
of question whether with the many
avenues presented for the investment of
the money, the government could success
fully negotiate loan at less rate of
interest than four per cent.
AS to the time for which the bonds
should be permitted to run, the prepon-
derance of opinion seems to be in favor
of short bond, redeemable by the gov
erRment after five years, and maturing in
twenty. 1t is to be hoped that Congress
will finally authorize such an issue The
revenue of the government is now nearly
eighty millions of dollars more than the
expenditures, and by wise revision of
the tariff and internal revenue laws, this
difference can be still further increased.
1t will be no task upon our resources Ito
redeem this amount of bonds every year,
aud probably before ten years have
elapsed the treasury will be able to take
up the entire amount about to be refund
ed, and thus reduce the interest on the
public debt to minimum amount 1t
will not even be necessary to wait five
years to begin the work of redemption.
for as fast as surplus accumulates in
the treasury the bonds could be pur-
chased for sinking fund, and the inter-
est upon them paid to the government it
self. While long bond would no doubt
be more readily negotiated, there is little
question but a $40 bond would realize
par both in our own and in foreign money
centels. There is at present an abund-
ance of money to loan on good security,
and the present is probably the best time
that will present itself for many years for
the floating of interest short-t time
bond. Indeed, the refunding cannot be
delayed, as nearly eight hundred millions
of five and six per cent bonds fall due
during the present year.
There is little need of extended discus
sion on this bill. The risk attending the
issue of two and half or three per
cent. bond is considerable, and it is to be
feared that the credit of the government
would suffer in consequence of the at
tempt to float it. 1t may be possible to
procure all the money needed for three
and half per cent but the commissions
demanded by banks and brokers on their
sale would more than make up teh differ
ence between that rate and four per cent.
Experience has shown that a four per
cent. bond can be negotiated directly by
the government, without the interposi-
ton of banks or syndicates, or foAa mere
ly nominal commission. AS we shall be
able to redeem the obligations, provided
no financial disasters shall intervene.
within very few years, wisdom should
dictate that the bonds be made redeema-
BILE in five to twenty years at the option
of the government. Such, at least, is the
opinion of large majority of the people
and taxpayers of the country.