New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1881-09-26
EXTENDED BONDS CALLED.


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q EXTENDED BONDS CALLED.
y Secretary Window has surprised the public
! again. 1t was known that he fully appreciated
Z the necessity of preventing an undue accumu-
8 lation of money in the Treasury. 1t was there
Il fore expected that he would use the sur
plus revenues either 10y calling extended three
and half per cents or by buying four or four
and half per cents. But it was perceived
that he would have serious difficulties to over
come, in an attempt to keep down the accu-
mutation of money by calling bonds
3 Long notice was legally required in calling the
4 extended five per cents. Custom and general I'M
derstanding had made it very inexpedient TO
( call the extended six per cents without such
notice. No call maturing in December could
! be relied upon to release money accommodating
| in the Treasury in October. Experience
had shown that most holders would de-
/ cline to surrender their bonds until the
interest had ceased. The Treasury, therefore,
could not know what sum it could disburse in
any week or month in redecming called bonds,
and the circumstances made it exceedingly i'm
portant that the disbursements should be
fitted as closely as possible to the surplus re-
ceipts. These difficulties Mr.. Window has en-
deavored to overcome by peculiar form of call.
continued six per cents, and natures December
IA, when interest on these called bonds will
cease. BY itself this call would afford no ad =
equate outlet for accommodating funds until
Christmas. But circular is added, as fol-
lows
Notice is hereby given that, during the weeks ending
October J. s. TO- % and 30 1881. the Department will
redeem at the Office the Assistant Treasurer Of the
United states at NewYork paying par and interest
crcd AT tho date OF redemption any the United States
bonds continued to bear interest 2 per per an
num- called uncaIcd to an amount not exceed,n,
81, 600 600 in each week.
1t is the evident expectation that Mt least
50, 000,0 per week Of the extended bonds
will be offered for redemption on the terms
proposed, and that the surplus revenues will
not exceed $10,O0O,O0O during the five weeks
ending October 20. Any part of the bonds
surrendered may be of those not embraced in
the 105th call, and there will be little more
mducement to surrender the bonds so called
than any Others For illustration. We may
assume that $2,500.00O called bonds will be
surrendered, and $7,500,00O uncaled bonds :;
there will then remain, after the SIG, 900, 900
have been redeemed, $l7, 100000 called bonds
to be surrendered in December The redemp-
ton of these the Treasury can then accelerate.
if it seems desirable, 10y Offering to prcnay a
-.
If the plan works as the Secretary doubtless
Iexpects, from $50, 600 900 to $50. 900, 900 viii
he dsbursed before the end Of the year in re-
decming bonds at par.
There Ia room for some doubt whether this
plan will work as the Secretary expects The
radical difficulty is that there is no inducemeutI
whatever for those persons who wanted bonds
bearing 3l2 per cent interest, who accepted or
bought them when they were worth above mar
in the market, and who have until now refused
to sell them at 1Ol or more, to surrender
them AT this time for par and accrued
interest The extended five per cents will
hardly be surrendered, because il is evident
that, in the order Of calling, these are not
ilkeiy to be reached for long time. The
same reason will apply to those six per cents
winch, Ill the order of calling, are compara
lively distant. If men whose bonds will Ger
talnly cease to draw interest in December
prefer to retain them until that time, it
is still more likely that others will retain
bonds which will draw interest still longer
Of the called bonds, portion are held Inv
banks 10y trustees of estates. by Gduci,rv
corporations, or by permanent investors. and
money of that sort is not tempted by the nrns
pect of higher rates in the Street. because il
would not be loaned ia the Street at apv rate
1t Is but small class of persons who disturb
three-and-a- half per cent Government bonds L.
gaily exempt from all taxation, for the sake
SetIhg per cent on commercial Daper
or stock collaterais, and the proof 10
found in the fact that the three and n half nor
cents have been selling above par, while lend
ers were getting per cent for time money in
Wall Street.
Secretary Window has perhaps not done tho
wlSest thing, in financial point of
view. NO doubt, since he is able md
weii-advised, he realized that it would
be for the interests of the Government in tho
long run to buy up four or four and baIfE
per cent bonds, rather than TO call three and
a half per cents. 1t ma be assumed thai
he was Influenced by belief that the nuhlic
would not comprehend or appreciate the rea.
sons Tor that course, and 1t doubtless woulJ
nave exposed him to some ignorant or preiu-
diced criticism. Political rather than financial
considerations, probably, led him to shrink
from paying $4,000 to extinguish 800. 600 /
OF debt. But the determination to rely
upon calling bonds involves difficulties
which the Secretary does not yet appear to
have overcome. He has another resource. il is
true; he can at any time offer to redeem
$5,OOO,OOO or $4,000, 900 of tho called bonds.
paying interest to the maturity of the call.
But recent experience in dealing with tho
hve per cents has shown that, even by this
method, the Secretary cannot be sure how much
money he can disburse in a given time. II /
will be somewhat surprising and fortunate. if
some modification of the order just issued is (
not found necessary