Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1881-01-26
The Refundlng Bill.


and fifty millions of FIVE and six per cent
government bonds became redeemable. To
provide for refunding these bonds at a
lower rate of interest is one of the important
duties which devolves upon congress at the
present session. The house of representa-
tives, sitting as committee of the whole, has
matured refunding bill, and on Wednes-
day, the 10th instant, the house passed a
measure Of the following purport; The
secretary of the treasury is authorized to issue
bonds in amount not exceeding 100000
900, which shall bear interest at the rate of
three per cent per annum, redeemable at the
pleasure of the United States after FIVE
years, and payable ten years from date of
issue. He is also authorized to issue certif-
Gates of debt in the amount of s3OO,0O0,0OO
in denominations of $40, 500 and $50, either
registered or coupon, bearing three per cent
interest, redeemable after one, and payable
in ten years from date. The expense of
refunding shall not exceed onefourth of one
per cent The bill provides that after the
first day of May, 1881, the three per cent
bonds authorized by this act shall be the
only bonds receivable as security for ma
tional bank circulation or as security for
government deposits Provision is made
for substituting bonds Of other issues in
case any of the bonds authorized by this act
are designated for purchase or redemption by
the secretary Of the treasury, but bonds on
which interest has ceased shall not be &C.
cepted, or continued ON deposit. In case
bonds are not withdrawn within thirty days
after the interest thereon has ceased, the
bank depositing the same shall be subject
to liabilities and proceedings under existing
laws, which in plain English means that the
offending bank shall be put into the hands
of receiver and wound up. Certain laws
which permit bank to withdraw its bonds
by depositing legal money with the treas
urer of the United States are repealed, max |
ing it possible for bank to withdraw its |
bonds only by the slow process of collecting |
its own bills and delivering them up for |
cancellation, process which, in view of the |
universal and indiscriminate circulation of /
all national bank notes among the people, is
practically a bar against the withdrawal
of bonds deposited as security for circula-
ton. About s20O,O0000O of five and six
per cent bonds are now held by the govern
ment as security for national bank circula-
ton. By the provisions of this bill the re-
demption of these bonds is made absolute,
ha hapl 10 IoIra |
In payment three per cent bonds at not less
than par, redeemable at the option of the
after five years and payable ten
years from date. Should any bank indicate
a preference rather to receive no interest on
its bonds than to take three per cent short.
time bonds at par by leaving its five or six
per cent bonds on deposit thirty days after
the interest has ceased, that bank must go
into enforced liquidation. The act aims to
force the banks to take S20000O,0OO of un-
desirable bonds at par 1t also takes from
them all effective control over their crcula-
ton, practically compelling them to main
tain the same volume of currency when
the demand for money is light as when bus
mess needs demand the aid of the highest
financial resources of the country. With
the first appearance of the faintest POSSIBLE
ity that it may become law, the banks, in
the exercise of the natural right and duty
to protect their interests, will doubtless an
ticipate the enforcement of the provisions
Of this bill by taking to the fullest possible
sxtent the benefit of the present statutes re-
lating to the withdrawal of their bonds and
the redemption of their circulation. The
effect would of course be disastrous to the
business of the country, but it is hardly to
De expected that the banks should sit idly
Town and allow their resources to drift ire
rievably beyond their control
To three per cent loan of itself there can
'e no objection, provided it is accompanied
y inducements that render it reasonably
ure that it will be taken. The short time :.
# these proposed bonds and the coercive !;
nd restrictive measures by means of which
is attempted to float them--a tacit admis- .
ion of the impossibility of selling the Sc !
urities at par-do not give reasonable as :
urance that the loan would be taken. Per- =
nanency in loan is an advantage, next to
ecurity, sought by investors There is lit .
lie probability that our national debt will be ,
ntirely paid off during the next one hun /
red years. There are bonds bearing four /
nd four and half per cent interest which,
money can be hired at a lower rate, should
70 redeemed first. Many good financiers !
re of opinion that three per cent loan
would be taken at par if it were given this
Luality of permanency What objection
he trainers of this funding bill could have
o making the bonds payable in thirty years,
instead of ten, does not appear, unless their
cal purpose was correctly indicated by Mr..
Jpdegraff in his proposed amendment to
he title of the bill {" A bill to defeat re-
unding, to increase the amount of interest
IN the public debt, to contract the currency,
% injure the public credit and to depress
he business and industries of the country"
The fact that this bill will doubtless find no
Iavor with the senate and will be returned
% the house in radically amended form
all serious apprehension of disasters
hat would result from its enactment. As
4 practical measure, however, of the capa-
,ity for craftsmanship of the present house
Of representatives, it will serve to add ma
serially to the general feeling of reconcile
nent to the approaching dissolution of the
[orty-sixth congress, with its unpatriotic
and reactionary majority, as well as to the
late national defeat of the party which that
majority represents.
An Effective Speech.
During the debate on the refunding bill,