The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1881-04-16
windon's Proposed Exchange of Bonds,


sued circular calling in a large amount OF
six per cent. bonds, by July LIST, and gives
notice tina: holders of them, if they choose,
can obtain in exchange three and half per
cent bonds. The power of the Secretary to
issue new bonds is mooted question. On
the one hand it is claimed that such action
by the Secretary would in fact be a new con-
tract, for which he has no warrant of law; on
the other, it is said that by exchanging bonds
old contracts would only be continued. Ger
tainly such exchange would enure to the
benefit of the government, but it appears to
MS that the Secretary has no authority of law
for such procedure, and the precedent may
prove dangerous. Below we give the opin'
ions of several New York lawyers, extracted
from a number elected by New York World
reporter;
a reporter of the World HAS Secretary Window
the authority to recall the six per centbonds and re
issue them at So per cent; thus making new con
Secretary Window" replied General swayne,
evidently does notintend 10 make new contracts nc
is simply getting better terms for the Government uh
der the old contract"
but does he not exceed his authority as agent in
50 doing, or is he authorized by any provision t0
take such steps?'
HE is not specifically authorized I suppose; but
under his general powers he Is not exceeding M
authority You Will understand that he Is mol
bound to pay the bonds. The act OF July Il, 1901,
reads THE bonds to bear interest not exceeding :
per centum per annum, payable seml,annuaily
irredeemabe for twenty years, and after that perlog
redeemable at the pleasure of the United states
The act of August 5 1861. provides THAT the Sccre
tary ofthe Treasury is hereby authorized to issue
H,,F, dc nf hn b
eentum per annum, and payable at the pleasure OF
the United States after twenty years from GATE.
Thus YOU see the United States is not bound to re-
deem the bonds at their maturity, bat may do SO Il
il is deemed best So the Secretary OF the treasury
providing that he cannot redeem AZ me oonqs, Ee
offers to do so; but with the privilege extended e
the holder of letting the bonds run on al per cent
less than the old rate of interest"
But suppose Congress refuses TO PROVIDE LOT the
So per cent interest, what recourse would the hol
asimpIy 10 collect his per cent instead Of the
So But Secretary Window is not committing the
United States 10 anything new. He simply has the
power 10 pay these bonds and through tins power
Is extorting from the holders lower rate of interest
The United states is not bound % any contract thai
does not already exist 1t is as II an agent were q
receive general instructions that he might pay any
or his principals notes that he could. 20 the agent
goes 10 man and says he viii pay that 90 note
his principal owes. Butthe man may say NO, don
pay il now; don't know what TODD with the money.
aBut the note is drawing s per cent says thS
agent Il will take 81, replies the holder q tht
note and 10 this the agent agrees aud the new terms
might 20 to 100 creditors and reduce the nate from
tO 3ls per cent on each Of his principals notes
That is Just what Wisdom is trying 10 do and re
is his stamp to be afixed 20 the bonds Federal
or a private stamp " asked the reporter.
4 is not exactly ether u Is an indoINeiAent =
t.dence Of the change in the terms Of the contract
would there be any difference in the collection
OF the interest or principal Of the changed bonds
NO certainly not they viii be colicctab.e insi a
they formerly were.
the Registrar Of The Treasury SAID when sSktd
whether d thought Secretary Window had ihI
power - extend the six per cent, bonds AZ The re
duced rate OF 81 per cent Thee ) room ioE Z
considerable difference OF opinion. The right %
make such a contract may exist as 10 part OF theS
bonds and tmay not or may be very doubtful as :
the rest of them. The outstanding six per cent
amOnatiug 10 SIq5Du1o1l were issued. about sisst
O0O0 under the act Of July Il. is6 and The supple
meniary act Of August OF the same year ARd anen
sGQO0O1a under the act OF March = i>sst hy tis'
seventh OF luGiug section 81 the act 10 August
ISL the Secretary Of the Treasury was authorized s
issue Tor any paF1 OF TIE loan bonds ia! able ne
mon than twenty vee=s from date and bearing 10
tsTti OF any uut less than the equiv lcnt OF US
par value % bonds bearing per eent iaieftsi PEI
annum authorized by the act The octsiahdiul
skies issued Cnder this net therefore sn = b. b
Saluteiy PAYABLE the Isl Of July next The act @
March 8 is.sS under which the = manning huot
we're issued authorized the issue 81 bonds bearing
per cent interest payable not leSs than ten "T mon
than forty year. Fom date and thesc bonds an az
absolutely payable on July J. iSsl. lhrre would
sln Ia Ne no doubt Of the power OF the Secretary
10 rs,irr 20 arrec WITH ihc holders Of these bond
10 extend the time for their payment ~ d Fsdnosf
rasa OF Interest HIS right % mako snch e0nirae
i much tra-ar 81. GO thcsc bonds because they arl
not absolutely due on the IL q next July. th'
right % m9se CONTRACT q extend tne 'Ise ~ "
payment Of the bonds issued under thc at Of Juy
H. ls6I l. NOT founded upon tt act ltsctt pgs ~
exists nt al must bc impled iron the grneTzl prac
he ef the Government and ~ the right % SIC ogbtu
~ se-re, ith the creditor Tor an extension uf d,
debt afler < has mAturrd n thesc bends ar
CLEARLY due July j, ISL tho power % the tFnNeER
men % make contract ipr fneir xteiaicf3 ,, et<I
to question should nei be willing 10 cenf fbi
mower 10 make such an extension, untthiR& y laaci
more doubtful than ulldct tiie aei " MaFCn p lsts
.suppose c1uEress should refBsc . Faiiiy sueh az
-Weii Il these bonds ruraain unp&id thgy al
drau interest OK The rate Of F cent ana 4iii..ls
tonrass should hold thaI the Secretary 81 the iEess
ury could uot make contract reducing ihe iuiffs
10 8iS per ont. still a. the bond aoldeTs as''nic
think They would q D9tiha ~ " e..l.i-. y = ~
4 case Of an agreement 10 extend ief sFcriiNg tlae
but ~ extend II the pleasure % the Cos eFuiisL
do not sec thai Congress can pa any al o. give it'
l-pnlholder any greater intcses9 tsaH % agfets 2
. r,scsise ural~r the proposed arrangement
-Wli the prepused stamp uI1n the face % %.
bonds Tor 81 psf cent - an paie'al OK AZ aneaicia
stamp IN other words. VIII y H9i 1lnAe thr lqat
a private agreement
In M proposed plan the contract isF the cxien
sisu arises from the inquest Of the hanh05ses -
and the Government aNse toSu 40 eSelisla AZ
not ont Of the stamp upon the bond The efciui thn
stamp IS q gave notice q ne eonissSt % y
Of The bond and an persons 20 whom % W2s siter
,gar,is urrofiafed would advise r client f. arccpa
tbese teFrls because De would gain higher ra'r u
interest thereby IL he did noi Gecepi. his beHd
would b. paid and be could net invest IN other tnt
ernrnenls that would pay him much more than
Fs,r cent aud / cannot see hoW he would Dc pfNtg
dlccd hy accepting the ofser. wtsh y say inst q
arst the proposed arrepseInent seemed very lestT
bic one and not open 70 criticism A Eceent eNalsi
nation Of the aCts anleT which She bonds are Issued
has satisfied me that he pnieF4uie eiFse ffa piis
more consistent With the traditions 81 ifr 4fe2siTs
would have been % have paid these hoils- tff
funds al the Secretary control a11ed o TIE afi'
IN lie q s. G0uH q the four per eents would has.
been ample lor the purpose. The right 10 eXiel :
the Ewes IN ihe manner proposed eeiicFc 70 o
clear
III, Peter B. Olney. OF ihe fra Of Barlow 4 ulngy
II No 50 Brnadyay said when questioned -
have read the notice Of the Secretary 81 TIE Treas
my. bat not familiar with the statn - sAeil
ard giving him his poWcrS. on general Fflnei PEE
4 snen> a. ae thar he has not the power ~ do aAa
nc prupdSes 10 DO IN extending the time iuf the pay
mehg q rather pu9siling for the extension 81 ih'
six Der CENT bonds and allowing interest a. The rais
Of 81 per cent tFuEa July ISL Whist - pruTsass-
bond for an indeanfe PeYioi bearing Interest AZ the
rate 81 81 per cent A. J uEldeTsialld u ihiA y :
power hich Congress alone cGS7 excFsiss ne tae
thaf the holders OF the bonds may ssseaI "a Il make
40 difference Ia my Judgment or therehsn ihai ~
boyer Is wanting on the part o. the SccrctAfy 81 tt
Treasury - bind the Government II t0ukrts
should nos rafify the contract do not se that th'
holders II the bSnds would have any chance 81 gst
ting the 81 pes cent Interest ior the use OF the
money exeept by suit against MF. Window person.
ally u seems " also that Assuming lhls aet q
the Secretary 90 be Illegal he prolaey ieeEeA hiin
self open to Impeachment tusumuch a. ne h2s *
cectnti powers gwen O. him