Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1881-05-17
The Effect of the Treasury Policy

We presume fhere is not the least doubt
that the offer of the Secretary of the Treasury
to continue the five per cent bonds at three
and one-half per cent will be accepted by
more than the requisite number of holders.
In fact it would seem from the dispatches
published Yesterday that there is already
something Of scramble to get ir applications
for continuance early. The Limitation of the
amount that will be accepted for continuance
operates, as no doubt it was Intended, as n
spur to the owners of bonds who intend to
accept a lower rate of interest. Since there
is no reason to apprehend the least failure on
the part of the Treasury, let us see exactly
what is to be done.
There were outstanding on the 1st of MAY
FIVE per cent bonds to the amount of S463 .590,-
$50. OF these Sl37 ,234 $50 were coupon. and
1926, ,356, 900 registered bonds. A call. dated
on the 2lst of February. notified the cessation
| of interest upon twenty-five mllions-Ss, ,337, :,
300 coupon and SIG G62 700 registered bonds.
About six and one-half millions of these
bonds had already come in for
redemption at the beginning of the
month. and the conversion Of coupon into
registered bonds has been going on rapidly,
so that exact statistics of the present amount
of each class cannot be given. The depart
ment estimates roughly that there are 100
millions of coupon and 325 millions of regis
tered bonds to which the present arrange
ment will apply,-a total of AS millions, or
ls3 millions less than the present amount.
The Secretary calls in the whole issue of
FIVE per cents, of both classes. but there is a
difference in the terms. All the coupon
bonds may be continued, if the holders so de-
sire, but only $50 millions of the registered
bonds will be accepted, What the Secretary
therefore, proposes TO pay out on or before
| the 18th of August, only three months hence
| is ID about ls5 millions Of called five per
cents. due on the 2lst instant; 90 at least
10 millions of called skies not continued; (3)
a maximum Of three months interest on con-
| tinued bonds to the amount of $40 millions,
a sum of 81 ,625, 900; ~ 10 millions on regis
| tered bonds not allowed to be continued. and
| % whatever part Of l20 millions of coupon
bonds may not be presented for continuance.
Estimated at the very lowest, il seems to be
inevitable that not less than one hundred and
| ten millions of dollars in excess Of the or
dinary expe nditures and the ordinary interest
payments must come out of the Treasury
during the next ninety days. The surplus
revenue during that time, together with the
unused accumulation, will hardly exceed
fifty millions. Accordingly the Secretary
must draw upon the reserve Temporarily for
| at least sixty millions, and probably for more.
The effect upon the markets of snch an out
pJuring Of money can hardly be overestimat-
ed. 1t is to be hoped that jt will be drawn in
again before it has become necessary to bust
ness.
The results TO the Treasury and the govern
meRt. great as they will be, are insignificant
| in comparison with the consequences to busi-
| ness. Yet by the operation about to be un-
dertaken the government will save the whole
| interest on bot less than - million dollars
sum Of s3, 7j0.0 900; and one and one-haIf
per cent. on $50. .OO0, 900, or s., $50. 900.
The total saving, s., 300 900, will be increased
if there should be a larger amount than IS
millions actually pail of. 1t is but this week
that we remarked that the treatment Of the
six per cents and the payment Of bonds al
| ready called, would dncc the annual inter
est charge from s79 G33 1851, al which IL
stood on the lst of Julv. 1880, to S6s, 700. 900.
The newly announced programme will reduce
it still further to SO, 400, ,OO0. Thus, by the
policy of the Treasury. a sum of no less than
twenty millions is permanently added to the
surplus. This addition cannot fail TO have
the most important consequences 10 the gov
eminent, but it would be premature to discuss
them now.-Bossos Adrevtiser