The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1881-02-25
The New Funding Bill.

nss.ing a bill under whose provisions TUG
nnhl;e deb, redcemable this year VIII either
have 10 be refunded al 3 per cent, or eise
remain deb, bearing and per cent. IN
tere,t until the new Congress shall nave
passed bill more acceptable to the banks
and 10 capitalists.
Most persons will not venture INTO 'ne
in,rlcac;es Of the calculations wnicn pave
been resor,ed 10 In order 10 show not oh'y
that the Democrats In Congress were lus'i'
fable in wha, they did, but that 'he DC"
h,,, will damsce nobody. Such calculations
have hecn made In abundance. VEIN NH'
g,nss had an experience In figures OF ''Se
charac,et when the .McCrLLoch DIV was
neod,ng in our Legislature. Although 'ne
bill provided that the Interest on ."s TUT.
wear bonds should be per cent lot 'ne
first ZEN wears, 4 for the next twen'y, anu
to. Tho last ten, the weight OF authorities
seoo,oJ 10 teach that The interest would not
average exactly per cent, but traction
hs.. The public, however, took no STOCK
IN sacb calculations, but accepted II as a
fac, that The average rate OF interest Tor the
whole period would be per cent.
lie, US inquire, without going into the
n,cetIes OF the calculations, how much bet
tera4p.r cent. bond at STA is than
per cent. at pary These per cents TO the
amount Of s1Ss, 4sO, $50 are redeemable July
/. l9O7-say twenty.six years hence. Ihey
have sold as high as Slli. The per cent.
bonds are OF course to be had at par. Now
every reader can see for himself that II the
Der cents had only IA years 10 run and
were selling at STA, the 3 per cent. bond
at mar would be tic better investment. For
II the holder Of per cent. 500 BONA
should let his interest remain uncollecied
until the principal was due, be wonid then
collect, principal and interest, slo6, oi
which $50 would be interest; but as ne
Maid Sl4 above par for his bond, 1t Is evi-
a. n, that this sum must be deducted from
the $50. In word, bis interest would
amouutto only si2, or precisely the sum ne
would collect on a 3 per cent. BOND pur'
chased at par. But the per cent. bona
would he the preferable investment, De-
cause, although the interest realized would
be The same in both cases, yet the amount
invested would be S14 larger in the case oil
toe 4 per cent. bond than in the case OF the
3 per cent. bond.
The reader will see that The element OIL
time is an important consideration IN tDe
case OF bonds purchased above par, Du'
need not enter INTO the calculation at all ii
the bond be purchased at par. For Iilustfa'
ton, let us suppose that per cent. bona
Is bought at STA which turns out 10 DC re-
deemabe in three years and nan. When
the holder presents bis bond forredemption
at the end OF three Yeas he gets eXactiy
500, no more and no less, and thus mas
that the sl4 interest which he has collected
in three and half years was just enough 10
balance the premium OF Sl4 which he pa'u
for the bond. But il be had bought o per
cent. bond redcemable at the end oil tbree
and bali years, he would have received
back all the money he invested oes'ues
5000 Of interest. The short Time IL hao
10 run rendered the one bond valueless so
far rs interes, was concerned, whilst IL ala
not damage the other at alb
Now what is true as to bonds running Tor
short periods is lust as true OF bonds run
ming for long periods. The man who pays
STA THAT Is what they sold at on We'd
nesda,) for a 4 per cent bona, re-
deemable twenty.six years hence, as
these bonds are, pays in the premium
of sl3 Que half OF one per cent. per annum
for twenty-six years, which payment on the
loAn cd fynn Ne
terest received before the rate OF interest
actually realized can be fixed. IL goes
without saying that this deduction would OIL
Itself reduce the tate OF interest on the pei
cent. bonds from 10 50 per cent. Bn'
there is the annual interest on the Sl3 which
enters into the calculation. Thus, sup
posing, again, that the holder collected nc
interest until the tweniy.siX years were oufi
he would on 4 per cent. bond collect Slo4
OF Interest. Deduct Sl3 paid as premium
and he would have S91. The interest on
per cent. bond for the same period, pur
chased at par, would be SIs. Let both bond'
be redeemed at the end OF the period, and
the man holding the per cent. bond would
collect S204, principal and interest, on III
investment OF S113; whilst the man hold
ing the 3 per cent. bond would collect SliS
principal and interest, on an investment
Sl0O. The former makes on his investmen
80 per cent. in twenty.siX years. The latte
makes on his investment Is per cent. II
twenty.six years, or three per cent IN th'
one case, and tbree and one.thlrteenth II
the other.
Mr.. TUCKER says that per cent. bond a
about sl1s would be equal TO Q per cent
bond at par. We let that pass. Surprising on
calculations to be reliable, (and IL his are reia
bic. ours cannot be far out OF the way.) VIII
can possibly be damaged by the new fund
ing bill? Nobody. And the bankers AM
SPECTATORS have found it out. They woul
have forced the per cent. bonds up TO Sl2
il they had been worth that much in com
parison with the per cents. \ well-knowl
financier in Cincinnati says per cent
bond at STA is no better than at 800
We have tried TO get our figures straight
and we think we have succeeded. At an.
rate, we have made 1t clear that the hula
taloo raised 10 New York over the new
funding bill was without sufficient cause
We are persuaded that the new loan will b
success.
-----------
Tue New York San warns the banks 0
that city against making war upon the nes
funding bill. II says:
-