Evening star. [volume] (Washington, D.C.) 1854-1972, 1881-08-11
SECRETARY WINDOWS POLICY.
Letter to the Banking Association on the
Refunding Operations Of the
Government, Etc.

Marsand esq.,, corresponding secretary of the
American Bankers Association, at Niagara
Falls N.Y." the following letter, which explains
itself:
Sir:-I have to acknowledge the receipt of
your letter of June 30th. 1881, inviting me to be
present at the annual convention of your asso-
citation, to be held at Niagara Falls. the 10th,
18th and 10Th nsts. and to give to the conven-
ton sketch of the funding operations of the
government since the incoming of the present
administration. | regret that circumstances
will not permit me to accept your invitation to
be present and as the funding operations to
which you refer are not quite completed no pre-
else statement of the transactions can yet be
given.
It may be stated, however that when I
entered upon the duties of my present position,
in March, last. found that of the bonded in
debtedness of the government there were Of
five per cent bonds. redeemable at the option of
the government after May 1st 1881 the amount
OF $469. .320. $50 of which the amount of
s146. 101 800 was represented by coupon bonds.
and of six per cent bonds, redeemable at the
option of the government after July 1st, 1881.
the amount of S202, ,266, $50, of which 45 391 900
were represented by coupon bonds. Only the
coupons for the quarterly interest falling due
on May 1st, 1881, remained upon the coupon
per cents, and none upon the coupon 6 per
cents. the next semi-annual interest on which
would fall due on July 1st, 1881.
The refunding act 10y which it was proposed
to retire all of these bonds. and to issue there
for bonds bearing a lower rate Of interest, with
several years to run before the government had
the option of payment. after having received
much consideration by Congress- during the last
session, had failed to becomealaw. and the only
resource of the government to meet the matur-
ing obligations were the surplus revenues. and
the amount of S104 ,652, 200, four per cent bonds
being part of those authorized by the acts of
July 14th. 1870, and January Goth, lS7l. and re-
naming unissued.
These resources were not sufficient to provide
for all the maturing bonds, and owing to the
length Of time which such per cent bonds had
to run before maturity, it was not deemed adj
yisable to issue more of the loan if such issue
could well be avoided. While there was no i'm
perative necessity for providing for the regis
tered bonds of the maturing loans, some plan
was needed to meet the interest payments on
the coupon bonds and there seemed to be no
practical method OF meeting these payments
without considerable expense to the government
as well as to the holders of the bonds. Finally,
to meet the demand of public creditors, and at
the same time to avoid the calling of an extra
session of Congress, which seemed to be the
only other alternative. the plan was matured
which has been put into operation and has
proved successful.
Under this plan, on April 11th, there was
called for absolute payment on July l. 1881, the
small loan of S6SS, 200, bearing 6 per cent in
terest, and known as the Oregon war debt, and
the per cent loans, acts Of July II and August
5. 1861. amounting to S140.544.65O, and act of
March 3, 1868. amounting to $55, 145, $50; but to
the holders Of the bonds of the two latter loans
permission to have their bonds continued at the
pleasure of the government with interest at the
rate OF 31a per centum per annum, provided
they should so request, and the bonds should be
received by the Treasury for that purpose on or
before the 10th day of May, 1881, and in case of
coupon bonds, registered stock Of the same loan
should be issued therefor.
The six per cent bonds to be continued were
promptly received in a large amount and new
registered ones issued therefor with the fact of
their continuance stamped upon their face. but
it was subsequently deemed advisable to extend
the time for the receipt of the old bonds to Nav
20th 1881. 1t was also found that foreign hold
ers of the six per cent bonds were inclined to
dispose of their investments rather than to send
them to the Treasury for exchange. and the i'm
mediate payment of SO many bonds abroad being
and to disturb business, an agency for the ex-
change of the bonds in London was established
This plan for continuing the skies has
proved entirely satisfactory, there having been
presented in due time for continuance at 81 per
cent interest the amount of s178, ,055, $50, leav-
ing to be paid off from the surplus revenues
$4. .211 400 for which the Treasury had ample
resources. Having succeeded in disposing of
the six per cents, on May 18th the department
gave notice that the coupon bonds of the loan
of July 14th. 1870. and January 2oth. 1871,
would be paid on July LIST, 1881. with like
privilege of continuing the bonds at 81 per cent
to such Of the holders as might request, and at
the same time the Treasury offered to receive
for continuance, in like manner, any Of the un-
called registered bonds OF that loan to an
amount not exceeding $3.50, ,000, 900, the re-
mainder of the loan being reserved with view
of it's payment from the surplus revenues
The continued 319 per cent bonds having q
market price slightly above par, the per cents,
in question were rapidly presented, and it be-
came necessary to extend somewhat the limit
fixed for the amount Unregistered bonds to be ac-
cepted for continuance. On July 1st notice
fOrthe payment on October 1st 1881. of the regis
tered fyes, not continued, was given, and the
resources of the Treasury will be ample to meet
their payment. The transactions concerning the
per cents are. as before stated, not quite COM
pleted. Probably there will be continued in all
about 500, 600 of this loan, leaving to be
paid $39 70S,0 ,050, the remainder Of the loan
having already been paid from the surplus reve-
nues under calls previously made
By this plan the department has been not only
relieved from the embarrassment Of providing
for the payment of the coupon interest, but has
reduced all the six and five per cent loans of the
government to a loan payable at the option OF
the government, and bearing interest at only 3]s
per cent per annum, and this, with the trifling
expense to the government of preparing the new
registered bonds, of paying the actual expenses
of the London agency, at which only three per-
sons have been employed for few weeks, is
suing about $44, SOC. 600 of the continued bonds.
The saving to the government through the con-
ttnuance Of these bonds is very gratifying.
On the q per cents continued the annual saw
ing hereafter in interest will be S. 451 37S on
the per cents assuming 500 600 600 to be con-
tinued, the annual saving will be about 6O00,-
OO0 making total annual saving hereafter in
the interest OF the public debt of SO 451 S7S Is
Meanwhile, from March 1st to October 1st 1881,
when these operations willhave been completed,
there VIII be paid of per cents $24 2l1 400 and
OF per cents $69, $40, $50, making an additional
annual saving in interest Of 81 9l8 716 SO; total
reduction OF the interest charge in seven months
of $15 370O 0O9525.
In other words, the annual interest charge,
which was on March 1st 1881. 976 845, ,937. so;
will be- on October 1st 1881, as nearly as can now
be stated, S61. .475, ,642 25. Th4 saving in inter-
est can hereafter be applied I'd the reduction Of
the debt thus reducing it, Ind the burdens
arising therefrOm more rapidly than hereto
fore. Yours truly, WILixAM WINDOW.
Wall Street To-Day.
NEW YORK, August 1.-Tbe Posts financial
article Gao p. m. edition) says The stock ex-
change markets continue to be quiet In the
early dealings there was an irregular, but a gen.
orally declining market for stocks. prices having
fallen 14a1A per cent, land incllIdIng Gel. 2sl
per cent to SSl4; Reading fell lA to 63; Wabash,