The Portland daily press., 1881-01-05
THE FUNDING BILL.
Doubts About It's Passage.
SOME FEATURES ABOUT THE PRO-
POSED NEW BILL.
1Special to the BOSTON .Iourn all

Especial to the Boston Journ all
WASHINGTON, Jan. 4,-Secretary Sherman
now expresses doubts as to the possibility of
passing any practicable refunding bill in this
Congress. He still adheres to his original po-
sition that he should be given discretion to de-
termine the rate of interest according to the
market, within the maximum of per cent
He is not disposed to raise any technical OBJ
Jections at present, however, as he thinks it
better that some bill, no matter how defective,
should pass the House, and that the Senate
should be trusted to make the proper amend
mentS Doubts as to the possibility of float
ing per cent bond increase. The Treasury
officials generally doubt the ability of the gov
ernment to float such bond at par, and the
credit of the government would be greatly in
Jured should the bond go below par. The me-
chanical difficulties III the way of preparing
the bond are very considerable, and it is not
now expected it will be possible to redeem the
fives at maturity. There will hardly be time to
make the paper, engrave the plates, print and
sell the bonds and give the three months no.
tice before the day of maturity.
Treasury official, commenting upon the
refunding prospects, says that the borrowing
power of the government has never yet reach
ed so favorable point as per cent Today
the prices give an annual average interest
yield to the investor of 81 per cent, and at
their present price the per cent. consuls, pay
3 3l-lOO per cent per annum, and they will
have to sell for more than 1i9 before they will
pay as little as per cent. At the present
writing prices 3 per cents, having the same
time to run as the 4 per cents have, wonld
commend only ninety-four cents. The "Treas-
ury note" feature of the bill, supported by the
committee on ways and means, bears yery it.
tie resemblance to the carefully matured rec
Concentration of the Secretary OF the Treas
ury. The Secretary proposed that Congress
should authorize the issue of four hundred
millions OF Treasury notes, which would be
substantially the same as bonds, inasmuch as
they were to be in both registered and coupon
form, to mature at different periods within
the next ten years, the amount maturing in
any one year not to exceed the sinking fund
for that year. The Secretary would thus have
provided for about three-fourths of the re-
deemable bonds, estimating the straighout re-
demptions during the coming year. with the
anticipated surplus revenue, at about one hun
thorze four hundred millions of three per
cent. notes, redeemable after one year and
payable after ten years, the amount redeemed
in any one year not to exceed forty millions.
The feature OF greatest novelty is contained
in the provision that the particular notes to be
redee med each year are to be determined by
lot. The lottery system has been found to
work we'll in some countries where loans are
frequently placed at discount, and where, in
the annual drawings, the chance of drawing
prize, that is of having his bond draw for
payment at par is no inconsiderable element
in the calculation of the investor. 1t is doubt
full, however, if the mass of the American peo-
pie, and especially of the investor classes.
would appreciate a lottery as feature of ma
tonal finances. The fact that the government
will control the drawings and thus insure fair
ness might, however, be recommended on.
To provide for the remainder of the redeema-
BILE six per cent. bonds the committees bill au-
thorizes an issue of bonds to be redeemable af-
ter twenty years and payable in forty years. It
is generally admitted that the security must
be long one if it is to carry but per cent. in
terest, and this fact weakens faith in the abii
lty OF the government to dispose of so large an
amount of one to ten year three per cents The
failure to make any provision for refunding
would cost the government about fifteen mil.
lions annually, but the passage of an imprac-
ticable refunding measure would, it is feared,
have still more damaging effect, not only
upon the finances of the government, but up
on those of the country at large. Secretary
Sherman's plan possesses sufficient elasticity
to enable the treasury department to command
an ample success. Wall street, almost to
man, is favoring the passage of the Wood re.
funding bill, but Wall street does not wish to
have successful refunding measure passed.
1t owns, or practically owns, large proper
tion of the outstanding fives and SKIES, and
naturally prefers them to bonds bearing low
er interest.