The daily gazette., 1881-02-16
SECOND EDITION
THE FUNDING BILL.

DEBATE IN THE sENATE-No FINAT 7
ACTION TAKEN ON THE MEAsURE-
SPEECH OF MR.. BAYARD.
WASHINGTON, Feb. 15.-In the Sen
ate to-day, on motion of Mr.. Bayard, o.
Delaware, the pending order was post.
poned, and the Senate took up the
House Funding bill.
Mr.. Bayard (dem.,) of Del, suggest.
ed several verbal corrections of actual
errors and misprints, which were made
causing The bill to conform to the inten.
| tlon OF the committee in reporting it.
Calling attention to the proposition OF
the Secretary of the Treasury for a 3. .65
loan, redeemable after fifteen years. and
that OF the bill as 1t came from The
House fer 8 per cent $40 bond he said
the provision for the 81 per cent 500
bonds reported from the Senate Com
mlttee was modification of both of
these, while the amount of the issues
remained as recommended by the Sec
retary and The Hnnse. As the term
"o-20's" applicable TO this loan was faV-
oraDly known to the country and one to
which it had become accustomed, this
feature alone was regarded as tending
to enhance the probability OF the popu-
lar success of the loan. After referring
to the exceptionally favorable conditions
of The times for the success of the loan
Mr.. Bayard proceeded TO detail the rea-
sons Influencing the committee's action
IN the choice of the rate reported. He
said this choice was made because the
committee believed the weight Of au-
thorlty was III favor OF nearing no
risk OF failure in the negotiation of the
loan. The feature of PEI manent ma
tional debt possessed by the English
consols did not apply TO our securities,
and yet during the last fifty years the
loans Of Great British had touched par,
he believed, but twice. The rate on the
consols during that period had varied
between and 3t-he was speaking
now OF tho return on their market value
and sometimes they had paid less than
3 to the investor, but these were the ex-
treme figures. 1t might be said that IN
vestors in consols during the last quar-
ter OF century had received rather
more than 81 per cent for their money.
As eorroborative of this reference was
here made TO recent statement in the
London Economist and to tables show
ing also the market rate both of present
sale and original negotiation by France
aud Germany which disclosed that for
this period investment in the bonds and
securities of the leading commercial
nations of the world had paid more than
three and half per cent. Mr.. Bayard
also referred to nuctuation In the price
of English consols from October, 1928,
to the present time of more than 10 per
cent, they having sold as low as 90 in
1853 and as high as par in 1880. These
offered investors not simply permanence
but security that could be made avail
able at almost any day, and notwith-
Standing these two elements so favora-
BILE to low rate Of interest the consols
had not been maintained at par.
Money will be cheap where conf
dence is abundant. The demands fol
capital all over the country in legiti.
mate enterprises win make a govern
ment loan at 81 equitably low enough
Our own country being younger and
more progressive than European coun-
tries higher rate can be had here,
the average rate being Ave per cent =,
and in the newly settled portions six
or seven per cent. 1t will not do to
make an attempt to float a three per
cent loan and fail. Why should We
suggest ripple upon the placid
stream of prosperity on which the
country is now floating? The dispo-
sition of our own people to own them
and the requirements Of banking re-
lating to the deposit of bonds would
create a market for the bonds in the
United States.
VALUE OF THE FOUR PER CENTS.
In reply to the argument in favor of
the lower rate that the 4 per cents
were now at 81 IL and 81 13 in the
market, and that if 4 per cent was
worth that three per cent was worth
par, Mr.. Bayard said the fact itself
was in great degree owing to the
clamor and threat of issuing three
per cent and compelling the banks to
take them as the basis of their circula-
tion. He did not think it business
like or reasonable to take the present
exalted price OF the four per cents as
basis for calculation as TO the price Of
the new issue.
SECURITY FOR BANK CIRCULATION.
Under the fifth section, which the
Senate Committee had stricken out, the
new bonds were TO be the only ones
receivable as security for national bank
circulation and the banks we're to be
compelled to exchange hlgherrates bonds
for those now issued, the Intention there
by being to make market for some
$269, 100000 Of the latter. In the opinion
of the committee an exhibition of arbi
trary power by the government over
matters touching its credit has never
proved of value. To pass from the vol
untary to the involu itary system would
suggest distrust and want of credit and
this compulsory action would involve
an interference with the rights of con-
tract and properly in the stockholders
of banks created by an act of Congress.
1t would be contrary to the spirit of our
policy and government to compel re-
ception of loans by any class of people.
The committees amendment made the
bonds receivable, but not compulsorily
so by the bank.
TREASURY NOTES.
Then in the first section 100000, 900
OF Treasury notes, payable in ten years,
with government option to buy in one
year, were provided for, the rate not to
exceed 81. If the market proved favor
BILE there would be nothing to prevent
the sale at 3 or 2f per cent. These
Treasury notes are analogous in their
use to what are termed exchequer bills
in the English system. The substitu-