National Republican. (Washington City (D.C.)) 1872-1888, 1881-01-08

| DE exempt IOreSeT d1l LaAHltOu WlLuin Tic
State. Under the former bills there had been no
| such exemption, and the coupons had been sub
jected to a tax which was deducted from them
| whenever they were presented in payment of pub
lie dues. It also converted the whole of the debt
| principal and interest from one payable in cur
rency to one payablein gold orsterling at London,
at the option Of the creditor. further provision
was that if at any one of the semi-annual periods
| for the payment of interest there should not be
money in the treasury for that purpose it should
be borrowed, or there should be issued certificates
fOrsInS of one dollar and its mutiples, receivable
for all taxes to be hypothecated sold at not less
than Seyenty-fiye cents on the dollar. The fund
| ing was to proceed by installments not less than
sS,0OOGOO by the 1st of January, 1880, and of not
| less than 100000 within each succeeding six
| months. Such were the main features ofthe meas
/ ure as it was perfected and came from the syndi-
cate. That this was
a MERE BROKERS' JOB
was obvious upon its face, and it was soon de
veloped that the peeer creditors were to be afro
ciOuSly victimized. These, as has been said, had
received only the equivalent of two years interest
| in eight years. and on each of their one-hundred-
dollar bonds there was overdue and unpaid thirty
six dollars in interest. This portion of the debt
chiefly held by guardians and other fduciaries,
under provision of our code requiring them to SO
securities had not as general thing been changed
under any of the previous bills. This bill author
lied nanciers TO invest their funds under it with
out the usual inerposition of any court. But mark
how the peeler holder was placed at the mercy of
the syndicate. Anxious to exchange his helpless
bonds for the better provided by this bill, he
naturally applied to- the financial officers
Of the State to have it done. These at
once Informed him Tor her that they
Ia1 IL - tod
and required by Mr.. N1cCulloch's agent, through
whose Office all the funding must be transacted.
Calling on this agent, he was there informed that
his peeler bonds could not be funded unless ac-
companied by conSol bondsin the proportion of two
dollars in conSOls to one in 'peelers Not having
the cOnsOls, northe means orauthority to purchase
them, the 'peeler holder had no recourse but to
hold Oh to his barren bonds or sell them. But who
would buy bonds so unproductiYe, and which had
been put at such disadvantage by the McCulloch
bill? Mr.. McCulloch's agent! He would relieve
the peeler holder of his un1narketable bonds, and
for every one hundred dollars of principal having
upon it accrued and unpaid interest amounting to
thirtysix dollars fndabe at fifty cents ON the dol
lar, (making new capital of one hundred and
eighteen dollars, theagentOfthe syndicates offered
only twentyfOur dollars, ninety-six dollars less
than the fundable value of the security 1t was
monstrous to be sure; but what remedy had the
peeler holder against these brokers into whose
hands the State had delivered him? Into whose
keeping had been confded the honor and honesty
of the public faith? He had to submit and take
what they Offered him or hold On to his
bonds that were worthless in his hands,
and for which otherwise the bill made no
manner of provision. The McCuIloch syn
dictates, meantime, looking forward to this
speculation, had taken advantage of the depres-
sion of cOnSOls-bondS in the market consequent
on the result of State election of 1877 and had
provided themselves with supply of these bonds
10 enable them to proceed III their scheme They
had also provided in their bill that in making up
the first nstallment of eight millions to be funded
by the 1St of January 1885, the accrued interest to
be capitalized at fifty cents in the dollar might be
employed as 'peeler principal, and as the coupons
representing this interest were not receivable for
taxes and six years in arrears, the syndicateS
purchased large amount of them for their pur-
poses at seven to ten cents in the dollar. They
actually did make up their first installment of
eight millions by using this peeler interest to the
amount of about one million dollars.
In looking at this process, with respect to the
holder of the peeler bonds, the question naturally
arises, that if he were not an unwilling
VICTIM OF FORCE,
what is meant by force in this connection? He
was certainly no voluntary party to the arrange
llcllt which eNclulGQ from Il 1dF paTJIClD2-
ton III the funding, which repudiated absolutely
onehalf of his interest, and which gave the syndi-
Gates such complete mastery of his bonds His
consent was not sought, although he was as meri-
tOrouS as any other the creditors of the State
his bonds resting in the faith of the people
being part of the same debt, and calling for the
same rate of interest as the consols" But he was
| marked as McCuloch's game, and when he was
forced to accept twenty-four dollars from
the syndicates for his bond and accrued interest,
fundable at one hundred and eighteen dollars the
syndicates funded the same and sold the new
bond at market rates for S5940-thereby realizing
| investment of twenty-Io~- dollars II i nasv
to see that by a like process with I'M -,,o1o ton
millions of the 'peeler debt the syndicates could
| have melted three million five hundred
| thousand dollars on that alone, without reck
oning their commissions and profits from other
sources in this funding job of which they had the
complete monopoly, without restriction as to per
cent. They were in no sense the agents of the
! State-in effect, the assignees The bill was not
only forcible in the hands of the syndicates as
against the 'peeer creditors but also as against
the consO creditors and the State herself The force
here was principally provided in
THE TAX CERTIFICATES
| heretofore alluded to, whose issue was compul.
! sorry in default of money in the Treasury to meet
| any payment of accrued interest under the bill
and as interest was payable every six months
with default assured in advances at every such pc
Rod, these certificates to be sold at seventy-ive
cents in the dollar, were issuable semi-annually
and redeemed at six months, thus subjecting the
State as long the process possible, to an ex
| action of five and half per cent. per month OF
| SiXty-six and tWo-thirds per cent per annum to
| raise means to pay three per cent. interest upon
the bonds issued under the bill. How much better
| and more direct, how much more compatible with
honesty and fair dealing with the taxpayers, who
at last would bear the burden of the extortion-it
WERE to raise the rate of taxation the necessity for
which this ruinous provision confesses And just
| here we might inquire how long 1t would take by
this process to destroy the vitas of State, long
since in the throeS of bankruptcy, and unable to
make buckle and tongue meet-by deficiency
receiving nigh upon one million of dollars an
| nually? But as measure of forcible persuasion
and speculation they were needed. For 1t is to be
| observed that for the purpose of coercing the
| consideration, who relied upon the sale of his
! tax coupons in the market, and for the further
purpose of specializing in the certificates them
selves, the syndicates would take these tax-certi
Gates at seventy-fve cents on the dollarin payment
Of their interest; and thus equipped they were
well able to compete with the tax-coupons as theil
tax-certifcates were equally valuable in payment
of taxes and other dues to the State, and as the
syndicate could not only afford to sell them al
seventy-fve cents on the dollar, but at any lowel
rate that might be necessary to drive the consol
holders to accept the bill and the terms the syndi
cate choose to offer it. At seventy-fye cents how
ever, they brought the value of the consol coupon
already reduced TO four and half per cent, dowr
to three, the lowest rate borne by the McCuI
loch bonds This the FunderS Tor "Debt-payers"
and brokers designated as feature of"persua
the purposes of force and that it was designed tc
compel the consideration to yieldtothe syndicates
While therefore, the peeler-creditor was horribly
outraged by this bill, it less certainly, though
in less degree and in less direct manner fully
! nrenared TO command the submission of the con