New-York tribune., 1884-01-11
THE SINKING FUND EXPLAINED.

Secretary Folgers report concerning the Sink
ing Fund sheds needed light on a subject which
some Democratic fnancicrs have labored to
darken. At bottom the case is an exceedingly
simple one. A Democratic rebellion had made
it necessary for the Nation to borrow money
In order to borrow, the Government pledged Its
faith to establish and maintain sinking fund
sufficient to pay off the debt in a reasonable
time. This fund, it was promised, should be
increased each year by the purchase or pay
ment of bonds amounting to one per cent or the
public debt, and, in addition, by the interest on
all bonds previously redeemed for that fund.
This year, for example, there must be redeemed
for the fund bonds amounting to L per cent
of s., 1,8S4,171, ,728, the principal Of the public
debt at the beginning of the year. In addition
there must be applied to the fund sum equal
to the interest on all bonds previously pur-
chased for it, which appears from the an
nual report Up. pa to be %26, ,2O5,S96,
and by the end of the year there will
also be a balance of interest on bonds redeemed
during the year. Thus, the Secretary computes
that $45, ,S16,741 will be required for the fund
this year, and a gradually increasing sum each
wear. amounting in 1904 to S7S, ,9S9, 1O6. Dur
y
the fund was SAG, G,321 ,5G4 according to the
report just sent to Congress, and for the whole
time from 1862 to the close of the fiscal year
1883, 75O,225,O3O.
But during that time the Nation has paid
much larger part of its debt. Though it could
not carry out the sinking fund provisions for
few years, it began in 1869 and soon redeemed
more of the debt than strict compliance with
the act from the first would have required. Ac-
cordng to Secretary Folgers computation, the
debt less cash in the Treasury has been re-
duccd 81 POS, $40, 1864, or about S45j, 100000
more than the sinking act alone would
have required. a more correct test, however,
would be the actual reduction in the outstanding
principal of the debt, for the cash now in the
Treasury cannot yet be considered as having
been already applied to the payment Of indebt-
cdneSs. The debt amounted to -, S4l, ,649,62I
in 1865. and was reduced 5000 477,S98 atthe
close of the last fiscal year-about $2lO 100000
more than the act required.
1t is now proposed and has been by many
members of Congress at different times, TO treat
the past excess in redemption of debt as sutli-
cient compliance with the act for some years to
come, Having already paid of the debt
500. 900, ,OO0 more than Il strict compliance
with the act would have required, it IS SAID
that we may properly pay nothing for about
four wears, during which, upon Mr. Folgers
computation, the fund would require an addi-
ton of about S1S7 200, 900, and should even
then have done about $23,OOO,OO better III
1887 than the act required. The IAN
gpo,,a of the act, however does not sustain this
view; it requires 1.-The purchase or payment OF
zone per centum of the entire debt OF the
"Iruitcd States, 10 be mddc ritkiR each fiscal
"year, which is to be set apart as sinking
"fund." This section 1854 Revised Statutes)
is explicit, but the one which provides for pay
mcnt of interest on bonds previously purchased
is less so; il says (Section 369G). shall be APP
"plicd as the Secretary of the Treasury may
" from time to time direct, to the payment OF
''the public debt" Apparently the strict letter
of the law would require the payment of one
per cent of the principal each ycar-this year
about SIS ,S41 ,OOO-but would leave the time
Of applying the interest Oh bonds previously