Evening star. [volume] (Washington, D.C.) 1854-1972, 1895-01-29
THE BOND QUESTION
Ex-Secretary Boutwell, Doubts Relief
by Popular Loan.
THE PRESIDENTS AUTHORITY TO issue
He Can Put Out Four or Four-and-
a-Ha|f Per Cent Long Time Bonds.
CONSIDERING THE MATTER

Gov varnor Boutwell, of Massachusetts, who
was for eight years Secretary Of the Treas
ury during the days when the government
was emerging from the crisis of the great
war, commenting on the suggestion that
the government could secure relief by
popular loan. said:
II do not see how the government could
get any gold by popular loan. The gov
ernment might, in that way. obtain current
funds; but the people have no gold The
banks alone have gold, and they will con-
troll their own gold. The only way In
which the government can be certain Of
supply of gold is to provide for that sup
ply by law requiring that at least one
half Of the receipts from customs shall be
payable in gold. That would give the gov
ernment a certain continuing independent
supply of gold. For that supply the gov
ernment would not be dependent upon the
banks, sales of bonds. So long as eX-
listing laws continue, unmodited, 1t Is al
ways possible for any one who desires 10
obtain the treasury gold to secure 1t. The
government has now no gold supply, eX-
cept through purchases. BY requiring that
half at least of customs revenues shall be
paid in gold the government would nave
a certain, if limited, Independent gold rev.
enue. In the absence of some such legis-
silver basis.
Authority for Bonds.
The President in his message hdi-
Gates very clearly, although he does not
state it in exact words, that it is very
much to be doubted whether a bond can be
issued under a resumption act such as has
been issued when the two recent loans of
fifty millions have been negotiated at
rate which will be in accordance with the
dignity of the government, or which shall
show that the credit Of the United States
is at par. The President, in fact, fndorses
the opinions, which the New York bank
ers have expressed who have been mere IN
the last few hours, that it is exceedingly
doubtful whether even at 3 per cent bonds
can be issued III der the provision of the
resumption act. which authorizes the issue
Of ) per cent bond for the maintenance
of the parity.
Much Broader Power.
But the politicians evidently do not un-
derstand that the President has much
broader power than this under existing
law The act Of 1875 under which the 5
per cent ten-year bond is issued gives the
President a broader power. The per cent
bond has been issued because the credit
of the government has been good at 3 per
cent for SO short term bond as the per
cent bond. But the act of 1879 gives au-
thority to the Secretary Of the Treasury to
|
classes of bonds. They are bonds drawing
4 per cent and 4 1-2 per cent, as we'll as
the 5 per cent ten-year bonds. This same
act which gives the President the author
ity to issue bonds at per cent for ten
years authorizes him under the same condi-
tions and without any additional restriction
to issue per cent bond which is redeem
able only in thirty years. The per cent
ffty-year bond under this law will begin
to draw interest from the date of it's issue
and cannot be redeemed at the option of
the government until the expiration of the
thirty-year period. This bond the Presi-
dent has full authority to issue.
Can Issue 4 Per Cent Bonds.
In other words,if the Congress shall 1e-
fuse to accept the suggestions of the Presi
dent, and act in accordance with the recon-
mendations of his message submitted to
Congress, it will be entirely within the
power of the President to ISSUE for the
purposes Of maintaining the parity, and
to secure an adequate gold reserve, the
per cent thirty-year bonds provided for
in the resumption act. These bonds would
be welcomed by the bankers. They would
be eagerly accepted by those who control
practically all the gold which is now in
this country. Moreover, if an issue OF
bonds of this length of time can be made
by the President the currency agitation
would be measuraby prevented; for II
they obtain S1O0,O00,00O or 500,O00,OOO of
per cent thirty-year bonds they are in
position to maintain the existing national
bank circulation in spite Of the agitation
which is current against a national bank
unless that agitation shall take the form
Of law. In other words, the issuance Of 4
per cent thirty-year bonds would estab-
lish the national banking system on
basis which must continue for thirty years
in the absence of legislation which should
abolish or curtail 1t.
The Preside mt Considering the Matter
It is said that the President has been
seriously considering the propriety of is
suing these 4 per cent thirty-year bonds
in the event that the Congress shall fail to
act favorably upon his recommendations
of the message Of yesterday.
1t is known that bankers representing
vast capital, both in this country and in
Europe, who have been in Washington
within the last forty-eight hours, and in
consultation with the President, have
given him to understand that a per cent
thirty-year bond would be easily negotia-
ble by the United States government at
per cent This is the rate which the Con-
gress undoubtedly would be willing to pay,
issuance of this bond from which the dem
Ocrats in Congress would most certainly
shrink. But if the democrats in the two
houses shall refuse to yield to the sug-
gestions of their own party leaders, and to
pass the law which is deemed by him to
be essential they will be compelled to ac-
cept the alternative, which may be the is
sue Of five hundred millions of per cent
thrty-year bonds.
It may be Of interest to silver men to
know that August Belmont, the agent of
the Rothschilds, has spent some time in
ence with the President.