Amador ledger., 1900-09-07
extended. d..........
.S1,046, 1920


Total. .................$1 81 ,046, ,010, 1920
On account of the Spanish war, the
trouble in the Philippines and a desire
to take off some of the forms of in
great part of this debt can be immedi-
ately paid, though the 2 per cent ex-
tended bonds, amounting to $25, 1864, 400
have either been paid or are in process
Of payment and will soon cease to be a
part of the national debt.
The per cent bonds payable in 1925,
are so desirable a form of investment
and command such premium that
there was no hope of fefunding them
on favorable basis and so they were
omitted from the provisions of the
refunding law.
The provisions of the law therefore
apply to the 4 per cents payable in 1907,
the per cents payable in 1904 and the
per cents which might have been paid
in 1893 if it had not been for the war,
amounting in all, on the date above
given, to 1857, ,331 ,02O
But all the above bonds are at a very
considerable premium and the holders
would not exchange them for the new 2
per cent bonds without some compen-
sating advantage.
One of the advantages offered is that
the old bonds were payable in "coin,'
which would enable silver secretary
Of the treasury to iniure the national
credit very seriously by enforcing their
payment in silver, ,depreciating the value
Of the silver dollar, while the new bonds
are payable in 'gold coin of the present
standard of value
Another, and the chief inducement
authorized by the bill, is that the bonds
outstanding were to be received at their
actual present worth computed on a
basis of IA per cent interest per an
mum, bond being given for bond and
the difference, or worth above the face
value, to be paid in cash. This was
perfectly right because the old bonds,
drawing much higher rate of interest
than the new, are worth more.
Still another inducement offered was
per cent bonds as security for their
circulation. This was in the form of q
reduction i'll taxation upon circulation,
based upon such bonds, of one-fourth
of one per cent.
If all the bonds which are given the
right of exchange under this law were
to be refunded into the new bonds,
which is too much to expect, the saving
to the government in the final discharge
of the national debt would be $22, $685.
500, a very considerable amount.
Enough bonds have been refunded to
effect saving in interest of between
and 10 millions of dollars.
This is very comfortable saving and
there is no good reason why a nation
that has the best credit in the world
should not have the full benefit of that
credit in the shape of the lowest in
terest, just what this refunding meas
ure has afforded.
Mr.. Bryan's convention condemned
this refunding proposition on the ground
that it "fastens upon the taxpayers q
perpetual and growing debt for the
benefit of the banks"
The falsity of this contention will be
evident to any sensible person upon the
reflection that not all the bonds are at all
likely to be refunded and even if they
are, and although the new bonds are to
run 80 years, the government can 60 IN
to the market at any time it has sur
plus money in the treasury and buy
the bonds at or very near par and so
pay and cancel them; and it is extreme
~ unlikely that any bond bearing only
Q per cent interest per annum will COM
znand premium.
The reason for allowing the bonds to
run 30 years was that only long time
bond can be sold at so low rate of in
terest and it is not likely that the gov
ernment will want to pay them before
the 80 years have expired. yet can do so
if it desires by buying them in the mar
ket as above explained.
The time to refund Indebtedness at
low rates of interest is when it can be
done and in seizing favorably oppor-
tunity for its refunding measure con-
gress has done wisely.
Another important result attained is
that the rate paid by the government
has reflex action upon the general in
terest rate and low government rate
gives to those who want to borrow cheap
money and plenty of it, and so strips
the ttmoney power" of its chance to
harm by exacting usurious interest.