New-York tribune., 1900-01-25
THE REFUNDING PRor1sL0N.


There has been a quite natural desire on the
part of supporters of the Senate Refunding bill
TO have 1t supposed that practical bankers and
financiers are hearty and united in approving it.
On the contrary, it has been the fact that men
whose experience in and knowledge of such
matters are unsurpassed believe that the gold
standard bill would be safer wiser and much
more likely to pass if strictly confined to the
enactment of the gold standard One of them
whose eminent qualifications for correct judg-
ment regarding plans proposed would be every
where recognized if the use Of his name were
permitted, writes to urge that the measure
should be confined to the gold standard and re-
serve provisions. "and should not be embar-
rassed by attempting anything else" He adds
statement which seems of the highest impor-
tance 10 members of Congress, that the refund
ing provision lis premature, and its enactment
might prove great calamity" and that IF the
= per cent law were enacted to-day it would be
practically dead letter as to refunding ex-
"cept TO the extent that" some National banks
might desire to take advantage of its provisions
But members of Congress assuredly do not wish
to pass the bill in that form if its refundng pro-
vision is to prove of no use or benefit to any
body excepting TO some of the banks
1t should be remembered that the form of pro-
vision for refunding is not at all like that under
which previous reductions in the interest on
public debt have been effected. Every success
Iul refunding operation has been based upon
acts authorizing the issue of bonds bearing not
exceeding per cent interest" or mot exceeding
3 per cent interest" and leaving the Secretary
of the Treasury to do as much better for the
country as he could under conditions existing
But here for the first time there is proposed
measure for refunding in which no discretion is
left to the Secretary, and the only bonds author
lied bear lower rate than any ever placed by
the United States, by Great Britain or by any
other nation. This peculiar feature of the bill
suggests at the outset that no exchange of old
bonds for new can well be expected except by
banks which may wish 10 issue circulation on
cheaper bonds. If the intention were really to
refund the great body of bonds not held by the
banks one would suppose that the form of
authorization would have been that which has
proved successful before, and particularly that
the Treasury would not be required to issue
bonds at lower rate of interest than this or
any other nation has yet been able to establish.
The peril not only for the country but for
congressman also it may be urged with all
frankness, lies in the probability that bonds
bearing only per cent interest may not COM
mand par in the market. There are many bank
ers besides the one of great experience already
quoted who believe that , per cent bonds could
not now be placed excepting as a basis for more
bank note circulation. But if such bonds should
be issued and banks should presently wish to re-
tire part of their circulation, as some are doing
all the time, and TO realize on their bonds how
would it help the Nation to see its bonds selling
below par? If difficulties with foreign Powers
should arise, such as must be considered pos
sible in view of the new relations of this Nation
to others, can there be any assurance that the
Nations credit will not at once be impaired by
a fall of per cent bonds below par? Should
such difficulties threaten when the bonds now
outstanding approach maturity, in 1904 or 1907,
what discredit for the country would result
from the inability to borrow on per cent bonds
and the necessity of authorizing a new issue at
a higher rate
There is no excuse of urgent necessity for
fastening this foreign and questionable feature
upon gold standard bill The bonds outstand-
ing can be much more cheaply redeemed when
they fall due, without paying bonus in cash to
induce holders to surrender them now, provided
the credit of the country should then be good
enough TO warrant a per cent issue If it
should not then be good enough for the floating
of bonds at that extreme low rate an act in the
usual form giving discretionary power to the
Secretary would meet the difficulty without the
discredit which would attend failure to refund
on the terms now proposed. No reason appears
10 exist for attaching this feature TO a gold
standard bill which is decidedly stronger with
out It, unless 1t be desire to give some National
Danks cash bonus for bonds they now have on
deposit, While permitting them to continue their
circulation on more advantageous terms. Can
1t be fairly considered wise for Senators and
Representatives TO stake both National and per
sohal interests on proposal so unnecessary and
so liable TO involve danger?