Year: 1878

professions, Derslstently miSfepIeseht thc ut"i-
ings of the Treasury with hiose National
banks which have most efficiently aided
in funding the public debt. But IL
is strange that n gentleman so intelligent as
Mr.. Hewitt should be i'll informed about
these transactions. And it Is also strange that
Republican journals have taken so little pains
to make the matter clear to the public.


Under the funding act. it was provided that
bonds about to be paid by the United States
should be "caIed" three months before the
date fixed for their redemption or the stop
page of interest This WAS absolutely ncees-
snry. The greater part OF the bonds were held
i'm Europe. To stop interest Oh six per cents,
without giving notice to holders of the iuten-
ton of the United States to redeem bonds
of the numbers specified, would have been
a species of Reputation, and would have
severely shaken the public credit. To stop the
interest without giving sufficient notice, s.
that holders could have their bonds presented
for paynIent on the date fixed would have
been scarcely less disreputable and injurious.
Moreover. ms new bonds of lower rate of in
terest had to be sold before calls could be
made with confidence that the money
would be ready for the redemption OF
the l,lds called, insufficient notification to
holders of six per cents would have prevented
them from rcinvestinS their funds in the
bonds bearing n lower rate. This would
have deprived the public credit of support
from most important class of buyers.
Hence the time allowed was not too
great. considering that the formal notiiica-
ton of numbers called was necessarily sent
to all parts of Europe by mail, and that
a corresponding time was also requisite
To enable holders To forward to this
country their old bonds for payment,
and their orders Tor the purchase of new
bonds. Had the time of notice been shorter,
the credit of the country would have
riously suffered, and the funding of the debt
would not have proceeded 40 rapidly.


When new four per cent bonds Were issued, no
longer through the agency OF a Syndicate
but by the more popular method Of direct ap-
peal to the people for their subscriptions, it was
absolutely necessary that the Government
should be prepared to deliver the bonds rs soon
rs the subscribers desired and were ready to
pay for them. But it was also for the inter
est of the Government to provide that, any
subscriber, if holder of six per cent bonds
then called or about 10 be called, should be
permitted to deposit those bonds instead of the
gold in payment for the new bonds. For the
holder of the SIX per cents could have sold
them in open market aud thus obtained the
gold but at the cost of brokers' commits
SION. Such sales would have unduly depressed
the market. Meanwhile, the Government
would have been obliged to pay exactly the
same sum for tho six per cents in the end,
whether to the subscriber for four per
cents, Dr to any buyer of his old bonds, at the
expiration of the call. In order to encOur-
age subscriptions to the four per cents. il
was greatly to the interest Of the Govern
ment to enable holders of the old bonds to
Use them in payment, instead of undergoing
the risk and delay of sale, and the expense of
brokerage Thus 1t was wisely and properly
provided that the SIX per cent bond might be
deposited instead of the actual gold presently
to be drawn for it from the Treasury.


Ar. Hewitt is a business man. He there
fore ought to know that the withdrawal of
actual gold by compelling payment in coin
instead of bonds to be called, would
have caused great pressure i'll the mar
ket Many times more than all the
gold Obtalnable in the country would
have been required, to make payment
for bonds subscribed, for which correspond
ing calls for old bonds had not matured
Repeatedly the funding process would have
been absolutely stopped had this been re-
quired Instead, the Government very prop
erly avoided disturbing the money mar
ket as far as possible. 1t not only
allowed six per cents, but other bonds of the
United States, to be deposited as cOllatera
security for new bonds subscribed And 1t
not only lost not IA cent by this process
since the actual coin. if paid in, must have
been idle IN the Treasury for three months
but it prevented the defeat of its efforts to
fund the debt at lower rate OF interest.


Each of these arrangements was strictly law
fuI. and each was exceedingly beneficial to
the Government, If not absolutely necessary
to the maintenance of its credit and the sue
cess of the funding plan. Each involved
moreover neither loss nor the slightest expense
to the Government, but gave TO each individual
what was his absolute right. II a chose to sub
scribe for fourper cents and deposited gold, it
was necessary for the United States to allow
him interest on them, although the six per
cents to be paid with that gold were
vet to be outstanding and drawing iu-
tcrcst for ninety days. Also, if B. held
six per cents, it was absolutely necessary
to give him due notice that his bonds
were to be redeemed, aud at what time inter
est would cease. and this notice could not
safely be given until the Government had SC
cured the necessary gold by subscriptions to
new bonds. Ont Of these two necessities
came the unavoidable payment of interest