Year: 1871

SECRETARY BOUIWE ELL AMI 1liE DIN


DICATE.


TIE ARGUMENTS IN TIE sECRETARYs DEFENSE


HOW THEY ARE ANswERED-PRACTICAL


WORKING OF TIE FUNDING OPERATION.


IBY TELEGRAPH TO THR TRIBUNE.l


WILMINGTON. Nov 20.-A prominent Senator,
defending Secretary Boutwes contract with the syndi-
cate for the disposal Of the per cent bonds said to-day
that he believed would meet with the approval OF
Congress- and that while there might be objections
urged by people who scke for strict Interpretation
Of the law the fact that the bonds have been so and
that the Treasury will thereby per cent interest
on saoOooOoO of the debt, will be taken as sunicient
justification for any latitude Mr. Boutwell, may nave
given himself in carrying out the law nc ui'uei o".
that the Secretary not required 10 make in"eu"o
use of money obtained by the sale OF ne new pohoS
to purchase and cancel the old ones, and that some
margin f time necessary to effect the purchase III
tho mean time II the money had not been allowed 10
remain In the hands Of the banks forming the syndcae
It would have lain idle in the Treasury The treasury
would not have been the ganer, ana there was
no allowing the Syndicate to Keep the money or
20 days inducemcnt for them to suDserDe iof o
loan.


This s substantially the position taken by the secre
tary in conversation yesterday. He ignores the synd
cate and SAYS that tho transactions OF tho Department.
In connection with the loan, were with tho DahHE'
as such. Those that subscribed for tho loan were adc
depostarcs Of public money, and allowed to retain lot
90 days tho amount OF their subscriptions, anu rccee
interest for that period the bonds they purchased
The Secretary does not consider this days interest as
part expense Of dspOsng Of the loan within the
meaning Of the law


The Secretarys critics say, in reply to these argi'
mcnts that the debt was actually increased for the
period OF 90 days to tho amount OF e3oMOOOo that'
during that PERIOD tho Treasury was obliged, by the
with the Syndicate to interest OH that
amount Of the five per cent bonds. and also on inc
same amount of old six per cent bonds which should
have been Cancelled forthwith that this was the very d
OF Increase that the law intended to prohibit a'
does especially prohibit; and that this pay ymeht of
double interest, indnccment to the Syndicate 10
take the Ioan virtually part Of the expense OF dis
posng of tho bonds, and illegal the law specifying
that the expense should not exceed one half OF one per
cent whereas the Secretary paid that SUN and the three
months interest beside.


The practical working Of the funding operation is rep
resented TO be as follows The Syndicate certify 10 the
Treasury that they have deposited with themselves com
for the purchase Of the bonds they forward to the
Treasury II like amount of old hvetwentics as security
for the deposit the bonds at once placcdo ther
credit OF the end Of 90 days the fyewentes are can
cclc they receive tho three months interest that has
accrued pou them ard at the time get their new
bonds up N which three months interest has also ac
crucd No amount Of reasoning, 1t is urged, can make
this transaction any thing else than TEMPORARY Increase
OF the bonded debt.