Year: 1871

Cent Bonds-What is Our Proper Finan-


cial PolIcys


The House Of Representatives has passed


hundred millions of five per cent bonds, with


an amendment that the total amount Of bonds


shall not be increased. The object Of the


amendment must be apparent to every one.


1t is to prevent the increase of the debt


through exchanging the present six per cent


bonds for five per cent ones. We suppose


there will be no difficulty in passing such an


amendment In the Senate. In that case the


bill will become law. Then it will remain to


be seen If the Secretary Of the Treasury can


exchange so large portion Of the debt-fve


hundred millions-from q six to q five


per cent security at par. Of course he


must offer inducements. What are these


to be? The government can pay the debt off


as 1t natures at par in gold. and, instead Of


doing that, it can offer to the bondholders five


per cent long time bonds. Will the public
| creditors accept these new securities in place
| of the old ones at par? That is the question.
| It is an experiment, and there is no harm in
letting Secretary Boutwell, try what he can do.
Another plan is to raise loan In the markets
of the world at Ave per cent, either for the
whole of the five hundred millions or for such
a portion of It as can be foated, and if this
should be taken at par in gold the Secretary
could redeem the outstanding six per cents
debt


But, whatever may or can be done in the
| way of Transforming the debt and saving
| interest on 1t, the paramount question now is
| to reduce taxation and to relieve the country
of the burdens which SO much depress industry
and paralyze trade; and to do this, while con-
solidating the debt in long time securities,
would help Mr.. Boutwell, In his efforts to
change the debt from six per cent to five
per cent interest one. We want no large
| surplus in the Treasury, and only a
| small sinking fund for awhile. When
the six hundred horsemen charged
the Russian guns at Balaklava Bosquet, the
| illustrious French general, said, as he gazed
on them going to certain but useless destruc-
ton, 'It is magnificent but it is not war;"
So we, when we observe our gallant politicians
and people fitting full at the windmill of our
national debt with big, unmanageable sur
pluses, are compelled to cry, 'Tt is magnif-
cent, but it is not finance" In truth, the
spirit in which we have gone to work hitherto
with our revenue system and our public debt
has been not that Of men Of business, hard
headed practitioners, with ledgers and interest
tables, but Of pure and simple-alas! only too
simple-knight-erra When we had once
got the debt on our shoulders the first impulse
was to throw it off at all costs and hazards,
without stopping to consider whether the pro-
cess might not cost more than it was worth.
The first stage in the affair was that movement
to pay it off by subscription, as though the
republic were sort Of broken-down old pau
per, for whom the hat must without delay be
sent round. That broke down altogether. 1t
was too absurd miscalculation of expediency
and of profit and loss. But we are not pre-
pared to say that the next steps were much
wiser.


Inpoint offact they have been steps only, and
have not amounted to policy, and have been
due to the popular horror of such thing as
national debt existing at all. The bare fact of
the burden seemed to place us in uncomforta-
BILE juxtaposition with the decaying, wornout
States Of the Old World. And it was natural
and praiseworthy, perhaps, however anan-
cially unreasoning, that we should have risen in
insurrection against it. 1t is now, however,
high time that we stop short and think the
matter over carefully.


We have struck the right key on this SUBJ
ject in our columns, and we earnestly
invite the attention Of our politicians and
the public to our observations We par
tcularly insist upon the fact so strangely over
looked hitherto, that by the plan of raising
vast surpluses to pay off debt prematurely we
are not diminishing the burdens of the people
though we may decrease the nominal figure Of
the debt. Nay, we are by that process vir-
tually increasing the debt We increase by
that methed the sum which government owes
| the people, if the account were properly
| kept or could be; for this extra sum is capi-


tai taken from them and loaned to government
under the pressure of the tax gatherer. Only,


unhappily, this disguised loan will never be
palO on I'LL Tue Gay OF Judgment, ana the prOnt


and loss account of the people who inhabit the


United States is the worse forever by the diff
ference between the value of the money to
them in their business and the figure of value
at which the public debt stands.


| Now, we believe this difference to be about


two to one. Speaking roughly the public
| debt of the Union is now five per cent obli-


gation-that is to say, the bonds of the


republic sell now in the market for sum
which brings about five per cent return. In


point of fact it is somewhat less, but the


difference is in favor of our argument; so