REFUNDING THE NATIONAL DEBT. 



757 



which, for the want of moans, it was thought 

 could not be reimbursed before the years 1829 

 and 1830, the Committee of Ways and Means 

 believed it advisable to provide for that por- 

 tion by a new stock, at a reduced rate of in- 

 terest and payable at those periods. The com- 

 mittee therefore recommended a new loan, or 

 an exchange to the amount of $12,000,000, at 

 a rate of interest not exceeding -1 * per cent., 

 reimbursable in equal portions in the years 

 1829 and 1830. 



An act for this purpose was approved March 

 8, 1825. The first section authorized the Pres- 

 ident to borrow on the credit of the United 

 States a sum not exceeding $12,000,000, at not 

 exceeding 4J per cent, interest, $6,000,000 of 

 the principal to be reimbursable at the plea- 

 sure of the Government at any time after De- 

 cember 31, 1828, and $6,000,000 at any time 

 after December 81, 1829, the money borrowed 

 to be applied to redeeming such part of the 

 six per cent, stock as was reimbursable after 

 January 1, 1826. The Bank of the United 

 States was to be permitted to lend the sum 

 or any part thereof, and the Secretary of the 

 Treasury was authorized to raise the money 

 by selling certificates of stock, not under par. 

 Section 3 proposed a subscription to the amount 

 of $12,000,000 of the six per cent, stock of the 

 year 1813, all subscriptions in this stock to be 

 counted as a part of the $12,000,000 author- 

 ized by the act to be borrowed. For the whole 

 or any part of the sum subscribed in money or 

 six per cents, certificates of stock were to be 

 issued at not exceeding 4 per cent, interest, 

 payable quarterly, and reimbursable as pro- 

 vided for in the first section. The same funds 

 already pledged by law for the payment of the 

 interest and the reimbursement of the princi- 

 pal of the stock which might be redeemed or 

 exchanged, were to remain pledged for pay- 

 ment of the interest and the reimbursement of 

 the principal of the stock created under this 

 act. 



The low rate of interest offered made this 

 loan a failure, as far as borrowing money was 

 concerned, and the amount of stock exchanged 

 under the act was comparatively small. The 

 Secretary of the Treasury, in his report of 

 December 22, 1825, says : " The proper mea- 

 sures were taken to execute this act, but have 

 prevailed only to a limited extent. The opera- 

 tion of exchange, which was first resorted to, 

 took effect to the amount of $1,585,188.88, 

 and this sum, divided into equal parts, forms 

 the two sums that now stand in the general 

 table of the debt as redeemable in the years 

 1829 and 1830, while they have also served to 

 diminish by so much the six per cent, stock of 

 1813. Proposals for the residue of the sum 

 wanted were next issued, but no offers were 

 received. The causes of the failure, it may bo 

 presumed, were the low rate of interest and 

 short periods of redemption held out by the 

 act, in conjunction with an activity in the 

 commercial and manufacturing operations of 



the country affording higher inducements to 

 the investment of capital." 



Under this act stock was issued in the 

 amount of only $1,639,336.16. 



With these transactions the refunding oper- 

 ations of the Government closed, not to be re- 

 newed again for many years. The outstanding 

 debt continued to be reduced by redemptions 

 from the surplus revenues, until in 1836 it was 

 practically extinguished. Subsequently, how- 

 ever, owing to insufficient revenues and the 

 extraordinary expenses caused by the Mexican 

 war, a new debt was incurred, amounting on 

 June 30, 1861, to $90,580,873.72. 



The unprecedented expenses incurred in the 

 war of secession, during the four years from 

 1861 to 1865, were partly met by the imposi- 

 tion of heavy taxes, but largely by the issue 

 of loans bearing various rates of interest and 

 having different periods to run. Some of the 

 earlier loans were redeemed from the proceeds 

 of loans subsequently issued. 



On August 31, 1865, when the debt reached 

 its highest point, the interest-bearing debt was 

 made up of loans bearing interest as follows : 



Four per cents $618,127 98 



Five per cents. 269,175,727 63 



Six per cents 1,281,786,43)9 88 



Seven and three tenths per cents. . 830,000,000 00 



Total interest-bearing debt.... |2,3S1, 580,294 96 



Some of these bonds were paid off, and 

 others were converted into the five-twenty 

 consols of 1865, 1867, and 1868, bearing 6 per 

 cent, interest. 



On March 18, 1869, Congress passed an act 

 to strengthen the public credit, in which it is 

 declared that " the faith of the United States 

 is solemnly pledged to payment in coin or its 

 equivalent of all its interest-bearing obliga- 

 tions, except in cases where the law authoriz- 

 ing their issue has expressly provided that the 

 same may be paid in lawful money or other 

 currency than gold and silver ; but none of 

 such interest-bearing obligations not already 

 due should be redeemed or paid before matu- 

 rity, unless at such, time United States notes 

 should be convertible into coin at the option 

 of the holder, or unless at such time bonds of 

 the United States bearing a lower rate of in- 

 terest than the bonds to be redeemed could be 

 sold at par in coin." This act had the effect of 

 improving the credit of the country, and, as it 

 was believed that the outstanding debt might 

 be refunded into bonds bearing a lower rate of 

 interest, the matter was thoroughly discussed 

 in the succeeding Congress, and an act for the 

 purpose was approved July 14, 1870, entitled 

 " An act to authorize the refunding of the na- 

 tional debt," of which the following is a copy : 



Be it enacted by the Senate and House of Renrett*- 

 tatices of the United State* of America in Vongret* 

 assembled^ That the Secretary of the Treasury is here- 

 by authorized to issue, in a sum or sums not exceed- 

 ing in the aggregate two hundred million dollars, 

 coupon or registered bonds of the United States, in 

 such form as be may prescribe, and of denominations 

 of fifty dollars, or some multiple of that sum, redeem- 



