762 



REFUNDING THE NATIONAL DEBT. 



convertible at any time, with accrued interest, 

 into the four per cent, bonds described in the 

 refunding act the money received to be ap- 

 plied only in the payment of bonds bearing in- 

 terest at a rate not less than 5 per cent. 



Apprehensions that there would be difficulty 

 in settlements on the 1st of April, 1879, for 

 the large amount of bonds which had been 

 subscribed for in January, caused a temporary 

 depreciation in the price of the bonds and cer- 

 tificates. It was believed, however, that this 

 depreciation was but temporary, and that, 

 when it was found that the settlements could 

 be made without difficulty, the bonds and cer- 

 tificates would again appreciate in value. To 

 secure to the Government the advantage of 

 the appreciation, Secretary Sherman on March 

 4, 1879, gave notice that when the outstand- 

 ing five-twenty six per cent, bonds of the 

 United States should be covered by subscrip- 

 tions to the four per cent, consols of 1907, 

 the latter would be withdrawn from sale un- 

 der the terms proposed in the Department's 

 circular of January 1, 1879, and the terms 

 stated in the contract of January 21, 1879. 



As soon as the 1st of April passed, and 

 without embarrassment in the settlement of 

 balances, subscriptions poured in rapidly. On 

 the 4th of that month one subscription was 

 received for $40,000,000. This was followed 

 by a subscription of $10,000,000, another of 

 $2,000,000, two more of $25,000,000 each, and 

 another of $30,000,000, together with others 

 of less amounts. Of these, $59,565,700 were 

 accepted, and $60,919,800, which came too late, 

 were rejected, and further sales ceased. 



The policy of withdrawing further sales of 

 the bonds under the offer of January 1st proved 

 to be a wise one ; and immediately after the 

 suspension of sales of certificates and bonds on 

 April 4th, as above stated, steps were taken with 

 a view of again offering them at an advance 

 upon their previous price. On April 16th 

 there were offered to the public $150,000,000 

 of the four per cents at a premium of one half 

 of one per cent., and in addition thereto about 

 $45,000,000 of refunding certificates, the pro- 

 ceeds of the whole being sufficient to redeem 

 the outstanding ten-forty bonds, which were all 

 the bonds redeemable at that time. The four 

 per cents were also offered in exchange for the 

 ten-forties, as authorized by the act of January 

 25, 1879. Before the close of the day sub- 

 scriptions under the new terms for $2,000,000 

 of the bonds offered were received. The next 

 day came one for $10,000,000, followed by oth- 

 ers of $1,000,000, $2,000,000, and $4,000,000 

 respectively, and others for smaller amounts ; 

 and just before the close of business on that day, 

 a subscription was received from one bank, rep- 

 resenting a large number of private bankers in 

 New York, for the entire amount of bonds 

 offered and $40,000,000 of the refunding cer- 

 tificates. Subscriptions were received and ac- 

 cepted for $149,389,650, and received and de- 

 clined for $34,755,000. Exchanges were also 



made to the amount of $2,089,500. The sub- 

 scription of $40,000,000 for the refunding cer- 

 tificates was also declined, the evident intent 

 of the law being that they should be distrib- 

 uted as far as practicable among the people. 

 To bring the certificates within the reach of 

 small investors, on and after April 18th their 

 sale was restricted to Independent Treasury 

 officers and public officers bonded for that pur- 

 pose, and to sums not exceeding $100 at one 

 time. In response to the invitation to become 

 depositaries for the sale of these certificates, 

 509 public officers and 76 national banks were 

 designated for the purpose, and engaged in the 

 sale. 



The sale of the certificates was completed in 

 June, 1879, and the proceeds were applied to 

 the redemption of the ten-forty bonds. The 

 certificates were sold as follows: 



By public officers designated as depositaries $28,569,200 



By national banks 1,197,670 



By Independent Treasury officers 10,245,880 



In all $40,012,750 



Thus was accomplished the refunding of all 

 the bonds which were then redeemable, with- 

 out the loss of a dollar, and to the great ad- 

 vantage of the country. 



The entire amount of four and a half per 

 cent, bonds issued by Secretary Sherman for 

 refunding purposes has been $135,000,000; of 

 four per cent, bonds and refunding certificates, 

 $710,345,950 ; making a total of $845,345,950 ; 

 for which were redeemed of six per cent, 

 bonds $651,195,700, and of five per cent, bonds 

 $194,150,250, resulting in an annual saving in 

 the interest charge of $14,290,416.50. 



The following table shows all the transac- 

 tions under the refunding acts since 1870, 

 with the amount of annual interest charge 

 saved thereon : 



In place of the above bonds there have been 

 issued bonds bearing interest as follows : 



