Do Senators consider to what extent the Government determines the rates of interest in the money centres of the country? Not only for itself does it determine, but for others also. Government bonds enjoy preëminence as an investment,—and if the interest is high, they attract the disposable money of the country. Government sixes are worth more than a six per cent. bond of any private corporation or individual, no matter how well secured. Therefore, it is easy to see, so long as we retain our standard at six per cent., so long as we have sixes, will the capital of the country seek these bonds for investment, permanent or temporary, to the detriment of numerous enterprises important to the national development, which are driven to be the stipendiaries of foreign capital. Railroads, especially at the West and South, are sufferers, being sometimes delayed by the difficulty of borrowing money, and sometimes becoming bankrupt from ruinous rates of interest, always in competition with the Government. But what is true of railroads is also true of other enterprises, which are pinched, and even killed, by these exactions in which the Government plays such a part. All are familiar with the recurring appeals for money on bonds even at eight per cent., which is more than can be paid permanently without loss; and even at such a ruinous rate there is difficulty in obtaining the required amount.
Doubtless the excessive interest now demanded is partly due to our fictitious currency, where failed paper is forced upon the market; but beyond this influence is that of our sixes, absorbing disposable capital. I venture to assert, that, if we could at an early day reduce these sixes to fives, there are millions which would be released to seek investment in other securities at six per cent., especially to the relief of the West and South. The reduction of interest to four and a half per cent. and four per cent. would release further millions. A recent incident in the financial history of Massachusetts illustrates the disturbing influence of our sixes. An attempt to obtain a loan in Europe at five per cent. was unsuccessful, chiefly because the National Government offered six per cent.
Therefore, for the sake of public enterprise in its manifold forms, for the sake of that prosperity which depends on human industry, for the sake of manufactures, for the sake of commerce, and especially for the sake of railroads, by which all these are quickened, we must do what we can to reduce the general rate of interest, which is now such a curb on enterprise; and here we must begin with our own bonds. Without any adverse intention, the National Government is a victorious competitor, and the defeated parties are those very enterprises whose success is so important to the country. A competition so destructive should cease. Keeping this before us in the new loan, we shall adopt that form of bond by which the interest will most surely be reduced. Thus, while refunding the national debt, we shall open the way to improvements of all kinds.
This is what I have to say for the present on the refunding propositions of the Committee. Their object is the same as mine. If I differ from them in details, it is because after careful consideration it seems to me that in some particulars their system may be improved.
Proceeding from these pivotal propositions, I find other things where I must again differ. When I first addressed the Senate on this subject, I took occasion to declare my objection to the idea of agencies or offices in the commercial centres of Europe, where interest should be paid. I am not ready to withdraw that objection,—though, if I could be tempted, it would be by the Senator from Ohio [Mr. Sherman], when he held up the prospect of a common money among nations. This is one of the desires of my heart, as it is one of the necessities of civilization; but I fail to see how this aspiration will be promoted by the system proposed,—which must be judged on its own merits, without any such recommendation. It is easy to see that such a system, besides being the beginning of a new policy on the part of the Government, may entail serious embarrassments. Sub-treasuries must be created in foreign capitals, which must be continued so long as the bonds last. Remittances of coin must be semiannual; and should such remittances fail at any time, there must be advances at no little cost to the Government. I cannot imagine any advantage from this new system sufficient to induce us to encounter the possible embarrassments or entanglements which it may cause.
I would not take too much of the time of the Senate, and therefore I pass at once to the proposition of the Committee, being section seven, providing for the very early payment of the national debt.