Mr. VANW NKLE. I propose to say al cent. (per annum may be legally paid and receive, if previously agreed upon, and efforts are constantly making in other States to repeal the usury laws, not, of course, in order to reduce, but to permit an increase of, the rate of interest. It is truethat on Wall street the rate of interest is sometimes regulated by the character of the security; but this has very little effect in the younger States, where the capital afloat is disproportioned to the business enter rise everywhere manifested; where property is always increasing in value, and where. generally, the security is more readily found than the money. In short, Mr. PreSident, it may be confidently asserted that almost everywhere throughout the country the use of money is absolutely worth considerably more than 5%. perannum. Ioffer this fact, for such fbelieve it to be, to the Senfrom Ohio as a satisfactory explanation of what he seemed inclined to think a reflection on our country, namely, that our Government cannot negotiate its loans as cheaply as those of Europe. It should rather be considered, in view of the fact that so large a proortion of the profits of every year become hxed‘ instead of active capital in the next, an evidence of the enterprise of our people and the high degree of prosperity they have attained. But, sir, I presume the friends of this measurehardly expect that any considerable portion of this loan will be taken by the classes to whom I have alluded. It is, therefore, necessary to inquire whether the loan proposed by the bill before us resents such inducements to capitalists an investors as will insure its being taken by them at par, the Secretary being for bidden to negotiate any of the bonds at less than their face. The 1st observable feature in which this differs from former loans is, that it is not redeemable at the pleasure of the Government after 5 or ten years, but is absolutely irre deemable for 30 years, or for whatever pe riod it is originall issued. It may be a new idea to our frien s in neighborhoods remote from the stock exchanges that the value of a bond is enhanced by postponing its time of payment, if the security is satisfactory; but there are doubtless among them some holders of 5 twenties and 7 thirties who will soon experience the inconvenience of exchanging securities with which they are satisfied and probably more than satisfied for others they may not deem equally advantageous, or at all events of seeking new investments of their funds. They will thus practically learn why those whose object is permanent and safe investment, prefer the longer loans, and will, perhaps, cease to be surprised when they see the 6es of‘81 quoted at some 7%. above the 5 twenties. I can see no objection to the 30 years proposed as a maximum in the present case. A ve%. bond is not likely to remain so far above par as to prevent its purchase at suitable o portunities with the funds provided for the redemption of the debt. Sue opportunities will frequent] be afforded by the in evitable fluctuations o the money market, and it by no means impu us the credit of the government to say that there will be periods when these live%. bonds can be purchased even below par. It is not long since the 7 thirties, with their very high rate of interest, were below par in currency. Previous to the war, when the Government made loans, its ability to redeem them within a very short time appeared so certain that it was only wisdom to reserve the right to pay them off at an early day. But circumstances are now very differ ent. The most sanguine cannot expect that our heavy debt can, in any possible contingency, be wholly extinguished within the time limited for the redemption of these bonds, and I think there will be no difficulty in purchasing in the market on fair terms, probably at.par or under, an amount of the bonds equal to the comparatively small sum we can annually approprinte for their redemption. I do not With the Senfrom Ohio anticipate that the “good time coming” which he promises, when we can negotiate a 4%; loan. will reach us within a generation. On the contrary I entertain the inpifliifli dillulgkwflmpfl I as;, have not sufficiently investigated the subject to warrant me in giving itexpression, that the rate of interest or value of money is gradually but steadily rising on the other side of the Water, and this notwithstanding the immensely increased production of gold. Another and a very important inducement to invest in the proposed oan, is the exemption of the bonds, as declared by the bill, from all tnxation national, State, and municipal. I postpone what l have to say on the new cat ure exem ah the income derived from these bonds, until I have considered the general subject. We were correctly told by the Senator in charge of the bill, on the unimpeachable authorit of repeated decisions of the Supreme Court, tist if the clause excm ting from taxation by State authority bon s issued by the U.S. was omitted from the law, the States could not legally tax them. The most liberal construction that could be given to the national Constitution, with any show of reason, would not ive to a State the right, by its legislation or otherwise, to controlor im ode in any way the legitimate operations of the General Government. The Senfrom Ohio suliiciently showed how the constitutional right of that Government “to borrow money” might be rendered nugatory by State taxation of the securities issued for its loans. It does not authorize the complaint of injustice that congress, in order to give an explicit assurance of an already existing exemption to the national creditors, has declared it in its laws. But it is said that Congress has the power to give authority to the States to tax the national securities. This was intimated by the Senfrom Maine, and assented to by the Senfrom Ohio. If it is meant by this that congress may authorize the States to tax its securities to an unlimited extent, I beg leave to dissent from the opinion; for to do this would be to invest the States with authority to control the exercise by Congress of a power specifically delegated, and I am inclined to think that to concede the authority to an extent, however limited, is open to the same objection. What cannot be done in gross cannot be done in par cels; and if there is impropriety in alnr e concession, it is only lessened, not avoi ed, by limiting it. Leaving these considerations, Mr. President, to those more able to grapple with them, I propose to look at this exemption in a practical point ofview. So far as the measure before us is concerned, no exemption from taxation of an additional amount of honds‘is proposed. We are simply about to change the form of our debt, not to increase it. the securities we propose to redeem with the proceeds of the new loan are now free from taxation, and this is declared by the laws authorizing their issue. It is now, therefore, a contract with the holders of those securities, which we cannot with honor annnl. If the new loan is not authorized or cannot be effected, the same amount of capital or property remains exempt from taxation as would be if the proposed loan were carried into full effect. There is, Mr. President, in some quarters a growing discontent, to use no stronger term, with this exemption of the national securities from taxation under State authority, the cause of which I do not fully comprehend. The existing loans were made when the necessities of the Government were great, and, to all appearance, the means of supplying them dilficult to be procured. Congress was unquestionably justified in offering almost any inducement to secure these means. This exemption, among Others, was offered, and proved very success ful, and thus became a contract with the holders of the now outstanding securities. It is, of course, too late to make the objection, and if there are any who are disposed to advise a breach of the national faith they can have no adequate conception of the character or of the amount of evil such a course would inevitably inflict n on the country. The iscontent to which I have alluded is, I am informed, founded on the withdrawal of the large amount of capital constituting the national debt from State taxation, thus do priving the States while the debt continues of a e it imate and important source of revenue. T 1is complaint, I understand, comes chiefly from the agricultural States. If so I begto state that the case is not quite so bad as they would have it appear. Congress has abstained since 1861 from laying any tax upon land. It is true that this is chiefly due to the fact that the constitutional mode of levying a land or direct tax has proved very unequal, and therefore unjust in its operation. It hardly mends the matter that slavery has been abolished, as that only adds 2/5th s of the late slaves, or some million and a half to the more than 30 millions among whom such a tax would be apportioned. The evil of the rule is, that the tax must be apportioned among the several States in (proportion to their respective populations, on not the value of their lands. It will be readily perceived that such a tax must bear heavily upon the agricultural States of the West, where the value of land is much less than in the older States, and where the proportion of unused and therefore unproductive and is so much renter. Now, this best subject of taxation as since 1861 been left entirely to the States, and is certainly equal in tax producing value to the capital invested in national securities. I venture to say, therefore, that so longas Congress keeps its tax atherers off the lands the complaint to which I have alluded is unjust, from whatevsr quarter it may come, for there is not an interest or class that would not be sensibly affected by such a tax. It may be well for those who are calling for equality of taxation, in view of the exemption of Government securities, to remember that the same cry may be raised by other classes in view of the exemption of lands from national taxation. As to the proposed exemption of the interest of the new bonds from the income tax, it would certainly hold out an additional inducement to those disposed to invest in these securities; and as this would hardly fall within the reason, of the decisions of the Supreme Court I have referred to, it is fair to presume that it is inserted in the bill because it furnishes such an inducement. With the income tax at 5%. it would be to the holder of the bonds equal to an additional one 4th of 1%. of interest on his investment. The Senfrom Ohio has shown that it would very slightly affect the revenues of the U.S., and the bill, if Iunderstand it. correctly, does not exempt it from State taxation. While, therefore, it must be admitted that as an inducement to invest in the bonds' it is of great importance, it does not appear that other interests would be to any great extent injuriously affected by it. If it induces the purchase of the 5%. bonds, it is giving, at the most, 7 and a half millions in order to effect a saving of 30 millions. There is another consideration to which investors in public securities attach great importance, and that is, that their punctual payment at maturity should be placed as far as possible beyond contingency. It may be said that the limitless resources and unimpenched credit of the U.S. furnish a sufficient assurance on this head. But is this true? They do, indeed, give an assurance of ulti mate but not of punctual payment; and I apreheud that an overdue bond of even the U.S., with no provision made for its redemption, although it would not depreciate in intrinsic value, certainly would in its inur ket rice. The bill before us promises I shouiyd rather say pledges the faith of the U.S. that the interest on the new issues shall be aid at maturity, and that an der any and all circumstances the sum of $30,000,000 shall be annually applied to the redemption of the principal. But this provides for the extinction of considerably ess than 1/3rd of the debt by the time it may tures, and therefore does not constitute the inducement which investors are apt to require. If it was the intention of the author of the bill to give assurance that the whole debt should be paid off in 36 years, the 3rd section must be amended in an important particular. I have already intimated that if a sum equal to the annual interest on the original amoniit of debt, to other with the 30 millions pledged by the bill, be appropriuted annually for the purpose, the whole debt, principal and interest, will be thereby extinguishe in something less than 37 years. In other words the'interest on the original debt, or 150 millions, added to the 30 millions mentioned in the bill, gives an aggregate of 108 millions, which sum up lied annually to the payment of the accrued' interest, and the resi no, as far as it willgo, to the redemption of the principal, will extinguish the whole debt in the time named. It will be observed that by this plan the sum paid year by year in reduction of the principal increases at an accelerating ratio. In about 20 years 1/3rd of the debt will have been redeemed, in about 30 years 2/3rds, and the whole in less than 37 years. There is no mistake in this. I have made the calculation, and figures cannot lie. It of course supposes that on the do. the period of redemption begins the funding has been completed, and that no part of the annual appropriation to be a plied to the payment of pri n cipal, lies idle or a moment. It must either be drawing interest or stopping its accretion, or the time will be lengthened. On the other hand, as the interest is payable semi annually, if 1/2 of the 180 millions is upplied semi annually in the same way the time will be sensibly. shortened. I may add that if the debt is extinguished in 36 and a half years by the annual apprqpriation I propose, the aggregate amount pai will be 6,000 570 millions; but if we should continue to pay the interest as it accrues until the end of that period and then pay the principal, the whole amount required will be 8,000 475 millions. Imention this to illustrate the importance of providin at cute for the gradual and not too protracte redemption of our national debt; the difference of the sums named as the results of the 2 plans bein equal to nearly 2/3rds of the original det. The latter plan is substantially that which GreatBritain has nrsued since she abandoned her sinking fund in 1819, for the sums she has since applied to the reduction of her debt hear so inconsiderable a proportion to its aggregate, as scarcely to constitute a departure irom it. I have gone into more detail, Mr. President, than was otherwise necessary, because the bill proposes to do away with the sinkin fund contemplated by the act of 1862, and oes not, as it now stands, make an equivalent for the rapid absorption of the debt. By its present provisions, which pledge but 30 millions annually, the whole Will not be paid off in less than 100 years, although the interest to be paid will annually decrease in amount. I however infer from the remarks of the Senfrom Ohio that the author of the bill before u contemplated an o oration similar to that I have indicated; and t at, as I understand it, is precisely the operation of a sinking fund. When such a fund is created by a municipal or other corporation its management is usu' ally confided to commissioners or trustees, who stand, as it were, between the corporation and the holders of its obligations, with power to enforce by action or other legal means the fulfillment of the pledges constituting the conditions of the loan. The only difference that I can perceive between an ordinary sinking fund and what I infer is intended to be proposed by the bill under consideration is that in the one case it is usually managed by commissioners, and in the other becomes a part of the operations of the Treasury Dept. To this I see no objection, even when considered in connection with the inquiries I have been making as to the inducements that can be offered to capitalists and investors to take the proposed loan. It may be stated, however, that in the cases of corporations it sometimes becomes necessary to interpose commissioners in order that the fund may be invested in the bonds in tended to be secured, as their fiduciary character enables them to enforce, if necessary, the payment of the accruing interest on those they hold. As these are usually secured by mortgage it is important to the creditors generally that those belonging to the fund should be ke talive; and this is effected by their being held by the commissioners, who are trustees for both debtor and creditor. It is evident that if the bonds are purchased by the corporation for its own account it is equivalent to a redemption or payment, and they consequentl cease to have value and cannot be reissuetf.’ If the national bonds are purchased by the SecyTreasury, actiii only in the capacity of an officer or agent of the Government, they become extinct, or mere waste paper; they are in fact aid off, and the obligation they once impose is discharged. There can, however, be no necessity in the case of the Government for keeping them alive. If the annual appropriation I have suggested is made art of the law authorizing the new loan, it becomes a condition of the contract ’with those who purchase the bonds, and the faith of the U.S. is pledged for its observance, and no security or guarantee can be more ample. It will of course be the imperative duty of the SecyTreasury to carry into effect a law which, morally at least, is irrepealable until its purposes are accomplished. The plan of payment I have endeavored to delineate recommends itself not alone as an inducement to the capitalist to invest in the proposed bonds, but a so as a scheme by persistence in which the whole debt may be got rid of in a little more than a generation, if we are spare a foreign war or another domestic insurrection. It therefore becomes of para mount importance to ascertain whether the probable resources of the country, taking one year with another throughout the period named, will justify Congress in now pledging the national faith that $180,000,000, derived from customs, taxation, and other sources of reve nue, and not from loans, shall be annually appropriated to the payment of the principal and interest of the debt, to be suspended only in case of war or insurrection. Are we prepared to give this pledge? We have had the assurance from a high and well informed quar ter, and I think it is nowhere disputed, that we can appropriate 30 millions annually to the reduction of the principal of the debt, paying besides the interest as it accrues. Certainly, then, if we can reduce the rate of interest as proposed in the bill, our abilit to make the annual appropriation I have indicated cannot "be doubted). I have insisted on a pledge of the national faith not only as an assurance due to the public creditor, butas an act of justice to our selves; and in this term I include not only the present and future tax payers, but every industrial interest of the country. To permit the debt to increase in time of case would be palpably suicidal. lf the trut of this remark was not so obvious, I might cite to proveit the late declarations of the British Chancellor of the Exchequer. Their debt has not crma nently increased of late years, but its re uction has been very slight compared with its amount, which is greater than ours, although the annual interest is less than ours would be at 5%. When they abolished their sinking fund, instead of fixing an amount to be raised by imposts and taxation, and paid annually toward the reduction of their debt, they merely provided that their whole surplus revenue should be a plied to that purpose, and the result is that lint little has been effected. Mr. Gladstone and Mr. Mill, at least, have at length become alarmed at this state of things, and if they are able to correct it it will be by making a fixed annual appropriation toward its reduction, and treating this as paramountto all considerations except national defense. The same remark is true of this country. Our resources are certainly greater than those of GreatBritain, and more rapidly increasing, and I think are more at our command. Our annual expenditure for ordinary purposes is much less. We can safely fix a comparatively early period for the extinction of our debt, but I doubt if this can be said of GreatBritain. If what I propose should be found burdensome at the beginnin, it will doubtless be much less so at the end of the 1st decade, and may cease to be so to any inconvenient extent long before the 37 years have passed. ntil this condition is attained the business of the country will be more or less hampered b the existence of the debt; but I am persuadecfthat if by our legislation we ban give the country and the world a sufficient assurance that the debt will certainly be extinguished at a day not too remote, much of the evil consequent upon its existence will have already ceased. I have expressed doubts whether the proposed 5%. loan can be disposed of at par; but as the SecyTreasury, as well as several rsons in private stations, more familiar with the stock and money mar kets than I can pretend to be, whose opinions, for which I have a high respect, have been communicated to me, think that it can be read ily sold if it combines the inducements I have endeavored to discuss, I am willing that the exeriment shall be made. I am willing, not on y because its success is, as I have attempted to show, very desirable, but also because, after giving the subject much and earnest consideration, I am not apprehensive that its failure would be productive of any evil beyond the temporary postponement of a final arrangement of the mode of redeeming the debt. It is not made obligatory on the Secretar to issue these bonds, nor is he restrained from issuing others at 6%., as authorized by existin laws. Then this bill is finally passed, with such amendments as may be suggested and approved, he will have the precise conditions of the loan before him, and they will also be before the capitalists and invest ors of the country. He will then, better than now, be able to determine what pros ect there is of making sale of the bonds; and am very sure that unless this is entirely satisfactory he will not put them on the market. Besides, a failure to sell them will not indicate any deficiency of credit on the part of the Government, as it will be owing entirely to the character of the bonds. With these views I am still willing that the experiment shall be made. I have not noticed so far the 4th section of the bill under consideration. It is not necessarily connected with what precedes it. I approve its object, and believe that in the place it now occupies, or by itself, it should speedily be enacted into a law, with, perhaps a slight amendment. I will not detain the Senate by further remarks upon it, but conclude by again urgin upon its consideration the propriety of proviing at this session for the total redemption of the national debt within a definite and not very protracted period, by a fixed annual appropriation. whether the particular plan I have indicated or some other, equally or more efficient, be adopted. I now move to amend the 3rd section of the bill by striking out after the word “least, ” in line 7, and inserting. 90 million dollars (including the saving of interest aforesaid out of nny moneyin the treasury not otherwise appropriated shall a applied to the paymentof the interestas it accruesand the reduction of the prine i til of the said debt by the purchase or redemption o the said bonds at not exceeding their par value. unless a greater rate is hereafter authorizedby law.