At first sight this would seem to be a profitable and sensible
transaction on the part of the Government, but, as suggested by the
Secretary of the Treasury, the surplus thus expended for the purchase of
bonds was money drawn from the people in excess of any actual need of
the Government and was so expended rather than allow it to remain idle
in the Treasury. If this surplus, under the operation of just and
equitable laws, had been left in the hands of the people, it would have
been worth in their business at least 6 per cent per annum. Deducting
from the amount of interest upon the principal and premium of these
bonds for the time they had to run at the rate of 6 per cent the saving
of 2 per cent made for the people by the purchase of such bonds, the
loss will appear to be $55,760,000.
This calculation would seem to demonstrate that if excessive and
unnecessary taxation is continued and the Government is forced to pursue
this policy of purchasing its own bonds at the premiums which it will be
necessary to pay, the loss to the people will be hundreds of millions of
dollars.
Since the purchase of bonds was undertaken as mentioned nearly all that
have been offered were at last accepted. It has been made quite apparent
that the Government was in danger of being subjected to combinations to
raise their price, as appears by the instance cited by the Secretary of
the offering of bonds of the par value of only $326,000 so often that
the aggregate of the sums demanded for their purchase amounted to more
than $19,700,000.
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