THROUGHOUT this last session of the Forty-First Congress, while the quarrel with Sumner occupied the public eye and the Administration labored to build political capital out of foreign affairs, the perennial questions of finance and Reconstruction were not lost from sight. In the Treasury, Boutwell pursued his methodical reduction of the debt by the application of surplus revenue to outstanding obligations, and the impressive figures of payments mounted each month until partisans and bondholders could rejoice in the tangible evidences of national honesty. By December, 1870, $190,000,000 had been lopped off the debt--easily $100,000,000 more than would have been saved "had a President as lenient to whiskey thieves and other revenue defrauders as Andrew Johnson ruled. . . ."1 Not only was the debt being reduced by payment but, under an act of July, 1870, the five-twenty bonds were being funded into new bonds with lower interest rates. Boutwell's recommendations for funding the debt had borne fruit in congressional authorization of new issues of $200,000,000 five per cent ten-year bonds, $300,000,000 at four and one-half per cent to run for fifteen years, and $1,000,000,000 four per cents payable in thirty years.
For a year after this law, the Secretary strove against obstacles to exchange the five-twenties for the new bonds. Impetus was given to Boutwell's eagerness by the reduced revenue which resulted from another law of July, 1870, but the outbreak of war in Europe prevented the sale of bonds on foreign exchanges. Finding only the five per cent bonds readily marketable, Boutwell in December, 1870, recommended an increase in the number. By March, he was able to accept subscriptions for the bonds, but by the end of the summer of 1871, he had been able to dispose of but $66,000,000, all but $2,000,000 of which had been taken by national banks.2 The failure, however, was attributed to European troubles rather than to the absurdity of offering bonds of three different interest rates simultaneously, and as the reduction of the debt went steadily on, the Administration was still able to catalogue a triumph in its financial status.____________________