The Sun.
London, England, 1867-09-25 00:00:00

REPUDIATION.

Last Monday evening a message was brought by
the cable from New York informing Europe that
the question of paying off the 5-20 United States
Bonds in currency is being politically agitated. The
effect of such telegrams is not felt immediately.
The vague feeling of alarm generated in the minds
of the holders of these Bonds does not cause in-
stant action, for the people believe that the move-
ment has been made by political parties to forward
their objects. The dread of the United States
adopting so dishonourable a course as to redeem
the Bonds in greenbacks when the option rests
with the Government has always exercised an
injurious influence on the value of these secu-
rities. Many well-informed men, both in the
United States and in Europe, have persistently
maintained that such would be the eventual action
of the American people. This belief, held by those
of no hostile spirit to the United States, was
grounded on these facts. First, that a large party
in the Northern States had been opposed to the war,
had persistently denounced the creation of the debt,
and had prophesied its repudiation, a prophecy they
feel bound to justify. Second, that the South regard-
ing the burden fastened upon them in common with
the conquering North as a degrading penalty, the
badge of their subjugation—the rod which they had
been compelled to bring for their own chas-
tisement—would make every effort after the
Reconstruction of the Union to cast off the
oppressive weight. Third, viewing the bad side of
human nature, it was reasonable to expect that the
Democrats and the South would be aided by a large
party who cared for neither, but who felt the pres-
sure of the taxation, and who would be content to
relieve themselves at any sacrifice to the nation.
Those who have held so persistently that the Ameri-
can financial problem would be solved by repudia.
tion watch with great interest the attacks of
the Democratic leaders on the public credit. It is
natural enough for them now to exclaim, while
priding themselves on their foresight, " We told
you so !" and we cannot disguise that the uphold-
ers of the United States credit in Europe are
in some degree put to shame. It is not that they
doubt for a moment that anything but complete
discomfiture can be the ultimateresult. But they are
grieved to see an agitation like this, gain anything ap-
proaching to formidable proportions. At the same
time the holders of bonds ought to have been pre-
pared for the war now waged. The material question
to them is what is likely to be the result. Mr.
PENDLETON'S plan is to redeem the bonds at par, in
greenbacks, as the time arrives when the Government
have the option. The 5-20's of 1862, amounting to
$514,780,500 (the Bonds chiefly held in Europe),
could be taken up by the Government at any period
from the Ist May last. These are the Securities mainly
quoted on the Stock Exchanges which were becom-
ing so favourite an investment in Great Britain,
Germany, and France, as to check the exportation
from New York of specie, and give a fresh
medium of exchange. If Mr. PENDLETON'S plan
were carried out, the Treasury would have to
strike off from the presses $500,000,000, and
redeem the whole issue. The advantage to the
holders would lie in being the first swindled.
Although the loss would be fearful, the United
States' greenback currency would not become
at once valueless; therefore at least a por-
tion of the principal would return to the
holders, which would scarcely be the case with
the Bonds of a later date. As nearly all
the debts of the United States are nt w funded in
5-20's, in five years hence all could be redeemed, the
debt cancelled, and the currency increased by
the amount. The effect can scarcely be esti-
mated. Debts of all kinds would be annihilated,
every bank in the country would be destroyed, and
until specie was manufactured and obtained circu-
lation it would be impossible to carry on the
ordinary business of the country. A man buying
a leg of mutton and the usual household supplies
would have to be accompanied by a cart-load of
greenbacks. The greenback is a legal tender,
but no law can compel men to exchange sterling
substance for a worthless currency. A simple re-
pudiation would not be so disastrous, because it
would involve loss only to the bondholders, but
the annihilation of the value of the currency which
would follow Mr. PENDLETON'S plan would ramify
over the country, influencing every monetary
transaction between man and man. The question
is, what would be the depreciation of the currency
supposing that an amount equal to the National
Debt was added to it ? Mr. PENDLETON pretends
to believe that the value would not be materially
changed. Does any sane man believe that
the United States could absorb twenty-eight
hundred millions of paper dollars, representing
a sum in sterling of more than £550,000,000. The
note circulation in England is under £24,000,000,
and the gigantic trade of that country is carried on
with a tenth of the currency with which Mr. PEN
DLETON'S plan, would deluge the United States.
That gentleman urges the fact that, during the War,
the Government borrowed this money as low as 40
cents of gold to the dollar, and as the Government
received the sums the loans realised, in greenbacks,
they are justified in paying in the same currency.
We would like Mr. PENDLETON to answer this ques-
tion—The Government had their presses during the
War, they could turn out any amount of paper
currency, instead of borrowing to repay hereafter
by the manufacture of this irredeemable paper, why
did they not at the time manufacture it, and pay
their debts without swindling any one ? had they
tried it, Mr. PENDLETON knows as well as we do
that the value of their currency would have
sunk to the level of that of the Confederates,
and the United States would have been com-
pelled either to suspend military operations or
to carry them on by means of forced loans. A
Government, like an individual, when in extremity
has to pay heavily for accommodation. If the loans
reinstate the Government or the individual in a
sound financial position, it is surely not creditable
that those thus saved should turn on their preservers
\ and argue that they ought to receive back no more