The Sun.
London, England, 1866-11-23 00:00:00

AMERICAN GOVERNMENT SECURITIES

Secretary McCuLLocii's letter to the Honour-
able W. MURPHY, Consul-General from the United
States, to Frankfort-on-the Maine, dated Washing-
ton, October 18, 1866, and published in our last
number, is, though a private document, of the
highest interest and importance to large numbers of
investors in Europe. The Secretary of the United
States' Treasury says " that the policy of the Go-
" vernment in regard to its Bonds is well understood
" in America, and there ought not to be any mistake
" about it on the other side. The principal of all
&& our Bonds, the interest of which is payable in coin,
" will be paid in coin. Our interest-bearing notes
" are payable in currency." This is the most con-
clusive answer to the assertion that the Government
of the United States are not bound to pay the
principal of the 5-20 Bonds, when due, in coin.
In the fewest words the Secretary constructs a sen-
tence which annihilates all doubt on the subject.
There are many persons who endeavour to throw
discredit on everything American, because they
hate American Institutions. Such persons areaided
by speculators, who, operating for a fall, use the
most unscrupulous means to attain their end. The
timid public are made the victims of the former's
hate and the latter's fraud. The public should learn
that the Government of the United States has been
the most scrupulously honourable in meeting its
engagements. Whether legally bound or not, to
pay these bonds when due in coin, the engagement
when the transaction was concluded, was a distinct
understanding between the borrower and the lender
that the Bonds were thus to be liquidated. To sup-
pose that the Government of the United States would
avail itself of a shuffle to lessen its liability is to
suppose the wildest absurdity, grounded on singular
ignorance. The Union is the only great nation,
with but one or two exceptions, that has not con-
tracted a debt the principal of which it cannot see
its way to pay. Nearly all other first-rate Powers
have borrowed money with the prospect only of
meeting the interest when due. Many great Go-
vernments use every means to increase their liabili-
ties—to borrow more and more, and to saddle
coming generations with a burden they can never
honestly cast off. There are two points which
European investors should carefully note in the
financial transactions of the United States if they
wish to be on the safe side in lending their money to
foreign countries:—

1. The United States have met every engagement
contracted before the war—principal and interest.
2. The United States have contracted no debt
the principal of which they are not as well able to
pay as the interest in the terms of their engage-
ment.

If we look over the world we will see how singu-
lar is this exception in Government financial trans-
actions. Take every first-class Power in Europe,
and, excluding Prussia, all are hopelessly involved
in debt. The highest aim of most of these Govern-
ments is to meet the semi-annual liability for inte-
rest. Some, even in this particular, fail. With few
exceptions they are engaged in increasing the already
hopeless burden. The task of financial Ministers
is to devise means of raising new loans, not to devise
means of paying those already contracted. Great Bri-
tain enjoys the highest credit of all Governments, yet
on her shoulders lies a debt which the people have
grown to regard as a burden they were born to bear.
Financial pretenders occasionally propose ridiculous
schemes for relieving the English public of their
National Debt, but the people know the age of
miracles is past, and such plans excite the contempt
tliey deserve. Spain is in a position of acknow-
ledged bankruptcy. Turkey endeavours by fitful
efforts to revive a credit almost wholly lost. Aus-
tyrioandantdneir means,ltalyhold the place of men living far be-
whose estates are known to be
mortgaged over their value. France and Russia
add year by year to their heavy b‘urdens. A great
debt has been contracted by British India, and the
colonies of this empire lose no opportunities of corn-
ing on the market as borrowers. Some of these
Governments have sinking funds which are mostly
delusions to entice lenders.
Bonds by annual lotteries, whiScloinladed rae dlittle
gt
ahme
_r
bling excitement to the substantial security of the
guaranteed interest. Each year, however, but adds to
their encumbrances, and whether in peace or in
war there is but one result, the sacrifice of the
future to the present, the continued call for more
and more. Surrounded as we are by such financial
transactions as thNesoe,
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the United States Government will beexits,in
before they are due. Although nearly
in specie was disbursed on the Ist inst.o,othe gold
e
balance in the Treasury was £14,000,0 •
estimate for the year 1866 of the gold and silver The
product of the United States is £21,000,000.
production of the precious metals increases, and
under a new crushing process lately introduced into
California this increase will probably receive a
fresh impetus. The vitality of the nation is won-
derful, and unbounded as is the confidence of the
Americans in their own resources, the case with which
the enormous Slllll3 are levied in taxes, excites even
their own surprise. A Government so placed would,
one might well suppose, be above even the breath of
suspicion. But the English cling tenaciously to
prejudices, and there are precedents in the action of
one or two of the individual States which gives some
colour to the suspicions of those who cannot un-
derstand the Constitution of the Great Republic.
The action of the Secretary of the Treasury is the
best answer to statements we have heard, and
which in truth are not worth discussion—that the
object of America is to pass as many of the 5-20
Bonds as she can to Europe, and then repudiate the
debt. As long as there is a profit in sending Five-
twenties from New York, instead of gold, merchants
will avail themselves of this means of remittance.
But the moment the price rises in New York to ,