The Sun.
London, England, 1868-11-03 00:00:00

The following is the letter above alluded to :—.

Dear Mr. -- You ask me what I think of the con-
troversy now going on in the United States respecting the
rightfulness of paying off a portion of the national debt,
contracted in cash, in a depreciated paper currency, and
of taxing, in violation of an express compact, tho interest
of the national bonds. It is painful to have to answer
such a question. It is already a groat calamity that two
sue!, propmls should hw boon inscribed in tho electoral
programme of a groat political party, and not unanimously
rejected even by its opponents. The success of either
proposal would, in my estimation, ba ono of the heaviest
blows that.could givau to the reputation of popular
Governments, and to the morality and civilization of the
human race. _ _

This is ono of those vital questions which send us
back to the first principles of social existence, and compel
us to ask ourselves what are the conditions which enable
mankind to dwell together in nations and communities, to
work together in joint undertakings, and exchange the
privations of the savage for the blessings of civilized life.
The very first and 'most essential of these conditions is,
that they should be able to trust one another's engage-
ments. Even savage life could not be carried on unless
the aavagee frequently helped one another; in civilized

life, every human being depends for comfort, for security,
often for life itself, upon things done for him by other
people. If he could not rely upon other people for doing
what they undertake ; if his experience taught him that a
man who makes a promise dons so with the intention

of only keeping the promise if it happens to be quite con-
venient, ho would have to look to himself alone for all pro-
tection, and for the supply of all his wants. lie would be
below the condition of most savages. If we cannot trust
each other's word (was the saying of an eminent man), we
may as well go back to the woods.
But if there is one case more than another in which it
is indispensable that men should keep their promises—
should do what they pledge themselves to do—it is the
case of money contracts. All the complex fabric of our
civilization rests upon the paying and receiving of money ;
every one's plans of life, and almost every one's assurance
of living at all, are built upon the expectation of receiving
at the appointed time the money or money's worth, due
to him from others. If any ono buys a thing and then
d.)es not pay for it, or sells a thing and then does not de-
liver it; if any one hires services and does not pay the
wages agreel on, or receives wages and does not perform
the service; if any one borrows money or money's worth,
and, thoughable, does not repay it at Cm time agreed on, •
or withholds the equivalent which he lid bargained to
give for its use, the defaulter not only proves himself a
dishonourable and dishonest man, he not only inflicts as
injury, which may be serious, which may be even irre-
parable, upon the individual who has trusted him, but he
does what lies in him to dissolve and put au end to that
trust in one another without which there would be no ex-
change of commodities, no separation of employments, and
.no man would have. any satisfaction for his wants except
what his own labour or craft could directly provide. The

impossibility of carrying on human society, even in au
almost rudimentary state, without holding men to the
fulfilment of their engagements, has always been so obvi-
ous, that there is not a single known community, past or
present, in which provision has not been made for enforc-
ing those engagements, by laws and tribunals, supported
either by a public force set apart fur the purpose, or, in
ruder societies, 'by the collective strength of the com-
munity.

Can any reason be given why the obligation of good
faith, which holds between one man and another, is not
equally binding between the entire community and any
person who has trusted them? Is a promise made by the
whole people thrcugh their authorized agents less sacred
than a promise made by a private person, which also may
have been made through his agents? Ought the fact that
Core is a tribunal which can compel individuals to keep
their contracts, and no tribunal which can coerce a nation ;
ought the fact that the debt of a nation is a debt of honour ;
ought the fact that a nation can be a swindler and knave
if it chooses—ought this to make any civilized people
think that it can dispense in its own favour with the duty
which its own tribunals enforce against its citizens ? Un-
less it be a sufficient license for committing a crime, that
it can be committed without any immediate penalty ex-
cept the disgrace, there is no other difference between the
two cases but such as makes the criminality greater of a
nation which robs its creditors than of an individual. For,
in the first place, a nation always can pay its creditors if
it chooses, which cannot always be said of an individual ;
and, in the next place, a broach of faith by a whole people
involves everybody in the guilt, except such as with their
whole heart and strength denounce and protest against it.
It is an example of fraud displayed in the sight of man-
kind, and penetrating into every family in the country. It
is a direct sanction of the like dishonesty to every citizen
in his private transactions. Lot any one be really per-
suaded that a whole people may break its word, and re-
fuse to pay in full the money it has borrowed, is he likely
to think that he himself is culpable for doing the same in
his own private affairs, if he can manage to evade the legal
punishment which is the only real distinction between the
two cases ?

The detractors of Democratic Government on this side
of the Atlantic have been accustomed to say that, however
specious may be the arguments for it, in its actual work-
ing it would turn out to be a retrogradation towards bar-
I Until now, the example of the great American
Republic, notwithstanding the dishonourable conduct of
several of the States (mostly—would that I could say
always—among those which had been demoralized by
slavery), has generally been deemed a practical refutation
of these sinister prophecies. But the charge against De-
mocracy of being a return to barbarism would be made
out if its effect were to be the public repudiation of pecu-
niary engagements. It is a remarkable fact that what the
people of the United States are now urged to do with re-
spect to the 5-20 Bonds—urged by the programme of a
political party (happily, not by every member even of that
party)—bears an almost exact likeness to some of the
most disgraceful misdeeds of the European despots in the
Middle Ages. Read the history of the most profligate
kings of Franco and other European countries, not ex-
cepting England, and S3O who were those whose conduct ex-
cited the greatest public indignation during their lives, and
left the deepest stain on their memory when dead. They
were those who debased the coin. What was their motive
for debasing it ? To put off their creditors with the same
nominal sum of money, tut a less quantity of the precious
metal. Even the despots wore so conscious and so much
afraid of the infamy of this fraud that they generally endea-
voured to commit it secretly and in silence. They made it
a capital offence to betray the secret. Would they have
been less emilty if they had impudently brazened it out ?
Living iu a rude age, the only means at their disposal for
committing the fraud was the coarse expedient of alter-
ing the coin. Their ingenuity hid not reached the coa-
trivance of putting forth pieces of pap )r which pretended
to be money and were not, inducing people to take them
by a promise, printed on the paper to give for it on demand
real money of the same nominal value, and then breaking
that promise and issuing them in such numbers as to be
only worth half the money which they purported to re-
present. But this roundabout way and the direct way
have the self-same purpose : to get rid of debts by paying,
instead of what ono has engaged to pay, what is called the
same sum of money, but is really a much smaller sum.
And this example, set by the despots of barbarous ages,
the people of the United States, in the ninety-second year
of their national freedom, are invited by many of their
active politicians to imitate !
Observe, too, that none of the apelogies, poor and weak
as they are, which have been suggested to the nations of
Europe by the same sort of bad advisers, have any appli-
cability to the case of the United States. The Democracy
of European countries have sometimes been told that they
are not bound to pay their national debts, because the
money was borrowed by kings and aristocracies who did
not represent the people, and was expended in keeping the
people in subjection, or in carrying on foreign wars which
the people had not authorised. None of these lame excuses
can be alleged by the American repudiators. The most au-
dacious pleader for dishonesty cannot deny that the money
was borrowed by a Congress and a President elected by,
and fully responsible to, the people—borrowed for the ser-
vice of the American Republic in its utmost need, for a
war which was emphatically a war of the people, and in
which the stake involved was the preservation of their
collective.. .existence as a nation. The only persons in
in whose mouths any other doctrine can possibly be sin-
cere are the ex-rebels and their favourers. To all but
them it is impossible to conceive a case in which the obli-
gation to pay the debt, principal and interest, to the full
extent of the contract, could be more binding.
A plea which imposes upon some people who would
shrink from anything which they themselves regarded as
repudiation, is this:—Greenbacks, however they may be
depreciated, are legal tender, are the lawful currency of
,the United States; other persons are obliged to receive
this currency in payment of all their dues, and why should
the public creditor be an exception? This seems to have
been the argument which prevailed with the upright, but
not always clear-sighted or discerning, mind of the late
Thaddeus Stevens. But the answers to it are manifold.
The first is, that almost all persons except the public cre-
ditor have the remedy in their own hands. Those who
have goods to sell can and' do demand a higher price ;
those who sell their services can and do require a higher
remuneration. Even in loan transactions that are yet to
come, the lenders know the chances they are exposed to ;
are aware that the medium they are to be paid in is of un-
certain value, and can and will require a rate of interest
sufficient in their estimation to cover their risks. To all
these persons the uncertainty of the measure of value
is a source of great inconvenience, but to none of them
is it an injustice. Injustice is dune to those who had
lent their money, or had otherwise become entitled to
fixed annual income; before specie payments were sus-
pended.
Among these aro the old creditors of many of the States.
All persons thus situated are grievously injured by being
paid their interest in depreciated greenbacks, and would
be still further defrauded if the principal were repaid to
them in a similar medium. But at least the nation col-
lectively had incurred no obligation to those persons be-
yond the general obligation of good government. It had
not specifically pledged the national honour to them.
Even the separate States never, I believe, pledged their
faith to their creditors that they shoaled not suf-
fer this particular injury; however binding the ob-
ligation ought to have been felt, in honour and
conscience. That pledge has been given to the credi-
tors of the United States. I make no distinction
between payment of the interest and repayment of the
principal. The bends themselves, it is net denied, stipu-
late expressly that the interest shall be paid in cash,
but are silent as to the principal. That the obligation,
however, applied to principal as well as interest, was uni-
versally uaderstool ; was expressly declared by the autho-
rized agents of the patina whenever the question was
asked; was net then gainsaid by any of those who are
now attempting to shake off the o`eliga'iou ; and was only
not declared in express terms, because nobody thought
that such a declaration was necess try, or could add any
strength to the pledge. In consequence of this under-
standing, the loans were obtained at rates of interest very
low under the circumstances, far lower than would other-
wise have been possible. Governments which pay their
creditors in inconvertible paper, always borrow, if able to
borrow at all, on much more onerous terms than other
Governments. If those who lent their savings to the
United States had been told, at the time, that every thou-
sand dollars they lent should be repaid to them in green-
backs, which might then be worth not more than a thou

sand cents (the depreciation of the French assignatg
amounted to that and more), nobody, unless he could afford
to make the nation a present of his money, would have
parted with it unless at a rate of interest sufficienc to en-
sure him against the extreme risk. The United States ob-
tained these great sums of money, in their extreme neces-
sity, at an interest (all things considered) not very much
exceeding what the high value of capital in a new coun-
try compels them to pay in ordinary times ; and after
having reaped the benefit, having by that indispensable
help saved their national existence, they are now ex-
horted to withold the price, at the cost of the national
honour.

The same reasons of justice and good faith apply still
more obviously to the conditions expressly stipulated by-
the lenders, that the interest on the bonds should not be
subject to direct taxation. Some people imagine that the
breach of this stipulation would not be robbery, provided
that the bonds are not taxed at a higher rate than other
property. Bat if exemption from all direct taxation were
a condition of the contract, and expressly stipulated for, it
is not an unjust advantage conceded to the bondholders
over (Aber people, since for every advantage ao obtained
value has been given by those who enjoy it iu the shape
of a diminished interest. The only difference in respect
of taxation between them and the rest of the public is,•
that they have paid down their taxes in advance, while
other people wait for the visit of the tax-gatherer. g-'€)
make them pay over ayain, under pretence that they had
not already paid, would be one of the most flagrant forme
of the iniquity of breaking a contract and keeping the
pecuniary, consideration received for it.

But there is little danger that these immoral counsels
will provail. It has been shown by many examples •10
the recent history of the United States that an agitation
for something wrong and mischievous may go on kr
certain length of time without visibly stirring up the
good sense and honesty of the country to resist it; and
many such agitations commence, culminate, and decal
without disturbing public tranquillity or leaving any per-
manent traces of their existence ; bnt that, when one of
these agitations attains a sufficient height to begin to be
dangerous, a mass of opinion which ordinarily remains
quiescent rouses itself into activity, puts down the wrong
thing with a vigorous hand, and peremptorily de-
mands the right thing instead. So I doubt not it will be
with this pernicious and discreditable, but as I firmly be-
lieve chiefly factitious, movement, set up by political ad-
venturers for the chance of gaining the few stray votes
which, in the present state of parties, might suffice to
turn the balance of many an election.—l am, dear
Mr.—, very sincerely yours, J. S. MILL.
Avignon, Sept. 24, 1868.