Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1859-01-10
Federal Depreciation of State Credit.

eral debt increased, within the space OF Il
months. from 30 up to about SIO,Ooo,VVo, II
bchoovcs us To enquire As 10 the effect when
this state of things must produce on the Value
Of State securities.
50 long a. State credit il worth anything
at all, so long as State bonds can be sofa al or
above par. they are affected but little by the
speculation, Of stock iobbers. The value va
ries ONLY hy the law of actual b"n0 tide COM
mercial' and financial demand and supply,
and they cannot become. 10 any serious ex-
tent. the subject of fictitious valuation. Some
real and vital necessity for depreciation must
occur, before they can become the instru-
lncuts of stock gambling.
1t is useless. at present, and would per-
haps. at any time, be impossible to enumer-
ate all the different means by which State
bond, are degraded from being the medium
of permanent Investment, to become the
fancy stock" Of mere Spectators, by means
of fictitious fluctuations.
1t is sufficient TO state, generally, that the
bad faith or bad management OF State
Government, is the first great cause OF the
depreciation Of State credit. Reputation IN
any form, whether it consists III ncapaclty
or unwillingness to meet contracted debts,
shaving State bonds by State authority, or
State tax upon her own bonds in the hands
of State creditors must invariably beggar
State credit.
The next principal cause of the dcprecia-
ton of State bonds, is one without the control
of the State Government. Whenever the de-
mani for actual investment is met by a sup
ply Of securities more easy of transfer, and
depending for redemption on guarantees, more
,,.r. vii. LILO lnttnr lnown N thp
commercial world than those which parti
cular State can oiier--thc bonds Of that State
must suffer comparative depreciation.
Let Us apply this latter rule TO the ease of
Virginia bonds. With State tax so small
that, when properly aud equally distributed,
it can law no apprcciable burden on the shout
dcrs Of any class OF citizens, and which, never
theleSs, produces a revenue more than thrice
what is required for the ordinary adminlstra-
ton of government, apart from the payment
of the interest and principal Of public debt
Otno extraordinary amount-are revenue which
more than suihccs To cover the interest and
supply the Sinking fund on the public debt;
constitutional provision for Il sinking fund.
50 arranged rs to offer the public creditor a
permanent investment for thirty-four years,
certain payment mt the end Of that time, and
constantly recurring opportunities for re-
dcmption before that time, IN case the credi-
Tor 80 elect; with all these advantages on her
side, Nirgnia's stock can suffer nothing from
competition with those of her sister States, or
ofthe numerous industrial, commercial, fnan-
ca and municipal corporations of the whole
country.
There is hut ono power in the land which
can render Virginia stock Il drug in the mar
ket; aud that is the financial power of the
General Government.
Virginia bonds depend. for the security of
redemption. entirely on the one resource of
direct taxation within the limits of the State.
This is indeed, al-sufhcient, except in the
event of great national disasters. Still such
disaster is. at all times, a possibility. and en-
ters into all the calculations of those great
fnanciers who determine the value of mar
ketable securities. We are not without an
instance, near at hand to demonstrate the
entire justice of this state of facts If the
Governor of this Commonwealth had, twelve
months ago, Welded to the tauntS, clamor
and persuasions of Il certain class OF newspa-
per writers and would be tinancialist politi-
clans in the State, if, in the midst of the COM
mercial crisis, he had consented to employ his
discretionary constitutional power, by apply
ing stringent cOcrciye measures TO our bank
ing Neutrality-suspicious. consequences To
private fortunes total depreciation of every
species of property would have ensued, and
the collection of taxes would ut once have
been rendered impossible.
Another point is 10 be considered. How
ever secure and reliable may be the credit of
the State of Virginia, the evidences of such
reliability, can never acquire the worldwide
reputation which attaches to the operations
and condition of the Federal Treasury. Hence
Virginia bonds can never be so extensively
transferable aS are Federal bonds--and this
extended facility of transfer is itself one
large element of value.
Again the Federal bonds are not depen-
dent on direct taxation for redemption. 1t
Is we'll known to the whole world that they
are first guaranteed by an impost tax on all
the imports Ui the cUuutry-a source OF rerc-
nue.. which, of itself, has ordinarily been
found more than sufficient for all the require
ments of expenditure The Federal credit
is further guaranteed by a basis of real estate
comprehending an empire of territory, ut all
times liable To be sold to meet financial re-
quiremcn,S. Lastly, it is guaranteed 10y Il
power of direct taxation, extending over the
What wonder. then that, under the most
favorable circumstances Virginia bonds may
at all times, be brought below par, or even
thrown out of the market altogether by Fed
cral stocks commanding premium Of four,
i've ten or fifteen per cent!
This is an easy lesson. \ child may learn
it. \ Federal debt is and must at ali times
prove injurious to the public credit of the
several States. We call the attention of our
members of Congress to this significant fact.
lionc hundred millions of dollars is to be ap'
propriatrd for Pacific railroad. or for the
prospective purchase OF Cuba, for the estab-
li>hment Of a protectorate over Mexico, or for
war with any considerable one of the eight
foreign powers with whom we seem now to
hc eutanglcd in one way or another. such APP
preparation will be made at the expense of
State credit and to the consequent detrimcnt
OF all internal Improvements dependent on
State patronage. Rich. Enq
The Vacant Judgeship.
The death of t;rccn 4. Samues, one of the