Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1868-12-24
THE NArroNALFINANoEs.
Senator Sherman's Funding II IL Let
ter from Hon. Geo. II. PendIet n.

gives to the public the following letter re
, ceived in August last from Hon. Georg
II. Pendleton. The question is as i'm
portant now as it was then, and the pub
LEGATION of Mr. PendIeton's views NOR
appropriate from the probability Of thoi
receiving a more candid consideration
than could have been expected in tn
heat of the canvass:
| MR.. PENDLEToN's LETTER.
CINCINNATI, August 4, S6S.-Ale5
IT, p. GdreSche-MY DEAR SIR: You
ask my opinion of the funding biIl."s !
have not a copy before me, but remem.
Der well its important provisions. II
provides for the, issue Of two classes o
bonds, the one bearing four and hal
per cent. interest, having thirty years to
run, the other bearing four per cent. in
terest, having forty years to run, both
payable, principal and interest, in coin,
and both exempt from municipal, State
and Federal taxation. These bonds are
to be exchanged for the present outstand>
ing bonds Of the United States, or they
are to be sold, and the proceeds applied
exclusively to the payment of such bonds.
Two observations on this bill will oc E
cur to every person ssELiE
First. 1t recognizes the right Of the
government to pay the five-twenty bonds
in greenbacks. If those bonds are paya-
Bile in coin only, no man will exchange
them, bearing six per cent. interest, for
bonds bearing only four and one half per
cent; and it is equally true that no man,
having money to invest, will buy those
bonds, bearing this less rate of interest,
when every day he can buy in the mar
ket the five-twenties, bearing six per
cent. interest, at the same rate.
The law will be utterly imperative
unless the holders of the five-twenties
and the moneyed men are driven to in>
vest in the new bonds by the threat that
the five>twenties will be paid in green>
backs, and not coin. Senator Sherman
understands this very well, and accor-
dinghy, when he made his report last win
ter to the Senate. he asserted that this
means Of coercion would be resorted to.
But if the five-twenties may legally
be paid in greenbacks, it seems to. me
that it would be madness to convert them
into bonds which must be paid in coin.
The outstanding five-twenties to. day
reach about $1,70Q000000. Assume
they are payable in greenbacks, and ST.
7OO,000,0O0 in greenbacks will suffice to
pay them. Substitute for them bonds
payable only in coin, and coin being, as it
is quoted to-day, at 81 40, S2,3SOOOO,-
600 in greenbacks will be required for
their payment, and S6S0,000000 are
thus added to the public debt. We are
told that the reduction of the interest
will compensate for this addition to the
principal. We will save one and one>
half per cent. or perhaps two per cent.
on 81, 7000O0,000-that is S25, 100000,
or, at most, S34000000, annually in the
way Of interest. Even the saving of the
larger amount would not in twenty years
exceed the amount thus added to the
principal | venture TO affirm that no
prudent business man would make such
arrangements in his private affairs. No
nation can make it and maintain its
credit. Interest eats up the prosperity
Of the individual. 1t is equally fatal TO
nation. But as an Offset to the adVan-
tage the people derive from lower inter-
est, we must remember that the govern
ment expressly sbandons the right to
tax the new bonds, which un4uestion-
bly, exists as to the five-twenties. t
Second. If the payment of the deb.
shall be postponed for forty years, it will
become permanent institutien-it will
never be paid at ALT will be perma-
nent as the debt OF Great Britain. The
same considerations which now induce
US to postpone the payment for forty
years, will then induce us to postpone it
indefinitely. Times will be as hard,
money will be as scarce, the seductions OF
light taxes will be as great, and the
temptation to ''let posterity bear the bur-
den as it will reap the benefit of the
public debt" will be as strong as it now
is. And, above all, We will then have
contracted the habit of being in debt,
and Of being satisfied with the payment
Of interest; and this habit will cause US
to yield very readily to suggestions whose
force we do not now Withstand. l need
not paint to you the evils Of permanent
public debt. They bear with crushing
weight upon labor, and condemn poverty
to life long slavery. They are the fruits
ful parents Of corruption and despotism
see no redeeming feature in this bill
| have said that its theory is that the
fve-twenties are payable in greenbacks.
At the discussion in the Senate, as we'll
as before and since, Senators Sherman
and Morton ably maintained this doc
trine. Their arguments are unanswer>
able. They have not been, and cannot
be, successfully controverted. As far as
argument can settle any question, they
have settled this question. | will do
these gentlemen no injustice. They
maintain that the government has the
legal right to pay these fVe-twenties in
greenbacks, but ought not to exercise it.
Both gentlemen have limited that they
might make an exception in favor Of en-
forcing the funding" process, but they
generally ignore that especial case.
agree with them that the governs
ment has the legal right, and against them
| maintain that the government ought to
exercise it. | say, indeed, that it is in
duty bound to exercise it; | say that it
can not honestly and legally do other
wise. The government is only trustee
an agent of the people. 1t has no
mOney-nO property of it's own. Every
dollar is drawn from the people, and
every expenditure ought to be for the
benefit of the people. 1t has no right to
pay to creditor more than the people
owe him. The people owe him exactly
what they have promised to pay him.
Every dollar beyond this is giUeR to him.
and in order that it may have the dollar
to give, the government must take it by
force from some other citizen.
The advantage of paying in grcenbacks
always assuming, as Sherman and
Morton and the funding bill assert,
that we have the legal rights so obvi~
Gus that every man will admit that pay
ment ought to be made in that way, I'M
less good reasons to the contrary shall be
shown.
Now, what are the reasons usually
alleged
First That such payment would be
a breach Of good faith.
/ deny it. Good faith is kept if we
live up TO our promises. Our promises
are contained in the laws and the bonds
We cannot be called upon to go beyond
them. According to Messrs. Sherman
and Morton the laws and the bonds con-
tain no promise to pay the five-twenties
IN coin. In recruiting soldiers for the
army, in very many instances, the re-
cruiting officer promised bounty and pay
beyond the amount allowed by law. In
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