The New Orleans crescent. [volume] (New Orleans, La.) 1866-1869, 1869-02-20
PALACES ABOUT PUBLIC DEBTS.

| chequers by pawning whatever credit they
may have to the harpies of usury, as the Dick
| Turpins, Jack Sheppards and Robert Macaires
| of the worlds diversified industry have al
ways been ready to replenish their exhausted
purses by bestowing the crude earnings of
their perspiring brows or brains with those
commodious depositaries, commonly and
injuriously described by Ainsworth and other
romancists as receivers of stolen goods" 1t
is startling, upon reflection, to see how much
further the parallel may be carried. That
the cashiers of borrowing governments and
the cashiers of impecunious rogues alike
make awful gouges is but small part of the
analogy, and its real Importance consists in
what it suggests. Why is it that the public
credit in one case is bought as cheaply
as the criminal spoils in the other case?
There is but one answer. The genuineness
of the security is doubted. The negotiator of
public loan is accustomed to represent that
the credit which he pledges is secured by the
whole wealth of the community for whose
benefit, ostensibly, the loan ia intanded
This wealth, the real and personal estates of
citizens in the aggregate, it is argued. con-
stitutes a fund on which the public fnancier
may draw, for the repayment of moneys adj
vanced, as properly as a private proprietor
may draw, for like purpose, on his assets in
the shape of lots and houses or plantations
and crops Nothing has been more common
in certain quarters than to hear the debt of
the United States spoken of as trihing sum,
two or three thousand millions only, in COM
parison with the total wealth of the country,
say fifteen or twenty thousand millions. Apru-
dent man engaged in any lucrative business, it
is said, would not hesitate to borrow much
larger amount in proportion to his actual re-
sources, with perfect assurance of his ability
to discharge the debt, principal and interest
To be sure, men have been known to repay
loans to the value of the hall, two-thirds, or
even the whole of their estates. But is it to
be supposed that the government of the Uni
ted States, or Of any State, or of any city,
would dream of hquidating a debt equal to
one-half, or one-third, or one-fourth of all
the property owned by its citizens? Is there
on record any instance in which a govern
ment has extinguished, by full and final pay
property owned by its citizens? Each of
these questions challenges an unhesitating
negative. And yet it is estimated that the
entire wealth of the people of the United
States is not more than the quintuple of the
national debt, and that the total
value of their average net earnings per
year, say three per cent, is only about one
sixth of the debt and little greater than twice
the amount of its annual interest. 1t may
do for fnanciers of the Jay Cooke order to
disport in the fanciful assumption that the
pecuniary obligations of governments and Of
individuals rest upon the same sort of basis
and are governed by the same principles.
The fallscy deceives nobody but those who
want to be deceived. 1t does not, at all
events, impose upon money lenders. They
understand well enough that the solicitors
for public loans cannot, in the nature of
things. hypothecate anything more than a
small per cent. of the private capital of the
country, an amount that it is possible to real
ize by taxation out of the annual product of
to lie deeper than this, and to pledge both
skin and carcass if the fleece should not suf-
fee, they advance not one cent. If they can
get more than the fleece, to be sure they will
graciously take it; but no money will they risk
on SO unlikely a contingency.
1t is another fallacy in regard to the security
of public loans, to suppose that community
increases in debt-paying capacity in proper
ton as it increases in aggregate wealth and
numbers. On this supposition are based all
those schemes for raising money by discon-
tinuing drafts on the anticipated resources of
a city, or of "a State, or of the national govern
ment, in some future period. But no large
debt thus contracted was ever paid. And
the reason is easily explained. The debt
paying capacity of people is only another
name for tax-paying capacity. The expenses,
and therefore the taxes, OF -s.~ArnmAnt
grow with the aggregate growth of popu-
lation and wealth. Indeed, in almost every
instance, their rate Of increase is still
greater; so that Il, for example,
New Orleans should double the number of
her inhabitants and the amount of her private
property at the end of the next ten years, she |
would more than double, Judging from gen.
eral experience in such cases, her expenses
and taxes. If, then. the taxpaying capacity
of the people of this city is not adequate to
the payment of her present liabilities how is it,
ten, or twenty, or any number of years hence,
with still larger rate of exaction upon it for
current expenses, to meet the demands Of |
those large augmentations of the debt which |
it is now proposed to maker In the condi- |
tons supposed, and they form a safe basis of |!
calculation, the thing is not conceivable. 1t |
would be possible only in case that the |
average ability of individuals to pay taxes |
should increase in greater ratio than the
pecuniary wants Of the city government But
as the reverse has been the rule in nearly all |
instances, the idea that the financial position |
of the city could be really improved by dis |
counting at usury the taxable resources of |
the future may be resolved into the general |
proposition that insolvency may redeem itself |
by drawing upon still greater insolvency.