The Republican journal., 1870-04-07
A RADICAL FINANCIAL HUMBUG.

HC SpCCldl dulCullOu VI Jul ICiuCIS 10
called to an article on the outside Of this pa
per, copied from the Harrisburg Patriot 1t
is devoted to a pricking of the bubble by
which Mr.. Secretary Boutwell, seeks to amuse
the people of this country, and the delusion
that the national debt is being reduced.
We ask that every subscriber to the Journal
shall give to that statement a careful read
ing, and then pass it to his neighbor There
is food for reflection in it.
We had occasion, year or two ago, to ex-
pose the same fallacy in the report of the
Treasurer of the State of Maine. He, too,
had bought quantity Of the bonds of the
that the principal and interest on those ghost
ly securities should be counted as assets, and
that the interest they were rolling up would
in time eXtinguish the remainder of the debt !!
And no doubt a good many honest but de-
luded members of the party swallowed the il
fusion, and praised the sagacity of the State
Treasurer. This growing rich on the inter-
ests of ones debts, is 4 conception that never
existed previous to the present radical party,
and will not be likely to survive its fall, which
we pray the Lord may be near All previous
authorities have regarded bonds of q State or
nation like the notes Of an individual, as ev-
licences of money spent. 1t remained for the
party in power to 50 reverse things that they
shall appear rs evidences of money earned,
and to solve the old time problem. OF how
Jack can eat his cake and have it, too.
A sinking fund, in the DAYS Of sound poit-
zeal economy and finance, was founded upon
a different plan and it is nj this time by pri-
vate corporations. The kenncbcc & Port
land Railroad Company has a sinking fund,
but the clear headed managers Of thai cor
poraton permit it to be constructed of no
such rotten timber as does Mr.. Boutwell,
That company's fund is made up Of the bonds
of the nation, state and cities When its own
bonds are paid they are 50 much waste pa
per, and nothing more. As 4 matter of fact,
national or state sinking funds, even upon
the best principles, are humbugs. Adam
Smith, confessedy the soundeSt writer on
these matters, in remarling upon the British
National Debt, says
To make capital increase at compound interest
it must be employed in some sort Of productive in
tlustry; and the profits, instead of being consumed
as income, must be regularly added to the principal
to form new capital. 1t is unnecessary to say that
10 such sinking fund has ever existed. Those thai
have been set on foot in this and other countries,
have all been supported either by loans or by the
produce of taxes, and have never paid off a single
larhng of debt by their own agency.
If i clear from This statement that when thprn
is no surplus revenue there can be sinking fund.
Dr. Price. however. did rot serupe to lay it down
broadly, that TO suspend the sinking fund during
war. though the expenditure might then greatly cx-
coed the income would be the greatest Imaginable
folly. And Uncomfortable as ii may now appear,
all parties in parliament coheurred III the sound
ness of his opinion, and approved the policy OF
keeping up the sinking fund machinery throughout
the whole OF last war! Hence, the loans for the
service OF the year had to be increased by the
tire amount of the sums placed ut the disposal of
the sinking fund commissioners that for every
shng's worth of stock transferred to them by
this futile proceeding. equal amount of new debt
had TO be contracted, exclusive Of the loss incurred
though the expense of management sc.
For upwards of twenty years this pltful lugge
was kept up; parliament and the nation believing.
notwithstanding the most decisive experience to
the contrary, that it was rapidly diminishing the
public debt, Dr. Hamilton, of Aberdeen. had the
merit of lisSipating this dellson. the grosSest
tainly. that ever imposed on any people. He show
ed, in his work on the National Debt published in
1873, that the sinking fund. instead OF diminishing,
had really added to the debt and he proved to de-
monStritOn, that the excess OF revenue above cN-
pcnditurc is the only sinking fund by which any
part of the national debt ever be discharged.
With these views Of 4 sinking fund, con-
structcd upon the principle o boarding other
securities than those it was designed to opor-
ate upon what would Adam Smith have
said to fund built ''likc the bascleSs fabric
of dream" on cancelled and dctlnct bonds
worth perhaps three cents 4 pound for the
paper mills Surely no one but the financial
representative of the party that has main
tanned its existence by hoodwinking the peo-
pie, would ever dream Of putting forth such
4 transparent absurtlity Success has made
Mr.. Boutwell, very bold.
1t is stated that Governor Chamberlain will
appoint a Democrat on the Paper Credit Com
mission, and that Hon E. Wilder Farley will
be the man. Some weeks ago, without any
means fprophesying concerning the matter,
we expressed the opinion that Gov. Cham