The Grange advance., 1874-06-24
Insurance Monitor for june

Next to mortgages, public bonds are the
principal investment Of our insurance COM
panies. The mortgages, if properly select.
ed, have a fixed value, but the bonds will
t1uctuate with the presumptive ability or
good faith of the people. With life com
pany especially, the problematic future
value Of national securities is not reduced
to question Of one year or five years. The
investment is of permanent character.
What State or Government bonds will be
worth twenty-five years hence, if it could
be answered, would be deeply interesting
query. It may be said that the future pros
perity of all our financial institutions large
ly depends on the future of our public
debts.
In paper recently read before the Brit
ish Statistical Society, Mr.. Dudley Baxter
gave the very concise and instructive his
tory Of the national debts of the various
| countries. The public debts Of all nations
now amount to "a. sc, 100000. All but
! about ZOO, ,O00, 900 of this amount has
been contracted within the last twenty five
years, and the principal increase has been
since 1860. Up to 1860, the borrowing was
chiefly European, caused by the revolution
! Of 1S4S, the Crimean, and the Franco-Aus-
trian wars. Since 1860, our own and the
| two Prussian wars have caused the issue of
immense volumes of these securities. both
| in Europe and America. In addition, as
! the author observes, the mania for borrow
! ing seems to have spread all over the earth,
and petty states of all nationalities ard de-
grees of civilization have become vigorous
competitors for the absorption of all the
loan funds in the markets. The average
increase of national debts since 1860 has
been &200, 0,000,0 900 annually, and, as MIR.
Baxter observes, if kept up for twenty five
years to come, the aggregate will reach
Gl0, 600, 600 900, on which the interest at
five per cent. will equal the public reven-
ues of combined Europe and America.
The facts thus stated by Mr.. Baxter ap-
pear of startling purport. Except to very
not represent public improvement, or any,
thing Of present value. They are simply SO
much capital sunk in war, for which the
various nations have mortgaged the prop
erty of their citizens. One of three things
must apparently happen, either the present
borrowing mania must stop, the worlds
wealth must enormously increase, or bank
ruptcy, practical reputation, and an ex-
tensive decline in the public credit must
follow. So far as Europe is concerned, the
prospects of the first, it must be confessed,
are not very encouraging. The enormous
blood and treasure split during the last ten
years, SO far from assuring the general
peace, have left the situation more critical
than ever. Unless all appearances are de-
ceptive, the questions Of Sevastopol and
Sedan and United Italy will have to be
fought over within the next generation.
Never was Europe in time of peace such a
vast military camp in training for the COM
ing struggle. No room is left for reducing
expenses during the interval.
! So, too, all increase of wealth to meet the
drain does not afford, in the old world, a
very hopeful prosperity. Germany is an
nually pouring nearly a hundred thousand
of her most valuable citizens into our midst
refugees from the crushing exactions Of
the State.
Regarded simply from this general stand
point, national securities, as class, do not
present very encouraging picture to con-
template.
But a closer analysis Of the individual
States, whose figures are given by Mr.. Bax-
ter, will materially modify this view. Prior
to lS48, England had been the great bor-
rover Of the world. Her debt at that date
equalled those of all other States combined.
But she has since reduced the sum. Her
Indebtedness is smaller to-day than it was
twenty-five years ago, and the interest rate
commanded by her corsols is the lowest of
any IN the market-only 1-2 per cent.
This, as the writer observes, is the dis
tinguishing feature among the States.
Although the beginning of the debts are
the same, after the emergency has passed
the we'll managed State aims at reduction,
while those badly governed continue to
borrow and increase their debts year by
| year. The securities Of the one class con.
tinue firm, while those of the other are de-
preciated, commanding a high interest on
their market value.
Among the first, Notwithstanding the
enormous sums so recently borrowed, will
be found our own country and all the
States of Northern Europe, with interest
rates ranging from four to FIVE and half
per cent, while every nation Of Southern
Europe, including Austria, can only float
their bonds at high interest, from nearly
seven to over ten per cent, and our South
American States adjacent to the equator are
compelled to pay rates simply ruinous,