The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1874-02-02
Fstuous Schemes OF Paying tho Debt
or InAating tho Currency.

Fstuous schemes OF Paying tho Debt
or Innating tho Currency.
There is but one verdict which history can
pronounce when it comes to survey the fnan-
cial vicissitudes of this country since the war,
the crude plans of its Ministers, the idiotic
measures OF it's legislators the willy schemes
OF it's political managers or the extravaganza
and impossible theories preached to the
masses. That verdict is, San era OF folly,
corruption and delirium."
| To retrench expenditure; to fix the measure
ofvalues; to cheaper the cost of that measure
these are probably the postulates into which
the greatest practical problems that affect our
country to-day would be thrown by men of all
parties. There is no question about retrench-
ment It's absolute necessity is universally
conceded, except only by those loathsome
parasites of the Treasury who fatten upon a
prodigal expenditure. Here the ways and
means are matters of little consequence. Re-
trenchment is welcome, no matter the form in
which it comes. But single doubt presents
itself in this connection, and that is concern
ing the policy of disseminating to pay off the
public debt.
To pay off national debt and to pay off an
individual debt involve entirely different con-
sideratons Individual credit compared with
national credit is low, and the market rate of
interest charged for loans of money to indi-
viduals is high because the risk is high. And
since the rate of net profits of the capital en-
ployed by individuals in their dealings or in
vestments is certain to be less than the rate of
interest they have to pay for money, it is usu-
ally advantageous for them to pay off their
debts as soon as convenient. Not so with
nations Under good management their debts
are susceptible of being funded at rate of
interest quite rs low as the average net rate of
profit on capital-sometimes lower; and in
such case there is nothing to be gained by
paying them of, whether convenient or not
If money is worth to the taxpayers of this
country, on the average, seven per cent per
annum. there is obviously no advantage in
their paying off debt of money which they
are borrowing at an average rate Of five per
cent The interest charge is therefore the
only source Of concern which nation should
have with reference to its debt. To pay off
the debt even when it has the means already
reasons stated, be losing operation ; to pay
it off by instalments, with means wrung from
time to time through taxation from the hard
hand of toll, is sheer madness.
1t has, however, been claimed by the sup
porters of the debtpaying policy that to lower
the interest charge was the very object they
had in view. The payment of a portion of
the debt, they argue, will give assurance of our
ability and willingness to pay the rest as
though the bondholder- interest it is, so
long as the bonds draw high rate of interest,
that they shall not be paid off-was not capable
of calculating this ability and willingness as
well as the rest Of the people This part pay
ment will result, they continue, in an apprecia
ton of the bonds and enable us to fund
them at lower rates of interest. Messrs.
McCulloch and Boutwell, both held these
views and tried this policy without success.
They did not appear to be aware that the mar
ket rate of interest for money is always sensi-
bly, affected by the current amount and eco
nomical expenditure of taxation. High taxes
and wasteful expenditures, particularly when,
as now, they are accompanied by their usual
concomitants- corruption, insecurity and
lax administration of justice-will themselves
tend to render money dear; for who will lend
cheaply to spendthrifts or where justice can
not be enforced with certainty? Therefore to
tax nation heavily, as we are being taxed
now, with the object of acquiring large sur
plus wherewith to pay off portion of its
debt, is precisely the way not to diminish the
rate of interest which the remainder of the
debt will have to pay. With light taxes,
economy and rigid enforcement of the laws,
the nation could go into the market and
borrow all the money it needed at three per
cent, and with this money it could pay off its
existing debt on which it is now paying an
average of five per cent; but with the con-
tinuance of the present system it can no more
readily lessen its interest charge than man
can hoist himself into the air by Juggling at
his brooches bands The principle in the two
cases is precisely the same.
Another very important consideration in
connection with the public debt is the
unavoidable perturbations in values and COM
merce occasioned by the collection of large
sum of federal taxes, its incidental retention,
first by officials. next by the national Treas
ury and then by the public repositories, "
and its eventual distribution through the dis
bursting departments of the government In
this way no less than four hundred million
dollars year-a sum equal to the entire out
standing greenback currency-is sequestered
from public use as money, either to benefit
revenue officials or the banks, to lie idly in
the Treasury or be sustained in continual and
useless voyage about the country in the locked
safes of express companies. At the present
moment of time no less than one hundred
millions of public money are thus kept from
their vitality useful purpose of measuring values
and promoting industrial activity Will it
dare be maintained that such tremendous
onJ oopcfopf oaouaot ra t;o,, &c o,rro,cx no,