New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-06-15
AMERICAN CREDIT ABROAD
FIFTH LETTER FROM Ex- sECRE TARY
McCIIlIO(.H

WHY TIKI NATIONAL CREDIT OF TIE UNITED sTAIxs
OUGHT TO DR EQUAL 10 THAT OF ANT ofnxa
NATIONALITY 1T IS NOT-DIsHOSoRgD STATE
NEUTRALITY-SUSPICIOUS. AS AN ILLUSTRATION.
70 tho Edifor Of The Trfb"ne.
SIR: Absence from London and other engagements
have prevented me from continuing for some weeks
past my correspondence with THE TRIBUNE. In ny
previous letters l have alluded TO such facts In
regard to the financial condition OF France-ths
habits and characteristics Of her people, tho merits
and faults of bcr governmcnt-as l have thought
might be interesting to your readers. and perhaps
worthy Of their consideration in the existing circum.
stances of the United States In this letter shall
speak of our National Credit.
The credit of the United States, a nation. ought
to DO, and but for the facts to which shall ailuds.
would DO equal if not superior, to that Of any other
nation. The United States not rich in accumu-
lated wealth; no Young nation can be. The wealth
of the nations Of the Old World is the result OF long
years of industry aad economy, stimulated and pro-
tected by wise laws and good governments, or Of .
patient and persistent thrift that has created
wealth in spite of unwse laws and bad governmental
Tho United States are not . rich nation,
but they possess the means OF becoming and
they will in time become, the richest nation In
the world. Many a hard lesson must. however.
be learned by the people from experience, tho 90
verest and most thorough of all teachers. before
this will DO accomplished. But although the
United States arc not rich In accumulated
wealth. there are the best Of reasons why the ma
tional credit should be exceptionally high. l viii
briefly state them, and then refer to tho causes
which have prevented it from being so:
First Tho United States are moro rapidly incrcas-
ing in population than any other country, and their
inhabitants are not excclled. if they arc cqualed,
in energy, inventive talent intelligence and pos-
sonal independence.
Secondly: There is no country possessing moro
excellent soil, rich in minerals. none thas
can successfully compete with them in the produo-
ton of articles Ct prime necessity
Thi, din: Notwithstanding somewhat free eypen-
dture of the public money, tho Government of the
United States burdened by standing army or OK
pensive navy, is, in comparison with that OF other
great nations. economically administered.
Fowtkly: The traditional policy Of steadily 70
ducing the public debt is being persisenty adhered
to- under circumstances which render this am"ss
exceptional policy in the highest degree creditabie
Regarding the United States in these particulars
alone. the conclusion would 10 irresistible that the
national credit ought to be Of the very highest char
acter. That it is not is attributable mainly to TIVE
causes.
First To the default Of the States.
Seooudly To tho apprehension which exists in the
minds of many capitalists and small investors Ian
apprehension that will entirely cease as long
~ an unredeemablo and deprecated currency
maintained by the Government that the United
States bonds may be called in and paid in legaten-
der notes.
In this letter shall speak of the defaultng Sates
II is true that American credit las suffered by the
failure of so many Of railroad companies as have
within the last two years gone by the board" en-
failing immense losses upon the holders OF their
bonds; but these failures have had altogether less
influence in shaking the confidence of men who look
beyond the mere question of pecuniary loss in
American credit and American character than the
default of the States.
The Government of the United States is not only
peculiar in its republican and somewhat democratic
features but in the fact that it embraces within
itself States with many of the powers and immune
ties of sovereignty This feature Of our complex
system ia only imperfectly understood by even in
telgent foregners-it is in fact understood only by
the very few who have made the Constitution OF
the United States q study. To large majority OF
investors it is utterly unintellgible. That STATE
should have the power to contract debts, be able 10
shield itself against prosecution for the non-fulhl-
mcnt of its obligations by its sovereignty and at tho
same time be 80 situated as to avoid the RESPONSE
bty TO which 1t might BIO held by the laws OF na-
tiOns if it independent is so novel feature IN
q national organization that it is not strange IL
should not be readily cOmprehended; nor that repu'
diation dfanlt by State should affect njurousiy
the credit of tho nation of which it forms part.
"Why should u nation be trustworthy when the
States that compose it have shown themselves TO
be untrtlstworthyT "What assurances havo we
that your Federal Government, as you call it, will
under all circumstances be faithful to its obliga-
TONS while so many Of the States Of which it
made up are unfaithful to theirsT
Such are tho questions which the holders Of dis
horored State obligations are apt to put to Amen-
cans, when the credit Of the Government is being
discussed, and they questions which arc nos
easily answered to the satisfaction. at least, OF the
questiOncrs. Now. as very few OF the holders OF
these dishonored State obligations ara disposed to
invest in any kind of American securities. and ~
these holders are numerous and each has some
friends whom he influences, it will be readily
perceived how much smaller must be the number OK
purchasers of Government bonds than it would b
if all the States bad kept faith with their creditorS
Omtting all mention Of the States which are doing
nothing and which not proposing to do any
thing toward paying their debts, l shall refer "
Two cases to which my attention has been called, N
addition that general discrcdt which attaches 70
nearly all the States by reason OF their paying IN
currency the interest which ought TO be paid IN
coin. Tho cases to which shall especially refer
are those of Indiana and Virginia.
Since have been in London have been frequently
and painfully reminded Of the faci-a fact thati
had almost forgotten-that considerable amount
of the old Internal Improvement bonds of my own
state are still outstanding 1t is only a few days
since an old gentleman called upon me with soma
United States railroad bonds, which had matured.
and which he desired TO have cashcd or forwarded
for collection These said he, he handed mo