The daily gazette., 1880-05-26
GROWTH OF NATIONAL DEBTS.
taalr. -.

| IT-HoW THE DEBT WAS PAID OFF,
Reported for the Baltimore Sun.
Prof. Henry C. Adams, late fellow of
Johns Hopkins University, delivered
in Hopkins Hall yestel day the eighth
of series of lectures on national
debts, the subject being American
debt from 1889 to 1886. He said in
1889 one of the prominent questions
before the United States was that OF
the management of the public debt
which had been incurred during the
war against England. This debt was
IN confused state no regular pay
ments had been made, even of the in
terest, for many years,and consequent
ly the credit of the country was yery
low. This is explained by the fact
that though the articles of confedera.
tion empowered Congress to borrow
money, they provided no sufficient
means by which money could be OBJ
tained for payment. by the adoption
of the constitution this defect in gov
ernment was remedied, since the tax
ing power was thereby delegated to
Congress. 1t is not strange, therefore.
that the first bill debated in the first
Congress was one which provided for
national revenue, and that the fir 4
report from the first Secretary of the
Treasury was upon "Public Credit -
This report of Hamilton's Justly re-
ceives great praise, but the difficulties
of the problem to which it was ad-
dressed were not so great as some have
supposed. Certificates of indebted
ness had fallen to fifteen cents. but
credit was not entirely lost" The
lain, too, that America was Door is
inaccurate. She had a national in
come Of $3.50, 900, 900; her per capita
income was about fifty dollars, being
but seven dollars and a half less than
that of England, and ten dollars more
than that of France, Austria or Prus-
sia. Interest upon her entire debt
amoun cd to but three per cent. of in
come, whilst that of England in 1889
was six per cent. The difficulty of
the problem lay in the fact that the
people were unaccustomed to taxes.
except for local purposes; that the re-
sources of the country were untried.
and that every act was viewed in it's
political as well as its financial bear
ing. Esf
& Tbedebtifor which Congress as
responsible was foreign debt of Sill
10000 for principal and back inter
est, due to France, Holland and Spain.
and domestic debt of $42 400, O0O.-
To this was added the State debts.
which swelled the amount funded to
about S78, 000, 900. All agreed that
the foreign debt should be funded ac-
cording TO The letter of the contract
Respecting the home debt there was
great dispute, the opposition consider
ing it unjust that the present holders
of the certificates, who were specula-
tors, should be paid, and not the orig
inal creditors, who had received al
most nothing for their services render
ed 10 the country. 1t was a case in
which legal justice was opposed to fair
ness. MIR. Madison proposed a COM
promise TO the effect that the holders
of the debt should receive the highest
market price up to the date of the re-
port, and the original creditors the re-
mainder. This would have given the
speculators a profit of about 35 cents
ON an investment of Is cents; but the
amendment was rejected, and full
paym ent made to the holders of the
debt.
The question of the funding of the
debt came next up for consideration.
The bill for funding passed on the 4th
of August, 1890. The main purpose
in this act was to throw the weight of
the debt as far as possible inio the fI-
ture, because it was thought inexpe-
dent to levy taxes Immediately to the
full amount of the yearly interest. For
this purpose new loan was opened.
subscriptions to which might be paid
in certificates of old stock. The new
certificates or bonds issued were of
three kinds-first, six per cent. stock,
equal to two-thirds of the sum sub
scyibed. interest upon which began
from January, 1890; second, six per
cent. deferred stock, for the remaining
sum subscribed, interest to be paid
from January. 1900; and, thirdly.
three per cent. stock, which arose from
the funding of the "indents" or cer-
tificates of Indebtedness issued for
back interest. To induce subscribers
to accept the deferred stock, the gov
ernment bound itself not to pay any of
the six per cents more rapidly than by
an annuity of eight dollars for princi- |
pal and interest upon every one hun
dred dollars of stock.
The same principle of postponing
palt of the interest was followed in
funding the State debts which were |
although here no difference |
was made between principal and inter- |
est. Subscriptions were received in
certificates of Indebtedness, and each
subscriber received four-ninths in six
per cent. stock and three. ninths i'm
three per cent. stock, interest accruinp
from 1892, the remaining two-ninths
was given in six per cent. stock, with
interest frem 1900. These bonds were
subject to the same condition of paw
ment as the others. There was Joined
TO this funding bill sinking fund
clause, whicn established fund for
the purchase of debt. THIS fund was
made up of the surplus of The first
year, being quite consider able on ac-
count of the funding of that years in
terest, and of the proceeds loan for
two million dollars authorized for that
A sinking fund act was pass
ed in l795.
That the errors which permeated Eng
land respecting debt-payine were also
accepted in America Is evident from the
- ,ha cinkfnn f,,nI |