New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-04-13
STATE IND LOCAL DIETS.

Two grave problems CONFRONT lne statesmen
of to- day. One is to preserve for the country
the best currency yet devised by mankind, and
to provide for such expansion of it as the
growth of the country may hereafter require.
The other is to free the country from the curse
and shame of an irregular, constantly disputed,
half dishonored and constantly growing State
and local Indebtedness. 1t is possible that
these two problems, either apparently insoluble
by itself, if considered together may solve each
other.
The bonds upon which the National bank cir
culation is based are rapidly being redeemed.
Within ten years, at the present rate of retire.
ment, all the bonds except the four per cents
will have been cancelled, and the four per cents
Will have become too costly to serve as profit
able basis for circulation. Already, the growth
of the system and its adaptation to local needs
have been arrested by the change in the bonded
debt. In a short time, unless the basis is
changed, the banking system will cease to be
capable of expansion, will begin to decay just
when increase of circulation is needed, and
will then be nuisance. But it is difficult to
suggest any change in the basis, if other than
National bonds are permitted to be deposited as
security, without impairng the value of the
notes. The NATIONAL uniformity Oh Ndlue IT,
quires National security.
Misconduct as to State and local Indebtedness
has brought reproach upon our free institu-
tons. The disgrace has affected the whole
country. The destruction of credit has fallen
upon some States, counties and cities like
blight At other points the burdens have been
intoerable and have produced complete par
alysis. The new census shows that the State,
county, township, school district and municipal
debts aggregate more than $l,2OO,OOOOOO.
The average rate of interest upon more than
two thirds of that amount-the municipal debt
is over 6 per cent, and the average OF the
whole is probably not less. Hence the burden
of these debts alone is $72,00O,OOO yearly. If
no provision whatever is made for payment or
reduction. The interest on the National
bonded debt of 81, 100000 900 is now less than
500, 900, 900, and it might be possible for the
Nation to make arrangements satisfactory to
State and local creditors by which the burden
of debt could be greatly reduced. In doing so
the Nation might either issue guarantee new
bonds, which would serve for many years to
come as basis for safe, uniform and gradu-
ally expanding National currency. 1t is not
contemplated that the Nation would assume
any part of the burden of States or municipali-
ties. The debt which the people of these com
munities have incurred it ought to be their
pride and is their duty to pay. Not one dollar
on their account ought to be paid by citizens OF
other States or cities which have not incurred
debts or have honOrably discharged them. But
perhaps it is POT sible for the United States, by
general law and with the formal assent of any
community having outstanding debts, to assume
or guarantee the payment of interest and ulti-
mately of the principal, upon having conceded
to it power to enforce the collection of a sufh-
cient sum in taxes. Primarily, no change in
mode of taxation would be requisite. The
State county or municipality could simply bind
itself to pay TO the United States Treasury the
sum required each year to meet the interest
and ultimately the principal of the debt as
sumed OF guaranteed. AS long as this payment
was regularly and promptly made, the local
tax might be collected as it is now, under local
laws and by local officials. But power would
be given to the United States, whenever any
default or delay occurred, to enforce its claim.
at once either by seizure of property or reye-
nucs or by levying and collecting tax through
Federal officials
The details would not be found as difficult to
arrange as mt first they may appear. The GER
tainty that the United States could and would
collect would make every community certain to
pay that claim in preference to all others.
Moreover, with formal assent by the State or
municipality, and the passage OF such local
statute as would be preliminary required, the
United States could compel the payment of
tax without other machinery or officials than it
now employs. One point of difficulty would be
TO secure the assent of indebted communities 10
a step which would put it cut of their power
ever to repudate.
The inducement to that end, however, would
be strong. Many cities OF States might save