The representative. [volume] (St. Paul, Minn.) 1893-1901, 1894-12-12
TOM WATSON TALKS.
A SARCASTIC DISSECTION OF
NATIONAL FINANCES.
Paying For the Privilege of Taking
Up Debts Before Due.

a bank, railroad, factory or store.
When Mr.. Cleveland became president in
1884, he found full treasury and an ample
revenue. Not only did the income of the
government meet it's expenses, but exceeded
them. There was a surplus in the treasury,
which soon became an embarrassment to
the administration. They said that the
country was being ruined by it. How to
get rid of the surplus was an exciting ques-
ton. The bondholders and national bankers
were ready with "a wise and conservative"
medicine for the occasion-as usual. They
proposed that the government should buy
! in the bonds which were not yet due, and
thus get rid Of the surplus" So meagre
were the resources of Democratic states
manship that no better plan could be sug-
gested than Of buying UP the unmatured
obligations of the government.
Mr.. Mills, of Texas, introduced the bill
which carried the scheme of the bondhold-
ers into effect Such complete lack of bust
ness sense was shown that they adopted no
prudential limits whatever to the price
which the secretary Of the treasury might
give for the privilege of buying bonds which
were not due.
d
took advantage of the situation. The law
gave the secretary no option. He was
dered to buy the bonds. Consequently the
bondholders held back for a premium. Usu-
ally when a business man pays a debt be-
fore it becomes due he gets a discount.
Nowhere in the world so far as we ever
heard, does debtor have to pay a pre-
MUM, a fine. a penalty, a bonus, a profit,
for the privilege of paying debt not yet
due. But under the Mills act our govern
ment did it. During the years 1888, we
could see in the newspapers, every day. the
regular news item about the purchase OF
the bonds.
The statement would be something like
this: THE secretary of the treasury ac-
cepted $3,0OO,0o0 in bonds yesterday at 124.'
Atlanta (Ga) Peoples Paper.
Being interpreted, this meant that the
government paid a premium of "a cents on
the dollar for the privilege of paying
debts not due. To discharge bonds amount
ing to $3,000OO0, the government thus had
to pay the $3,0O0,000 and "A cents on the
dollar besides ($720,000) making, in all, 49,
10000 What did the government get in
return for the $720,000? Nothing. The to-
tai amount of the premiums thrown away
in this manner under the Mills act aggre-
gated the stupendous sum of sixty millions
of dollars, in round numbers.
1t was a bonus, an unprecedented and il
legal bonus, given to a favored class, at
the expense of the unprvileged taxpayers
of the county,
We denounced this piece of legislation
at the time, as an outrage upon the peo-
pie, and our opinion of it has never
changed.
Let us be perfectly fair, and state that
the reason assigned for this Mills act was,
that it stopped the interest on the bonds"
The answer is plain: The interest was
only from to per cent, and the govern
ment could have done one of two things;
it could have found out beforehand what
the bonds could be bought for, or it could
have put a limit to the price in the act
itself
The moment congress passed law which
said the bonds must be bought, without
limit to price, it is quite apparent that
the bondho]ders We're, to all intents and
purposes, told to walk into the pantry and
help themselves. Being human, they act
ed promptly and the pantry suffered.
When Mr.. Cleveland retired. at the end
of his first term, there was no surplus to
hurt. It had been spent in premiums to
the bondholders, and in meeting the enor-
mously increased expenditures of the gov
eminent.
All this scheme of building up great
navy, at ruinOuS cost, originated with
Clevelands first administration, and in
every other department of the government
he very largely added to the sums which
were being spent before he and his rigid
economy appeared the scene.
During Harrison's administration the ex-
penses steadily increased, just as they
have done ever since, and when he came
to the end of his term, and gave way to
1.-The other twin" Cleveland, the national
pocket book had wan and emaciated APP
pearance-and SO did the taxpayers
We will do President Harrison the jus
tice to say, however, that during his term
he paid $3.50, 900 of bonded Indebtedness
of the country, and reduced the yearly in
terest charge of the government $12 600 900
The bonds he paid off were matured obli-
cations and no premiums We're given.
One of the notable events of his admins
tration was the continuance of the AZ per
cent bonds at 2 per cent.
In our judgment the law was violated in
the extension Of the bonds. 1t was virtually
a new issue of bonds. and we hold that
there is no authority anywhere. since 1873
for the issuance of any bonds whatsoever.
This view was held by the Democra tic
leaders at that time, and Mr. Foster was
taken sharply to task for continuing bonds
at 2 per cent. The statesmen who badgered
Foster about the per cent bonds are the
same distinguished humbugs who now say
it is all right to issue another s50,00O,oOo of
5 per cent bonds.
The bonds are coming-how many of them
nobody knows.
Think of it! Mr.. Cleveland paid these
bondholders S6000O,00O in premiums for the
privilege of paying their bonds before they
matured, and now he is going to give the
bonds back to them!
He violated the law in order to give them
the chance to take the "god reserve" out
of the treasury; and in order to get the gold
back, he violates the law to issue bonds.
Under his ruling Wall street can get as
many bonds it wants. 1t first gets hold
of lot of silver purchase notes. carries
them to Mr. Carlisle and demand gold. Car
Isle pays the gold. when the law says he
must use both silver and gold. Having
paid out his gold Mr.. Carlisle wants it
back again. How is he to get it? By is
suing gold bonds-in violation of law
Whereupon the men who had got the
gold out of the treasury with paper money,
give back the gold and get bonds which are
not taxed, and which reap a harvest from
the taxes of others.
Then if the bondholders want more bonds
they get up some more paper money, go to
Mr. Carlisle and demand the gold they have
lust paid out for bonds. Carlisle hands it
out-and then sells more bonds to get
back the gold
Nice finances, isn't it? Every time this
game is worked the country is burdened
with a great national mortgage called "a
bond issue"
Such finance would ruin any merchant,
manufacturer, railroader or banker; and it
will ruin our people.
tissue bonds to preserve the credit of
the government" So speak "the wise, con-
sentative Wall streeters.
Whose credit did a mortgage ever "pre-
serve?
Bonds are nothing in the world but gov
fr~qp oS a ho nv,