Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1894-07-27
PANICS OF THE PAST.
The Lowest Price Ever Reached BY
the National Credit.
Arithmetical Problem History Of Treasury
National Debt--soms Costly Panics.

:" HeHeVer bHerc Is u panic, followed Dy Ue-
preston in business, scarcity of money,
strikes and riots, there is always great
Dutcry that the administration is to blame;
that times never were SO bad; that money
never was so hard to get, and that there
never was such a complication Of indus
trial and financial troubles since the foun-
dation of the world. 1t is therefore great
consolation to turn back the pages Of his
tory and learn how wrctched our fathers
and grandfathcrs were, and incidentally
how very mean some Of them were, and
how foolish most Of the others. Know,
then, innocent friend, that there have
been many worse years than this; that
money has often been much harder to get,
and that, as to strikes and riots, 1894 is
but sitleshow compared with 1877. Know
also that all our secretaries Of the treas
ury have been fairly good men and some
Of them remarkably able financiers, such
MS Hamilton, Gallatin, Walker, Guthrie,
Chase, McCu1loch, Sherman and Man
ming, not to mention Carlisle, who is still
with us and not to be praised like the first
named until he is as dead as they are.
Credit at q Low Ebb.
The lowest point ever reached by the
credit Of the United States was in John
the government could not borrow at all at
any rate Of interest Treasury notes were
issued, and even congressman had to take
their pay in them. Senator Benton had
one Of these notes protested in January,
1912, and thus put upon the judicial rec
ord that the government was bankrupt
Very appropriately congress at that ses-
sion passed the most radical bankruptcy
act ever adopted under q constitutional
government, and the secretary said that
the number who wanted to avail them
selves Of it and start anew was at least
100, 600. The next lowest point reached by
government credit was In 1854, when some
bonds were issued Mt nominal 5 per cent
and others at 9, but the depreciation OF
grcenbacks concealed from the people the
real ratio Of interest. Hero Is case to
figure on: Fifty dollars In gold would
buy 81 900 In grccnbacks, for which a
$40 bond for 800 could be obtained, in
terest at 6 per cent In gold and payable
semiannually At the end of 10 years
such bond was worth its face in gold
was in terms payable in gold (morc strict
Iy speaking, COIN and could be sold at
that rate or refunded in a coin bond
Practically, therefore, the investor of 1864
received f2 per cent annually on his $50
Investment end at the end Of 10 years re
ceivod his principal and q bonus of $50,
being $160 for his original investment Of
$50. What rate of interest did he gctY l
have heard it estimated all the way from
Is to 20 per cont. l hayo therefore sub
mitted the case to Mr.. Mccoy and re-
ceived this reply
July i6.
DEAR SRA person purchasing n 500 per
ward for 500. interest payable and reinvested
scmannually, realizes 1913 per cent on his in
vestment. Yours respectfully,
Jas S. Mccoy, Government Actuary.
This is high authority, but just the same
do not believe it. | maintain that the
investor received n minute fraction over
30 per cent interest The man who figured
for tho house committee on appropriations
makes it fraction over % per cent 1t
will do schoolboy no harm to figure on it.
Another Depressed Period.
Tho next greatest depression Of govern
ment credit was in the closing period of
Buchanan's administration, when the
treasury notes were sold at discount
which made the interest 19 per cent So
far as Is determined by rates of interest
and facility Of borrowing, our credit is
now ut it's best, but IL Is claimed by some
that the highest point was really reached
in tho administration Of Franklin Pierce,
when Secretary Guthrie had to pay 10 per
cent premium on purchased bonds to get
the surplus money out Of the treasury. As
current rates 81 interest then were nearly
twice as high as now, II is assumed by
some that : pcr cent bond then CORE
spends with u 3 per cent bond now. There
Is strange error prevalent which sur
wives repeated demonstration of its falsity
namely, that Il low interest rate proves
prosperity. lii the majority of cases the
fact Is exactly tho reverse, for in an era OF
activity and rising prices there Is in
creased demand for money.
A Question of Figures.
The act creating tho treasury depart
ment was signed by George Washington
Sept 2, 1889. and Alexander Hamilton
was ut once appointed to BIC the head of II
ut 80 years of age Tho first tariff act had
been signed July 4, but there was no rev
enue from IL till the 10Th of September.
Tho problem before Hamilton was appall
ing in its simplicity. There was no money
and none coming in; there was debt
then roughly estimated ut 500, GOO, 900, be
sides inoaiculablc obligations to tho sol
diers of the Revolution and those who had
furnfSneu supplies. EXPERIMENTATION was us
simple as that OF the fellow in the old
story who married for money and found
that his mothcr-in law had / children and
10 negroes worth possibly 81, 900 each. HI
figured it. Eleven into ten goes nary
times and nothing over The estimate Of
tho financial board of the old confedcra
tionwas considerably reduced by Hamil
ton, but no recommended assumption OF
tho state debt 1t is interesting now tc
observe that Massachusetts, and South
Carolina had zach expended 81, 900, 600 fol
the common cause; Virginia, So, 500, 600
Pennsylvania 81, 200, 900; New York, only
$1,000, 600.
A Great Einancicr.
Hamilton finally figured 1t down to g
foreign debt Of Sl1, 7le.37S, a domestic
debt of $i0.0 oS5 and state debts to b,
assumed of S95, 900, 900, As a matter OF
fact, only SIS, 27l, Ts6 were assumed fol
the states. and tho rest was balanced
,if," in the expressive phrase of the time,
Hamilton and his successor, Oliver VOL
colt, had to kick this debt along by Dor
rowing and refunding for some years, but
in 1894 our first great boom" began.
There was war in Europe, and everything