The representative. [volume] (St. Paul, Minn.) 1893-1901, 1897-07-28
1.-The following is the detailed statement
by years:
$327, ,S42, III $45. .3os, ,Sg1 ses2, So. $40
WAS MERCHANDISE THE CONSIDERA-


"Since it seems clear that the foreigners
who bought 1:uing the war period. bill
lion and half Of the United States bonds
for only $500, 000, 900, did not pay for them
with money, 1t would seem natural to
expect that they paid the $500, GOO with
me r. chandise. And the custom returns snow
that as a matter OF fact, during the five
years 1852 to 1885, inclusive. the imports
of mercha ndise exceeded the exports by
about 1854, coo, 600, or about 60 per cent OF the
purchase price Of the bonds. But against
this, we have shown. this country paid
SIS, eco 900 of gold. and in addition also ex-
ported about 900 Of silver, at Its gold
value in excess Of the importations Of
silver.
Taking into consideration therefore the
merchandise. silver and money (gold) dur
ing the four years of the war and the
following year of settlements, the imports
exceed the export by the COM
paratively small amount Of $e4,OOO,OoO. which
is only about three per cent Of the par.
and only nine per cent OF the purchase
price OF the bonds.
The paltry three per cent Of the par
value or nine per cent of the purchase
price. constitutes the only tangible thing
which the records disclose as ever having
beer sent to this country IN exchange for
q billion and half Of government bonds.
WAS EASILY EARNED.
After giving other evidence of the same
facts President Stickney goes on to say:
"The facts which have been produced
conclusivey prove that for the billion and
half Of government bonds which were
sold abroad mostly In England, for the
paltry sum Of six hundred millions, and
for the billions Of railway and other securi-
ties which have been sold since she gave
us in exchange neither merchandise nor
silver, nor gold, nor any other tangible
thing whatsoever.
1T is undoubtedly true that the principal
foundation Of this vast Indebtedness was
the government bonds sold during the war
period. To understand this remarkable
transaction England's supremacy in bank
ing must be borne In mind, and 1t must
also be understood that bankers do not
lend 80 much of what they have OF
what they have not. The chief profits of
banking are derived from collecting in
terest on what the banker owes. In fact
1t is the most important function Of the
bank to produce loanable credit which
performs many of the functions Of money
and may be circulated, either by notes or
checks. 1t was such credits to the extent
of six hundred millions which were given
In exchange for a billion and half of
United States government bonds.
THE enormous profit realized by Eng
land from these transactions will be easily
appreciated when 1T Is considered that
per cent on 100 cents Is equal to Is per cent
on 40 cents. and therefore England could
redeem about One-siXth Of such non-int er est
bearing promises each year by cutting of
and returning the coupons Of the bonds
which 1t had received in the swapping
Hence. in a little over six years England &
entire Indebtedness to the United States
on this account was paid off. not by Eng
lish gold or English productions labor
and skill but with the coupons which the
United States government paid. Besides.
1T will be remembered that before these
six years had expired the principal Of the
government bonds began to be paid, not
at 40 per cent of par nor at par but at a
premium of more than half the original
purchase price.
''On the other hand. the wonderful credit
Of the London bankers, the mere use of
which was practically the only considera-
ton which was ever given for the bonds.
cost them nothing but the organization of
their capital and a long standing reputa-
tion for integrity.
SUBSEQUENT PURCHASES.
Having thus obtained billion and half
OF six per cent bonds, the subsequent ac-
cumulatton of American railway and other
bonds and securities without exporting ia
America either money or merchan ndise in
exchange. became easy. For every six
months they had a coupon amounting in
the aggregate, at the end Of the first six
months to, say, $45, ,000, ,000 and at the end OF
the next six another 81, ,OOO 600, and in
addition the interest on the first 49, 0O0, ,OOO
and the amount annually available from
this source has kept on increasing in the
geometric ratio Of the compound interest
tables ever since, until now 1t probably
amounts to the full average value Of an
entire wheat crop OF the whole United
States