The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-07-21

OIhER
But 1t is not necessary to go to the rec
prus Tor these facts. 1t is within our own
knowledge without regard to the custom house
tecorus that the United States used neithe.
the products nor the money of foreign ma
tl9ns to prosecute the civil war.
II is within our own knowledge that all the
1000, clothing and shelter of the army. it's
cannon, guns, ships of war and other equip
ment' were manufactured In this country
from raw material, produced In this country.
And as for money, 1t is also within our own
memory that not a dollar of foreign coinage
circulated in the United States during the
war.
But there is other evidence. perhaps still
more conclusive, that the consideration given
by England, the principal purchaser of the
government bonds in question, was neither
money nor tangible property of any kind.
England has not now, nor never had, six
hundred million dollars of money which she
could withdraw from her circulation and ex-
port TO this country or any other country in
payment for bonds or for any other purpose.
NO other country on earth has or ever had
that amount of money which they could with
draw from circulation and export in six
years.
1t has been shown from the records that
the United States exported over seven hun
dred millions in thirty-seveu years, but this
was only possible by reason of its being 4
producer Of gold. producing during the same
period about fifteen hundred millions.
England Is not a producer, but a consumer
of gold.
There is probably no subject connected with
practical affairs upon which the average
American is so densely ignorant as Of money
in general, and of the quality of money in
England in particular.
England is rich in interest-bearing securi-
ties and tncome-producing properties, but she
has no extraordinary amount of money.
The entire monetary stock of England is
stated to consist of $500, 900, 900 of gold, $115,-
600, 900 silver and $113, 900, 900 of circulating
bank notes. The only part which would be
of value as money if exported is the god.
And as there are no bank notes of smaller
denominations than $25, the pulk of the gold
of England is held as pocket money by
the people, which leaves but a comparatively
small quantity which can by any possibility
be exported.
land alone holds all the money of England
which can be exported. The amount held by
the bank varies from a minimum of say
$3.50, 900, 900 to a maximum of say $3.50, 900, 900.
A mere fraction of the amount which the
bank may at any time hold is approximately
the amount which it would be possible to ex-
port.
There can be no risk in saying that there
has never been a time since 1860 when our
foreign debt began to assume large propro-
tions, that England could have exported $780,
DOC, 900 in money to this country in exchange
for bonds or for any other purpose without
producing panic or ruin at home. AS to
England's ability to send America her prod
ucts in exchange for bonds it may be said
that, although the soil of England is produce
tive and under the highest state of cultiva-
ton. it is a well-known fact that it cannot
| produce OHG-HdI lue lGOu WHICH u OWh pSOplC
require. 1t has an insufficient supply OF such
raw materia! as can be made into clothing,
and of timber, for its own requirements. 1t
has a surplus, for the time being, OF iron ores,
which could be smelted and rolled into shapes
and exported in exchange for American bonds,
and in the early days this was done, out fr
a quarter of a century America has produced
its own.
And so if we should go through the whole
list in detail it would be found that England
has nothing and produces nothing tangible
L = oo-ll hy ~ DOScihi1itV he piVpn in
| exchange for ponds. All that the farms, the
forests, the streams, the mines and the man
ufactories of England produce will not sup
port her own people. In this sense there are
few countries so poor as England.
AS long ago as 1886 the value of England's
imports exceeded the value of her exports by
creased year by year, so that last year the
excess amounted to f2O2, 900, 600, the equivalent
of 81. 900, 900, 900, in a single year.
ANSWER TO THE CONUNDRUM.
The facts which have been produced con-
clusively prove that for the billion ana a
half of government bonds Whlch were soIu
abroad, mostly in England, for the pantry
sum of SIX hundred millions. and for the
billions of railway and other securities Wh1ch
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 banking must be
borne in mind. and it must also be under.
stood that bankers do not lend so much OF
what they have as Of what they have not.
The chief profits of banking are derived
from collecting interest on what the banker
owes. In fact, it is the most important rune
ton 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 a half of United
States government bonds.
A SWAPPING OF PROMISES.
Without attempting to trace the innumera
BILE details of the transactions the result of
the international exchanges, growing out of
the transactions, in effect, amounted to this:
The promises of the United States govern
ment to pay a billion and a half of dollars
in the form of bonds bearing an average of
6 per cent interest were sold by the govern
ment to Americans, nominally at par, because
paid for in deprecated greenbacks, and were
by them exchanged not for English gold, but
for the unwritten promises of the merchants
and bankers of London to pay only six hun
dred millions of dollars without interest. It
was in effect, a swapping of interest bearing
promises to pay 100 cents for non-:nterest
bearing promises to pay 40 cents.
The enormous profit realized by England
from these transactions will be easily appre-
c:ated when it is considered that 6 per cent
cents, and therefore England could redeem
about one-sixth of such non-interest bearing
PlOLnlSSS SdCH year ny cutting OH ana re-
turning the coupons of the bonds which it
had received in the swapping. Hence, in a
little over six years England's entire indebt-
edness to the United States on this account
was paid off, not by English gold CT by En-
glish productions, labor and Skill, but with
the coupons which the United States govern
ment pad. Besides, it will be remembered
that before these SIX years had expirpd the
principal OF the government bonds began to
be paid, not at 40 per cent of par. nor ar
par, but at a premium of more than half If
the original purchase price.
On the other hand, the wonderful credit of
the London bankers the mere use of which
was practically the only consideration which
was ever given for the bonds, cost them
nothing but the organization of their capital
and a long standing reputation for integ-
rity.
AN ASTONISHING STATEMENT.
1 am aware that the statements which 7
have just made. that practically the only
consideration which England ever gave for
the billion and a half of government bonds in
question. was the mere use Of English bank
ers' credit, for a few years, will be so start
ling and so Incredible to such of my au-
dience as are not familiar with the uses of
bankers credits that it will probably be re-
ceiVed with Incredibly by them. But make
the statements deliberately. and am prepared
to maintain it by proof. Indeed, | claim that
the facts which | have already produced
sufficiently prove the statements. Of course,
! must not be understood as saying that. as
between the individual American who sold
a pond or a number of bonds, and the indi-
vidual Engl.shman who purchased such bond
or Donds' the account was held open until
the coupons Of the bonds paid the agreed
purchase price. In a general way the modus
operandi of selling bonds abroad is to shin
the DondS against a merchants or bankers
transferred by the sellers draft against II
which passes from hand tn hand n @ a -