Evening star., 1927-11-20

1our drHCies on the UndnteS VI tHt F'h-
| eral Government. The next article, 20
I've published in December. viii deal with
the Nation 8 resources.
1t pays TO lend money TO Uncle
Sam for almost always he liquldates
his debts in a better dollar than that
! which he borrows The dollar which
we lent him in order 10 fight the
World War and to help our allies IN
doing So had a purchasing power or
! lust little over 80 cents. The re-
suit was that while the nominal, the
par value of the money which we lent
! to the Government was over S24.oo0,-
| 000. 900. these dollars served to buy no
more goods than S12 .00o,000,000 would
/ have bought in 1918. Since the close
of the war repayments Of borrowed
! money have been made in dollar
| having Il purchasing poWtr-on the
| aVera ge--of 81 cents, but this vas
| largely due to the very low value of
~ cents in 1926. Since 1920 the dol
| lar has been fairly stable at Il pur
chasing power approXimating two
| thirds of its pre-war value. If 1t pre-
serves this status until the debt is all
paid. say for the next so years, then
the bond holders will have RECEIVED
|
chasing power for the S12 .224 600, 900 of
purchasing power which they lent the
! Government according to statistics
compiled by the Bankers Trust Co. of
! New York
The same thing happened to the
| people who lent the money with which
the Civil War was fought They took
their money into the Treasury at
Washington. and into the subtreas-
uries at New York and other cities
and left il there as though it were a
votivc offering. not knowing that they
would ever see it again. This was
true especially in the early days of
the war after the disaster at Bull Run
and when Mcclellan was making his
Intellectual campaign against Rich
mond. The dollar which these de-
voted natirots lent for the conduct of
the war had purchasing power of
about CA cents. The dollar in which
they were eventually repaid had
purchasing power of about S1.O5-
again 1t paid to trust Uncle Sam.
Made Money on Mexican War.
The old gentleman Jared better in
connection with the financing of the
Mexican War period. He received a
dollar with purchasing power of
dollar ard cents and repaid this
borrowed money in dollar with a
purchasing power of about 81 cents
but in his financing of the second
war with England he Jared very bad.
~. for he received only a 50-cent dol
lar and paid back an S0-cent dollar
However. this was an unpopular war
and very difficult to finance. The
same thing is true for the Revolu-
tlonary War, but for different rea-
sons. People of means hesitated TO
lend money to the Continental Con.
cress. which had no right to levy
taxes. and therefore no means of as.
surlng repayment of borrowed money.
Hence 1t was that in the early days
or the war resort was had to issues
or paper money, which followed the
usual course of excessive fiat money
issues and shortly faded out of sight
III 1t had not been for the success
OF Arthur Lee. Silas Deane and Col
Laurens, of John Jay and John
ADAMS and above all of BENJAMIN
FrankEn in securing aid from Louis
ANI. TO a small extent from Spain
ana loan guaranteed by France
from Holland. and of Robert Norris
in his never-to- be forgotten efforts At
nome, the outcome of the Reyolu.
different S
From the close of the war until the
inauguration of Washington. what
John Fiske, the historian. aptlv call.
ed the critical period of our history
When there was only the semblan noe
or a central Government. even the
interest upon all forms of public debt
poth foreign and domestic. fell into
arrears Ihis condition led to the
auoption OF the present Constitution.
giving the central Government the
taxing power and other definite COW.
erhmental functions. The inaug,,ra.
ton of Washington as our FIRST Presi.
dent at Federal Hall, in New York
on April 30. 1889, and the appoint.
ment by him of Alexander Hamilton
as the hrst Secretary of the Treas
ury was followed immediately by
steps to fund the Revolutionary debts
OF the Continental Congress and. unon
the urgent advice of Hamilton. of the
assumption and funding of the state
deots. When the revolutionary debts
were all funded they were found To
amount to about S77.000,00O. of which
amount S12,S13,000 was due in for.
elsn countries-$7,562. 900 to thu
french government. S250,OO0 to Spain
ana s500,00O to Dutch investors. The
In full by 1896. partly from the pro.
ceeds of new loans made in the Dutch
markets and partly by the funding
OF s.. 10000 OF the French debt in
1893 into domestic debt. Our loans
10 Holland were all liquidated by
1919, Since then we have only directly
borrowed abroad in two or three in.
stances, but at times foreign investors
nave held considerable amounts of
the securities of our Government.
which they have bought in the open
market.
The Louisiana Purchase.
One of the most interesting of the
new borrowings abroad took place
when. in 1904, during Jefferson's ad-
ministration, we bought all of Frances
claims in continental United States.
known as the Louisiana Purchase,
thls involved an expenditure of Sl5.-
ooo,00o. This sum was paid by giving
France $ll.250.000 per cent bonds
and by assuming claims of American
citizens against France, chiefly for
depredatiCns upon our shipping, ag-
gregating s3,250,000. The opportu-
nity to make this purchase arose be-
cause of Napoleon's necessity for re-
sources with which to fight his wars
against the other European powers.
incidentally, it may be mentioned
that only a short time previously
Napoleon had taken Louisiana from
Spain. The Louisiana Purchase gave
'is title not only to the present State
OF Louisiana, but also 10 the territory
comprising the present States OF Ar
kansas. Missouri. Iowa, Nebraska and
North and South Dakota; also 10 the
largest part of the States of Min
| nesota, Kansas. Wyoming, Montana
and Oklahoma. and to about one falf
OF Colorado, an area larger than
Great Britain. Germany, France,
| Spain. Portugal and Italy combined.
In 1922 the Census Bureau estimated
the wealth Of these States at S60.St@,-
| 900 900