- At the time we were funding our national debt, we heard
much about "a public debt being a public blessing"; that the
stock representing it was a creation of active capital for the aliment
of commerce, manufactures and agriculture. This paradox was well adapted
to the minds of believers in dreams, and the gulls of that size entered
bonâ fide into it. But the art and mystery of banks is a wonderful
improvement on that. It is established on the principle that "private
debts are a public blessing "; that the evidences of those private
debts, called bank notes, become active capital, and aliment the whole
commerce, manufactures, and agriculture of the United States.
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- Here are a set of people, for instance, who have bestowed
on us the great blessing of running in our debt about two hundred millions
of dollars, without our knowing who they are, where they are, or want property
they have to pay this debt when called on; nay, who have made us so sensible
of the blessings of letting them run in our debt, that we have exempted
them by law from the repayment of these debts beyond a given proportion
(generally estimated at one-third). And to fill up the measure of blessing,
instead of paying, they receive an interest on what they owe from those
to whom they owe; for all the notes, or evidences of what they owe, which
we see in circulation, have been lent to somebody on an interest which
is levied again on us through the medium of commerce. And they are so ready
still to deal out their liberalities to us, that they are now willing to
let themselves run in our debt ninety millions more, on our paying them
the same premium of six or eight per cent. interest, and on the same legal
exemption from the repayment of more than thirty millions of the debt when
it shall be called for.
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- But let us look at this principle in its original form,
and its copy will then be equally understood. "A public debt is a
public blessing." That our debt was juggled from forty-three to eighty
millions, and funded at that amount, according to this opinion a great
public blessing, because the evidences of it could be vested in commerce,
and thus converted into active capital, and then the more the debt was
made to be, the more active capital was created. That is to say, the creditors
could now employ in commerce the money due them from the public, and make
from it an annual profit of five per cent., or four millions of dollars.
But observe, that the public were at the same time paying on it an interest
of exactly the same amount of four millions of dollars. Where, then, is
the gain to either party, which makes it a public blessing?
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- There is no change in the state of things, but of persons
only. A has a debt due to him from the public, of which he holds their
certificate as evidence, and on which he is receiving an annual interest.
He wishes, however, to have the money itself, and to go into business with
it. B has an equal sum of money in business, but wishes now to retire,
and live on the interest. He therefore gives it to A in exchange for A's
certificates of public stock. Now, then, A has the money to employ in business,
which B so employed before. B has the money on interest to live on, which
A lived on before; and the public pays the interest to B which they paid
to A before. Here is no new creation of capital, no additional money employed,
nor even a change in the employment of a single dollar. The only change
is of place between A and B in which we discover no creation of capital,
nor public blessing.
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- Suppose, again, the public to owe nothing. Then A not
having lent his money to the public, would be in possession of it himself,
and would go into business without the previous operation of selling stock.
Here, again, the same quantity of capital is employed as in the former
case, though no public debt exists. In neither case is there any creation
of active capital, nor other difference than that there is a public debt
in the first case, and none in the last; and we may safely ask which of
the two situations is most truly a public blessing? If, then, a public
debt be no public blessing, we may pronounce, à fortiori, that a
private one cannot be so. If the debt which the banking companies owe be
a blessing to anybody, it is to themselves alone, who are realizing a solid
interest of eight or ten per cent. on it.
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- As to the public, these companies have banished all our
gold and silver medium, which, before their institution, we had without
interest, which never could have perished in our hands, and would have
been our salvation now in the hour of war; instead of which they have given
us two hundred million of froth and bubble, on which we are to pay them
heavy interest, until it shall vanish into air as the Morris notes did.
We are warranted, then, in affirming that this parody on the principle
of "a public debt being a public blessing," and its mutation
into the blessing of private instead of public debts, is as ridiculous
as the original principle itself. In both cases, the truth is, that capital
may be produced by industry, and accumulated by economy; but jugglers only
will propose to create it by legerdemain tricks with paper.
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- http://etext.virginia.edu/etcbin/ot2www-foley?specfile=/texts/english/jeffers
on/foley/public/JefCycl.o2w&act=surround&offset=2554431&tag=2013.+
DEBT,+Public.+--+&query=private&id=JCE2013
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