family of five persons owe $500 of the public debt, and, on an average, must pay the annual interest upon the same; say, from $30 to $40. A little reflection will satisfy any one, that the number of families that hold $500 of the national bonds, compared with the whole number, must be very small; and, therefore, that a vast majority can have no pecuniary interest in securing the payment of the national indebtedness.

In these illustrations, we see the folly of the assumption that a public debt gives security to government. Of all who are directly or indirectly owners of the public obligations, not one in twenty has so large an interest that he would not be greatly benefited by its repudiation. Of those who vote, probably not one in fifty has an interest in the public debt sufficient to counterbalance the taxation he must endure in consequence of its existence. How idle, then, to talk of the stability a national debt gives to a republican government, under which the will of the people is the supreme law!

On the other hand, who does not see plainly that such a debt, from the necessary taxation it imposes, must be a constant source of irritation and dissatisfaction; that a party will inevitably be formed for its overthrow, and that in such a party will be found sectionalism and all the bad and dangerous elements of society? The future peace and prosperity of the nation are more endangered by the national debt than by all other causes. In a country where the people have little or no power at the ballot-box, a public debt may, doubtless, be made an effective engine of tyranny, and contribute to the enslavement of the masses; but it is quite otherwise where suffrage is universal.

4th, A fourth fallacy is, that a national debt ensures protection to home industry, since the heavy taxation it causes will, if laid on foreign goods, secure that object. Having already discussed the question of protection, we need not now enter upon it; but remark, that a large national debt

does not make it certain that there will be a high protective tariff. Great Britain has the largest debt of any nation in the world; yet she has abandoned her protective system. She has become satisfied that such a luxury is too great a hinderance to her commercial prosperity, too heavy a burden upon her home industry; and that she can only compete with other nations, in her manufactures, by maintaining freedom of trade. No nation has had a larger experience of the operation of a severe protective system than Great Britain, and in none is it more heartily repudiated.

5th, But, again, it is said that a national debt is desirable, as a basis for a national currency. That this is an idle assumption, we have already endeavored to show. No such foundation is needed for any currency which the good of a nation demands. It is a false and pernicious system which requires any connection with national indebtedness. Debt is no sound basis for banking. Banks should be created to loan capital that exists, not debt for capital that has disappeared.

We will briefly notice one other fallacy in regard to a national debt; viz., that the generation which contracts it is under no obligation to pay it; since, having been contracted for the good of the country, posterity ought to share, at least, the burden of it. What is the principle involved in this statement? Clearly, that one generation has the right to create a debt for such purposes, and to such an extent, as it deems best, and impose on another the payment of the whole, or of such part as it does not choose to discharge out of its own resources. Can this be true? Does it not follow from this, that one generation has the right to enslave another, since, if it can impose a tax, it can enslave? for, to the extent of the tax, it is slavery, or labor taken without compensation. Suppose the tax carried to such an extent as to consume all the products of the laborer over that which is absolutely necessary to existence. If the present generation may lay a tax of ten dollars on each producer for all

time to come, it may lay one of a hundred dollars, or a thousand. If it may take away a fourth of a man's income, it may take a half, or why not the whole? The right to tax posterity at pleasure is the right to establish a most terrific despotism; and yet this is one of the popular sophisms of the present day.

A slave is one who does not enjoy the fruits of his labor, further than to preserve his efficiency, and to keep good the number of laborers. It is little matter in what way this is brought about, whether by lawless violence or legal exactions. The result is the same. The British laborer feels it, has always felt it, and, so far as we can judge from the present, always will. He cannot be bought and sold. That is chattelism; that would convert him into capital: but his earnings can be taken from him to pay interest upon debts contracted long before he was born, and for purposes that all now admit were useless.

If such is the effect of the principle which establishes the right to entail upon posterity unlimited indebtedness, can it be safe, economically considered? Surely no man can give an affirmative answer. "But nations must sometimes cre

ate debts." To this we reply,

1st, That the occasions when nations are really so compelled, or can rightfully do so, rarely occur. The great struggle through which the United States has just passed, is one of the strongest cases that has ever been presented; and yet, had the currency been sound at the commencement, and had a sufficiently effective system of taxation been adopted, there is little doubt that the war expenditures might have been met as incurred. It is certain that almost all the service and material was furnished by the country; and therefore, had the taxation been so laid as to apportion the amount judiciously and fairly, the whole cost might have been provided for, and we to-day be essentially free from debt. Without entering, however, upon this question, we can safely assume that the whole should be paid off

within the present century, which will also be within the present generation, as a generation is reckoned. We are told by the Secretary of the Treasury (Report, 1865), that two hundred millions paid annually, for principal and interest, will extinguish the debt within the period named. Does any one doubt the ability of the people to do this, if they will? Is it not their duty, if they can?

Unless it is the settled policy of the nation to have a permanent debt, it should at once commence the payment, and continue to discharge it in a regular, systematic manner; for, unless the work is commenced promptly, it will never be done. Like England, and other European countries, we shall submit to never-ending taxation for mere interest.

We need not pursue the examination of these fallacies further: indeed, an apology is demanded for noticing them at all. And that apology must be found in the respectable and semi-official source in which they originated. The pamphlet referred to would be of little consequence, however, were it not for a prevalent popular delusion, that, somehow or other, a national debt is real wealth. It is that fallacy which we have attempted to expose.

In conclusion, we will only observe that any people capable of maintaining self-government, and worthy of free institutions, will need no other bond of union than their common loyalty; no other sentiment than that of honor and honesty, to induce them to sustain a national debt, contracted in good faith for the preservation of national existence.

CHAPTER XIV.

RISE AND GROWTH OF THE MODERN FINANCIAL SYSTEM.

No large national debt has ever been paid, or in any way discharged, except by repudiation. The debt of the old French monarchy was wiped out with the "assignats."

The debt incurred in the American Revolution vanished in worthless "continental money." The present debts of England, France, Austria, and other European countries, are so large, the constantly increasing demand for more extensive and costly armaments so pressing, so absolutely overwhelming, that the hope of any payment of the principal cannot be reasonably indulged. A national debt may be regarded, under the existing war policy of the world, as a fixed institution, an inevitable appendage of government.

The United States, which, up to the time of the great Rebellion, formed the only exception among the principal nations of the earth, has entered upon the same course. That general system of finance, of which national indebtedness forms so important a fact in its influence upon the industrial interests of mankind, deserves a careful consideration.

When William of Orange succeeded to the throne of England, Louis XIV., then at the zenith of his power, refused to acknowledge him as a legitimate monarch, and espoused the cause of the exiled Stuart. War, of course, followed. But fighting, in consequence of the invention of gunpowder, and the changes it gradually introduced into warfare, had become an expensive luxury; a game which kings, with their limited and uncertain revenues, could ill afford to play at, particularly for a great length of time. War with one so powerful as the Grand Monarque could not be safely commenced or successfully prosecuted, while every penny must be extorted from a reluctant and now independent Commons, and the taxes immediately assessed on the large land or other property holders of the realm.

Such was the difficulty which King William encountered; but, fortunately for his fame, he was a shrewd financier, as well as an able soldier. Up to this time, England had never had a permanent organized national debt,,a national bank, or any regular and reliable system of revenue. Grants and subsidies had been voted, from time to time; duties and spe