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To increase the embarrassments of the Government, individual and State credit had been nearly stricken down and confidence in the General Government was so much impaired that loans of a small amount could only be negotiated at a considerable sacrifice.
Aside from the permanent annual expenditures, which have necessarily largely increased, a portion of the public debt, amounting to $8,075,986.59, must be provided for within the next two fiscal years. It is most desirable that these accruing demands should be met without resorting to new loans.
Who dares take a risk, especially when disbursements are large and returns remote? Who dares lend on long credits ? If loans are still made they are not for a year but for a month, while the interest which, before the Revolution was six, five or even four per cent. per annum, is now two per cent. a month on securities."
The receipts in the Treasury from the 1st of October to the 31st day of March last, including the sums received on account of Treasury notes and of the loans authorized by the acts of the last and the preceding sessions of Congress, have amounted to $15,412,000. The expenditures during the same period amounted to $15,920,000, and left in the Treasury on the 1st of April the sum of $1,857,000.
The maker in this case is a friend who loans his name. As there was no value received such a note could not be collected by the payee. But if it passes into the hands of a third party, who endorses it, then the maker of the note can be compelled to pay. A note may be lost or stolen. The losing of a note does not release the maker from payment of the full amount on the date and at the place named.
The loan of sixteen millions was not contracted for at a less interest than about 7 1/2 per cent, and, although other causes may have had an agency, it can not be doubted that, with the advantage of a more extended and less precarious revenue, a lower rate of interest might have sufficed. A longer postponement of this advantage could not fail to have a still greater influence on future loans.
Under this system, the police of nations not having seen at first the essential contradiction of loans at interest, the wage-worker, instead of depending directly upon himself, had to depend upon an employer, as the soldier belonged to the count, or the tribe to the patriarch.
Don't reckon yourselves wiser than Natur', my billies. . . . As for steam trawlin', simmee, I han't heard so much open grievin' over it since Government started loans for motors. Come to think hey? there ben't no such tearin' difference between motors an' steam not on principle.
In part, also, the cost of the war was defrayed through loans. A portion of the amount borrowed was by the sale of War Savings This expedient was designed doubtless not merely to encourage persons of small means to aid in winning the war a beginning could be made with twenty-five cents but also to encourage thrift among all classes.
The general prosperity however was not due to any notable advance in official Economics. What it owed to the Government was the immense improvement in public credit brought about by the restored coinage, and the punctual repayment of loans and settlement of debts, coupled with confidence in a steady rule and freedom from costly wars.
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