Chapelle, the debt had already risen to £79,293,713; and at the close of the Seven Years' War, which brought no advantage to England, in 1763, had nearly doubled, being then £138,865,430. The American war increased it still further; so that at the peace of Versailles,

In 1783, it had again nearly doubled, reaching the enormous figure of .

During the next ten years it was reduced

Leaving it at the commencement of the French revolutionary war

£249,851,628 5,732,993

£244,118,635

Nine years later it was more than double that amount, being then, in 1802, £520,207,101. The wars against Napoleon, which also did England no good, left the national debt in 1814, at the emperor's first expulsion, £742,115,067. His second expulsion required another loan of £45,000,000, and increased the national debt to that extent. It is about the same amount now, that is, £780,000,000. The interesting question here is, whether the people of England would have voted these loans, through Parliament, if the additional debt, incurred from time to time, had been levied upon them directly, and if they had not been deluded by the supposition that posterity would have to pay the debt, and that they would only have to pay the annual interest on it? As Great Britain reaped no real immediate benefit from those wars, and was not compelled to undertake them in self-defence, I am inclined to believe that the people would have voted down each loan almost unanimously, if they had been told in dry figures that their taxes, which in 1793 amounted to only £17,170,400, would within twenty-two years, in 1815, at the close of the wars against France, amount to four times that amount, -i.e., £70,403,448 a year. Great Britain, however, has done one wise thing in the issue of those bonds, in that it has made them irredeemable, only the interest being payable.

We have another illustration, however, closer at hand, in the financial experience of the city of New York.

In 1830 the public debt of that city amounted to about $900,000, at which figure it stood, with small fluctuations, until 1836, when it was increased to $1,282,103.58. Seeing how easy it was to increase its public debt, the city, in the next year, nearly doubled it, and in the following year again, and then again, so that in 1839 it had already reached the respectable amount of $7,126,790. This was still further

increased to $13,316,292.86 in 1842, at which figure the debt remained stationary for full ten years.

During the decade 1852-1862 it was swelled to $21,695,506.88. Then came six years of still greater extravagance, increasing the debt from $14,000,000 to $35,983,647 in 1868. One year more, and it was $47,691,840. Another year, and $25,000,000 more had been borrowed, making the debt $72,373,552 in 1870. Since then it has risen in the same enormous proportion.

Thus, in nine years- from 1865 to 1874 - the public debt of the city of New York has increased from $35,000,000 to $114,000,000. Of course the rate of taxation has increased correspondingly, to wit: From $2.51 in 1830 to $4.33 in 1840; from $4.33 in 1840 to $6.27 in 1850; from $6.27 in 1850 to $11.99 in 1860; from $11.99 in 1860 to $25.11 in 1870; from $25.11 in 1870 to $32.31 in 1874, on each inhabitant of New York, man, woman, and child. The amount of debt to each inhabitant, which in 1830 was only $3.82, has now reached the enormous amount of $114.98.

Paradoxical as it may seem, therefore, this increase of the public indebtedness, and this alone, explains the increase in the wealth of almost all the nations of the world. The wealth of the United States, for instance, which was about $7,000,000,000 in 1850, rose to $16,000,000,000 in 1860; then, in the next decade, amidst a war which destroyed $9,000,000,000 of property, it rose to the enormous sum of $30,000,000,000, and could never have assumed these vast proportions had not the issue of paper money and bonds furnished the necessary circulating medium. For money credits can be quite as readily transferred from one place to another in the shape of bonds as in the shape of notes; and hence every bond serves as a means of exchange between the various cities of the country, and in another way, too, between this country and foreign countries. The issue of bonds by any State in the world in this way increases by so much the circulation of world-money, and contributes to the wealth of all nations using them as exchange.

11

If Great Britain nas accumulated more wealth since the beginning of this century than she had during all the eighteen hundred years. previous, the explanation can be seen in the above table of debts; the benefit of which Great Britain has enjoyed more than other nations in proportion as she has been the chief negotiator of most of them, and has been able to use successfully, during all the Napoleonic wars, the national currency of the Bank of England during the long suspension of specie payments occasioned by those wars. This absolute and irredeemable money has given her a monetary supremacy over all the nations of the world.

Again, the remarkable prosperity which all Europe, and particularly France, enjoyed since the close of the frightful Franco-German war, when every one expected that France would be as financially ruined as she seemed to be politically, is properly understood only by looking upon the issues of the bonds, or rentes, to make up the five milliard loan wherewith to pay the German indemnity, as so much circulating wealth added in the short space of two years to the money of Western Europe.

Nothing is, therefore, more true than the seeming financial paradox, that the contracting of debts increases the circulating exchangewealth of the world; and this paradox must necessarily remain true until all the nations of the world have swept away their debts by substituting paper money in their place, and issuing enough of it for the requirements of their States. The paradox will then cease to be one by being shaped into its rational formula: that the issue of the necessary amount of money needed by a State is not in the nature of a debt, but the prerogative inherent in the sovereignty of the State to issue the representative of the entire wealth of the State, if necessary, in a circulating medium.

Nothing else, moreover, explains the extraordinary fact, that the discovery of gold in California and Australia did not produce a steady decline in the price of gold, and that the average price of wheat is to-day nearly the same as it was in 1850, when it was about one dollar. What a great outcry was then raised by M. Michel Chevalier of France, and De Quincey in England, about the ruin impending over the world by reason of the fall in the price of gold it was supposed would necessarily follow those discoveries. If gold had then been and had continued to be the only world-money, their

prophecies might have been in part fulfilled. But the fact is, that gold had ceased to be the only world-money long before then, the infinitely greater part of that money being made of paper, - in the shape of checks, drafts, bonds, etc., as I have shown.

CHAPTER IV.

THE CURSE OF INTEREST.

While thus in one respect the issue of these bonds has been a blessing to the people, by furnishing them the needed means of exchange values, in another way it has been a curse; and as curses all grow with age, so the weight of this curse is to be felt only in the future in all its crushing power. This curse is the interest attached to the bonds, the inevitable coupon, - for which the State that issues the bond gets nothing, and which, with its accumulating force of compound interest, must necessarily ruin every State ultimately, or force it into bankruptcy.

This curse is the result of cowardice;. the State being afraid to assume the same power which some few banking-houses, not within one million times so wealthy as the State, are superstitiously supposed to possess, of converting their issues of paper into money, which is the real philosopher's stone. Like all other superstitions, this one will have to be swept away.

The absurd fact is, that a sovereign State, finding, say, one hundred million more of dollars necessary for its circulation, did not dare to meet the exigency by simply making the amount of money needed, but in a roundabout sort of way issued some paper money, called bonds, and going to capitalists, say one or two large bankers, like the Rothschilds, or Jay Cooke & Co., begged them to be pleased to recognize this paper money as good current money; which these bankers agreed to do upon payment of a large immediate discount and a continuous future semi-annuity, called interest, which is the tribute paid these money-kings.

The State having agreed to the terms of this contract, the capitalists put the profits into their pockets, and told the people of the State

that those paper moneys, or bonds, were good current money; and thus, having made manifest their supreme power over their own sovereign State, looked around for some other power to subdue in the same manner, by compelling it to pay interest tribute.

It is apparent, that when a whole people, constituting a State, puts such an immense monopoly into the hands of a few capitalists, either at home or abroad, it must be ruinous to their liberties and welfare, and that the accumulation of interest compounded in such manner must eventually swallow up the whole property and values of the State. Why should these capitalists have the power to say what is money? Why should not the people themselves, in their organic law, decide upon this matter, and agree among themselves what they all intend to receive as money, thus all pledging to each one the security of the money and the permanency of its value forever? The main objection made is this: that so long as each State of the world is an absolutely separate organization, the paper money of one State can never become the legal currency of any other State, and that gold and silver must therefore always remain the only possible worldmoney. To what extent this objection is valid, and how it is to be overcome, will be considered hereafter.

There is, however, still another, and even more disastrous view to be taken of this issuing of interest-bearing bonds by a State. It is virtually the mortgaging by the State, as a political body, of all the rights, liberties, wealth, and franchises of its citizens to foreign bondholders; and to what extent this can be carried was very effectively shown in the case of Mexico, when the foreign bondholders, with their claims upon the State of over eighty-three millions of dollars, succeeded in inducing their European governments to impose a foreign emperor upon the Mexican people, plunging them into those fatal wars that were to end in the tragic death of Maximilian.

The same financial fraud is now transpiring under our eyes. The khedive of Egypt was lately compelled to become a fugitive, not because he had too many wives for European conscience, but because he owed too many overdue bonded debts to agree with European conscience; and his brother of Turkey is gently following his example toward a bankruptcy which will cause the dismemberment of the empire.

No State government should have the power to sell its citizens into