Finances

“ Passing from foreign to domestic affairs, your attention is naturally directed to the financial condition of the country, always a subject of general interest. For complete and exact information regarding the finances and the various branches of the public service connected therewith I refer you to the report of the Secretary of the Treasury, from which it will appear that the amount of revenue during the last fiscal year from all sources was $73,549,705, and that the public expenditures for the same period, exclusive of payments on account of the public debt, amounted to $51, 018,249. ”

“ An administration of Government finances based on a system of paper currency, produces oppressive taxation of the people, is calculated to make the few who are rich, richer, and the many in moderate circumstances, poorer ”

“ I would ask, by way of finishing the picture which our friend from Carolina so happily commenced, and in order to settle the question of reckless expenditure, on which you all seem to exhaust your eloquence, how many of those that belong to our fashionable society can afford its expenses without impairing their estates?—how many of them would be able to continue them without the assistance of credit?—and how many of them, if their estates were to be settled to-morrow, would be able to pay fifty cents in a dollar? ”

“ It is through the expenditure of public money that the State works in all of its activities, and it is the first duty of the science of finance to determine their nature and scope. Finance accepts public expenditures as a fact. ”

“ With ten, or twenty millions! My system is similar to that of the State: the higher the debt of a country, the higher stands her credit; therefore, what is credit?—wealth! This is elementary, not counting that it involves a high question of moral philosophy. But I shall explain my financial and philosophical ideas on a more favorable occasion. Go to Mariette, and report to me later. As for me, I have promised to take my little shop-girl out on a new saddle-horse which, by the way, cost me an outrageous price. ”

“ In finance the most striking effect in America has, on the first view of it, certainly been good. It has enabled the Government to obtain and to keep a vast surplus of revenue over expenditure. Even before the civil war it did this—from 1837 to 1857. ”

“ Being able to buy food where it is grown, cuts down expenses to a very small amount comparatively. When I told them this, one of them acknowledged that he could see that they would have less expense, but that they would still have need of money. ‘You bind us to take all we earn in scrip or shares for our labor?’ one of them asked of me. ‘Certainly,’ I said, ‘that is the protection of the society.’ But I told them they could buy money with their scrip. ”

“ Take care that you know definitely what sum you can afford to spend on your household expenses, and make it a point of conscience never to exceed it. Market with ready money, if possible; but, if it is more convenient to pay by the month, or quarter, never make that an excuse for letting your bills mount up to double what you can afford to pay. With accounts, carefully kept, it is quite possible to regulate the expenditure to the income. ”

“ You took that old sideboard for a debt—yes, a debt at 18 per cent. interest. You don't pay a cent of taxes. You sing psalms and wear out your trousers on the platform at the prayer-meeting, and then loan out the church's money on worthless securities. You're too mean to keep a cat, for the cost of her milk. You read a penny newspaper and take books out of a circulating library. ”

“ Suddenly, agriculture raised her drooping head, for commerce beckoned her to prosperity. Your people began to pay their debts and to become rich. Public credit was restored; the Treasury began to fill readily. Sources of revenue were explored, certain of continually increasing, equally certain of being never exhausted, except by folly and madness. Indeed, sir, so perfect was the financial machinery that it admitted of no improvement. ”

“ Of course, having not even money, we still less have credit. All estimates deal directly with the real things, the flour, iron, wood, wool, and labor, of which money and credit were for you the very misleading representatives. In our calcula- tion of cost there can be no mistakes. Out of the annual product the amount necessary for the support of the people is taken, and the requisite labor to produce the next year's consumption provided for. The residue of the material and labor represents what can be safely expended in improvements. ”

“ But if you spend more than you receive, you may have recourse to sinking funds, you may modify them as you please, you may render your accounts extremely complex, you may give a scientific appearance to additions and subtractions, you must still necessarily increase your debt. If you spend more than you receive, the difference must be supplied by loans; and if out of these receipts you have set a sum apart to pay your debts, if you have so mortgaged or disposed of that sum that you cannot apply it to your{231} useful expenditure, you must borrow so much more in order to meet your expenditure. ”

“ If your revenue is nine millions of dollars and your expenditure fourteen, you must borrow, you must create a new debt of five millions. But if two millions of that revenue are, under the name of sinking fund, applicable to the payment of the principal of an old debt, and pledged for it, then the portion of your revenue applicable to discharging your current expenditures of fourteen millions is reduced to seven millions; and instead of borrowing five millions you must borrow seven; you create a new debt of seven millions, and you pay an old debt of two. ”

“ The proper business of finance, I take it, ought to be to consider of the means to improve the revenue, and introducing economy into the expenditures; to recommend general systems of finance, without having any thing to do with the actual administration of them, because, if he engages in the executive business, we shall be deprived of his talents in more important concerns. ”

“ In the former case, the wealth of individuals insensibly increases, and income keeps ahead of expenditure. But in the latter instance, debts have been contracted, engagements made, and habits of expense established, in reference to the existing state of wealth and of its representative. When these come to be greatly reduced, individuals find their debts still existing, their engagements unexecuted, and their habits inveterate. ”

“ Thus may any Gentleman, with very little trouble, apportion his Income:—and as no two Gentlemen live exactly alike, this Table will shew, by inspection only, what branch of Expense may best be curtailed, so as to afford an addition to any other branch, and still keep his whole Expenses short of his actual Revenue. ”

“ For five or six years the income has not been forty thousand, but there has been no reduction in the style of expenditure. Whence comes the money? Not a burden has been shaken off, fresh are annually heaped on. ”

“ Expenditure, revenue, borrowing to meet deficiencies are all, in a sense, developed into their present-day form. Increase in amount and some refinements in procedure, combined with improved views of public policy, are the only changes that occur later on. ”

“ One may build a house or purchase a motor-car instead of going abroad. And whichever choice is made, related expenditures must be made in consequence for which, on the assumption of a definite amount of income, compensation must be made by curtailment of outlay at other points. What seems clear316 in general is that one's total budget is relative to the general plan and manner of life one deems for him the best possible and that this plan, more or less definitely formulated, more or less steadily operative, is what really determines how far expenditure shall go in this direction and in that. ”

“ In a money economy those who have cash use it to pay their bills or settle their accounts.
Those who buy on credit pay interest to money lenders. The money lenders, later the bankers, make their profits by helping others to spend beyond their own means. ”

“ Extraordinary expenses " come into every life, however simple, just as into public finance, and in order to meet these a budget of extraordinary receipts should be kept, as well as one for ordinary expenses. ”

“ The chief source of revenue is from indirect taxes, which bring nearly 10,000,000, while the greatest expenditure is for the payment of the interest on the debt, which with the sinking fund demands upward of 7,000,000. ”

“ Whatever is spent, cannot but be drawn from yearly income. The whole and every part of the wealth produced in the country, forms, or helps to form, the yearly income of somebody. The privation which it is supposed must result from taking the amount in the shape of taxes is not avoided by taking it in a loan. ”

“ Three hundred thousand landed proprietors enjoy an income of three thousand five hundred francs and represent all territorial wealth.
Two hundred thousand payees, at the rate of fifteen hundred francs each, represent the distribution of public funds by the state budget, by the budgets of the cities and departments, less the national debt, church funds and soldier’s pay, (i.e. five sous a day with allowances for washing, weapons, victuals, clothes, etc.) ”

“ True money will be a present economy so far as it takes the place of the national debt, and it will be a future revenue to the extent of the increase of population. The rate of increase has been more than three and a half per cent. per annum, but taking it at three per cent. there are persons living who will be living when the population will be two hundred and fifty millions, and the currency proportionate. ”

“ Capital may be employed in short loans or bills of exchange at two or three months, in paying wages of labour for which there may be return in a day or not in less than a year or more, or in operations involving within themselves every form of capital expenditure, and requiring a few years or ninety-nine years for the promised fructification on which they proceed. ”

“ All other payments were made in bonds bearing interest at eight per cent. per annum till redeemed. Strenuous reductions were made in the public expenditure, the utmost care was exercised over the collections, and in twelve months' time enough cash had been accumulated to pay off the whole of the new paper debt, besides meeting the ordinary expenses of government. ”

“ The net output thus obtained is obviously for each industry the only fund from which first, wages, salaries, interest on capital, rent, royalties and profits are, or can be, paid, and secondly, taxes, rates, depreciation, advertisement and sales expenses. ”

“ Digest the whole, public and private, Dutch, French and Spanish, into a table, showing the sum of interest due every year, and the portions of principal payable the same year. Take the most certain branch of revenue, and one which shall suffice to pay the interest, and leave such a surplus as may accomplish all the payments of the capital, at terms somewhat short of those at which they will become due. Let the surplusses of those years, in which no reimbursement of principal falls, be applied to buy up our paper on the exchange of Amsterdam, and thus anticipate the demands of principal. ”

“ The distribution of provisions, money, and merchandise in just proportions, according to times and places, is the true secret of finance and the source of wealth, provided those who administer it have foresight enough to suffer a present apparent loss, in order really to obtain immense profits in the future. ”

“ Put one man of reputation and sense at its head; give him what staff he asks for, and a fixed annual sum for expenditure—specific accounts to be printed annually for all the world's seeing—and let him alone. The original expenditure for building and fitting must be magnificent, and the current expenditure for cleaning and refitting magnanimous ”

“ At the beginning of any year take the amount of real wealth in the hands of the non-producers. During the year the governments continue, the taxes are gathered and the expenses are paid: your debts, your expenses and all; the producers have continued to labour as usual, and at the end of the year find themselves just where they were at its beginning; but the property of the wealthy classes has increased about three per cent. ”

“ The economic demands which make up the budget of a particular person at a particular time are clearly interdependent. A man's income or the greater part of it is usually distributed among various channels of expenditure in a certain fairly constant way. ”

“ He will most require this aid in the making of leases, deeds, agreements, and other legal instruments.
The balance of cash, which may often be considerable, ought not be allowed to lie idle in the house. All money is part of the vital blood of society, and should be kept in circulation. ”

“ It enables the banks to sell their credit and make a gain, to use a part of their money deposits to buy mercantile paper with, and so get a bank interest on them; it enables dealers in commodities [302] to realize in cash minus the discount the sum of what they have sold on time; and by means of accommodation notes or bills, which only differ from the others in that there is no actual debt between the parties, business men may swell the volume of their business temporarily, and non-business people may borrow small sums for convenience or emergencies. ”

“ Let the reader notice in passing, as a corollary from what has just been shown, that when forms of Credit like bank cheques come into growing use to make payments with and settle balances, they displace to a large extent commodity-moneys, like gold and silver, which would otherwise have to be employed. ”

“ And so it goes in every business but finance—finance, the most important of all, the business into which is merged all other businesses, the business of taking and preserving the results of all other businesses, of all other human endeavor. ”