Government borrowing

“ The legislative power of borrowing money, and of making all laws necessary and proper for carrying into execution that power, seems obviously competent to the appointment of the organ through which the abilities and wills of individuals may be most efficaciously exerted, for the accommodation of the government by loans. ”

“ An honest government would quickly set about paying this debt off, by offering life annuities to a certain [Pg 144] number of stock-holders every year. A real State power ought never to borrow money; it ought to make it when required to cancel its obligations, receiving the same money back in the form of taxes, so as to prevent depreciation. The government practice of borrowing money on Exchequer bills is also absurdly wasteful ”

“ All the ordinary means of rendering efficient the several powers of Congress above-mentioned had been employed to their utmost capacity, and with the spirit of the rebellion unbroken, with large armies in the field unpaid, with a current expenditure of over a million of dollars per day, the credit of the government nearly exhausted, and the resources of taxation inadequate to pay even the interest on the public debt, Congress was called on to devise some new means of borrowing money on the credit of the nation ”

“ Borrowing and over-spending are among human frailties. They are also forms of risk-taking or gambling. Who knows whether the banker who promises to pay on demand will be alive and doing business next week when his promise to pay is presented for settlement? When the promise to pay is issued by a government which decides the value of currency, and accepted by that government as payment for taxes and other obligations, it is more readily acceptable than paper issued and guaranteed by an individual money lender or banker. ”

“ This vast debt, if permitted to become permanent and increasing, must eventually be gathered into the hands of a few, and enable them to exert a dangerous and controlling power in the affairs of the Government. The borrowers would become servants to the lenders, the lenders the masters of the people. ”

“ So long as provision is made to secure in this way the regular payment of the interest on the sums borrowed, the Government holds the purse-strings of the capitalist, and has nothing to do but to call for whatever amount is needed for the public service. ”

“ Budget authority and new budget authority.— (A) In general.— The term “budget authority” means the authority provided by Federal law to incur financial obligations, as follows: (i) provisions of law that make funds available for obligation and expenditure (other than borrowing authority) , including the authority to obligate and expend the proceeds of offsetting receipts and collections; (ii) borrowing authority, which means authority granted to a Federal entity to borrow and obligate and expend the borrowed funds, including through the issuance of promissory notes or other monetary credits ”

“ There shall be no privileged class of creditors. Official salaries, pensions, bonds, and all other debts and obligations, public and private, shall be discharged in the legal-tender money of the United States, strictly according to the stipulations of the laws under which they were contracted. ”

“ But the truth is that public debts do not fall entirely in either class. They are benefits in one sense and evils in another. The power to borrow, like any other power, may be used wisely or unwisely. In times of great emergency, or for public improvements of permanent value, money may very properly be obtained by borrowing; always provided, however, that arrangements are made to pay off the debts within a reasonable time. ”

“ Private parties found it to their advantage to step in, purchase a portion of the property, pay a portion of the debt, and, upon giving satisfactory security, assume the remainder, amounting to a hundred thousand dollars, at six per cent. It may be a little irregular to favor particular parties in this way, but then public money had better be bringing six per cent. than lying idle in the treasury; and besides, when it is found necessary to issue treasury notes in order to carry on the government, they bring a premium, and there is a gain to that extent over the ready cash. ”

“ Resolved, That it is the duty of every branch of the government to enforce and practice the most rigid economy in conducting our public affairs, and that no more revenue ought to be raised than is required to defray the necessary expenses of the government, and for the gradual but certain extinction of the public debt. ”

“ There are as effectual limits to public debts as to private ones, for when once the money borrowed is so great as to require the whole yearly revenue to discharge the interest thereon, there is an end to further borrowing; in the same manner as when the interest of a man's debts amounts to the yearly income of his estate, there is an end to his credit. ”

“ That the best policy to diminish our burden of debt is to so improve our credit that capitalists will seek to loan us money at lower rates of interest than we now pay, and must continue to pay, so long as repudiation, partial or total, open or covert, is threatened or suspected. ”

“ The burden of paying the interest on this mortgage, and the final payment of the principal, is wholly on the capable and industrious members of the family.
National debts are incurred to relieve the present wealth of the burden of present government calls and obligations, and to roll it upon those who shall produce wealth in the future. So the debt of a city, state, or nation is a present relief to property holders, by placing the producers under future obligations.
A street in a city is to be paved; no additional tax is levied; but bonds are issued running twenty years. ”

“ We should not collect revenue for the purpose of anticipating our bonds beyond the requirements of the sinking fund, but any unappropriated surplus in the Treasury should be so used, as there is no other lawful way of returning the money to circulation, and the profit realized by the Government offers a substantial advantage. ”

“ The taxes charged with the interest of the public debts proving often deficient, the shortest way of discharging the arrears has been often taken, by adding them to the principal, and paying compound interest for money.—Is it a wonder, that a nation which has been so careless in contracting debts, should have done so little towards discharging them?
[110] That is, in other words; there is no one who would not be glad to lend to government on any higher interest than that which he can make in the funds. There is no one, for instance, who would not be glad to lend 75l. at 4 per cent. ”

“ We demand a National money, safe and sound, issued by the general government only, without the intervention of banks of issue, to be a full legal tender for an debts, public and private, and a just, equitable, and efficient means of distribution direct to the people and through the lawful disbursements of the Government. ”

“ When government loans are limited to the overflowings of the national capital, or to those accumulations which would not take place at all unless suffered to overflow, they are at least not liable to this grave condemnation. ”

“ With rigid economy, vigorous salvage operations, and adequate revenues from taxation, a surplus of current receipts over current expenditures can be realized and should be applied to the floating debt. All branches of the Government should cooperate to see that this program is realized. I cannot overemphasize the necessity of economy in Government appropriations and expenditures and the avoidance by the Congress of practices which take money from the Treasury by indefinite or revolving fund appropriations. ”

“ If there are any who still think that the surplus should have been kept out of circulation by hoarding it in the Treasury, or deposited in favored banks without interest while the Government continued to pay to these very banks interest upon the bonds deposited as security for the deposits, or who think that the extended pension legislation was a public robbery, or that the duties upon sugar should have been maintained, I am content to leave the argument where it now rests while we wait to see whether these criticisms will take the form of legislation. ”

“ When they are made and the money is paid into the treasury, whether it is kept there idle during the three months or deposited with national banks under existing law, the government not only pays interest on both classes of bonds during the ninety days, but, if the sales are large, the hoarding of large sums may disturb the market. ”

“ They are mortgagees on the general wealth of the country. The cancelling of the debt would be no destruction of wealth, but a transfer of it: a wrongful abstraction of wealth from certain members of the community, for the profit of the government, or of the tax-payers. Funded property therefore cannot be counted as part of the national wealth. This is not always borne in mind by the dealers in statistical calculations. ”

“ Either the surplus must lie idle in the Treasury or the Government will be forced to buy at market rates its bonds not then redeemable, and which under such circumstances can not fail to command an enormous premium, or the swollen revenues will be devoted to extravagant expenditure, which, as experience has taught, is ever the bane of an overflowing treasury. ”

“ In the present state of legislation the only pretense of any existing executive power to restore at this time any part of our surplus revenues to the people by its expenditure consists in the supposition that the Secretary of the Treasury may enter the market and purchase the bonds of the Government not yet due, at a rate of premium to be agreed upon. ”

“ We demand a judicious system of preparation, by public economies, by official retrenchments, and by wise finance, which shall enable the nation soon to assure the whole world of its perfect ability and of its perfect readiness to meet any of its promises at the call of the creditor entitled to payment. ”

“ The Government, it is said, may want and must have money, in any great national crisis. A National Bank with an extensive capital will furnish ample means for loans, will facilitate the exercise of the power to borrow; and, therefore, the right to establish such a bank is implied in the power to borrow. No one, but a logician, sir, would imagine that a power to lend and a power to borrow had any relation to each other, much less could he conjecture that a power to borrow, and a power to create the ability to lend, mean the same thing. ”

“ The only considerable branch of the public revenue which yet remains unmortgaged is thus regularly spent before it comes in. Like an improvident spendthrift, whose pressing occasions will not allow him to wait for the regular payment of his revenue, the state is in the constant practice of borrowing of its own factors and agents, and of paying interest for the use of its own money. ”

“ In this case, if the public credit is good, they may borrow a certain sum, and raise for the present only enough to pay the interest, deferring the payment of the principal till the public is more able to bear it. In the other case, where no money can be borrowed, there is no resource, if the whole sum cannot be raised immediately. ”

“ Of the seventy or eighty millions now estimated to be in the country, ten millions would be abundantly sufficient for that purpose provided an accumulation of a large amount of revenue beyond the necessary wants of the Government be hereafter prevented. If to these considerations be added the facilities which will arise from enabling the Treasury to satisfy the public creditors by its drafts or notes receivable in payment of the public dues, it may be safely assumed that no motive of convenience to the citizen requires the reception of bank paper. ”

“ If the borrowings of a state be only in proportion to the extinction of the old capitals, or of what I have called determinate annuities, then the debts will not increase.
When a statesman, therefore, establishes a system of public credit, the first object which should fix his attention is to calculate how far the constitution of the state, and its internal circumstances, render it expedient to throw the revenue of it into the hands of a money’d interest. ”

“ That the national debt should be paid in good faith, according to the original contract, at the earliest option of the government, without mortgaging the property of the people or the future exigencies of labor to enrich a few capitalists at home and abroad. ”

“ The budget deficit shall be financed by cash balances of the federal government, short-term
borrowings, domestic and external loans, or by the issuance of government debt securities.
Short-term borrowings may be used for the purpose of ensuring liquidity during a period no
longer than six months. ”

“ For example, if the Government borrows by an issue of bonds, such bonds taken by the banks, and payment for them made in the form of bank credit which is at once transferred to individuals who have furnished labor or supplies, it is evident that there has been a net addition to the purchasing power of the community not represented by any corresponding addition to wealth whether of a saleable or available form. ”