In the North American Review for December Mr. John F. Hume repeats his appeal to the honest people of this country to vindicate the national honor by paying the dishonored bonds of twelve states. Mr. Hume is severe and almost bitter; but he tells us some truth which must needs be unpleasant and should be seriously told. We are in an anomalous position in the matter of these state debts; the states are by the eleventh amendment secure from legal pursuit, and the Union secures them from the forcible settlement which the law of nations authorizes. There is no doubt that each of these states would have been seized for debt by foreign powers, just as Mexico was seized a few years ago, if the national government did not cover them with its protection. The evil is precisely this, that the constitution cuts off creditors of states from any remedy when the states do not pay their debts. This state of things was brought about by the whole people when the eleventh amendment was adopted. We are all therefore responsible for state roguery. We have, though unintentionally, authorized the repudiation by opening the door to it; and so long as we leave the door open we are responsible for the rascally people who repudiate state bonds. We have tried hard to see some escape from the logic of Mr. Hume; but we have found none. We are as a nation responsible for the existence of these dishonored debts, which now exceed three hundred millions of dollars. We are a dishonest nation; it is a hard saying, but it is the exact truth of the case.
The logical remedy is the repeal of the eleventh amendment, but unfortunately there is no hope of that. The defaulting states are too numerous; and there is further some doubt whether the rest of us are honest enough to approve such a reform. Representatives in legislatures and in Congress are liable to be influenced by a set of considerations which have no proper relation to the matter. It is affirmed that the states were wronged by their officers in the issue of the bonds; that the bonds are now held by men who bought them for a small part of their face value; and that to pay them is to honor the rascalities which gave them birth, and reward speculators in unreasonable measure. If the subject is pressed upon our attention, we shall be told, and have no reason to disbelieve it, that the speculators are spending money through a lobby, and that the road to honor lies through more filth than is piled up in the path of dishonor. The evil, we shall be told, is done, and is irremediable. We can not reach the persons who were really wronged. They have parted with their property at an almost total sacrifice; the present holders have no moral rights whatever. All this has been plentifully said, and it has lulled many consciences to sleep. Another moral opiate is the fact that the creditors had due notice that the states could not be sued at law, and therefore can not complain of this defect in our constitution. But this is a two-edged argument and might well rouse a sleepy conscience. These state debts are for this very reason debts of honor, such as honest men pay before all other debts. And yet, it is true, and pity ’tis ’tis true, no hope exists that the unfortunate amendment can be repealed. It is perfectly just to say that it would be proper to accompany the repeal with any legislation which might be required to enable courts to take account of all the equities in each case, even to require that original holders of bonds, or their heirs be found, and that any reduction from par in the original sales be allowed to the state. It would, in short, be possible to do justice as exactly as men can do justice in transactions of this complicated character, and to secure the tax-payers of the states in default against any oppression. But the great public is not going to be convinced. It will be said that the remedial measure is for the relief of idle rich men in Wall street, and Congressmen and legislators will be warned not to sign their death warrants. In the course of such a campaign so much immorality will be taught, so many men now decent in life will be manufactured into rascals, that it may be wiser not to attempt to repeal the eleventh amendment. It is a disagreeable conclusion to reach, but we reach it frankly: We are a dishonest nation. There is no reasonable hope, rather no shadow of hope, that we can purge ourselves in the matter of dishonored state bonds. There are not enough honest voters to redeem our reputation. We may succeed in raising up an honest generation to follow us; for our part, we of this generation must wear the stigma and groan under the burden of our dishonor. We are not able to allow creditors of defaulting states to present their cases to our own courts and have them passed upon as all other debts are. The nation has a court to consider claims against itself; but a state is free of even such supervision, and is authorized to be guilty of any dishonesty. The other remedy which Mr. Hume proposes is not practicable for the foregoing reasons. He proposes that the nation shall assume all these debts. We could easily pay them; but for that matter, it would be easier for the indebted states to pay them than not to pay them. No one doubts that the state of Illinois did the best thing financially when in 1845 it assumed and provided for the crushing debt—for which, by the way, it had very little to show as value received. Good men avoid dishonest communities, and such states are resorted to by men of prey. Granted, however, that we might pass in Congress the proper bills to pay the dishonored bonds of states, it would certainly be better to pay thus than to bear our reproach. And yet this would only give us a short rest. The next decade would find us plunged back into the gulf of disgrace. So long as dishonest men can create debts, for which no one is legally responsible, by using the names of states, the business of making us all responsible for scoundrelism will go on. No, we will modify that. The men who made the debts are not necessarily rascals. They may mean that posterity shall pay the debts; but so long as a dishonest legislature can with a stroke of the pen plunge us back into dishonor, it is hardly worth while to pay the dishonored millions now staring our consciences in the face and humiliating us to the dust. The bill for paying off the debts should be contingent on the repeal of the eleventh amendment. In short, this repeal is the only road to honor. When we shake ourselves from our rogueries, we shall have to march to the eleventh amendment and wash ourselves in a national act of repeal. We write most sorrowfully our conviction that we shall not for some time rid ourselves of this uncleanness.
Mr. Hume very properly calls attention to the solemn silence of our American churches on this subject. We are glad that he has done so. Our church organizations are verily guilty in the matter. They often lift up their voices on subjects of far less obvious and direct moral concernment. We are living in a state of the national law whose direct effect is to make every citizen a thief, a partaker with thieves in their violation of the eighth commandment. Decalogue religion is, we sometimes fear, a little below par. Thousands of our citizens who are church members fail miserably in keeping the Decalogue in their public conduct as voters and members of political parties. And yet we believe that the silence of our churches is due to the forgetfulness of the facts, or to despair of any real and permanent cure. It is a hard case. More than one newspaper has asked how many bonds Mr. Hume owns; and the ministers who urge the duty of public honesty will in fact find themselves aiding and abetting the schemes of Wall street speculators and lobbyists. The road to righteousness is so foul and so infested with thieves that sublime courage is necessary to him who attempts the journey. We have written every sentence of this article with a consciousness that we are offending men who see the uncleanness of the path to honor, and do not see that it is the righteous road in spite of the foul smells with which it reeks. We recall such to the simple facts: First, by the eleventh amendment a state can not be sued. It is the only debt-creating power in the Union which is above any form of judicial inquiry or compulsion. Even the Union has a court of claims whose decisions are respected by Congress. Second, more than three hundred millions of money is apparently due by defaulting states to their creditors. The nation stands between the creditors and the states, and bars the way to the courts. It is our one colossal and unpardonable crime against the eighth commandment.
THE FALL IN PRICES.
It is often disagreeable to admit a plain truth, and there are truths which one may safely admit in private which have an almost incendiary character when printed. To admit in private that the commercial outlook is not good costs nothing; to print the fact and prove it is to run the risk of aggravating the causes of the unpromising condition of affairs. The public is like a patient whose chance of recovery depends upon his not knowing his critical condition. If his nerves get to playing around that danger, they may drag him into it. To state in printed words that the times are bad and growing worse might be to tell a truth; but it would tend to produce the worse times. This is the reason why editors are either silent, or even lie a little, in seasons of financial and commercial depression. But it is also true that in our present circumstances there are unpleasant things which admit of mitigation, and even of radical cure; and it is perhaps wiser to state what most of us know and suggest the remedies for an evil case.
It is known that the wages of laboring men and clerks all over the country are being cut down. It is probably within the mark to say that seven millions of wage-earners (of all classes) will receive in 1885 an average of ten per cent. less compensation for their services than they received in 1884. Assuming a very low average for the old wages, $1.25 per day, the total reduction in wages for the year will amount to more than $260,000,000. This amount will of course be taken from the net total of trade. The workmen and clerks will buy two hundred and sixty million dollars worth less of goods in 1885. The reduction will be dispersed over a large area, but it will not spread into a thinness which will render it impalpable. Nor does the reduction end with the workmen. All the persons of whom workmen buy manufactured goods will buy less for their own consumption—they also will have less to buy with. This class is a very large one, and there are few of us who do not belong in it—are not in some way dependent on workmen for patronage. To say that all these will reduce their annual purchases two hundred and sixty millions, carrying the reduction up to five hundred and twenty millions, is probably within the mark. We may as well consider in this connection the reductions in the price of farm products, another great drain on the volume of trade. Agricultural products are worth at most ten per cent. less than in 1883. The effect of the reduction in prices of farm products acts more disastrously on trade, since farmers usually double their caution. They will not merely buy ten per cent. less; they will buy as little as possible. Old clothes, old wagons, old tools, will be kept in use, and it may be within the mark to say that the loss of farmers’ trade of all sorts will amount to as much as all the others—to five hundred and twenty millions more. One thousand and forty millions taken off from the net total of sales of goods will necessarily be keenly missed. The payment of all the national debt in a prosperous year would be easier and more pleasant. If it had no compensations this reduction would crush the life out of us. At least it is a burden to bear. Economies upon customary spending in a single household matter but little, but economies in millions of households—less buying of customary comforts—are a large matter. They are not merely a consequence of hard times; they make the times hard. And we are so bound together that the enforced economies in the families of workmen act on the whole purchasing line with mathematical certainty. It is a good thing, a beneficence of natural order, that there are compensations. We see these natural offsets most easily by looking back at the case of the farmer. He has to sell his food in a cheaper market, and wants to buy also in a cheaper market. He has made food cheaper for the workman, and he wants the goods made by the workman at less cost. He wants the same amount of cloth, sugar, salt, tools, etc., for the same number of bushels of wheat. It is the cloth, tools, etc., that he wants as a farmer. As a debtor, indeed, he wants the same number of dollars; and this is his real pinch. He is in debt, and has to pay in the fall of grain a twenty per cent. premium on what he owes. As a producer, he would, however, suffer no harm if all other prices fell as much as the price of grain. If, then, by the corresponding and simultaneous reduction of the price of food and of wages, the ten per cent. less money would buy the same things to eat and wear—if the reduction were equalized all round—nobody would suffer. The farmer’s grain would buy as much as before; the workman’s wages would buy as much. Goods of all kinds would be so much cheaper in money terms, but just as valuable in barter terms. The reduction would be only in the figures and not in the facts of trade. The footings of the ledgers would be smaller, but the ledgers of comfort would show an undiminished balance in favor of happiness.
Will it work out in this way? Partly it will; partly it will not. Cheaper food will partly balance the accounts of all parties, but some accounts will not balance. Prices sink or rise unequally. And this is not half our trouble. In these matters “thinking makes it so;” the belief that we are losing ground causes the sliding back which we dread. There is a reluctance to buy what we are accustomed to buy. The reduction in wages makes men feel poor; and to feel poor is to be a poor customer of the seller. Suppose that a general fall in prices is going on—a possibly complete explanation of our troubles—then we must remember that all values are disturbed. We can not make a “horizontal reduction” by a stroke of the pen. It must be effected slowly and painfully and irregularly and in detail. The results are suffering and depression of spirit. The strain is severe, but it has to be borne; and patience really lightens all burdens. If we reflect that these stretches of bare ground in trade are really safe roads—safer than the smoother paths along which we have driven gaily and recklessly—we shall have confidence to keep company with patience, and the two will make a rough road tolerable, if not enjoyable. Honest and industrious souls thrive in such times. Speculative rogues thrive in good times. The honest man’s chief trouble is that he will get into debt. His worst calamity is he is paying now with eighty-cent wheat debts contracted in dollar-wheat prices. The poor man can not be helped. May the Lord be good to him.
“But” one will say, “this is not our whole disease. We are really at war. Workmen are falling under the wheels of a great machine called progress; and the machine is driven by forces too powerful for any hope of resistance. It is not a mere readjustment of prices; it is a life and death struggle; and the god Competition must be dethroned, or the people will perish.” We do not believe this wild-eyed reformer, but we do expect a hard winter. Let us all remember the poor.