Nearly all of our State and local governments, as well as the national government, have contracted large public debts, the interest payments upon which constitute one of the chief items in their lists of expenditures. The present debt of the Federal Government is largely the result of the enormous expenditures occasioned by the Civil War. In 1865, August 31, it reached its highest point $2,381,530,294, with an annual interest charge of $150,977,697. Since then it has been steadily reduced until in 1889 the total interest-bearing debt was but $829,853,990, with an annual interest charge of $33,752,354. The principal of the national debt is mainly in the form of interest-bearing bonds held by the National banks and private individuals. These bonds are of various denominations and are promises of the government to pay the sums named on their face, at the expiration of a certain period. The bonds at present unpaid, and as such constituting the major portion of our national debt, are principally of two kinds; those bearing four and one-half per cent, annual interest and falling due in 1891, and those bearing four per cent, interest and falling due in 1907.
The debts of most of the States were contracted by ill-advised and untimely systems of internal improvements. The total state indebtedness June I, 1890, as shown by the Eleventh Census, was $238,396,590, a decrease of slightly over $58,000,000 in ten years. The tendency now seems to be for States to withdraw from the money market as borrowers, and for the county and city governments to take their place.
The local debts are very large, and have shown a marked increase during the last twenty years. They have been for the most part incurred in improvements and construction of public works, which have in most instances well repaid the debts incurred.
CHAPTER XVIII.
Money.[1]
No man by himself produces everything he wants to use, but devotes his time to the production of some few things, and the surplus that he does not use, he exchanges for other things made by other men. In rude stages of society this is done by a direct exchange of one commodity for another, e.g. so much wheat or corn for a gun or plow. This is a very imperfect and cumbersome method, which cannot be employed in our present complicated transactions of buying and selling. There thus early developed the use of money, or the practice of referring the value of all things to one standard, usually the precious metals: so that, instead of trading 20 bushels of corn for a plow, where it would be necessary to go to the great trouble of finding a man who had a plow, and also wanted your corn, you sell it for so much money, and with this money you buy a plow. Money is thus but a medium of exchange and a standard of value.
In the United States, as in most nations, money has always been made by the Government, and the Government alone, so that one certain fixed system may prevail. For the sake of convenience, money is made of various kinds and denominations, and United States money may conveniently be regarded under the five following divisions: 1. #Gold Coin, Gold Bullion, and Gold Certificates.#—There are six gold coins: (1) the eagle, $10 piece; (2) the double eagle, $20 piece; (3) the half eagle, $5; (4) the quarter eagle, $2.50; (5) the $3 piece, and (6) the $1 piece. The three last are but little used. The gold bullion, or gold in bars and blocks uncoined, is for all practical purposes as good as the coin, and in foreign trade is much used, it being more convenient to handle. Besides the gold coin and bullion there are in circulation gold certificates. These are paper, the same in general appearance as the ordinary bank-note, and certify that an equivalent amount of gold has been deposited with the Treasurer of the United States, and that the holder of the certificate has the right to obtain the gold for it at any time. This does not increase the amount of money in circulation, as for every one issued just so much coin is withdrawn and stowed away in the Treasury. The certificates are used simply for convenience, and in order to avoid the necessary wear of the coin if in constant use. These certificates are of the denomination of $20.
2. #Silver Dollars and Silver Certificates#.—There is no silver bullion circulating as money, for a silver dollar does not contain a dollar's worth of silver, as the gold dollar does of gold, and the silver bullion is thus of different value (less value), according to weight, than the silver dollar. The silver certificates are similar to the gold certificates, already described, and certify that an equivalent amount of silver has been deposited in the Treasury.
3. #Subsidiary and Minor Coins.#—All coins of a lower denomination than $1 belong to one or the other of these two classes. There are three subsidiary coins, the fifty cent, the twenty-five cent, and the ten cent pieces. The three cent piece is no longer coined. All other coins are minor coins. The peculiarity of the subsidiary and minor coins is that they are, as compared with the standard coins (gold and silver dollars), of a greater value than the value of the metal they contain. The subsidiary coins are legal-tender to the amount of $10, the minor to the extent of twenty-five cents. By legal-tender is meant that the government has ordered that it must be received in payment of all debts and articles bought. Gold coin and the silver dollars and certificates are legal-tender to any amount.
4. #Treasury Notes.#—Under this head are included that form of money ordinarily known as "greenbacks," from the color of their backs. They were originally issued during the civil war, and are promissory notes on the part of the government, and as such constitute a portion of the debt of the government. They are paper, which of itself is of no value, and no coin is deposited in the Treasury which they represent, as in the case of the gold and silver certificates. They thus cost the government nothing, and, as they are made legal-tender, and paid out by the government, they were just so much clear gain to it. At first they were not redeemable, i.e., exchangeable for coin at the Treasury, but since 1879 they are, and are therefore just as valuable now as any other form of money, though formerly worth much less than their face value. One hundred million dollars in gold is kept on deposit in the Treasury for their redemption.