This section is from the "The Science Of Wealth" book, by Amasa Walker.
Pecuniary obligations, between different nations, may be of four different kinds : —
1st, Individual Indebtedness. — This can only be of limited and temporary duration, since it must soon be paid, or wiped out by insolvency.
2d, Corporate Indebtedness. — This is of two kinds: (a) the bonds or other obligations of incorporated companies formed for industrial purposes, the building of railroads, &c.; and (6) the bonds of municipal corporations, cities, towns, and counties. These have been issued to an enormous extent in the United States, and a large amount have been disposed of abroad. These two kinds of indebtedness are alike in this, that they may be enforced by law upon the promisors. Property may be attached and sold, if it can be found; and as, in the case of municipal corporations, there is rarely any deficiency in that respect, the latter are quite sure of ultimate, if not prompt payment.
3d, State Indebtedness. — Nearly all the States of the American Union have contracted debts, and issued coupon bonds, which, to a considerable extent, have been sold abroad. These rest upon a different footing from the preceding, since they cannot be enforced by any legal process. They are secured only by the honor of the promisor. The Constitution of the Union gives no authority to the general government to compel a delinquent State to regard its obligations; and no foreign power, if disposed, would be allowed to enter the national territory. So there is no remedy. State indebtedness abroad must amount, at the present time, to many millions.
4th, National Indebtedness. — Great Britain has a debt, as heretofore stated, of eight hundred millions sterling; but it is almost entirely held at home. The rate of interest on her consols is only three per cent, and there is little inducement for capitalists in America to invest in them; but it is quite otherwise with the United States. Interest here is at least six per cent on the best securities.
We may safely assume, that the civil war has caused, or will cause, the issue of United-States stocks to the amount of nearly three thousand million dollars. According to the comptroller's statement, seven hundred millions of these have already gone abroad; and it is certain, if the credit of the government is preserved, a large part of the balance will take the same direction. Is this desirable, or otherwise, economically considered?