Debts

National, amounts owed by governments. A national debt is in the form usually of bonds bearing a fixed rate of interest. Sometimes the bonds are sold for face, sometimes at a premium, and sometimes at a ruinous discount-all according to the credit of the borrowing government and the amount of money waiting for investment. War is the great cause of public debt. The Spanish-American War, the Boer War, and the Russo-Japanese War increased the debts of the countries concerned. Government bonds are attractive for several reasons. They are considered safe. They are exempt usually from taxation; they are converted readily into cash, and may be had in large or small blocks to suit, saving the expense and detail of looking after many small loans.

According to the Statesman's Year Book nearly if not all civilized countries, even frugal Switzerland, have a bonded indebtedness. France has the largest national debt. It was increased greatly by the expense of the Franco-Prussian War and the indemnity demanded by the Germans. The public debt of Great Britain is considered one of the most remarkable in the world. It has been formed largely by the expense of acquiring and administering so many colonial possessions. No attempt is being made to reduce the principal.

The debt of the United States began with borrowing money to pay off the expenses and the debts of the Revolutionary War. Under Washington's first administration, and thereafter, for a time, the public debt was about $75,000,000. The purchase of Louisiana increased the debt to $86,000,000. This amount was diminished year by year, but ran up again on account of the War of 1812 to about $125,000,000; but by 1835 this debt had been reduced to a nominal $37,000, with $40,000,000 on deposit in various banks to the credit of the United States. The Mexican War created a new debt of $70,000,000, which had not been materially reduced before the enormous expense of the Civil War created a national debt unprecedented for rapidity of growth. In February, 1861, Congress authorized the secretary of the treasury to borrow $25,000,000; a year later a similar act authorized the borrowing of $250,000,000; and this was but one of many similar acts. The United States debt reached its climax in 1866, when the statement of the United States treasurer showed a public debt of $2,773,236,174. By 1893 this debt had been reduced a half. The Spanish-American War, the erection of public buildings in many cities, the enlarging of the pension list, the extension of rural free delivery and the building of the Panama canal, have brought the debt to a point over two billion again. Of this amount $925,011,637 is a bonded indebtedness bearing interest. At the close of the Civil War our national debt amounted to $79.44 per person. In 1902 the grand total of national, state, city, county, and village indebtedness was only $35.49.

The following table gives an idea of the various national debts, based on reports, dated 1905-1909: