with the money, which has been oversubscribed. (What was the use of taking it?) The subscription is evidently considerably in excess of the amount asked for. Therein lies the effect, for it is thus demonstrated that the public has confidence in the government obligations.
But after the comedy has been played the fact of the debt appears, and it is usually a heavy one. In order to pay the interest, new loans have to be issued, which do not liquidate but increase the original debt. Then when the borrowing capacity of the government has been exhausted, it becomes necessary to meet the interest on the loan—not the loan itself—by new taxes. These taxes are nothing but a debit used to cover a debit.
Then comes the period of conversions, but these only decrease the payment of interest while they do not annul the debts. Moreover, they cannot be made without the consent of the bondholders. When a conversion is advertised, an offer is made to return the money to those who are not willing to convert their bonds. If everybody were to demand his money, the government would be caught in its own net and would be unable to return all the money. Fortunately, the Goy subjects, ignorant of financial affairs, always preferred to suffer a fall in the value of their securities and a reduction of interest to the risk of new investments; thus, they have given these governments more than one opportunity of throwing off a deficit of several millions. At present, with the existence of foreign loans, the Goys cannot play such tricks, for they know that we would demand all the money back.
Thus, an avowed bankruptcy will be the best proof of the lack of common interest between the people and their government.
I direct your express attention to the above circumstance, as also to the following: At present all domestic loans are consolidated into so-called floating debts; in other words, into those