HOW TO TREAT FOREIGN LOANS.
Loan DUDLEY STUART'S Bill.to prevent dealing in Russian " Scrip " as well as Stock is a logical complement to the existing law on the subject of loans to an enemy ; but it has been a disastrous refinement of legislative pedantry. It is a measure which—setting aside the blundering workmanship—can scarcely be denied on grounds of strict consistency ; practically uncalled for, it does little credit to its author. ID supporting the claptrap, Lord Pal- merston outrages our reason, by falling in with the cant as well as the feeling of the day ; in resisting it, Mr. Wilson insults the feeling of the day for the sake of a pedantry in trading philosophy. The sentiment of the matter renders any talk about aid, or loans, or traffic, with a power like Russia, odious to genuine feeling : yet foreign loans are not things to be put down by statute. They are subject to a higher law. The best check to the propensity for supplying enemies or false allies with subsidies of this kind will be—as indeed Mr. Wilson showed by some examples—a better knowledge of the subject on the part of the public ; and recent events have contributed largely to that better knowledge. The Russian Czar has recently been endeavouring to raise money on loan upon the Continent; the principal contribution being ex- pected from his favourite market, Amsterdam. The loan, how- ever, does not appear to have met with much favour in any part. This circumstance, and the coolness with which proposals for foreign loans have been received quite recently, might almost make one hope that the money-owning public is learning to appreciate foreign bonds rather better than it used to do. There is no doubt that all states besides our own are not to be lumped together under the name of foreign and equally condemned. The credit of some is as good as that of the best house in London. But the worst of it is, that the Englishman has comparatively little opportunity of learning the moral, economical, or political reasons which may modify the credit of a state at different times. It is not long since Russian credit was in high feather, although the Emperor was borrowing money for one purpose under pretext of another ; but what has become of that credit now ? Yet it is not probable that the character of the man has altered, or that the resources of his empire have been entirely confiscated by his mistake in going to war. On the other hand, Peru suspended payment from 1826 to 1849, and Peruvian credit was as proverbial as Punic faith : Peru, however, discovers a deposit of guano, takes a financial stand upon that, and redeems her credit in the market. Probably the same honourable feeling existed in Peru all along ; but it wanted sup- port. Now, how is an English bondholder to calculate what may be the modified value of Russian credit plus a war, or of Peruvian credit minus guano ?
All foreign stocks are not entirely taken up in our market, and it would consume some time to calculate the exact proportion ; but we know that a good deal of English money has gone—to Madrid, to Peru, up the Mississippi, and down the Danube.
Now there is a striking difference between mistake in foreign and in domestic investments. We have indeed had wholesale in- solvencies at home, and Capel Court is a name which at once sig- nifies a host of memories ; but in such cases all the money that is wasted is not lost. Even if railways were not carried out, and nothing were produced for the money, a good part of the cash being drawn from non-producing classes, it only "changed hands." It went from the simple to the cunning ; individuals were made poor, and in many cases the sums went to swell large and lucky lea; but it was not abstracted from the community. It is dif- ferent when money is invested in foreign stocks, where there is no return. It is lost; for it is not distributed in trade at home, as it IS even when the money is drunk by riotous " stags "; nor is it re- turned from the foreign country by any triangular trade : it is
absolutely sent into exile, and the nation as well as the individual los.
It would be impossible to estimate with exactness the amount thus thrown abroad. Since 1824, including the arrangement of 1833, there has been more than four millions and a half sterling sent to Greece ; yet every kind of payment in return has been , arrear since 1836. Spain has received more than eighty mil- lions from foreign countries, while at home she has received not so flinch as fifty millions. Hew does this speak for the condition of the country, when it must borrow so much more largely
of the foreigner than of its own citizens; when it seeks even the capital for internal improvements from the foreigner, and cannot have it, because the Government action constantly tends to destroy the local and independent self-reliance and sponta-
neous action of the people, and because no faith can be re- posed in a country commercially, politically, socially, and regally
corrupt ? It is a question amongst bondholders, whether Spanish finance is improved and the Government will not pay, or whether it is declining and the Government cannot pay. Again, setting
aside the smaller stocks of Guatemala, Buenos Ayres, Chili, and
other South American states,—passing Brazil, whose faith has been so well kept,—making little account of Venezuela and New Gra- nada, with their joint capital of ten millions sterling neatly divi- ded and subdivided into Active and Deferred,—let us point alone to, that entangled mystery representing some ten millions of capital, called "Mexican Bonds "—Five per Cents—converted into Three per Cents; the story lost in conversions and modifications—in war with the United States, and civil wars with Governments that su- perseded each other. The English bondholder, we say, cannot dis- criminate between the title in an United States bond, whose credit is equal to that of Queen Victoria's Government, and a Mississippi State bond, representing its share in a capital of more than ten million dollars and in a quarrel about the very validity of the bond. English bondholders cannot draw these distinctions; can- not calculate the probability that Mexico will pay ; cannot pre- sume a latent guano in every Peru; cannot follow the motives of Russian expediency. What, then, is the motive which instigates the lender on a foreign bond P—It is lucre. A man is told that he can purchase
1001. of Stock, to bear interest at 5 per cent, for 591. in the Greek funds, or even for 561. 10s. The offer seems very improvident; but Mr. Pitt was even more improvident ; and Parliament has always ratified Mr. Pitt, so why should not the Greek Senate ratify the Greek Pitt? Thirty years later, men may look back upon the folly of those days, and discover that there are distinctions between.
states that are trustworthy, and that it is not every Government, de facto or de jure, which can really guarantee to a man the return of his own money or even interest for it. For the Greek case there was some excuse, since the Governments of England, France, and Russia, guaranteed the debt, and the state sustains the loss; but the private person, who in the language of the Stook Exchange is called " the public," will never be safe in trusting to his own es- timate of political probabilities. He cannot do it at home, even in a country whose feelings and institutions he understands, or ought to understand; but how can he abroad ? Surveying man-
kind from Russia to Peru, how can ha conjecture the honesty, the resources, or the probable duration of a Government, so as to be enabled to insure his own money lent? It is clearly impossible.
If the fate of English money sent wandering after undue profits in these foreign loans could be presented in one distinct connected, story,—if we could impersonate it, and make it as familiar to the reader as the loss of the Wager or the Amazon, or Anson's expe- dition,—" the public " would begin to learn how sovereigns thus sent forth in search of greedy profits seldom come back with more than a pittance, often come back so " converted" and clipped as to be without their original proportions, and oftener still never come back at all. There is only one way in which the private person called "the public" can deal with foreign loans, and that is—not to deal with them at all.
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