_Government debts._—An important part of government machinery is connected with its ability to make use of borrowed capital. Under the pressure of heavy expenditures in case of war, or in undertaking permanent improvements in a new country, or in carrying on various enterprises for common welfare, the demand for means is greater than the supply from ordinary modes of taxation. Not even the special devices of war taxes can meet at once the burdens of a defensive war. The rightfulness of such expenditures upon the credit of the government depends upon the object to be secured. The expense of the war which defends and preserves the future home of posterity may properly be borne in part, at least, by posterity. The court house, the water works, or the electric plant, whose benefits will be shared by the people for a hundred years, may properly be so constructed that all the people benefited may share in the burden. Good economy requires the foresight which builds beyond mere present need. The danger is that expenditure made under expectation that others will pay may be wasteful, and often other reasons than actual needs in the interest of private speculation control. Nevertheless, there is good reason for government debts; and every form of government, from the loftiest to the most insignificant, finds such indebtedness easy to contract. The smallest school district can issue scrip in payment of its teacher, or can issue bonds for the construction of its school-house. Only the general government, under our laws, can borrow by issuing due-bills in the form of legal tender notes. All of these certificates of indebtedness enter into the general commerce under the common law of supply and demand, and bear an economic price proportional to the certainty of their final payment and the convenience of their use in commercial transactions. The exemption of national bonds, or even state bonds, from local taxation works no more hardship than the exemption of state property. Under ordinary circumstances the entire advantage of such exemption is gained by the state, and so by all the taxpayers of the state. The exemption of national bonds from every form of taxation prohibits interference with the government’s privilege of borrowing when and where it can, and the advantage comes back to the people _in full_ through the low rate of interest or the premium in price which such bonds bear. They are subject to fluctuations in value through their being a means of transferring floating capital between industries. Under a stable government, with a somewhat permanent debt, a holder of bonds is a sort of stockholder in the governmental wealth, with definite stated dividends rather than profits.