... "I know but one way that a nation has of paying her debts, and that is precisely the same which individuals practise. 'Spend _less_ than you receive, and you may then apply the surplus of your receipts to the discharge of your debts. But if you spend _more_ than you receive, you may have recourse to sinking funds, you may modify them as you please, you may render your accounts extremely complex, you may give a scientific appearance to additions and subtractions, you must still necessarily increase your debt. If you spend more than you receive, the difference must be supplied by loans; and if out of these receipts you have set a sum apart to pay your debts, if you have so mortgaged or disposed of that sum that you cannot apply it to your useful expenditure, you must borrow so much more in order to meet your expenditure. If your revenue is nine millions of dollars and your expenditure fourteen, you must borrow, you must create a new debt of five millions. But if two millions of that revenue are, under the name of sinking fund, applicable to the payment of the principal of an old debt, and pledged for it, then the portion of your revenue applicable to discharging your current expenditures of fourteen millions is reduced to seven millions; and instead of borrowing five millions you must borrow seven; you create a new debt of seven millions, and you pay an old debt of two. It is still the same increase of five millions of debt. The only difference that is produced arises from the relative price you give for the old debt and rate of interest you pay for the new. At present we pay yearly a part of a domestic debt bearing six per cent. interest, and of a foreign debt bearing four or five per cent. interest; and we may pay both of them at par. At the same time we are obliged to borrow at the rate of eight per cent. At present, therefore, that nominal sinking fund increases our debt, or at least the annual interest payable on our debt." ...