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.

Such bonds have various effects upon a general industry of the country.
While they lessen somewhat the immediate burdens of present productive
industries, they may increase the burden of the same industries in a
second generation. Their convenience in securing annuities for long series
of years may diminish the enterprise of a community by fostering a class
of non-producers, whose wealth is represented in the display of government
buildings rather than in productive enterprises. Just so far as government
employs the capital of the country through bonds, it diminishes the
capital which would otherwise find investment in productive employment.
The danger of extravagance to even small communities, from the ease with
which such government debts can be contracted, warrants the contrivance of
strong constitutional limitations. Indeed, provision, not only against
extravagant debt, but for reasonably prompt settlement, ma