The Ethics of Government Debt

When repudiation is forced upon a nation by events and conditions beyond its control no question of ethics is involved. A country engaged in a war that has drained away its resources and impoverished it, or a subjected country ruthlessly exploited by its conquerors, may be forced to repudiate its debt for want of means to support it. This is the public equivalent of honorable bankruptcy in private life. WTien, however, ignorance, indifference, neglect, and extravagance put a nation on the road to repudiation the ethics of borrowing and of debt have been violated. The high principle implied in the promise to pay, a promise without which no lender would have transferred his purchasing power to the government, has been abandoned. Indiffer? ence, neglect and extravagance in government finance are inexcusable. Public officials are trusted by those whom they serve to exercise dili? gence and care, to be aware of the consequences of their policies. With them ignorance can be no defense for failure to pursue sound financial policies; for there is a considerable body of knowledge available to aid and guide them?knowledge based on reality, fortified by common sense, and accumulated throughout the course of history. As much to be feared as ignorance and indifference is the deliberate intention of some individuals and groups to bring about great changes in the social structure by means of government spending beyond the ability of the taxpayers to support it. To such people debauchment of the currency and repudiation of the debt through endless inflationary deficit financing is a desirable goal. In this way the accumulated savings of nearly all classes can be destroyed and the productive processes by which the nation's wealth is formed can be broken down. It is an axiom of social revolution that its accomplishment can be hastened by destroying the value of the cur? rency and thereby the value of the government's obligations. Here, of course, the ethical problem of debt as a promise to pay is compounded with that of deception and subversion. Principles and Practicality At a time when the Federal debt is far greater than it has ever been, its ethical aspects can easily be overlooked or misunderstood. They in? volve not only the relationship between the government as borrower

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