Collected Works of Abraham Lincoln. Volume 1.
Lincoln, Abraham, 1809-1865.
December 4, 1840

Mr. LINCOLN moved to strike out the bill and amendment and insert the following:

AN ACT providing for the payment of interest on the State debt.

SEC. 1st. Be it enacted by the people of the State of Illinois, represented in the General Assembly, That the Governor be authorized and required to issue, from time to time, such an amount of State bonds, to be called the ``Illinois Interest Bonds,'' as may be absolutely necessary for the payment of the interest upon the lawful debts of the State, contracted before the passage of this act.

SEC. 2d Said bonds shall bear interest at the rate of per cent annum, payable half yearly at and be reimbursable in years from their respective issuings.

SEC. 3d. That the State's portion of the tax hereafter arising from all lands which were not taxable in the year one thousand eight hundred and forty, is hereby set apart as an exclusive fund for the payment of interest on the said ``Illinois Interest Bonds'';Page  216 and the faith of the State is hereby pledged, that said fund shall be applied to that object and to no other, except at any time there should be a surplus, in which case such surplus shall become a part of the general funds of the Treasury.

SEC. 4th. That hereafter the sum of thirty cents for each hundred dollars' worth of all taxable property shall be paid into the State Treasury; and no more than forty cents for each hundred dollars worth of such taxable property shall be levied and collected for county purposes.

Mr. LINCOLN said he submitted this proposition with great diffidence. He had felt his share of the responsibility devolving upon us in the present crisis, and after revolving in his mind every scheme which seemed to afford the least prospect of relief, he submitted this as the result of his own deliberations. The details of the bill might be imperfect, but he relied upon the correctness of its general features. By the plan proposed in the original bill, of hypothecating our bonds, he was satisfied we could not get along more than two or three months before some other step would be necessary---another session would have to be called, and new provisions made.

It might be objected that these bonds would not be saleable, and the money could not be raised in time. He was no financier, but he believed these bonds thus secured, would be equal to the best in market. A perfect security was provided for the interest, and it was this characteristic that inspired confidence and made bonds saleable. If there was any distrust, it could not be because enough had not been promised; it must be because our means of fulfilling our promises were distrusted. He believed it would have the effect to raise our other bonds in market. There was another objection to this plan, which applied to the original bill, and that was as to impropriety of borrowing money to pay interest on borrowed money---that we are hereby paying compound interest. To this he would reply, that if it were a fact that our population and wealth were increasing in a ratio greater than the increased interest hereby incurred, then this was not a good objection. If our increasing means would justify us in deferring to a future time the resort to taxation, then we had better pay compound interest, than resort to taxation now. He was satisfied that, by a direct tax now, money enough could not be collected to pay our accruing interest. The bill proposed to provide in this way for interest not otherwise provided for. It was not intended to apply to those bonds, for the interest on which, a security had already been provided. He hoped the House would seriously consider the proposition. He had no pride in its success, as a measure of his own, but submitted it to the wisdom ofPage  217 the House, with the hope, that if there was any thing objectionable in it, it would be pointed out and amended. [2]

Mr. LINCOLN replied at considerable length, and repeated his former arguments in favor of the amendment offered by himself. In conclusion, Mr. L. said that his plan had been termed an expedient. He considered this an unfortunate expression for those who advocated the original bill. That [was?] emphatically an expedient---a mere shift, which could but answer a temporary purpose, and might lead to further difficulty. [3]

Mr. Lincoln went into the reasons which appeared to him to render this plan preferable to that of hypothecating the State bonds. By this course we could get along till the next meeting of the Legislature, which was of great importance. To the objection which might be urged that, these interest bonds could not be cashed, he replied, that if our other bonds could, much more could these which offered a perfect security, a fund being irrevocably set aside to provide for their redemption. To another objection, that we should be paying compound interest he would reply, that the rapid growth and increase of our resources was in so great a ratio as to outstrip the difficulty; that his object was to do the best that could be done in the present emergency; all agreed that the faith of the State must be preserved; this plan appeared to him preferable to an hypothecation of bonds, which would have to be redeemed and the interest paid. How this was to be done he could not see; therefore he had after turning the matter over in every way devised this measure, which would carry us on till the next Legislature. [4]