THE NEW SAFETY OF NATIONAL DEBTS.
SMAGLIANI, the Italian Chancellor of the Exchequer, • was justified in the credit which, in his great speech of Sunday, he took for his country in the matter of finance. Italy has for twenty years behaved admirably to her creditors. The sur- tax imposed upon the bonds was no more in practice than the income-tax paid by all other holders of realised property ; and apart from that measure, the country has been thoroughly and painfully honest. Though obliged to keep up an immense army, and tempted to construct a powerful fleet, the people have endured excessive taxation, including a cruel tax on free- holds and a direct tax on bread, rather than allow their credit to be reduced. They have paid off twenty millions sterling of their floating debt, and they hope to pay it off altogether ; they have redeemed their paper currency, in spite of the progressive appreciation of gold ; and they have raised the value of their bonds in the eyes of the European market to within 10 per cent. of those of France. Those are results which testify strongly to the political sense of the Italian people, and would testify to a certain separateness in them but for the evidence which reaches us from every side of the growing popular feeling in all countries as to the extreme inexpediency of tam- pering with National Debts. There is now no country in Europe which attempts openly to repudiate or postpone pay- ment of national obligations. Several have made default, but all, including even Turkey, have now compromised, while none plead any excuse for default except positive in- ability to pay. France pays the interest on her enormously increased Debt by patient submission to a taxation which is nevertheless bitterly felt. Italy has made sacrifices for the same end almost unprecedented in Europe. Spain is keeping her new obligations. Germany used her great windfall to pay off debt, and can raise money at 4 per cent. The first thought of the Austro-Hungarian Governments is their pecuniary credit ; and even Russia, though so discredited by the im- placable hostility of all Jews, pays her bonds as strictly as her soldiers. Many of the little States, such as Holland, Belgium, and Sweden, stand in the forefront of the market ; and even Den- mark, with her past territorial losses and her obscure future, is not distrusted by the loan-dealers. There is not a single statesman left in Europe who does not insist on the rigid payment of all obligations, and not a popular leader, unless he is openly an Anarchist, who ventures to hint at the application of the sponge. So strong, indeed, is the feeling, that the argument which now does most to induce Parliaments to vote new taxes is the " absolute necessity " of maintaining national credit in its highest form.
The cause of this faithfulness among statesmen, which, if we look back only a century, we shall find to be quite new, at least in its extent and perfectness, lies, of course, upon the surface. The ruling men of Europe are not yet unanimous as to many economic propositions. They are not clear as to the superiority of direct taxation, are sometimes irrational about commercial intercourse ; and in spite of the curious evidence to the contrary afforded by the Berlin Conference, are divided about the pre- cise effect and value of Free-trade. But they are all painfully aware, even over-convinced, if that be possible, that the power of borrowing cheaply and suddenly is a first element in national strength, and that this power is almost wholly de- pendent upon the punctilious discharge of all obligations to the national creditor. They are, in fact, almost morbidly anxious on the subject, and are reluctant to offend the great capitalists, who, in the hour of strait, can enable the Treasuries to keep their obligations, to a degree which greatly influences, and, in one way, degrades all political action. Half the difficulties of Egypt at this moment arise from the fear of the Continental statesmen that, if they affront or injure two or three great houses which are loaded with Egyptian Bonds, they may, at the next monetary crisis, be refused their help or good-will, and so be compelled to postpone payment of their own obliga- tions.
This improvement in the tone of ruling men is natural enough, but it extends to the peoples, which no longer favour the demagogues who promise relief from debt ; and it is worth while to consider the causes of the change. One un- doubtedly is the spread of Parliamentarism. It is one thing to repudiate a debt raised by a King, or a Government, or a ruling caste, and quite another to dishonour an obligation incurred by the people themselves. The pride of the nation, as well as its honesty, is enlisted on the side of the Treasury ; and the Bondholder is regarded as a creditor, instead of a capitalist who is levying usury by force. This feeling, which has modified the whole attitude of the people towards tax-gatherers, and has made the old disposition to hang them seem almost incredible, is of course greatly increased by the diffusion of the Debts among the body of the peoples. Where, as in France, the peasants who vote and fight, also hold the State bonds, the reverence for the Eighth Command- ment naturally becomes acute, even among the majority, who, though they hold no bonds, look to such holding as the highest pleasure. The respect for national credit, however, has spread beyond the peasantry, and we cannot but think that one main cause, as operative as national pride or even the diffusion of the bonds, is the increase of commercial aptitude among the people. Everywhere they have learned to understand what Companies can do, what strength association gives to themselves, what Benefit Societies can secure, and what can be accom- plished through the working of insurance. A great many objections have been raised to Prince Bismarck's plans for founding a State Assurance Fund against accidents ; but the notion that the common people would not understand it has entered no one's head, and it is from their speeial representa- tives in France that proposals come for improving on and extending the German Chancellor's idea. Here in England there are literally millions of people who are paying steadily to innumerable " Societies," for unseen advantages to come to them in the future, and who, consequently, are rigorous in their demand that such promises shall be punctually kept. It is impossible that in men so involved a respect for contract should not grow up, or that they should not learn to regard the State as a great Association or Insurance Office, which must first of all keep its pecuniary engagements. It has had the money, and must pay its per-tentage, just as a Benefit Society, which had had its sixpence a week, must pay the promised sick or burial allowance. The notion that tax- gatherers oppress for the benefit of the rich, disappears in favour of the notion that they collect in order to keep promises which must be kept ; and the bloated Bondholder, who once was the first object of attack, is now the last. We doubt if it would now be safe, even in Ireland, where " holding the rent " is at all events a venial offence, to propose that the Treasury should " hold" the interest on Consols, or the people " hold" the taxes which make the Treasury safe. If that view is correct, and we cannot but think it is, the national creditors of Europe have a guarantee for their money stronger than Treasury pro- mises, and may think themselves indefinitely safer than the owners of large blocks of land. Yet it is not forty years since a capitalist, who invested a large fortune in State Stocks, instead of land, was considered so eccentric and so rash that he was publicly mentioned as a man who stood almost alone, and who believed in the good faith of the State to a preposterous degree.
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