9 DECEMBER 1854, Page 9


RE a not unnatural mistake, the question of a loan appears to have been at once taken up in a too extensive fashion and on the other band limited too much to a particular date. Some pains have been used to establish the truth of the contradiction authoritatively sent to the Times and to show that Government has not been cramped in its warlike operations by want of means, while the Chancellor of the Exchequer has not been obliged to run into debt in order to accomplish what has already been done. In another page we quote some of the figures that have been brought forward to show the perfect solvency of the Government down to the present time, and probably to the termination of the financial year. Therefore, it is inferred, no loan is requisite. We do not suppose, however, that any well-informed person who assisted in raising the discussion really believed that a loan would be necessary to square Mr. Gladstone's current account. Should any wonderful chance bring Russia to reason, and the war terminate by a bona fide negotiation on "the four points" within a month, we shall have paid all the costs in action, shall be acquitted of our additional income-tax, and be enabled to proceed with fiscal and other reforms, setting aside the loan, for ever as a superfluous luxury. But if the war be continued, it cannot be continued on its present footing or scale. The enlarged taxation must be sustained, and new expenses must be incurred, on a scale, perhaps, not only of arithmetical but of geometrical progression ; and it is then that the question of the loan will come into practical activity. It is of course not a question for the short sitting before Christmas, but it may be one for an early day in the spring session. In the mean time, the discussion, as we said last week, has not been prematurely raised. We have a proof in the interest which it has excited, and in the manifestation of our own correspondence. One letter we print, because the writer very fairly challenges consideration for some points in the defence of Mr. Pitt, almost suggesting that we may have to copy rather than avoid the example of that financier. If Pitt issued a Three per Cent Stock at 60/. or 67.1. at that time, necessity may equally raise the value of money during the present war, and oblige his successor to give an equal bonus: the bonus given to loan-contractors is a device which may be necessary in the same season of difficulty: Mr. Gladstone's attempt to issue to the public Exchequer Benda directly "was all but a failure," as habit makes John Bull less disposed to direct dealings than they are in France or America : and terminable annuities are not popular, because there is a disinclination to extinguish capital. The reply to these suggestions greatly strengthens the case which our correspondent challenges. There is a dislike to extinguish capital, but it is a dislike that diminishes in a rapid ratio as the time is extended into futurity. Almost as much is given for a ninety-years lease as for a perpetual lease, even a sixtyyears lease not being greatly cheaper than perpetuity. We should lose at the commencement by substituting terminable for interminable annuities;. but to our grandchildren, and to the immortal state in the time of our grandchildren, the difference would be the whole of that between debt and no debt at all. Clear honest principles never were available in the market at so reasonable a price as when paying the difference between terminable and inter'likable annuities. If John Bull has been the creature of habit, improved education in modern days has sometimes taught him better ; and the success of direct dealings was not tested by Mr. Gladstone's experiments, because the instrument itself was new, and there was no adequate incitement at that time to call out either the nation or the great capitalist. The bonus would not be increased in the case of terminable annuitiea, since it is paid, not for any difference between one kind of stock and another, but for cash when demand raises the value of that commodity. When the Chancellor of the Exchequer, however, shirks the excessive exigency that presses upon him, greedily snatches at accommodation upon usurious terms, and gives a bonus beskles for cash-crimps who will bring in funds, he beats down his own value, and becomes, as we said, the head of the Bear party. Mr. Gladstone can do that; but also, we believe, he can avoid doing it. The old system of loans was, to borrow a certain sum and to give the lender credit for a much larger sum; thus throwing an unfair proportion of the burden upon posterity. That method might be reversed, by borrowing at a high rate of interest, and giving the lender credit for a smaller sum than the sum actually received by the state. For example, and speaking in round numbers--formerly 60/. was really borrowed, and credit was given for 1001.; the National Debt was increased by 100/. for every 601. borrowed. If reversing this system, a lean were to be negotiated

I at 6 per cent, guaranteed for a given number of years against either repayment or reduction of interest, the 1001. would be negotiable for probably 150/. In that case, the National Debt would be increased by only 100/. for every 150/. received ; and the nearest approach which a war contingency admits of would be made to Mr. Gladstone's broad principle. Our correspondent says, that " in this country, the aid and example of the great capitalists will probably always be required to inspire that degree of confidence needful to unlock the pockets of the prudent investor, who habitually and on principle prefers to pay 1201. for a well-secured Bente of 51., rather than purchase a doubtful one of the same amount at 80/." Now the really "pmdent invester " will not be led by example, but will judge for himself; and he certainly will perceive that in such dealings as these, unlike some others of a commercial kind, the " great capitalist" gives no security at all. The sole guarantee lies in the body of the state security. Again, there may be a varying price for different forms and extensions of accommodation, but in oases of money borrowed by our Government, or by any other solvent state, not giving collateral securities, the security is identical for every form of stock. The risks, such as the possible break-up of our constitution, or the adoption of "repudiation" in England, are the same for all kinds of stock. The guarantee lies in the traditional good faith of England and its Government, never for an instant called in question; the value of that guarantee is constantly increasing, though practically it is already as high as it can well be; but it is identical for all kinds of public security, and there is no difference in the probable safety of a stook to modify its selling price.

The circumstances of the country are very unlike those of Mr. Pitt's day. Our intercourse with foreign countries is on a scale that mocks all past comparison. It is not even tested by the exports, since they do not represent the immense mass of wealth actively and properly engaged in the trade we carry on with all parts of the world. But our exports in 1805 showed a total of 38,069,1471.; our exports in 1853 amounted to 87,357,000/. The United States, our Colonies, the factory system, the agricultural system as it is now commencing, steam navigation, railways, the commercial system of the world which brings the Antipodes within a few weeks' communication, are things of which Mr. Pitt knewnothing. The population of England, which in 1800 steed at 9,168,000, stood in 1851 at 17,927,000. There are therefore 8,759,000 more people ; and the vast bulk of the population, as its condition is indicated by the amount of the exports and imports, and the uniform increase in articles of general consumption, even more than in the rise of wages, is decidedly richer. The present war does not yet, and will scarcely at all, be able to interrupt trade as it did in Pitt's days. Austria herself has not been reduced to a Pitt scale of prices for the sale of public stock ; and he must be a Dutch auctioneer indeed who is compelled to do anything but reverse the circumstances under which that Minister supplied the necessities of the day.