THE REASONS FOR PAYING-OFF DEBT.
IT is worth while to consider the arguments for paying-off English Debt, for there is more latent distaste for Mr. Childers' proposals in that direction than their reception in Parliament would indicate. Everybody accepts them, but everybody does not like them ; and if the electors were, as in France, the Fundholders, the resistance might speedily be per- ceptible. The opposition, which as yet is hardly overt, comes from two cl +saes. A good many men, of whom Mr. Hubbard, we see, has made himself the spokesman, question whether the payment of Debt is really as beneficial to the country as the remission of taxes. You pay off an obligation, they say, to the extent of a million a year, and that money days in the pockets of the people ; but if you remit a tax of a million, the money also stays, and so, in addition, does all the profit from the fresh trade produced by every remission. If the tea-duty is taken off, for example, the poor benefit by the reduced cost of their tea, and, in addition, the exporter, the importer, the shipowner, and the distributing shopkeeper benefit by the increased consumption. That argument quite carries away some men, who forget that, apart altogether from the general reasons of State policy, which we give below, every remission of a tax tends, in the first instance, to benefit a class, the traders ; while every reduction of Debt directly relieves the whole community, which is not only taxed for the Debt, but is answerable for its security. There might, of course, be a tax so bad in principle or oppressive in its incidence, that no re- duction of Debt could be as valuable as the remission of the impost ; but, unless we consider tobacco a necessity, or believe the Income-tax to be deducted from the wage-paying fund, instead of the fund for buying superfluities—as is now nearly, though not quite, true—no such tax can be said to re- main. Those who oppose reduction of Debt on this ground are not, however, so formidable as those who dislike it on another. These are the whole body of Trustees, in- cluding Corporations like the Hospitals, timid investors, and men interested in Banks, Insurance Companies, and all the concerns which must place large sums in securities at once safe and saleable at short notice. They know perfectly well the first secret of 'Change—that, as compared with the bulk of the Debt, the quantity of Consols bought and sold is very small indeed ; they see that Two and a half per cent. Stock mounts with the steadiness of mercury in fine weather, and they fear that with the heavy and continuous purchases arranged by Mr. Childers, Consols will speedily reach the point-105, we believe —at which conversion becomes a financial certainty. They see a gaunt spectre before them, a National Stock yielding only two and a half per cent., with a subsidiary Stock behind that yield- ing only two ; and they ask, with deep sighs, half of alarm and half of fatness, what, then, will be the use of ac- cumulating cash ? Every safe investment sympathises with Consols, their great old rival, Land, is terribly out of favour, and it seems possible that 2 per cent. may, within ten years, be for the time a usual minimum dividend. Some of our readers will smile, but in every country except England and America this odd fear—a fear, in truth, lest one's credit should be too good—weighs heavily on Treasuries, preventing operations of great profit to the taxpayer. In France in par- ticular, the Treasury is at this moment paying £2,250,000 a year more than it need, from a fear that the peasant holders of the Fives will be enraged if they are suddenly paid off, or offered Fours.
There is, of course, no danger from this fear in England, where the notion of taxing the people for a needless payment to Fundholders would be scouted ; but still it operates silently, and it is well every now and then to state the great reasons for paying Debt. One distinctly is a moral one, that if we have borrowed foolishly or lavishly—and we have undoubtedly done both, though not on our grandfathers' scale—we ought to pay off our own Debt, if we can, and not burden posterity for ever. Posterity is justly liable for any cost of insurance, but not in the same degree for the coat of blundering. Of course, it must pay, just as the son of a drunkard must pay fbr his father's drunkenness ; but the liability is more an affliction than a duty. Another reason, a temporary one, is the certainty that, as gold is becoming appreciated—we wish Mr. Goschen would give us a better word—the Debt must, while that process continues, press more heavily, the interest on Consols being guaranteed in gold. A third argument is the strong probability that this generation is eating too greedily of the great cake, its territorial fortune. We may be exhausting the soil, we are certainly exhausting the woods, the quarries, and the brick-fields, and we shall shortly be exhausting the coal-mines. There may be remedies for this, for we do not know what science will do for us,—if we could store the electricity developed, for instance, by the tide, we might almost dispense with coal,—but the probability of exhaustion is great enough to be considered, as is also the chance that emigration may at no distant date deplete the population of Great Britain, as well as of Ireland. There is no present danger, for the emigrants, though they carry away energy, leave room for those left behind to use their energies in; • but a large reduction of population would make the Debt a much more serious weight. We should stagger under it, if we were only twenty millions, with a soil pining for a period of recuperation, and producing, therefore, poor crops,—a state of affairs which many keen observers believe to have already arrived in Ireland. To pay off Debt under such circumstances is only wise, as wise as it would be in a landlord who expected a fall of rents to clear off his mortgages while his income remained at its high level. Englishmen hardly feel the taxes just now—the true secret of the tendency to increased Estimates—and they should utilise their prosperity to reduce the burdens on their future.
The grand reason for paying Debt is, however, none of these, but a very different one. We want to strengthen the credit of the State, as the cheapest and best of all Insurances. That Credit is, in truth, a gigantic force, which enables England even now to maintain her position in the world without a conscription, and which may hereafter enable her to undertake great schemes for the internal benefit of the people. The ability to raise huge sums at once rapidly and cheaply is the steam-power in our engine. The Continent smiles at our Army, but does not want to provoke us, because it knows that it could be quintupled for defence without the Treasury quaking. A hundred millions a year would give us a million of men, and we could spend that for five years, and still be burdened only with an extra fourpence on the Income-tax and threepence a pound on sugar. That is a brutal form of stating the truth, but it is a truth ; and in the truth, which becomes more true with every payment of Debt, is the most potent application of the principle of Insurance. We have not to pay the money, because we could pay it. If any one doubts that, let him look at the position of the United States. That grand Republic has no Fleet, and on the water could hardly fight Spain. But she has reduced her Debt by strenuous paying to a trifling amount, barely ten millions a year, and every one knows that if she wanted a fleet to blow Spain out of the water, or to contest the seas with us, she would buy and build one in twelve months. Her payment of her Debt is an insurance not only against defeat, but against attack. Nor is this all. If there is one movement in modern society which is gaining in distinctness, startling distinctness, it is that which impels the whole community to use its aggregate force for the benefit of the suffering masses at its base. Call it Socialism, or any nickname you please, but the impulse is there. At this moment, England has given sixty millions,—the capital value of the permanent tax of three millions,—for the education of the Poor. At this moment, Lord Salisbury, the Tory chief, not the Liberal, has publicly stated that it would be well for the State to assist in rehousing the body of the people, that is, practically to rebuild, or repair, or improve the majority of the six million houses in the country, a task of appall- ing extent. It is certain that not only will such pro- positions continue to be made, but that some of them, once reduced to solid plans, will sooner or later be carried out. The Democracy will not live in wretchedness, if it can be comfortable without plunder. The whole ques- tion, whether this movement shall be ruinously costly, that is, shall involve such taxation as will make industry languish, or shall be comparatively cheap, will depend in the long-ran on State credit, and that is dependent on payment of the Debt. Suppose, again to put the matter with brutal distinct- ness, it took a loan of £500,000,000 to repair the lacunae in our civilisation, the bad. housing of the people being one of them. What would that cost in dividend ? At present, pro- bably four per cent., or 120,000,000a year ; but, if conversion could be effected, and a Two per Cent. Loan be started, it might be only three per cent., or only £15,000,000. In other words, Mr. Childers' principle would have increased the potency of the State for social improvement, as well as for battle, by one-fourth, a calculation which is possibly in excess of present truth, but which will bring the actual truth home to all minds. That truth is, that not only is every hundred millions we pay off available for future expenditure, but avail- able at a lower rate, the investors thinking the State promise still more secure. In other words, if we could gradually pay the whole Debt off, the Kingdom could raise a thousand millions for any beneficial or needful purpose, and then be no more burdened than it is now. We despair of conveying to our readers an accurate imrression of the magnitude of that force, for a mouth-filling, phrase like a thousand millions— though it is only two-thirds of the French Debt—is, except to financiers, beyond realisation ; but perhaps this will give them some idea of it :—The power to raise a thousand millions means
the power to employ a million of workers or fighters at £1 a week for twenty years. Of course, the Debt will not be paid, though the Americans are setting such an example; but Mr. Childers's heavy blows at it,which he would redouble if the Representatives encouraged him, do proportionately store up new force for the State, which Parliament may in twenty years employ in furthering great efforts for the improvement of the condition of the people. Socialism, as usually explained, we distrust utterly. A man in health should either earn his own living or go where he can do it, not pillage his neighbours ; but that the community can make this earning easier, by securing certain conditions of civilisation at the general expense, we make no doubt whatever. It is all very well to talk of Socialism, but if the English were a non-subscribing people, like the French and Irish, a State-supported Hospital for Accidents would have to be set up in each great city. All the chatter in the world about paying for one's own broken bones would not hinder that work one week.
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