PREMIUM BONDS.
SIR ROBERT KINDERSLEY has done good service to his country by issuing a powerful counterblast to the current Press agitation in favour of premium bonds. That agitation is superficially plausible. Lookers-on at present in- dustrial and financial movements see that an immense amount of money is being made by munitioners and others' and that comparatively little of it is invested in War Bonds. They then proceed to make the deduction that the advantage to be gained by bond-fide investment is not sufficient to tempt the man who finds himself in possession of unexpected wealth. To save 110 at the cost of some self-sacrifice and only to get 10s. a year does not seem to such a man to be good enough. He wants to have something more to show for his money. Notoriousit a large portion of the working classes, and a good many middle. class and upper-class people too, are fond of gambling. If then —so it is arg-ued—peopl, like to gamble, why should they not be tempted to invest their money in Government Loans by tht prospect of winning a prize ? The advocate of premium bondo next goes on to plead that the worst evils of gambling can bt avoided by providing that the capital invested shall in no cir- cumstances be lost, but that those who draw the lucky numbers shall obtain a prize over and above the low rate of interest carried by all the bonds. To be specific, it is generally pro- posed that, instead of issuing 5 per cent, bonds to everybody, bonds carrying 21 percent. should be issued entitling a minority of lucky drawers to large prizes. Against this and kindred proposals Sir Robert Kindersley protests in a communication to the Press which most of those who study it carefully will certainly find conclusive. He starts quite rightly by dealing with what he calls the ethical side of the subject. Few people will go so far as to condemn gambling as immoral. It is within limits a more or less universal human instinct, and within limits it does not do perhaps very much harm. The objection to it on the ethical side is not that the act of gambling is immoral in itself, but that it represents an appeal to an instinct of lower social value than the instinct of saving. The man who proceeds on the get-rich-quick principle, which is the basis of all gambling, may possibly have more fun in life, but he certainly does less good to his fellow-creatures than the man who works hard and saves hard. More than this, if we look at the problem from the point of view of war needs, then we are bound to agree with Sir Robert Kindersley that it would be a fundamental mistake to appeal to the lower motives rather than to the higher motives of mankind. We are engaged in a great war which in the final resort can only be justified by the ethical ideals that lie behind it—the ideal of honour among nations, the ideal of the peaceful settlement of international differences, the ideal of chivalrous conduct even in the final arbitrament of war. All these represent appeals to the higher qualities of man. Are we when setting these ideals before our fellow-countrymen at the same time to appeal to motives which belong to an altogether lower plane ? To ask a man to work hard and to save every penny he can from his personal expenditure, and to lend it to his country for the purposes of the ideals embodied in the war, is a consistent pro- posal. To ask him instead to join in a big gamble in order that incidentally the State may get money with which to finance the war is an altogether different proposal. This is Sir Robert Kindersley's main argument, and it cannot be better sum- marized than in his own words :— " The curse of war may be tempered with blessing if it is utilized to promote and sustain the spirit of patriotism which the war hns evoked, to strengthen decision of character and promote persistent effort ; .but the appeal must be all the time to everything that is best in the people, and not to their baser side."
This consideration is by itself of such tremendous importance that it ought alone to prevail unless the arguments on the other side are overwhelming on the ground of expediency. When, however, we look into the matter a little more deeply, as Sir Robert Kindersley, with his experience of the War Savings Committees, has had to do, we see that the argument for idealism is, as a matter of fact, reinforced by the argument from expe- diency. The War Savings Committees have already done a magnificent work. They have enlisted no fewer than one hun- dred and twenty thousand voluntary workers throughout the country, who are going about collecting subscriptions in six- pences and shillings for the War Loan. They have already collected a gigantic sum. During the war the small investor has contributed not less than £240,000,000 to the various War Loans over and above the £250,000,000 now standing to his credit in the Savings Banks. The greater part of this money is on call, and it is certain that if premium bonds were started, human nature being what it is a very large proportion of these small investors would withdraw their present investments in order to have a fling at the premium bonds. To this extent the State would get no new money at all ; it would merely have the trouble—a very heavy trouble—of handing out money already invested in order that it might be reinvested in another shape. That by itself is a very strong argument on grounds of sheer expediency against the premium bonds scheme. More im- portant still is the consideration that if premium bonds were established a great many—probably the immense majority— of those people who are now saving steadily and persistently would prefer the excitement of an occasional gamble. It may be argued that even so the State would get the money ; but the point is that the State would only get it temporarily. This is a deduction from the experience of the City of London. Speculative investments are known as "bad money" because the type of person who makes such investments is always wanting his money back, or even spending money in advance on the prospect of his speculation turning out well. From this every- day experience in the City it is safe to deduce the inference that the people who invested in premium bonds would immediately after the drawings try to sell their bonds for the sake of another gamble ; so that the probability is that though the first issue of premium bonds might bring in a very large amount of money, the second and subsequent issues would bring in very little new money of any kind. In addition, the get-rich-quick spirit which lies at the base of the premium bond movement would certainly encourage extravagant expenditure. It is notorious that even in the case of the comparatively limited premium bond issues recently undertaken by two commercial firms people were heard saying : "I have bought so-and-so on the strength of the prize I am going to win in the coming lottery." That is not the kind of spirit which will produce fresh money for the war.
These a priori considerations are greatly reinforced when we examine the history of premium bonds in past generations. Few people during the continuance of the present controversy seem to have taken the trouble to examine what happened to the numerous lotteries which used to be run in this country on behalf of the State down to the end of the first quarter of the nineteenth century. In lottery loans as in other matters private enterprise has led the way. The earliest known lottery of any dimensions in England was in the year 1612. It was set on foot to defray the expenses attending the establishment of English settlements in Virginia. Within eight years, how- ever, the disadvantage of rousing the gambling spirit of the nation was so strongly felt that in 1620 lotteries were pro- hibited by Order in Council. Two generations later the State, while still professing to regard lotteries as objectionable, pro- ceeded under William and Mary in 1694 itself to raise money by this method. It is interesting to observe that in this, the first official lottery loan, the principle now being advocated was adopted—namely, the principle of giving a moderate annuity to every contributor plus the chance of a prize. The conflict between the State's condemnation on ethical ground of the principle of lotteries and the action of the State in employing lotteries for its own purposes continued unbroken. In 1699 an Act was passed declaring lotteries to be" a common and public nuisance." Yet every few years fresh Government lotteries were organized. The amount of money raised was never very considerable. About the middle of the eighteenth century the State adopted the practice of annual lotteries to raise revenue in addition to periodical lotteries to raise capital. The latter, indeed, ceased in 1784, but annual lotteries for purely revenue purposes continued down to 1823, although repeatedly condemned as injurious to the nation. Among the incidents of the system was the creation of a considerable body of adventurers who cut into the profits of the State by selling chances on lottery tickets not yet drawn, or by insuring the holders of tickets against the chance of drawing no prize, or even by illegally running private lotteries on terms more favourable than those offered by the Government. From the financial point of view, it may safely be said that the whole thing was a failure. During the last thirty years that the t:ystem of annual lotteries was in operation, the net revenue produced, after deducting the very heavy cost for advertising and other incidentals, was only about a quarter of a million a year. No doubt a very much larger sum would be raised now, because the resources of the country are so much greater. But past 'experience gives not the slightest ground for hoping that we should by the lottery method be able to raise con- tinuously any sum bearing an adequate proportion to our present needs.
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