TOPICS OF THE DAY
THE FEVERISH REDEMPTION OF DEBT
FEVERISH Redemption of Debt--that is the source of our discontents. That is what is injuring our industries, and causing alarm and embarrassment to the Government and its huge and loyal majority. We must pay our debts to the last farthing and carry out our contracts to the letter. That is a proposition that cannot be denied, but keeping our promises and redeeming our debts with blind haste are perfectly different things. A horse may take a moderate load up a hill every week for a long stretch of years, but if he is overloaded in an attempt to finish the job in a hurry his back will soon he broken. That is what we are doing when we raise £50,000,000 a year for rapid debt redemption in years of industrial weakness and depression, instead of treating the National Debt scientifically and spreading repayment evenly over a long term of years.
Against most of Mr. Churchill's Budget proposals per se we have no complaint. The only exception is the Silk Tax. There is a case of shipwreck on the worst of all the sunken rocks in economies---the double impossibility of deciding what is a luxury and what is a raw material. With the attempt to give us without delay some of the benefits of " All-in " Insurance we are in principle in full sympathy. But here there is, under present conditions, grave risk of injury to trade. As Sir Robert Horne put it, we are proposing to break the hearts of our business men. The Budget, in truth, is spoilt by the attempt to do too much on too narrow a basis. If we want to give real security to the worker, the benefits must be all-embracing, adequate in amount, and must place no extra burden on business. Finally, the scheme must do away with the cancerous tumour of the Poor Law. But Mr. Churchill tells us, quite truly from his point of view, that this is economically impossible. Yet the fact remains that if he persists in his new burdens on business in general, and silk in particular, he will do immense damage.
If we make the period of debt redemption long enough we can get rid of the burden of the debt almost automatically. But let me say before I make my proposal that it is totally different from the scheme proposed last week by Mr. Hoare. We printed that view, not because we agreed with it, but because we maintain a free forum in our pages and hear all sides.
Everyone recognizes that a leasehold house with ninety-nine years to run is worth as much as a freehold. I am told, indeed, that no accountant or expert in valua- tions makes any difference in his balance-sheet between a leasehold with over sixty-five years to run and a freehold. In the same way, a perpetual annuity and an annuity for a long term of years are practically of identical value. To put it in another way, the amount you have to put by each year for ninety-nine years, in order to accumulate £100, is something like two shillings. If, then, by law you turned the National Debt into termin- able annuities of ninety-nine years, but at the same time added to the interest on the National Debt a couple of shillings a year for every £100 you would have done the State's creditors no economic harm. If they refused the offer, you would simply hand over their extra one-tenth per cent. each year to a body of Commissioners and tell them to make a sinking fund out of the proceeds in the name of John Jones and others. But John Jones and others would not refuse.- They would feel that the one-tenth addition of interest was worth taking. If it were given to a Sinking Fund Com- mission they would feel that in a great emergency their funds might be depreciated, or even raided, by a needy Chancellor of the Exchequer. Further, they would argue, and argue rightly, that a leasehold National Debt would not irritate the minds of _Communists, economic theorists, credit cranks, and predatory. politicians generally, half so much as the idea of a perpetual burden; which can be too easily described as " pure usury.".
When the end is in sight, even if only distantly descried; the debt seems less menacing. As the years roll on, it will appear more and more like theft to repudiate it If we were to turn the freehold debt of £8,000,000,000 into a ninety-nine years' leasehold, the extra cost would be only £8,000,000 a year. In fact; it would be a good deal less. Even if the Income Tax were considerably reduced on the lower incomes, and moderately on the larger, the Government. would, we may feel sure, take sonic £2,000,000 a year of the extra sum spent under the item " Interest on Debt." In that case the net addition to our expenditure would probably not be more than £6,000,000 a year. If we substitute a charge of £6,000,000 a year under a scientific sinking fund for a delirious debt redemption allotment of £50,000,000 a year, we should have some forty-four millions set free each year. And what could we not do to vitalize industry if we used such a sum wisely ? We hold that the sum should for the most part be regarded in the light of an investment to be laid out on the national estate. We would use it, in the first place, to guarantee a comprehensive scheme of "All-in " Insurance as wide and as generous as the Broad Scheme, and so ample enough to warrant the complete abolition of the Poor Law. We would leave no ghost unlaid to haunt us here. And with the Poor Law would go the dole.
Next we would make the Post Office no longer a burden on industry, but would secure that its services in letter- carrying, telephoning and acting as the poor man's banker, should provide a direct stimulus to our industries.
A really cheap parcels post combined with " cash on delivery-" would be a blessing to every poor man's house.
Why should not our daily bread, and our daily milk and butter be delivered with our daily letters and our daily newspapers by a system of Government delivery which recognized the facts that when you call twice or three times a day at a man's door it is as well not to do so with a single postcard, and that light motor vehicles are quicker in delivering goods in the country than perspiring men who toil up hills on foot or on push bikes " ?
The " reductions " in prices and amplifications in service, such as I have just suggested, though they sound alarming from the revenue point of view, would; I am certain, if properly applied, end as -sources of national income. In any case, thirty or forty millions released each year would react at once on our industrial conditions. We should change from that mood of despair, which is now making things much worse than they really are, into a mood of optimism which I am not afraid to say is the essential condition for successful trading. Trade cannot flourish unless you " speculate,". and you cannot " speculate " when you think' that business is getting worse every day. • - But how about the contractual sinking funds and the promises to repay in full at fixed dates ? Maintain our promises to the letter: But while we do that, we are free to offer the Terminable Annuities to the nation's creditors, or to borrow the money required to pay thein off in the open market on a Ainety-niue years' lease. We should find no lack of applicants for dur leasehold
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