1 1 J temptation. She is as a nation a trifle too
rich, and is beginning to think that a little extravagance might not only be becoming but even useful. She is half-dis- posed to fling away money, especially on objects which will yield to her, besides the pleasure of spending, a feel- ing of increased dignity or the glow which accompanies an unexpected act of charity. One knows the symptoms in private life well enough. Smith finds his business in- creasing, and his income with it ; and forthwith he sets up a carriage, increases his subscriptions, ceases to worry about small bills, and meets the demands of wife and children, who know quite well that he is prospering, with an indulgent smile. The Treasury has a large surplus, the Government is disposed to spend, and every interest which thinks itself distressed makes out a case for liberal treatment or relief. The cost of the Civil Service goes up by leaps and bounds ; there is no end to the necessities oF the Navy ; even the Army, which can usually get nothing asks apologetically for money ; and as to the public, if Sit Michael Hicks-Beach were to grant one-half its demands, particularly those which seem reasonable, the Treasury, now so full of the "pride of life," would soon be beginning to wonder, like the American Treasury, when it would be empty and disconsolate. Indeed, we are not sure that it will not be urged to borrow money. It is an experience of all men that when they are poor nobody will lend them a shilling, and when they are rich, bankers, solicitors, agents eagerly press money on their acceptance " at the most tem- perate rates, Sir,"—" temperate" being the felicitous word with which lenders soothe the disquietudes of those whose securities are undeniable. The country in the same way is asked to borrow ; bankers love safe discounting customers, and capitalists just now want very much to love Great Britain. They do not know where to put their money so as to be safe, to be ready at call, and to produce an interest of 3 per cent. Exchequer Bills at 18s. seem to them improvident investments, Consols at 1091 are hardly better, and keeping millions on current deposit without interest strikes them as immoral. There is no sign of the great war which is to add a thousand millions to the book debts of the world, the engineers have not hit upon any- thing to absorb tens of millions, except the Nicaragua Canal, and that hangs fire, and there is for a moment a sort of famine of big borrowers. Could not Great Britain, which is so rich, be induced to give up paying off debt, or even be tempted into issuing a nice fat loan ? If she would only ask for two hundred millions, or even one hundred, there would be a sensible feeling of relief in Lombard Street, gladness on the Stock Exchange, and something approaching ecstasy among the tribes of Israel, who, to their amused surprise, have rediscovered Ophir far to the south of its traditionary site. Mr. Burdett, who is secretary to the Stock Exchange, editor of the Investors' Bible—he calls it "Burdett s Official Intel- ligence "—and, if we mistake not, promoter of various philanthropies, thinks the idea in the circumstances of the hour qeite feasible, and in the preface to his edition for 1896 calmly suggests that Great Britain, instead of paying off debt, should borrow a hundred millions— loans are cheap, gentlemen, to-day, loans and Exchequer Bills—and spend it on a thorough completion of the Navy. If so much is not required, there are plenty of philan- thropic, and possibly paying, improvements in civilisation on which to spend the money, and at all events the State would avoid buying-up its own debts, to the incon- venience of all capitalists, at a premium of 9 per cent.
The proposal is quite serious, and at all events much wiser than the plan of the American Protectionists, who, finding the Treasury so full that duties must be taken off, invented a Pension system which absorbed £30,000,000 a year, which secured half a million votes, and which has actually compelled the United States to borrow some fifty millions in peacetime lest the richest Treasury on earth should be left without sufficient eagles to pay its bills with. The loan, too, would be popular. The democracy no more understands what a hundred millions means than schoolgirls understand what sort of a hill a quintillion grains of sand would make ; and would hear of the expen- diture of that sum with a definite sense of pleasure as implying a promise of a glorious plentifulness of work. The middle-class, which does understand, would see a compensation for taxes in a rise of the rate of interest ; while financiers and bankers and discounters would snap at the loan, first as a purse to put money in, and secondly because they would know very well that forty-eight hours after its issue Consols would begin again their slow, steady, irresistible rise, driving up all other securities, as the water in a hydraulic press drives up its superincuinbent weight. The only classes which would be annoyed are the statesmen and the political economists, both of whom know that of all the follies a State can commit, that of spending borrowed money without necessity is the most certain to injure its prosperity. It is not only that the money is usually lost, and that the people are fined for ever in a percentage of their wages, but that the habit of thrift is lost too. Establishments are larger, wages are higher, and the vague ideals of all classes, "the things they would have if they could," become pressing needs, wanting which they are querulous and discontented. The business of refusing, which every Treasury must pursue or become insolvent, is abandoned, or laxly conducted, until at last a season of adversity sets in, and the State discovers that half its income is mortgaged in advance, that it requires fresh loans merely to get along, and that its credit has declined till loans can only be raised by an advance upon its rate of interest of at least one-fourth. To stop the pay- ment of debt when money is required may be the wisest of polices, for every new tax weighs down some industry or other, and, of course, in hours of emergency money must he borrowed, but to arrest such payments without need, or to borrow largely because money is cheap, is utter financial folly. The business of a Chancellor of the Exchequer is not to think of the capitalists, who can always place their money, if they will only use their brains, or who, at all events, can do without interest until opportunity comes round, but of the body of the people who pay for all these projects, and whose one hope of future comfort is that their money should be left to fructify in their pockets. The low rate of interest, which worries capitalists, means for the poor the possibility of enterprise, and a national credit which enables them, when danger arses, to make the greatest efforts without any sense of strain.
It is often said, we know, that a low rate for money, if long continued, is sure to produce disaster, because the people get sick of it, and rush into speculations which, when overdone, result in prodigious losses ; but the saying, though partly true, is also partly false. It is perfectly true that, with money at 2 per cent., the saving classes turn to speculation as a relief from want of income ; but it is not true that speculltion is always or often injurious to the nation. The regular routine is for the speculators to fix on some promising industrial under- taking, to make it pay exceedingly well, to repeat it with much more lavish outlay, and finally to overdo it till the limit of profit is reached, and similar undertakings are abandoned. That sounds very disastrous ; and so it is for individuals, but it rarely is so for the nation, which has obtained a great improvement, though at too high a price. The railways of this island cost, perhaps, twice as much as they ought to have done ; but they were built, built rapidly, and built well; they have made the nation prosperous ; and they now return, on the average, a better profit than any equally ex- tensive reservoir of sleeping capital. The next ex- penditure, say of a hundred millions, will probably be on "autocars " of every description, from heavy wains down to bicycles ; and no doubt if the first companies succeed greatly, about half the money will be thrown away. That will be bad, no doubt, for those who invest during the latter part of the mania, and thousands will be ruined ; but at the end the country will be provided with autocare, the average of profit will be greater than the dividend on Consols, and the cost of transmitting goods and passengers will have been reduced one-half, to the indefinite facilitation of all business. For the State to borrow that money lest it should be wasted, is no better policy than that of the landlord who spent all his income every year lest he should be tempted to sink drains, which, as he remarked, had ruined all his neighbours except one or two. It is, indeed, much worse policy, for the landlord did not borrow money, and the State can only obtain great sums by paying regular interest. Mr. Burdett talks of a loan of a hundred millions—which is, we quite admit, a small sum in comparison with the masses of capital waiting employment—as if it could be obtained for nothing, and forgets to mention that every hundred millions spent by the State means a fine for ever inflicted on the Income-tax payer of five farthings in the pound, and for most of them a loss, in addition, of another twopence, which might have been obtained by the expenditure of the money on reproductive undertakings. The richer the country, the more steadily should the Treasury keep before it the two great maxims, that the people can invest more wisely than the State can, and that nothing can justify great loans except considerations of national security. If we are to borrow both in peace and war, even the British purse will be found to have a bottom.
Previous page
