CHAPTER XII.
Review of the National Debt.—Opinions.—Bolingbroke.—Financial Reform Association.—Extravagance of Government.—Schemes for paying off the National Debt.—Review of them.—Proposals for Debentures.
Review of the National Debt.—Opinions.—Bolingbroke.—Financial Reform Association.—Extravagance of Government.—Schemes for paying off the National Debt.—Review of them.—Proposals for Debentures.
The period at which the present narrative has arrived does not appear ill adapted for a prospective and retrospective glance at a debt which, in 121 years, has increased from £660,000 to £800,000,000, which is the great problem of the day, and the great difficulty of legislators. It has been seen that the debt was not increased without strenuous opposition; and it need not be said that there were alarmists a century ago, as there are alarmists now; that, as each successive million was added, men were not wanting to declare the ruin of the country; or that prophets were plentiful with omens of evil. Bolingbroke wrote,—“It is impossible to look back without grief on the necessary and unavoidable consequences of this establishment, or without indignation on that mystery and iniquity which hath been raised upon it, and carried on by means of it. Who can answer that a scheme which oppresses the farmer, ruins the manufacturer, breaks the merchant, discourages industry, and reduces fraud to a system, which drains continually a portion of our national wealth away to foreigners, and draws most perniciously the rest of that immense property which was diffused among thousands into the pockets of the few,—who can answer that such a scheme will always endure? The whole art of stock-jobbing, the whole mystery of iniquity mentioned above, rises from this establishment, and is employed about the funds; and the main-springs which turn, or may turn, the artificial wheel of credit, and make thepaper estates that are fastened to it rise or fall, lurk behind the veil of the treasury. That luxury which began to spread after the restoration of Charles II. hath increased ever since, from the growth of wealth among the stock-jobbers, from this system. Nothing can be more certain than this,—that national luxury and national poverty may in time establish national prostitution. The immense wealth of particular men is a circumstance which always attends national poverty, and is, in a great measure, the cause of it. We may already apply to our country what Sallust makes Cato say of Rome,—‘Public want and private wealth abound in all declining states.’”
A reference to the tracts, pamphlets, and broadsides, which were given to the world in the early part of the century, will prove that public attention was constantly drawn to the growing difficulty; but the writers committed the great error of pointing their darts at the stock-jobbers. They persisted in regarding the consequence as the cause; nor was it, Mr. Alison thinks, until after the peace of Ryswick, that the great evil was regarded with any thing like alarm. This gentleman, in his “Military Life of Marlborough,” draws the following vivid picture, and the writer can confirm it from a careful perusal of contemporary documents:—
“The finances of Great Britain,” he says, “as they were managed in former times, could never have sustained the cost of such a war for a tenth part of the time. But expense now seemed no obstacle to the government. A new engine of surpassing strength had been discovered for extracting capital out of the country; and the able statesmen who had it in their hands felt it to be not less serviceable in consolidating the internal power, than in meeting the external expenses of the new dynasty.
“When this system first began, the nation was not sensible of the important consequences to which it would lead. They thought it could only be a temporary expedient; and that, though it might, perhaps, lead to a few millions being added to the national debt, yet that would be all. Though from the first, accordingly, its progress was viewed with a jealous eye by the thinking few, it made but little impression upon the unthinking many, before the peace of Ryswick. But when the War of the Succession began, in 1702, and continued without intermission, attended by daily and increasing expenditure, for ten years, the apprehensions of a large part of the nation became excessive. At the Revolution the national debt was £661,000; by 1710 it exceeded £50,000,000.
“The wars in which William was of necessity engaged, the loans which they rendered unavoidable, and which the commercial wealth of the nation enabled it to advance, and the great increase in the expenditure of the Exchequer, all conspired to place a vast and unprecedented amount of patronage in the hands of government. This was systematically directed to buy off opposition in Parliament, and secure a majority in the constituencies. Corruption, in every possible form, from the highest to the lowest, was employed in all parts of Great Britain, especially among the urban electors, and with such success, that almost every measure of government passed without difficulty through both Houses of Parliament. The nation had shaken off the prerogatives of the crown, butthey had fallen under the domination of its influence. The gold of the Exchequer was found to be more powerful than the penalties of the Star-Chamber.”
Almost every one professes to consider the debt as a drain upon the resources of the nation; as a nightmare upon the chests of the people; and as a millstone which will sink England below her proper position. Most of our political writers affect this view. All our alarmists make it their theme. Hume wrote,—“Either the nation must destroy public credit, or public credit must destroy the nation.” Sir Robert Walpole said,—“When the debt reaches 100 millions, the nation will be bankrupt.” In 1735, Lord Hervey, in his memoir of George II., remarked,—“I do not see how it would be possible for the country, on any exigence, or for the support of the most necessary war, to raise one million a year more than it now raises”; and in 1777 the third earl wrote as a note,—“What would my father have said had he seen seventeen millions raised in a year?” Lord Bolingbroke declared the debt was sinking England into the gulf of inevitable bankruptcy. Cobbett was perfectly rabid in his attacks on those whom he invariably classed as Jews and fundholders, predicted the ruin of England in half a century, and proposed, in 1832, a plan which would have ceased the interest on the national debt in twenty-seven years, and have classed England among the repudiators.
Adam Smith thought that the practice of funding had gradually weakened every state which had adopted it. Paine openly predicted the Bank and the government would perish together in a few months. Mr. Tierney said, in 1817, such a state of things could not go on. Sir James Graham proposed, in 1827, a reduction of thirty per cent. Mr. Baines thought it might be ultimately necessary to make a general contribution to extinguish a large portion of the debt; and the late Earl Grey talked in early life of “taking the bull by the horns”; although he failed to fulfil in his age the promise of his youth.
If prophecies such as these have been plentiful, the following extract, at once a picture and illustration of the period when the nation first commenced to borrow, will prove that other views are entertained by many, and that there is a large class who, however they may deprecate the great evils arising from the debt, consider that it has been beneficial to the interests of England.
“The era of the Revolution is chiefly remarkable for the new dynasty having taught the government how to raise taxes in the country, and thus brought England to take the place to which she was entitled in the scale of nations, by bringing the vast national resources to bear upon the national struggles. That which the Stuarts never could effect by appeal to honor, spirit, or patriotism, William and Anne soon accomplished by bringing into play, and enlisting on their side, different and less creditable motives. They no longer bullied the House of Commons, they bribed it; and, strange to say, it is to the entire success of the gigantic system of borrowing, expending, and corrupting, which they introduced, and which their successors so faithfully followed, that the subsequent greatness of England is mainly to be ascribed. It was the system ofmanaging the House of Commons by loans, good places, and bribes, which provided the sinews of war, and prepared the triumphs of Blenheim and Ramilies. William tripled the revenue, and gave so much of it to the House of Commons that they cordially agreed to the tripling. He spent largely; he corrupted still more largely; he made the national interest in support of taxation more powerful than those operating to resist it. The memoirs recently come out give details of corruption so barefaced and gross, that they would exceed belief if their frequency, and the testimony to their authenticity from different quarters, did not defy disbelief.”
It is now known, that when Walpole’s ministerial supporters were invited to his ministerial dinner, each found a £500 note under his napkin.
It is one great evil of the present age, that it persists in regarding the debt as perpetual. Immediately the expenditure is exceeded by the revenue, there is a demand for the reduction of taxation. We, a commercial people, brought up at the feet of McCulloch, with the books of the national debt as a constant study, with the interest on the national debt as a constant remembrancer, persist in scoffing at any idea of decreasing the encumbrance; and when a Chancellor of the Exchequer proposes a loan of eight millions, we growl and grumble, call it charitable, trust for better times, and read the opposition papers with renewed zest.
There is no doubt that the resources of the nation are equal to far more than is now imposed; but it can only be done by an efficient revision of our taxation; and this will never be effected till the wolf is at the door. A war which greatly increased our yearly imposts would, with the present system, crush the artisan, paralyze the middle class, and scarcely leave the landed proprietor unscathed. The convertibility of the note of the Bank of England would cease; and it would be impossible to preserve the charter of Sir Robert Peel in its entirety, while twenty-eight millions were claimable yearly in specie, and the gold of the country went abroad in subsidies.
In an earlier portion of the volume, the writer briefly advocated annuities as one mode of treating the national debt. There would in this be no breach of faith to the present public; there would be no dread of a general bankruptcy; there would be no need of loans; and, had this principle been carried out, the national debt would be yearly diminishing. In ten years nearly two millions of terminable annuities will expire; and it behoves the government to inquire into the effect which the conversion of the interminable debt into terminable annuities would have on the money market.
It is absolutely idle for the Financial Reform Association to think of effectually lowering the taxation of the country while twenty-eight millions are paid for interest; and it is to be feared that great evil will accompany whatever good they may achieve. That there are many offices which might be abolished; that it is a rule in England that the least worked should be best paid; that an extravagant system of barbaric grandeur exists; that the army and the navy, the pulpit and the bar, are conducted unwisely; and that great men are paid great salaries for doing nothing,—are indisputable; but it is equally so, that great savings havebeen effected, and that great efforts are making to economize further. There is a faith pledged to the public servant as much as to the public creditor; and, whether he be a colonel or a clerk, a man of peace or a man of war, it is impracticable, imprudent, and unjust to attempt that which would as much break faith with him, as to cease to pay the dividends on the national debt would be to break faith with the national creditor.
These things are paltry and puerile compared with that which, excepting a total revision of taxation, can alone materially meet the difficulties of England; and the gentlemen of the Reform Association are aware of this. They may cut down salaries; lower the defences of the country; abolish expensive forms and ceremonies; amalgamate a few boards of direction; reduce the civil list; and do away with all sinecures. But the evil is too vast, and the difficulties are too gigantic, to be met in so simple a manner. Nor will these gentlemen be satisfied with it while there are 800 millions at which to level their Quixotic spear. Repudiation was darkly alluded to at one meeting of the Association; and, though it has since been denied, it is to be feared that time only is required to ripen the attempt.
Mr. Henley, a few months ago, brought forward a motion to deduct ten per cent. from all official salaries, and the motion was deservedly negatived. But such motions, when meant to meet a great difficulty, are too contemptible to notice; and would only pauperize the feelings of those who are already almost pauperized in purse. Let Mr. Henley think of the salaries paid at the Custom-House, the Post-Office, and Somerset House, before he again introduces a proposal on a principle so broad that it is unworthy a statesman, and insulting to an educated, an intelligent, and a trustworthy class.
To reduce or pay off the national debt may be gigantic, but it is not impossible; and the writer closes the present chapter with a review of some of the proposals which have been laid before the public.
In 1715, a pamphlet was published, entitled, “A Method that will enable the Government to pay off that Part of the Public Debt which is redeemable by Parliament,” by which twenty-one millions were to be paid in seventeen years, by bills of credit without interest. Soon after the accession of the present royal family, Mr. Archibald Hutcheson presented a plan which excited much attention at the time, and is well entitled to recapitulation; and his principal propositions were,—
1. That the sums severally assessed on the lands of Great Britain for the land-tax of 1713 be made payable as a rent-charge in fee for ever, out of the several respective lands, redeemable at any time by the proprietors paying twenty-two years’ purchase.
2. That the said rents, or the money raised by redemption or assignments of the same, be applied to the discharge of the public debt.
3. That one tenth part of all annuities for life, and all other rents issuing out of the aforesaid lands, and of all sums of money secured by mortgage, and of all other debts which affect lands, be entirely remitted to their respective proprietors.
4. That the proprietors of such land be empowered to sell so much of them as shall be sufficient to redeem the aforesaid respective rent-charges.
5. That one tenth part of all the debts secured by public funds be remitted.
6. That one tenth part of all the other net personal estates of all the inhabitants of Great Britain, which affect land and public funds, be applied to the payment of the public debt.
7. That 2s.in the pound be made payable yearly out of the salaries and perquisites of all offices and places.
8. That the legal interest be reduced to four per cent. per annum.
9. That, for the effectual securing of the payment of such public debts, for which there either is at present no provision, or the provision made by Parliament appears deficient, all funds granted for any term of years be made perpetual, until the principal and interest of all the said public debts be fully paid off; and that the interest of such public debts as at present have defective or no securities be paid out of the yearly produce of the said funds; and that the remainder only of such produce, over and above the interest of the said public debts, be applied towards the sinking of the principal money.
10. That provisions may be made by an excise on apparel, or some other excise, sufficient to produce one million per annum in lieu of the land-tax, till all the public debts are discharged.
In 1715, Mr. Asgill published his plan for the more speedy redemption of all the perpetual funds; two millions were to be raised in specie, and deposited in a bank, to support the circulation of twenty millions of exchequer-bills at three per cent., with which all the redeemable debts were to be paid off. As an annual interest of £1,182,454 10s.5d.was then paid for these redeemable debts, and as the interest of the two millions to be borrowed at six per cent., and of twenty millions of exchequer-bills at three per cent., amounted only to £720,000, the public would thus have acquired a sinking fund of £462,454 10s.5d.
In 1719, Stephen Barbier proposed to pay the public debt. The plan of this gentleman was to convert forty millions of the debt into notes, bearing one per cent. less interest than the original fund, which was thus to be converted; the conversion was only to take place at the request of the creditor, who might thus at any time obtain both principal and interest. These notes were to be current in all pecuniary transactions, and were to be paid in specie, six months after they were presented for payment.
Such were the chief propositions at the commencement of the eighteenth century. It would be impracticable to follow the numerous schemes which have since been propounded, but a few of the later plans may not be uninteresting. In 1819, a proposition was made which boldly grappled with the immediate difficulty. Estimating the entire private property of the kingdom, on the lowest calculation, at two thousand five hundred millions, it suggested that all such property, including all claims on the government, in respect of money lent and advanced, should be declared liable to a contribution of fifteen per cent.
In 1821, a “practical scheme” appeared, the leading points of which were,—
That all the annuities must be consolidated, viz.:—
That an assessment of twenty per cent. be laid on all property and funds so consolidated.
That an assessment of five per cent. be laid on private property not in the British funds.
That fixed property, except buildings, be valued at twenty years’ purchase.
That this assessment be converted into a redeemable income-tax, at the option of the proprietor, at five per cent. per annum.
That a similar assessment, for the term of ten years, be levied on net profits of trade and agriculture.
In 1827, it was proposed to pay one half the debt by an assessment of twelve per cent. upon the entire capital of the country; and, in 1832, another “practical plan” was suggested; “to impose a loan of twenty per cent. upon all the net real property, excepting those whose possessions are less than £100; the amount to be paid either at once, or by instalments, within five years.”
To impose a tax of five per cent. for one year upon all incomes of not less than £100 a year, arising from profits of artists and other professional men.
To abolish all internal taxes, excepting the land-tax.
Other propositions have appeared, but they have been entirely disregarded. The evil day has been deferred, and will continue to be so; but it affects all good citizens to bear in mind that it must eventually arrive; and some future historian will record that the ruin of England arose from the greatness of her national debt, because her citizens were deficient in that abnegation of self which alone could grapple with a great difficulty, save a great country, and alleviate the sufferings of a patient and enduring people.
In 1817, the ministry debated the advisability of altering the mode of registering the accounts of the national debt. Many complaints had been made by bankers and merchants, of the long period employed by the Bank of England in preparing for the payment of the dividends; and they contended that six weeks were unnecessary; or, if necessary, that some new method should be tried by which the annoyance might be remedied.
The suggestion was taken into consideration, and the system of debentures very generally debated. After much mature thought, it was decided that, though the plan answered very well with foreign securities, the English debt was too gigantic, and the plan would involve too great a risk to be entertained. After much discussion in the journals, and a few questions in the House, the idea was abandoned; nor was it until thirty years from the above time, that the objection of the bankers was met; and, by the arrangements of Mr. William Ray Smee, now in operation at the Bank of England, the stocks closed only three instead of six weeks.