Historical surveys and parallels are notoriously risky, particularly
where the conditions have no precedent. They ought, however, to be made,
provided that we keep our generalisations from them under careful
control. Now, after the Napoleonic wars we had a national debt somewhat
comparable in magnitude in its relation to the national wealth and
income with the present debt. What happened to that as a burden during
the 100 years just gone by? If it was alleviated, to what was the
alleviation due? I would not burden you with a mass of figures, but I
would just give you one or two selected periods. You can find more
details in my recent book on _Wealth and Taxable Capacity_. We had a
total debt of--
850 million pounds in 1817
841 " " " 1842
836 " " " 1857
659 " " " 1895
800 " " " 1903
and before this last war it had been reduced to 707 million pounds. In
1920, of course, it was over 8000 million pounds. Such incidents as the
Crimean and the Boer wars added materially to the debt, but apart
therefrom you will see that there is no tremendous relief by way of
capital repayment to the original debt. Similarly, in a hundred years,
even if we have no big wars, it is quite possible we may have additions
to the national debt from smaller causes. Yet the volume of the debt per
head fell from £50 to £15.7, so you will see that the increasing
population made an enormous difference. The real burden of the debt is
of course felt mainly in its annual charge. I will take this, therefore,
rather than the capital:--
In 1817 the charge was 32 million pounds
" 1842 " " " 28 " "
" 1857 " " " 28.8 " "
In 1895 the charge was 25 million pounds
" 1903 " " " 27 " "
" 1914 " " " 24 " "
Here you will see that the reduction from 32 to 24 was 25 per cent. or a
much greater reduction than the reduction of the _total_ capital debt,
and this, of course, was contributed to by the lower rates of interest
which had been brought about from time to time. When we take the annual
charge per head the fall is much more striking. In the hundred years it
decreased from 37s. to 10s. This, however, was a money reduction, and
the _real_ burden per head can only be judged after we have considered
what the purchasing power of that money was. Now, the charge per head,
reduced to a common basis of purchasing power, fell as follows:--
Index figure
1817 260
1842 242
1857 191
1895 210
1914 118
In the year 1920 the charge per head was £7.16 and my purchasing power
index figure 629. You will see that the _real_ burden in commodities
moved down much less violently than the _money_ burden, and the relief
was not actually so great as it looks, because prices were far lower in
1914 than they were early in the nineteenth century.
In view of the fact that our debt is approximately ten times that of the
last century, let us ask ourselves the broad question: "Can we look
forward to nothing better than the reduction of our debt by 450
millions in thirty-seven years?"
The nineteenth century was one long contest between two opposing forces.
The increase in the population, together with the power to make wealth,
were together enormously effective in decreasing the burden. Against
them was the ultimate tendency to lower prices, and the former of these
two forces slowly won the day.
I hesitate to say that we can expect anything at all comparable with the
wonderful leap forward in productive power during the early Victorian
era. I hope that in this I may prove to be wrong. Anyway I do not think
that in our lifetime we can expect these islands to double their
population.