NATIONAL DEBT A MORTGAGE ON REALISED PROPERTY.
Necessity for Adjustment of Public and Private Debts--Their
overwhelming Burden must result in Civil War--Third Resolution
the only Remedy--Opinion of Cobbett--Enormous Increase of Debt
through Improvements in Manufactures--Only just Claims of Public
and Private Creditors.
Resolution No. 3 of the League proposes an equitable settlement of
questions of grave moment--of questions which will ere long be settled
by force out of doors, unless Parliament adjusts them within by fair
legislation. It is to the following effect:--
“Pending the operation of these measures, it is desirable to mitigate
the burdens of taxation and of public and private indebtedness upon
all classes who suffer thereby--the more especially as these burdens
have been vastly aggravated by the recent monetary and free-trade
measures of Sir Robert Peel. To this end, the Public Debt and all
private indebtedness affected by the fall of prices should be equitably
adjusted in favour of the debtor and productive classes, and the
charges of government should be reduced upon a scale corresponding
with the general fall of prices and of wages. And as what is
improperly called the National Debt has been admitted, in both Houses
of Parliament, to be in the nature of a _bona fide_ mortgage upon
the realised property of the country, it is but strict justice that
the owners of this property, and they only, should be henceforward
held responsible for both capital and interest. At all events, the
industrious classes should not be held answerable for it, seeing the
debt was not borrowed by them, nor for them, nor with their consent;
and that, even had it been so, they have had no assets left them for
the payment of it. Moreover, the realised property of this country
being estimated at eight times the amount of the debt, the owners or
mortgagers have no valid excuse or plea to offer, on the score of
inability, for refusing to meet the claims of the mortgagees.”
The questions here dealt with are those which, in all probability,
are destined to involve England in the great European revolution. If
not adjusted somehow in an early session of parliament, we predict
they will cause a civil war between the agriculturists and the town
“interests”--between the men of acres and the fund and money lords.
And should that war ensue, it will merge into a general social war of
classes, in the progress of which all will be losers, but the final
issue of which will be the extinction of “vested interests” and the
proscription of all who would maintain them. Resolution No. 3 is
intended to avert such a catastrophe for the sake of all parties. Let
us see if we are just in our demands.
The Public Debt is estimated, in round numbers, at £800,000,000. The
private indebtedness of the country is calculated at more than three
times the amount of the Public Debt--say £2,500,000,000. The interest
of the Public Debt is at least £30,000,000 per annum, including the
expenses of collection. The annual interest of private debts is
believed to exceed £100,000,000. Here is a fearful deduction to be made
from the aggregate earnings of the people every year, before a shilling
can be set aside for wages or profits. This mass of £130,000,000 per
annum is all sheer usury--a sheer plundering of the productive classes.
Yet it is only a part, and by no means the major part, of the annual
sacrifice entailed upon the industrious orders by our agrarian and
commercial systems. There is acknowledged to be upwards of £700,000,000
of property insured with our several insurance companies, who of course
receive premiums on the whole, varying in the per-centage charged,
according to the nature of the property insured, but amounting in the
aggregate to an enormous annual sum. This sum, like the interest of
the public and private debts, must be provided for every year before
wages and profits can begin. Then there is the unmortgaged portion of
the incomes derived from lands and houses. Then there is the public
and private taxation of the country (not included in the £30,000,000
set aside for the payment of the interest of the debt). There are the
tithes; the losses accruing from bad debts; the revenues of railway
companies, canal companies, water companies, gas companies, dock
companies, mining companies, banking companies, cemetery companies, and
countless other companies; the whole of which must be deducted from the
annual production of the country before the mechanic and labourer can
receive a farthing of wages, or before the mere employer and tradesman
can enter upon that margin to which wages and profits must look for
their share of the general produce. If we assume our present annual
production to be £630,000,000, one-third of this, or some £200,000,000,
must be set aside for the interest of public and private debts, the
revenues of companies, the claims of taxation, &c. The capitalists
and tradespeople may be supposed to pocket some £300,000,000 more,
and the miserable remnant, some £130,000,000 per annum, is probably
the _maximum_ of what the working-classes receive for producing the
whole. At all events, the latter do not average above 10s. per week for
each family; and supposing the number of working families to be about
5,000,000, this would give them a gross income of about £130,000,000
per annum.
We pretend not to perfect accuracy in these figures: we profess to deal
only with round numbers. An approximation to the actual state of things
is all we aim at; for that is all we require to elucidate our position.
But if we deviate from arithmetical exactness (as must needs be in such
calculations), the deviation will be found to be rather _in favour_ of
the producer than against him; and therefore our argument must be held
so much the stronger, the less exact we are in figures.
That the producer does not, upon the average, receive a fourth of his
produce is a certain fact. If the producers got back £125,000,000
out of a gross annual produce of £600,000,000 and odd, it is the very
extreme of their good fortune. Some of them, we know, get far more
than in this proportion--more than a fourth or than a third,--nay,
mayhap one-half. But the majority, on the other hand, get less than a
fourth; and millions of them less than a sixth or even an eighth of
their produce. An Irish labourer or a London needlewoman does not,
probably, receive a tithe of the value of their labour. Estimating in
this way--striking a balance between all the various descriptions of
producers--we do not understate their income when we average it at 10s.
per week for each family, or at from £125,000,000 to £130,000,000 for
the whole, out of a gross annual production of, say, from £600,000,000
to £630,000,000 sterling. Small as is this proportion allotted to the
producer out of his own earnings, it is becoming smaller and smaller
every year, as prices and wages decline under the operation of Peel’s
monetary and free-trade measures. The reason is obvious. To make money
scarce, on the one hand, and to invite foreign competition on the
other, must of necessity lower prices. Whatever lowers prices swells
the burden of debts, taxes, and of all other fixed money obligations.
In the same ratio it must reduce the aggregate of profits and wages;
for the more the producers (employers and employed) have to give out of
the common stock to pay taxes and the interest of public and private
debts, the less there must be left for themselves.
Peel’s monetary laws of 1819 and 1844-45 have made money scarce, and
will keep it permanently so while they remain in force. His free-trade
measures of 1846 go to aggravate competition in our home markets, and
tend directly to the lowering of prices and wages in favour of the mere
annuitant or idle consumer. The effect of both measures, conjointly,
is to increase the pressure of debt and taxes to a degree that is
already felt to be unbearable. If persevered in, the inevitable result
is revolution--violent revolution. Under the conjoint effects of his
measures, wheat has already gone down below 40s.,--nay, as low as 36s.
Bankruptcies have reached an appalling figure; and estates are rapidly
changing hands (passing from mortgagors to mortgagees), and not a few
of them are going out of cultivation altogether. The Encumbered Estates
Commission was sitting hardly three months in Dublin before one-twelfth
of the landed property of Ireland, measured by rental, came within its
jurisdiction. Scores of Scotch landlords and hundreds of Irish are no
longer able to pay interest on their mortgages, owing to the reduced
prices of agricultural produce. For the same reason, farmers cannot
pay rents, nor the interest of borrowed capital. In England they are
universally reducing, or threatening to reduce, wages. In Ireland
they are throwing up their farms, or falling into arrears with their
rent. In Scotland the same may be said. In all three countries the
poor labourers are ground down so low that lower they can hardly be.
Hence the agricultural risings and incendiarisms in England; hence
the midnight outrages and murders in Ireland; hence the unprecedented
tide of emigration from all three countries. No farmer can possibly
pay rent, taxes, tithes, and interest of capital with wheat below
40s. No landlord, having his estates encumbered, can make head against
his liabilities with existing prices. No labourer can have any other
prospect before him but starvation and crime under such a system. To
have to pay some £200,000,000 a year (out of £600,000,000) to usurers
and tax-eaters would be a dire enough infliction even with wheat at
60s. and all other commodities at proportionally high prices. But to be
saddled with such a liability in the face of wheat at 36s., and of the
like downward progress of prices and wages in every other department
of industry, is what the country cannot bear. No country on earth
could stand it: England will not stand it. A furious civil war--a
downright revolution--must, we repeat, be the inevitable consequence of
perseverance in such a system.
Our third resolution offers the only just and feasible way of averting
such revolution. We cannot restore corn-laws; we cannot go back to
Protection: it is too late for that. The country has no more sympathy
with the landlords than it has with the moneymongers. It wants not to
bolster up one interest at the expense of the other, but to compel
both to adjust their conflicting claims without robbing the public. If
parliament will insist upon “keeping faith with the public creditor,”
let it do so at the expense of the parties properly liable. Let the
owners of _realised_ property be the only parties responsible for the
“National” Debt. Sir Robert Peel and Lord Brougham declared, amid
the cheers of both Houses, that this debt is a _bona fide_ mortgage
upon the whole realised property of the country. Very well. Let the
mortgagors, then, be made to do as all other mortgagors do;--let them
either redeem the mortgage (as they may do), or pay the interest till
they do. And if they will not pay interest or capital, let the mortgage
be foreclosed, and their estates sequestered. This is but common
sense and common justice. It is only the most shameless and hardened
dishonesty that could saddle such a liability upon the non-propertied
classes, seeing they never borrowed the money, had no advantage from
its expenditure, and have had no assets left them wherewith to pay that
or any other debt. Speaking of this monstrous injustice--the injustice
of taxing the working-classes for the interest of this debt--the late
Mr. Cobbett indignantly asked, “What would be said of a law that
should compel the children to pay the debts of the father, he having
left them nothing wherewith to pay?--of a law that should make the
children work all the days of their lives to clear off the score run
up by a profligate and drunken father?--of a law which should say to
the father, ‘Spend away; run in debt; keep on borrowing; close your
eyes in the midst of drunkenness and gluttony; imitate the frequenters
of Bellamy’s all your life; and your children and children’s children
shall be slaves to pay Bellamy and others, with whom you have run up
the score?’ Would not the makers of such a law be held in everlasting
execration? And in what respect does this case differ from that of a
prodigal and borrowing nation which would make its working-classes
responsible for debts they had no share in borrowing or spending?”
There is no getting over this. Cobbett’s reasoning is the reasoning of
every just and honest man who knows anything of the subject. The case
is even stronger than he puts it. The bulk of the debt was contracted
to force unjust taxation on the American colonies and to force back
Bourbon royalty upon France. These are the very last objects upon which
the working-classes would expend money or incur liabilities. It is, in
fact, making them pay for crime and murder, as well as for their own
impoverishment and enslavement!
These views, we rejoice to say, are making way in all quarters, high
and low. Mr. Isaac Buchanan (formerly President of the Boards of Trade
of Toronto and Hamilton in Canada, and who represented the metropolis
of Upper Canada in the Canadian parliament) has boldly demanded
that all connection shall cease between the National Debt and her
Majesty’s Exchequer, in a pamphlet issued by him, entitled “The Moral
Consequences of Sir Robert Peel’s Unprincipled and Fatal Course,”
&c. The same view is taken by the democrats of Ireland, and has been
successfully promulgated at sundry Chartist meetings in town and
country. By-and-by it will be the creed of all classes, as well as of
the Chartists and National Reform League.
But while we insist that the owners of realised property shall be
held solely responsible for the National Debt, we assert that justice
to them demands that the debt be equitably adjusted for them before
they are called upon to liquidate it. Peel’s monetary and free-trade
measures have more than doubled the debt. We say nothing of the
£27,000,000 which our “reformed” parliament has added of late years to
the debt; let that pass. We speak of the change made in the value of
money by the Act of 1819, restoring cash payments; and of the complete
revolution in prices effected by the tariff and corn-law repeal. These
measures have more than doubled the value of the pound sterling, and
more than trebled the original value of Consols. For example, the
average price paid for £100 stock in the 3 per Cents. during the war
was £60 of depreciated bank paper, worth then only £40 in silver. The
holder of that stock is now entitled to receive ninety-seven sovereigns
for it. Every individual pound of the £60, at the time it was lent,
would only buy one-fourth of a quarter of wheat. Every pound paid back
now will buy more than half a quarter--more than twice as much. It will
buy more than three times as much of London or Birmingham goods, and
more than four or five times as much of Manchester and Glasgow goods.
Here, then, we have the value of the pound more than doubled, on the
one hand; and, on the other, we find the fundholder entitled to receive
£97 for every £60 he lent in rags! Combine these two alterations: mark
their conjoint effect in favour of the public creditor. Observe the
difference to him of going into market with ninety-seven sovereigns
wherewith to buy wheat at less than 40s. and going with only sixty rags
to buy wheat at upwards of 80s. (the average price during the war, when
he lent his money); and then bear in mind that what is clear gain to
him is so much clear loss to us, the taxpayers. The difference is, in
fact, so much downright plunder taken from the industrious and given
to the idle and useless.
Not even at the expense of the owners of realised property are the
fundholders entitled to any such advantage. They are entitled to their
own (to receive it from the proper parties, the borrowers), but they
have no just claim for more than their own. What was borrowed should
be paid back, and no more. Peel’s measures give them thrice their own,
while they work in an opposite direction against land and labour. Let
there be a fair adjustment, then. Let the £800,000,000 of capital be
reduced according to the change in the value of money and the fall in
prices, and let the owners of every description of property be made to
pay their equitable share of the adjusted burden; but on no account let
another shilling of taxes be raised on account of the debt. No doubt
the Chartists will have an eye to this when their day comes; and it is
coming fast.
Private obligations affected by Peel’s measures should be adjusted
upon the same principle as the public debt. Not to do so is to rob one
class to enrich another: to persevere in such a course is to invite
convulsion. Law is intended to _protect_ property for all; not to
_create_ property for any. To pervert it from this, its legitimate
function, into an instrument of rapine for the injury and ruin of those
it should shield is to arm the nation against the law. This is the very
effect Peel’s measures are now producing. Hence the necessity for a
timely adjustment. The Act of 1819 ought to have provided against any
such necessity; and when he introduced his free-trade measures in 1846,
he ought to have made provision in his Acts that all public and private
liabilities, involving fixed money payments, should be dischargeable
only upon a reduced scale to be calculated upon the general fall of
prices. Upon this principle all mortgages, leases, contracts, &c.,
would be open to easy readjustment, and the whole of our taxation might
be reduced upon a scale corresponding with the fall of prices, without
any necessity for a fresh enactment on the subject. If prices fell
_one-third_, upon the average, all salaries, pensions, &c., would be
reduced one-third; and the same in respect of public and private debts,
mortgages, leases, &c. As it is, we see no remedy for the mischief but
what is pointed out in our third resolution. We said so before Peel’s
measure became law; and some of the ablest and most experienced men in
the kingdom have since publicly expressed a similar opinion.
But enough on the _provisional_ or _palliative_ measures that are
needful ere the four resolutions, embodied in the succeeding chapters,
shall have had time to operate a full reform of our present iniquitous
agrarian and commercial laws and institutions.