_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 the paper 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, but they 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 of managing 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 have been 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 2_s._ 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 10_s._ 5_d._ 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 10_s._ 5_d._
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.:—
The 3 per cents at 65
3½ ” 73½
4½ ” 81
5 ” 100
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.