The Stourbridge Observer, Cradley Heath, Halesowen & District Chronicle.
Stourbridge, West Midlands, England, 1887-05-14 00:00:00

HOW TO SAVE THREE MILLIONS A

YEAR.

AN INTERVIEW WITII 81R JOHN LUBBOCK, M.P.

In discussing the Budget resolutions the other even-
ing, Sir John Lubbock made the observation that if
we could reduce the interest of the National Debt
we should save some 3,000,000 sterling a year. When
the Chancellor of the Exchequer cuts into the amount
set apart for the reduction of the principal to the
extent of 2,000,000 on the ground of our national
poverty, it is worth inquiring whether it may be pos-
sible to reduce the annual burden of 21,000,000 paid
in interest by a sum of 3,000,000. With a view to a
further elucidation of the proposal, a representative
had an interview with Sir John Lubbock.

"The plan," said Sir John, in reply to the first
question, "would simply be this: to raise the 21
per cents. to par by firmly maintaining the Sinking
Fund. At present the 21's are at 91, and if the City
felt quite sure that we should rigidly adhere to our
determination to pay off the debt, even at the rate of
5,000,000, as Mr. Goschen proposes, these securities
would go up to par. This, of course, presupposes
that we had no European war, for then it would be
impossible to continue the rate of repayment, but
with that exception there is no reason why this should
not be the absolute minimum: At present there is
not that confidence in the City which is necessary to
the success of the scheme, because of the attacks that
are continually being made upon the different sinking
funds. Had Mr. Goschen left these funds as they
were, and provided for the payment of 7,000,000 this
year, and this level had been adhered to for two or
three years longer, the gradual repayment of the
principal and the certainty of that operation continu-
ing at an accelerated pace would have made the re-
duction of the interest an easy matter."
"If Sir Stafford Northcote's arrangement had
been adhered to, how should we have stood—say in
three years?"—" By paying 7,000,000 we should
have in three years cut down the debt by nearly
22,000,000, but that is not all. There is con-
tinual absorption of money by the savings banks,
and a large sum would be taken off the market by
that means. But it is to the moral effect of the cer:
tainty of our policy more than the amount to which I
attach importance. If you get the City to feel that a
firm policy would be pursued, I believe the Two and
a Half per Cents, would rise substantially, but here
we have Mr. Goschen giving up 2,000,000, and with
some pressure another Chancellor may give up
another 2,000,000, so holders say, Oh, I will hang
on to my Three per Cents., and probably I will re-
ceive this rate as long as I live.' I repeat, there-
fore, that I attach quite as much importance to the
moral effect as to the amount paid off."

"Mr. Childers's experiments in the way of con-
version did not succeed ? "—" No, because he did not
give quite good enough terms and he made the mis-
take of allowing too long a time. My impression is
that he should have announced his terms and given a
fortnight at the outside. They would have been more
readily accepted then. On the other hand, some
persons thought he offered too favourable terms. But
it was necessary to make a beginning. It was neces-
sary to have a stook of the kind in the market to see
what the feeling was. Now that is done, if we
really mean to go on reducing the debt I would not
issue more at the present price. If we don't mean to
pay off the debt that is another matter, but if we do
let us go on paying 3 per cent. for a few years longer
until we can offer 21 or 23- at par."
"Do you expect that the price of Two and a Half
per Cents, will go up? "—" Evidently that is the
impression at present. The Three per Cents. now are
in round numbers 102; the Two and Three-quarters,
94; and the Two and a Half, 91. These prices have
no relation really to the dividends. If von invest
£lOO in the Threes you will receive .C 2 19s. 6d. in
interest. while £lOO in the Two and a Halves will
give you about .E 2 16s. There is a difference of some
three or four shillings, and that means that psople
who hold on to the Two and a Halves think they will
rise. If they did not they would prefer to hold
stock that would give them the highest interest, and
the price of the Two and a Halves would go down."
"You would apply the 3,000,000 saved in
interest to the reduction of principal ?"—" That was
Sir Stafford Nortlicote s plan. He proposed to fix
the amount for the service of the debt at 28,000,000.
and as we paid debt off less would go in interest and
more in repayment of principal. This left the burden
of the taxpayer exactly the same, but it increased the
amount of repayment year by year. Sir Stafford also
thought this plan fairer to successive Chancellors of
the Exchequer, as comparisons could then be made
on the same basis. As a matter of fact, Sir Stafford
did not fully carry out his own policy. What I feel
strongly is that if we don't pay off in time of peace,
and borrow in times of war, our debt will in the
long run increase. We have only paid off since 1815
some 200,000,000. It is difficult to say exactly what
the debt then was, because of the terminable annui-
ties which existed, but it might be taken at some-
thing over 900,000,000, and it is now 711,000,000.
We have had the Crimean war and other minor wars,
but altogether the rate of repayment is not creditable
to us."

"Is there any reason why the price of Consols
should be higher than other Government securities r,
—" Well, a great many people must hold Consols—
bankers, for instance. There is no legal obligation,
but if you want money at a moment's notice, there is
no better security for that purpose. You can go and
realise £lOO,OOO worth, or even more, in five minutes,
and get the nioney at once. Trustees are not
restricted to Consols as they were, as they can invest
in other Government, Colonial, and Indian securities,
but a great many of them do hold Consols. Then
the difficulties about land are tending to drive money
in that direction, for mortgages are not now looked
upon so favourably as they were. All these circum-
stances would tend in the direction of a reduction of
interest."
"You would not proulse to make a wholesale con-
version of Three per Cents. ?"—" Oh no, that would
be too stupendous an operation. They would have to
be taken in blocks, and any difficulty in the case of
the first imtilment would be diminished in the
second. Gazette.

A SMALL BOY who was studying English history was
asked what the Prince of Wales would be when the
Queen died.—Please, sir, an orphan, replied the
scholar.
Miss BLANK, to her cousin' who has inadvertently
admired her foot: Yes, papa thinks so much of my
foot that while we were in Italy he tried his best to
persuade we to have a bust made of it.
THEY were talking of the fair sex at a Parisian re-
ception, when a lady exclaimed to the gentleman with,
whom she was conversing, You men are right to
accuse us! I know only two perfect women !—Apcl
who ic the other? inouired her companion galhintly,