The Sun.
London, England, 1870-10-21 00:00:00

PAYMENT OF THE NATIONAL DEBT

(BY THOMAS DE MiI:SOWN, LL.D.)
The question of the liquidation of the National Debt, is
one that seems to be steadily advancing in popular favour.
Last session and the session before the subject was
brought forward in the House of Commons by Mr. Lam-
bert, the member for the county Bucks. It holds, we
believe, a prominent place in the policy of the extreme
liberals, and at the last meeting of the British Associa-
tion in Liverpool, it was twice discussed in Section F ,
the great weight of opinion being on both occasions,
decisively in its favour. Mr. Lambert did not divide the
House upon his motion last session, but we understand
that he had promises of support from so many, and from
such influential quarters, that if he had gone to a division
he would probably have put the government iu a
minority.
The rapid and decisive growth of opinion on this
question is probably mainly due to the course
the United States of America have taken in respect of
their debt. Within the last five years they have paid
off nearly 75 millions sterling, and this year they will pay
off above 20 millions sterling.
It is remarkable that above forty years ago, in 1828, a
select committee of the House of Commons on " Income
and Expenditure," strenuously pressed the policy of
liquidation upon Parliament. In their fourth report they
observe :—"lf the accumulated debt of each period of
extraordinary exertion is to be handed down undiminished,
as a load upon those who are hereafter to meet the
exigencies of other struggles and other difficulties, it is too
obvious to require an argument, that the time cannot be
very distant (according to the ordinary vicissitudes of
peace and war in the history of human affairs) when the
combined weight of past and present burdens must become
too great for the most prosperous people to support, and
the fabric of Public Credit must crumble under the accu-
mulated pressure." The history of the Debt for the last
forty years sfiews how little effect the representations of
this committee have had, . although, perhaps, we ought
not to depreciate the efforts made at that period for the
reduction of the Debt, for they were not inconsiderable.
Thus the debt in 1815 was £861,000,000, with an annual
charge of £32,640,000. In 1829 it was a little below
£800,000,000, with a charge of £29,000,000, and in
1834 the debt was reduced to £773,000,000, with
an annual charge of £2B,soo,ooo—thus in seven-
teen years, (for in 1816.7 no reduction occurred), the
annual charge had been reduced by four millions, and the
capital by eighty-eight millions. Now, considering that
several of these years were years of great financial pressure
and embarrassment, we cannot sufficiently applaud the
patriotism and self-denial of the Parliaments of those
times that reduced the debt at the rate of five millions

a-year.
It is a singular fact that after Mr. William
Pitt had carried on the great war against
France for several years he came round to the
opinion that carrying on the war by means of loans was a
blunder. In a speech made towards the close of 1797 he
says :—" It would have been fortunate if the practice of
funding had never been introduced, and that it is not
terminated is much to be lamented." Why, then, it will
be asked did Mr. Pitt commence the war by borrowing ?
The answer is obvious. He just followed the usual red
tape routine, the established line of practice. He may be
said to have grown up under a system of loans. He was
just sixteen years of age when the American war broke
out, and from that period until he entered
Parliament there wai a loan effected every year ; indeed,
even after he entered Parliament until he was called to
the head of affairs there was a loan every year. Loans
were therefore presented to his mind as the natural and
ordinary method of defraying the expenses of a war.
Thus, in his budget-speech of 1797, he says, "According
to the received system of our financial operations the
natural and ordinary mode of supplying this sum (19
millions) would be by a loan."
Moreover, Mr. Pitt firmly believed that along with
every loan which he effected that he created an effectual
instrument for its speedy and complete redemption in the
shape of a sinking fund. This appears in every one of
his speeches. Throughout the debates it is taken for
granted, not only by Mr. Pitt, but by every other speaker,
that all the loans then contracted would be liquidated in
less than forty-five years from the period of their con-
traction. Not only so, but in 1.802 many financiers
were confident that the debt would he entirely paid off
by 1830.
It is beyond all question that in 1798 Mr. Pitt saw the
fatal error that he had committed, in raising during the
first five years of the war the whole war
expenditure, by loans, and laying on such additional
taxes only as were necessary to pay the interest
on these loans. In that year he set to work vigorously to
repair his error, and sought at once to raise the taxation
of the country from less than nineteen millions a year to
above thirty. We may to some extent realise the magni-
tude of this effort by imagining our taxation raised at a
single bound to £120,000,000 a year. But the interest
upon the debts which he had contracted in the first years
of the war now amounted to nearly seven millions a year,
being like a mill-stone about his neck. Still each succes-
sive year fresh efforts were manfully made to retrieve the
irretrievable error, until at last the taxation rose to above
seventy millions a year.
Had Mr. Pitt begun the war by raising the taxation of
the country to thirty millions, he might have raised the
whole, or most of the supplies, within the year, and we
should not now have to deplore the terrific incubus of our
debt.

And, in passing, we may perhaps quote Mr. J. S. Mill
to shew that had Mr. Pitt raised the whole supplies within
the year, 'and refrained from borrowing altogether, he
would have pursued not only a wise, but also an economi.
cally just policy. Mr. Mill says :—" If athe capital taken
in loans is abstracted from funds engaged in production,
or destined to be employed in it, their diver-
sion from that purpose is equivalent to taking the
amount from the wages of the labouring classes. Borrow-
ing in this case is not a substitute for raising the supplies
within the year. A Government that borrows does ac-
tually take the amount within the year,and that too by a tax
exclusively on the labouring classes ; than which it could
have done nothing worse if it had supplied its wants by
avowed taxation, and in that case the transaction and its
evils would have ended with the emergency ; while by
the circuitous mode adopted, the value extracted from
labour is gained not by the state, but by
the employers of labour, the State remaining charged
with the debt besides, and with its interest in
perpetuity. The system of public loans in such circum-
stances may be pronounced the very worst which is still
included in the catalogue of financial expedients." Mr.
Mill goes on to say that most of the loans contracted
during this war are amenable to the severest condemna-
tion. It is remarkable that in 1798 Mr. Pitt arrived, on
different grounds, at the same conclusion.
In fairness to Mr. Pitt, we should state that he firmly
believed in an early termination of the war with France
—precisely as the Prussians do now just seventy-
five years after. In Pellew's Life of Lord Sid-
mouth, there is a letter of Mr. Pitt to Mr. Wad-
dington, dated 4th October 1795, in which he speaks
of bringing forward his budg6t before Christmas, and says
" if that goes off tolerably well it will give us peace be-
fore Easter." How utterly deceived was this great states-
man, and, as Mr. Cardwell the other day observed at
Oxford, " How often do the best-laid schemes eventuate
in results entirely opposite to what was intended or
desired !" No English statesman ever more ardently
desired to transmit to posterity an unencumbered inheri-
tance. in 1797 he exclaims in the House of Commons,
"This is the conduct fit for men legislating for a country
that bears the fairest title to any in Europe to perpetuity.
The only question now to be considered is, shall we
sacrifice or shall we save our posterity a sum of forty
millions 1"
The action of the United States in respect of their
debt is most remarkable ; the resolution to pay it off
appears to have been common to the whole nation. They
arrived at the conclusion that it was necessary for the
future greatness of their country to liquidate their debt,
and they cheerfully make the necessary sacrifices. 'When
their debt is liquidated, unless we pay our debt pari
passu, we shall not stand, a chance in campeting with
them. Our producers will be heavily weighted, and will
be infallibly beaten out of the market.
-in conclusion we would just observe,.while every region
under heaven is yielding us wealth, every tribe minister-
ing to our resources, and the riches of the world pouring
into our lap, this burden may seem light and its pressure
unperceived, still, remember, there are moments in the
history of many nations when burdens which, in the hey-
day, of their strength, appeared little inconvenient—yet
in the hour of debilitated resources have proved the inci-
dental occasion of their destruction, when causes which
were unable to prevent prosperity have been effectual in
effecting ruin.