The Sun.
London, England, 1870-11-18 00:00:00

interest only rose because profits rose, I reply that this
does not weaken, but only strengthens the argument. If
the Government loans produced a rise of profits by the
great amount of capital which they absorbed, by what
means can they have had this effect unless bylowering the
wages of labour ? " .
" If the Government had abstained from taking this
capital by loan, and had allowed it to reach the labourers,
but had raised the supplies which it required by a direct
tax on the labouring classes, it would have produced the
very same economical effects, in every respect, which it
did produce, except that'we should not now have had the
debt. The course it actually took was therefore worse,
by the whole of that great fact, than the very worst mode
that it could possibly have adopted of raising the supplies
within the year."
I do not advert to the case, which he supposes, of a
Government raising a loan from capital seeking foreign
investment ; for if this capital, which leaves this country
every year for foreign investment, were intercepted by
the Government, the rate of interest would rise there, and
drawing other capital engaged here in production, but at
a lower rate of interest, would quickly raise the rate of
interest here. Then as to " the capital which would not
have been saved at all unless this mode of investment
were open to it," I must confess I cannot see how the in-
ducement to save would be strengthened except by a
higher rate of interest, however. We are very far re-
moved indeed from that state in which capital will be
consumed solely because there is no mode of investment
open to it.
But the grand test is—does a Government loan raise the
rate of interest ? Now, I think a challenge might be
boldly thrown down to the advocates of loans to produce
a single instance in which Government raised loans for
several successive years without raising the rate of
interest. At all events, during the last hundred years no
Government has been able to do it.

Dr. Chalmers says, the common notion is that in calling
for the whole amount in one year, you require what is
either impossible or very inconvenient ; that the people
cannot, without great hardship, pay the whole at
once out of their yearly income, and that it is much better
to require of them a small payment every year in the
shape of interest, than so great a sacrifice once for all.
It need scarcely be said this continues to be the staple
argument of all supporters of the loan system.
To this Chalmers answers—" The sacrifice is made equal
in !either case. Whatever is spent cannot but be drawn
from yearly income. The whole and every part of the
wealth produced in the country forms, or helps to form
the yearly income of somebody, The privation which is
supposed must result from taking the amount in the shape
of taxes, is not avoided by taking it in a loan. The suf-
fering is not averted, but only thrown on the labouring
classes, the least able, and who least ought to bear it,
while all inconveniencies, physical, moral, and political,
produced by maintaining taxes for the perpetual payment
of the interest, are incurred in pure loss. Whenever
capital is withdrawn from production, or from the fund
destined for production, to be lent to the State to be ex-
pended unproductively, that whole sum is withheld
from the labouring classes. The loan, therefore, is in
truth, paid off the same year; the whole of the sacrifice
necessary for paying it off is actually made ; only, it is
paid to the wrong persons, and, therefore, does not ex-
tinguish the claim; and paid by the very worst of taxes,
—a tax exclusively on the labouring class. And, after
having in this most painful and unjust of ways, gone
through the whole effort necessary for extinguishing the
debt, the country remains charged with it, and with the
payment of its interest in perpetuity."
Such is the testimony of two of the ablest writers on
the subject sine the late war, both men of enlarged and
profound views,—seldom agreeing on other subjects, yet
united in the utter and preremptory condemnation of loans
which raise the rate of interest. The advantages, there-
fore, which the operative classes would derive from the
payment of the National Debt are—

1. A portion of the annual revenue of the country
would, by being paid to the fundholder, be converted into
capital, and thereby augment the circulating capital and
raise the general rate of wages.
2. Upon the extinction of the Debt the industry of the
country would be relieved from an incubus of taxation of
above £26;000,000 a-year.
3. They would be able to compete on better terms with
foreign labour.
4. In future wars (if such should happen) we should
be able to raise the whole revenue within the year with-
out resorting to loans, which are tantaniont to a tax upon
wages.