The Eaton Democrat. (Eaton, Ohio) 1875-1903, 1882-11-23
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The British Debt.


The British Debt.
The popular conception of the Nation
al debt is that it amounts on rough es-
innate to f800, 900. 600, and that all
efforts to reduce it have touched only
small fraction of it. The accounts, how
ever. prove that for the past quarter of o
century in fact, since the winding-up
of the charges of the Crimean War
the reduction of debt has gone on stead-
ily from year to year. In 1857-'58 the
total amount was f339 900, 900; in 1865
'66, at the close of MIR, Gladstone's most
brilliant period of financial administra-
ton, twas brought down to &Slb.000,-
600; in 1S6S-'69, when the Conserva-
tives had held office for three years, it
had fallen to 9803, 900, 900; in 1873-'74s
greater advance had been made and
the debt stood at E7S2, 900, 900; and in
1S75-'76. the process having been unin-
terrupted by the change of Government.
at 72,000.0Jo. At this point there
was a turn in the tide, due mainly to the
exigencies of foreign politics. and until
the last financial year, 1S8i-'82. the debt
never stood at SO low figure as in 1876
'76. Last year it was f768, 700, 900, and
for the present year the official estimate
fixes the amount at R763, ,000, 00-that
is, f76, 900, 900 less than the debt as it
stood ive-and-twenty years ago.
This is not an inconsiderable reduc-
ton, even if the character of the burden
were precisely the same as that to which
the Nation was subject at the close Of
the Crimean war. But, as Mr.. Hubbard
has pointed out in one of his instructive
letters which was lstely printed on this
subject, large part OF the debt created
in recent years, which has diminished
the apparent net reduction, is repre-
sented by certain valuable assets unlike
ANYTHING to be found on the right side
of the account of 1857. For exa nple,
the purchase of the rights and property
of the telegraph companies by the
State involved the creation of nearly
ELL, ,000, 900 worth of stock, but in ex-
change for this the Government has OBJ
tanned possession of a paying concern,
at present actually yielding aproit equal
to the interest on the stock created for
this purpose, and giving fair promise OF
much larger return. Again, the money
raised for the purchase of the late Khe-
dives Suez Canal shares figures as q
temporary increase of the debt in 1876;
but the shares. it is admitted were al
WAYS full value for the $4,000, 900 which
were paid for them, and are now, il it
were expedient to part with them, worth
great deal more. M. de Lesseps re-
minded us the other day that the origi-
nal 500-franc shares are now worth
| about 2,700 francs each in the open
market, and though of course the shares
! held by the British Government stand in
! d different position from the ordinary
shares, because interest at five per cent.
| Is paid upon them by the Egyptian Gov
ernment, and not by the company, and
the regular coupons have been alienated
/ for several years to come. it is still OBJ
/ yious that they share in the increase of
value due to the success of the enter
prise Another element in tbs debt
which Is rather apparent than resl is
| the amount representing .sloans recov-
1 erable," which Mr.. Hubbard reckons at
over f28, ,O00,O 900. The official return
| shows that in the quarter of a century
the total decrease in the debt, mot TAX
| ing into account the amount of debt Gre
ated for special purposes" was over
| f119, 900, 900. But the especial pur-
poses" in question include such unpro-
ductive expenditure as that upon forti6-
cations and army localization, which,
however necessary and defensible. have
procured the country nothing in the
Shape of a realizable and recoverable
asset. Taking, however the assets that
thsy be properly set eff against debt
the telegraph property, the Suez Canal
| shares, and the loans to public
! bodies-there is sum of not less
than f43.O00, 900 to be substracted from
the f763, 600, 600, which is the nominal
amount of the debt at the present time.
Mr.. Hubbard insists upon another point
| in which, he maintains, the official
figures unfairly exaggerate the burden
upon the community. The amount of
the ordinary stocks is computed at par.
and certainly there seems to beno reason
for assuming that the Government will
be able to extinguish their three per
cents. below par. But besides the or
dinary stocks there are the terminable
annuities, which in calculating the capital
/ of the debt have to be reduced to cash
value. It is an easy actuarial operation
to determine the cash value of the ter
minal annuities. But in the official re-
turn it is estimated as If invested in
three per cent. stock at an assumed price
of 93.3. 1t is difficult to understand
why this imaginary conversion is made
| dG u tJIlSS WuiCn has hO Pi ioSoiOhi ACioeoAs
to the present value of consols. If the
Government had really to sell or buy
three per cent. stock, it would have to
deal upon the basis of price ranging
within fraction, one way or the other,
of par. Mr.. Hubbard appears to be
justified in his criticisms upon the incon-
gruity of Jumping together in the COM
putation of the aggregate debt ordinary
stocks and unfounded debt all reckoned
as payable at par, and the capital value
of the terminable annuities supposed to
be invested at nearly eight per cent.
below par. If the value OF the termin-
able annuities be supposed to be repre-
sented like the rest of the debt. by three
per cent. stock at par instead of at 93. 3,
another deduction of over f2.000. 600
must be made from the total. In that
case, the actual burden of the debt will
be found to be about ELS, 600. 900, or
f120, 900, 600 less than the amount ow-
ing by the State quarter of century
ago.-London Times.