New-York tribune., 1918-08-18
H. ]. Davenport

Professo, Of Economies in Cornell University
"HE debt Of England is now
nearing $4O,00O,0O0,OO0-
"A $1,000 per capita, $4,000
per family. This, however, need
not mean that England has now be-
come a poor nation or even is on
the way to become poor nation.
In the main, the English debt is
held in England. The aggregate
wealth of a country is neither the
less nor the greater because Of do
mestic debt relations. 1t is only
with respect to the ownership of
its existing wealth and to the dis
tribution Of it's future income that
tho volume of Indebtedness Is sig
nificant. For every debit there is q
credit. Cancel the debt, and as
much as the debtors are richer the
creditors are poorer. Increase it, and
as much as the creditors are the
richer the debtors are the poorer.
In a national accountancy these
items Of domestic debt are neutral
items. In an inventory Of national
! wealth they cancel out.
Nor in any other aspect of wealth
need war mean national poverty.
Rarely does war seriously diminish
wealth. The lands of England are
still there, unwasted and unworn;
its factories wanting nothing in
equipment, its warehouses nothing
in goods, its dwelling houses unde-
cayed, it's railroads intact and with
ample rolling stock. At any rate,
deterioration can hardly be ap-
preciable, and if appreciable can
hardly be serious. The war toll of
life has been heavy. But this means
that the rate Of loss in life has far
outrun the rate of loss in wealth.
Stated in terms Of per capita wealth,
England may to-day be richer than
before the war, rather than poorer.
Redistribution,
/ Not Exhaustion
How, then, can England year
ago have been approaching, or be
now approaching, war exhaustion? It
may be easy, no doubt, for any one
man to lose his wealth-the heir to
dissipate his estate, the borrower to
become insolvent. But what one
man loses to another's gain does not
I lmpoverish the realm. So, again,
it may be easy for any one indi-
vidual to consume more than his
income and be compelled to dispose
of his property. But the main eff
feet of this is merely to redistribute
the property. Speaking in the large,
the prodigal consumption of one
merely displaces the consumption of
others; and these others, as their
indemnity, come into possession Of
the prodigal's estate.
And as with any individual In u
society, SO with any one nation
among nations. One country may
get into debt to another. Or, in
stead of issuing obligations against
its existing wealth or its future in
come, one country may sell out to
another the titles Of proprietorship
to its domestic wealth or to it's
wealth of foreign investment. But
nothing of this involves any change
in the total Of world wealth, but
l only redistribution of it in point
of ownership.
England has, no doubt, grievously
diminished its patrimony, not only
by the sale Of war bonds in America.
but still more by marketing enor-
nous holdings Of international Sc
curities in America. And note also
that all these sales Of securities in
America by which England is so
much the poorer relatively to Amer
lea have gone none the less to swell
the government debt to Individual
investors in England, the debt on
which the taxpayer must make good
the interest burden. The investors
are no poorer, but only England.
They now hold English consols in
place of the securities that have
been marketed abroad to furnish
England with purchasing power
here. BY marketing it's new issues
of consols here, or by selling here
the securities purchased in England
by consols marketed here, England
has supplied itself with American
goods far in excess Of what English
exports of products would buy-an
export Of obligations and titles
rather than Of products. Instead,
therefore, Of its old position of
creditor abroad or Of owner abroad,
England has been moving toward
the status Of debtor nation.
What England
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