The Pamphlet Collection of Sir Robert Stout: Volume 14
The National Debt
The National Debt.
This fiscal monster, which has swallowed upwards of two thousand miliions during the present century, owes its origin to Indirect Taxation, the Funding (i.e., Mortgaging) system, and "The Balance of Power." From the Norman Conquest to the Accession of Charles II. this country contrived to fight and pay its way without contracting any permanent debt, because its revenue was principally derived from lands reserved to the Crown, lands allotted on conditions of feudal service, and feudal payments from the allottees, strictly in the nature of Rent, with occasional direct levies on personalty. Charles II.'s Parliament of Land holders did away with these feudal obligations and paymonts, and, converting themselves into Landowners, gave His Majesty and his successors Excise Duties on Beer, &c., payable by the people, "in compensation" for what they and their predecessors had been bound to pay as tenants of the Crown. Prior to the Restoration of the Stuarts it had occasionally been the practice of English Sovereigns to raise or extort loans from their subjects under letters of Privy Seal, the latest wholesale issue of these having been made by James I., in 1604, much to the disgust of the nobility and gentry of the English counties who had only just acolaimed the new monarch.
Charles II. incurred a "Banker's Debt," or "King's Debt," which was not acknowledged by his successor, nor until the latter part of William Ill.'s reign. Its original amount was £1,328,526, bearing (nominally) 6 per cent, interest; but, after much litigation and long suspension of the payments, it was in Anne's reign agreed to charge on the Hereditary Excise an annuity at the rate of 3 per cent, on the original loan, to be redeemable on payment of £664,263, or half the "King's Debt." This sum was afterwards incorporated with the Capital of the loans incurred after the Revolution.
James II. borrowed £84,888 6s. 9d. on the security of Exchequer tallies, anticipating the proceeds of duties on French linens, both this sovereign and his brother having frequently resorted to such improvident shifts as a substitute for Loans under the Privy Seal.
|1688||The "Kings' Debt" incorporated by William III.||664,264|
|1702||The "National Debt" at the Accession of Anne||12,767,225||Increase in 14 years||12,102,962|
|1714||The "National Debt" at the Accession of George I.||36,175,460||Increase in 12 years||23,408,235|
|1727||The "National Debt" at the Accession of George II.||52,523,023||Increase in 13 years||16,317,563|
|1760||The "National Debt" at the Accession of George III.||102,014,018||Increase in 33 years||49,490,996|
|1820||The "National Debt" at the Accession of George IV.||834,900,900||Increase in 60 years||732,886,942|
|1830||The "National Debt" at the Accession of Wiiliam IV.||784,803,997||Decrease in 10 years||50,196,963|
|1837||The "National Debt" at the Accession of Victoria||787,529,114||Increase in 7 years||2,725,117|
|1886||The "National Debt" at end of last financial year||748,716,170||Decrease in 49 years||38,812,944|
|Total of the Funded Debt on 31st March, 1886||638,849,694|
|Total of the Unfunded Debt on 31st March, 1886||17,602,800|
|Value in Stock, at par, of Terminable Annuities, ditto||85,829,917|
|Deficits calculated at the price of the day on the Savings Banks and Friendly Societies to 20th November, 1885||2,133,497|
|Liability of the Consolidated Fund on 31st March, 1886, under various Acts relating to the Courts of Justice||3,768,704|
|Ditto in respect of Advances by the Bank of England to the Exchequer from the Dividend Account||496,558|
|Ditto in respect of Advance by the National Debt Commissioners from Life, &c. Annuities Account||35,000|
|It is important to observe that a certain amount of set-off existed, viz.:—|
|Probable Amount of Loans due to the State that will be recovered||27,769,954|
|Nominal Value of Suez Canal Shares||3,532,040|
|Balances at the Banks of England and Ireland on the 31st March, 1886||5,625,944|
|And this would reduce the net total to||£711,788,232|
|Amount of Funded Debt, March 31, 1885||640,181,896||2||6|
|Amount of Funded Created in 1885-6||nil|
|Amount of Funded Reduced as per contra||1,332,202||9||8|
|Amount of Funded March 31, 1885||638,819,693||12||10|
|Amount of Unfunded Debt, March 31, 1886||17,602,800||0||0|
|Capital Value of Terminable Annuities||85,829,917||0||0|
|Deficit calculated at price of the day on the Savings Banks and Friendly Societies to November 20, 1885||2,133,497||0||0|
|Liabilities of Consolidated Fund (as on last page)||4,300,262||0||0|
|Total Debt, March 31, 1886||£748,716,169||12||10|
|By Capital purchased with money from various Sinking Funds, &c.||135,909||5||11|
|By Capital purchased with sums received for composition of Stamp Duties on Transfers||199,685||16||1|
|By Capital purchased with forfeited deposits in a Trustee Savings Bank||10||9||4|
|By Capital Transferred for Purchase of Annuities||906,744||12||2|
|By Capital Transferred for redemption of Land Tax||70,552||0||4|
|By Capital On account of Surplus Tax||16,563||2||8|
|By Capital Received in respect of Fore shores||2,737||3||2|
|Total Reduction, 1885-6||£1,332,202||9||8|
At the end of the financial year, 31st March, 1886, the following amounts of Stock of the Debt were held by Government on account of their own departments: 3 per cent. Consols, £36,313,835. Reduced 3 per cents., £15,820,796. New 3 per cents., £30,009,623. New 3½ per cents., £6,431. 2½ per cents., £15,024,518. 2¾ per cents., £121,677. Consol 3 per cent. Certificates, £6350. Exchequer Bonds, &c., £5,656,000. Annuities for terms, £7,074,138. Total Stock £102,959,230. Estimated Capital Value £178,533,360.
Return showing for each year since 1873-74 the total amount of the National Debt, the estimated amount of Recoverable Loans, the Balances at the Banks of England and Ireland, and the Net Balance of Debt; and what Amount in each year of the Annual Reduction of Debt is due to the Automatic Operation of Terminable Annuities, and the Net Annual Charge in each year upon the Consolidated Fund for the Service of the National Debt.
|Years ending 31st March.||Total Amounts (Funded, Unfunded, and Capital Value of Terminable Annuities) computed in 3 per Cent. Stock at para.||Savings Banks and Friendly Societies' Deflcienies on 20th November in each year.*||Liability of the Consolidated Fund under various Acts.†||Totals of 1. 2, and 3,||Estimated Amount of Recoverable Loans.¶||Balances at the banks of England and Ireland.||Totals of 5 and 6.||Net Balance of Debt (4-7).|
|Repayment of Capital‖|
|Year ending 31st March.||Interest.||By Automatic Operation of Terminable Annuities.||Sinking Funds, forming part of the Annual Charge, and Suez Bonds Paid off.||Totals.||‡ Receipts applicable as a set off against the Charge for Debt.||Net Annual Charge (12-13).§|
|Year.||Amount of Debt||Interest Charge.|
|Capital of Funded Debt.||Estimated Capital of Terminable Annuities.||Amount of Unfunded Debt.||Annual cost of Interest and Management.|
|On 6th January, 1841||766,371,725||(Not computed)||21,076,350||29,467,475|
|On 6th January, 1846||766,672,822||(Not computed)||18,380,200||Total Debt.||28,588,567|
|On 6th January, 1851||769,272,562||(Not computed)||17,756,600||£||28,297,584|
|On 31st March, 1856||775,730,994||25,666,104||28,182,700||829,579,798||28,112,825|
|(After this line, the amounts of unclaimed Stock and Dividends are added in.)|
|On 31st March, 1861||788,970,609||18,947,740||16,689,000||824,607,459||26,231,019|
|On 31st March, 1866||773,941,190||25,435,034||8,187,700||807,563,924||26,233,288|
|On 31st March, 1871||732,043,270||57,969,885||6,091,000||796,104,155||26,826,437|
|(After this line the Suez Bonds are added to Unfunded Debt.)|
|(From 1876. onwards, the Interest of the Local Loans Debt and Suez Bonds is added to the Annual Permanent Debt charge.)|
|On 31st March, 1881||709,078.526||87,547.666||22,077,500||768,703,692||29,575,264|
|On 31st March, 1886||638,849,694||85,829,917||17,602,800||742,282,411||23,449,678|
- 1856 to 1866, 22 millions
- 1866 to 1876, 31 millions
- 1876 to 1886, 34 millions
|(1.)||Some very considerable augmentation of Revenue; or|
|(2.)||Some equally considerable reduction of Expenditure.|
"A more equal Land-Tax: a more equal tax upon the rent of houses, and . . . alterations in . . . Customs and Excise, might, without increasing the burden of the greater part of the people, but only distributing its weight more equally . . . produce a considerably augmented revenue."
It is evident that the great economist little foresaw, when he wrote these words, that our National Debt, after increasing by nearly six hundred millions, would be reduced by at least £100,000,000 under a system of taxation by which the trader, the merchant, and the artisan have had to pay in increasing ratio, whilst owners of landed property have contributed a steadily dwindling decimal part; and this permitted by what are supposed to be Reformed Parliaments, and directed by so-called Liberal Cabinets. Let us hope that something more just and equitable may be accomplished during the next hundred years, and those who seek redress for fiscal inequalities will do well to remember Adam Smith's hint, and insist upon a more equal land tax, a more equal house duty, and the total abolition of the Customs and Excise burdens upon national industry.
The evil of the Debt lies mainly here, that, owing to the extravagance and mismanagement of aristocratic governments of landowners, a mortgage of some £750,000,000 still lies upon the taxes of this country, having been placed there by unconstitutional means, for no Parliament has any right to bind its successor to vote taxes. Being so placed, however, it should be the aim of statesmen to minimise evil consequences, by seeing that in the repayment of National Debt injury is not done to National Wealth; in other words, that the revenue necessary for repayment shall not be raised in such way as to interfere with wealth production.
We are not of opinion that the efforts made recently to reduce the Debt have been unwise. Our complaint would rather be that in reducing Debt before re-adjusting the incidence of taxation Mr. Childers put the cart before the horse. By so doing he succeeded in inducing a landlord House of Commons to add 7 or 8 millions to the fixed burdens of the taxpayers in a time of serious trade depression, and this being effected, the same House of landed gentlemen snapped their fingers at him when, two years later, he attempted to equalize a portion of the incidence. Now had the horse been put before the cart, the Chancellor of 1883 might have availed himself of the expiring annuities to reduce indirect taxes and abolish the breakfast table imposts altogether. The stimulus thus given to trade would have improved the yield of Income Tax and other branches of Revenue, and ere now have recouped the Exchequer, besides greatly benefiting the masses of the people. The calls of increased expenditure in 1885 would, under such circumstances, have been met with much less risk of unpopularity; a bold attempt to extend and equalize the Death Duties and House Tax simultaneously would probably have been successful, and the further reduction of Debt would then have been prepared for by a more righteous adjustment of the people's burdens. The national advantage of further reduction may be surmised from the following statement of What the National Debt has Cost the Taxpayer in Simple Interest Alone.
|1691 to 1700—Ten Years||9,228,211|
|1701 to 1710—Ten Years||14,779,968|
|1711 to 1720—Ten Years||29,437,104|
|1721 to 1730—Ten Years||25,762,251|
|1731 to 1740—Ten Years||21,114,749|
|1741 to 1750—Ten Years||25,853,046|
|1751 to 1760—Ten Years||28,664,024|
|1761 to 1770—Ten Years||47,092,783|
|1771 to 1780—Ten Years||52,093,419|
|1781 to 1790—Ten Years||92,135,484|
|1791 to 1800—Ten Years||135,123,780|
|1801 to 1810—Ten Years||224,138,726|
|1811 to 1820—Ten Years||303,639,929|
|1821 to 1836—Ten Years||294,437,684|
|1831 to 1840—Ten Years||290,254,607|
|1841 to 1850—Ten Years||285,099,761|
|1851 to 1860—Ten Years||280,780,788|
|1861 to 1870—Ten Years||255,000,000|
|1871 to 1880—Ten Years||285,031,907|
|1881 to 1886—Six Years||142,852,180|
|Total in 196 years||£2,792,020,401|
Mr. Henry Lloyd Morgan, who first compiled a similar table to the above, remarked:—"This is for simple interest only; yet even this gigantic sum represents only a comparatively small portion of the actual costs of war; moreover, it must be remembered that all this has been abstracted from the working capital of the country; therefore, in reality, 'compound interest' should be charged to represent even the outlay for payment of the simple interest; to which must be added a much larger sum for extra taxation levied to carry on war."
a In a prior Return the Capital Value of Terminable Annuities was computed in 3 per cent. Stock at £92.3077.
† Two million pounds for loan to India is included in this year.
¶ Five per cent, on the amount outstanding at the end of each financial year for loans for Public Works has been allowed for possible bad debts.
* An annuity was created under "Savings Bank Act, 1880," to pay off the Total Capital Deficiency of Trustee Savings Banks, and the Capital Value thereof is included in Column 1 from 1881-2 inclusive.
‖ The Old Sinking Fund and sundry other amounts are also applicable to the reduction of debt, but do not form part of the annual charge.
‡ These receipts consist mainly of interest on loans for Local Works, interest on Purchase Money of Suez Canal Shares, and the amount payable by the Bank of England out of the profits of issue.
§ It will be found that the figures in this column, from 1875 inclusive, agree with the totals of columns 1 and 2 on page 4 of House of Commons Paper, No. 240 of Session 1886, after the addition of Issues from the Exchequer in respect of the Bankruptcy Book Debt detailed in Notes to Appendix, page 8 of the Paper.
** Exclusive of £1,914,633 issued to redeem the Indian Loan Annuity.