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.

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.

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.

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."