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The Pamphlet Collection of Sir Robert Stout: Volume 79

Interest and Taxation

Interest and Taxation.

The following table speaks volumes as to the effect of Interest on a community:—
At Compound Interest, £1.000,000 becomes (in thousands)
At 3%. At 4%. At 5%. At 6%.
In 5 years 1,159,000 1,217,000 1,276,000 1,338,000
In 10 years 1,344,000 1,480,000 1,629,000 1,791,000
In 15 years 1,558,000 1,801,000 2,079,000 2,397,000
In 20 years 1,806,000 2,191,000 2,653,000 3,207,000
In 25 years 2,094,000 2,666,000 3,386,000 4,292,000
In 30 years 2,427,000 3,243,000 4,322,000 5,743,000
In 35 years 2,814,000 3,946,000 5,516,000 7,686,000
In 40 years 3,262,000 4,801,000 7,040,000 10,286,000

Most people will be surprised to learn that, £1,000,000, at 6 per cent. Compound Interest, becomes in 40 years more than Ten Millions!

In compiling this table, figures over £550 have been reckoned as the next £1,000, and figures under £550 have been discarded.

page 10
I know that you dislike the study of figures, but I ask you to look at these figures hard. They are easily understood, and they are of vital interest to your well-being. They expose at one glance the unfair and evil effects of our present Gold system. Now our National debt is a little over eighty millions (£80,000,000) of money. This amount is made up of the millions which we have borrowed from time to time; during the past fifty odd years. On this amount we pay out every year, in interest, over three millions (£3,000,000) of money. That is to say, that our million of inhabitants of this country pay annually over £3 each for interest on our loans, and we are taxed to do this. You can easily understand that, and you can just as easily understand this: A million of money lent out at 4 per cent will double itself in 25 years in simple interest alone (it will double itself in a shorter time on compound interest.) Now, my point is this: Amongst these millions upon which we are paying interest let us take one million of the date 18S7. That is 25 years and. On that million we have been paying 4 per cent. We have many, therefore, paid a million (£1,000,000) on it in interest (for it doubles itself in 25 years), and yet the cruel fact remains that we still owe the principal amount of one million. We can get rid of the loan only by paying back the original million, or we may, as we are doing, continue paying interest on it for another 25 years, at which date we shall have paid two millions (£2,000,000) for a loan of one million, and even then we shall still owe the million that we borrowed. You will readily see that this system of finance is both good and bad: it is good for the Gold-bug, but it is bad for us. It will not now surprise you to learn that during the past 20 years, 1891-1910, we have paid away in interest on our National debt the huge sum of £30,300,315, or nearly thirty-six and a-half millions of money. (See our New Zealand Year Hook for 1910, p. 674.) As I have already shown, and you may prove it for yourselves, a millions at 4 per cent, doubles itself in 25 years. (The interest amounts to, £40,000 a year, and twenty-five times 40,000 makes one million exactly.) But this is not all that the Gold-bug squeezes out of us for his £1,000,000, not alloy any means. He gets our annual payments, and loans these back to us, thus making what is known as '"compound interest." Now, a million pounds in compound interest at 4 per cent, amounts to—for the 25 year period—two millions six hundred and sixty-six thousand (£2,666,000) pounds. So that for the original £1,000,000 which we borrowed from the Gold-bug twenty-five years ago, he has extracted from us £1,666,000, and we still owe him the original million. I think that this short account puts the question of this cruel and outrageous Gold system quite clearly to you, seeing that the average school child ought to be able to understand it. Well indeed does the poet say—

"Gold! Gold! Gold! Gold!
Bright and yellow, hard and cold."

Yes, for us, hard and cold; but for the Gold-bugs, soft and warm. Are you surprised now to learn why we are every year sinking deeper and deeper into the mire of interest? Now, I have just shown you that during the past 20 years we have paid in interest alone the huge sum of £36,300,315. As against that fact, I now assure you that by the establishment of a State Bank, and by the issue of our own Paper money, that huge amount could be saved by us during the next 20 years! I want you to grasp this fact hard, and I want you to bestir yourselves; to bestir yourselves by telling all your friends these simple truths, and by advocating the establishment of our own State Bank. You will have the Gold-bugs to fight, but better to fight them than to remain—as you now are—their slaves. These Gold-bugs soon page 11 come out against a Paper issue. When the great Benjamin Franklin, of America, in 1739 wrote his able essay recommending a Paper issue, owing to the shortage of money in the States of Delaware and Pennsylvania, these two States adopted it, and thrived under it. But when Franklin died the Gold-bugs successfully destroyed the scheme. They can afford to pay to crush out a system which, while favourable to the masses, deprives them of their "interest." Let us now consider how we may form and work