New Suggestions for Liquidating the Debt.

All idea of liquidating the Debt, by the operation of the Sinking Fund, being abandoned, it may be concluded this great national incumbrance is destined to be a perpetual burthen entailed on succeeding generations. This, it must be confessed, holds out a discouraging prospect for the future. Let us, however, inquire if it be not possible to imagine a course of public affairs which would tend to the just and natural extinguishment of the Debt; or, secondly, let us inquire if such changes in the monetary system of Europe may not supervene, as would constitute an equitable claim for a reduction in the amount of the annuity payable to the public creditor. Although there are few questions in public economy that have excited more intense inquiry than the progress and final issue of our funding system, still we think there are one or two views of the subject which have been overlooked by political writers, and which we shall beg leave briefly to submit to our readers’ consideration.

Lord Goderich has justly remarked, (House of Lords, May 7, 1830,) that it is not the magnitude of the capital of the debt, but the amount of the dividends which form a question of interest. A public creditor is not, like a private creditor, entitled to demand payment of both principal and interest: all to which he has compulsory claim is the regular payment of his dividend. A greater amount of capital is only important to the public inasmuch as it imposes a heavier burthen in the charges of management payable to the Bank of England. The vital consideration is the amount of the perpetual annuity entailed on the country: whatever tends to lessen this charge relieves the public; and let us see what system of policy would most effectually promote so desirable a consummation.

The interest of money has been gradually falling for centuries; and, from the augmentation of capital, it is not possible to assign the minimum;—it may be depressed to one, or even a half per cent.; or money may become so redundant, that, instead of the payment of interest for the use, a premium may be given merely for its safe custody. How far this reduction may be still carried depends entirely on the management of public affairs. Let us suppose our rulers have resolved, all at once, to carry on the government on principles of justice and wisdom, without regard to the partial interests of the Church, the Aristocracy, or any other section of society; let us suppose they are resolved to give full scope for the augmentation of national wealth, by the abolition of commerical and charted monopolies—by the repeal of the Corn Laws, and of all such taxes and restrictions as impede the development of industry: let us suppose that government is resolved to make all reasonable concessions for the attainment of internal quiet and contentment, by the extension of the elective franchise—the improvement of the judicial administration—the abolition of partial and oppressive laws—the reduction of exorbitant salaries, the extinction of sinecures, the rescinding of unmerited pensions, and the relinquishing of unprofitable and useless colonies: let us further suppose that government is resolved to pursue a system of impartial justice towards Ireland, remove all pretext for popular agitation, and cultivate, to the utmost advantage, her vast resources: lastly, let us suppose that government is so wholly intent on promoting the general welfare, that they are resolved to remove all restrictions on the freedom of discussion, and allow the utmost latitude, without regard to considerations personal to themselves, for the free investigation of every question in the least relevant to the public happiness; especially of such questions as elucidate the causes of the poverty and privations of the great body of the community.

Now, supposing such a liberal and enlightened policy to be pursued by the government, the consequences would be most extraordinary. Contentment and confidence would prevade all, and every obstacle to the full development of industry removed, commerce, manufactures, and agriculture attain an unexampled state of prosperity. The country would be inundated with wealth, and the mass of unemployed capital would be so great, that interest would be merely nominal. But would not ministers take advantage of such a favourable crisis in national affairs to reduce the Debt? Assuredly they would. All the stocks would rise above par, and they might either pay the public creditor his principal, or compel him to accept a lower rate of interest. It is in this way, merely by the operation of good government, by adopting measures to promote internal concord and prosperity, that the Three per Cents might be reduced to two, one, or even a half per cent.; and this is what we call the just and natural extinguishment of the Debt!

The unsettled state of Europe may postpone for a time the decline in the interest of money; but such is the intelligence and desire of accumulation pervading all classes, that we consider it an event of certain occurrence. Under this impression, we do not concur in the wisdom of the plan adopted by the Chancellor of the Exchequer in 1830, for the conversion of the Four per Cents. Agreeably to Mr. Goulbourn’s scheme, an option was given to the holders of the New Fours to accept a Five per Cent. stock, irredeemable for a long term of years. The chief saving to the public from this arrangement was a diminution in the amount of the capital of the debt; but this, as before remarked, is an unimportant consideration, and only affects the amount of per centage payable to the Bank for management. The great object for a financer to aim at is a reduction in the public annuities; but this reduction is foreclosed, by creating an irredeemable fund; and the country is precluded from deriving advantage from the augmentation of national wealth and consequent declension of the interest in money.

Let us next advert to the other contingency to which we alluded, as likely to operate, an equitable reduction in the monetary charge of the debt—namely, a rise throughout Europe in the value of the precious metals. That such a rise is in progress is highly probable, for the following reasons:—1. The unsettled state of South America during the last twenty years, and consequent interruption to the working of the gold and silver mines. 2. The increased consumption of the precious metals, from the diffusion of greater wealth and luxury. 3. The increased demand for them, owing to the increase of population, commerce, and commodities. 4. The general substitution of a metallic for a paper currency in England, America, and the continental states. All these causes obviously tend to enhance the value of the representative medium; and, should they continue to operate, they must eventually work a dissolution of money engagements; for it cannot be supposed that if a pound weight of silver attain as great an exchangeable value as in the reign of the Edwards, that either nations or individuals shall be bound by contracts made under circumstances so widely different. Such a revolution in the instrument of exchange, or even an approximation to it, could never have been foreseen, either by creditor or debtor; and the fulfilment of his obligations by the latter being rendered impracticable, by vicissitudes which he could neither foresee nor control, both equity and reason would relieve against them.

The practical application of this reasoning, to the reduction of the Debt, is too obvious to need explaining. It is a crisis wholly distinct from such as occur from the issue or withdrawal of Bank paper, or the rise or fall of mercantile credit. These are the local and ordinary fluctuations of the commercial world with which all mankind are familiar; but a rise or fall in the universal standard of value, from the general causes mentioned, is an event of a different nature. It is unnecessary, however, to pursue the subject further till the fact of a general rise in the value of the instrument of exchange has been ascertained, and the returns which the Marquis of Lansdowne moved for in the session of 1830, relative to the produce of the American mines, will tend far to its elucidation.

We have thus shortly explained the two sources whence, by possibility, relief may come to this tax-paying community; but we candidly confess we have not much faith either of them will be realized. That the Oligarchy will ever pursue such a course of policy as is most likely to diffuse general intelligence, contentment, and wealth, is inconsistent with all experience of their former conduct. Unfortunately, the government, in its unreformed state, only embodies the partial interests of the Aristocracy, and those interests are incompatible with the general interests of the community. Hence we conclude, the Manichæan principle of the constitution will triumph to the end of the chapter, and that the funding system will ultimately terminate by a violent death. The nature of its final dissolution, the hypocrisy and injustice by which it will be preceded, and the calamities it will entail on the country, we shall set forth in the next and concluding section.