THE SINKING FUND.

Dunstan Times, Issue 3381, 4 July 1927, Page 2

THE SI N KING FUN D.

At a time when nil the world is strain-' ing it,si resources to balance its Budget and put its affairs on a sound financial footing, it gives somewhat of a shock to find an important weekly advocating the abolition .of the Sinking Fund for the redemption of the National Debt. This idea is ventilated in the “New Statesman,” which, apart from its advocacy of municipal enterprise and somewhat more State enterprise than we now have, is regarded as exceptionally sound in its financial views. There is no prospect, it says, of a reduction—“Mr Churchill is too orthodox a financier for that —but there might possibly be a raid; if seems more likely, however, that the Sinking Fund will either be increased or left at the high figure at which it now stands. The banking; community is strongly in favour of Debt reduction—as it always has been of nil forms of ‘deflation,’ without regard to the interests of industry—and the Cohvyn Committee recently recommended that the Sinking Fund should be brought up to .■0100,000,000 a year (i.e., nearly doubled) as soon ns possible.’

i ft declares the term “National Debt” jto be misleading. National Debt, if Isays, might equally well be called “NuI tional Savings.” “The one phrase is no i more accurate than the other. We do in | fact call it savings when the Government I borrows the money of Uio comparatively poor through tbc machinery of the Post Olllco havings Bank, and Hie orthodox rejoice when this particular form of National Debt expands. The National Debt is. commonly regarded as a heavy burden. In truth, it is no burden at all upon anyone save the Chancellor of the Exchequer, ’.sUw has in find meows of UvmKcvvwg enormous sums from the pockets of Jones to the pocket of Smith. This refers, of course, only to (he internal debt. Our debt to America is a real burden. . . . . Obviously it (the National Debt) cannot lie-a burden upon the nation as a whole, because what is taken from one taxpayer is paid to another, and such transfers can make no nation poorer.” In support of his contention, the writer verts that we as a nation paid spot cash for the Great War, since it had to be carried on with munitions made and paid for at the time, and that the internal dkt is a more matter of bookkeeping. lie concludes (hat there is “no conceivable reason why wc should over sock to pay off a single penny of flic National Debt.” The writer, however, thinks that psychologically there is a case for the sinking flunk and suggest that wc should pay off every year something “for the look of the tiling.” Thu “Times” hastens into Iho lists vh hj (lie i’ui loving view of the dead v. eight of rhe debt “Tbc writer apparently fails lo perceive ■ !iil. his argument that the internal National Debt is no burden because it is merely a question of taking Jones to pay -miih destroys Ids case for the abolition of the sinking fund. The sinking fund is also merely a taking from Jones, the taxpayer, to pay Smith, the bondholder, who then becomes the possessor of cash I Inst ho can invest in business instead of Jones. If the one payment is not a burden, neither is the other. The argument that the National Debt might equally well he called savings is particularly weak. (-bvionsly, for every debtor there is. a c; editor: ami credits are exactly equal lo deiih-i. If the £7.£00,000.C00 Nation:.] Debt had been invested in productive enterprise, the debt would be paying for As keep and no one would I.e worse off. : nt Die National Debt to tbc debtors represent'; no tangible asset whatever. It is a deadweight upon the country, both in the material and in the psychological sense. Deb! of this kind is unhealthy, for there is no contra side lo (be account. It should l.c redeemed as soon as pos sidle within the limits of the count ry’.-a •• capacity to do so.”