PATER'S CHATS WITH THE BOYS.

Otago Witness, Issue 3315, 26 September 1917, Page 57

PATER'S CHATS WITH THE BOYS.

. ni.—.THE NATIONAL DEBT. Last week I referred (a) to the primitive Tally system in use until 1783, by means of -which checks—one of the origins for our cheque system, though we have no warrant for the modern spelling, the Americans keeping nearer to the true root—were utilised for' keeping the Exchequer accounts; (b) to the origin of the National Debt as a mortgage upon the nation as a permanent feature, giving the money-lender a gilt-edged security; (c) to the establishment of the Bank of England as a means of making national borrowing easy; (d) to the South Sea Company, which entered into competition with the bank as a money-lender to the State, but which collapsed in the effort; and (e) to the steady decline in the standard rate of interest, to which I must add a line to-day. " WORLD-FAMED BRITISH CONSOLS." This is the name given to National Debt debentures by a writer on the subject, because there is no other security in the world which is so reliable, for what greater' security can one get than that a stable State affords? We have seen that when the Bank of England was founded it lent the Government the whole of its capital, and was guaranteed 8 per cent, interest on Customs and Excise duties; then, when the South Sea Company came into competition, this was reduced to 6 per cent, then to 5 per cent., and eventually to 4 per cent. In 1749, or thereabouts, this, in turn, gave way to 3 per cent.; in 1888, to 2f per cent.; and in 1903 to 2£ per cent.; for as money became plentiful and a leisured class and classes wanting a sure income without any worry came into existence, the rate of interest on giltedged security went down. PROGRESSION AND RETROGRESSION. To show how the habit of national borrowing has grown with little or no chance of redemption I am giving a few figures: Time or Event. £. Foundation, 1693 1.200,000 Queen Anne's Accession .. .. 16,395,000 George I, 1714 .. 56.145,000 Georgia 111, 1760 184.865,000 After American "War Indep 249,852,000 End of Na.poneonic wars .. .. 840,850,000 Financial year, 1895-86 656,909 000 „ „ 1900-01 628,931.000 „ „ 1901-02 689,470.003 „ • „ 1902-03 745,016,000 „ „ 1903-04 770.779,000 1910-11 713,245.000 „ 1914-15 651,270,000 These are sufficient to illustrate my purpose. You see that, under" modern conditions, it is practically impossible to wipe out the No.tional Debt except by becoming insolvent or compromising, as has been done by some American republics and irresponsible nations, such as Turkey. I should not wonder if, to get a start of the Allies, Germany treats her loans as scraps of paper, to be torn up, and after the war is over, seeing she owes nearly all to her own subjects, say to them, "We'll pay so much in the pound to ourselves and make a new beginning, for the Allies will not repudiate any of their debt at home, and dare not abroad j so, by heavy taxation to meet interest charges, they will be handicapped

in production, and this will enable as to flood the Avorld's markets with our cheaper productions." But I am getting away from my point again. Notice the steady progression; but notice, too, the steady diminishing from the end of the Napoleonic wars until 1901-02, -when it went up as a result of the Boer war. Of courso, there were wars in between ; but these did not add very materially to the debt —taken per head of population it had decreased, — and were met out of revenue or soon reduced by sinking funds, which I have no time or space to speak of. Notice, further, how the debt went down in a few vears from 770 to 651 millions; and from* 1875 to 1900 over £155,000,000 was paid off at the rate of nearly £6,500,000 a year. THE DEBTS OF THE GREAT WAR We now come to figures inconceivable before the Great War started, and beyond the grasp of our finite minds. Read these: 1914-16. £. £. August .. .. 100,000,000 November .. .. 225,030,000 March .. .. 37,000.000 1915-16 March .. .. 250,000,000 June 250,000.000 July 150,000,000 September ■ .. 250,000.000 November .. .. 400,000,000 February .. .. 120,000,000 1916-17 February .. .. 800,000,000 May 800.000,000 July 450,000,000 October- .. .. 800,000,0z0 December .. .. 400,000,000 February .. .. 200.000,000 Maich 60,000,000 — 2,010,000,000 1917-18 February .. .. 850,000,000 May 500,000,000 July 050,000,000 Grand total £5,292,000,000 Can you grasp these figures ? And the end isn't yet. The Motherland is piling debt up at the rate of about £7,500,000 a day, or about 3s per head! Isn't it terrific? If Great Britain were "submerged in pauperism and the Government approaching bankruptcy" after Waterloo, what must it be doing now when, after the war is over, it will have to face commercial competition not in existence then? FLUCTUATION PRICES. I think that our senior pupils should be taught more about the purchasing power of money, and that when prices •rise that is an equivalent to a reduction in wages. Let me give an instance or two before I touch upon fluctuations in consols. When I was a boy there were no freezing works, and we could buy in Victoria a good leg of mutton for 6d or 9d, and a side of mutton for Is 6d. Say wages were then 5s a day. At the present time a side of mutton will cost, say, 10s 6d, or seven times as much; consequently wages, in the same proportion, ought to be 35s a dayl So, compared with then, a sovereign is worth less than 3s. Again, since I nave been in Dunedin, I have bought bread at 4Ad a 41b loaf; now it is 9d or more; so, to give the same purchasing power, wages ought to be doubled. Put another way, a sovereign is worth only half a sovereign, and so on. This decrease in purchasing power is one of the causes of social unrest at the present time, and rightly so, I think. Last week I quoted some of Hilaire Belloc's scathing remarks on National Debt building, and showing his impatience at the hold the moneylender gets upon the nation. If the principle had been laid down at the outset that no one should profit by a war, that all profits approximately should go to the nation to help to pay the cost of what the nation is contending for, then there would be much sordidness eliminated, much more patriotism shown, and a much smaller National Debt piled up.

I have still two or three points to touch, upon, for I haven.'t worked out fluctuations in consols nor referred to Australian and New Zealand debentures quoted on the London Stock Exchange; no, after all, I must run into another Chat.