WHEN BRITAIN BORROWS

Star (Christchurch), Issue 17219, 10 December 1923, Page 6

WHEN BRITAIN BORROWS

ALL ABOUT THE NATIONAL DEBT. This country (says “Pearson's Weekly ”) is like a big business firm— The United Ijiingdom, Limited—and we are all, as it were, assistants (and in a sense partners) in it. Some of us are highly paid managers and directors ; some scrape the barest of livings as humble assistants. Our firm is worth so much. This doesn’t only mean other people’s money, their salaries and savings, but also includes the entire stock in trade, machinery, factories, buildings, laud, forests, mines, everything. Ndw. this firm of ours has had at various stages in its history to borrowAnd this borrowed money is what we call our National Debt. Twenty years ago it stood at £682,000.000 odd, which meant that every man, woman ami child of us was owing £ls 17s 6d a head. To-day the amount is a good deal more than this. A CRISIS CALLS FOR MORE CA X SH. A nation, like a great business, needs money to “ carry on 7 with, and should not. if properly managed, ever need to borrow for the ordinary runping of its affairs. But sometimes there comes a crisis when extra funds are needed, and as a rule the situation is met by borrowing. This country first began to borrow seriously when the extraordinary crisis arose in its business of the Revolution of 1688. The Government had not enough cash in the safe to meet the unusual expenses, and heavy taxation would have crippled its industry <

Nations as a rule object to “ saving ” too much : a few millions in the petty

cash box are all very well, hut to accumulate enough for any emergency is “bad business ” for a country, far it demands such a taxation as will plow down the wheels of prosperity. The easiest way is to borrow when the need arises.

HOW THE COUNTRY BORROWS. Other emergencies, such as the Napoleonic Wars, the South African War, the Great War, have all been partly met by borrowing. Thus our National Debt has increased. The State may borrow in different ways. It may ask for a hundred pounds, repayable over so many years, or may engage to pay so much a year for the lender’s life. Or it may simply borrow the hundred, say nothing.about repayment at all. but engage to pay 60 much interest on it till such time —if ever—as the capital is paid back. In this last case, the man who lends the hundred pounds suffers no lossHe draws his interest .a profitable and Safe investment, and if he ever wants his hundred pounds, he get it, not bv applying to big debtor. the United Kingdom, but si mol r by selling his “share” in the Debt to someone else. REPUDIATION WOULD BE SUICIDE. If a State were to “ let down ” its creditors, the national credit would fall in a moment. And a. nation’s business, just like that of any other big firm, depends very largely upon its credit. A nation may repudiate its National Debt, hut if it does, it practically commits suicide. Half its lenders are its own citizens, ancl they are ruined. The other half are" citizens of other countries, and while they too are ruined, no foreign firm would ever again trust that country for a single cargo pf grain except for “cash in advance.” If we were to tepudiate our National Debt to-morrow, each of us would 6ave the taxation that goes to pay its interest. But we should bare*cut ourselves off from civilisation. Not a shipment, not a parrel, not a contract would ever enter this country from abroad.