CAPPS'S PRIZE ESSAY ON THE NATIONAL DEBT.*
IN the early part of 1857, the Society of Arts announced that "two hundred guineas had been placed in their hands," [by Mr. Henry Johnson,] for the purpose of bestowing that sum upon the author of the best essay on the financial condition of the country, especially in reference to recent events," a sinking-fund, and the National Debt. The prize was unanimously awarded by the adjudicators to Mr. Edward Capps ; and in a literary point of view we dare say rightfully. The essayist indeed has decided views on the often discussed question of contracting public debts at a nomi- nally low rate of interest, thus increasing the amount of the capi- tal of the debt, and the difficulty of paying it off. We think he allows himself to take the highest estimate that has been made of the alleged national loss by funding in the Three per Cents, whereas he ought really to have investigated the account for him- self. He also closes his mind to the opinions of men quite as competent as himself to judge of such a question—Lord Overstone for instance. But this feature being put aside, The National Debt Financially Considered is a creditable specimen of Eco- nomical literature. The subject is sufficiently extended without being overladen. The arrangement is distinct; first we have the history of the debt ; then some peculiar opinions of the author in connection with the pressure of its incidence, and its influence on money (currency,) taxation, and foreign trade. A good summary of the Sinking Fund is also presented, and a true enough judg- ment pronounced on the economical effect of the National Debt—that in itself it neither adds to nor detracts from the national wealth. A hopeful view is taken of the actual resources and future prospects of the country ; the most rational of the va- rious schemes for paying off the National Debt are briefly exam- ined, and the Essay closes with Mr. Capps's own plan for that purpose. All this is well done. The statistics (we assume their accuracy,) though a shade too much at second-hand, are well se- lected, and answer their purpose ; the ideas of the author are ex- pressed with clearness his arguments can be readily followed, his language is easily understood.
So far so good. It is another question how far it was well con- sidered in the Council of the Society of Arts, to lend their seeming sanction to questionable doctrines concerning currency and the National Debt; which doctrines are not only opposed, as the writer in part admits, to the great authorities in political econo- my, from Adam Smith to Lord Overstone, but which may lead, in their final conclusions, to nothing less than the sponge, though
• Prize Essay.—Society of Arts. The National Debt Financially Considered, By Edward Capps. Published by Groombridge.
calculators on the other side might land in an enhancement of the dividends or at least some part of them. The first and most common of t..1;, opinions of Mr. Capps is that we have not money enough. This opinion is grounded on the notion that the Na- tional Debt operates to restrict the amount of the currency ; and to this restriction Mr. Capps ascribes our periodically recurring panics ; ignoring over trading, rash speculations, and all the gam- bling or swindling transactions that come out, more or less, on these occasions ; and on none more so than the last. We cannot, conceive how "greater facilities" would have checked the course of Windle Cole, or Gordon, or Oliver of Liverpool, or the Borough. Bank, which propped him up, or the Western Bank of Glasgow, which has scattered ruin over Scotland, or various similar though' smaller concerns. But we can readily see that an " easier " money; market would have enabled all these worthies to go on longer, extending their transactions, and ruining greater numbers in the end. Such questions as these a Society of Arts should steer clear of, and not seem to lend their confirmation (we know they do not) to doctrines involving such disputable matters as these. A doctrine even more unsound is connected with what Mr. Capps calls "the value really borrowed by the State in the con- tracting of the National Debt." People (except perhaps Gene- ral Thompson) have hitherto supposed that when a man lends a sum of money either to public or private borrowers, the sole " value " for which he stipulates or has in his mind, is a payment (whether of interest or principal) of the same kind of coin that he parts with. [For though interminable discussions have taken place upon the value of the national debt, as (mainly) affected by Peel's Bill, those discussions turn upon the alleged depreciation or enhancement of the pound, not on the pound itself.] This idea is disputed by the Essayist. He says the national creditor who lent a certain sum in gold, or what during the depreciation was called a certain sum in gold, and who only thought of being paid in the current coin of the realm, ought to be protected against the fluctuations of this sublunary would ; and be kept in a state of unvarying receipt while .the incomes of everybody else were changing around him from improvements, decline, and changes of fashion, of opinion, or of nature herself. To attain this end, he holds that the fundholders income, in whatever form it might be paid, should be governed by the price of wheat. To answer this fallacy on economical grounds, would lead us into a long discus- sion; first on the causes which render the precious metals uni- versally accepted by civilized nations as money ; second on the probable nature and extent of their fluctuations in value ; thirdly on payments not based on the price of wheat as Mr. Capps puts it, but on the staple subsistence of the particular country—as rice in certain parts of the East. This, however, would require more space than we can spare, and would task the patience of news- paper readers in general. Nor is it needful. Everybody can see that a national creditor has no more right to this preference over all other creditors, than he has a claim to be kept alive as long as his annuity endures, in order that he may enjoy it ; or if this be deemed an impossible condition, and therefore not enforceable, that he and his descendants may be kept so comfortable, that they never need be compelled to sell their stock. And though per- haps of little abstract weight, the changes of property by sale and death, are of much real importance as regards fluctuations of value. The practical conclusion from Mr. Capps's idea, however, is of more consequence than the theory ; for according to the calcu- lator, and the accident of prices, the national debt must be en- hanced or reduced. Mr. Capp goes for the reduction. If we rightly understand the sum of his various estimates, at pages 48, 49, the loss against the country up to 1816, would be in round numbers two hundred and thirty four millions; or approaching thirty per cent. Mr. Capps apparently does not wish to apply the sponge to this extent : he would let the fundholder off for ten per cent. "We question the necessity and the justice of paying off the Stock at par. No doubt that if a serious intention of paying off the debt were enter- tained, and such intention were steadily acted upon for a few, yeprs, the Stocks, as they became scarcer through the gradual redemption, would 'iisu in price till they were at par. But we think the Government would be to blame to permit of this. There seems no reason why Parliament should not empower the Government to make a present purchase of all the Stocks at a fair and just price, taking all things into account—such Stock to be paid for in annual instalments, as above described. If this were done, and the price fixed upon for the Three per Cents were 90/., the Debt might be paid off in about forty years."
This passage is merely a passing remark on the plan of paying off the Debt by instalments from surplus revenue. This, however, is not Mr. Capps's plan, though he would take it in aid. His scheme, excluding details is to open subscription books in con- junction with the colonial:legislatures, for the sale of waste lands in the colonies ; the payment to be made in stook, on which an increased per-centage will be allowed for a short period, gra- dually diminishing until the annuity is finally extinguished. The answer to this is, that any body disposed to buy colonial lands, can now buy them on terms quite as favourable as under this plan, if not much more favourable. Colonial companies, public and professional agents are to be found in London, and books can be had anywhere, which give fuller and more varied information than government could supply. The speculator or intending settler can now buy in England, or in the colony he prefers, land in any state—in any place, and on any conditions—uncleared, half-cleared, or wholly brought into cultivation—in the wilder- ness, in thinly settled districts, or in the vicinity of cities—he can pay for it by ready money, or by instalments; if he prefers specu- lation, he may choose the wild and remote forest, or a forest where
roads, &c., are making, or are stipulated for. Government could only sell under this last condition. The fact is people with some- thing snug in the Three-per-Cents, are not the kind of persons who generally wish to colonize, or who care for colonial speculations. Your emigrant or colonial speculators are mostly "younger sons of younger brothers," or enterprising men of the middle and work- ing-class, or rash people who ill-at-ease here, fancy they shall mend matters by going elsewhere. The utmost possible success that could attend this scheme is measnreable by the amount which has been paid for our colonial waste lands since they were first sold ; from which must be deducted the probable per centage the Colonial legislatures would demand for emigration and other purposes. Practically, however, we do not believe those colonies which have the right of property in their waste lands, would give it up.
In these remarks we are attaching no blame to Mr. Capps. He is for keeping strict faith with public creditors ; it is only the logic of his theory which forces him into the laxity we have quoted. As for what we think the unsoundness of his doctrines, we have read so much on money, currency, and the cognate branches of political economy, that we are in the state of Addi- son's Cato, "surprised at nothing." We are, however, surprised that a body like the Society of Arts should, through the medium of two University professors and "Mr. J. T. Danson, Fellow of the Statistical Society," have lent their apparent sanction to the volume. We say again that we are aware this sanction is only appa- rent; but many wili not know this, and many will not accurately draw the distinstion. In fad, it is not easy to draw it. But for the counte lice of the Society we should scarcely have noticed at this , The National Debt Financially Considered.
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