THE sol Til AFRICAN NATIONAL DEBT. 319 



however, be judged by comparison with a systematic sinking fnn<l 

 of a fixed percentage of the debt, tor such a thing does not exist 

 here; and the chances are that in the absence <»l' any definite 

 policy debt will he allowed to accumulate in excess of the value 

 of the works it is supposed to represent. What is needed is a 

 safeguard against ton rapid accumulation of debt during the pro- 

 gressive stage of the country. When a more stationary condition 

 is reached, such as that of England now. in which public works 

 are not so urgent, the problem of reducing debt must he faced, 

 and the solution here proposed will not be applicable. But this 

 generation will not see that state of things, and we are discuss- 

 ing what should he done here and now. 



To illustrate the effect of the policy, suppose that this year 

 South .Africa needs to borrow a million for railways, etc.; but, 

 as population, industries, and needs are constantly growing — we 

 will say at the rate of 2\ per cent, per annum — the next year 

 £1.025,000 will be needed, and the sum borrowed every year will 

 increase at that rate. (This is in accordance with history. In 

 the sixties, borrowing was on the scale of a hundred thousand; 

 in the eighties, transactions had grown to millions; by the end of 

 the century, tens of millions; and now the total debt is over a 

 hundred millions. The rate of increase assumed is equivalent 

 to doubling in 28 years.) If, further, we snppose interest (over 

 a long period ahead ) to average three per cent., and the money 

 to be raised on the sinking fund plan, one-half per cent, being 

 set aside as a sinking fund ( this is suitable for public works 

 with a life of 60 years), then in 1962 the outstanding debt would 

 be £83,200,000. If the plan suggested be adopted, one-sixth 

 being paid out of revenue and no debt paid off, the outstanding 

 debt at that date will be £83,000,000. It is, perhaps, difficult to 

 grasp this result, which is due merely to the fact of not having 

 borrowed so much, but it is arrived at by the cold reasoning 

 of mathematics. If the period considered is less than 50 years, 

 the situation created by the proposed method is more favourable 

 — if longer, less favourable; but it must be repeated that the 

 method is not intended as a solution of the problem for all time. 

 On the contrary, by 1962, South Africa will be much richer, and 

 nearer to a stationary condition, and must be expected, then, to 

 begin paying off its debts. More than that, the salutary plan 

 of devoting surplus revenue, when there is no definite call on it, 

 to paying off debt, should be continued, and that will ensure 

 -"me reduction during times of prosperity. What is aimed at 

 here is a substitute for the illusory plan of a sinking fund — always 

 at the mercy of a needy Finance Minister — running concurrently 

 with new borrowing, or else for no plan at all, as in South 

 Africa at the present time. 



ft will probably he said that the Government might depart 

 from the system here proposed, after instituting it; just as in 

 the case of a sinking fund. Trite, there is no system that cannot 

 be abused. But it might be replied: (1) If a Government takes 



