236 . TRANSACTIONS OF SECTION F. 



required, not in any one year, but in ail future years. Such a scheme, conld it 

 be discovered, would meet entirely that ven' important dosideratiini of a tax, 

 namely, that it should be based on ability ia pay. 



Two other points mnst be kept in view. A tax must be equitable in its 

 incidence and reasonably continuous in its imposition. Given these three condi- 

 tions the economic burden of the impost will quickly fall on the right shoulders. 

 We may dismiss the argument which asks for a levy on capital and defends 

 it against the accusation of being confiscatory on the ground that it is no more 

 confiscatory than any other means of raising money by the State. No juggling 

 Vv'ith the balance sheets of the nations of the world will get rid of the fact that 

 many thousands of millions of wealth slowly accumulated in the generations 

 which lived before August 1914 have- been dis.sipated. 



If we confine ourselves to the more manageable figures which relate to 

 oan- own acti\nty we find that our public debt has risen from 710A million 

 pounds, at which it stood in 1914, to the colossal sum at which it stands to-day. 

 The history of the debt in the hundred years preceding 1914 had been one of 

 almost continuous reduction. From just over 900 million pounds in 1816 it fell to 

 628 million pounds in 1899. There Avere periods when the fall was arrested. 

 In 1905 it had risen to 798 million pounds — a figure comparable to that of thirty- 

 five years earlier. The Boer War was chiefly, but not entirely, responsible for 

 this increase. In 1914 it stood considerably above the lowest point which it 

 ever touched, but in the preceding eleven years every year but one showed 

 a marked reduction. 



In the last five years all this has been changed. From Augiust, 1914, to 

 March, 1915, 450 million pounds were added. The next year added moi'e than 

 1,000 million pounds. By INIarch, 1917, it stood at 3.906 million poimds, and 

 now it has nearly doubled and is more than ten times what it was at the out- 

 break of the war. 



It is true we have something to set against this vast sum. We have acted as 

 the financial agents of our allies. The siuris we have found for them amount to 

 close on 2,000 million pounds. On the other hand, we have ourselves contracted 

 debts abroad to the extent of well on to 1,500 million pounds. On balance, there- 

 fore, we have interest to receive on about 400 to 500 million pounds. But 

 to enable the inhabitants of this country to find money for our Govern- 

 ment we have sold fully as large an amount of our holding.s in foreign securities. 

 On balance it may be contended that we are little worse off. I fear in clo.ser 

 examination this view will not be found good. 



Let us admit that onr allies will find no difficulty in paying the 100 million 

 pounds a year or there.ibouts due for the interest on their debt to us. We must 

 recognise that this will make a serious draft on their resources. Very different 

 were the securities held by individuals in this country with which they 

 parted to take up each successive issue of Government Bonds at the urgent 

 insistence of successive Chancellors of the Exchequer. The securities 

 sold were usually first-class industrial or public-utility issues. They might be 

 the obligations of a Government in the wisdom and stability of which confidence 

 could be placed ; or the bonds of some great and progressive city, the money 

 having been used to bring water to the inhabitants ; or shares in some ctom- 

 mercial undertaking to further the development of the country. In the great 

 majority of cases we may assume that they had been invested so as to produce, 

 •lirestly or indirectly, a revenue to meet the interest. What have we got now? 

 A charge on a heavily burdened country of which, it may be, many thousand 

 acres have passed into the condition I attempted to describe a little while ago. 

 I fear if an accountant from the planet to which Mr. Gladstone told us years 

 ago we had banished political ecxDuomy were to pay us a visit he would regard 

 with no favourable eye the balance sheet which placed at their full value 

 debts of the sort we are considering. 



Put at the highest not many of our millions of pounds will find their own 

 interest. All the balance must come out of the product of the other and reail 

 industries of the debtor country, and to this branch of the subject we must 

 now turn. 



At the present moment it is of more vital importance than ever that we 

 should come to a clear and unprejudiced understanding on this subject. To 



