Зображення сторінки
PDF
ePub

and this would be impossible if power were given to a particular body to select first one stock and then another on its own collective judgment when dealing with investments on the large scale that would be necessary for our purpose. It would be an undeniable grievance to an insurance company, let us say, which had instructed its broker to buy Birmingham 3 per cents. to find that they had risen several pounds in a day through a large Government purchase. Such purchases would be suspected in every case of an unexpected inflation of price, and the introduction of so important a fresh element of uncertainty would give rise to much discontent. The perfect ideal of a stock market requires that the value of each separate concern which solicits capital shall be determined, with reference to the current rates of profit in business generally, by the competition of experts, in order that an as nearly as possible exact knowledge may be obtained of the comparative values of different investments. The prices quoted in such a market thus become a source of trustworthy information to the general investor, by means of which, with an average amount of care and judgment, he will be able to transfer his capital with safety from one object to another without the expense and delay of making a thorough personal investigation (often an impossibility) into the financial soundness of the exchange. Laying aside the moral and intellectual shortcomings and the physical difficulties which prevent the full attainment of this ideal, it can only be even approximately reached when the operators are acting for their own personal interests and when no overbalancing power is wielded by a few hands. But both of these disturbing factors are introduced when Government purchases largely on its own judgment.

There remains to be considered the manner in which the credit of the country would be affected by the proposed change. Although few will be found to deny that the present high price of consols places us at a disadvantage so far as redemption of debt is concerned, an impression exists that were this country to become engaged in a serious war, a corresponding advantage would be ours, since we should then become borrowers. This would be true were the high price occasioned solely by considerations of credit. As a matter of fact consols are at a false price; and, on the outbreak of war, the pressure which had raised them. -the Government policy of purchasing-would be withdrawn. A fall would thereby be occasioned to what I shall call the real credit level; and it would be from this point, as though consols had never been higher, that the war depression would act. These

causes acting simultaneously, the first sudden drop would be much greater than need be and the subsequent panic intensified accordingly.

In order to compare the two policies, let us assume that a certain period of time has elapsed sufficient to accomplish the objects of the scheme here detailed; that is to say, that we have arrived at a point where the Government holdings constitute a considerable proportion of the railway stocks, consols are at or about par, and transactions are taking place in a normal fashion. This is the stage at which the question of credit would be most thoroughly tested and the faults or merits of the policy be most easily demonstrable. And at this stage let us further assume that war, the sole eventuality for which a high governmental credit is requisite, breaks out. Since, instead of paying off debt on exorbitant terms, the money which would otherwise have been devoted to that purpose has been invested at its full market value, it follows that the net liabilities of the nation must have become considerably less than they would under the present policy. This result is independent of the assumption that the scheme would permit of a continued, although slower reduction of debt on better terms. So far as net indebtedness is concerned then, we are in a better position to incur further burdens and will consequently obtain a correspondingly greater loan on given terms. Let us now deduct the net liabilities from both systems. We have then to consider the effect on national credit of the retention of a portion of debt, combined with the possession of as much railway stock as the money necessary to accomplish the redemption of this debt has been able to purchase. Apart from the minor fluctuations of the market, which are as likely to be favourable as unfavourable, the force which has been applied to purchases of railway stocks can still be translated by their sale into a power of raising a war fund, just as though it had been used in redemption of debt. The fall that must ensue in the price of railway stocks, offered by the Government for sale or as collateral security, would be produced by the same causes, neither stronger nor weaker, as would, under the alternative policy of a lower debt and no assets, make the terms of a loan onerous. The extent and urgency of the Government wants and the caution engendered in the minds of the lending class by the prospective financial dangers of the war would be the factors at work in either case; and on their strength the issue would depend, whether the force upon which they operated were exhibited in an absence of debt or the possession of tangible assets. So

much of the force of debt redemption, which is implied in a surplus revenue, as has not been actually wasted will give a power of borrowing that remains unchanged in strength in whatever form it is embodied. Criticism of methods of dealing with such surpluses in relation to the question of national credit, to be valid, must, accordingly, confine itself to an examination into their efficacy in preventing leakage-an examination which must result in the condemnation of the system at present pursued.

A leading feature of our times is the great struggle that is being carried on amongst the nations for commercial supremacy. Now, although we do not in this contest depend like our chief rivals on a system of customs charges and subsidies, it is a very narrow view that shuts out the important part political action has taken in the advancement of our foreign trade. It would, indeed, be difficult to point out a beneficial Act of Parliament, of any great importance, in which the tendency to promote commercial efficiency could not be traced; and this is true in an especial degree in regard to enactments concerning money matters. The excellence of our financial system, by economising the national wealth producing power, leaves a greater proportion of energy free for purposes of foreign trade than is the case with any of our competitors. To maintain this high standard, however, we must be prepared to make amendments whenever they are called for by altered circumstances. Under such conditions an obstinate clinging to use and wont is not conservatism, it is simply drifting; and in the present case means a considerable lessening of the advantage we now hold. For the injurious effects on our finances are not to be judged solely by considering how much of the money devoted to the reduction of debt is spent unnecessarily. The whole system is liable to be affected, as the following considerations will show.

Increased expenditure which entails the levying of fresh taxes has always to reckon on a formidable opposition and criticism; but, when the revenue is in excess, it is comparatively easy to resist the clamour for remission of taxes. Moreover, if a useful purpose can be found for the surplus, to remit a tax is to throw away a provision against the future and to narrow the basis of revenue. Formerly such a surplus could always be profitably employed in reducing debt; but now, in the minds of both those who have the spending of the money and those whose function it is to criticise expenditure, there is the ever-present idea that this outlet is wasteful. The consequences are that there is less reluctance to engage in new projects of expenditure and that the

voice of criticism falters because it has no alternative advice to utter. Extravagance under such circumstances must of necessity follow; making itself felt, not only in the amount of money spent, but likewise. in a less careful scrutiny of the return value.

It is customary to blame a ministry for all the financial aberrations originating during its term of office. This condemnation is seldom just. A democratic nation, having imperfectly ascertained and agreed to the line along which its leaders desire to advance, possesses the power, and invariably avails itself thereof, to drive them further than they would willingly have led. It then censures them for bad leadership, and, having chosen fresh guides, attempts once more to strike the proper route. Thus, instead of moving along a straight line, we have a zigzag motion intersecting the straight from the right and from the left alternately; and the most that statesmanship can do is to maintain the general direction and reduce as much as possible the limits of deviation. Let us take as an example the revolution in public finance accomplished mainly by the great statesman who has lately passed from us. A long series of reforms was carried out and an improved revenue system firmly established, admirable alike for its simplicity, its justness, and its efficacy in extracting the greatest possible sum at the least injury to the taxpayer. Averse as the general mind is to the study of such subjects, it is highly improbable that the enthusiasm requisite to carry out these projects would have been evoked by the consideration of their permanent results solely. But a subsidiary effect of these reforms, proper only to the transitional period, captivated the public imagination. This was the astonishing succession of surpluses that arose from the impossibility of accurately forecasting the immediate effect of the changes. A cult of surplus-worship took possession of the people; and the parsimonius policy which ensued, by refusing to pay a fair price for national defence, eventually led the country into grave danger. It is obvious that, once the people had become imbued with this fallacy of surpluses, it was quite beyond the power of the Government to restrain them; and the point to be noted is this powerlessness of even the greatest genius to avert the evil consequences of a departure in either way from that first maxim of finance-To give value for value and nothing for nothing.

On the other hand, we are now experiencing the natural revulsion from extreme retrenchment, and the equally dangerous fallacy, that economy must be thrown aside in order to secure

efficiency, is rapidly becoming too strong to be checked. There is a general call upon the nation's purse, and hence it is particularly necessary that the above maxim should be kept in view. In order to avoid any question of the desirability of the object of expenditure let us select by way of illustration one of the most reasonable of these demands, viz: the cry for a stronger Navy. Its realisation is not made a whit more easily attainable by thrusting economy aside. Recent events have conclusively shown that the naval power of a nation is not to be reckoned according to the amount of money spent upon it,-not even in the number and quality of its ships. The factor, whose absence renders such calculations nugatory, is one which cannot be stated in precise numerical terms; it is the degree in which the country approaches a sound economy in its general expenditure. It is impossible to isolate the various branches of a nation's expense, so that extravagant methods may be pursued in some whilst a correct system is maintained in the rest. Lavishness may, and generally does, prevail in some departments whilst others are starved; but healthy conditions must exist universally or not at all. If this be so, a question which will be dealt with presently, a state which does not adhere closely to the strict principle of value for value will devote too great or too small a sum to a given object. In the detailed application of the money the same laxity will be exhibited. It will be apportioned unequally; and, as there will always be an effort to provide fully whatever is easily visible, all that is wasted must be balanced by the omission or incompleteness of hidden but equally essential items. The final results are altogether untrustworthy.

There is an erroneous idea current that such consequences must be due to an under-estimate in the first place of the money required, and can be averted by an increased expenditure. In reality, they follow as certainly however much the money supplied is in excess of the requirements. The starvation of individual items would still be possible and would only cease if the entire personnel concerned were imbued with the above stated maxim— a condition, however, which is in direct contradiction to the supposition of a faulty estimate of either description. The mischief already accomplished is not in its nature remediable by subsequent additional outlay; nor is it mitigated, but exaggerated, when this supplementary charge is anticipated and included in the original estimate.

To show that the assumption on which the above argument is based is justifiable, it becomes necessary to inquire into the

« НазадПродовжити »