so much better understood than was once the case. Countries like Spain and Greece and the Argentine Confederation, that made no effort to pay their debts fifty years ago, have begun to learn by experience, though still in a halting and imperfect manner, that repudiation is far too costly a luxury to be indulged in.

Nevertheless, there seem to be two possibilities in the future that may reasonably inspire a little anxiety. One is, that States over-confident in the future may encumber themselves with obligations which it will scarcely be possible to discharge by any sacrifice. Let us suppose, for instance, that England tries an experiment in State Socialism, and buys up the land in Great Britain to distribute it again to small tenants by issuing a 24 per cent stock. We may assume, further, that the operation is carried out skilfully; that the landowner gets a sufficient, but not a fancy value for his land; and that the State may reasonably expect, if existing values are maintained, to lose nothing by the transaction, and even to gain ultimately, if farming by small occupiers proves a success, as great authorities have contended that it is bound to do. All of course depends upon this latter consideration. Now, it is at least conceivable that even though the small farmer gets more out of the land than the great landowner did, the farmer may yet fail to pay expenses, because the foreign market may be shut against his produce, and the home market may have diminished. For instance, the English coal-measures. may have begun to fall off,1 or countries like China,

1 The probability of this has constantly been prophesied, notably by the late Mr. Jevons; but the alarm seems to have subsided, because

and the United States may produce so cheaply as to drive English goods out of the market. In that case the English taxpayer, who has paid £1,600,000,000, let us say, for the land, and has created the money by charging himself with interest to the amount of £44,000,000, may find himself every year losing £10,000,000 or £12,000,000 upon his purchase. It will not be easy to make up this deficit by increased taxation. A property-tax would fall largely upon the very class who are by hypothesis unable to pay rent. An income-tax, if it were severe, would drive the large class of Englishmen who have invested their savings in foreign countries to make their homes abroad. Confiscation of Church lands, large as the estates of the Church are on paper, would bring in very little, till the compensation due to actual incumbents had been paid off, and would be very unpopular in the country if money, heretofore spent in the parishes, was diverted to the Treasury for the benefit of non-resident fundholders. Put it how we may, it is difficult to suppose that the pressure upon the taxpayer in such a case as has been assumed might not be very severe and long-continued.

Now, in such a crisis, it is difficult to believeand this is the second danger-that the taxpayer might not be sorely tempted to draw a distinction between debts due to a foreign creditor and obligations incurred to fellow-countrymen. Forty years

ago, a very able student of political economy proposed to declare the National Debt a 3 per cent annuity the measures are more extensive than was at first supposed, and can be worked profitably at greater depths than was thought possible. Still, they are not inexhaustible, and their value might be depreciated before they were worked out by the opening up of mines elsewhere.

terminable at the end of a hundred years.1 A great part of the National Debt had been contracted for what the writer regarded as immoral purposes; a great part had been raised in the most wasteful way; and the difference in price between 3 per cent stock and an annuity, only determined at the end of a century, was so small as scarcely to deserve consideration when the great relief the nation would sustain was taken into account. The fact that this proposal, though it came at a time of great national depression, was received with indifference or indignation, may be taken as evidence that the commercial instinct and sense of national honour were perfectly sound in the England of that day. It may seem unreasonable to assume that the world will ever have a lower standard of good faith in the matter of indebtedness than it had forty years ago. Still, it is well to remember that even good moral purpose may break down under an impossible burden. The American States, which Sydney Smith lashed so wholesomely for repudiation, had more to say for themselves than their English creditor was disposed to see. Pennsylvania was threatened with an exodus of taxpayers if it raised money enough to provide the interest it owed. An English Government, in the hypothetical case put, might have to face the same possibility. It would probably argue that it was better for the English fund-holder to lose a part of his interest than to be paid in whole for a time by loans that would soon culminate in general bankruptcy; that if the State has a right to impose a five. shillings in the pound income-tax, it may reasonably reduce incomes by five shillings in the pound; and,

1 Professor F. Newman.

them.

finally, perhaps that the fund-holder had been overpaid in the first settlement, and would receive his substantial dues on a smaller dividend. It is unnecessary to point out what is sophistical in these arguments. They cannot be called inconceivable, for every country that has repudiated has used some of them by turns, and the only question is, whether an English-speaking people would ever come to adopt What is to be feared is, that if national debts continue to increase on the assumption that general prosperity is bound to advance in the future as it has done in the past, a great many communities are bound to have recourse to repudiation when bad times come, though the form of bankruptcy may be artfully disguised. A sweeping succession duty would be an insidious and very practicable form of relieving the State from unpleasant obligations.

Englishmen are perhaps apt to rely too much on the precedent of integrity which has been maintained in England for two centuries. Over-indebtedness, leading to bankruptcy and to ruin or heavy temporary complications, has been a common feature of state-life throughout history. The decline of the Roman Empire was undoubtedly hastened by the heavy indebtedness of the cities, an indebtedness which was often occasioned by their engaging in great public works. The Mississippi scheme of Law, which plunged France in bankruptcy, was an attempt to apply the most daring principles of modern finance under the administration of a thoroughly corrupt court. France was bankrupt again at the time of the Revolution, and the resource of confiscating the Church lands and many private estates was perfectly valueless. The American colonies were

mostly impecunious or worse under English rule. Spain has a long record of insolvencies. Even England has never paid her full bill for the glory of the French wars under Edward III., and has witnessed the spectacle of a Lord Chancellor suspending payment of debts, because the Crown was insolvent, not much more than two centuries ago.1 Nay, there are still men living who can remember the time when the Bank of England was relieved by law from the obligation to give gold for its notes. When a State undertakes enterprises beyond its strength, it always does it at the risk of bankruptcy, whatever its good intentions may be. The question is, whether the tendency to State Socialism may not be a tendency also to the running up of large debts.

Two consequences seem to follow inevitably upon repudiation of any kind. The one is that the private as well as the public standard of honour will be lowered. Individuals do not as a rule profess to be more moral than the Government and the law, especially in countries where the State is highly organised. The other is, that the class ruined by repudiation is likely to be that class which is essentially conservative of tradition, of refinement, of all the passive elements of character. In such a case as has been assumed, the aristocracy, deprived of power and prestige by the forcible purchase of their landed property, would be reduced to insignificance by the resumption of a large part of the compensation first awarded them.

The general purport of the argument has been in agreement with Mr. Ticknor's predictions, though it is rather more optimistic than Mr. Ticknor would 1 In 1672, under Charles II.-Lingard, vol. xii. pp. 18, 19.