THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 
 352 
 V34 
 
 ECONOMieS
 
 ENQUIRY 
 
 INTO THE 
 
 EXPEDIENCY AND PRACTICABILITY 
 OF 
 
 REDUCING THE INTEREST 
 ON THE NATIONAL DEBT; 
 
 AND 
 
 A PLAN 
 
 rOR EFFECTUATING THAT MEASURE, 
 WITH THE CONCURRENCE OF THE 
 
 FUNDHOLDERS. 
 
 BY JOHN GORDON. 
 
 EDINBURGH: 
 
 Printed and Published by John Gordon^ 
 55 Cumberland Street. 
 
 1836.
 
 ENQUIRY 
 
 INTO THE 
 
 NATIONAL DEBT. 
 
 About two years ago Mr Hume offered 
 to prove before the House of Common«», 
 that the Taxation of the Country, not- 
 withstanding all the reductions since the 
 Peace, if measured either by the price of 
 Com, or the price of Gold, was then 
 heavier than at any period during the 
 War. The largest amount of Taxes ever 
 raised in this Country, was in 1815 when 
 they amounted to 72 Millions, and the 
 price of Wheat being 76 s.per Quarter, it 
 was equal to a Taxation of 19,473;684 
 Quarters of Wheat; the Taxes now 
 amount to 43 and a half Millions,and the
 
 price of Wheat is according to the Mar- 
 quis of Chandos 38 s. per Quarter, (and 
 by the Averages which regulate the Duty 
 39 to 40 s.)which is equal to a Taxation 
 of 22,894,726' Quarters, thus showing an 
 actual encrease in the Taxation, when 
 measured by the price of Corn the most 
 correct standard of value, of nearly 20 
 per Cent ! There is no doubt that the 
 alteration of the Currency from Paper to 
 Gold, has been chiefly instrumental in 
 producing so deplorable a result that while 
 the Taxation has been nominally reduced, 
 it has in fact been encreased ; and the 
 mischief does not end here, for it has e- 
 qually affected every private transaction, 
 and the prices of all commodities bought 
 and sold, and thereby produced a degree 
 of private distress which is altogether in- 
 calculable. If a change in the Cnrv? c\ 
 affected on'y the public finances we n' frh; 
 with safety retrace our steps, and go back
 
 to the paper system, but unfortunately 
 that cannot be done without again alter- 
 ing the value oF every commodity, and 
 disordering every private contract now ex- 
 isting; the only remedy is to adapt our 
 expenditure to the altered circumstances, 
 and if a Sovereign in Gold be equal to 
 thirty shillings in Paper-money, to spend 
 only 20 shillings where we before spent 
 30 shillings. Partial reductions in the 
 Public expenditure have already been 
 made uithout producing any sensible re- 
 lief, and it seems now to be generally felt 
 that some plan must be resorted to for 
 reducing the heaviest of our burthens the 
 luterest on the Debt, which, (including 
 the charge for emancipating the Slaves,) 
 is about 29 Millions, or Two-thirds of the 
 ivhole Public Expenditwe! 
 
 The Fund holders have benefitted 
 greaily by the change in the Currency, 
 for they now receive in Gold as much as
 
 they foniieily rtceived in Paper ^ and tte 
 gold will purchase double the quantity of 
 Wheat that could be got for the same 
 Dividend in 1815; but this is no reason 
 why the Fundholders, and they alone 
 should be subjected to Mr Cobbett's 'E- 
 quitable adjustment'; those who lent their 
 money on public securities, have benefit- 
 ted n» more than those who lent on pri- 
 vate securities; the Act which has proved 
 favourable t& their interests was apjjlica- 
 ble generally to property of all descrip^ 
 tions, and if it is to be modified, that 
 measure ought also to be general. For 
 the Legislature to pass an Act reducing 
 the Interest on the Public Debt without 
 he consent of the Fundholders, would be 
 nothing less than confiscation of property; 
 if refusing to remedy the greatel- evil, 
 (the disorders produced in private engage- 
 ments,) they should seek to rectify the 
 lesser evil, it would be a plain declaratias
 
 that they were not actuated by equal 
 justice, but that as parties interested, and 
 having the power to decide in their own 
 cause, they undertook to relieve them- 
 selves, while all other debtors were left 
 without relief. A partial Act of this na- 
 ture passed by one of the parties to a 
 contract, against the wish of the othet- 
 party, is a direct refusal to pay, an act of 
 National Bankruptcy, under whatever 
 plea it may be urged, and would be pro- 
 ductive of evils ten-fold greater than those 
 from which it professes to relieve the 
 country. An event so much to be dread- 
 ed may be brought about hf indirect 
 means, as well as by an intentional act 
 of Bankruptcy, and the possibility of its 
 occurrence has been repeatedly alluded to 
 by Ministers, who have declared that in 
 the event of the Malt, the Window, and 
 other Taxes, being rej)ealed, faith could 
 nAt be kept with the Public Creditor;
 
 these declarations from their frequency 
 have begun to lose much of the force 
 they formerly had, the cry for a reduc- 
 tion of taxes becomes more urgent, and it 
 is to be feared that eventually some con- 
 siderable repeals will be carried, without 
 providing for the deficiency thereby occa- 
 sioned in the Revenue; all ihese circum- 
 stances render it important to enquire be- 
 fore-hand into the means of reducing the 
 public expenditure, and especially that 
 branch which forms the major part of it, 
 the Interest on the Debt. 
 
 It has already been seen that a general 
 act regarding the Currency would be an 
 aggravation of the evil, and a partial act 
 affecting the property of the Fundholders 
 would be an act of gross injustice, and 
 produce indescribable mischief by the des- 
 truction of public and private credit, but 
 there is another course for obtaining re- 
 lief yet open to the Nation, in common
 
 r 
 
 with every other debtor, and that is, to 
 aher the contract by a mutual and vo- 
 luntary agreement with their Creditors. 
 Ors this principle reductions have been 
 made in the Interest, at various times 
 siuce the Peace, amounting in the whole 
 to if2,355,845 per annum; this has 
 been effected by the Government offer- 
 ing to pay off some of the smaller 
 Stocks unless the holders agreed to ac- 
 cept a reduced rate of Interest, and as 
 the latter could not employ their money 
 to more advantage they generally accept- 
 ed of the terms offered, and those who 
 refuseil the terms were accordingly paid 
 off. But although this plan has succeed- 
 ed to a certain extent with the smaller 
 Funds it seems utterly impracticable with 
 r'^gard to the 3 per Cent Consols which 
 l.;is reached the enormous amount of 348 
 Millions; the knowledge that Government 
 has not the means of paying off a tenth
 
 8 
 
 p^rt of this aniQupt* ^9^\4 lie^. tfee 
 proprietors to resist every attempt to y^t 
 d'dce th ir interest by this method; and 
 even if Government had the means ^f 
 paying the whole or any considerable part 
 of this Stock, it may be questioned if it 
 ^ould be advisable so to do, as they would 
 have to pay if 100 for every M'C)0 origin^ 
 ally lent, and which even at the present 
 high price of the Public Funds is not 
 worth more than 1^90 or M92. The idea 
 therefore of paying off the 3 Per Cents, 
 or of holding out the prospect of that 
 event, with a view to induce the Fund- 
 l^olders to accept a reduced rate of inter- 
 est, is quite out of the question. There 
 is no doubt that some of the smaller 
 Stocks might be again reduced, but it 
 would he a harsh mea<*ure to reduce 
 them a second or third time, while the 
 3. pet Qent# are untouched, and besides 
 the sa,ving would be inconsiderable; with-
 
 u 
 
 out reducing the 3 per Cent JStoclc-^ 
 uhich altogctlicr amount to above f>G() 
 Millions, there can be no essential relief 
 to the public burthens, and to deal e- 
 qually with all parties we ought now to 
 begin with them, for it will be found on 
 examination that property investecj ii| the 
 3 per Cents at various periods both be- 
 fore and since the peace, has been mor<? 
 productive than property invested in the 
 other Stocks, that is, the public has 
 paid more, and is liable to pay niore, 
 to the proprietors of the 3 per Cents, 
 than to the other FundhoKlers. 
 
 The principal obstacles to any measure 
 for reducing the Interest of the Thre^ 
 per Cents, are, 
 
 First The enormous amount of the 3 per 
 Cent Consols, which renders it impracti- 
 cable For Government to propose paying 
 il" dissentients; and 
 Secondly The terms of the original con-
 
 tract, by "which Government is bound to 
 pay ^100 for every if 60 originally lent, 
 and ^vhich is not worth at the highest 
 market price above if 90 or if 92. 
 
 There appears no other way of over- 
 coming these obstacles than by altering 
 the terms of the contract, and for that 
 purpose holding out to the proprietors of 
 Stock seme inducem.ents to enter into a 
 new arrangement by whkh every separate 
 investment woulb be a separate and dis- 
 tinct contract with Government, and in 
 which also the other impediment would 
 be removed. This measure might be re- 
 commended at a considcrablj pecuniary 
 sacrifice, but it is hoped that such an 
 arrangement may be brought about with- 
 out even a temponiry augiiientation of 
 the public burdens. Many ['lans iiiig'it 
 probably be suggested, but as evuy r.e'.\- 
 scheme which goes to c ^an^e the wh^ii.; 
 system of the i u' lie fina c s ii u.^t nttcs-
 
 11 
 
 saiily be attended with some degree of 
 uncertainty as to its working, that which 
 is safest, and \\hith in the event of its 
 failure would have the least injurious 
 coi sequences, should be preferred. With 
 these vitws the suhjcined Plan was in 
 April 1 8.- 5 submitted to the consideration 
 of the Chancellor of the Exchequer, and 
 the period which has since elapsed ren- 
 dering it improbable that any further no- 
 tice \\'\\\ be taken of it in that quarter, 
 it is new cfeicd to the public, to under- 
 go tliat crcleal \\hich will either stamp its 
 character as cne of the visionary schemes 
 vhich are perpetually thrust into being, 
 or peradventure award to it a more ho- 
 norable fate. 
 
 The author has proposed as the means 
 of inducing the Fundholders to enter into 
 a new contract, 
 
 1. To guarantee to those who accept of 
 the transfer, the full payment of their
 
 r^spettit'e dividends, without any leduc- 
 
 tioii in the interest, until all tin- })re>ent 
 
 iSfotks are paid off or extingui>bed 
 
 '2. A like guarantee a^ai.st p^iving the 
 
 j rincipaljj until the same period. 
 
 .'], The ahiount of prin(ipal to w' ich 
 
 thiise ivho transfer will be entitled in the 
 
 new fund will be at the rate of the pre- 
 
 ^*elJt high market price of the Public 
 
 funds. 
 
 4. The liberty of transferring to be li- 
 mited to enfe year, at the expiration of 
 \^hith time the terms of transfer to be 
 {iltered by Government. 
 
 5. Those who first avcejt the tran fer 
 will be entitled to superior advantages ac- 
 cording to priority. 
 
 6. After a certain peri(d the tiahsfer 
 Stock to be opened to new investments 
 of Capital, on terms that \AilI secure to 
 it a preference over the old Stocks. 
 
 This ^^cheme holds out advantages to
 
 13 
 
 those who first accept the terms, and it 
 also ro^^sessfc's an impelling power over the 
 more reluctant I'undliolders, for should 
 they allou the prcscrihed time to expire, 
 without accepting the transfer, they would 
 have to enter into a competition with 
 Government for a ' new investments of 
 capital, with the certainty of being un- 
 dersold ; these new investments would 
 form a fund wherewith to buy up the 
 old Stocks, or pay them off, as might be 
 deemed most advisable by Government, 
 and when this was accomplished Govern- 
 p t nt Plight proceed to reduce the interest 
 ' _v <ttiiiig to jay off J^n■laIl portions of 
 {h(' Debt as might be convenient from 
 tim.' to time. 
 
 'lis ^cl en e sl.culd succeed it would 
 
 ;'c nalii of tlie British Govern- 
 
 rueni, and give encreased security to the 
 
 Public Creditor, by convincing the world 
 
 that notwithstanding the enormous amount
 
 l4 
 
 of the Debt, it i.s s.ili withiti the resoiir- 
 (fs of the Country ; and it is impossible 
 tjj foresee to how low a rate the interest 
 liiight eventually be reduced, for every 
 reductiori (by fair means) would be, nt)t 
 only a certain advantage to the amount 
 saved, but also an encrcase of ciedit to 
 the Public securities, and consequently a 
 .^tcp towaids a fuither reduction, a con- 
 ^(a^t tendancy towards the mhiimum rate 
 u'^ interest. If on the other hand it 
 should prove a complete failure, no evil 
 const cuences woi. Id ensue, and any other 
 c unse would be open to the Government 
 f< r the reduction or niodificatioi of the 
 Debt ; and if it succeeded partially, to 
 tr.al extent would the 3 per Cent St)cks 
 b<: l)roken into and rendered more manage- 
 able ; there would be no encrease of the 
 public burdens, and no engagement to 
 prevent Government from resorting to 
 any other mensurcs which miight' after-
 
 15 
 
 war.ls be thought requisite. 
 
 With this plan of transferring the (lAy. 
 into a new fumi is connected a Supple- 
 mentary Fund, the object of which is tu 
 diminish the public burthens at the earli- 
 est perio ', anJ to commence while the 
 transfer is in a state of progress. 
 
 The prirciple on which it is reconi- 
 mended that the new contracts shkill l;c 
 entered into with the public creditors, Ii;h 
 long ])-en acted upon by the East India 
 Company'.^ G )vernmcnt in their Inti'ian 
 Loans, and events have proved what a 
 powerful engine it is in keeping up those 
 securities to a high market value, antl 
 in enabling the Government to borrow 
 on favourable terms. Before the year 
 1808 a large portion of the Indian debt 
 bore interest at the rates of 10 and 8 
 per Cent ; it was afterwards reduced to 
 6* per Cent, and this was the lowest rate 
 at which loans were effected down to the
 
 16 
 
 year 1823 ; the Indian Government w^s 
 then enahled to raise loans at the iinj re- 
 cedented low rate of 5 per C( nt, and at 
 the earliest period at vAhich by the condi- 
 tions of these loans they could proceed to 
 pay them off, they have succeeded under 
 the thre*t of doing so, in reducing the 
 interest to only 4 per Cent, which is 
 about one half the current rate of in- 
 terest in private transactions. This was 
 accomplished, not by means of any sur- 
 plus revenue (^br it was well kn )vvn that 
 the revenue was defidcnt), but by the 
 power that was reserved to the Indian 
 Government of paying ofT small potions 
 of debt, instead of having to provide for 
 the whole amrunt of the loan at one 
 time. It must be a'm-ttcd that this jast 
 operation wa-^ greatly facilitated by the 
 destructio:! o" pvit^ credit resulting 
 from the fiilur.s of al the old mercantile 
 bouses in Calcut a, fnd tl]e Indian. iG-qr
 
 17 
 
 vernment may justly be reproached with 
 having taken advantage of the panic, and 
 general distress, which prevailed at that 
 time, to carry their rediictioni to an ex- 
 tent to which, under ordinary circumstan- 
 ces, tliey would Iv.ive been unable to do^ 
 but with every allouance for these consi- 
 derations, it is jHvertheless undeniable 
 that the reduction of inteicst was effected 
 princi: ally by t*rte powei- reserved to the 
 Goveriuncnt of paying off small portions 
 of tlic Diht Wc.r.) time to tin e, and that 
 without ihis power ihey woidd have been 
 Utterly unai.L- in the tV.ce of a deficient 
 revenue, to tuke advnnt-.'ge of the above 
 menlioiicd (ircumstances as they have 
 done. By advertising for payment one 
 or two ^^ilh()ns (,f the 5 per Cent Loans 
 at VI time, and giving the owners the op~ 
 tion of iransferring into a 4 per Cent 
 Lean, the Indian Government could with- 
 out much difficulty provide for the pay-
 
 18 
 
 tneat of dissentients ; this was evident to 
 the I'ublic creditors, and would under or- 
 dinary circumstances have had its effect 5 
 but if the Government instead of provid- 
 ing for dissentients to a small amount, 
 had been obliged to provide for the pay- 
 ment of the entire Loan at one time, 
 they could not under the circumstances 
 have ventured to propose any such mea- 
 sure of reduction ; for the proprietors of 
 the 5 per Cents knowing the inability of 
 Government to pay off any considerable 
 nmount, would unanimously have rejected 
 the offer of transfer into a 4 per Cent 
 Loar?. 
 
 While the Indian Government has thus 
 been enabled to reduce the Isitere^t of the 
 Debt at the earliest period, and within 
 about ten years of the debt being con- 
 tracted, the Briti^h Government has con- 
 iis^ijcd to j:ay during twenty years of 
 Pciue, the same high rate of interest at
 
 19 
 
 which the money was oiiginally bon-owc\l 
 in the time of War ; the contrast is in- 
 deed striking for the Nation is still pay- 
 ing 5 per Cent for nearly all the money 
 borrowed, while any merchant in goo i 
 credit can borrow at 3 or 4 per C;;nl:, 
 loans on private securities are effected on 
 similar terms, and first-rate bills are dis- 
 counted at 2 and a half per Cent ; in 
 Calcutta the rates of discount on first-rate 
 private bills are from 6 to 7 per Cent, 
 the current rate is somewhat higher, the 
 legal rate is 12 per Cent, and yet the 
 Government can borrow at 4 per Cent ! 
 
 Instead of throwing into the hands of 
 the Fund holders and Stockjobbers the 
 whole premium or advance on the Public 
 securities, arising from the encreased cre- 
 dit of Government in times of peace, the 
 abundance of capital, and other circum* 
 stances, the Indian Govdrnment has swept 
 these profits into its own treasury, forced
 
 21) 
 
 up its credit, and reduced the interest of 
 the debt to the very lowest rate at which 
 inoney can be borrowed in that country. 
 It might be supposed from these cir- 
 cumstances, that the security afforded to 
 the public creditor by the Indian Govern- 
 ment was much superior to that of the 
 British Government, but this is so far 
 from being the case that the Court of 
 Directors, and the Proprietors of East 
 India Stock (v\ho may be supposed to 
 understand their own interest in this 
 matter} strongly jTOtested against having 
 their Dividends placed on the security of 
 the Indian Revenues, and demanded a 
 guarantee for them in the British Funds, 
 which was accordingly conceded to them 
 on the late renewal of their Charter. 
 
 Of all countries in the worl f, Great 
 Britain fiom its vaM wealth and resour- 
 ces, the gtability of its Government, and 
 it» proverbial g(od laith offers the best
 
 21 
 
 gecurity to the piihlic creditor, and ought 
 therefore to he iihle to horrow on the 
 most ravoiir:il;le terms; how is it then 
 that with all these advantages, it pays a 
 highe' rate than piivate indivithials, or 
 even than the foreifrn rulers of India, 
 "vvliose fir^t sii'oal reverse of fortune would 
 annihilate t1i(>m, and btgpar their credit- 
 or.> ? 'i'he inly rt ( ly to this tjUesticD ia 
 the cri;!R()us principle of the Funding 
 system, which has prevented the British 
 Government from profiting by its o^n 
 improved trefli', the super-abundance of 
 caj}it:;i, and the consequent reduced rato 
 of interest since the peace, and obHged 
 it vhilc giving the best security to pay 
 at the rate of inferior security. The 
 prices of the j ublic funds demonstrate 
 that Government is able now, to borrow 
 money, on terms n.ore favourable by 50 
 per Cent, than when the dtbt waa con- 
 tracted; all the benefit of this improved
 
 22 
 
 credit properly belongs to the Nation, yfe 
 instead of the interest being reduced by 
 10 or 15 millions a year, there has been 
 only the trifling reduction of if2,555,845. 
 It remains for the Nation to follow 
 the course that has long since been taken 
 by every private debtor, and if their cre- 
 ditors will not voluntarily agree to a re- 
 duction in the interest, corresponding with 
 the altered circumstances, to create a new 
 debt, from the produce of which the pre^ 
 sent creditors may be paid off, or other^ 
 wise satisfied.
 
 23 
 
 PLAN for reducing the Interest of the 
 National Debt to its due proportion with 
 the Interest on Private Securities, and for 
 enabling Government to treat with the 
 Fundholders individually, or in limited 
 sections. 
 
 IT IS PROPOSED 
 
 FIRST, That two new Funds shall be 
 opened, to be called the new debt, and 
 
 the SUPPLKMKNTARY DKBT. 
 
 SECONDLY, That all holders of Stock shall 
 be allowed twelve months to transfer their 
 interests into the New Debt, on the fol- 
 lowing terms, 
 
 1. The annual interest to be the same 
 that they are now entitled to. 
 
 2. The amount of principal to be fix- 
 ed by the average market price of each 
 Stock for the last months, provided 
 it be not above par.
 
 M 
 
 After twelve months the rate of trans- 
 fer to be Taried by Government at dis- 
 cretion. 
 
 THIRDLY. That such persons as have so 
 trtnsferred their interests into the New 
 Debtj shall at any tims within twelve 
 months, be allowed to subscribe to the 
 Supplementary Debt. 
 
 foWRTHL?. That at the expiration of six 
 months, all other persons (not holders of 
 Stock), shall be allowed to subscribe to 
 the New Debt and Supplementary Debt, 
 at rates to be fixed from time to time. 
 FIFTHLY. That the holders of New Debt 
 be secured against the paying off their 
 principal, and the reducticn of their in- 
 terest, until all the present Funded Debt 
 or Stocki (except terminnble annuities &c) 
 are extinguished, either by transfer, or by 
 payment ; and that when pail of-', or the 
 interest reduced, it shall be in the inverse 
 order of subscription, so that tn.e first
 
 25 
 
 lubscribers to the New Debt sliall be the 
 last to have their principal paid, or their 
 interest reduced. 
 
 SIXTHLY. That the hal('crs of Siipple- 
 nientarv Debt shall have this benefit, 
 th^t when New Debt, or any portion of 
 it, is paid off, or the interest thereon re- 
 cKiceii, the holding of Supplementary Debt 
 for ^100 will exempt i^lOOO of New 
 Debt from such payment or reduction 
 until all the New Debt (which is not 
 thus protected by the holders having sub- 
 icribed one tenth the amount to Supple- 
 mentary Debt) shall be paid, or the in- 
 terest thereof reduced, as the case may be. 
 SEVENTHLY. That in consequence, the 
 interest on Supplementary Debt shall be 
 two and a half per Cent per annum.
 
 It may be questioned whether the 
 Fundholders would voluntarily transfer 
 their interests into the New Debt, the 
 object of which is eventually to reduce 
 their annuities, but these doubts scarcely 
 apply to the holders of the 3 and a half, 
 and 4 per Cents, who would undoubtedly 
 be benefited by the transfer, as they would 
 be secured against any reductir>n of their 
 interest until all the other Funds had 
 been paid off, and their principal would 
 be undiminished, or very nearly so. 
 
 The holders of 3 per Cents would be 
 somewhat diiFerently situated, as they
 
 27 
 
 would be required to give up a claim of 
 i£'10O Lr about MV2 ; they would not 
 ho\\fcvcr be feubjtctcd to any actual loss 
 by this transfer, for tew of them have 
 paid so much as 92 for 100 Stock; they 
 would (1,1} It giving up the chance of 
 gaining 8 per Cmt more, in the event 
 of the S per Ctnts being paid off, or 
 rising to | ar But what chance would 
 tliere be of either of these events taking 
 pbice \\hLn the New Debt was opened to 
 the public, and when Governmenn by 
 fixing the rate of purchase would draw 
 fl// 7iew invpstmeiits of Capital into the 
 Ktw Debf^ and then by rai^ing the rate 
 render rhe transfer less advantageous to 
 the iiolders of 3 per Cents, even if they 
 vtre paid off at par. Without new in- 
 vestments ot capital in the 3 per Cents 
 or any other Stoik, it is impossible that 
 their price can be long kept up in the 
 market, for there must always be sellersi
 
 28 
 
 and it is obvious that every one wishing 
 to make a pern^anent investment of capi- 
 tal would prefer New Debt at the rate 
 of 92 for every three [ounds of annual 
 interest, to tiie 3 per Ctnts at 93, 94, or 
 more. From the want of purchasers the 
 3 per Cents must necessarily fall in price, 
 and those holders whose object it is to 
 have a permanent investment of their 
 property, would no doubt trani^fer into the 
 Kcw Debt : by these means the 3 per 
 Cent Stocks would be so broken into that 
 they could either be gradually bought up 
 by Government with the money subscribed 
 to New Debt, or paid off. The probabi- 
 lity is that a great j art of the three per 
 Cents would be subscribed to New Debt 
 before the expiration of the twelve months, 
 and the stipulation that the first subscri- 
 bers shall be the last to have their inter- 
 est reduced in the New Debt, will be as 
 great an incentive to the holders of three
 
 29 
 
 per Cents, as of the other Funds. 
 
 With regard to the Supplementary Debt 
 it is not expected that the subscriptions to 
 it \^ill exceed what is necessary to protect 
 the holders of New Debt, that is, one 
 tenth part the amount of New Debt, or 
 the anticipated amount of New Debt. In 
 order to ensure subscriptions, it will be 
 sufficient that Government reserve to itself 
 the power of closing this fund after twelve 
 months, or of regulating the terms of sub- 
 ficription, and if any of the holders of 
 New Debt omit to secure themselves by 
 subscr'bing one tenth of their interests to 
 the Supplementary debt, it is by no 
 means unlikely tliat speculators will sub- 
 sciibe, in hopes of soon being enabled to 
 dispose of their shares at a premium, 
 when the New debt encreases in amount. 
 There is therefore every reason to ex- 
 pect that when the New debt comes well 
 into operation, the Supplementary debt
 
 30 
 
 will h^ar a fair prop^-JFtion to it in ajuount/ 
 If the holder of ilOJ three per Cents 
 traosFerred the whole into New debt, he 
 would receive anrtu-d interest - - sg3^>. 
 but if he wished to .secure himself 
 in the Supplementary debt, he 
 would transfer only 1000 to New 
 
 debt, the interest on which is .30 - - 
 
 the renjaiiung 100 he would .sub- 
 scribe to Supplementary debt, at 
 92 on which he would receive in- 
 terest i'it two and a half per Cent 2. 6. " 
 
 32 6. - 
 the difilrence is so very trifling that it 
 may be supposed few would hesitate to 
 secure themrelves by subscribing to Sup- 
 plementary debt, and this would effect an 
 immediate reduction of the public burdens 
 while other measures were in progress for 
 further changes. 
 
 The advantages of this plan, supposing it 
 to be carried into full eiiect by the trans-
 
 51 
 
 fer of all the present Funds i::ta Xow 
 Debt, and •subscriptions of one tenth into 
 Supplementary De])t, will be 
 FIRST, A diminution of the public Debt 
 of about 40 Millions. 
 
 SF.((^M)i.v, An immediate reduction in the 
 Inurcst of si^()0(),00() per annum, by 
 n;f.ins of the Supplementary debt, which 
 to I he extent of 70 Millions would be 
 .substituted for other <lebt bearing a higher 
 rate of interest. 
 
 TH!iM)i,Y, 'J'he means of reducing the 
 Iijteiest on the public debt, to its due 
 proportion with the current rate of inter- 
 est on private securities, would be facili- 
 tated, as the Government might reduce 
 or pay off* 50 or ICO Millions, or any 
 other portion of New debt at a time ; in 
 this way the interest on the whole debt 
 might graduaJly be reduced to perhaps 
 two and a half per Cent, which would 
 reduce the annual charge by 6 or 7
 
 52 
 
 Millions. 
 
 FOURTHLY, This mode of reduction is 
 equitable for all the Fiindholders ; to the 
 holders of 3 per Cents it secures a high 
 valuation of their Stock, and it protects 
 the other Furdholders from any further 
 partial reductions. From calculations 
 
 made at different periods it will be found 
 that capital invested in the 5 per Cents 
 has been more productive than in the 
 3 and a half, 4, and 5 per Cents, and it 
 would therefore be unfair to subject the 
 latter to further losses, while the Three 
 per Cents are exempt. 
 
 Printsd by John Gordon, Cumberland Street 
 Edinburgh.
 
 if# 
 
 M'4i|:-'!Wl«li