In the other article on the subject of post-war debt contributed to the last number of this Journal, an “Ex-M.P.” plumped for a somewhat novel variety of the Levy on Capital, in the shape of a Compulsory Loan, bearing no interest and repayable in 100 years.  Each individual citizen to be made to subscribe to the extent of 20 per cent. of his possessions.  Ten per cent. of the amount due to be paid on application, 10 per cent. six months after allotment, and 80 per cent. on January 1st of the following year.  When desired, the Government to advance at 5 per cent. the money necessary for the payment subsequent to allotment, full repayment of such advances to be made within eight years.  A Sinking Fund to be established to redeem the loan at maturity.  But is there any real advantage in this scheme over the Levy on Capital, from which it only differs by the receipt by the payer of a promise to repay in 100 years’ time?  The approximate value of L1000 nominal of the Compulsory Loan stock would be, according to “Ex-M.P.’s” calculation, in the year of issue L7 12s., money being worth 5 per cent. and assuming that rate to be current during the remainder of the term.  The claim that there is no confiscation, because “a perfectly good security is given for the money received,” would seem rather futile to those who paid L1000 and received a security, the present value of which might be below L10.  They might very likely think that outright confiscation (since confiscation originally means nothing but “putting into the Treasury”) is really a simpler way of dealing with the problem.  “Ex-M.P.,” however, estimates that the immediate redemption of L2800 millions of debt (which he, rather modestly, expects to be the result of his 20 per cent. levy) would enable the balance of the War Debt to be converted into 3-1/2 per cent. stock.  This may be true, but if so it is equally true if a similar or larger amount of debt is cancelled by means of an outright Levy on Capital.

The merits and demerits of a Levy on Capital have already been dealt with in the pages of this Journal “Ex-M.P.,” however, brought forward a slightly novel form of argument in its favour.  He pointed out that the money constituting the great increase in debt that has taken place during the war will have been, in the main, contributed by people who have worked at home under the protection of the Army and Navy, while the soldiers and sailors have been prevented by the duty which sent them out to risk their lives from subscribing a proportionate share to the National Debt.  Hence “a class that deserves most of the State will find itself indebted to a class which—­if it does not deserve least of the State—­has, at any rate, turned a national emergency to personal profit.”  This is a strong argument, which, has been used frequently in the course of the war in the pages of the Economist, against borrowing for war purposes to the large extent to which our timid rulers have adopted the policy.