HOW TO SAVE THREE MILLIONS A YEAR. An Interview wlth Sir John Lubbock, M.P.

Te Aroha News, Volume V, Issue 216, 20 August 1887, Page 2

HOW TO SAVE THREE MILLIONS A YEAR. An Interview wlth Sir John Lubbock, M.P.

In - discussing* the* Bmlgot resolutions th& ofchor evening, Sir John. Lubbock made the observation fclmfc if we could reduce the interest of The National Debt we should save some L3,000,0()a stealing a year. When the Chancellor of the Exchequer cuts into the amount set apart for the reduction of the principal to the extent of L' 2,000,000 on the ground of our national poverty, it ife worth inquiring whether it may be possible to reduce the nnnuahburden of lii 1,000,000 paid in interest I>y a xum of L 3,000,000. With a view to a iurther elucidation of the proposal, a representative had an interview with Sir John Lubbock. •• The plan," wild .Sir John, in reply to the iirV. question, " would singly be this : to raise the 2i per cents, to par by (irmly m-unUuning the Sinking Fund. At present the 2i'» are at «.», and if the City felt quite sure that v/e should rigidly adhere to our determination to ]>ay oil the debt, even at the rate oi L0.000.0U0, as Mr (ioschen propose-,, these securities would 00 up to par. This, of course, presupposes that \\u had no Kmopean war, tor then it would be impossible to continue the law of repayment, but with that exception there is no reason why this should, not ,be the absolute niinnnuin. At present there is not that confidence in the City which isnuce«»aiy to the .success ot the scheme, because ot the attacks that are continually beim; made upon the .sinking funds,. Had MrUo-chenleft these funds as they were,, and provided for the payment ot L7,00U,00O i this year, and thi.s level had been adhered to ior two or three years longer, the guulual repayment of the principal and The eeitninty ot that operation continuing at an neuoleiated pace would h:ne made the reduction ot the interest an easy mattei I . "' " Ii Sir StafiordNorthoote's ar angement had been adhered to, how .^houlcl wo have stood say in three year*. ':''--" By paying L7,ouo,ooi> mc should h.i\e in three years cut down the debt by nearly L' 22,000,000, but th.it i-. not all. There is continual absorption of money by the savings banks, and a large sum would be taken off themarkot by that mean.s. But it is to the moral eiu-et of the certainty ot our policy moi c than the amount to -»\ hich 1 attach importance If you get the City to feel that a linn policy would be pursued, I believe the Two and a Halt per Cents, would rise uib>tantially ; but hoi o we ha\c Mr Gobchen givino up l/2,00u,000,and with some pressure another Chancellor nriy give up another 1/2,000,000, so hollies >i\y, ' Oh, 1 will hang on to my Three pel Cents., and probably 1 willicccne this rate as long as I live.' I iepo.it, theivioie, th.it 1 attach quite as much importance to the moral efiect ad to the amount paid oil."' "Mr Childer.-'s experiment^ in the way of conversion did not succeed Y%Y %> — "No, because he did not give quite good enough term.-., and he made the mistake of allowing too long a time. My impression is that he should have announced his terms and given a fortnight at the outside. They would ha\o been more readily accepted then. On. the oilier hand, some persons thought he ottered too favourable terms. But it was noce.^.uy to make a beginning. It was nee»>s-.ary to have a stock ot the kind in the market to see what the feeling was. Now that is done, if we really mean to go on 1 educing the debt I would not issue more .it tho pro-ent- pi ice. 1£ wo don't mean to pay oil' the debt , that is another matter, but it y e do let us go on paying 3 per cent, for a t<>w >rars longer until we can otter 2} or 2\ at par." "'• i>o you expect that the price of Two and a Half per Cent-,. * ill go up ?"— " Evidently that is the impression at present. The Three per Cents, now are in round mimbeirt 102; the Two and Threequart vis, 94 ; and the Two and a Half 91. The^e prices 1 ha\e no l elation really to the dividends, if you invest LlOO in the Thiees you Mill receive T/2 U)s (id in interest, while LI 00 in tne Two and a Hahes will give you about 1/2 10*. There is> a difference of some tin cc or four shillings, and that means that people who hold on to the Two and a Hahes think they uill rise. If they did not they would prefer to hold stock that would give them the highest interest, and the price of the Two and a Halves would go down." "You would apply the L 3,000,000 saved in inteiest to the reduction of principal?"— " That \\^is- Sir Stafford Northcote's plan. He proposed to fix the amount for the service of the debt at L28,()00,000, and as we paid debt off less would go in interest and more in repayment of principal. This left the burden of the taxpayer exactly the same, but it increased the amount of repayment year by year. Sir Stafford also thought thi.s plan fairer to successive Chaiujcllovs of the Exchequer, a& comparisons could then be made on the same basis. As a matter of fact, Sir Stafford did not fully carry out his own policy. What) 1 feel strongly is that if wo don't pay off in time of peace, and borrow in times of war, our debt will in the long run increase. Wo have only paid off since 1813 some 1/200,000,000. It is difficult to say exactly what the debt then was, because of the terminable annuities which existed, but it might be taken at something over L 900,000,000, and it is now L 711,000,000. We have had the Crimean war and other minor wars, but altogether the rate of payment is not credit ible to us " "Is there any reason why the price of Consols should be higher than other Government securities?"—" Well, a great many people must hold Consols— bankers, for instance. There is no legal obligation, but if you want money at a moment's notice, there it- no better security for that purpose. You can go and realise LlOO.OOO worth, or even more, in live minutes, and get the money at> once. Trustees are not i estricted to Consols as they were, as they can invest in other Government, Colonial, and Indian securities, but a great many of them do hold Consols. Then the difficulties about land are tending to drive money in that direotion, for mortages are not now looked upon so favourably as they were. All these circumstances would tend in the direotion of a reduction of interest." "You would not propose to make a wholesale conversion of Three per Cents ?" — " Oh no, that) would be too stupendous an operation. They would have to be taken in blocks, and any difficulty in the case of the first instalment would be diminished in tho second.'—" Tall Mall Gazette."

"Oh, give us a rest-," said a young man* impatiently, to a little boy who was busy plying him with cjuestioni?. The little fellow looked at him a moment, and then, with the utmost innocence said, " Well, you ve*t and I'll talk." " Don't waste your time in clipping off the branches," said the woodman to his. son, " but lay your axo ( at the foot, of thetree.", And the young rnau went and'laid hi* axe at the foot of ttie y treo,likfc a.good and dutiful boy— and' then' he' went a-iish-ing.