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NATIONAL is the public debt of the country, or rather the debt incurred and owing by the state on behalf of the nation generally. The feature which particularly characterises the national debt, as distinguished from a private debt, is that generally the state has at all times the right to pay off its creditors at par, while the creditors have no right to demand re payment of the principal money, but must content themselves with their dividends. It was at one time strongly insisted, and that only within recent years, that the real difference between a private debt and the national debt consists in the compound chtracter of the creditors, who as members of the nation are legally and morally bound to contribute towards the maintenance of the public faith, while they have each a personal interest in its preservation. But that difference cannot altogether be recognised now, for the creditors are not by any means all members of the nation. It would seem, indeed, that regardless of the obvious advantage of having as many of such creditors as possible, in case of need, the Government now goes voluntarily outside the nation to place its loans with foreigners. Perhaps by adopting this course it raises larger sums in fewer "parcels" than it could by offering the stock to the mass of its own people, but granting even this, the policy is hardly wise and is certainly an unpopular one. The French debt, which is nearly half as large again as the English, is held almost entirely in France, and the national securities are very widely distributed among the masses. In addition to this enormous sum, securities of Portugal, Spain, Italy, and Russia are held in France in large amounts. Of Austria-Hungary's debt the large proportion is held by her own people. Of Germany, Belgium, Netherlands, Denmark, Sweden, and Norway, it may be said that almost the entire debt is held by citizens of the respective countries named. Practically all the debt of the United States is now held by her own people, who, it will be remembered, forwarded to the United States Treasury in 1899 subscriptions aggregating five times as much as the amount of the national securities offered on that occasion. The United Kingdom should in this matter, as in many others, adopt more modern methods; for one thing it should popularise the national securities, and attract the small capitalist. When a loan is issued every local post office, for example, could be made a receiving office for applica tions for small amounts, information as to these arrangements being well advertised. ,Then, most probably, the securities of the United Kingdom could be issued at par. Even Chili has a class of securities, aggregating

about $7,000,000, which were issued at 101.

The contracting of the National Debt cannot be said to have begun before the Revolution of 1688, the first permanent instalment being the sum of 21,200,000 lent by the Bank of England in 1693, at the time of its charter. But war soon raised it, for in four years' time it stood at 221,500,000. After a reduction to it rose again, this time to 254,000,00, at the time of the accession of George I. The high figure alarmed the House of Commons, and with a view to its reduction the system of annuities was introduced in the year 1717. But in 1748, so vain were the efforts at reduction, it rose to .276,000,000, while the Seven Years' war brought it in 1763 to about 2133,000,000. Then, after another period of gradual reduction, the termination of the war of American Independence, in 1784, saw the total increase to 2273,000,000, and finally, in the year 1815, that of Waterloo, the debt of this country reached the enormous figure of over 2900,000,000. Fortunately, that year saw the high-water mark of our national indebtedness, and even in 1857, after the Crimean war, thanks to the long peace that had preceded it, the amount of the debt was no more than 284:2,500,000. Since then the gross liabilities of the State have moved on the following lines; the movement showing a most substantial decrease until the year 1900, when the South African war then forced an increase :— The National Debt, strictly speaking and as regarded in the above figures, comprises four distinct classes of liabilities ;—(1) The Funded Debt ; (2) Terminable Annuities ; (3) The Unfunded Debt; and (4) " Other Capital Liabilities." But there are also some contingent or indirect liabilities of the State which, pursuant to various Acts of Parliament, have the guarantee of the Consolidated Fund behind them, and which may therefore be regarded as proper additions to be made in a statement of the total indebtedness of the nation. And, on the other hand, the State has certain specific assets vvhieli admit of being calculated and set off against its debt. It is proposed in this article to give, in the first place, some account of the four constituents of the National Debt proper, then, following the practice of the Treasury, to notice the assets already referred to, and afterwards to summarise the additional contingent and indirect liabilities. The figures are those for the financial year ending on the 31st March 1909. Filially, the subject of the conversion of the National Debt will be referred to.

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