These " Other Capital Liabilities," which amounted to .P47,840,151 in 1911, are loans obtained for special purposes, and repayment is made out of the funds of some particular Government department. Thus the loan for the Uganda railway was raised under a special Act by the creation of terminable annuities, the charge in respect of which is borne on the vote in Parliament for " Uganda, Central, and East Africa Protectorates and Uganda Railway." And so the charge in respect of the loan under the Telegraph Acts is borne on the vote for Post-Office Telegraph Services. And again, the money raised under the Barracks Act is a charge on the votes for Army Services, and no charge in respect to this item appears in the accounts for 1911. Loans of this class are always raised by creating terminable annuities.
In addition, however, to this balance of direct indebtedness there must be noted a sum of considerably over 100 millions representing certain con tingent or indirect liabilities of the State, which have behind them, pursuant to various Acts of Parliament, the guarantee of the Consolidated Fund. Of this large amount a small part of over 10 millions is made up of monies due to depositors in the Post-Office Savings Bank, to suitors' and bankrupts' estates in the English and Irish courts of law, and to sundry other creditors. The amount so due to the Post-Office Savings Bank is over .P5,000,000, and, in view of the widespread belief that almost untold millions are lying in Chancery awaiting rightful claimants, it is worth remarking that the total amount due to all suitors in all the courts and divisions of the English Supreme Court is not more than 21 millions. The remainder of these indirect liabilities is made up of a number of guaranteed loans. Of these may be mentioned certain loans to colonies—a loan to New Zealand, for the purpose of assisting immigration and the construction of roads, bridges, and other communication, the revenues of the colony being available as the primary security for re payment; also loans, similarly secured, to Canada to aid the construction of railways and for the purchase of Rupert's Land from the Hudson's Bay Company; and a loan, also secured on the revenues of the colony, to Mauritius, for the relief of distress caused by a hurricane and for the con struction of public works there. Then there are loans to foreign countries. There is nearly X4,000,000 still due from Turkey in respect of an advance made by England to meet the expenses of Turkey during the Crimean war ; the security for the repayment of this is in the whole of the revenues of the Ottoman Empire, and especially the annual amount of the tribute of Egypt which remains over and above the part thereof appropriated to a prior loan, and on the customs of Smyrna and Syria. Over „e6,000,000 is due to England from Greece in respect of a loan made a few years ago to enable the latter country to pay the war indemnity to Turkey ; the repayment of this is charged on revenues assigned for the liquidation of the Hellenic Public Debt. About X14,000,000 is due from Ireland, the greater portion of which
-,,ras utilised in the purchase of land, the repayment being secured by certain Guaranteed Land Stock. The rest of the Irish indebtedness is secured by the Irish Church Temporalities Fund, and represents monies advanced for such various objects as the purposes of the Irish Church Act, intermediate education, relief of distress, and the promotion, improvement, and encourage ment of sea fisheries. And last, and by no means least, must be mentioned a sum of more than X71,000,000 charged on the assets of the Local Loans Fund, and representing many large loans for public works and improve ments.
Conversion is now a very favourite practice of the financial statesman. A loan has been issued perhaps at a time when the country was in the throes of a great war, when the future was doubtful, and when money was scarce and tight. The issue, therefore, had to be made upon such favourable terms as would attract the public and its money ; a good discount was allowed, and most certainly a high rate of interest. But since then the war has come to a successful end ; the prosperity of the country is once more assured, and money is plentiful, freely available for investment, and comparatively cheap. And with this change has come the opportunity of the statesman. He at once proceeds to convert. His method is either that of conversion, strictly so-called, when he issues to the holders of the stock to be converted another stock bearing a different rate of interest, or that of redemption. By the method of redemption he raises a loan, at a lower rate of interest than that payable on the stock to be converted, but sufficient to pay off the holders of that stock. The former loan is then paid off and so practically converted into the later one. Without going so far as to suggest that governments should in perpetuity pay an exorbitant rate of interest, it is yet permissible to contend that some check should be placed upon their converting pro pensities. They should give a definite undertaking, in all cases, not to convert or redeem before a particular date. In the financial year 1888-89 the British Government effected a scheme of conversion by which it has saved an annual liability for interest amounting to over £1,000,000. Under the National Debt (Conversion) Act, 1888, it converted .e549,094,010,19s. consolidated, reduced, and new 3 per cents. into an equal amount of con solidated stock which was to bear interest at the rate of 21 per cent. until 5th April 1903, and thenceforward, until 5th April 1923, at per cent., after which date it should be redeemable at any time. After 5th April 1905 the new stock is to be known as the " Two-and-half per cent. consolidated stock."