§ It is customary at this point to refer to the National Debt. Some addition—the £141 million just referred to, less certain adjustments which brought it down to £106 million—was made to the total of the debt. The addition, of course, was more than accounted for by Exchequer advances for productive investments, on which the borrowers pay interest and sinking funds to the Exchequer. The details as to the composition of the debt, are given in the Financial Statement. It is worth noting that, in spite of this increase of £106 million, there was a decrease of £143 million in that part of the debt covered by Treasury Bills.
§ The total of the National Debt now stands at £27,040 million. It might interest the Committee to know that on 3rd September, 1939, it stood at about £8,400 million. On 4th August, 1914, it stood at about £645 million. These figures fill one with a certain awe. There are few nations, victors or vanquished, in these forty years that have so honourably tried to meet their obligations, at home and abroad. The service of the debt cost us £638 million—just about the same as the 1914 debt—or nearly 3s. on the Income Tax. The funded debt is a dull, dragging burden; the unfunded a constant and acute anxiety. No one who contemplates these figures can fail to draw the lesson.
§ Whatever the temporary difficulties from which we may suffer by trying to run too fast, if we stand still we are lost. Inflation must be curbed, because runaway inflation ends up by being itself restrictionist. But deflation—in the sense of seeking stability by courses which, among other things, would result in an increase in the debt burden in relation to the national income—that is out of the question. We must all be expansionists, but expansionists of real wealth. The 860 problem of inflation cannot be dealt with just by cutting down demand; the other side of the picture is the need for increasing production. The only question is at what rate, for what markets, and how best guided our expansion is to be.
There is one comfort in it; it has all happened before. If the Committee will allow me, I will venture to read a famous passage from one of Macaulay's Essays—so relevant that I venture to repeat it:
We cannot absolutely prove that those are in error who tell us that society has reached a turning point, that we have seen our best days. But so said all who came before us, and with just as much apparent reason. 'A million a year will beggar us,' said the patriots of 1640. 'Two millions a year will grind the country to powder,' was the cry in 1660. 'Six millions a year, and a debt of fifty millions!' exclaimed Swift; 'the high allies have been the ruin of us.' 'A hundred and forty millions of debt!' said Junius; 'well may we say that we owe Lord Chatham more than we shall ever pay, if we owe him such a load as this.' 'Two hundred and forty millions of debt!' cried all the statesmen of 1783 in chorus; 'what abilities or what economy on the part of a minister, can save a country so burdened?'.
These are very striking figures from past epochs, almost as striking as those of the last fifty years—from £650 million to £27,000 million. The essayist then went on to ask, with commendable optimism:
On what principle is it that, when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?
That is very apt to our present circumstances.
§ We have done it before, we can do it again; but we shall need, as our fathers before us, prudence and daring—in the right proportions—and, above all, the instinctive judgment as to the right policy at any moment and the courage to apply it.