SCHEME FOR REDUCING THE INTEREST OF THE NATIONAL DEBT.

But the capital measure which distinguished this session of parliament was the reduction of the interest on the public funds; a scheme which was planned and executed by the minister, without any national disturbance or disquiet, to the astonishment of all Europe; the different nations of which could not comprehend how it would be possible for the government, at the close of a long expensive war, which had so considerably drained the country, and augmented the enormous burden of national debt, to find money for paying off such of the public creditors as might choose to receive the principal, rather than submit to a reduction of the interest. It was not very much for the honour of the opposition, that some of its leading members endeavoured to impede this great machine of civil economy, by taking opportunities of affirming in parliament, in opposition to his majesty’s speech, that the nation, far from being in a flourishing condition, was almost entirely exhausted; that commerce drooped and declined; that public credit stood tottering on the brink of ruin; and that all the treaties lately concluded among the different powers of Europe were, in effect, disadvantageous and prejudicial to the interests of Great Britain. In answer to these assertions, Mr. Pelham undertook to prove, from the register of exports and imports, that the commerce of the kingdom was more extensive at this than at any former period; and that the public credit was strong enough to admit of an experiment, which he would not presume to hazard, except upon a moral certainty of its being firmly rooted beyond the power of accident and faction to shake or overturn. He declared, that his design of reducing the interest upon the funds was the result of the love he bore his country, and an opinion that it was the duty of the servants of the crown to ease the burdens of the people. He said, he had conferred on this subject with persons of the most approved knowledge, and undoubted experience; and chose to promulgate the method proposed for alleviating the load of the national debt, that the public, in knowing the particulars of the scheme, might have time to consider them at leisure, and start such objections as should occur to their reflection, before it might be too late to adopt amendments. He observed, that nothing could more clearly demonstrate the vigour of public credit, and the augmentation of national commerce, than the price of stock, which had within three years risen to a very considerable increase; and the duties on imports, which in nine months had added one million to the sinking fund, notwithstanding a very extraordinary sum which had been paid as bounties for exported corn. He expressed great tenderness and regard for the interests of those who had advanced their money for the service of the government; declaring, that his aim was to contrive a fair, honest, and equitable method for lessening the national incumbrances, by lowering the interest, conformable to parliamentary faith, and agreeable to the rules of eternal justice. His plan was accordingly communicated, canvassed, and ap proved in the house of commons, and an act passed for reducing the interest of the funds which constitute the national debt. 321 [See note 2 Q, at the end of this Vol.] In pursuance of this act for the reduction of the interest, the greater part of the creditors complied with the terms proposed, and subscribed their respective annuities before the end of February; but the three great companies at first kept aloof, and refused to subscribe any part of their capital.

About the middle of March the commons ordered the proper officers to lay before them an account of the sums which had been subscribed, and these were taken into consideration by a committee of the whole house. It was then that Mr. Pelham, as chancellor of the exchequer, observed, that besides the debts due to the three great companies in their corporate capacity, all the rest, carrying four per centum interest, had been subscribed, except about eight or nine millions, the proprietors of which had forfeited the favour designed them by parliament; but as many of these had been misled by evil counsellors, who perhaps were more intent on distressing the government, than solicitous to serve their friends; and as many were foreigners, residing beyond sea, who had not time to take proper advice, and give the necessary instruction; and as these could not possibly be distinguished from such as refused to subscribe from mere obstinacy or disaffection, it might be thought cruel to take the most rigorous advantage of the forfeiture they had incurred. With respect to the proprietors of the stock or capital belonging to the three great companies, he asserted, that many of them would willingly have subscribed their properties within the time limited, but were necessarily excluded by the majority on the ballot; and as it was equally impossible to know those who were against the question on the ballot, he thought that some tenderness was due even to the proprietors of those three companies; his opinion therefore was, that they and the uncomplying annuitants should be indulged with further time to complete their subscription; but, in order to preserve the authority of parliament, and the respect due to that august assembly, they ought not to be gratified with such advantageous terms as were allowed to the annuitants who at first cheerfully complied with the proposals offered by the legislature. For these reasons he proposed, that although the term of subscribing should be protracted till the thirtieth day of May, the encouragement of three pounds ten shillings per centum per annum should not be continued to the second subscribers longer than till the fifth day of December, in the year one thousand seven hundred and fifty-five. The proposal being approved, a bill was framed for this purpose, as well as for redeeming such annuities as should not be subscribed, which passed through both houses, and was enacted into a law, after having received an additional clause, empowering the East India company, in case they should subscribe all their stock bearing an interest of four per centum, to borrow, with the consent of the treasury, any sums not exceeding four millions two hundred thousand pounds, after the several rates of interest before proposed to be paid by the public, and one million more at three per centum per annum. They were also vested with a power to raise money by bonds as formerly; yet so as the whole, including the annuities, should not exceed what they were by former acts empowered to borrow. The objections to the execution of this project, which by many were deemed insurmountable, entirely vanished before the fortitude, perseverance, and caution of the minister; who had secured, among the monied men of the nation, the promise of such sums as would have been sufficient to pay off the capital belonging to those creditors who might refuse to accept the interest thus reduced. The second subscription had the desired effect. The three great companies acquiesced, and their example was followed by the other scrupulous annuitants; the national burden was comfortably lightened, and the sinking fund considerably increased, without producing the least perplexity or disturbance in the commonwealth; a circumstance that could not fail to excite the admiration and envy of all Christendom.

1750