Page 209 - clra62_0019-(GIPE)

CONSOLS IN A GREAT WAR 201
Of course, these calculations do not carry us beyond
the actual beginning of a war and the beginning of
large issues consequent upon it. What would happen
as the indirect result of all the comm<>tion and excite-
ment attendant upon a war, and the great efforts which
might have to be made to carry it on, is a little beyond
even the slight prevision which may be considered
possible on the assumption with which we started.
The great point is that wt! must not assume too hastily
that there is not going to be a great fall in Con sols,
quite disproportionate to what there may be in other
first-class securities. .
I might stop at this point, having answered the
question put; but there is a practical issue on which
the facts stated appear to have some bearing, viz., the
question of the use of a sinking fund for the redemption
of debt or for the accumulation of a reserve against
emergencies by a Government like our own. The
bearing of the facts stated seems to be that the credit
of ~he Government for purposes of business is not
improved by the redemption of the debt or by the ac-
cumulation of a reserve fund against emergencies, be-
cause its credit is already of the highest possible quality,
and its borrowing power will be regulated accordingly
by the general conditions of credit, and not by the in-
crease or decrease of the debt bya few millions annually.
The Government is one of many first-class borrowers,
and a little redemption of its own debt does not seem
to matter as far as its credit is concerned, one way or
the other. This may seem a hard saying; but when we
perceive the credit of a country like Russia increasing
from year to year, notwithstanding increasing debt, and
the credit of a country like France increasing the same
way, we have surely cause to doubt what precise part
is played by the redemption of debt on our own credit.
Formerly this debt redemption was undoubtedly an im-
portant factor. When our debt was so large as to
amount to one-third of the property in the country,