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 states, generally the smaller ones, having a considerable amount of exclusively internal debt, though it is obvious that the bulk of national debts are both external and internal.

We referred above to various ways of reducing the burden of a debt, and also to methods of contracting loans by which within a certain period they are amortized or extinguished. Most states, however, are burdened with enormous quasi-permanent debts, the reduction or extinction of which gives ample scope for the financial skill of statesmen. A favourite method of accomplishing this is by the establishment of what is known as a sinking fund, formed by the setting aside of a certain amount of national revenue for the reduction of the principal of the debt.

The following table shows the general state of the world’s public indebtedness at the beginning of the 20th century, divided according to the more important countries, the bracketed figures in black type indicating the position of the country referred to under each heading in the list. The figures are given by preference for the year 1900, as more representative, in a case like this, than for some later years; for the Boer War, as regards the United Kingdom, and also the Russo-Japanese War, introduced new debt and new considerations, hardly fair to the comparison, while this stands at the end of a long period of peace. The figures in every case are not to be supposed to be absolutely accurate; statistics of national debts differ, often remarkably, and it is practically impossible to give a perfectly satisfactory comparison, owing partly to difficulties of computing the exchange, partly to inaccurate accounts, and partly to the varieties of debt (reproductive or non-reproductive, &c.)

The total indebtedness of the countries named in the table amounted to £6,311,017,478, and the total indebtedness of the world (i.e. including countries not here mentioned) for the year 1898 was computed by Lord Avebury (Journ. Roy. Stat. Soc. vol. lxiv part i.) as £6,432,757,000, as against £5,097,910,000 in 1888. This compares (taking figures compiled by Mr Dudley Baxter in Journ Roy. Stat. Soc., March 1874) with a total indebtedness of 4680 millions sterling in 1874 and 1700 millions sterling in 1848. The United Kingdom had diminished its total debt since 1883 by 127 millions, the amount per head by £6, the annual charge by 6 millions, and the charge per head by 5s. 8d The United States debt was lower by nearly a hundred millions. Japan, Egypt and Brazil had sensibly improved their positions. But the following countries had increased their debts: France (by 86 millions), Russia (by some 240 millions), Italy (by 140 millions), Austria-Hungary (by 70 millions), Spain (by 190 millions), Prussia (by 227 millions), Portugal (by 80 millions), Holland (by 18 millions), Belgium (by 32 millions), and Argentina (by 73 millions).

The result is that, whereas in 1883 the total debt of the United

Kingdom (756 millions) stood second to that of France (1000 millions), in 1900 it stood third to France and Russia; whereas in 1883 its weight per head of population was third, in 1900 it was eleventh; whereas in 1883 its annual charge stood second, in 1900 it stood fourth; and whereas the weight of the charge per head of population in 1883 was fifth, in 1900 it was eleventh. The indebtedness of the great British dependencies, on the other hand, had increased from 302 millions to 544 millions sterling, or by 242 millions; and the local (municipal) debt of Great Britain had risen from about 100 millions to upwards of 300 millions.

It is interesting to recall the history of the British national debt during the 19th century. The debt at the close Napoleonic war (1816) was nearly 887 millions sterling, and at the beginning of 1900 this debt had been of reduced to 621 millions, or a decrease of 266 millions—notwithstanding

interim additions of about 367 millions, which made the gross reduction during that period 633 millions sterling, an amount actually larger than the whole (dead-weight ) debt at the end of the century. No country (except the United States, to a smaller amount) has ever redeemed its obligations on such a scale, and this was done while all other European countries of similar standing were piling up debt.

This enormous reduction was effected at different rates of speed. Between 1817 and 1830, when what was known as Pitt’s sinking fund was in operation (depending upon the devotion of surplus income to the repayment of debt, but much complicated by the raising of fresh loans), a net reduction was made of £29,488,072—an annual average of £2,268,313. From 1830 to 1876 the system of using surplus revenue—the so-called old sinking fund—for redeeming debt, was steadily applied, together with the creation of terminable annuities, by which definite blocks of debt were cancelled and the whole amount paid off in a term of years. During this period the debt was reduced by £85,175,782, an annual average of £1,851,647. “In 1876 Sir Stafford Northcote’s (Lord Iddesleigh’s) new sinking fund came into operation, in addition to previous methods of redeeming debt. By this system a definite annual sum was set aside for the service of the debt, the difference between it and