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 Of Capital. 35

. Government management is almost invariably wasteful and inefficient. Even when the circumstances warrant the Government in raising a loan for some industrial work, it often happens that the advantage which such a loan might bring to the country is to a great extent counteracted by the wasteful manner in which the work is carried out. The history of the Public Works Department in India affords numerous examples of the truth of this remark.

But again, referring to loans which are unproductively expended by the Government, it may not unnaturally be asked:—Why should the unproductive expenditure of a Government impoverish a nation more than if the same amount of wealth was spent unproductively by individuals? In one sense, no doubt, a nation is not rendered poorer, as may be shown from the following considerations: Suppose, for instance, we wish to make an estimate of the whole wealth of the English nation. All the wealth possessed by Englishmen in the funds should be omitted from this estimate. If it were not so, the same wealth would be counted twice over. Suppose A has a mortgage of 10,000l. on B's estate. The mortgage is wealth to A; but it is not a part of the nation's wealth, because the mortgage simply shows that B's estate is not entirely his own property, but that A has a share of it, the value of which share is equivalent to the amount of the mortgage. Similarly the fundholders have a mortgage upon the industry of the nation; and if the fundholders were all English, and the nation repudiated its debt, the wealth of the country would not in the slightest degree be either decreased or augmented: a most unjust confiscation of property would be perpetrated, but there would have been no destruction of wealth; for what the fundholders would lose the tax-payers would gain. The national debt, considered in this aspect, is a mortgage upon the industry of the nation; and the creation of a mortgage cannot diminish the wealth of a nation unless the persons who own the mortgage should be foreigners, when, of course, a portion of the national wealth is transferred to another country. These considerations show that if the raising of a loan encourages money to be saved, the loan might be spent in the

BOOK I. CH. IV.

''Loans applied to unproductive purposes. ''