THE ABSURDITY of the National Debt, by Hastings Russell, the 12th Duke of Bedford, was written in 1947. Nothing has changed in terms of public understanding of national indebtedness either here or in England since then; things have only gotten worse.

An excerpt:

The National Debt started in 1694, when the Government of the day unwisely arranged that a private syndicate, which later became known as the “Bank of England,” should lend it £1,200,000 in gold, at 8% interest. With even greater stupidity, they then allowed the syndicate to issue bank notes to the value of £1,200,000 which it was able to lend into circulation, charging interest. Thus, although the Bank of England was not put to any expense beyond the cost of the paper and printing, it was allowed to draw interest on two lots of money—its own gold and the new notes to the value of the gold! Later, the Bank of England managed to obtain still more gold which they also lent to the Government at interest, and, whenever they did so, they increased their issue of virtually costless paper money until they were getting interest on £16 millions in gold and £16 millions in paper notes. If the Government had done the obviously sensible thing and, instead of borrowing, had decided to issue its own paper money, it could likewise have done so at the mere cost of paper and printing; there would have been no need for interest to be paid to anybody; and the taxpayer would not have been burdened to provide interest.

[…]

“…. the power of people of all classes to buy and enjoy the goods and services which either were produced or could have been produced, was diminished by the vastly increased taxation. Rich people had to pay far more in super-tax. Poor people had to pay more in “indirect taxation.” (Indirect taxation means Customs and Excise dues on imported goods, which add to the price of the latter and increase the amount of money which purchasers, including the poor have to pay in order to obtain them.)

Educated people who were wealthy, or had once been wealthy, never had the sense to ask themselves why, when the nation’s power to produce goods and services was greater than before, they, because of increased taxation, must be content with less; nor did they ever enquire why the poor could not be given a larger amount of the increased wealth in goods, without their own standard of living being reduced. Most of them attributed the heavy taxation and diminution of their power to purchase what they needed or desired, to the increased expenditure on Government services, including education, unemployment relief, etc. Here their ignorance of financial matters led them into error, for as far as its effect on taxation was concerned, increased expenditure on Government services was a mere flea-bite by comparison with the amount they had to pay in order to provide interest on the ever- growing National Debt.

The more selfish among the complainants, and those who were not eye-witnesses of the sufferings of the poor, grumbled because more money was being spent — and rightly spent — in helping members of the weekly wage- earning class. They remembered cases they had come across of lazy workmen, and they thought and argued as though ail the unemployed were lazy. The weekly wage-earners, on the other hand, equally ignorant of financial matters and naturally angered by the selfish and unfair criticism of those who, in spite of their reduced standard of living, were still far better off than themselves, hated their critics and demanded that they should be taxed still more heavily, believing that only by such means could their own lot be improved. Thus it came about that the spirit of class hatred and antagonism tended to increase, largely because both sides were putting the blame in the wrong place!” [bold added]

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