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The New Financial Juggle; Or
Gladstone And The Pennies[45]

Karl Marx

Our readers know, to their cost, and have learned, to the tune of their pockets, that an old financial juggle has imposed a National Debt of £800,000,000 on the people's shoulders. That Debt was chiefly contracted to prevent the liberation of the American colonies, and to counteract the French Revolution of the last century. The influence of the increase of the National Debt on the increase of the national expenditure may be gathered from the following tabular analysis[a]:-

1. National Debt

When Queen Anne succeeded to William (1701)[46] 16,394,702
When George I ascended the Throne (1714) 54,145,363
When George II began his Reign (1727) 52,092,235
When George -III assumed the reins of Government (1760) 146,682,844
After the American War (1784) 257,213,043
At the end of the Anti-Jacobin War (1801) 579,931,447
In January, 1810 (during the Napoleonic War) 811,898,082
After 1815 about 1,000,000,000

2. National Expenditure

When Queen Anne succeeded to William (1701), all expenses,
including the interest of the National Debt, amounted to
When George I ascended the Throne (1714) 6,633,581
When George II began his Reign (1727) 5,441,248
When George III assumed the reins of power (1760) 24,456,940
At the end of the Anti-Jacobin War (1801) [b] 61,278,018

3. National Taxation

Queen Anne (1701) 4,212,358
George I (1714) 6,762,643
George II (1727) 6,522,540
George III (1760) 8,744,682
After the American War (1784) 13,300,921
After the Anti-Jacobin War (1801) 36,728,971
1809 70,240,226
After 1815 about 82,000,000

The people well know, from personal pocket-experience, what is the weight of taxation resulting from the National Debt but many are not aware of the peculiar forms under which this Debt has as been contracted, and actually exists. The "State," that jointocracy of coalesced land and money mongers, wants money for the purpose of home and foreign oppression. It borrows money of capitalists and usurers, and in return gives them a bit of paper, pledging itself to pay them so much money in the shape of interest for each £100 they lend. The means of paying this money i tears from the working classes through the means of taxation— so that the people are the security for their oppressors to the men who lend them the money to cut the people's throats. This money has been borrowed as a debt under various denominations sometimes to pay 3 per cent., 3½ per cent., 4 per cent., &c., and according to that percentage and other accidents the funds have various denominations, as the 3 per cents., &c.

Every Chancellor of the Exchequer, with the exception of the Whigs, as not only the working classes, but the manufacturers and landlords also, have to pay a portion of this interest, and wish to pay as little as possible, tries accordingly, in some way or other, to alleviate the pressure of this incubus.

On the 8th of April, before the Budget of the present Ministry was brought forward, Mr. Gladstone laid before the House a statement of several resolutions dealing with the Public Debt and before this statement had been made The Morning Chronicle announced that resolutions of the utmost importance were to be proposed, "heralded by rumours of great interest and magnitude[c]." The funds rose on these rumours; there ) was an impression that Gladstone was going to pay off the National Debt. Now, "what was all this pother about?"[d]

The ultimate aim of Mr. Gladstone's proposals, as stated by himself, was to reduce the interest on the various public stocks to 2'½ per cent. Now, in the years 1822-3, 1824-5, 1830-1, 1844-5, there had been reductions, from 5 per cent. to 4½, from 4½ to 4, from 4 to 3½, from 3½ to 3, respectively. Why should there not be a reduction from 3 to 2½?

Now, let us see in what manner Mr. Gladstone proposes to achieve this end.

Firstly. He proposes with respect to certain stocks amounting to £9,500,000, chiefly connected with the old South Sea Bubble[47], to bring them under one single denomination, and to reduce them compulsorily from 3. per cent to 2¾- per cent. This gives a permanent annual saving approaching to £25,000. The invention of a new general name of various stocks, and the saving for £25,000 on an annual expense of £30,000,000, does not merit any particular admiration.

Secondly. He proposes to issue a new financial paper, called exchequer Bonds, not exceeding the amount of £30,000,000, transferable by simple delivery, without cost of any kind, bearing interest at 2¾ per cent., up to the 1st of September, 1864, and then 2½ per cent up to the 1st of September, 1894. Now this is simply the creation of a new financial instrument for the comfort of the monied and mercantile class. He says "without cost," that is, without cost to the City Merchant. At the present moment there are £18,000,000 of Exchequer Bills at 1½ per cent. Is it not a loss to the country to pay 1 per cent more upon the Exchequer Bonds than upon the Exchequer Bills? At all events the second proposition has nothing to do with the reduction of the National Debt. The Exchequer Bills can circulate only in Great Britain, but t he Exchequer Bonds are transferable as common Bills, therefore it is a mere measure of convenience to the City Merchants, for which the people pay a high price.

Now, finally, we come to the only important matter to the 3 per cent. consols, and the "3 per cent reduced," amounting together to a capital of nearly 500,000,000. As there exists a Parliamentary provision forbidding these stocks to be reduced compulsorily, except on twelve months notice, Mr. Gladstone chooses the system of voluntary commutation, offering various alternatives to the holders of the 3 per cent stock for exchanging t hem at option with other stocks to be created under his resolutions. The holders of the 3 per cent stocks shall have the option of exchanging each £ 100 3 per cent. in one of the three following forms:

1.—Semi-Exchange, every £ 100 of the 3 per cent with an Exchequer Bond for the like amount carrying interest at the rate of £2 15s until 1864, and then at the rate of £2 10s until 1894. If the whole of the £30,000,000 of Exchequer Bonds at 2½ per cent replaced £30,000,000 of 3 per cents, there would be a saving in the first ten years of £75,000; and after the first ten years of £150,000; together £225,000; but the Government would be bound to repay the whole of the £30,000,000, after forty years. In no respect is this a proposition dealing largely, or even at all, with the National Debt. For what is a saving of £225,000 in an annual expense of £30,000,000?

2.—The second proposal is, that the holders of stock shall retain for every £100 in 3 per cents, £82 10s in new stock of 3½ per cent, which would be paid at the rate of £3 10s per cent until the 5th of January, 1894. The result of that would be to give a present income to the persons accepting the 3½ per cent stock, of £2 17s 9d, instead of £3 reduction of 2s 3d on the interest of every £100. If the £500,000,000 were all converted under this proposal, the result would be that, instead of paying, as at present, £15,000,000 per annum, the nation would only pay £14,437,500, and this would be a gain of £562,500 a year: But, for this saving of £562,500 Parliament would tie up its hands for half a century, and grant higher interest than 2 four-fifths per cent at a time of transition and of utter insecurity of every rate of interest! One thing, however, would be gained for Gladstone at the expiration of forty years there would be, in the place of the 3 per cent. stock being now defended by twelve months' notice, a 3½ per cent stock redeemable at par by Parliament. Gladstone proposes not to fix any limit on that 3½ per cent stock.

3.—The third proposal is, that the holders of every £100 3 per cent shall receive £110 in a new stock of 2½ per cent until 1894. When Mr. Gladstone first introduced his plan in the House of Commons, on the 8th of April, he had not limited the amount of the new 2½ per cent. to be issued, but Mr. Disraeli having pointed out that, contrasting this proposal with the two other ones, every man in his senses would choose the conversion of £100 3 per cent into £110 2½ per cent; and that by the conversion of the £500,000,000 3 per cent. into the new stock, the nation would gain on one side, £1,250,000 per annum, but be saddled on the other hand with an addition to the Public Debt of £50,000,000, Mr. Gladstone, on the following day, altered his proposition, and proposed to limit the new 2½ per cent stock to £30,000,000. By this limitation, his proposal loses almost all effect on the great stock of the Public Debt, and augments its capital only by £3,000,000.

Now you know "one of the most important and gigantic financial proposals that ever has been brought forward[e]." There exists, perhaps, in general, no greater humbug than the so-called finance. The simplest operations relating to the Budget and the Public Debt, are clothed by the adepts of that "occult science" in abstruse terminology, concealing the trivial manoeuvres of creating various denominations of stocks, the commutation of old stocks for new ones, the diminishing the interest, and raising the nominal capital the raising the interest and reducing the capital, the instalment of premiums, bonuses, priority shares the distinction between redeemable and irredeemable annuities the artificial graduation in the facility of transferring the various papers in such a manner that the public understanding is quite bamboozled by these detestable stock-jobbing scholastics and the frightful complexity in details; while with every such new financial operation the usurers obtain an eagerly-seized opportunity for developing their mischievous and predatory activity. Mr. Glad-stone is, without any doubt, a master in this sort of financial alchemy, and this proposal cannot be better characterised than by the words of Mr. Disraeli:—

More complicated and ingenious machinery to produce so slight a result, appeared to him never to have been devised by the subtlety and genius of the most skilful casuist. In Saint Thomas Aquinas[f] there was a chapter that speculated upon the question of how many angels could dance on the point of a needle. It was one of the rarest productions of human genius; and he recognised in these resolutions something of that master mind.

You will remember that we have stated that the ultimate end of Gladstone's plan was the establishment of a "normal" 2½ per cent fund. Now, in order to achieve this end, he creates a very limited 2½ per cent fund, and an illimited 3½ per cent stock. In order to create his limited 2½ per cent stock, he reduces the interest by a half per cent, and augments the capital by a bonus of 10 per cent. In order to rid himself of the difficulty of all legislation on the 3 per cents being defended by twelve months' notice, he prefers legislating for half a century to come; in conclusion, he would, if successful, cut off all chance of financial liberation for half a century from the British people.

Every one will confess, that if the Jewish Disabilities Bill was a little attempt at establishing religious tolerance the Canada Reserves Bill a little attempt at granting colonial self-government[48] the Education Resolution[g] a little attempt at avoiding National Education Gladstone's financial scheme is a mighty little attempt at dealing with that giant-monster, the National Debt of Britain.

Written on April 12, 1853
First published in The People's Paper, No. 50, April 16, 1853
Signed: C. M.
Reproduced from the newspaper


[a] The figures for the following table were taken mainly from W. Cobbett's book, Paper against Gold, pp. 21-25.—Ed.

[b] The People's Paper erroneously gave £82,027,288 here as national expenditure for 1809. The figure has been corrected according to W. Cobbett's book.—Ed.

[c] The Morning Chronicle, No. 26922, April 7, 1853.—Ed.

[d] Here and below the quotations are from Benjamin Disraeli's speech in the House of Commons on April 8, 1853 (The Times, No. 21398, April 9, 1853).—Ed.

[e] A quotation from the speech of Edward Ellice, M.P. from Coventry, cited by Benjamin Disraeli in his House of Commons speech on April 8, 1853.—Ed.

[f] Thomas Aquinas, Summa Theologica.—Ed.

[g] See this volume, pp. 51-52.—Ed.

[45] This article is the first in a series by Marx on the budget of Aberdeen's Coalition Ministry, published in the London weekly The People's Paper, the organ of the revolutionary wing of Chartists founded in May 1852. He wrote them at the same time as his articles on the subject for the New-York Daily Tribune, and in places the text is almost identical.

Marx contributed his articles to The People's Paper without payment, and frequently assisted with editing articles and helped Ernest Jones, the editor-in-chief, with matters of organisation. He also enlisted his close colleagues, Georg Eccarius, Wilhelm Pieper and Adolph Cluss, to write for the newspaper as permanent contributors. Eccarius, in particular, wrote with Marx's assistance a review of the literature on the coup d'état in France on December 2 (see present edition, Vol. 11, Appendices). This review was the first in the English press to popularise Marx's ideas that were set forth in The Eighteenth Brumaire of Louis Bonaparte.

Apart from publishing Marx's articles, written specially for it, The People's Paper from October 1852 to December 1856 reprinted the most important articles by Marx and Engels from the New-York Daily Tribune. In 1856, as a result of Jones' rapprochement with the bourgeois radicals, Marx and Engels ceased their work for The People's Paper and temporarily broke off relations with Jones. In June 1858 the newspaper passed into the hands of bourgeois businessmen.

[46] Following William Cobbett, Marx gives the year 1701 as the beginning of Queen Anne's reign, in accordance with the calendar in operation in England before 1752, when the new year began with March 25. According to the new style, Anne's reign began in 1702.

[47] The South Sea Company was founded in England about 1712 officially for trade with South America and the Pacific islands, but its real purpose was speculation in state bonds. The government granted several privileges and monopoly rights to the Company, including the right to issue state securities. The Company's large-scale speculation brought it to bankruptcy in 1720 and greatly increased Britain's national debt.

[48] A reference to Russell's motion for the "removal of some disabilities of Her Majesty's Jewish subjects", introduced in the House of Commons on February 24, 1853. The motion aimed at granting the Jews the right to be elected to the House of Commons. It passed through the Commons but was turned down by the House of Lords. Marx gave an appraisal of this bill in his article "Parliamentary Debates.—The Clergy Against Socialism.—Starvation" (see present edition, Vol. 11).

The Canada Clergy Reserves (1791-1840) consisted of a seventh of the revenue from the sale of lands in Canada and were used chiefly for subsidising the Established and the Presbyterian Churches. In 1853 the British Parliament passed a law authorising the legislative bodies in Canada to distribute the funds independently and grant subsidies to other churches also according to the proportion of the population professing this or that religion. When Peel's Bill, introduced on February 15, 1853, was passing through the House of Commons, the members, on Russell's initiative, voted against the clause on the withdrawal of subsidies to various churches in Canada, which were granted in years when their share of the revenue from the sale of lands was below a fixed sum.

Source: Marx and Engels Collected Works, Volume 12 (pp.44-49), Progress Publishers, Moscow 1979
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