The Management of the National Debt of the United Kingdom, 1900-1932

The Management of the National Debt of the United Kingdom, 1900-1932

The Management of the National Debt of the United Kingdom, 1900-1932

The Management of the National Debt of the United Kingdom, 1900-1932


This volume analyses the management of the national debt of the United Kingdom from the Boer War to the period of the Great Depression in the early 1930s.


The National Debt of the United Kingdom is unusual in combining great age with continuity. With a single exception, for 300 years it has not experienced a default, nor has it been destroyed by political upheaval or an inflation so great that it has lost all value. At the end of the twentieth century, the uk Treasury still pays £6.9m each year for the interest on 2 1/2 per cent Consols, a marketable security that has been in existence since 1888 and is the direct and traceable descendant of debt sold to finance the European and North American wars of the eighteenth and early nineteenth centuries. Despite the damage wrought by the price inflation of two world wars and the second half of the twentieth century, Consols stands out starkly against the political disturbances and the budgetary and monetary excesses that have totally destroyed the debts of so many nations.

What do Consols teach us about British society and politics and the state whose liability they have been for nearly 250 years? Perhaps at its most banal, Consols say that the uk is a group of islands that has not been invaded or had its government overthrown and replaced by another—foreign or home-grown—with no reason to recognise its defeated predecessor’s debts. At this level, the Debt’s survival is explained by power—geography and natural resources, the technology to produce goods, organise people, and build and maintain defence forces—and the statesmanship and diplomacy which have ensured that the resources have been used for clear and attainable purposes; and that, when there have been lapses, they have not been mortal.

On another level, the Debt’s continuity and age reflect the legitimacy that British governments have enjoyed in the eyes of their citizens: the population’s willingness to offer the state service, accept the monetary and fiscal disciplines that give value to the money in which the obligations have been denominated and tolerate the extraction of the taxes that have enabled the securities to be serviced. It also shows that the distribution of the burden has been considered fair, so that the coercion and dislocation that are inseparable from all tax raising have not created such resentment that the stability of the state has been threatened and default or monetisation has become the preferred or necessary option.

When J.P. Morgan, the Treasury’s American bankers, were issuing the Anglo-French Loan in New York in 1915, they coupled the citizens’ willingness to recognise and pay for the Debt with their income and wealth:

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