mercial basis, which, however, raises the serious question whether such a lending office is not remotely, if not immediately, mischievous. That is to say, do the borrowing local authorities know what they are doing when they borrow, and does the London County Council know what it is doing-first, when it borrows to use, and, second, when it borrows to lend? The presumption is that neither the London County Council nor the borrowing local authorities are aware that they are playing with edged tools. But this is anticipation. The overthrow of the Metropolitan Board of Works was dramatic. It was occasioned by a dog-fight, and should its successor the London County Council be also overthrown it will be by elementary financial error. Two gentlemen, personally unknown to each other, went into residence in adjoining mansions in a fashionable London suburbone a high placed official of the Metropolitan Board of Works at Spring Gardens, the other a newspaper man of distinction. As is the English habit, neither soon acknowledged the other, but each closing his entrance-gate each morning at the same time to catch the same omnibus or train, conversation at odd times followed, which eventually led to a close intimacy. They exchanged visits. They smoked together. They played whist in the one mansion and billiards in the other. The families became inseparable. The newspaper man, as all newspaper men are, was charming, brimful of press anecdotes, scandals, failures, successes, and so on, each drawing out the other on Spring Gardens' troubles, schemes, bickerings, extravagance, and follies, with, as set-off, a disclosure of the sacred things personal to the newspaper man. In short, the one became father-confessor to the other. This was neighbourlike and charming, and continued until the fateful morning of the dog-fight. As usual, on that morning the two gentlemen closed each his gate at the same moment, neither having noticed that the dogs had got outside also. And tooth and nail the dogs were at it, the Spring Gardens' dog now shaken like a rat, now pinned to the ground. without the appearance of a shake left in him. Words were exchanged. The language of the poets followed and both gentlemen began to strip. On the first round Spring Gardens drew blood, and on the second he caught the kerb with his foot and came a cropper. There was no walking together to omnibus or train that morning. On subsequent mornings each chose his own time of leaving, as still waters run deep. The families on meeting looked the other way. After a while a newspaper campaign was opened, by horse and foot guards and hussars, against the Metropolitan Board of Works. No one knew whence the inspiration, nor to this day does any one know. First a messenger boy was blamed, next the head waiter, and last the door-keeeper. Stock, lock, and barrel, the secrets of the prison-house were revealed. Metropolitan stock was dropped like a hot potato. The Bank authorities were appre

hensive of a panic, and the Governor and Deputy-Governor were on the premises for a week in case it should be necessary to ask the Chancellor of the Exchequer to suspend the Bank Charter Act. The public were scandalised. Questions followed in both Houses of Parliament. The Commons appointed a committee and asked the champion boxer to give evidence. He refused point blank, and the committee reported the fact to the House. The champion boxer was summoned to the Bar. Instead of complying, he packed a Gladston● bag, called a cab, and, as fast as steam could take him, he settled down in quiet Normandy until the House rose, when its power ceased. From Normandy the situation was aggravated by a series of highly spiced letters condemnatory of the House which appeared in the newspapers; but the House was equal to the occasion, for it wiped out the Metropolitan Board of Works.

The London County Council commenced business under favourable auspices, taking over assets and responsibilities. Under the Metropolitan Act of 1885 it might lend to vestry or district board, or to any corporation, commissioners, burial, or public body, or to a board of guardians, the managers of an asylum, district, or the School Board of London, and also on the free trade principle to others. Obviously these great powers expressed in Acts of Parliament entrusted to men of proved ignorance of what would follow on reckless trading. The policy evolved was not that of enabling a candle to be lighted at both ends but the Acts provided for a candle to be cut into pieces that as many ends as possible might be lighted. For illustration of the working, typical of all cases turn to Burdett 1892-3 when various schemes were propounded for paying off a debt, which then stood at the considerable sum of £17,000,000 at an average of 3 per cent. The annual instalment payment system was favourably regarded out of doors with payments during sixty years to cover principle and interest. On that basis the scheme worked out to an aggregate payment of £33,851,250 as the price of the £17,000,000; but worse than that, the scheme ignored the negative interest involved. This probably arose from ignorance of such a thing as negative interest with no intention to deceive the public. Briefly explained, negative interest arises whenever one parts with money; not only is money then parted with but the interest which the money would bring in is also parted with; on negative interest, insurance, sinking funds, annuities, and investment generally are founded. Thus negative interest is a real thing, in fact it is so terribly real socially that it is regrettable it should not have had a place in Burdett's schemes. For example, socially interest at 1 per cent. is just equal to human effort in seventy years; at 2 per cent, it is four times greater than human effort; at 4 per cent. it is almost sixteen times greater; at 8 per cent. it is more than 218 times greater, and at 10 per cent. it is almost 790 times greater. As hereafter explained whatever in a lifetime

of seventy years a man may acquire interest at 1 per cent. will double the sum in seventy years. But returning to the £17,000,000 for which the sum of £33,851,250 was to be paid in sixty years, the annual average payment during those years being £543,201 exclusive of negative interest. Accordingly what so far has followed from the debt of the London County Council has been the spreading over a wide field of the genius of expenditure without regard to consequences, for ends often whimsical and generally for the production of debt and not of wealth. Wealth is less of local than of international apprecia

tion.

By the usual tables, £1 in a year at 31 per cent. compound interest becomes in sixty years not £60 but £163 which as the multiplier of the £543,291 for the £17,000,000 becomes £110,696,541 which added to Burdett's £33,851,250 gives a total of £144,547,791 as the cost of loan of £17,000,000. But it will be said as the borrowing is at 31 per cent. and the lending to outsiders is at 4 per cent. there is a clear gain of per cent. So there is, when you ignore negative interest. To further illustrate negative interest, you buy a house to return you £100 annually and in sixty years the £100 to you becomes at 3 per cent. £589; but to the tenant in sixty years £100 "a year" becomes £16,300. Such is the radical difference between paying annually and paying a lump sum; and all annual payments increase in the same ratio. Another illustration: in the Wandsworth and Clapham Union the valuations for rating are down to 2s. 6d. a week occupations which is a £3 a year rateable value; and at the Battersea 8s. rate a payment of 24s. a year is thus made by the poorest of the poor. This "annual" payment of 24s. becomes in sixty years £196. Hence the prevailing poverty. Twenty-four shillings a year at 3 per cent. compound interest would not give a poor man an old-age pension, but it would give him in hand £196. And while the tenant at £100 a year paid in sixty years £16,300, the house which cost £1000 will in sixty years have cost £5890. Such is negative interest; but it may be contended that depreciating house property does not admit of finance. That is so, but still a skilful use of negative interest in a decaying neighbourhood may by anticipation admit of set-off. What is the prospective trouble? Is it a railway extension that will bring a vibratory tube across your breakfast room, or is it one that will subject the inmates to day and night locomotive screechings, or is a small-pox hospital to be erected against your garden wall? Generally organic changes are talked of in advance which would give you time to get into the borough council where you might advocate the formation of a new street that would take in your house. Or a course of study in the museum library might unearth such facts as that Shakespeare spent most of his boyhood in your house, or that Cromwell's father once lived in your house. As for the small-pox hospital your tooth and nail opposition would be bought off at a high figure.

In a narrow, an extremely narrow sense, Glasgow is to the north what the London County Council is to London, with as a difference an absence of power to enable others outside of the Corporation to hatch financial chickens. Glasgow has not had bestowed upon it, nor has it assumed the function of money lender, it has preferred that each tub should stand on its own bottom. It does not borrow at 31 per cent. that it may lend at 4 per cent. to busy bodies who may make ducks and drakes of the loan. Glasgow by old Saltmarket instinct has gone on its own because in bygone years it had so much struggle and wretchedness hanging to its skirts, especially in trade depression periods, with laissez faire no remedy, and learning a wise lesson it with zest embarked in municipal undertakings to make money out of them without sentiment or love for humankind; and to gaze upon its work with and without legislative backing is to become convinced that more may be achieved by public spirit well or ill directed than by grace of Parliament inspired by personal or class log rolling. What Glasgow as a municipality has projected, pushed through, and operated successfully or unsuccessfully, need not be recalled much less commented on. Evidently in the main Glasgow has been inspired by the example of the States of Guernsey, which furnished itself with a meat-market which paid for itself in ten years, when the community had the meat-market for nothing, and with it a clear annual income of £400 by rents. Nothing, however, which Glasgow has done has come up to the Guernsey standard, and while the Corporation bas acted up to its lights financially, the presumption is that a by no means remote posterity have a bad quarter of an hour before them, with municipal liquidation in fact, on the basis at a venture of half-a-crown in the pound, as a'so is probable to London posterity. To make the case of Glasgow clear, assume that it is face to face with the housing question, and that it borrows £1,000,000 for seventy years at 3 per cent. In seventy years at compound interest £1,000,000 at 3 per cent. becomes £8,000,000, of which £1,000,000 is capital and £7,000,000 is interest, which interest divided by seventy years gives in round numbers £100,000 a year for negative interest; and as £1 per annum at 3 per cent. becomes £230 11s. 10d. in seventy years, that sum multiplied by £100,000 becomes the considerable sum of £23,000,000, which added to the £7,000,000, gives an obligation to posterity of £30,000,000 against a set-off of £100,000 as rent by the borrowed £1,000 000, less 5 per cent. for upkeep, loss, repairs, and insurance, or £50,000. To demonstration these figures show how on the one hand wealth has been acquired by the few, and how the many have been reduced to poverty and want. It would be nonsense to charge the Corporation of Glasgow with knowingly going in for reckless trading, although its trading has been reckless. has bogged itself in the mysteries of interest. In vain to it the

It

many publications on interest simple and compound. The nigger on the fence is the actuary who in debauching mathematics has fooled the Glasgow and many other corporations, inclusive of the London County Council. The interest tables show that at simple interest £1 in seventy years at 3 per cent. becomes £7 14s. 44d., and £1 per annum in seventy years at 3 per cent. becomes £230 11s. 101d. Upon such simple facts actuarial humbug has been reared with so much nonsense that the mysteries of insurance annuities, sinking funds, perpetuities, and public debts are utterly incomprehensible to the general public.

Although the Guernsey meat-market is an old story by one Jonathan Duncan, in his letters on "Monetary Science," a condensed account of the finance needs no apology. The meat-market was to cost £4000, and £1 notes for that sum were guaranteed by the whole property of the island, and issued in payment for the market. The notes were inscribed "Gurnsey Meat-market Notes" and numbered 1 to 4000. Nobody refused the notes, as they were receivable for rates and taxes, and the butchers' shops and offices over them were rented for £400 a year in notes. The notes as soon as received were destroyed, so that at the end of ten years the £4000 in notes disappeared, not only providing a meat-market for nothing, but in addition yielding an annual income of £400. Such should be the ideal of all local borrowing; indeed, it should without loss of time be made compulsory as a borrowing system.

in private life we cannot get at all times what we wish without waiting, why not apply the same maxim of prudence to municipal life?

Annual payments as distinguished from lump sum payments, on units of £1, at 3 per cent., carry with them ever-increasing negative interest; while in twenty-four years a single £1 only becomes £2; but £1 annually in twenty-four years becomes £34 8s. 61d. The difference between £2 and £34 8s. 61d. is the sum of the negative interest involved at 3 per cent. Hence the impossible continued doublings on posterity of unredeemed national and local debt, as to each rope there is an end. What, then, is to be done, not so much by criticism as by suggestion, to the distinguished man at the Exchequer ? But first, to emphasise the present urgency of heroic action, turn to the debt of the Government to the Bank of England, which "American Notes" (Cassell & Co.) stigmatise as slim in origin. A debt of £14,000,000 arose out of Pitt's "poker chips," which that grossly misunderstood and absurd man in many ways, Sir Robert Peel, admitted for the more easy passing of his Bank Charter Act of 1844, the parent of all subsequent financial scandal. On May 31, 1833, Lord Althorp paid off a fourth of the £14,000,000, which left the present debt as it stands weekly in the Bank statement at £11,016,100. This debt since 1833 has carried 3 per cent. interest,