Wednesday, 25 September 2013
Attempts to pay off the UK National Debt, 1920s style
The National Fund was established in 1927 by an anonymous donor, who left the state £500,000 (of which £338,909 was in cash, and the rest in securities). The designated Trustee was Barings Bank. The money was conditional: it would be retained and accumulate debt until either alone, or in concert with other funds, it ran at a sufficient sum to discharge the national debt. The money could be invested but not put into business, trade, or the stock market. By the mid 1970s, it was bringing in about £7 million a year, a rate however it continues at today. As at April 2011, the total amount stood at £339.9 million – not even enough to cover three days of current debt interest. It has some way to go yet before being drawn upon.
The Elsie Mackay Fund was set up in 1927 by the first Lord Inchcape in memory of his daughter, an aviation pioneer who died in an early Transatlantic attempt. Under the terms, the money would accumulate for 45-50 years. Originally £527,809, by 1976 the fund (shortly before the account was closed) had reached only £4,039,302.
The John Buchanan Fund was set up in 1932, two years after the death of Dr Buchanan, with annuities to accumulate for fifty years. Trustees for this scheme included the Chancellor, the Governor of the Bank of England, and the Comptroller General of the National Debt Office. As at 1976, the sum appeared to have accumulated to a total of £100,978.
It is of course astonishing to look at these sums, once considered to be large sums of private wealth which, despite decades of investment, have barely amassed enough since to scratch the surface of our national debt. Had public spending been gotten under control, they would have provided the last step for a state to find its solvency. But perhaps there is a greater thing of astonishing value in these cases. The generosity of spirit that drove these benefactors – despite existing levels of taxation, including death duties – to provide what were at the time large amounts for public benefit is astonishing. Churchill indeed was even questioned as Chancellor over the National Fund as to whether the donation had deprived members of the family from their own inheritance. He ducked the question.
from "A Fate Worse than Debt" by Lee Rotherham
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