Ricardo on Public Debt: the Question of Motive

Abstract

Among the most controversial of David Ricardo’s contributions to policy debate was his scheme for the redemption of the public debt by means of a ‘capital levy’; a one-time tax on the property of the nation. Public debt policy had been the subject of sporadic debate throughout the eighteenth century, but faced increased scrutiny by the time Ricardo came to address the subject. While government revenues were suffering from the repeal of the temporary income tax which had been imposed during the Napoleonic Wars, revenue requirements remained high, as the savings in terms of military expenditures were being offset by the need to make interest payments on a debt which had grown during the latter years of the war. Ricardo’s analysis of public debt was not novel; nor was the proposal for a capital levy to achieve its redemption.¹ Where Ricardo’s proposal differed from its predecessors was in its provision that the burden of debt redemption was to be shared between owners of capital, owners of land, and holders of government bonds themselves.

His speaking was of an admirable description; clear, simple, correct in diction, copious in argument, pregnant with information, but never thrown away. He reserved the share which he took in [parliamentary] debate for questions to which his attention had been particularly directed, with which he was familiar, and to which he attached great importance… [H]e appeared not to court the opportunity of delivering them, but as if compelled by a sense of duty to declare his mind… Few men have, accordingly, had more weight in Parliament; certainly none who, finding but a very small body of his fellow-members to agree with his leading opinions, might be said generally to speak against the sense of his audience, ever commanded a more patient or even favourable hearing; and, as this was effected without any of the more ordinary powers of oratory or of entertainment possessed by others, it might be regarded as the triumph of reason, intelligence, and integrity over untoward circumstances and alien natures.Henry Lord Brougham on David Ricardo, 1839, p. 190