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Britain still hasn’t paid off the slavery compensation debt

Summary:
Something that seems to be extremely common these days, this idea that Britain paid off the debt for that £20 million in compensation to slave owners back in the day. As an example, although we’ve seen it around several times in the past couple of days alone: Indeed, the “compensation” paid to slave owners after abolition was so vast that it took until 2015 for Britain to finish paying the bill.Entirely piffle.As to the compensation, or as some call it reparations that didn’t make it to the ex-slaves, we tend to a different view. It was a bribe and one well worth it. The slave interests had considerable political power in the Britain of the 1830s. The abolition of slavery wasn’t going to happen anytime soon unless those interests were appeased. £20 million was the price and we regard it

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Something that seems to be extremely common these days, this idea that Britain paid off the debt for that £20 million in compensation to slave owners back in the day. As an example, although we’ve seen it around several times in the past couple of days alone:

Indeed, the “compensation” paid to slave owners after abolition was so vast that it took until 2015 for Britain to finish paying the bill.

Entirely piffle.

As to the compensation, or as some call it reparations that didn’t make it to the ex-slaves, we tend to a different view. It was a bribe and one well worth it. The slave interests had considerable political power in the Britain of the 1830s. The abolition of slavery wasn’t going to happen anytime soon unless those interests were appeased. £20 million was the price and we regard it as an excellent one, a bargain, to free that upwards of 800,000 people from durance vile.

The point here being that the debt was not paid off, has not been paid off and some infinitesimal portion of everyones’ tax bill is still servicing that debt.

Varied old debts - the slavery compensation, the Crimean, Napoleonic Wars - were swept up into Consols (Consolidated Loan Stock) which were perpetuals. There was no repayment date, they lasted forever. The interest rate was fair enough - although horribly manipulated - for a zero inflation environment but of course that’s hot what we had post-WWII. Thus these perpetual bonds traded at 20 pence, perhaps 30 pence on the pound. The debt managers could have called them in and paid them off at any time but to do so they would have had to pay 100 pence on the £. Allowing government creditors to recoup their inflation losses was never high on anyone’s list of things to do so therefore they weren’t called in, those Consols.

Then post-QE interest rates fell to something like was being paid on the perpetuals, as naturally happens at that point Consols traded at about 100 pence on the £. This gave George Osborne the chance to do something - perhaps the only thing - he was good at, make a political gesture. Call in those Consols and claim to have paid them off.

Except anyone noted what was the government’s debt position in 2015? That’s right, it was still borrowing an extra tens of billions of £s each year. It didn’t, because it couldn’t, pay off debt. It could pay off a particular set of bonds, sure, but not actually retire the debt because the only way it had of paying off debt was to issue more debt. The Consols, that is, were rolled over into the standard Treasury (Gilts) issues of 2015.

The slavery compensation bill is still there in the national debt. Tax bills still include some portion of debt servicing on that sum.

Again, we think that bribe of £20 million to have been money well spent considering what it bought. But we do insist that we’re all still paying it.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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