THE NATIONAL SAVINGS MOVEMENT 213
whether they are advantageous, or justifiable, from the stand-
point of the tax-payer. The certificates are primarily intended
for small investors, whose incomes are for the most part exempt
from Income-tax. For such people a rate of interest such as
4-138, which is yielded by the third series certificates at the end
of ten years, cannot be considered excessive, and a higher return
could be obtained from other Government securities. The
trouble is to fix terms which do justice to the small investor,
without the State paying too high a rate of interest for the
money of those purchasers of certificates who are liable for
Income-tax and Super-tax, which are not charged upon the
interest earned by certificates.
It was because of this Income-tax problem that it was
originally decided that certificates could not be held by people
whose incomes exceeded £300 a year. This proved to be an
impracticable arrangement, and the holding of certificates
was limited to five hundred, with the exception that there was
no limit to the number of certificates that can be inherited,
though when an individual holds more than five hundred he
cannot buy any more.
The rate of interest paid upon certificates is being carefully
watched, and should it at any time prove to be unduly high or
low, the terms can be modified with no great difficulty. It
should, however, be remembered that it is possible to give
a comparatively high rate of interest to those who retain their
certificates for a long period, because of the low rate payable if
certificates are cashed within a few years of the date of purchase.
The Savings Certificate is a peculiarly flexible and con-
venient security, and has become the most popular and con-
venient channel through which, to the great benefit of the
individual, substantial advantages can be conferred upon the
community as a whole. While the money is being saved and
interest paid upon it, the capital is used in one way or another
to pay wages or buy materials, and so comes into circulation
for the development of industry and the provision of employ-
ment.
If, as in course of time is likely to be the case, this habit of
. 589.58
