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    Book V: Chapter 3

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    Chapter 36
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    In that rude state of society which precedes the extension of
    commerce and the improvement of manufactures ; when those
    expensive luxuries, which commerce and manufactures can alone
    introduce, are altogether unknown ; the person who possesses a
    large revenue, I have endeavoured to show in the third book of
    this Inquiry, can spend or enjoy that revenue in no other way
    than by maintaining nearly as many people as it can maintain. A
    large revenue may at all times be said to consist in the command
    of a large quantity of the necessaries of life. In that rude
    state of things, it is commonly paid in a large quantity of those
    necessaries, in the materials of plain food and coarse clothing,
    in corn and cattle, in wool and raw hides. When neither commerce
    nor manufactures furnish any thing for which the owner can
    exchange the greater part of those materials which are over and
    above his own consumption, he can do nothing with the surplus,
    but feed and clothe nearly as many people as it will feed and
    clothe. A hospitality in which there is no luxury, and a
    liberality in which there is no ostentation, occasion, in this
    situation of things, the principal expenses of the rich and the
    great. But these I have likewise endeavoured to show, in the same
    book, are expenses by which people are not very apt to ruin
    themselves. There is not, perhaps, any selfish pleasure so
    frivolous, of which the pursuit has not sometimes ruined even
    sensible men. A passion for cock-fighting has ruined many. But
    the instances, I believe, are not very numerous, of people who
    have been ruined by a hospitality or liberality of this kind;
    though the hospitality of luxury, and the liberality of
    ostentation have ruined many. Among our feudal ancestors, the
    long time during which estates used to continue in the same
    family, sufficiently demonstrates the general disposition of
    people to live within their income. Though the rustic
    hospitality, constantly exercised by the great landholders, may
    not, to us in the present times, seem consistent with that order
    which we are apt to consider as inseparably connected with good
    economy; yet we must certainly allow them to have been at least
    so far frugal, as not commonly to have spent their whole income.
    A part of their wool and raw hides, they had generally an
    opportunity of selling for money. Some part of this money,
    perhaps, they spent in purchasing the few objects of vanity and
    luxury, with which the circumstances of the times could furnish
    them ; but some part of it they seem commonly to have hoarded.
    They could not well, indeed, do any thing else but hoard whatever
    money they saved. To trade, was disgraceful to a gentleman; and
    to lend money at interest, which at that time was considered as
    usury, and prohibited bylaw, would have been still more so. In
    those times of violence and disorder, besides, it was convenient
    to have a hoard of money at hand, that in case they should be
    driven from their own home, they might have something of known
    value to carry with them to some place of safety. The same
    violence which made it convenient to hoard, made it equally
    convenient to conceal the hoard. The frequency of treasure-trove,
    or of treasure found, of which no owner was known, sufficiently
    demonstrates the frequency, in those times, both of hoarding and
    of concealing the hoard. Treasure-trove was then considered as an
    important branch of the revenue of the sovereign. All the
    treasure-truve of the kingdom would scarce, perhaps, in the
    present times, make an important branch of the revenue of a
    private gentleman of a good estate.

    The same disposition, to save and to hoard, prevailed in the
    sovereign, as well as in the subjects. Among nations, to whom
    commerce and manufacture are little known, the sovereign, it has
    already been observed in the Fourth book, is in a situation which
    naturally disposes him to the parsimony requisite for
    accumulation. In that situation, the expense, even of a
    sovereign, cannot be directed by that vanity which delights in
    the gaudy finery of a court. The ignorance of the times affords
    but few of the trinkets in which that finery consists. Standing
    armies are not then necessary; so that the expense, even of a
    sovereign, like that of any other great lord can be employed in
    scarce any thing but bounty to his tenants, and hospitality to
    his retainers. But bounty and hospitality very seldom lead to
    extravagance; though vanity almost always does. All the ancient
    sovereigns of Europe, accordingly, it has already been observed,
    had treasures. Every Tartar chief, in the present times, is said
    to have one.

    In a commercial country, abounding with every sort of expensive
    luxury, the sovereign, in the same manner as almost all the great
    proprietors in his dominions, naturally spends a great part of
    his revenue in purchasing those luxuries. His own and the
    neighbouring countries supply him abundantly with all the costly
    trinkets which compose the splendid, but insignificant, pageantry
    of a court. For the sake of an inferior pageantry of the same
    kind, his nobles dismiss their retainers, make their tenants
    independent, and become gradually themselves as insignificant as
    the greater part of the wealthy burghers in his dominions.
    The same frivolous passions, which influence their conduct,
    influence his. How can it be supposed that he should be the only
    rich man in his dominions who is insensible to pleasures of this
    kind ? If he does not, what he is very likely to do, spend upon
    those pleasures so great a part of his revenue as to debilitate
    very much the defensive power of the state, it cannot well be
    expected that he should not spend upon them all that part of it
    which is over and above what is necessary for supporting that
    defensive power. His ordinary expense becomes equal to his
    ordinary revenue, and it is well if it does not frequently exceed
    it. The amassing of treasure can no longer be expected; and when
    extraordinary exigencies require extraordinary expenses, he must
    necessarily call upon his subjects for an extraordinary aid. The
    present and the late king of Prussia are the only great princes
    of Europe, who, since the death of Henry IV. of France, in 1610,
    are supposed to have amassed any considerable treasure. The
    parsimony which leads to accumulation has become almost as rare
    in republican as in monarchical governments. The Italian
    republics, the United Provinces of the Netherlands, are all in
    debt. The canton of Berne is the single republic in Europe which
    has amassed any considerable treasure. The other Swiss republics
    have not. The taste for some sort of pageantry, for splendid
    buildings, at least, and other public ornaments, frequently
    prevails as much in the apparently sober senate-house of a little
    republic, as in the dissipated court of the greatest king.

    The want of parsimony, in time of peace, imposes the necessity of
    contracting debt in time of war. When war comes, there is no
    money in the treasury, but what is necessary for carrying on the
    ordinary expense of the peace establishment. In war, an
    establishment of three or four times that expense be. comes
    necessary for the defence of the state ; and consequently, a
    revenue three or four times greater than the peace revenue.
    Supposing that the sovereign should have, what he scarce ever
    has, the immediate means of augmenting his revenue in proportion
    to the augmentation of his expense; yet still the produce of the
    taxes, from which this increase of revenue must be drawn, will
    not begin to come into the treasury, till perhaps ten or twelve
    months after they are imposed. But the moment in which war
    begins, or rather the moment in which it appears likely to begin,
    the army must be augmented, the fleet must be fitted out, the
    garrisoned towns must be put into a posture of defence; that
    army, that fleet, those garrisoned towns, must be furnished with
    arms, ammunition, and provisions. An immediate and great
    expense must be incurred in that moment of immediate danger,
    which will not wait for the gradual and slow returns of the new
    taxes. In this exigency, government can have no other resource
    but in borrowing.

    The same commercial state of society which, by the operation of
    moral causes, brings government in this manner into the necessity
    of borrowing, produces in the subjects both an ability and an
    inclination to lend. If it commonly brings along with it the
    necessity of borrowing, it likewise brings with it the facility
    of doing so.

    A country abounding with merchants and manufacturers, necessarily
    abounds with a set of people through whose hands, not only their
    own capitals, but the capitals of all those who either lend them
    money, or trust them with goods, pass as frequently, or more
    frequently, than the revenue of a private man, who, without trade
    or business, lives upon his income, passes through his hands. The
    revenue of such a man can regularly pass through his hands only
    once in a year. But the whole amount of the capital and credit of
    a merchant, who deals in a trade of which the returns are very
    quick, may sometimes pass through his hands two, three, or four
    times in a year. A country abounding with merchants and
    manufacturers, therefore, necessarily abounds with a set of
    people, who have it at all times in their power to advance, if
    they chuse to do so, a very large sum of money to government.
    Hence the ability in the subjects of a commercial state to lend.

    Commerce and manufactures can seldom flourish long in any state
    which does not enjoy a regular administration of justice; in
    which the people do not feel themselves secure in the possession
    of their property ; in which the faith of contracts is not
    supported by law ; and in which the authority of the state is not
    supposed to be regularly employed in enforcing the payment of
    debts from all those who are able to pay. Commerce and
    manufactures, in short, can seldom flourish in any state, in
    which there is not a certain degree of confidence in the justice
    of government. The same confidence which disposes great merchants
    and manufacturers upon ordinary occasions, to trust their
    property to the protection of a particular government, disposes
    them, upon extraordinary occasions, to trust that government with
    the use of their property. By lending money to government, they
    do not even for a moment diminish their ability to carry on their
    trade and manufactures; on the contrary, they commonly augment
    it. The necessities of the state render government, upon most
    occasions willing to borrow upon terms extremely advantageous to
    the lender. The security which it grants to the original
    creditor, is made transferable to any other creditor ; and from
    the universal confidence in the justice of the state, generally
    sells in the market for more than was originally paid for it. The
    merchant or monied man makes money by lending money to
    government, and instead of diminishing. increases his trading
    capital. He generally considers it as a favour, therefore, when
    the administration admits him to a share in the first
    subscription for a new loan. Hence the inclination or willingness
    in the subjects of a commercial state to lend.

    The government of such a state is very apt to repose itself upon
    this ability and willingness of its subjects to lend it their
    money on extraordinary occasions. It foresees the facility of
    borrowing, and therefore dispenses itself from the duty of

    In a rude state of society, there are no great mercantile or
    manufacturing capitals. The individuals, who hoard whatever money
    they can save, and who conceal their hoard, do so from a distrust
    of the justice of government ; from a fear, that if it was known
    that they had a hoard, and where that hoard was to be found, they
    would quickly be plundered. In such a state of things, few people
    would be able, and nobody would be willing to lend their money to
    government on extraordinary exigencies. The sovereign feels that
    he must provide for such exigencies by saving, because he
    foresees the absolute impossibility of borrowing. This foresight
    increases still further his natural disposition to save.

    The progress of the enormous debts which at present oppress, and
    will in the long-run probably ruin, all the great nations of
    Europe, has been pretty uniform. Nations, like private men, have
    generally begun to borrow upon what may be called personal
    credit, without assigning or mortgaging any particular fund for
    the payment of the debt; and when this resource has failed them,
    they have gone on to borrow upon assignments or mortgages of
    particular funds.

    What is called the unfunded debt of Great Britain, is contracted
    in the former of those two ways. It consists partly in a debt
    which bears, or is supposed to bear, no interest, and which
    resembles the debts that a private man contracts upon account;
    and partly in a debt which bears interest, and which resembles
    what a private man contracts upon his bill or promissory-note.
    The debts which are due, either for extraordinary services, or
    for services either not provided for, or not paid at the time
    when they are performed; part of the extraordinaries of the army,
    navy, and ordnance, the arrears of subsidies to foreign princes,
    those of seamen's wages, etc. usually constitute a debt of the
    first kind. Navy and exchequer bills, which are issued sometimes
    in payment of a part of such debts, and sometimes for other
    purposes, constitute a debt of the second kind; exchequer bills
    bearing interest from the day on which they are issued, and navy
    bills six months after they are issued. The bank of England,
    either by voluntarily discounting those bills at their current
    value, or by agreeing with government for certain considerations
    to circulate exchequer bills, that is, to receive them at par,
    paying the interest which happens to be due upon them, keeps up
    their value, and facilitates their circulation, and thereby
    frequently enables government to contract a very large debt of
    this kind. In France, where there is no bank, the state bills
    (billets d'etat { See Examen des Reflections Politiques sur les
    Finances.}) have sometimes sold at sixty and seventy per cent.
    discount. During the great recoinage in king William's time, when
    the bank of England thought proper to put a stop to its usual
    transactions, exchequer bills and tallies are said to have sold
    from twenty-five to sixty per cent. discount; owing partly, no
    doubt, to the supposed instability of the new government
    established by the Revolution, but partly, too, to the want of
    the support of the bank of England.

    When this resource is exhausted, and it becomes necessary, in
    order to raise money, to assign or mortgage some particular
    branch of the public revenue for the payment of the debt,
    government has, upon different occasions, done this in two
    different ways. Sometimes it has made this assignment or mortgage
    for a short period of time only, a year, or a few years, for
    example; and sometimes for perpetuity. In the one case, the fund
    was supposed sufficient to pay, within the limited time, both
    principal and interest of the money borrowed. In the other, it
    was supposed sufticient to pay the interest only, or a perpetual
    annuity equivalent to the interest, government being at liberty
    to redeem, at any time, this annuity, upon paying back the
    principal sum borrowed. When money was raised in the one way. it
    was said to be raised by anticipation ; when in the other, by
    perpetual funding, or, more shortly, by funding.

    In Great Britain, the annual land and malt taxes are regularly
    anticipated every year, by virtue of a borrowing clause
    constantly inserted into the acts which impose them. The bank of
    England generally advances at an interest, which, since the
    Revolution, has varied from eight to three per cent., the sums of
    which those taxes are granted, and receives payment as their
    produce gradually comes in. If there is a deficiency, which there
    always is, it is provided for in the supplies of the ensuing
    year. The only considerable branch of the public revenue which
    yet remains unmortgaged, is thus regularly spent before it comes
    in. Like an improvident spendthrift, whose pressing occasions
    will not allow him to wait for the regular payment of his
    revenue, the state is in the constant practice of borrowing of
    its own factors and agents, and of paying interest for the use of
    its own money.

    In the reign of king William, and during a great part of that of
    queen Anne, before we had become so familiar as we are now with
    the practice of perpetual funding, the greater part of the new
    taxes were imposed but for a short period of time (for four,
    five, six, or seven years only), and a great part of the grants
    of every year consisted in loans upon anticipations of the
    produce of those taxes. The produce being frequently insufficient
    for paying, within the limited term, the principal and interest
    of the money borrowed, deficiencies arose; to make good which, it
    became necessary to prolong the term.

    In 1697, by the 8th of William III., c. 20, the deficiencies of
    several taxes were charged upon what was then called the first
    general mortgage or fund, consisting of a prolongation to the
    first of August 1706, of several different taxes, which would
    have expired within a shorter term, and of which the produce was
    accumulated into one general fund. The deficiencies charged upon
    this prolonged term amounted to £5,160,459: 14: 9½.

    In 1701, those duties, with some others, were still further
    prolonged, for the like purposes, till the first of August 1710,
    and were called the second general mortgage or fund. The
    deficiencies charged upon it amounted to £2,055,999: 7: 11½.

    In 1707, those duties were still further prolonged, as a fund for
    new loans. to the first of August 1712, and were called the third
    general mortgage or fund. The sum borrowed upon it was

    In 1708, those duties were all (except the old subsidy of tonnage
    and poundage, of which one moiety only was made a part of this
    fund, and a duty upon the importation of Scotch linen, which had
    been taken off by the articles of union) still further continued,
    as a fund for new loans, to the first of August 1714, and were
    called the fourth general mortgage or fund. The sum borrowed upon
    it was £925,176:9:2¼.

    In 1709, those duties were all ( except the old subsidy of
    tonnage and poundage, which was now left out of this fund
    altogether ) still further continued, for the same purpose, to
    the first of August 1716, and were called the fifth general
    mortgage or fund. The sum borrowed upon it was £922,029:6s.

    In 1710, those duties were again prolonged to the first of August
    1720, and were called the sixth general mortgage or fund. The sum
    borrowed upon it was £1,296,552:9:11¾.

    In 1711, the same duties (which at this time were thus subject to
    four different anticipations), together with several others, were
    continued for ever, and made a fund for paying the interest of
    the capital of the South-sea company, which had that year
    advanced to government, for paying debts, and making good
    deficiencies, the sum of £9,177,967:15:4d, the greatest loan
    which at that time had ever been made.

    Before this period, the principal, so far as I have been able to
    observe, the only taxes, which, in order to pay the interest of a
    debt, had been imposed for perpetuity, were those for paying the
    interest of the money which had been advanced to government by
    the bank and East-India company, and of what it was expected
    would be advanced, but which was never advanced, by a projected
    land bank. The bank fund at this time amounted to
    £3,375,027:17:10½, for which was paid an annuity or interest of
    £206,501:15:5d. The East-India fund amounted to £3,200,000, for
    which was paid an annuity or interest of £160,000; the bank fund
    being at six per cent., the East-India fund at five per cent.

    In 1715, by the first of George I., c. 12, the different taxes
    which had been mortgaged for paying the bank annuity, together
    with several others, which, by this act, were likewise rendered
    perpetual, were accumulated into one common fund, called the
    aggregate fund, which was charged not only with the payment of
    the bank annuity, but with several other annuities and burdens of
    different kinds. This fund was afterwards augmented by the third
    of George I., c.8., and by the fifth of George I., c. 3, and the
    different duties which were then added to it were likewise
    rendered perpetual.

    In 1717, by the third of George I., c. 7, several other taxes
    were rendered perpetual, and accumulated into another common
    fund, called the general fund, for the payment of certain
    annuities, amounting in the whole to £724,849:6:10½.

    In consequence of those different acts, the greater part of the
    taxes, which before had been anticipated only for a short term of
    years were rendered perpetual, as a fund for paying, not the
    capital, but the interest only, of the money which had been
    borrowed upon them by different successive anticipations.

    Had money never been raised but by anticipation, the course of a
    few years would have liberated the public revenue, without any
    other attention of government besides that of not overloading the
    fund, by charging it with more debt than it could pay within the
    limited term, and not of anticipating a second time before the
    expiration of the first anticipation. But the greater part of
    European governments have been incapable of those attentions.
    They have frequently overloaded the fund, even upon the first
    anticipation; and when this happened not to be the case, they
    have generally taken care to overload it, by anticipating a
    second and a third time, before the expiration of the first
    anticipation. The fund becoming in this manner altogether
    insufficient for paying both principal and interest of the money
    borrowed upon it, it became necessary to charge it with the
    interest only, or a perpetual annuity equal to the interest ; and
    such improvident anticipations necessarily gave birth to the more
    ruinous practice of perpetual funding. But though this practice
    necessarily puts off the liberation of the public revenue from a
    fixed period, to one so indefinite that it is not very likely
    ever to arrive ; yet, as a greater sum can, in all cases, be
    raised by this new practice than by the old one of anticipation,
    the former, when men have once become familiar with it, has, in
    the great exigencies of the state, been universally preferred to
    the latter. To relieve the present exigency, is always the object
    which principally interests those immediately concerned in the
    administration of public affairs. The future liberation of the
    public revenue they leave to the care of posterity.

    During the reign of queen Anne, the market rate of interest had
    fallen from six to five per cent.; and, in the twelfth year of
    her reign, five per cent. was declared to be the highest rate
    which could lawfully be taken for money borrowed upon private
    security. Soon after the greater part of the temporary taxes of
    Great Britain had been rendered perpetual, and distributed into
    the aggregate, South-sea, and general funds, the creditors of the
    public, like those of private persons, were induced to accept of
    five per cent. for the interest of their money, which occasioned
    a saving of one per cent. upon the capital of the greater part or
    the debts which had been thus funded for perpetuity, or of
    one-sixth of the greater part of the annuities which were paid
    out of the three great funds above mentioned. This saving left a
    considerable surplus in the produce of the different taxes which
    had been accumulated into those funds, over and above what was
    necessary for paying the annuities which were now charged upon
    them, and laid the foundation of what has since been called the
    sinking fund. In 1717, it amounted to £523,454:7:7½. In 1727, the
    interest of the greater part of the public debts was still
    further reduced to four per cent.; and, in 1753 and 1757, to
    three and a-half, and three per cent., which reductions still
    further augmented the sinking fund.

    A sinking fund, though instituted for the payment of old,
    facilitates very much the contracting of new debts. It is a
    subsidiary fund, always at hand, to be mortgaged in aid of any
    other doubtful fund, upon which money is proposed to be raised in
    any exigency of the state. Whether the sinking fund of Great
    Britain has been more frequently applied to the one or to other
    of those two purposes, will sufficiently appear by and by.

    Besides those two methods of borrowing, by anticipations and by a
    perpetual funding, there are two other methods, which hold a sort
    of middle place between them ; these are, that of borrowing upon
    annuities for terms of years, and that of borrowing upon
    annuities for lives.

    During the reigns of king William and queen Anne, large sums were
    frequently borrowed upon annuities for terms of years, which were
    sometimes longer and sometimes shorter. In 1695, an act was
    passed for borrowing one million upon an annuity of fourteen per
    cent., or £140,000 a-year, for sixteen years. In 1691, an act was
    passed for borrowing a million upon annuities for lives, upon
    terms which, in the present times, would appear very
    advantageous; but the subscription was not filled up. In the
    following year, the deficiency was made good, by borrowing upon
    annuities for lives, at fourteen per cent. or a little more than
    seven years purchase. In 1695, the persons who had purchased
    those annuities were allowed to exchange them for others of
    ninety-six years, upon paying into the exchequer sixty-three
    pounds in the hundred ; that is, the difference between fourteen
    per cent. for life, and fourteen per cent. for ninety-six years,
    was sold for sixty-three pounds, or for four and a-half years
    purchase. Such was the supposed instability of government, that
    even these terms procured few purchasers. In the reign of queen
    Anne, money was, upon different occasions, borrowed both upon
    annuities for lives, and upon annuities for terms of thirty-two,
    of eighty-nine, of ninety-eight, and of ninety-nine years. In
    1719, the proprietors of the annuities for thirty-two years were
    induced to accept, in lieu of them, South-sea stock to the amount
    of eleven and a-half years purchase of the annuities, together
    with an additional quantity of stock, equal to the arrears which
    happened then to be due upon them. In 1720, the greater part of
    the other annuities for terms of years, both long and short, were
    subscribed into the same fund. The long annuities, at that time,
    amounted to £666,821: 8:3½ a-year. On the 5th of January 1775,
    the remainder of them, or what was not subscribed at that time,
    amounted only to £136,453:12:8d.

    During the two wars which began in 1739 and in 1755, little money
    was borrowed, either upon annuities for terms of years, or upon
    those for lives. An annuity for ninety-eight or ninety-nine
    years, however, is worth nearly as much as a perpetuity, and
    should therefore, one might think, be a fund for borrowing nearly
    as much. But those who, in order to make family settlements, and
    to provide for remote futurity, buy into the public stocks, would
    not care to purchase into one of which the value was continually
    diminishing ; and such people make a very considerable
    proportion, both of the proprietors and purchasers of stock. An
    annuity for a long term of years, therefore, though its intrinsic
    value may be very nearly the same with that of a perpetual
    annuity, will not find nearly the same number of purchasers. The
    subscribers to a new loan, who mean generally to sell their
    subscription as soon as possible, prefer greatly a perpetual
    annuity, redeemable by parliament, to an irredeemable annuity,
    for a long term of years, of only equal amount. The value of the
    former may be supposed always the same, or very nearly the same;
    and it makes, therefore, a more convenient transferable stock
    than the latter.

    During the two last-mentioned wars, annuities, either for terms
    of years or for lives, were seldom granted, but as premiums to
    the subscribers of a new loan, over and above the redeemable
    annuity or interest, upon the credit of which the loan was
    supposed to be made. They were granted, not as the proper fund
    upon which the money was borrowed, but as an additional
    encouragement to the lender.

    Annuities for lives have occasionally been granted in two
    different ways ; either upon separate lives, or upon lots of
    lives, which, in French, are called tontines, from the name of
    their inventor. When annuities are granted upon separate lives,
    the death of every individual annuitant disburdens the public
    revenue, so far as it was affected by his annuity. When annuities
    are granted upon tontines, the liberation of the public revenue
    does not commence till the death of all the annuitants
    comprehended in one lot, which may sometimes consist of twenty or
    thirty persons, of whom the survivors succeed to the annuities of
    all those who die before them; the last survivor succeeding to
    the annuities of the whole lot. Upon the same revenue, more money
    can always be raised by tontines than by annuities for separate
    lives. An annuity, with a right of survivorship, is really worth
    more than an equal annuity for a separate life ; and, from the
    confidence which every man naturally has in his own good fortune,
    the principle upon which is founded the success of all lotteries,
    such an annuity generally sells for something more than it is
    worth. In countries where it is usual for government to raise
    money by granting annuities, tontines are, upon this account,
    generally preferred to annuities for separate lives. The
    expedient which will raise most money, is almost always preferred
    to that which is likely to bring about, in the speediest manner,
    the liberation of the public revenue.

    In France, a much greater proportion of the public debts consists
    in annuities for lives than in England. According to a memoir
    presented by the parliament of Bourdeaux to the king, in 1764,
    the whole public debt ot France is estimated at twenty-four
    hundred millions of livres; of which the capital, for which
    annuities for lives had been granted, is supposed to amount to
    three hundred millions, the eighth part of the whole public debt.
    The annuities themselves are computed to amount to thirty
    millions a-year, the fourth part of one hundred and twenty
    millions, the supposed interest of that whole debt. These
    estimations, I know very well, are not exact; but having been
    presented by so very respectable a body as approximations to the
    truth, they may, I apprehend, be considered as such. It is not
    the different degrees of anxiety in the two governments of France
    and England for the liberation of the public revenue, which
    occasions this difference in their respective modes of borrowing
    ; it arises altogether from the different views and interests of
    the lenders.

    In England, the seat of government being in the greatest
    mercantile city in the world, the merchants are generally the
    people who advance money to government. By advancing it, they do
    not mean to diminish, but, on the contrary, to increase their
    mercantile capitals; and unless they expected to sell, with some
    profit, their share in the subscription for a new loan, they
    never would subscribe. But if, by advancing their money, they
    were to purchase, instead of perpetual annuities, annuities for
    lives only, whether their own or those of other people, they
    would not always be so likely to sell them with a profit.
    Annuities upon their own lives they would always sell with loss;
    because no man will give for an annuity upon the life of another,
    whose age and state of health are nearly the same with his own,
    the same price which he would give for one upon his own. An
    annuity upon the life of a third person, indeed, is, no doubt, of
    equal value to the buyer and the seller; but its real value
    begins to diminish from the moment it is granted, and continues
    to do so, more and more, as long as it subsists. It can never,
    therefore, make so convenient a transferable stock as a perpetual
    annuity, of which the real value may be supposed always the same,
    or very nearly the same.

    In France, the seat of government not being in a great mercantile
    city, merchants do not make so great a proportion of the people
    who advance money to government. The people concerned in the
    finances, the farmers-general, the receivers of the taxes which
    are not in farm, the court-bankers, etc. make the greater part of
    those who advance their money in all public exigencies. Such
    people are commonly men of mean birth, but of great wealth, and
    frequently of great pride. They are too proud to marry their
    equals, and women of quality disdain to marry them. They
    frequently resolve, therefore, to live bachelors; and having
    neither any families of their own, nor much regard for those of
    their relations, whom they are not always very fond of
    acknowledging, they desire only to live in splendour during their
    own time, and are not unwilling that their fortune should end
    with themselves. The number of rich people, besides, who are
    either averse to marry, or whose condition of life renders it
    either improper or inconvenient for them to do so, is much
    greater in France than in England. To such people, who have
    little or no care for posterity, nothing can be more convenient
    than to exchange their capital for a revenue, which is to last
    just as long, and no longer, than they wish it to do.

    The ordinary expense of the greater part of modern governments,
    in time of peace, being equal, or nearly equal, to their ordinary
    revenue, when war comes, they are both unwilling and unable to
    increase their revenue in proportion to the increase of their
    expense. They are unwilling, for fear of offending the people,
    who, by so great and so sudden an increase of taxes, would soon
    be disgusted with the war ; and they are unable, from not well
    knowing what taxes would be sufficient to produce the revenue
    wanted. The facility of borrowing delivers them from the
    embarrassment which this fear and inability would otherwise
    occasion. By means of borrowing, they are enabled, with a very
    moderate increase of taxes, to raise, from year to year, money
    sufficient for carrying on the war; and by the practice of
    perpetual funding, they are enabled, with the smallest possible
    increase of taxes, to raise annually the largest possible sum of
    money. In great empires, the people who live in the capital, and
    in the provinces remote from the scene of action, feel, many of
    them, scarce any inconveniency from the war, but enjoy, at their
    ease, the amusement of reading in the newspapers the exploits of
    their own fleets and armies. To them this amusement compensates
    the small difference between the taxes which they pay on account
    of the war, and those which they had been accustomed to pay in
    time of peace. They are commonly dissatisfied with the return of
    peace, which puts an end to their amusement, and to a thousand
    visionary hopes of conquest and national glory, from a longer
    continuance of the war.

    The return of peace, indeed, seldom relieves them from the
    greater part of the taxes imposed during the war. These are
    mortgaged for the interest of the debt contracted, in order to
    carry it on. If, over and above paying the interest of this debt,
    and defraying the ordinary expense of government, the old
    revenue, together with the new taxes, produce some surplus
    revenue, it may, perhaps, be converted into a sinking fund for
    paying off the debt. But, in the first place, this sinking fund,
    even supposing it should be applied to no other purpose, is
    generally altogether inadequate for paying, in the course of any
    period during which it can reasonably be expected that peace
    should continue, the whole debt contracted during the war ; and,
    in the second place, this fund is almost always applied to other

    The new taxes were imposed for the sole purpose of paying the
    interest of the money borrowed upon them. If they produce more,
    it is generally something which was neither intended nor
    expected, and is, therefore, seldom very considerable. Sinking
    funds have generally arisen, not so much from any surplus of the
    taxes which was over and above what was necessary for paying the
    interest or annuity originally charged upon them, as from a
    subsequent reduction of that interest ; that of Holland in 1655,
    and that of the ecclesiastical state in 1685, were both formed in
    this manner. Hence the usual insufficiency of such funds.

    During the most profound peace, various events occur, which
    require an extraordinary expense ; and government finds it always
    more convenient to defray this expense by misapplying the sinking
    fund, than by imposing a new tax. Every new tax is immediately
    felt more or less by the people. It occasions always some murmur,
    and meets with some opposition. The more taxes may have been
    multiplied, the higher they may have been raised upon every
    different subject of taxation; the more loudly the people
    complain of every new tax, the more difficult it becomes, too,
    either to find out new subjects of taxation, or to raise much
    higher the taxes already imposed upon the old. A momentary
    suspension of the payment of debt is not immediately felt by the
    people, and occasions neither murmur nor complaint. To borrow of
    the sinking fund is always an obvious and easy expedient for
    getting out of the present difficulty. The more the public debts
    may have been accumulated, the more necessary it may have become
    to study to reduce them; the more dangerous, the more ruinous it
    may be to missapply any part of the sinking fund ; the less
    likely is the public debt to be reduced to any considerable
    degree, the more likely, the more certainly, is the sinking fund
    to be misapplied towards defraying all the extraordinary expenses
    which occur in time of peace. When a nation is already
    overburdened with taxes, nothing but the necessities of a new
    war, nothing but either the animosity of national vengeance, or
    the anxiety for national security, can induce the people to
    submit, with tolerable patience, to a new tax. Hence the usual
    misapplication of the sinking fund.

    In Great Britain, from the time that we had first recourse to the
    ruinous expedient of perpetual funding, the reduction of the
    public debt, in time of peace, has never borne any proportion to
    its accumulation in time of war. It was in the war which began in
    1668, and was concluded by the treaty of Ryswick, in 1697, that
    the foundation of the present enormous debt of Great Britain was
    first laid.

    On the 31st of December 1697, the public debts of Great Britain,
    funded and unfunded, amounted to £21,515,742:13:8½. A great part
    of those debts had been contracted upon short anticipations, and
    some part upon annuities for lives; so that, before the 31st of
    December 1701, in less than four years, there had partly been
    paid off; and partly reverted to the public, the sum of
    £5,121,041:12:0¾d; a greater reduction of the public debt than
    has ever since been brought about in so short a period of time.
    The remaining debt, therefore, amounted only to

    In the war which began in 1702, and which was concluded by the
    treaty of Utrecht, the public debts were still more accumulated.
    On the 31st of December 1714, they amounted to £53,681,076:5:6½.
    The subscription into the South-sea fund, of the short and long
    annuities, increased the capital of the public debt ; so that, on
    the 31st of December 1722, it amounted to £55,282,978:1:3 5/6.
    The reduction of the debt began in 1723, and went on so slowly,
    that, on the 31st of December 1739, during seventeen years-of
    profound peace, the whole sum paid off was no more than
    £8,328,554:17:11 3/12, the capital of the public debt, at that
    time, amounting to £46,954,623:3:4 7/12.

    The Spanish war, which began in 1739, and the French war which
    soon followed it, occasioned a further increase of the debt,
    which, on the 31st of December 1748, after the war had been
    concluded by the treaty of Aix-la-Chapelle, amounted to
    £78,293,313:1:10¾. The most profound peace, of 17 years
    continuance, had taken no more than £8,328,354, 17:11¼ from it. A
    war, of less than nine years continuance, added £31,338,689:18: 6
    1/6 to it. {See James Postlethwaite's History of the Public

    During the administration of Mr. Pelham, the interest of the
    public debt was reduced, or at least measures were taken for
    reducing it, from four to three per cent.; the sinking fund was
    increased, and some part of the publie debt was paid off. In
    1755, before the breaking out of the late war, the funded debt of
    Great Britain amounted to £72,289,675. On the 5th of January
    1763, at the conclusion of the peace, the funded debt amounted
    debt to £122,603,336:8:2¼. The unfunded debt has been stated at
    £13,927,589:2:2. But the expense occasioned by the war did not
    end with the conclusion of the peace ; so that, though on the 5th
    of January 1764, the funded debt was increased (partly by a new
    loan, and partly by funding a part of the unfunded debt) to
    £129,586,789:10:1¾, there still remained (according to the very
    well informed author of Considerations on the Trade and Finances
    of Great Britain) an unfunded debt, which was brought to account
    in that and the following year, of £9,975,017: 12:2 15/44d. In
    1764, therefore, the public debt of Great Britain, funded and
    unfunded together, amounted, according to this author, to
    £139,561,807:2:4. The annuities for lives, too, which had been
    granted as premiums to the subscribers to the new loans in 1757,
    estimated at fourteen years purchase, were valued at £472,500 ;
    and the annuities for long terms of years, granted as premiums
    likewise, in 1761 and 1762, estimated at twenty-seven and a-half
    years purchase, were valued at £6,826,875. During a peace of
    about seven years continuance, the prudent and truly patriotic
    administration of Mr. Pelham was not able to pay off an old debt
    of six millions. During a war of nearly the same continuance, a
    new debt of more than seventy-five millions was contracted.

    On the 5th of January 1775, the funded debt of Great Britain
    amounted to £124,996,086, 1:6¼d. The unfunded, exclusive of a
    large civil-list debt, to £4,150,236:3:11 7/8. Both together, to
    £129,146,322:5:6. According to this account, the whole debt paid
    off, during eleven years of profound peace, amounted only to
    £10,415,476:16:9 7/8. Even this small reduction of debt, however,
    has not been all made from the savings out of the ordinary
    revenue of the state. Several extraneous sums, altogether
    independent of that ordinary revenue, have contributed towards
    it. Amongst these we may reckon an additional shilling in the
    pound land tax, for three years; the two millions received from
    the East-India company, as indemnification for their territorial
    acquisitions ; and the one hundred and ten thousand pounds
    received from the bank for the renewal of their charter. To these
    must be added several other sums, which, as they arose out of the
    late war, ought perhaps to be considered as deductions from the
    expenses of it. The principal are,

    The produce of French prizes .............. £690,449: 18: 9
    Composition for French prisoners ......... 670,000: 0: 0

    What has been received from the sale
    of the ceded islands ......................... 95,500: 0: 0

    Total, .....................................£1,455,949: 18: 9

    If we add to this sum the balance of the earl of Chatham's and
    Mr. Calcraft's accounts, and other army savings of the same kind,
    together with what has been received from the bank, the
    East-India company, and the additional shilling in the pound land
    tax, the whole must be a good deal more than five millions. The
    debt, therefore, which, since the peace, has been paid out of the
    savings from the ordinary revenue of the state, has not, one year
    with another, amounted to half a million a-year. The sinking fund
    has, no doubt, been considerably augmented since the peace, by
    the debt which had been paid off, by the reduction of the
    redeemable four per cents to three per cents, and by the
    annuities for lives which have fallen in; and, if peace were to
    continue, a million, perhaps, might now be annually spared out of
    it towards the discharge of the debt. Another million,
    accordingly, was paid in the course of last year ; but at the
    same time, a large civil-list debt was left unpaid, and we are
    now involved in a new war, which, in its progress, may prove as
    expensive as any of our former wars.{It has proved more expensive
    than any one of our former wars, and has involved us in an
    additional debt of more than one hundred millions. During a
    profound peace of eleven years, little more than ten millions of
    debt was paid; during a war of seven years, more than one hundred
    millions was contracted.} The new debt which will probably be
    contracted before the end of the next campaign, may, perhaps, be
    nearly equal to all the old debt which has been paid off from the
    savings out of the ordinary revenue of the state. It would be
    altogether chimerical, therefore, to expect that the public debt
    should ever be completely discharged, by any savings which are
    likely to be made from that ordinary revenue as it stands at

    The public funds of the different indebted nations of Europe,
    particularly those of England, have, by one author, been
    represented as the accumulation of a great capital, superadded to
    the other capital of the country, by means of which its trade is
    extended, its manufactures are multiplied, and its lands
    cultivated and improved, much beyond what they could have been by
    means of that other capital only. He does not consider that the
    capital which the first creditors of the public advanced to
    government, was, from the moment in which he advanced it, a
    certain portion of the annual produce, turned away from serving
    in the function of a capital, to serve in that of a revenue ;
    from maintaining productive labourers, to maintain unproductive
    ones, and to be spent and wasted, generally in the course of the
    year, without even the hope of any future reproduction. In return
    for the capital which they advanced, they obtained, indeed, an
    annuity of the public funds, in most cases, of more than equal
    value. This annuity, no doubt, replaced to them their capital,
    and enabled them to carry on their trade and business to the
    same, or, perhaps, to a greater extent than before; that is, they
    were enabled, either to borrow of other people a new capital,
    upon the credit of this annuity or, by selling it, to get from
    other people a new capital of their own, equal, or superior, to
    that which they had advanced to government. This new capital,
    however, which they in this manner either bought or borrowed of
    other people, must have existed in the country before, and must
    have been employed, as all capitals are, in maintaining
    productive labour. When it came into the hands of those who had
    advanced their money to government, though it was, in some
    respects, a new capital to them, it was not so to the country,
    but was only a capital withdrawn from certain employments, in
    order to be turned towards others. Though it replaced to them
    what they had advanced to government, it did not replace it to
    the country. Had they not advanced this capital to government,
    there would have been in the country two capitals, two portions
    of the annual produce, instead of one, employed in maintaining
    productive labour.

    When, for defraying the expense of government, a revenue is
    raised within the year, from the produce of free or unmortgaged
    taxes, a certain portion of the revenue of private people is only
    turned away from maintaining one species of unproductive labour,
    towards maintaining another. Some part of what they pay in those
    taxes, might, no doubt, have been accumulated into capital, and
    consequently employed in maintaining productive labour ; but the
    greater part would probably have been spent, and consequently
    employed in maintaining unproductive labour. The public expense,
    however, when defrayed in this manner, no doubt hinders, more or
    less, the further accumulation of new capital; but it does not
    necessarily occasion the destruction of any actually-existing

    When the public expense is defrayed by funding, it is defrayed by
    the annual destruction of some capital which had before existed
    in the country; by the perversion of some portion of the annual
    produce which had before been destined for the maintenance of
    productive labour, towards that of unproductive labour. As in
    this case, however, the taxes are lighter than they would have
    been, had a revenue sufficient for defraying the same expense
    been raised within the year ; the private revenue of individuals
    is necessarily less burdened, and consequently their ability to
    save and accumulate some part of that revenue into capital, is a
    good deal less impaired. If the method of funding destroys more
    old capital, it, at the same time, hinders less the accumulation
    or acquisition of new capital, than that of defraying the public
    expense by a revenue raised within the year. Under the system of
    funding, the frugality and industry of private people can more
    easily repair the breaches which the waste and extravagance of
    government may occasionally make in the general capital of the

    It is only during the continuance of war, however, that the
    system of funding has this advantage over the other system. Were
    the expense of war to be defrayed always by a revenue raised
    within the year, the taxes from which that extraordinary revenue
    was drawn would last no longer than the war. The ability of
    private people to accumulate, though less during the war, would
    have been greater during the peace, than under the system of
    funding. War would not necessarily have occasioned the
    destruction of any old capitals, and peace would have occasioned
    the accumulation of many more new. Wars would, in general, be
    more speedily concluded, and less wantonly undertaken. The people
    feeling, during continuance of war, the complete burden of it,
    would soon grow weary of it; and government, in order to humour
    them, would not be under the necessity of carrying it on longer
    than it was necessary to do so. The foresight of the heavy and
    unavoidable burdens of war would hinder the people from wantonly
    calling for it when there was no real or solid interest to fight
    for. The seasons during which the ability of private people to
    accumulate was somewhat impaired, would occur more rarely, and be
    of shorter continuance. Those, on the contrary, during which that
    ability was in the highest vigour would be of much longer
    duration than they can well be under the system of funding.

    When funding, besides, has made a certain progress, the
    multiplication of taxes which it brings along with it, sometimes
    impairs as much the ability of private people to accumulate, even
    in time of peace, as the other system would in time of war. The
    peace revenue of Great Britain amounts at present to more than
    ten millions a-year. If free and unmortgaged, it might be
    sufficient, with proper management, and without contracting a
    shilling of new debt, to carry on the most vigorous war. The
    private revenue of the inhabitants of Great Britain is at present
    as much incumbered in time of peace, their ability to accumulate
    is as much impaired, as it would have been in the time of the
    most expensive war, had the pernicious system of funding never
    been adopted.

    In the payment of the interest of the public debt, it has been
    said, it is the right hand which pays the left. The money does
    not go out of the country. It is only a part of the revenue of
    one set of the inhabitants which is transferred to another ; and
    the nation is not a farthing the poorer. This apology is founded
    altogether in the sophistry of the mercantile system; and, after
    the long examination which I have already bestowed upon that
    system, it may, perhaps, be unnecessary to say anything further
    about it. It supposes, besides, that the whole public debt is
    owing to the inhabitants of the country, which happens not to be
    true ; the Dutch, as well as several other foreign nations,
    having a very considerable share in our public funds. But though
    the whole debt were owing to the inhabitants of the country, it
    would not, upon that account, be less pernicious.

    Land and capital stock are the two original sources of all
    revenue, both private and public. Capital stock pays the wages of
    productive labour, whether employed in agriculture, manufactures,
    or commerce. The management of those two original sources of
    revenue belongs to two different sets of people; the proprietors
    of land, and the owners or employers of capital stock.

    The proprietor of land is interested, for the sake of his own
    revenue, to keep his estate in as good condition as he can, by
    building and repairing his tenants houses, by making and
    maintaining the necessary drains and inclosures, and all those
    other expensive improvements which it properly belongs to the
    landlord to make and maintain. But, by different land taxes, the
    revenue of the landlord may be so much diminished, and, by
    different duties upon the necessaries and conveniencies of life,
    that diminished revenue may be rendered of so little real value,
    that he may find himself altogether unable to make or maintain
    those expensive improvements. When the landlord, however, ceases
    to do his part, it is altogether impossible that the tenant
    should continue to do his. As the distress of the landlord
    increases, the agriculture of the country must necessarily

    When, by different taxes upon the necessaries and conveniencies
    of life, the owners and employers of capital stock find, that
    whatever revenue they derive from it, will not, in a particular
    country, purchase the same quantity of those necessaries and
    conveniencies which an equal revenue would in almost any other,
    they will be disposed to remove to some other. And when, in order
    to raise those taxes, all or the greater part of merchants and
    manufacturers, that is, all or the greater part of the employers
    of great capitals, come to be continually exposed to the
    mortifying and vexatious visits of the tax-gatherers, this
    disposition to remove will soon be changed into an actual
    removing. The industry of the country will necessarily fall with
    the removal of the capital which supported it, and the ruin of
    trade and manufactures will follow the declension of agriculture.

    To transfer from the owners of those two great sources of
    revenue, land, and capital stock, from the persons immediately
    interested in the good condition of every particular portion of
    land, and in the good management of every particular portion of
    capital stock, to another set of persons (the creditors of the
    public, who have no such particular interest ), the greater part
    of the revenue arising from either, must, in the long-run,
    occasion both the neglect of land, and the waste or removal of
    capital stock. A creditor of the public has, no doubt, a general
    interest in the prosperity of the agriculture, manufactures, and
    commerce of the country ; and consequently in the good condition
    of its land, and in the good management of its capital stock.
    Should there be any general failure or declension in any of these
    things, the produce of the different taxes might no longer be
    sufficient to pay him the annuity or interest which is due to
    him. But a creditor of the public, considered merely as such, has
    no interest in the good condition of any particular portion of
    land, or in the good management of any particular portion of
    capital stock. As a creditor of the public, he has no knowledge
    of any such particular portion. He has no inspection of it. He
    can have no care about it. Its ruin may in some cases be unknown
    to him, and cannot directly affect him.

    The practice of funding has gradually enfeebled every state which
    has adopted it. The Italian republics seem to have begun it.
    Genoa and Venice, the only two remaining which can pretend to an
    independent existence, have both been enfeebled by it. Spain
    seems to have learned the practice from the Italian republics,
    and (its taxes being probably less judicious than theirs) it has,
    in proportion to its natural strength, been-still more enfeebled.
    The debts of Spain are of very old standing. It was deeply in
    debt before the end of the sixteenth century, about a hundred
    years before England owed a shilling. France, not. withstanding
    all its natural resources, languishes under an oppressive load of
    the same kind. The republic of the United Provinces is as much
    enfeebled by its debts as either Genoa or Venice. Is it likely
    that, in Great Britain alone, a practice, which has brought
    either weakness or dissolution into every other country, should
    prove altogether innocent ?

    The system of taxation established in those different countries,
    it may be said, is inferior to that of England. I believe it is
    so. But it ought to be remembered, that when the wisest
    government has exhausted all the proper subjects of taxation, it
    must, in cases of urgent necessity, have recourse to improper
    ones. The wise republic of Holland has, upon some occasions, been
    obliged to have recourse to taxes as inconvenient as the greater
    part of those of Spain. Another war, begun before any
    considerable liberation of the public revenue had been brought
    about, and growing in its progress as expensive as the last war,
    may, from irresistible necessity, render the British system of
    taxation as oppressive as that of Holland, or even as that of
    Spain. To the honour of our present system of taxation,
    indeed, it has hitherto given so little embarrassment to
    industry, that, during the course even of the most expensive
    wars, the frugality and good conduct of individuals seem to have
    been able, by saving and accumulation, to repair all the breaches
    which the waste and extravagance of government had made in the
    general capital of the society. At the conclusion of the late
    war, the most expensive that Great Britain ever waged, her
    agriculture was as flourishing, her manufacturers as numerous and
    as fully employed, and her commerce as extensive, as they had
    ever been before. The capital, therefore, which supported all
    those different branches of industry, must have been equal to
    what it had ever been before. Since the peace, agriculture has
    been still further improved; the rents of houses have risen in
    every town and village of the country, a proof of the increasing
    wealth and revenue of the people; and the annual amount of the
    greater part of the old taxes, of the principal branches of the
    excise and customs, in particular, has been continually
    increasing, an equally clear proof of an increasing consumption,
    and consequently of an increasing produce, which could alone
    support that consumption. Great Britain seems to support with
    ease, a burden which, half a century ago, nobody believed her
    capable of supporting, Let us not, however, upon this account,
    rashly conclude that she is capable of supporting any burden; nor
    even be too confident that she could support. without great
    distress, a burden a little greater than what has already been
    laid upon her.

    When national debts have once been accumulated to a certain
    degree, there is scarce, I believe, a single instance of their
    having been fairly and completely paid. The liberation of the
    public revenue, if it has ever been brought about at all, has
    always been brought about by a bankruptcy ; sometimes by an
    avowed one, though frequently by a pretended payment.

    The raising of the denomination of the coin has been the most
    usual expedient by which a real public bankruptcy has been
    disguised under the appearance of a pretended payment. If a
    sixpence, for example, should, either by act of parliament or
    royal proclamation. be raised to the denomination of a shilling,
    and twenty sixpences to that of a pound sterling ; the person
    who, under the old denomination, had borrowed twenty shillings,
    or near four ounces of silver, would, under the new, pay with
    twenty sixpences, or with something less than two ounces. A
    national debt of about a hundred and twenty-eight millions, near
    the capital of the funded and unfunded debt of Great Britain,
    might, in this manner, be paid with about sixty-four millions of
    our present money. It would, indeed, be a pretended payment only,
    and the creditors of the public would really be defrauded of ten
    shillings in the pound of what was due to them. The calamity,
    too, would extend much further than to the creditors of the
    public, and those of every private person would suffer a
    proportionable loss; and this without any advantage, but in most
    cases with a great additional loss, to the creditors of the
    public. If the creditors of the public, indeed, were generally
    much in debt to other people, they might in some measure
    compensate their loss by paying their creditors in the same coin
    in which the public had paid them. But in most countries, the
    creditors of the public are, the greater part of them, wealthy
    people, who stand more in the relation of creditors than in that
    of debtors, towards the rest of their fellow citizens. A
    pretended payment of this kind, therefore, instead of
    alleviating, aggravates, in most cases, the loss of the creditors
    of the public; and, without any advantage to the public, extends
    the calamity to a great number of other innocent people. It
    occasions a general and most pernicious subversion of the
    fortunes of private people; enriching, in most cases, the idle
    and profuse debtor, at the expense of the industrious and frugal
    creditor ; and transporting a great part of the national capital
    from the hands which were likely to increase and improve it, to
    those who are likely to dissipate and destroy it. When it becomes
    necessary for a state to declare itself bankrupt, in the same
    manner as when it becomes necessary for an individual to do so, a
    fair, open, and avowed bankruptcy, is always the measure which is
    both least dishonourable to the debtor, and least hurtful to the
    creditor. The honour of a state is surely very poorly provided
    for, when, in order to cover the disgrace of a real bankruptcy,
    it has recourse to a juggling trick of this kind, so easily seen
    through, and at the same time so extremely pernicious.

    Almost all states, however, ancient as well as modern, when
    reduced to this necessity, have, upon some occasions, played this
    very juggling trick. The Romans, at the end of the first Punic
    war, reduced the As, the coin or denomination by which they
    computed the value of all their other coins, from containing
    twelve ounces of copper, to contain only two ounces; that is,
    they raised two ounces of copper to a denomination which had
    always before expressed the value of twelve ounces. The republic
    was, in this manner, enabled to pay the great debts which it had
    contracted with the sixth part of what it really owed. So sudden
    and so great a bankruptcy, we should in the present times be apt
    to imagine, must have occasioned a very violent popular clamour.
    It does not appear to have occasioned any. The law which enacted
    it was, like all other laws relating to the coin, introduced and
    carried through the assembly of the people by a tribune, and was
    probably a very popular law. In Rome, as in all other ancient
    republics, the poor people were constantly in debt to the rich
    and the great, who, in order to secure their votes at the annual
    elections, used to lend them money at exorbitant interest, which,
    being never paid, soon accumulated into a sum too great either
    for the debtor to pay, or for any body else to pay for him. The
    debtor, for fear of a very severe execution, was obliged, without
    any further gratuity, to vote for the candidate whom the creditor
    recommended. In spite of all the laws against bribery and
    corruption, the bounty of the candidates, together with the
    occasional distributions of coin which were ordered by the
    senate, were the principal funds from which, during the latter
    times of the Roman republic, the poorer citizens derived their
    subsistence. To deliver themselves from this subjection to their
    creditors, the poorer citizens were continually calling out,
    either for an entire abolition of debts, or for what they called
    new tables ; that is, for a law which should entitle them to a
    complete acquittance, upon paying only a certain proportion of
    their accumulated debts. The law which reduced the coin of all
    denominations to a sixth part of its former value, as it enabled
    them to pay their debts with a sixth part of what they really
    owed, was equivalent to the most advantageous new tables. In
    order to satisfy the people, the rich and the great were, upon
    several different occasions, obliged to consent to laws, both for
    abolishing debts, and for introducing new tables; and they
    probably were induced to consent to this law, partly for the same
    reason, and partly that, by liberating the public revenue, they
    might restore vigour to that government, of which they themselves
    had the principal direction. An operation of this kind would
    at once reduce a debt of £128,000,000 to £21,333,333:6:8. In the
    course of the second Punic war, the As was still further reduced,
    first, from two ounces of copper to one ounce, and afterwards
    from one ounce to half an ounce ; that is, to the twenty-fourth
    part of its original value. By combining the three Roman
    operations into one, a debt of a hundred and twenty-eight
    millions of our present money, might in this manner be reduced
    all at once to a debt of £5,333,333:6:8. Even the enormous debt
    of Great Britain might in this manner soon be paid.

    By means of such expedients, the coin of, I believe, all nations,
    has been gradually reduced more and more below its original
    value, and the same nominal sum has been gradually brought to
    contain a smaller and a smaller quantity of silver.

    Nations have sometimes, for the same purpose, adulterated the
    standard of their coin ; that is, have mixed a greater quantity
    of alloy in it. If in the pound weight of our silver coin, for
    example, instead of eighteen penny-weight, according to the
    present standard, there were mixed eight ounces of alloy; a pound
    sterling, or twenty shillings of such coin, would be worth little
    more than six shillings and eightpence of our present money. The
    quantity of silver contained in six shillings and eightpence of
    our present money, would thus be raised very nearly to the
    denomination of a pound sterling. The adulteration of the
    standard has exactly the same effect with what the French call an
    augmentation, or a direct raising of the denomination of the

    An augmentation, or a direct raising of the denomination of the
    coin, always is, and from its nature must be, an open and avowed
    operation. By means of it, pieces of a smaller weight and bulk
    are called by the same name, which had before been given to
    pieces of a greater weight and bulk. The adulteration of the
    standard, on the contrary, has generally been a concealed
    operation. By means of it, pieces are issued from the mint, of
    the same denomination, and, as nearly as could be contrived, of
    the same weight, bulk, and appearance, with pieces which had been
    current before of much greater value. When king John of
    France,{See Du Cange Glossary, voce Moneta; the Benedictine
    Edition.} in order to pay his debts, adulterated his coin, all
    the officers of his mint were sworn to secrecy. Both operations
    are unjust. But a simple augmentation is an injustice of open
    violence; whereas an adulteration is an injustice of treacherous
    fraud. This latter operation, therefore, as soon as it has been
    discovered, and it could never be concealed very long, has always
    excited much greater indignation than the former. The coin, after
    any considerable augmentation, has very seldom been brought back
    to its former weight ; but after the greatest adulterations, it
    has almost always been brought back to its former fineness. It
    has scarce ever happened, that the fury and indignation of the
    people could otherwise be appeased.

    In the end of the reign of Henry VIII., and in the beginning of
    that of Edward VI., the English coin was not only raised in its
    denomination, but adulterated in its standard. The like frauds
    were practised in Scotland during the minority of James VI. They
    have occasionally been practised in most other countries.

    That the public revenue of Great Britain can never be completely
    liberated, or even that any considerable progress can ever be
    made towards that liberation, while the surplus of that revenue,
    or what is over and above defraying the annual expense of the
    peace establishment, is so very small, it seems altogether in
    vain to expect. That liberation, it is evident, can never be
    brought about, without either some very considerable augmentation
    of the public revenue, or some equally considerable reduction of
    the public expense.

    A more equal land tax, a more equal tax upon the rent of houses,
    and such alterations in the present system of customs and excise
    as those which have been mentioned in the foregoing chapter,
    might, perhaps, without increasing the burden of the greater part
    of the people, but only distributing the weight of it more
    equally upon the whole, produce a considerable augmentation of
    revenue. The most sanguine projector, however, could scarce
    flatter himself, that any augmentation of this kind would be such
    as could give any reasonable hopes, either of liberating the
    public revenue altogether, or even of making such progress
    towards that liberation in time of peace, as either to prevent or
    to compensate the further accumulation of the public debt in the
    next war.

    By extending the British system of taxation to all the different
    provinces of the empire, inhabited by people either of British or
    European extraction, a much greater augmentation of revenue might
    be expected. This, however, could scarce, perhaps, be done,
    consistently with the principles of the British constitution,
    without admitting into the British parliament, or, if you will,
    into the states-general of the British empire, a fair and equal
    representation of all those different provinces ; that of each
    province bearing the same proportion to the produce of its taxes,
    as the representation of Great Britain might bear to the produce
    of the taxes levied upon Great Britain. The private interest of
    many powerful individuals, the confirmed prejudices of great
    bodies of people, seem, indeed, at present, to oppose to so great
    a change, such obstacles as it may be very difficult, perhaps
    altogether impossible, to surmount. Without, however, pretending
    to determine whether such a union be practicable or
    impracticable, it may not, perhaps, be improper, in a speculative
    work of this kind, to consider how far the British system of
    taxation might be applicable to all the different provinces of
    the empire ; what revenue might be expected from it, if so
    applied ; and in what manner a general union of this kind might
    be likely to affect the happiness and prosperity of the
    differrent provinces comprehended within it. Such a speculation,
    can, at worst, be regarded but as a new Utopia, less amusing,
    certainly, but no more useless and chimerical than the old one.

    The land-tax, the stamp duties, and the different duties of
    customs and excise, constitute the four principal branches of the
    British taxes.

    Ireland is certainly as able, and our American and West India
    plantations more able, to pay a land tax, than Great Britain.
    Where the landlord is subject neither to tythe nor poor's rate,
    he must certainly be more able to pay such a tax, than where he
    is subject to both those other burdens. The tythe, where there is
    no modus, and where it is levied in kind, diminishes more what
    would otherwise be the rent of the landlord, than a land tax
    which really amounted to five shillings in the pound. Such a
    tythe will be found, in most cases, to amount to more than a
    fourth part of the real rent of the land, or of what remains
    after replacing completely the capital of the farmer, together
    with his reasonable profit. If all moduses and all impropriations
    were taken away, the complete church tythe of Great Britain and
    Ireland could not well be estimated at less than six or seven
    millions. If there was no tythe either in Great Britain or
    Ireland, the landlords could afford to pay six or seven millions
    additional land tax, without being more burdened than a very
    great part of them are at present. America pays no tythe, and
    could, therefore, very well afford to pay a land tax. The lands
    in America and the West Indies, indeed, are, in general, not
    tenanted nor leased out to farmers. They could not, therefore, be
    assessed according to any rent roll. But neither were the lands
    of Great Britain, in the 4th of William and Mary, assessed
    according to any rent roll, but according to a very loose and
    inaccurate estimation. The lands in America might be assessed
    either in the same manner, or acording to an equitable valuation,
    in consequence of an accurate survey, like that which was lately
    made in the Milanese, and in the dominions of Austria, Prussia,
    and Sardinia.

    Stamp duties, it is evident, might be levied without any
    variation, in all countries where the forms of law process, and
    the deeds by which property, both real and personal, is
    transferred, are the same, or nearly the same.

    The extension of the custom-house laws of Great Britain to
    Ireland and the plantations, provided it was accompanied, as in
    justice it ought to be, with an extension of the freedom of
    trade, would be in the highest degree advantageous to both. All
    the invidious restraints which at present oppress the trade of
    Ireland, the distinction between the enumerated and
    non-enumerated commodities of America, would be entirely at an
    end. The countries north of Cape Finisterre would be as open to
    every part of the produce of America, as those south of that cape
    are to some parts of that produce at present. The trade between
    all the different parts of the British empire would, in
    consequence of this uniformity in the custom-house laws, be as
    free as the coasting trade of Great Britain is at present. The
    British empire would thus afford, within itself, an immense
    internal market for every part of the produce of all its
    different provinces. So great an extension of market would soon
    compensate, both to Ireland and the plantations, all that they
    could suffer from the increase of the duties of customs.

    The excise is the only part of the British system of taxation,
    which would require to be varied in any respect, according as it
    was applied to the different provinces of the empire. It might be
    applied to Ireland without any variation ; the produce and
    consumption of that kingdom being exactly of tho same nature with
    those of Great Britain. In its application to America and the
    West Indies, of which the produce and consumption are so very
    different from those of Great Britain, some modification might be
    necessary, in the same manner as in its application to the cyder
    and beer counties of England.

    A fermented liquor, for example, which is called beer, but which,
    as it is made of molasses, bears very little resemblance to our
    beer, makes a considerable part of the common drink of the people
    in America. This liquor, as it can be kept only for a few days,
    cannot, like our beer, be prepared and stored up for sale in
    great breweries ; but every private family must brew it for their
    own use, in the same manner as they cook their victuals. But to
    subject every private family to the odious visits and examination
    of the tax-gatherers, in the same manner as we subject the
    keepers of ale-houses and the brewers for public sale, would be
    altogether inconsistent with liberty. If, for the sake of
    equality, it was thought necessary to lay a tax upon this liquor,
    it might be taxed by taxing the material of which it is made,
    either at the place of manufacture, or, if the circumstances of
    the trade rendered such an excise improper, by laying a duty upon
    its importation into the colony in which it was to be consumed.
    Besides the duty of one penny a-gallon imposed by the British
    parliament upon the importation of molasses into America, there
    is a provincial tax of this kind upon their importation into
    Massachusetts Bay, in ships belonging to any other colony, of
    eight-pence the hogshead; and another upon their importation from
    the northern colonies into South Carolina, of five-pence the
    gallon. Or, if neither of these methods was found convenient,
    each family might compound for its consumption of this liquor,
    either according to the number of persons of which it consisted,
    in the same manner as private families compound for the malt tax
    in England; or according to the different ages and sexes of those
    persons, in the same manner as several different taxes are levied
    in Holland ; or, nearly as Sir Matthew Decker proposes, that all
    taxes upon consumable commodities should be levied in England.
    This mode of taxation, it has already been observed, when applied
    to objects of a speedy consumption, is not a very convenient one.
    It might be adopted, however, in cases where no better could be

    Sugar, rum, and tobacco, are commodities which are nowhere
    necessaries of life, which are become objects of almost universal
    consumption, and which are, therefore, extremely proper subjects
    of taxation. If a union with the colonies were to take place,
    those commodities might be taxed, either before they go out of
    the hands of the manufacturer or grower ; or, if this mode of
    taxation did not suit the circumstances of those persons, they
    might be deposited in public warehouses, both at the place of
    manufacture, and at all the different ports of the empire, to
    which they might afterwards be transported, to remain there,
    under the joint custody of the owner and the revenue officer,
    till such time as they should be delivered out, either to the
    consumer, to the merchant-retailer for home consumption, or to
    the merchant-exporter; the tax not to be advanced till such
    delivery. When delivered out for exportation, to go duty-free,
    upon proper security being given, that they should really be
    exported out of the empire. These are, perhaps, the principal
    commodities, with regard to which the union with the colonies
    might require some considerable change in the present system of
    British taxation.

    What might be the amount of the revenue which this system of
    taxation, extended to all the different provinces of the empire,
    might produce, it must, no doubt, be altogether impossible to
    ascertain with tolerable exactness. By means of this system,
    there is annually levied in Great Britain, upon less than eight
    millions of people, more than ten millions of revenue. Ireland
    contains more than two millions of people, and, according to the
    accounts laid before the congress, the twelve associated
    provinces of America contain more than three. Those accounts,
    however, may have been exaggerated, in order, perhaps, either to
    encourage their own people, or to intimidate those of this
    country ; and we shall suppose, therefore, that our North
    American and West Indian colonies, taken together, contain no
    more than three millions ; or that the whole British empire, in
    Europe and America, contains no more than thirteen millions of
    inhabitants. If, upon less than eight millions of inhabitants,
    this system of taxation raises a revenue of more than ten
    millions sterling; it ought, upon thirteen millions of
    inhabitants, to raise a revenue of more than sixteen millions two
    hundred and fifty thousand pounds sterling. From this revenue,
    supposing that this system could produce it, must be deducted the
    revenue usually raised in Ireland and the plantations, for
    defraying the expense of the respective civil governments. The
    expense of the civil and military establishment of Ireland,
    together with the interest of the public debt, amounts, at a
    medium of the two years which ended March 1775, to something less
    than seven hundred and fifty thousand pounds ayear. By a very
    exact account of the revenue of the principal colonies of America
    and the West Indies, it amounted, before the commencement of the
    present disturbances, to a hundred and forty-one thousand eight
    hundred pounds. In this account, however, the revenue of
    Maryland, of North Carolina, and of all our late acquisitions,
    both upon the continent, and in the islands, is omitted; which
    may, perhaps, make a difference of thirty or forty thousand
    pounds. For the sake of even numbers, therefore, let us suppose
    that the revenue necessary for supporting the civil government of
    Ireland and the plantations may amount to a million. There would
    remain, consequently, a revenue of fifteen millions two hundred
    and fifty thousand pounds, to be applied towards defraying the
    general expense of the empire, and towards paying the public
    debt. But if, from the present revenue of Great Britain, a
    million could, in peaceable times, be spared towards the payment
    of that debt, six millions two hundred and fifty thousand pounds
    could very well be spared from this improved revenue. This great
    sinking fund, too, might be augmented every year by the interest
    of the debt which had been discharged the year before ; and
    might, in this manner, increase so very rapidly, as to be
    sufficient in a few years to discharge the whole debt, and thus
    to restore completely the at-present debilitated and languishing
    vigour of the empire. In the meantime, the people might be
    relieved from some of the most burdensome taxes; from those which
    are imposed either upon the necessaries of life, or upon the
    materials of manufacture. The labouring poor would thus be
    enabled to live better, to work cheaper, and to send their goods
    cheaper to market. The cheapness of their goods would increase
    the demand for them, and consequently for the labour of those who
    produced them. This increase in the demand for labour would both
    increase the numbers, and improve the circumstances of the
    labouring poor. Their consumption would increase, and, together
    with it, the revenue arising from all those articles of their
    consumption upon which the taxes might be allowed to remain.

    The revenue arising from this system of taxation, however, might
    not immediately increase in proportion to the number of people
    who were subjected to it. Great indulgence would for some time be
    due to those provinces of the empire which were thus subjected to
    burdens to which they had not before been accustomed; and even
    when the same taxes came to be levied everywhere as exactly as
    possible, they would not everywhere produce a revenue
    proportioned to the numbers of the people. In a poor country, the
    consumption of the principal commodities subject to the duties of
    customs and excise, is very small; and in a thinly inhabited
    country, the opportunities of smuggling are very great. The
    consumption of malt liquors among the inferior ranks of people in
    Scotland is very small ; and the excise upon malt, beer, and ale,
    produces less there than in England, in proportion to the numbers
    of the people and the rate of the duties, which upon malt is
    different, on account of a supposed difference of quality. In
    these particular branches of the excise, there is not, I
    apprehend, much more smuggling in the one country than in the
    other. The duties upon the distillery, and the greater part of
    the duties of customs, in proportion to the numbers of people in
    the respective countries, produce less in Scotland than in
    England, not only on account of the smaller consumption of the
    taxed commodities, but of the much greater facility of smuggling.
    In Ireland, the inferior ranks of people are still poorer than in
    Scotland, and many parts of the country are almost as thinly
    inhabited. In Ireland, therefore, the consumption of the taxed
    commodities might, in proportion to the number of the people, be
    still less than in Scotland, and the facility of smuggling nearly
    the same. In America and the West Indies, the white people, even
    of the lowest rank, are in much better circumstances than those
    of the same rank in England ; and their consumption of all the
    luxuries in which they usually indulge themselves, is probably
    much greater. The blacks, indeed, who make the greater part of
    the inhabitants, both of the southern colonies upon the continent
    and of the West India islands, as they are in a state of slavery,
    are, no doubt, in a worse condition than the poorest people
    either in Scotland or Ireland. We must not, however, upon that
    account, imagine that they are worse fed, or that their
    consumption of articles which might be subjected to moderate
    duties, is less than that even of the lower ranks of people in
    England. In order that they may work well, it is the interest of
    their master that they should be fed well, and kept in good
    heart, in the same manner as it is his interest that his working
    cattle should be so. The blacks, accordingly, have almost
    everywhere their allowance of rum, and of molasses or
    spruce-beer, in the same manner as the white servants ; and this
    allowance would not probably be withdrawn, though those articles
    should be subjected to moderate duties. The consumption of the
    taxed commodities, therefore, in proportion to the number of
    inhabitants, would probably be as great in America and the West
    Indies as in any part of the British empire. The opportunities of
    smuggling, indeed, would be much greater ; America, in proportion
    to the extent of the country, being much more thinly inhabited
    than either Scotland or Ireland. If the revenue, however, which
    is at present raised by the different duties upon malt and malt
    liquors, were to be levied by a single duty upon malt, the
    opportunity of smuggling in the most important branch of the
    excise would be almost entirely taken away ; and if the duties of
    customs, instead of being imposed upon almost all the different
    articles of importation, were confined to a few of the most
    general use and consumption, and if the levying of those duties
    were subjected to the excise laws, the opportunity of smuggling,
    though not so entirely taken away, would be very much diminished.
    In consequence of those two apparently very simple and easy
    alterations, the duties of customs and excise might probably
    produce a revenue as great, in proportion to the consumption of
    the most thinly inhabited province, as they do at present, in
    proportion to that of the most populous.

    The Americans, it has been said, indeed, have no gold or silver
    money, the interior commerce of the country being carried on by a
    paper currency; and the gold and silver, which occasionally come
    among them, being all sent to Great Britain, in return for the
    commodities which they receive from us. But without gold and
    silver, it is added, there is no possibility of paying taxes. We
    already get all the gold and silver which they have. How is it
    possible to draw from them what they have not ?

    The present scarcity of gold and silver money in America, is not
    the effect of the poverty of that country, or of the inability of
    the people there to purchase those metals. In a country where the
    wages of labour are so much higher, and the price of provisions
    so much lower than in England, the greater part of the people
    must surely have wherewithal to purchase a greater quantity, if
    it were either necessary or convenient for them to do so. The
    scarcity of those metals, therefore, must be the effect of
    choice, and not of necessity.

    It is for transacting either domestic or foreign business, that
    gold or silver money is either necessary or convenient.

    The domestic business of every country, it has been shewn in the
    second book of this Inquiry, may, at least in peaceable times, be
    transacted by means of a paper currency, with nearly the same
    degree of conveniency as by gold and silver money. It is
    convenient for the Americans, who could always employ with
    profit, in the improvement of their lands, a greater stock than
    they can easily get, to save as much as possible the expense of
    so costly an instrument of commerce as gold and silver; and
    rather to employ that part of their surplus produce which would
    be necessary for purchasing those metals, in purchasing the
    instruments of trade, the materials of clothing, several parts of
    household furniture, and the iron work necessary for building and
    extending their settlements and plantations ; in purchasing not
    dead stock, but active and productive stock. The colony
    governments find it for their interest to supply the people with
    such a quantity of paper money as is fully sufficient, and
    generally more than sufficient, for transacting their domestic
    business. Some of those governments, that of Pennsylvania,
    particularly, derive a revenue from lending this paper money to
    their subjects, at an interest of so much per cent. Others, like
    that of Massachusetts Bay, advance, upon extraordinary
    emergencies, a paper money of this kind for defraying the public
    expense; and afterwards, when it suits the conveniency of the
    colony, redeem it at the depreciated value to which it gradually
    falls. In 1747, {See Hutchinson's History of Massachusetts Bay
    vol. ii. page 436 et seq.} that colony paid in this manner the
    greater part of its public debts, with the tenth part of the
    money for which its bills had been granted. It suits the
    conveniency of the planters, to save the expense of employing
    gold and silver money in their domestic transactions; and it
    suits the conveniency of the colony governments, to supply them
    with a medium, which, though attended with some very considerable
    disadvantages, enables them to save that expense. The redundancy
    of paper money necessarily banishes gold and silver from the
    domestic transactions of the colonies, for the same reason that
    it has banished those metals from the greater part of the
    domestic transactions in Scotland ; and in both countries, it is
    not the poverty, but the enterprizing and projecting spirit of
    the people, their desire of employing all the stock which they
    can get, as active and productive stock, which has occasioned
    this redundancy of paper money.

    In the exterior commerce which the different colonies carry on
    with Great Britain, gold and silver are more or less employed,
    exactly in proportion as they are more or less necessary. Where
    those metals are not necessary, they seldom appear. Where they
    are necessary, they are generally found.

    In the commerce between Great Britain and the tobacco colonies,
    the British goods are generally advanced to the colonists at a
    pretty long credit, and are afterwards paid for in tobacco, rated
    at a certain price. It is more convenient for the colonists to
    pay in tobacco than in gold and silver. It would be more
    convenient for any merchant to pay for the goods which his
    correspondents had sold to him, in some other sort of goods which
    he might happen to deal in, than in money. Such a merchant would
    have no occasion to keep any part of his stock by him unemployed,
    and in ready money, for answering occasional demands. He could
    have, at all times, a larget quantity of goods in his shop or
    warehouse, and he could deal to a greater extent. But it seldom
    happens to be convenient for all the correspondents of a merchant
    to receive payment for the goods which they sell to him, in goods
    of some other kind which he happens to deal in. The British
    merchants who trade to Virginia and Maryland, happen to be a
    particular set of correspondents, to whom it is more convenient
    to receive payment for the goods which they sell to those
    colonies in tobacco, than in gold and silver. They expect to make
    a profit by the sale of the tobacco ; they could make none by
    that of the gold and silver. Gold and silver, therefore, very
    seldom appear in the commerce between Great Britain and the
    tobacco colonies. Maryland and Virginia have as little occasion
    for those metals in their foreign, as in their domestic commerce.
    They are said, accordingly, to have less gold and silver money
    than any other colonies in America. They are reckoned, however,
    as thriving, and consequently as rich, as any of their

    In the northern colonies, Pennsylvania, New York, New Jersey, the
    four governments of New England, etc. the value of their own
    produce which they export to Great Britain is not equal to that
    of the manufactures which they import for their own use, and for
    that of some of the other colonies, to which they are the
    carriers. A balance, therefore, must be paid to the
    mother-country in gold and silver and this balance they generally

    In the sugar colonies, the value of the produce annually exported
    to Great Britain is much greater than that of all the goods
    imported from thence. If the sugar and rum annually sent to the
    mother-country were paid for in those colonies, Great Britain
    would be obliged to send out, every year, a very large balance in
    money ; and the trade to the West Indies would, by a certain
    species of politicians, be considered as extremely
    disadvantageous. But it so happens, that many of the principal
    proprietors of the sugar plantations reside in Great Britain.
    Their rents are remitted to them in sugar and rum, the produce of
    their estates. The sugar and rum which the West India merchants
    purchase in those colonies upon their own account, are not equal
    in value to the goods which they annually sell there. A balance,
    therefore, must necessarily be paid to them in gold and silver,
    and this balance, too, is generally found.

    The difficulty and irregularity of payment from the different
    colonies to Great Britain, have not been at all in proportion to
    the greatness or smallness of the balances which were
    respectively due from them. Payments have, in general, been more
    regular from the northern than from the tobacco colonies, though
    the former have generally paid a pretty large balance in money,
    while the latter have either paid no balance, or a much smaller
    one. The difficulty of getting payment from our different sugar
    colonies has been greater or less in proportion, not so much to
    the extent of the balances respectively due from them, as to the
    quantity of uncultivated land which they contained; that is, to
    the greater or smaller temptation which the planters have been
    under of over-trading, or of undertaking the settlement and
    plantation of greater quantities of waste land than suited the
    extent of their capitals. The returns from the great island of
    Jamaica, where there is still much uncultivated land, have, upon
    this account, been, in general, more irregular and uncertain than
    those from the smaller islands of Barbadoes, Antigua, and St.
    Christopher's, which have, for these many years, been completely
    cultivated, and have, upon that account, afforded less field for
    the speculations of the planter. The new acquisitions of Grenada,
    Tobago, St. Vincent's, and Dominica, have opened a new field for
    speculations of this kind ; and the returns front those islands
    have of late been as irregular and uncertain as those from the
    great island of Jamaica.

    It is not, therefore, the poverty of the colonies which
    occasions, in the greater part of them, the present scarcity of
    gold and silver money. Their great demand for active and
    productive stock makes it convenient for them to have as little
    dead stock as possible, and disposes them, upon that account, to
    content themselves with a cheaper, though less commodious
    instrument of commerce, than gold and silver. They are thereby
    enabled to convert the value of that gold and silver into the
    instruments of trade, into the materials of clothing, into
    household furniture, and into the iron work necessary for
    building and extending their settlements and plantations. In
    those branches of business which cannot be transacted without
    gold and silver money, it appears, that they can always find the
    necessary quantity of those metals; and if they frequently do not
    find it, their failure is generally the effect, not of their
    necessary poverty, but of their unnecessary and excessive
    enterprise. It is not because they are poor that their payments
    are irregular and uncertain, but because they are too eager to
    become excessively rich. Though all that part of the produce of
    the colony taxes, which was over and above what was necessary for
    defraying the expense of their own civil and military
    establishments, were to be remitted to Great Britain in gold and
    silver, the colonies have abundantly wherewithal to purchase the
    requisite quantity of those metals. They would in this case be
    obliged, indeed, to exchange a part of their surplus produce,
    with which they now purchase active and productive stock, for
    dead stock. In transacting their domestic business, they
    would be obliged to employ a costly, instead of a cheap
    instrument of commerce; and the expense of purchasing this costly
    instrument might damp somewhat the vivacity and ardour of their
    excessive enterprise in the improvement of land. It might not,
    however, be necessary to remit any part of the American revenue
    in gold and silver. It might be remitted in bills drawn upon, and
    accepted by, particular merchants or companies in Great Britain,
    to whom a part of the surplus produce of America had been
    consigned, who would pay into the treasury the American revenue
    in money, after having themselves received the value of it in
    goods ; and the whole business might frequently be transacted
    without exporting a single ounce of gold or silver from America.

    It is not contrary to justice, that both Ireland and America
    should contribute towards the discharge of the public debt of
    Great Britain. That debt has been contracted in support of the
    government established by the Revolution ; a government to which
    the protestants of Ireland owe, not only the whole authority
    which they at present enjoy in their own country, but every
    security which they possess for their liberty, their property,
    and their religion; a government to which several of the colonies
    of America owe their present charters, and consequently their
    present constitution; and to which all the colonies of America
    owe the liberty, security, and property, which they have ever
    since enjoyed. That public debt has been contracted in the
    defence, not of Great Britain alone, but of all the different
    provinces of the empire. The immense debt contracted in the late
    war in particular, and a great part of that contracted in the war
    before, were both properly contracted in defence of America.

    By a union with Great Britain, Ireland would gain, besides the
    freedom of trade, other advantages much more important, and which
    would much more than compensate any increase of taxes that might
    accompany that union. By the union with England, the
    middling and inferior ranks of people in Scotland gained a
    complete deliverance from the power of an aristocracy, which had
    always before oppressed them. By a union with Great Britain, the
    greater part of people of all ranks in Ireland would gain an
    equally complete deliverance from a much more oppressive
    aristocracy ; an aristocracy not founded, like that of Scotland,
    in the natural and respectable distinctions of birth and fortune,
    but in the most odious of all distinctions, those of religious
    and political prejudices; distinctions which, more than any
    other, animate both the insolence of the oppressors, and the
    hatred and indignation of the oppressed, and which commonly
    render the inhabitants of the same country more hostile to one
    another than those of different countries ever are. Without a
    union with Great Britain, the inhabitants of Ireland are not
    likely, for many ages, to consider themselves as one people.

    No oppressive aristocracy has ever prevailed in the colonies.
    Even they, however, would, in point of happiness and
    tranquillity, gain considerably by a union with Great Britain. It
    would, at least, deliver them from those rancourous and virulent
    factions which are inseparable from small democracies, and which
    have so frequently divided the affections of their people, and
    disturbed the tranquillity of their governments, in their form so
    nearly democratical. In the case of a total separation from Great
    Britain, which, unless prevented by a union of this kind, seems
    very likely to take place, those factions would be ten times more
    virulent than ever. Before the commencement of the present
    disturbances, the coercive power of the mother-country had always
    been able to restrain those factions from breaking out into any
    thing worse than gross brutality and insult. If that coercive
    power were entirely taken away, they would probably soon break
    out into open violence and bloodshed. In all great countries
    which are united under one uniform government, the spirit of
    party commonly prevails less in the remote provinces than in the
    centre of the empire. The distance of those provinces from the
    capital, from the principal seat of the great scramble of faction
    and ambition, makes them enter less into the views of any of the
    contending parties, and renders them more indifferent and
    impartial spectators of the conduct of all. The spirit of party
    prevails less in Scotland than in England. In the case of a
    union, it would probably prevail less in Ireland than in
    Scotland; and the colonies would probably soon enjoy a degree of
    concord and unanimity, at present unknown in any part of the
    British empire. Both Ireland and the colonies, indeed, would be
    subjected to heavier taxes than any which they at present pay. In
    consequence, however, of a diligent and faithful application of
    the public revenue towards the discharge of the national debt,
    the greater part of those taxes might not be of long continuance,
    and the public revenue of Great Britain might soon be reduced to
    what was necessary for maintaining a moderate

    The territorial acquisitions of the East India Company, the
    undoubted right of the Crown, that is, of the state and people of
    Great Britain, might be rendered another source of revenue, more
    abundant, perhaps, than all those already mentioned. Those
    countries are represented as more fertile, more extensive, and,
    in proportion to their extent, much richer and more populous than
    Great Britain. In order to draw a great revenue from them, it
    would not probably be necessary to introduce any new system of
    taxation into countries which are already sufficiently, and more
    than sufficiently, taxed. It might, perhaps, be more proper to
    lighten than to aggravate the burden of those unfortunate
    countries, and to endeavour to draw a revenue from them, not by
    imposing new taxes, but by preventing the embezzlement and
    misapplication of the greater part of those which they already

    If it should be found impracticable for Great Britain to draw any
    considerable augmentation of revenue from any of the resources
    above mentioned, the only resource which can remain to her, is a
    diminution of her expense. In the mode of collecting and in that
    of expending the public revenue, though in both there may be
    still room for improvement, Great Britain seems to be at least as
    economical as any of her neighbours. The military establishment
    which she maintains for her own defence in time of peace, is more
    moderate than that of any European state, which can pretend to
    rival her either in wealth or in power. None of these articles,
    therefore, seem to admit of any considerable reduction of
    expense. The expense of the peace-establishment of the
    colonies was, before the commencement of the present
    disturbances, very considerable, and is an expense which may,
    and, if no revenue can be drawn from them, ought certainly to be
    saved altogether. This constant expense in time of peace, though
    very great, is insignificant in comparison with what the defence
    of the colonies has cost us in time of war. The last war, which
    was undertaken altogether on account of the colonies, cost Great
    Britain, it has already been observed, upwards of ninety
    millions. The Spanish war of 1739 was principally undertaken on
    their account; in which, and in the French war that was the
    consequence of it, Great Britain, spent upwards of forty millions
    ; a great part of which ought justly to be charged to the
    colonies. In those two wars, the colonies cost Great Britain much
    more than double the sum which the national debt amounted to
    before the commencement of the first of them. Had it not been for
    those wars, that debt might, and probably would by this time,
    have been completely paid; and had it not been for the colonies,
    the former of those wars might not, and the latter certainly
    would not, have been undertaken. It was because the colonies were
    supposed to be provinces of the British Empire, that this expense
    was laid out upon them. But countries which contribute neither
    revenue nor military force towards the support of the empire,
    cannot be considered as provinces. They may, perhaps, be
    considered as appendages, as a sort of splendid and shewy
    equipage of the empire. But if the empire can no longer support
    the expense of keeping up this equipage, it ought certainly to
    lay it down ; and if it cannot raise its revenue in proportion to
    its expense, it ought at least to accommodate its expense to its
    revenue. If the colonies, notwithstanding their refusal to submit
    to British taxes, are still to be considered as provinces of the
    British empire, their defence, in some future war, may cost Great
    Britain as great an expense as it ever has done in any former
    war. The rulers of Great Britain have, for more than a century
    past, amused the people with the imagination that they possessed
    a great empire on the west side of the Atlantic. This empire,
    however, has hitherto existed in imagination only. It has
    hitherto been, not an empire, but the project of an empire ; not
    a gold mine, but the project of a gold mine; a project which has
    cost, which continues to cost, and which, if pursued in the same
    way as it has been hitherto, is likely to cost, immense expense,
    without being likely to bring any profit ; for the effects of the
    monopoly of the colony trade, it has been shewn, are to the great
    body of the people, mere loss instead of profit. It is surely now
    time that our rulers should either realize this golden dream, in
    which they have been indulging themselves, perhaps, as well as
    the people ; or that they should awake from it themselves, and
    endeavour to awaken the people. If the project cannot be
    completed, it ought to be given up. If any of the provinces of
    the British empire cannot be made to contribute towards the
    support of the whole empire, it is surely time that Great Britain
    should free herself from the expense of defending those provinces
    in time of war, and of supporting any part of their civil or
    military establishment in time of peace; and endeavour to
    accommodate her future views and designs to the real mediocrity
    of her circumstances.
    Chapter 36
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