THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 
 33Z

 
 THE 
 
 w 
 
 PUBLIC DEBT, 
 
 INFLUENCE AND ITS MANAGEMENT 
 
 CONSIDERED 
 
 IN A DIFFERENT POINT OF VIEW 
 
 SIR HENRY PARNELL, 
 
 IN HIS WORK ON 
 
 FINANCIAL REFORM. 
 
 By M. B. 
 
 LONDON: 
 JAMES RIDGWAY, KID, PICCADILLY. 
 
 M.DCCC.XXXl.
 
 Tillins, Printer, Chelsea.
 
 PUBLIC DEBT, 
 
 4*c. HfC. 
 
 The work of Sir Henry Parnell on Financial 
 Reform has created so deep a sensation, and the 
 author's name has acquired so great an authority, 
 that it would be dangerous to allow, under such 
 auspices, errors to pass unnoticed, which, in their 
 application, might hereafter become detrimental 
 to the country; a consequence the more likely 
 to follow, as the errors exist in the very jmn- 
 ciples upon which Sir Henry has founded his 
 work ; principles, indeed, that have been pre- 
 viously advocated by great financial authorities, 
 such as Adam Smith, Say, and Ricardo, and 
 which, therefore, might be considered to be es- 
 tablished axioms in political economy, if the fal- 
 lacies they contain were not now controverted and 
 exposed. 
 
 B
 
 2 
 
 This is the aim that we have proposed to our- 
 selves in entering the Lists with Sir Henry Parnell ; 
 and the points intended to be attacked, being of 
 vital importance to the future welfare of the Bri- 
 tish Empire, depending, as it does, in a great 
 measure, on the gigantic structure of its finances 
 and credit, it is hoped, that should the reasons 
 brought forward fail to convince at once, in con- 
 sequence of a want of sufficient development in 
 these pages, they will at least be of a nature to 
 engage reflection on the subject ; and, by the aid 
 of other writers impressed with their truth, even- 
 tually prove, that the thesis of political economy, 
 promulgated as infallible by Sir Henry and his 
 predecessors, is, in fact, not only disputable, but, 
 on mature consideration, will be discovered to be 
 positively erroneous and groundless. 
 
 It is, therefore, the principles advanced by Sir 
 Henry, particularly those which have any refe- 
 rence to the National Debt, its influence, and 
 management, which will form the subject of our 
 examination ; and we will endeavour to carry it on 
 as impartially, and as dispassionately, as a question 
 of a nature so serious and so essential for the 
 prosperity of the country requires to be treated. 
 
 The debt of Great Britain, and its influence 
 on the general welfare of the country, has given 
 rise as yet to comparatively few controversies; 
 nearly all writers and orators having concurred 
 in opinion, that it has been detrimental to the
 
 public interests and prosperity. Already, in the 
 time of William III., when the debt was in its 
 very infancy, it was called enormous. A writer of 
 great reputation, (d'Avenant,) then said, that 
 England could not provide a revenue of more than 
 two millions sterling, (equal to eight millions of 
 the present time,) without ruining her trade and 
 manufactures. Durino- the whole course of last 
 century, we have seen every writer assail the debt. 
 Hume declares, that *' if the nation does not 
 " destroy credit, credit will destroy the nation." 
 Dr. Price says, " that the evils and dangers of an 
 ** exorbitant debt are so great, that they cannot 
 *• be exaggerated," and " that we have reached 
 " so nearly the end of our resources, (1790,) that 
 " but little time is left to save us from impending 
 " ruin." " An exorbitant debt," he adds, " leads 
 ** to despotism, towards which all Governments 
 " have a natural tendency." 
 
 Kames, Adam Smith, Blackstone, Malthus, 
 Ricardo, and, latterly, Sir Henry Parnell, all hold 
 nearly the same language. But as experience 
 2indi facts disavow their predictions, and as Great 
 Britain, notwithstanding their gloomy forebodings, 
 is still very far from the dreaded period, anticipa- 
 ted in their imaginations, when the imposts requi- 
 red by the debt would exceed the means of provi- 
 ding for the same, it may be useful to examine : 
 1 . Whether there is not misconce'ption in the general 
 ideas formed as to the nature of a public debt: 
 
 b2
 
 2. Whether that debt in Great Britain has actuaUy 
 been detrimental to the interests of the country; 
 'and 3, Whether it is evident, as these writers have 
 asserted, that it jnust eventually entail national bank- 
 ruptcy or ruin. 
 
 Although we propose to argue the question as 
 little theoretically as possible, and to arrive at the 
 solution of the problem by mathematical enquiries^ 
 and by demonstrations, rather than by general 
 reasonings, which never produce the same degree 
 of conviction, still we think it right to state 
 a theoretical view of our ideas on the nature of a 
 public debt; and as they are in direct opposition 
 to those of most writers on political economy, 
 some of whom are put down as authorities in the 
 judgment of the public, we, in our comparative 
 humility, crave only of our readers to defer their 
 decision between us, until they have examined the 
 subsequent arithmetical proofs, intended to be 
 brought forward in support of our opinion. Proofs 
 are more difficult of confutation than a theory, 
 which, although logical, appears to leave still an 
 open field to doubt and controversy. 
 
 Credit is one of the great perfections of the 
 social mechanism of modern States, unknown to 
 the ancients, or even the middle ages. Its theory 
 might be thus expressed : 
 
 Government is charged to do for each indivi- 
 dual composing the community at large, that 
 which he cannot perform for himself; to see
 
 justice duly administered, maintain inward order 
 and tranquillity, defend the frontiers, &c. &c. ; in 
 fact, secure that happy independence and order, 
 without which, neither person, production, nor 
 property, can be safe, and no country prosperous. 
 In order to fulfil these duties, Government requires 
 money to defray the expenses of salaries to Judges, 
 Magistrates, &c., to pay to the armed force, civil 
 power, &c. 
 
 To provide for such expenditure, it is incum- 
 bent on the State to raise supplies in a manner 
 least burthensome to the community, that the 
 people may not be deprived of what is requisite 
 for their personal comforts, and for carrying on 
 their pursuits of trade and industry ; in fact, to 
 borrow for the use of all, that the imposts may 
 not fall too heavy on any. Thus, the public debt 
 consists of the capitals raised by Government in 
 the name of the body politic, and of which every 
 individual in the country would have to provide 
 his share on his own credit, in addition to his 
 personal wants, if the charges of administration 
 were not entrusted to others acting in, or re- 
 quired to act in the interest of all. 
 
 This being our view of the public debt, with 
 reference to the theoretical character of its origin, 
 we must now consider its effects on the commu- 
 nity, when its principles are carried into prac- 
 tice. 
 
 The debt is a means of circulation and repro- 
 b3
 
 6 
 
 duction, a principle of motion and activity for 
 capitals of all kinds — a supplement even of capi- 
 tal. When examining the public debt in its sepa- 
 rate attributes, in the capitals which it represents, 
 and the revenue or interest which it distributes,, 
 the importance of its use must be approved. 
 The engagements and contracts of a funded debt, 
 respected as they should ever be, form part of 
 the real property of a State, and as such they 
 figure among the assets of personal fortune, only 
 varying in proportionate value with land, houses, 
 and other goods and chattels, and acquiring, 
 through coiijidence, the reality and substantial in- 
 fluence which other property possesses by its in- 
 herent general value. Public Stock has, indeed, 
 often the preference over material property by its 
 easy mode of conversion into any species of 
 property, and the facilities it affords for com- 
 mercial transactions. And here the important 
 fact must strike the reflecting Statesman, that 
 the true elements of public wealth are nothing else 
 hut the wealth of private individuals ; consequently, 
 the State can truly be said to participate in the 
 losses of individuals, and a permanent fall in the 
 Funds, which reduces the capital of the Stock- 
 holder, aflects in the same ratio the wealth of the 
 State, notwithstanding the advantage the State 
 derives in a reduction of the nominal amount of 
 its debt, (an advantage, which, however, is more 
 Jictitious than real, as we will try to prove).
 
 The analogy which has been attempted to be 
 drawn between a national debt and the debt of an 
 iiidividuul, has given rise to the greatest misconcep- 
 tions into which all writers on finance, with few 
 exception, have fallen,* and who, by their dicta, in 
 their turn, have biassed the opinion of the public. 
 But, in truth, no kind of analogy exists between a 
 public debt and that of an individual. The former 
 is, both with reference to capital and interest, a 
 debt of the right hand to the left of the same in- 
 corporated individual, the nation who pays only 
 what it receives, and receives only what it pays, 
 and has, therefore, neither minus nor plus ; but 
 the debt of an individual is quite different ; the 
 amount does not pass from the right hand to the 
 left of the same person, but is transferred into the 
 
 * There is only the exception of Alexander Hamilton, of 
 the United States of America, who had discovered the secret 
 of the creative power of a public debt, although he has but 
 feebly developed it in his Report to Congress. We wish it 
 were in our power to cite as an exception, also, another dis- 
 tinguished Statesman, M. J. Laffitte, who, in hrs work, 
 " Reflexion sur la reduction de la /2e»i<e," published in 1824, 
 had perfectly developed the benefits of a public debt, and 
 whose expressions we have borrowed in some instances, being 
 too illustrating to be replaced by others ; but having, in his later 
 publication, " Opinions sur Vemprunt de 80 millions," which 
 appeared in 1828, attacked the principle which he advocated 
 in 1824, we dare not quote his authority in our favour. 
 
 Mr. Ouvrard has been more consistent in his principles, 
 having always acknowledged the benefits accrued to Fraace, 
 by adopting, in 1817, the system of funded Stock. 
 
 B 4
 
 8 
 
 hand of another, leaving the individual paying with 
 a decided minus of means. The case is, therefore, 
 widely different ; and it is only surprising that a 
 thesis, so thoroughly erroneous, has maintained 
 itself so long, and that it should have been sup- 
 ported by authors of such eminent merit, as 
 Adam Smith, Ricardo, Say, and Sir Henry 
 ParnelL 
 
 This is merely the theory of our opinion on the 
 nature of an internal debt, such as Great Britain's; 
 for as to public debts contracted with foreigners, 
 the interest of which is to be paid out of the 
 country, they are very objectionable, since they 
 possess all the reputed evils of an internal debt, 
 without any of its advantages.* 
 
 We shall now proceed to the special examina- 
 tion of the advantages or disadvantages resulting 
 to the community at large, from a great public 
 debt ; and in this investigation, we shall follow the 
 path pursued by Sir Henry Parnell, in his work 
 on Financial Reform. 
 
 Sir Henry, in (chapter XIX. on the National 
 Debt, says, (pages 265, 266, third edition :) — 
 
 " As the great amount of the debt has produced 
 " a very general opinion that England cannot 
 
 * It is well known, that part of any debt may be in the 
 hands of foreigners, and that such is the case with the one in 
 question; but it is also known, that such partial prejudice is 
 amply compensated by the large amount of Foreign Stock and 
 Bonds being held by British subjects.
 
 *' embark in new wars, without destroying her 
 " trade and manufactures, and without so ex- 
 *' hausting the resources of taxation as to incur 
 '* the calamity of national bankruptcy, it is im- 
 " portant to make some remarks on the funding 
 '* system, by which the debt has been created, 
 " and to trace its effects on the industry, wealth, 
 ** and power of the State." 
 
 " It is now, while we are at peace, that it is 
 " proper to make those investigations which are 
 *' necessary to enable us to form correct opinions 
 " respecting the injury which the debt has already 
 " occasioned, and respecting the probable injury 
 " which will be the result of making additions to 
 ** it. This opportunity ought not to be neglected 
 " for considering these questions, and for digest- 
 " ing and maturing those measures, which, after 
 ** a full examination of the financial circumstan- 
 '* ces of the nation, may appear most fit to be 
 ** adopted. But before going into this subject, 
 " a few remarks will be made, to explain what 
 " the extent of the evil is, which the Debt has 
 " produced." 
 
 " After the capital of individuals gets into the 
 ** hands of Government in the shape of a loan, it 
 " is immediately paid away in purchasing stores, 
 " provisions, or in providing the instruments and 
 " materials of war, that is, on pcrinhabk commo- 
 " d'dies. So that, at the end of a year, or at most 
 " a few months more, it is turned away from
 
 10 
 
 * serving in the function o^ capital to serve in that 
 ' of revenue, arid it is spent and wasted, without even 
 ' the hope of ani/ future reproduction^ 
 
 " If the capital which, from time to time, has 
 ' been contributed to loans, had not been so 
 
 * applied, it would still be in existence, and it 
 ' would have been employed in carrying on some 
 
 * trade, with the ordinary rate of profit, so that 
 
 * it would, every year, have been augmented. 
 
 * The debt, therefore, has not only diminished the 
 ' wealth of the nation, by the actual amount of 
 ' the capital subscribed to it, but by the amount 
 ' also of the accumulation of new capital, which 
 ' would have followed from the lost capital being 
 ' productively employed." 
 
 " This is the great evil which has arisen from 
 ' the funding system ; and had it not been for 
 
 * the wonderful energies of the country in accu- 
 ' mulating new capital, to replace the immense 
 ' amount that has been extinguished, poverty 
 
 * and ruin must have been the result." 
 
 Sir Henry has here made use of the very same 
 expressions as Adam Smith, in his celebrated 
 " Wealth of Nations," to prove the calamities re- 
 sulting from a National Debt ; and as this argu- 
 ment is the 07ily one, brought forward by Sir Henry in 
 support of an opinion which forms the ground work of 
 his structure, it is this argument principally that we 
 shall attempt to refute. 
 
 Adam Smith, and Sir Henry Parnell, assert.
 
 11 
 
 that " The capital of individuals passed into the 
 ** hands of Government in the shape of loans, is 
 " immediately paid away in purchasing stores, 
 " provisions, or in providing the materials of war, 
 *' that is, on perisJiable commodities ^ 
 
 By what motives are individuals actuated who 
 place their money in the public Funds, or sub- 
 scribe to Government Loans? Let it not be sup- 
 posed that they are in general cases instigated by 
 patriotism, or by an anxiety to afford assistance 
 to Government in its necessities. Such notions 
 would be absurd. The fact is, that individuals 
 invest their money in the Stocks for want of a 
 more profitable employment for it; they being 
 obliged to let their capital otherwise remain idle, or 
 to embark it in hazardous speculative enterprizes. 
 But even granting that this capital had been em- 
 ployed more advantageously in the pursuits of trade, 
 industry, and agriculture, still the produce resulting 
 from it would always have been of a nature quite as 
 perishable* as those commodities produced by the 
 sums lent to Government, and employed in the pur- 
 chase of stores, provisions, orinstrumentsand mate- 
 rials of war. Some of these articles are the produce 
 of industry and trade, others of agriculture ; all 
 afford a livelihood and profit to those who manufac- 
 
 • AH articles produced by means of money are perishable; 
 it is, therefore, difficult to conceive what Adam Smith, and 
 Sir Henry, intend to infer by perishable commodities, pro- 
 duced by the debt.
 
 n 
 
 ture, sell, or cultivate them. These profits, in the 
 hands of the traders and cultivators, produce savhigs, 
 w^hich again form capitals ; and, therefore, it is, in 
 fact, but an additional means of increasing the circula- 
 tion of the country, by giving employment to capitals 
 which otherwise would have laid dormant, or been 
 invested in uncertain undertakings. 
 
 With regard to that part of perishable commo- 
 dities referred to, such as " instruments, and 
 materials of war," on looking over the map of 
 the world we shall see that they have not had 
 an ephemeral existence. Without them. Great 
 Britain would neither see, as she now does, her 
 victorious trident floating in every sea, nor would 
 she possess a conquered empire of above one 
 hundred millions of inhabitants in one hemis- 
 phere, and in the others rich colonies or military 
 positions, enforcing respect for her power ; she 
 might, on the contrary, have been obliged to strike 
 her flag to a rival power, which, under the dynasty 
 of the Napoleons, would then have maintained its 
 political supremacy in Europe, and whose over- 
 throw is principally due to the immense develop- 
 ment of strength which the debt called into 
 action. 
 
 To return, however, to the sober reflection ne- 
 cessary for a discussion on financial matters. Sir 
 Henry, when speaking of the money invested in 
 funds, or public loans, says, " That it is turned 
 " away from serving in the function of capital, to
 
 13 
 
 * serve in that of I'evenue, and is spent and wasted 
 ' without even the hope of any future reproduc- 
 ' tion." 
 
 Sir Henry says, (page 269) : — 
 
 " On the other hand, the pubHc derives some 
 ' advantage from the debt ; for it serves to promote 
 ' the accumulation of capital, by aflfording, with 
 ' very httle trouble or expense, the opportunity of 
 ' investing money in stock, with the certainty of 
 
 * receiving the interest upon it on a fixed day, 
 
 * and with the power of getting immediate pos- 
 ' session of the principal, whenever it may be 
 ' wanted." 
 
 But if the debt promotes the accumulation of 
 capital, by affording, with very little trouble 
 or expense, the opportunity of investing money 
 in stock, with the certainty of receiving the interest 
 upon it, on a fixed day, the money is not turned 
 away from serving in the function of capital, to serve 
 in that of revenue. 
 
 Sir Henry having thus, by a second opinion, 
 refuted victoriously his former one, leaves us in 
 uncertainty which of these to adopt; we shall, 
 therefore, proceed to analyse the question, that we 
 may arrive at its correct solution. 
 
 The investments in the Funds possess both cha- 
 racters described by Sir Henry Parnell ; partly 
 they are savings placed in the Stocks, partly they 
 are capitals, which, by the use Government makes
 
 of them, are dispersed into circulation to form new 
 savings, and new capitals in other hands, or in the 
 same hands. 
 
 It is, therefore, unfair to ascribe either of these 
 properties exclusively to the debt, for it disperses 
 capital, and it creates capital, and it is impossible 
 to ascertain which of these effects preponderates ; 
 therefore, on this point, the debt deserves neither 
 blame nor praise. Although our opinion leans 
 more in favour of its contributing to the accumula- 
 tion of capital, than to the dissemination of it, still, 
 as this position is as difficult of being proved as 
 Sir Henry's, impartiality imposes the obligation of 
 leaving the question in statu quo, ante bellum. 
 
 Having thus attacked the principal arguments 
 of Sir Henry, we now come to the practical infe- 
 rence he draws from it, and which, in political 
 economy, as well as in every thing else, is the main 
 point for enquiry and decision. 
 
 Sir Henry says, page 268 : — 
 
 '' Our present situation, in consequence of the 
 ** extent to which taxation has been carried, for 
 " providing the interest of the debt, ought to 
 ** remove all doubt concerning its destructive cha- 
 *' racter ; for we certainly are less able than we 
 " ought to be, to resist whatever attacks may be 
 *' made on our freedom and independence, as 
 '* well as to interfere with decisive effect in 
 " defence of the liberties of others."
 
 16 
 
 A cursory retrospect of the history of the 
 country, will best enable us to refute Sir Henry, 
 and will shew whether the power and wealth of 
 Great Britain have actually declined since the 
 creation and increase of the public debt, or 
 whether the country has not rather attained a 
 degree of power and wealth, which the most san- 
 guine mind could never have anticipated. 
 
 In referring to the origin of the public debt, we 
 trace it to an early epoch after the Revolution, 
 which placed William III. on the throne, in 1688, 
 till which period the finances were in a bad state, 
 ivithoiit debt, but also without credit. 
 
 In this reign, (William and Mary,) Government 
 encountered great difficulty in borrowing the most 
 trifling sums, at a less annual charge than seven 
 or eight per cent. ; and millions can now be raised 
 with much greater facility than thousands could 
 be obtained, during the first 30 years of the reign 
 of George III. Interest on money has since 
 fallen gradually to 6, 5, 4, and 3^ per cent. ; at 
 which latter rate it may be stated now ; and to this 
 low rate of interest, we may partly ascribe the 
 possibility of the productions of British industry 
 being able to compete in foreign markets, not- 
 withstanding their heavy taxation ; this competi- 
 tion being assisted by the perfection of an expen- 
 sive machinery, (which again is the fruit of the 
 superabundance of the capital of the country,) and 
 which thereby diminishes the cost of production to
 
 IG 
 
 such a degree as to procure an almost universal 
 preference to articles of English manufacture. 
 
 In the reign of William and Mary, good land 
 was let at little more than one shilling per acre, 
 corresponding to four shillings of the present 
 standard of value ; the expenditure then amounted 
 to £7,000,000. 
 
 The acre of good land noiv, lets, on an average, at 
 40*., and the expenditure amounts to 52 millions.* 
 The present expenditure amounts, therefore, to 
 about seven and a half times as much as that in 
 the time of William and Mary, while the rent of 
 land has increased ten fold ; say, from four 
 shillings to forty. The country, therefore, con- 
 tributes now, comparatively, to its income only 
 three fourths of what it did then, the fullest 
 allowance for alteration in the value of money 
 being made. 
 
 In 1672, Charles II. had incurred bankruptcy 
 for a sum of £1,328,516., the interest of which, 
 £79,711., continued to be paid for some years, 
 but ceased previously to his death. The credi- 
 tors pursued their claims in the Courts of Justice, 
 and obtained a verdict against Government, in 
 1697, for £3,428,526., including twenty-five years 
 interest. Government, however, being the strongest 
 
 * The expenditure of 1827 was £55,744,863.; but as a 
 diminution of between three and four millions have been made 
 since 1827, the expenditure can be calculated now to be 
 52 million;:.
 
 17 
 
 party, overthrew the decision; and in 1(599, by 
 a single stroke of the pen, cancelled the above 
 debt, substituting in its stead a sum of £664,263., 
 which forms the foundation of the present debt 
 of Great Britain. 
 
 Since that period, the public debt has gone on 
 increasing. It was, 
 
 Millions. 
 
 At the Accession of Queen Ann - 16 
 At that of George I. - . - . 54 
 At the close of the War with Spain 78 
 At the beginning of the French 
 
 Revolution, 1793 - - - . 252 
 
 At the Peace of Luneville, 1803 - 570 
 
 And at present, it is about - - 780* 
 
 In order to apply this well known specification 
 to some purpose, and to shew whether the facilities 
 of the country to bear the weight of the debt, and 
 its annual charge of interest, have diminished, in 
 proportion to the increase of the debt ; and whe- 
 ther it is true, as Sir Henry, and his predecessors, 
 have asserted, that " we are less able than we 
 ** ought to be to resist whatever attacks may be 
 
 * Capital of debt unredeemed £777,470,890. 
 
 Long Annuities ] ,331 ,4o8. 
 
 Imperial and Exchequer Annuities .. 67,718. 
 
 Life Annuities (Jl 7,537. 
 
 Annuity, payalile to the Hank .... 585,740. 
 C
 
 18 
 
 " made on our freedom and independence, as well 
 *' as to interfere with decisive effect in defence of 
 ** the liberties of others," it is necessary to draw 
 a parallel between some of those periods and the 
 present one ; and we shall there find such an 
 arithmetical solution of the problem, as will remove 
 all doubts on the subject. 
 
 At the beginning of the French Revolution, the 
 public debt amounted to £252,000,000, and the 
 annual charge for interest was £9,500,000. 
 
 Mr. Lowe says, in his work on the State of 
 England, that the taxable income amounted, in 
 1793, to £125,000,000. 
 
 Thus the interest of the debt, in 1793, consumed 
 one-thirteenth part of the income of Great Britain. 
 
 The debt amounts at present to £780,000,000, 
 and the annual charge for interest to £28,000,000. 
 The income can now be computed at £350,000,000;* 
 and thus the interest of the debt at present, 
 and which constitutes the only true burthen, or 
 imputed burthen, still does not consume more than 
 about one-thirteenth part of the income. 
 
 * Mr. Ricardo has computed, in 1819, the general income at 
 300 millions; as 12 years have elapsed since Mr. Ricardo 
 made this calculation, and as similar proofs can be referred to, 
 shewing a continued increase of production, it is within bounds 
 to compute it at present at 350 millions. 
 
 The increase of a million a year in the rateable income of 
 Lancashire, stated by Sir Robert Peel, in the House of 
 Commons, to have taken place between 1815 and 1829, 
 sustain this conclusion.
 
 19 
 
 It is, therefore, evident, that notwithstanding 
 an increase of 538 millions to the amount of the 
 debt since 1793, the interest which constitutes 
 its actual burthen does not require a greater 
 proportion of the income of the country for its 
 payment than it did in 1793; and, therefore, the 
 increase of means to provide for the interest has kept 
 pace with the increase of the debt itself. 
 
 In this respect, the case is analogous with the 
 State and individuals. It is preferable to be rich 
 though having much to pay, than to be poor, and 
 be called upon to expend in proportion ; and it 
 follows, that Great Britain, in 1831, with a debt 
 of 780 millions, and an income of 350 millions, is 
 much wealthier than Great Britain, in 1793, with 
 a debt of 252 millions, and an income of 125 
 millions; for deducting one-thirteenth part of the 
 income of each period for the charge of interest, 
 it will leave to Great Britain, 1831, an excess of 
 income of 322 millions; whereas, in 1793, the 
 excess of income was only 116 millions. 
 
 This statement is positive, and furnishes a ma- 
 thematical proof against the assertion, that the 
 country has been ruined by the debt. 
 
 A comparison between the totality of the taxes 
 at present, with what they have been, would offer 
 a still more favourable result. In 1800, for in- 
 stance, the income of the country, according to 
 Lowe, was 170 millions, and the expenditure 
 60 millions, being more than one-third of the 
 
 c 2
 
 20 
 
 income; whereas, now, the expenditure of 52 
 millions does not amount to more than about 
 one-seventh part of the income, 350 millions. 
 
 This result, so very satisfactory, as a positive 
 fact, is still more so, in a relative point of view, when 
 compared with the financial state of nearly all the 
 other Powers of Europe. 
 
 As an example, we may be allowed to notice 
 France. 
 
 During the Consulate and the Empire under 
 Napoleon, the Budget never exceeded 30 millions 
 sterling; during the reigns of Louis XVIII. and 
 Charles X. it was increased to 40 millions, and 
 has now been carried to 44 millions; although, 
 if her income be increased at all, it has not been 
 increased in any proportion, approaching the 
 increase that has taken place in England. In 
 the financial condition of one of these rival Powers, 
 we see an immense increase of income, and a con- 
 siderable diminution of expenditure ; in the other, 
 a trifling increase of income, with a gradual but 
 rapid augmentation of expenditure ; while both 
 have had the privilege of enjoying, with a very 
 partial exception, a state of peace. 
 
 The difference of the state of credit which 
 Great Britain presents, when compared to that 
 of France, is still more striking. You will find 
 the French 5 per cent. Consols quoted at 
 85, when the 3 per cent. English are as high 
 as 83^.
 
 21 
 
 We will adduce another positive proof in sup- 
 port of our opinion, viz. the immense increase of 
 precious metals in Great Britain, during the period 
 of the development of her credit. 
 
 According to Dr. Price, the gold and silver in 
 circulation in the three United Kingdoms, in 
 1773, amounted to about sixteen millions; at 
 present, it can be valued at fifty millions, having 
 been trebled since the above period, and thus 
 affording proof how the financial situation of the 
 country has been ameliorated during the last fifty 
 years, which is also the period of the greatest 
 increase of its debt. 
 
 The foreign trade of Great Britain presents the 
 same results. About half a century ago, it was 
 nearly equal to that of France, now the loliok 
 exportations of France are valued at forty mil- 
 lions sterling, whereas the official value of ex- 
 ported British and Irish manufactures amounted 
 yearly to fifty-five millions, although the popu- 
 lation and geographical surface of Great Britain 
 are so inferior to that of France. 
 
 Sir Henry says, page 269 : *' There must be a 
 ** limit somewhere to taxation, beyond which, if 
 " it be carried, national decay will follow; and, 
 " surely, a debt of nearly 800 millions, requiring 
 '* 28 millions of taxes for interest, must have 
 " brought the country a long way in the course of 
 '* approximation to that limit.''' 
 
 Let us see what Sir Henry says, jiages 4 and 5 : 
 c3
 
 22 
 
 " Notwithstanding the very injurious effect of 
 " many of the taxes, taxation has not yet been 
 " carried to such an extent as to place this coun- 
 " try either in a declining or stationary state with 
 " respect to its agriculture, manufactures, and 
 " commerce. This is a conclusion come to by 
 " reasoning on facts, which show the continued 
 *' accumulation of wealth in defiance of all impe- 
 " diments; it is a conclusion in no degree ori- 
 " ginating in any preconceived theory, nor does 
 " it lose any of its claim to have confidence placed 
 "in it, by its being directly opposed to the opi- 
 ** nions of a number of persons, who maintain that 
 *' the nation is in a dechning state, because these 
 " persons wholly omit to sustain that opinion by 
 " any reasoning whatever. They merely exclaim : 
 " Look at the National Debt, the distress of 
 ** agriculture and manufactures!" but they forget 
 " that the country was in the highest state of 
 " prosperity in the years 1823, 1824, and 1825, 
 " with the same debt and taxes which now exist, 
 •' and that similar distress to what now pre- 
 " vails (February, 1830,) has been a matter of 
 " regular occurrence, and regularly followed by 
 *' recovery, as soon as the disturbed proportion of 
 " supply to demand is restored to its proper ratio, 
 *' an event which happens as a matter of course, 
 " from the operation of the common rules by 
 " which trade is carried on." 
 
 These are very good arguments against the fears
 
 23 
 
 expressed by Sir Henry, page 269, but there is 
 another one, still more convincing, which he 
 quotes, page 271, where he says: "That a pro- 
 *' perty tax of ten per cent, throughout the United 
 " Kingdom should now yield a much larger 
 " revenue than it did in 1815, in consequence of 
 ** the increased wealth of the nat'on since that 
 " time, notwithstanding the reduction of rents 
 " which has taken place." 
 
 Sir Henry has calculated that this tax yielded, 
 in. 1815, a revenue of 18 millions, and adds, '* If 
 '* no more than 19 millions were required, in 
 ** addition to our present expenditure, there ouglit 
 '' to be no difficulty in raising it."" 
 
 We ask, then, has the country reached that limit 
 of taxation, beyond which, if it be carried, na- 
 tional decay will follow ? No, positively not ; for 
 the resources of the country have not alone been 
 developed as the debt advanced in amount, but 
 the original resources themselves have acquired 
 additional power under the influence of that very 
 increase. The enormous capital which the debt 
 represents, directed into the circulation of the 
 country, enlivens commerce, industry, and agri- 
 culture. Cancel the debt, and Great Britain 
 sinks, like a giant deprived of the requisite supply 
 of nourishment. 
 
 We will here introduce a calculation of how 
 much the public debt might be even yet in- 
 
 c 4
 
 24 
 
 creased, without interfering in the least with 
 the prosperity of the country at large. 
 
 An income tax of 10 per cent, would produce 
 a revenue of 20 millions, representing, at four per 
 cent, interest, and a sinking fund of one per cent., 
 a capital of 400 millions. The debt might, there- 
 fore, be increased from 800 to 1,200 millions, and 
 still present the same security as it does now ; but 
 the progression might be even extended, when we 
 consider that this creation of 400 millions of new 
 stock, would in turn create new capitals, which, 
 again paying income tax, would augment the 
 produce of the latter, and thereby add to the 
 means of funding more stock. 
 
 Let it not be supposed, that this calculation is 
 intended to prove the utility of increasing the 
 public debt to that amount, or the propriety of 
 making any addition at all to it ; it is only meant 
 to shew that it is still practicable ; and that this 
 extreme limit, to which Sir Henry and his pre- 
 decessors in political ceconomy, for more than a 
 century, have alluded and predicted as at hand, 
 has not yet been reached. It is a limit, itideed, ivhich 
 may be compared to the illusion of the Alirage in 
 the desert, that constantly dazzles at a short distance 
 before the eyes, but never permits closer approach. 
 
 We are far from saying that a public debt 
 is not accompanied with some inconveniences, 
 which principally consist in the fact, that the in-
 
 25 
 
 crease of taxes necessary to provide for the inte- 
 rest of the debt, forces up the prices of the neces- 
 saries of life, which, in their turn, raise the price 
 of the produce of manufacture, and render them 
 more difficult of sale in foreign markets. We 
 allow, however, that these inconveniences have 
 been much over-rated, from the plain reason, that 
 every body paying taxes feels the immediate evil 
 affecting his own interests, whereas few people 
 choose to reflect on the general bcnejit resulting to 
 the community at large. 
 
 The greatest evil attending the increase of 
 taxes, and the rise of prices thereof following, 
 is, that it begins at the wrong end, by the pi^oceeds 
 of labour, instead of the pay of labour. The 
 landed proprietor and his tenant are taxed, the 
 one exacts a higher rent, and the other a 
 greater price for his produce; but, as the de- 
 mand for labour has not increased, and im- 
 provements in machinery and larger farms have 
 a tendency to diminish it, the wages of labour do 
 not experience a corresponding advance, so that 
 the labourer can no longer procure, with his usual 
 salary, the common necessaries of life for himself 
 and family.* 
 
 * Social institutions are not, after all, chargeable with this 
 consequence ; the savage who roves uncontrolled by laws 
 through the wilderness, is still more immediately under the 
 tyranny of want, than the labourer of the fields of Europe ; 
 and the unanswerable proof is, that he multiplies less. But 
 the one is overtaken by an invisible hand, and the other sees
 
 26 
 
 There is another cause in action to prevent a 
 due proportion of wages, compared with the prices 
 of commodities ; it is the too great competition 
 occasioned by the influx of the Irish labourers into 
 England. 
 
 Ireland, within itself, presents the best remedy 
 for giving employment to its population. But it 
 is not by a reduction of the debt that you can ex- 
 pect to attain this desirable end ; on the contrary, 
 increase it from 800 millions to 850 millions,* ex- 
 it, and soon learns to detest it. The savage cannot feel re- 
 sentment against the deer which flies before him, or the fish 
 he cannot catch. The land he did not sow, cannot be ex- 
 pected to yield any thing to him ; but the labourer, who sows 
 and does not reap, — who sees abundance all around him, — 
 who creates it, in fact, and does not partake of it, — and 
 against whom a terrible law pronounces sentence of death, if 
 he should enter that granary which he filled, to take what his 
 salary does not suffice to purchase,— needs much virtue and a 
 sort of practical morality, very meritorious, to resign himself, 
 and endure in peace. He has a wife and three children, per- 
 haps, and earns their bread with great difficulty ; but without 
 this social order, he might be told, without this rigorous right 
 of property, his family might have already died with hunger, 
 or probably neither himself nor them would have ever existed. 
 Under this social order, his neighbour rolls in wealth, while 
 himself is restricted to mere necessaries ; yet without it, nei- 
 ther of them would have had these mere necessaries. All this 
 is undeniable ; but, if I may be allowed to use a common ex- 
 pression, more energetic than elegant: " Ventre aflame n'a 
 point d'oreilles." (Siraond.) 
 
 * The increase of 50 millions in the Public Debt would 
 probably not diminish the value of capitals in England;
 
 27 
 
 pend these 50 millions on Ireland ; and, instead of 
 a yearly return of four millions, the result will be a 
 yearly revenue of ten millions, yielding thus an 
 excess, not alone sufficient to cover the annual 
 charge of interest on the new debt, but an adequate 
 amount of sinking fund ; and in the short space of 
 thirty-six years, the natural consequence will be 
 seen in the Sister Island's wealth, and sincere 
 attachment to the English connexion.* England 
 would derive still greater benefit from these mea- 
 sures, by creating in Ireland th^X amoimt of demand 
 for the products of her industry, which she is 7iow 
 obliged to seek in the remotest regions of the globe. 
 In Ireland, she has, at her very threshold, millions 
 of fellow subjects, who have only rags for covering ; 
 mud huts for shelter ; and not even bread for food. 
 Let this unnatural state of things be remedied, 
 and the evil which now oppresses the working 
 classes in England, ** low wages," will be at once 
 removed. No artificial means can succeed, it is 
 only by diverting the great competition for work. 
 
 but, if so, it is the sole mode of taxing capitals, out of 
 which the revenue of the State does not derive any direct 
 benefit 
 
 * Lord Glengal's plan, (a local Public Debt on the prin- 
 ciples of those established in the Tlnitcd States of America,) 
 carried on a large scale, would oiler a fair chance of pros- 
 perity fur Ireland.
 
 28 
 
 into a natural channel, that a favourable result 
 can be expected. 
 
 But, if the above mentioned plan be not resorted 
 to, for restoring- the equilibrium which ought to 
 exist in every well-regulated community between 
 wages and price of food, that effect must be ob- 
 tained by forcing a reduction of the latter. It is 
 the only alternative ; and the repeal of the Corn 
 Laws, or at least their modification, offer infallible 
 means for attaining this end ; but this way of re- 
 moving the evil appears, however, less advisable 
 than the former ; for, surely, it is preferable to 
 7Yiise Ireland to a level of prosperity with England, 
 than to loiver the latter to the level of Irish wretch- 
 edness ; which would certainly be the consequence 
 of a total repeal of the Corn Laws, as far at least 
 as the most important interest of the Empire is 
 concerned, viz. the agricultural. 
 
 Another inconvenience inherent to the repeal 
 of the Corn Laws, is the difficulty that would arise 
 to maintain the Poor Laws; for although these 
 laws require a strict revisal, still they could not 
 be entirely abolished, without involving the coun- 
 try in great embarrassments and dangers in times 
 of manufacturing distress. 
 
 But to return from this digression to the enquiry 
 into the character and effects of the public debt, 
 we must refute the reproach cast upon credit, by 
 saying, " that it furnishes a bad Government 
 with a dangerous power, and lasting securities.
 
 29 
 
 because capitLilists are interested in its existence, 
 as creditors are in the existence of their debtors." 
 
 It is an egregious error to suppose that the 
 existence of a bad Government would be secured 
 by the debt, because, in our days, the debts are 
 not ministerially personal, because they descend 
 as an heirloom in trust to all Governments, how- 
 ever composed, and because the private interest 
 of some capitalists cannot fetter permanently the 
 expression of public opinion in defence of general 
 interests. We allow, that, in the hands of a bad 
 Government, credit is a dangerous tool ; but every 
 thing is dangerous in such hands ; the very best 
 institutions may be turned into engines of mis- 
 chief. But are these a reason sufficient for de- 
 stroying or injuring credit, or irreparably sub- 
 verting useful establishments? 
 
 The public debt forms a link of confidence 
 between Government and the subjects of the State. 
 When a public debt is created in a rich and 
 powerful country, of sufficient magnitude to form 
 a considerable part of the patrimony of the sub- 
 jects of the State, Government becomes the real 
 guardian of the Creditors of the Exchequer; the 
 special protector of the means of subsistence of 
 that multitude of families inscribed as co-proprie- 
 tors in the books of the National Debt. 
 
 To bind the greatest number of individuals to 
 the public wealth, is to establish among them a
 
 30 
 
 sure pledge of order and stability ; in line, the 
 conservative interest of property embraces every 
 other. To diffuse public prosperity over all classes 
 of the community, is to create a demand for its 
 increase ; a people cannot remain stationary ; every 
 thing tending to favour the ascending motion of 
 society, becomes therefore a pledge of security 
 and confidence for the M^hole community. 
 
 If a National Debt formed a bar to the prospe- 
 rity of a country, it follows that those countries 
 which are not shackled with any, ought to make 
 rapid strides towards the possession of w^ealth, 
 national and individual ; we know, however, 
 that there is a kingdom in Europe, without a 
 shilling of public debt, whose revenue exceeds its 
 annual expenditure ; whose soil is fertile, and rich 
 in mines and forests of considerable produce, and 
 which, accordingly, ought to be very prosperous ; 
 but the reverse is the case ; capital is wanting for 
 enterprise : the rate of interest is too high, which 
 prevents capital from being turned into trade, 
 industry, or agriculture, and thus all these branches 
 of public prosperity languish. What then is the 
 true cause of such inertion, and why do an in- 
 dustriously disposed and hardy people, under a 
 Sovereign most zealously desirous of promoting 
 its welfare and improvement, remain in a state of 
 comparative poverty and inactivity ? Why is S we- 
 den in such a condition ? Because, she wants an
 
 31 
 
 internal National Debt, which alone can stimulate 
 circulation, and create an invigorated spirit of 
 enterprise. 
 
 "We may also here advert to another w^ay of 
 stimulating public credit, on account of its direct 
 connexion with a National Debt — we mean the 
 banking system. 
 
 In the United States of America this system 
 has been introduced with considerable effect, and 
 has acted as a lever, by means of which that 
 country has extricated herself from her mo- 
 rasses, cleared her forests, cultivated her wilds, 
 and has created, in fact, in the shortest time 
 possible, almost as by enchantment, all that 
 constitutes the elements of civilization.* But this 
 system, too much extended, is not without its 
 inconvenience, whereof the many failures of local 
 banks in most districts of the United States ex- 
 hibit the strongest proofs. 
 
 The success of this plan depends, besides, en- 
 tirely on the spirit of enterprise and confidence of 
 the people by whom it is adopted. In the United 
 States, banks of this description, known to have 
 circulated notes to the amount of ten times their 
 
 * The United States Bank, which is one of the best con- 
 ducted establishments in the world, has rendered the greatest 
 benefit to all the States, by lowering the rate of discount and 
 of interest, to a very considerable degree, and facilitating 
 commercial transactions through the whole Union, for the 
 benefit of all the States.
 
 32 
 
 real capital, and whicli have stopped payment 
 at the first run upon them, have again risen and 
 flourished with the celerity of a mushroom's 
 grow^th, and the strength of the oak. 
 
 The very principle of these private banks is to 
 put into circulation a much larger capital than 
 they really possess, and one, which affords them 
 the only means by which the interest of the capi- 
 tal, and the expenses of management of their 
 establishments, can be covered : thus a Jictitious 
 capital is created, which, however, so long as its 
 credit is maintained, answers all the purposes of 
 a real one, by providing a circulating medium for 
 the country. 
 
 A National Debt offers the same advantages, 
 with more security, although the capital repre- 
 sented by it be fictitious ; it operates on the 
 circulation of the country as if the whole capital 
 were real ; the money lent to Government returns 
 immediately into circulation, and the amount of 
 stock remains, to fulfil all the functions of solid, 
 real, and active property. 
 
 It is advanced by the opposers of public debt, 
 that capitals invested in it would be employed with 
 more profit if allowed to circulate in private, 
 instead of Government channels ; but, in this 
 very argument, lays the fundamental error of the 
 sy stern. 
 
 Can it be supposed, for instance, that the sum 
 of seven hundred and seventy-seven millions, now
 
 33 • 
 
 forming the funded stocks, could have found em- 
 ployment among individuals in addition to the 
 sums already applied to private transactions ; and 
 that this further outlay could have been employed 
 in a manner as fructifying, or more fructifying 
 than has been done under the direction of Govern- 
 ment, by M^hom it has been returned directly into 
 the circulation of the country ? For our part, we 
 doubt it, and for the reasons we have already 
 assigned at full length. 
 
 Look at the Scotch Baiiks, and tlie Savings 
 Banks — they collect the small savings of indivi- 
 duals, and transform them into capitals ; the 
 effect of these, on a small scale, is produced by the 
 public debt on a large one. Without the debt, 
 Great Britain would feel the want of the capital 
 which it represents, and which has acted as the 
 great lever of all her enterprises of industry, com- 
 merce, and agriculture.* 
 
 The sinking fund is to the public debt, what 
 
 * Mere revenue, or stationary income, has seldom a repro- 
 ductive quality, and hence the proportion between capital and 
 revenue seems every where to regulate the proportion between 
 industry and idleness. Wherever capital prevails, industry, 
 producing some benefit to the country, is active. Wherever 
 revenue is to be found, it is generally surrounded by idleness 
 or unproductive labour. 
 
 It is capital, therefore, and not revenue, that gives im- 
 petus to the productive labour of all countries in a state of 
 civilization. The larger the capital is, the more abundant are 
 the resources for the beneficial employment of the people ; and 
 
 D
 
 34 
 
 cash payment is to private banks ; both are intended 
 to maintain credit by answering all demands for 
 outstanding bonds or notes, requiring to be realised ; 
 but the preference of the public debt over private 
 banks, is founded on that more 'permanent confi- 
 dence ivhich is felt in national over private institu- 
 tio7is ; thus, while the private banks are obliged to 
 keep in cash, at least, one tenth of the amount of 
 their circulation, the public debt maintains its cre- 
 dit, by keeping up a sinking fund of only one per 
 cent. The debt, therefore, in this point of view, as 
 in so many others, is the best means for stimu- 
 lating the public credit of a country, and far pre- 
 ferable to those offered by private banks for the 
 same purpose and end ; but the one institution 
 does not exclude the other ; on the contrary, one 
 is a natural consequence, a sine que non of the 
 other, and which we shall attempt to exemplify 
 in the following manner : — 
 
 Where funded stocks exist, a private bank can 
 be established with more security ; for in its circu- 
 lation of £1,000,000. it can still derive profit, if it 
 has one third of -the amount in cash, and two thirds 
 invested in stocks. Without stocks, the profits 
 must be made on the excess of the amount put 
 into circulation, beyond the amount of real pro- 
 
 ia proportion to the means which a nation possesses of exporting 
 the surplus labour thus produced, so will be the increase or the 
 diminution of the prosperity of a country. — P. Colquhoun, 
 p, 118, Second Edition.
 
 35 
 
 perty, but which is an adventure liable to frequent 
 and great losses. The English private banks have 
 this preference over those of the United States ; 
 the former are in great measure based upon stock, 
 the latter upon silver deposits.* 
 
 It is vvrith nations, as it is with individuals, who 
 are in the course of acquiring property. At first, 
 the progress is slow, until a certain amount is 
 obtained ; after which, as wealth has a creative 
 power, under skilful and judicious management, 
 the accumulation becomes more and more rapid, 
 expanding itself in all directions, diffusing its in- 
 fluence wherever talents and industry prevail, and 
 thereby communicating the power to thousands 
 
 * We are well aware that there exists a public debt in the 
 United States, but the amount of it being very much reduced, 
 and diminishing more and more every day, cannot be taken 
 into consideration. Its effect is now partially superseded by 
 private banks, as it has been mentioned here above, and par- 
 tially by local public debts. 
 
 The mode of introducing a local public debt in the United 
 States, is as follows: — A tax is agreed upon between the 
 citizens of a whole State, or of part of it ; a loan is founded on 
 that tax, the interest, as well as the sinking fund of which are 
 payable out of that very tax ; the amount of the loan is put 
 into circulation by bills, which, employed in some public un- 
 dertaking, become beneficial to the community, by whose co- 
 operation the loan is created. Thus, a large floating capital is 
 formed, where none formerly existed, and the whole country 
 derives immediate compensation for the sacrifice spontaneously 
 imposed. 
 
 D 2
 
 36 
 
 of acquiring riches, who must have remained 
 in poverty in countries less opulent. 
 
 The imagination cannot form a just idea of what 
 Great Britain would be without her debt, and the 
 low scale to which she might rapidly be reduced 
 in the estimation of the world ; her debt consti- 
 tutes the strength of her credit, and, without it, 
 she would be deprived of this first principle of 
 the prosperity of a country. Where there is no 
 public debt, the capitalist, in want of this kind of 
 investment for his capital, or his savings, is obliged 
 to adopt other means for placing out his surplus 
 funds ; such as lending on mortgage, houses, 
 land, discounting bills, &c., or embarking in 
 speculations of all kinds. But if Government 
 should then require a loan, what would happen ? 
 It could not be accommodated ; for capitals vested 
 in the above-mentioned ways, are Jiot disposable 
 ** on demand." The country is then placed in the 
 unpleasant dilemma, either to be without the 
 means of making a loan, (which, at times, might 
 be indispensable for its service,) or be obliged to 
 raise it, at a great expense, and under great dis- 
 advantages, in foreign countries, or again to see 
 the capitals of its subjects withdrawn from the 
 channels of trade and industry, and the mort- 
 gagers forced by their creditors to sacrifice their 
 property at a ruinous rate, in order to pay off their 
 mortgage, and thereby enable the creditors to take 
 a share of the loan.
 
 37 
 
 It is then quite evident that the public debt 
 stimulates the credit of the country, which, with- 
 out debt, would pine for such a financial element 
 to promote its healthful growth. 
 
 A single instance v/ill suffice to prove the dif- 
 ference of credit enjoyed by a country like Great 
 Britain, with a large internal debt, and one which 
 does not possess this advantage. 
 
 In 1829, when the Chancellor of the Exchequer 
 required a loan of only three millions and a half, 
 in the course of forty-eight hours no less than 
 twenty-seven millions were subscribed to it in 
 London ; and the whole of these twenty-seven 
 millions might have been borrowed at the low rate 
 of three and a half per cent, interest ; while the 
 powerful Empire of Russia (which is .without 
 any internal debt) was obliged, in the course of 
 the very same year, to pay five and a half per 
 cent, interest for a loan of two millions and a half, 
 contracted with the House of Hope and Co. of 
 Amsterdam ; and even at that rate it found diffi- 
 culty in obtaining the loan. 
 
 An argument has been frequently advanced, 
 which, at first sight, might appear correct, but 
 which, on maturer reflection, proves to be only a 
 sophism; namely, it has been said, that if a public 
 debt contributed to the prosperity of a country, it 
 would be easy enough to acquire wealth by get- 
 ting in debt. But, in the first instance, a country 
 cannot create an internal debt at will ; it requires 
 
 D 3
 
 38 
 
 a stock of disposable capital, which afterwards gene- 
 rates and accumulates with the debt. Every country 
 in its first steps towards the establishment of 
 public credit, is circumscribed in its financial 
 means, but these means increase with the ex- 
 pansion of credit, and eventually add to the real 
 stock of public riches. 
 
 The example of Russia, which we have noticed, 
 is an evidence that a public debt cannot be created 
 by an Ukase, it can only be contracted gradually , 
 according to the increasing wealth of the country, 
 and the provided means of development. The 
 debt itself is, then, an efficacious medium for 
 the production and acceleration of this deve- 
 lopment, and is not only a proof of wealth, but 
 also a mediuf?i by which it is acquired. 
 
 Having examined the public debt in its pro- 
 perties and bearings on the welfare of the com- 
 munity, we shall take a cursory glance of the 
 subject of its management ; and here, we are sorry 
 to acknowledge, that we differ again from Sir 
 Henry Parnell. 
 
 In Chapter XXI. Sir Henry discusses the com- 
 plicated question, whether is it most advantageous 
 to the public to borrow, in a nominal capital, 
 or to raise loans on stock of the same amount as 
 the sums lent. 
 
 Sir Henry admits, page 278, that the loans 
 raised in a nominal capital, according to the sys- 
 tem introduced by Mr. Pitt in 1793, have been
 
 39 
 
 obtained at a lower rate of interest than could have 
 been obtained for loans on stock, of the same 
 amount as the sums lent. 
 
 This admission of Sir Henry's is fully borne 
 out, in the higher rate of interest which the five 
 per cent, stock bore above that of the three per 
 cent, stock, from 1792, to 1816. But Sir Henry 
 adds : "If the millions of money which were 
 " borrowed between 1792 and 1816, had been 
 *' borrowed on stock, bearing five, six, or seven per 
 ** cent., according to the rate which circumstances 
 ** of the time of borrowing made unavoidable, the 
 ** public would have since been able to reduce the 
 ** charge y one, two, or three per cent, on the amount 
 *' of the sums borrowed, in consequence of the re- 
 ** duced rate of interest on money." 
 
 In order to judge of the correctness of Sir 
 Henry's position in this respect, it behoves us to 
 examine ; — 
 
 First, If the saving to the public, from 1792, to 
 1816, by the payment of a lower rate of interest on 
 loans, made in a nominal capital, than would have 
 been paid on loans made in stocks of the same 
 amount as the sums lent, does not exceed the ad- 
 vantage which the public would derive, if the no- 
 minal amount of the debt were less than at present. 
 
 Secondly, Whether Sir Henry's supposition is 
 correct, that, as a matter of course, *' the public 
 " would have since been able to reduce the 
 " charge, one, two, or three i)er cent, on the 
 
 d4
 
 40 
 
 " amount of the sums borrowed, ifi consequence of 
 " the reduced rate of interest on moneys 
 
 If, as Sir Henry says, *' loans in stock, of the 
 ** same amount as the sums lent, could not be 
 *' obtained, but at a higher rate of interest than 
 ** loans in stocks of a nominal capital," it is very 
 clear, that there has been a saving of interest ; 
 and does not this very saving provide a sinking 
 fund fully adequate for the compensation of the 
 nominal increase of capital, and for the total 
 extinction of the principle, in due time ? 
 
 Admitting the difference of interest to have 
 been one per cent., the saving of this one per 
 cent., employed as a sinking fund, with compound 
 interest, would have redeemed, in thirty-six years, 
 the capital borrowed, (the redemption being made 
 in the five per cents. ;) and as, since the greatest 
 part of these loans were raised, thirty-six years 
 and more have now elapsed, it follows, that the 
 profit which has accrued to the public, by pay- 
 ment of a less sum for interest for a considerable 
 number of years, exceeds that which would have 
 accrued to it, by the mere circumstance of the 
 nominal capital of the debt being less than it is at 
 present. 
 
 By calculations, which Sir Henry restricts to 
 the year 1802, but which, to be strictly impartial, 
 he ought to have carried on to 1816, he attempts 
 to prove that the difference on the two kinds of 
 loans has only been 12,5'. Qd. per cent. ; still our
 
 41 
 
 reasoning holds good ; for, although the numbec 
 of years required for the redemption of a capital, 
 with a sinking fund of only 12*. 6d. or f per cent., 
 would be naturally greater than if there had been 
 a sinking fund of one per cent, in action during 
 that time ; the argument, founded on arithmetical 
 truth, remains uncontroverted. But if the saving, 
 thus accrued, has not actually been employed 
 towards the redemption of the debt, the fault does 
 not lay in Mr. Pitt's system, attacked by Sir 
 Henry ; for its very first rule imposed the obliga- 
 tion to set aside, yearly, one per cent, of the 
 capital, to act as a sinking fund for the redemption 
 of the debt. If, however, circumstances have 
 prevented a strict adherence to the system, some 
 diminution of expenditure has resulted during the 
 suspension of the redemption, equally to benefit 
 the public. 
 
 Having now considered the question under the 
 most favourable point of view to the system of 
 Sir Henry, and granting the fulfilment of his own 
 position, "that the public would have since been 
 able to reduce the charge, one, two, or three per 
 cent, on the amount of the sums borrowed, in con- 
 sequence of the reduced rate of interest on money," 
 it becomes incumbent on us to investigate it under 
 a different aspect; namely, in a case where Sir 
 Henry's supposition has not been realized, and 
 the rate of interest has not fallen one, two, or three 
 percent., which must be admitted to be a possible
 
 42 
 
 case, as the rate of interest in the market is prin- 
 cipally ruled by that of the public debt, and does 
 certainly not take precedence in a fall. In this 
 case, then, the public would not only have lost 
 the many years savings of a less rate of interest 
 disbursed, but would even, to this day, be encum- 
 bered with the same burthen, and still have to 
 pay five per cent, interest on the debt, whereas, 
 now it pays only about three and a half per cent. ; 
 and granting that the debt would figure in a less 
 nominal amount, the interest upon it would still 
 require greater sacrifices on the part of the public. 
 
 But, in order to give an arithmetical test of this 
 position, and prove that it is more advantageous 
 to the country to borrow in a tiominal capital, at a 
 less rate of interest, than to pay a higher annual 
 charge for interest on the capital actually received, 
 we shall state the problem as follows ; — 
 
 Two countries, commanding an equal degree of 
 credit, require a loan of eighty millions. 
 
 One borrows in a nominal capital of one hun- 
 dred millions, at four per cent, interest, and re- 
 ceives eighty millions in money ; 
 
 The other receives the eighty millions in money, 
 and acknowledges this capital as a debt, paying 
 five per cent, interest per annum. 
 
 Thus, both are encumbered with an annual 
 charge of four millions for interest, and both 
 receive eighty millions in cash. The latter 
 would, however, have the advantage over the
 
 43 
 
 other, in as much as a debt of eighty millions 
 is sooner redeemed, than one of one hundred 
 millions. 
 
 But the question ought not to be put in that way ; 
 for the fact is known to be, that, in borrowing in a 
 nominal capital, the rate of interest is reduced in a 
 proportion, that the equality of ci^edit of the two 
 countries ivould not otherimse admit. 
 
 The country, therefore, which borrowed in a nomi- 
 nal capital of one hundred millions, instead of receiv- 
 ing eighty millions of money, as mentioned above, 
 would receive eighty- five, or even ninety millions 
 cash ; and thus the actual annual charge for interest 
 would be reduced to four and three quarters, or four 
 and a half per cent. ; while another country, borrow- 
 ing in a real capital, would be subject to the full 
 charge of five per cent, interest ; leaving, thus, to the 
 first country, a saving of one fourth ^ or one half per 
 cent, a year ; which, employed as a sinking fund, 
 redeems the principal in a fixed period, and is an 
 arithmetical proof of the advantage in loans in a 
 nominal capital, over those of a real capital. 
 
 That a country, borrowing in a nominal capital, 
 should receive, proportionally, more money for its loan 
 than by borrowing in a iral capital, is accounted for by 
 the fact, that it is easier for the former to rise to par, 
 than for the latter to mount above par ; the former 
 rises easier to par, because the sinking fund ceases to 
 act when the price goes above par ; and because the 
 exercise of the right of repayment begins at par, and
 
 44 
 
 becomes dangerous to the holder of stocks above par. 
 It is, therefore, very evident, that the contractors for 
 a loan are enabled to grant better terms for one in 
 a nominal capital, than for one in a real capital ; and, 
 consequently, the former is always more advantageous 
 for the country.* 
 
 This question has undergone great discussions, 
 both in England, and in France. The late President 
 of the Council, Mr. Jacques Laffitte, has advocated 
 in his Speeches in the Chamber of Deputies, (on the 
 14th and the 19th of May, 1828,) the same opinion 
 that we advance here, but has done it with a degree 
 of partiality, which we wish to avoid. 
 
 * In all loans, there are two kinds of lenders. One is 
 formed by speculators operating upon the price of stocks, as 
 upon any other article of merchandise ; the others are capi- 
 talists, investing their money to make most interest. Those 
 who prefer four per cent, interest on a nominal capital, enter- 
 tain hopes that the credit of the country will improve, and that 
 they will divide with Government the difference existing be- 
 tween the capital which they have given, and that which 
 Government promises. And, in fact, in France, as in England, 
 at the most critical periods, the loans have been at a premium 
 the day after the contract. When we have borrowed at fifty 
 and fifty-five, the funds have very soon advanced to sixty-four ; 
 and, on a new loan being made, they have risen to seventy-two ; 
 later, to eighty-nine ; and, at last, to one hundred. Thus 
 speculation bears on these promised differences of capital ; I 
 say, promised, for I think I have explained that this difference 
 is never entirely paid by the State. 
 
 Speech of Mr, Jacques Laffitte, May 20, 1828.
 
 45 
 
 In his Speech of the 14th of May, he says : — 
 " Is it preferable, in borrowing, to pay a less rate 
 " of interest on a nominal larger capital, or to pay a 
 " higher rate of interest on the capital actually re- 
 " ceived? Of the two following proposals, which is 
 "the most profitable? On receiving one hundred 
 " millions, to acknowledge a debt of one hundred 
 " millions, and pay five millions a year for interest, 
 " or to acknowledge a debt of one hundred and thirtv- 
 " three miUions and one third, and pay four millions 
 " a year interest ? The problem is not difficult to 
 " solve. In the first case, you are only obliged to 
 " repay the one hundred millions received, subject to 
 •* an annual charge of five millions for interest; in 
 " the other, you promise one hundred and thirty- 
 " three millions and one third, increasing thereby the 
 " capital by one third ; but incurring an annual charge 
 " for interest of ojily four millions, there is a positive 
 " saving of one million a year ; and is this million 
 " not a ready found sinking fund ? 
 
 " In how many years will one million, with com- 
 " pound interest, redeem a capital of one hundred and 
 " thirty-three millions ? In forty-five years. Thus, 
 " at the end of forty- five years, the three per cent. 
 " loan will be fully redeemed by the due application 
 *' of this saving of one million a year; whereas, 
 " the annual charge of five millions will remain 
 " upon the other, until the whole capital of one 
 " hundred millions be repaid."
 
 46 
 
 Farther on, he says : — 
 " Thirty millions of five per cent, rentes, forming 
 " a capital of six hundred millions, have been con- 
 " verted into three per cents. ; and, under their new 
 " form, they cost the country only twenty-four mil- 
 " lions. It is true, that, instead of a capital of six 
 " hundred millions, one of eight hundred millions 
 " has been acknowledged ; but the six millions, eco- 
 " nomized yearly by the reduced rate of interest, will, 
 *' in the space of thirty-six years, if the redemption 
 " is operated in five per cents., or in forty- five years, 
 " if in four per cents., extinguish not only the addi- 
 " tional two hundred millions, but the whole capital 
 " of eight hundred millions. Do you think the ope- 
 " ration a bad one? The sinking fund, if strictly 
 '' applied, will redeem the capital in thirty-two and 
 *' forty-two years, instead of thirty-six and forty-five 
 ** years." 
 
 Mr. Laffitte expresses himself thus, on the 19th 
 of May. 
 
 *' To borrow eighty millions, in five per cents., it 
 " will cost — 
 
 £4,000,000 for Interest. 
 
 800,000 for the Sinking Fund. 
 
 in all 4,800,000 a Year. 
 
 " To borrow eighty millions, in three per cents., 
 ** with a sinking fund of one per cent, on the nominal 
 *' capital of £114,777,600., it will cost only —
 
 47 
 
 £3,443,328 for Interest. 
 1,147,776 for the Sinking Fund. 
 
 in all 4,591,104 a year. 
 
 " These loans would be redeemed in thirty-three, 
 " or forty-two years. Thus, the plan of the Minister 
 '* costs the country 208,896 frs. a year more than 
 *' the one which I propose. Does not this sum of 
 *' 208,896 frs. offer an immediate saving, or an addi- 
 *' tional sinking fund, which would redeem the debt 
 " so much sooner ? I must leave the decision to the 
 " Chambers." 
 
 The partiality which we attribute to Mr. Laffitte, 
 consists in his not having started from the same point 
 in the two flans, and that one is much more advan- 
 tageous than the other. 
 
 He says, in the first instance, " which offer is 
 " the most profitable, to receive one hundred mil- 
 " lions, and acknowledge this capital, on paying five 
 " millions a year interest, or to acknowledge a ca- 
 " pital of one hundred and thirty-three millions, and 
 " one-third, and pay only four millions interest?" 
 
 But a country, which would be enabled to borrow 
 the sum in question at five per cent, interest, would not 
 probably succeed in raising the other loan at four per 
 cent.; therefore, the starting point, which, in good 
 logic, ought to be an equal credit, is erroneously 
 stated by Mr. Laffitte, and, consequently, the argu- 
 ments that follow are vitiated. 
 
 Both his other positions are placed in the same
 
 48 
 
 predicament. It is curious to see two such very 
 eminent financiers, as Mr. Laffitte, and Sir Henry 
 Parnell, plunge into opposite errors ; the former in 
 support of loans in nominal capital, the latter in 
 support of loans or stocks, in the same amount 
 as the sum lent. It requires, however, only a few 
 figures to give a mathematical solution to the prob- 
 lem, which cannot be refuted. 
 
 We shall now proceed to another vital part of 
 the question in the management of the debt, and 
 examine which is most advantageous for the country, 
 to borrow on funded stock, or to borrow in termi- 
 nable annuities, as Sir Henry advises. 
 
 In Chapter XXII., on terminable annuities^ Sir 
 Henry adopts the principles of Dr. Price, and quotes 
 the following passage, as expressive of his own 
 opinions, page 285. 
 
 "It is obvious, that accumulating debt so ra- 
 " pidly, and mortgaging posterity for eternity, in 
 " order to pay the interest of it, must, in the end, 
 " prove destructive. Rather than go on in this 
 " way, it is absolutely necessary that no money 
 " should be borrowed, except in annuities, which 
 '* are to terminate within a given period. Were 
 " this practised, there would be a limit beyond 
 " which no National Debt could be increased ; 
 " and time would do that necessarily for the public, 
 " which, if trusted to the conductors of its affairs, 
 *' would never be done. I am sensible, indeed, that 
 " the present burdens of the State would, in this
 
 49 
 
 " case, be increased, in consequence of the greater 
 " present interest which would be necessary to be 
 " given for money; but I do not consider this as an 
 " objection of any weight; for let an annuity be 
 ** for one hundred years, such an annuity is, to the 
 " present view of man, nearly the same with an 
 '* annuity for ever ; and it is, also, nearly the same in 
 " calculation ; its value, at four per cent., being 
 " twenty-four years and a half purchase, and, there- 
 " fore, only half a year's purchase less than the value 
 *' of a perpetual annuity. Supposing, therefore, the 
 " public able to borrow money at four per cent., on 
 " annuities for ever, it ought not to give 1^. Id. per 
 " cent, more for money borrowed for 100 years. 
 " But should it be obliged to give a quarter or half 
 '* per cent, more, the additional burden derived from 
 *' hence would not be such as could be very sensibly 
 " felt, and the advantages arising from the necessary 
 " annihilation of the public debt, by time would 
 " abundantly overbalance them." 
 
 Sir Henry adds, page 286 : — 
 
 " If all the loans which have been raised since the 
 " beginning of the war of 1739, had been borrowed 
 " in annuities for Q9 years, in eight years, from this 
 " time, the extinction of them would commence, and 
 " in 84 years the whole debt incurred up to 1815, 
 " would be extinguished : more need not be said to 
 " prove the expediency of borrowing in terminable 
 " annuities." 
 
 " The objection that is made to raising money by 
 
 £
 
 50 
 
 " this plan, is the same as that made to borrowing 
 ** in stocks of real capital, namely, a supposed 
 *' unwillingness on the part of the public to lend 
 *' money in any but a low priced perpetual stock. 
 *' This has been shewn to be an objection resting 
 ** on no solid foundation; and it is quite certain, 
 " that if Government wished to raise loans on ter- 
 *' minable annuities, it would be sure of obtaining 
 " them, (after, perhaps, some difficulty in counter- 
 " acting the schemes and combinations which 
 " old loan contractors would at first enter into to 
 "■ thwart it,) by having an open subscription, and 
 ** offering a proper rate of interest, and by not 
 *' being checked by the failure of the first at- 
 *' tempts." 
 
 ** The mere statement of the operation of the 
 ** Act of 1 829, for enabling the Commissioners of 
 ** the Sinking Fund to give, in exchange, terminable 
 *' annuities for money or stock, proves the cor- 
 *' rectness of these observations. From the 23rd 
 " of November, 1829, to the 18th of December, 
 " 1830, the progress of the terminable annuities 
 " has been as follows : — 
 
 ** For Annuities for terms of Years : — 
 
 £. s. d. 
 ** Money actually paid - - 1,856,435 13 6 
 " Money value of stock trans- 
 ferred 8,183,589 9 2 
 
 £10,040,025 2 8
 
 51 
 
 Fo7^ Life Annuities : — 
 
 £. s. d. 
 "Money taken 380,162 10 3 
 
 " Money value of stock - - 432,957 10 11 
 
 Total - - £10,853,145 3 10 
 
 "It is by making a proper use of terminable 
 " annuities, that the most easy, and, at the same 
 *' time, the most effectual means can be secured 
 " of redeeming a considerable part of the debt, 
 ** and, therefore, if any Sinking Fund be kept up, 
 ** the whole of it should be applied in commuting 
 " some of the annuities for ever, of which the 
 ** debt consists, into long annuities." 
 
 " With respect to getting rid of the present 
 ** great amount of unfunded debt, nothing would 
 " be more for the public advantage than paying it 
 ** off gradually, by giving long annuities for Ex- 
 ** chequer Bills, instead of funding them in three 
 " per cent, stock." 
 
 To re-establish, as Sir Henry here proposes, 
 the system of terminable annuities, and to substi- 
 tute them fov funded stocks, would be to throw the 
 science back to its infancy, would be to return 
 to the times when no transfer of stock could be 
 made, but by a notarial contract, and thus re- 
 plunge into those grave errors which the genius of 
 Pitt cleared away, and replaced by the luminous 
 method that has since carried the credit of Great 
 Britain to such a pinnacle of solidly based pros- 
 perity. 
 
 E 2
 
 52 
 
 The following difference is experienced by the 
 holders between terminable annuities and funded 
 stocks : — 
 
 First, — By the annuities, the capital is sunk, 
 the means of redemption being too inconsiderable to 
 be re-invested or fructified, whereas, in the funded 
 stocks, the capital j^emains unimpaired at the disposal 
 of its holder. 
 
 Secondly, — Annuities are not disposable, unless 
 as hypothetical securities, whereas, stock is sale- 
 able at the market price, and thus allows always of 
 the use of the capital. 
 
 Thirdly, — Annuities which are redecjnable by 
 lottery, have the inconvenience of exposing the 
 holder to the receipt of his capital at an unex- 
 pected period, when he may not meet with another 
 eligible investment for his money ; whereas, the 
 capital placed in the stocks, unites the advantage 
 of an optional time of sale, with that of perfect 
 stability. 
 
 The investment in funded stocks is, therefore, so 
 superior to that in terminable annuities, that a loan 
 in the latter securities could only be effected at a 
 much higher rate of annual interest than in the former, 
 and would consequently be more ojierous to the State. 
 But another and still more detrimental inconve- 
 nience would be felt by the State, namely, the 
 annual payment of 2i fixed amount as a sinking 
 fund, whereas, according to the present practice, 
 that amount is left ad libitum, and is not fixed by
 
 53 
 
 the amount of the debt, but by the surplus of income ; 
 or in other means that may be applied to that use. 
 By one of these methods of borrowing, the State 
 has its hands fettered, the other leaves them free. 
 
 An arithmetical error of Dr. Price's has been 
 adopted by Sir Henry Parnell, in asserting that 
 a debt contracted in terminable annuities is more 
 easily redeemed than one contracted in funded 
 stocks. If the same amount of sinking fund be 
 stipulated for each, the capital would be redeemed 
 in exactly the same number of years; but if, in 
 the latter case, the one per cent, interest, which, 
 by Sir Henry's own acknowledgment, it would 
 cost more to borrow in annuities than in funded 
 stocks, is added to the sinking fund, it must be 
 evident to every body's understanding that the 
 latter debt would be sooner redeemed, and that it 
 offers, therefore, this addition to the many other 
 advantages it has over the other mode of borrowing. 
 
 Sir Henry, finding that annuities require a 
 higher rate of interest than stocks, and feeling 
 the excess of expense which this would entail on 
 the State to be very contrary to his notions of 
 economy, proposes a medium between the two 
 methods, viz. to create annuities of one hundred 
 years. He must, however, acknowledge, that 
 even these annuities, notwithstanding their long 
 term, would still cost the State more than stocks, 
 would be less disposable, would sink the capital they 
 represent, and would thus embrace all the incon- 
 
 E 3
 
 54 
 
 veniencies of annuities, without having any of the 
 advantages possessed by funded stocks ; in short, 
 an injurious financial anomaly. 
 
 Nothing is more important to the good manage- 
 ment of a public debt, than the establishment of 
 a proportionate sinking fund, (if possible, quite 
 independent of the annual budget of the State; such 
 as ispaj'tly the case in France;) a fund, which, in 
 accordance to Mr. Pitt's plan, would redeem it 
 gradually ; not with the intention of its total ex- 
 tinction, which would prove a national calamity, 
 but with that of maintaining its value, which is as 
 necessary to the public welfare as it is to the sup- 
 port of the credit of Government, 
 
 We are touching here very closely the ground 
 of Dr. Hamilton, and of Lord Lauderdale, both 
 most respectable and enlightened writers, but in 
 whose opinions we cannot agree on the subject 
 of the uselessness of a sinking fund, for they 
 appear to have considered the question only under 
 one of its bearings, that of the more or less 
 expense occasioned by a sinking fund, and over- 
 looked, altogether, that no less important con- 
 sideration, the tnaintenance of the value of the debt 
 which results from its operation. 
 
 If, for the present, the credit of Great Britain be 
 sufficient, and the redundancy of its capital large 
 enough to render a sinking fund, on a fixed scale, 
 and proportionate to the amount of the debt super- 
 fluous, it must not be taken for granted, that the
 
 55 
 
 exception to the rule is the rul>^ itself; on the 
 contrary, this requires a sinking fund, which, as 
 suggested by Mr. Pitt, should be fixed at one per 
 cent, of the capital, for the debt ought not to bear 
 the character of uiiredeemabk, which is the case 
 when the sinking fund depends on the uncertain 
 surplus of income over expenditure ; the debt 
 ought always to be redeemahle, decreasing on one 
 side, and ready to be increased on the other ; but 
 never to remain fixed and immutable ; impressed 
 with that character of torpor, which is incom- 
 patible with financial health, where all ought to 
 be animated motion, and rapid circulation. 
 
 After having examined the public debt, and its 
 management, under its various features, let us 
 take a general view of the question ; to enquire 
 whether, as Sir Henry pretends, ** we certainly 
 ** are less able than we ought to be, to resist 
 *' whatever attacks may be made on our freedom 
 *' and independence, as well as to interfere with 
 ** decisive effect in defence of the liberty of others." 
 
 It appears superfluous to draw a comparison 
 here between the power and wealth of Great 
 Britain, and the corresponding condition of the 
 other countries of Europe. Facts speak for them- 
 selves. From Moscow to Lisbon, from Stockholm 
 to Naples, where is the country that can stand 
 any test of comparison with the British Empire, 
 its wealth, power, industry, trade, and its general 
 prosperity? Look at London, Liverpool, Man- 
 
 e4
 
 56 
 
 Chester, Glasgow, Edinburgh, and almost all the 
 large cities of the Empire ; observe their increase, 
 their improvements ; look at the country, where 
 mansions, country seats, villas, and public build- 
 ings of all kinds, on the scale of palaces, are rising 
 daily ; look at her 5,000 miles of canals and 
 railways; her 15,000 steam engines in full acti- 
 vity ; her Navy, composed of nearly 600 sail ; and 
 her merchant ships of a tonnage exceeding two 
 millions ; observe the progress of her industry ; 
 — and decide, whether Great Britan, far from 
 being on the brink of decay, has not, on the 
 contrary, attained such an ascendancy of pros- 
 perity, as has never yet been attained by any 
 empire in former ages.* 
 
 We certainly do not mean to assert, that the 
 public debt has been the only foundation of the 
 
 * Mr, Ricardo, in his Principles of Political Economy, 
 says: — " Notwithstanding the immense expenditure of the 
 " English Government, during the last twenty years, there 
 ** can be little doubt but that the increased production on the 
 " part of the people, has more than compensated for it. The 
 " national capital has not merely been unimpaired, it has been 
 " greatly increased ; and the annual income of the people, 
 ** even after the payment of their taxes, is, probably, greater 
 '* at the present time than at any former period of our history. 
 " For the proof of this, we might refer to the increase of popu- 
 " lation ; to the extension of agriculture; to the increase of 
 ** shipping and manufactures ; to the building of docks; to the 
 " opening of numerous canals ; as well as to many other ex- 
 " pensive undertakings ; all denoting an immense increase, both 
 " of capital and annual production."
 
 57 
 
 power, wealth, and prosperity of the British Em- 
 pire. No, these happy results are derived from 
 the power of mind and general intelligence of 
 its inhabitants ; their courage, spirit of enter- 
 prize, industry, and perseverance ; they are 
 owing to the fertility of the soil of the United 
 Kingdom, the riches of its mines, the commercial 
 advantages of its geographical situation, and the 
 wisdom of its political institutions. But if the 
 moral and physical facilities just enumerated, form 
 the basis of the powerful structure presented by 
 Great Britain, it is not less evident that these 
 facilities owe much of their development to the ex- 
 istence of the public debt. It is this debt which 
 has afforded the means of extending to a greater 
 number of individuals than in any other country, 
 through the benefits of education, that moral 
 energy, which is the first step towards the prospe- 
 rity of a nation. It is this debt, again, which 
 has supplied the means of developing the riches 
 of the soil of Great Britain, of stimulating the 
 springs of her industry, and of multiplying all the 
 resources of her trade. It is this debt which has 
 particularly given rise to public credit^ that all pow- 
 erful engine of national prosperity, and furnished 
 the means of raising and maintaining that Army 
 and Navy, which, if they have not contributed in 
 a direct way to the increase of production, and 
 thereby to the public welfare, have done it in- 
 directly by the conquest of the immense Colonies
 
 58 
 
 possessed now by Great Britain, forming the out- 
 lets for her trade and industry. 
 
 Great Britain, placed at the head of European 
 politics, able by a telegraphic order to dispatch 
 from her ports the most formidable fleets, and 
 direct them to any point of the world; having 
 the power of reinforcing her army in every 
 quarter of the globe, to the fullest extent of the 
 need, by embodying her militia; in possession 
 of arsenals provided with the materials requi- 
 site for at least five hundred thousand men, and 
 capable, by means of her credit, of raising, in a 
 few days, sums sufficient to cover the expense of 
 several campaigns ; surely such an empire does 
 not present and sanction the picture of impotence 
 drawn by Sir Henry. But, nevertheless, this yet 
 imaginary decay may end in a real calamity, if not 
 guarded against in time ; observe many of the pe- 
 titions presented to Parliament, calling for reduc- 
 tions and retrenchment the most inconsiderate and 
 destructive to national power and prosperity. 
 Economy is certainly desirable, when directed by 
 judgment, but it becomes injurious, if, overstep- 
 ping the due limits it should degenerate into an 
 enfeebling parsimony. 
 
 It is this tendency of the mind towards un- 
 reasonable objects, which, after all, would not 
 produce the anticipated result, (for no Adminis- 
 tration can ever carry retrenchment to such an 
 extent as to lighten materially the taxes,) which
 
 59 
 
 it appears necessary to repress and correct. This 
 excessive passion for retrenchment is contrary to 
 the financial interests of the country, contrary to 
 the necessary activity of its circulating medium, 
 and must prove fatal to the dignity of the empire ; 
 whose political influence in Europe would disap- 
 pear, or be humiliatingly diminished, if succes- 
 sive retrenchments were to form the basis of all 
 ministerial popularity. 
 
 Such a system could only be carried into effect, 
 by sacrificing either the credit of the country 
 and its property, in some shape or other, or the 
 military or naval force of Great Britain ; and, 
 therefore, it becomes the duty of every friend of 
 the British Empire to endeavour to dissipate the 
 errors of ideas so ruinous to its welfare, and to 
 place in their true light the principles of a wiser 
 course of policy. 
 
 We cannot withhold our meed of praise to the 
 general knowledge displayed, and the immense 
 labour bestowed by Sir Henry, in a work which 
 renders it highly valuable, particularly from its 
 correct statistical tables. Several of the measures 
 suggested appear most advisable ; among which, 
 that measure, which proposes the imposition of an 
 Income Tax of one and a half per cent. But we 
 apprehend, that Sir Henry, relying too much on the 
 authority of some great names, has not given the 
 whole subject of his work sufficient of his own re- 
 flection, and has thus fallen into some errors, as to
 
 60 
 
 the effects of the National Debt, and the principles 
 of its management ; errors which we have endea- 
 voured to controvert, in order that they may not 
 acquire, through the deserved confidence placed 
 by the public in Sir Henry's talents, an autho- 
 rity most detrimental to its interests ; happy, if 
 our attempts have succeeded in raising doubts on 
 positions hitherto laid down as ajcioms ; for this 
 doubt may, hereafter, acquire strength in more 
 skilful hands ; and its discussion may contribute 
 to solve one of the most important and difficult 
 problems of political economy, namely. What in- 
 jluence the existence of a public debt cvercises over 
 the prosperity of a country ? 
 
 Tilling, Printer, Chelsea,
 
 ♦*
 
 ■'V^IT'