LI B RARY 
 
 OF THE 
 
 U N I VEIRSITY 
 
 Of ILLINOIS 
 
 e>a75 
 
 W.I7
 
 CONSIDERATIONS 
 
 ON THE 
 
 SINKING FUND. 
 
 LONDON: 
 PRINTED FOR J. HATCHARD AND SON. 
 
 NO. 190, OPPOSITE ALBANY, PTCCADTLLY. 
 I8I9.
 
 S. Gesncll, Prtiiler, Little Queen Street, London.
 
 ^vefatoip 3^ematts. 
 
 1 HE following observations were reduced to writing 
 so long ago as the year 1798. The tide of public 
 opinion, at that time, ran so strongly in favour of 
 the Sinking Fund, as to leave no hope that any ar- 
 gument which could be raised against so favourite 
 a measure, would meet with any attention, and espe- 
 cially when urged by an obscure individual, with a 
 wholly unpractised and unskilful pen. 
 
 The pressure of the present times appears to 
 have given a turn to that tide, and has induced and 
 encouraged the Writer to lay before the Public the 
 sentiments which he has so long invariably enter- 
 tained upon a subject which is of vital importance 
 to the country at this moment. The extraordinary 
 events of the last twenty-one years have only served 
 to strengthen and confirm those sentiments ; and un- 
 der these impressions, he should have thought him- 
 self wanting in filial duty to that parent country 
 to which he owes every thing, and which has a just 
 
 A 2
 
 IV 
 
 claim to the best energies of all her sons, if he did 
 not in the hour of her difficulty humbly, but con- 
 fidently, submit his opinion upon the best mode of 
 administering to her relief. Too well aware of his 
 many imperfections, he trusts that the importance 
 and the complexity of the matter which he has ven- 
 tured to treat, will ensure to him the candour and 
 the indulgence of his Reader.
 
 CONTENTS. 
 
 Piigc 
 
 Error from considering public and private Debts as 
 
 similar *! 
 
 Difference — Public Debt not demanddble; private Debtor 
 would be unwise to pay Debts when he can make 
 greater Profit of Money lent ; in this resembles 
 public Debtor 2 
 
 It is not easy to sliow, in a palpable Manner, the Profits 
 made by the Public at large ; Profits of an Indivi- 
 dual easily calculated ; it is sufficient to show that 
 the Money left in the Hands of the Public would 
 increase by all the various Means and Proportions of 
 gainful Industry S 
 
 Even the Money spent in Extravagance is not lost to the 
 Community; though extravagantly spent, it is the 
 Source of Activity and Accumulation in others . . 5 
 
 Money only lost to the Community when hoarded; a 
 Mode of disposing of Money little known in this 
 Country ; by whatever Means it comes into Circu- 
 lation, it tends to increase the productive Powers of 
 the Country, and to diminish the Rate of Interest 
 or the Avhole Capital 6 
 
 Such would be the Effect of the Remission of the Whole 
 
 or of any Part of the Taxes 8 
 
 The Effect produced by a Purchase of Stock only an ap- 
 parent Rehef from the Interest payable on that Stock 9
 
 VI 
 
 Page 
 
 It is said, that the Money employed in this Purchase re- 
 turns so quickly into Circulation, that its Absence is 
 nyt felt; if so, the Reasons for diminishing the Debt 
 vanish ; but the greater the Demand for Money, 
 the greater its Price 15 
 
 Taxes increase the Price of Objects taxed far beyond the 
 Amount of the Tax, and not only the Thing taxed, 
 but all others remotely connected with it .... 16 
 
 Salaries of all civil and military Officers must also be in- 
 creased; every Man''s Comfort and Conrenience 
 diminished 17 
 
 Some consider the Dcht of the Nation as its Wealth ; if 
 so, it is absurd to redeem it ; Funds lent to the 
 Public existed in the Lenders prior to the Loan . 18 
 
 "War, though in itself an Expense, may have enabled 
 the Nation to acquire Wealth ; those who have at- 
 tempted to calculate, a priori, the Extent of Debt 
 which the Country could bear, have always reasoned 
 upon a Jixed Point ; the Debt of the Nation is not 
 less a Debt because lent by the Individuals com- 
 posing a Nation 19 
 
 Others would prove that the National Debt is so much of 
 capital Wealth created by the Debt, by showing 
 that the Annihilation of the Debt would annihilate 
 the Capital 20 
 
 Community at large, so far as it is at once Debtor and 
 Creditor to itself, cannot be enriched by the Pay- 
 ment of the Debt to itself 21 
 
 Supposed miraculous Effects of compound Interest an- 
 other great Source of Error 23 
 
 Corn-pound Interest would have produced more in the 
 
 Hands of the Community 24 
 
 The arithmetical Effect of compound Interest counter- 
 acted in Time of Peace by Rise of Stocks ... 25
 
 Vli 
 
 r..gf 
 Another Advantage is said to belong to tills I'lan, that 
 
 the Effect is greatest in Time of' War .... 26 
 
 But greater Burden is incurred by Money boiTowed than 
 
 is got rid of by Debt discharged during War . . 27 
 
 The Effect 271 Peace is still more disadvantageous . . • 33 
 
 Examination of the Question, how far this Plan of Re- 
 demption tends to keep up the Price of the Stocks . 35 
 
 This is now not a mere speculative Question ; we have 
 
 some Data to assist us on this Point 39 
 
 Stocks have fallen more since the Establishment of the 
 Sinking Fund, with a smaller Addition of Debt, 
 than they did in the American War 74 
 
 If tliis Effect of Purchase were (as supposed) to keep up 
 the Price of Stocks above their natural Level, the 
 Effept is not desirable 81 
 
 Effect of paying Interest of Debt alone, and taking off 
 Taxes to the Amount of the Surplus ; old Taxes 
 taken off are more easily reimposed ; Reduction of 
 Interest equal to Discharge of Capital .... 82 
 
 Complaints against Ministers for availing themselves of 
 
 Sinking Fund are ill founded 88 
 
 Loans arc made with a View to Reimbursement ; if the 
 Redemption is to continue, no Capital should be 
 created greater than the Amount of Money received 89 
 
 Success in War may depend on Ability to continue it for 
 
 a single Year 01 
 
 If the Plan of Redemption had been coeval with the Debt, 
 we might have had less Debt, but less Wealth and 
 less Power also 93 
 
 We should get rid of Fears on the nominal Amount of 
 Capital, and think only of the annual Amount of 
 Taxes 96 
 
 Origin of the Funding System, and beneficial Effects . 89
 
 viii 
 
 Page 
 
 Idea of raising a large Portion of the Supply within the 
 
 Year, taken up at the End of the War .... 100 
 
 Example of France not attended to; her financial Em- 
 barrassments were occasioned by too hasty Reim- 
 bursements 102 
 
 Money is borrowed when dear, paid oif when cheap . 103 
 
 To make a perfect Reimbursement, Years of Peace 
 ought to reimburse Years of War ; Reduction of 
 Interest is the only Relief from the Payment of 
 the annual Annuity, which is the only Burden ; 
 Effects coextensive to Means employed . . . . 104 
 
 Acts for Discharge of Debt proceed on a false Principle; 
 Operations of Finance should be as gradual as 
 possible 106 
 
 Three Millions an arbitrary Sum 107 
 
 If Accumulation takes place in War, we ought to apply 
 
 it to the Expenses of War 108 
 
 Conclusion 115 
 
 Appendix 121
 
 Constlretationfi 
 
 ON THE 
 
 SINKING FUND, 
 
 In contemplating the state of our finances, and in 
 devising modes for relieving the public from the 
 burden occasioned by the national debt, no circum- 
 stance has been a more common source of error, 
 than the habit of considering the public debt of the 
 nation as of the same nature as the private debts of an 
 individual. 
 
 By supposing it to be governed by similar rules, 
 and exposed to similar difliculties, speculators have 
 been led to propose the removal of those difficulties 
 by measures similar to tliose which an individual 
 might prudently employ to relieve himself from pe- 
 cuniary embarrassments. 
 
 The broad diftcrencc between the public debts 
 of the nation and the private debts of an individual, 
 that the reimbursement of the latter is for the 
 most part demandable, and not unfrequently at the
 
 instantaneous will of the creditor, while that of the 
 former (except in one recent instance) is subject to 
 the will of the debtor alone, has too often escaped 
 observation. 
 
 It may certainly be an act of prudence in a pri- 
 vate debtor, who is exposed to the arbitrary demand 
 of his creditor, to relieve himself as quickly as pos- 
 sible from so inconvenient a situation. 
 
 The demand may be made when it would be 
 extremely embarrassing and oppressive. He owes 
 it therefore to his credit and to his tranquillity to 
 get fid of this state of humiliation and subjection, 
 so soon as he can do it without injury or loss. 
 
 But even the private debtor, though exposed to 
 the inconvenience which may result from unex- 
 pected demand, will, before he hastens voluntarily 
 to pay a sum borrowed, have to examine whether 
 the profit which he is enabled to make by a deten- 
 tion of the money may not far outbalance both the 
 interest which he pays, and the risk of loss which 
 he may incur by the obligation of sudden repay- 
 ment. 
 
 In this point of view the situation of the public 
 and of the private debtor may be considered as 
 nearly similar; and if it could be clearly shown 
 that a profit of ten per cent, would be made, by the 
 individuals composing the public, of the money 
 which must be drawn out of their hands to dis- 
 charge a debt which bears an interest of only five, 
 six, or seven, no man would recommend as salutary 
 a measure so adverse to public prosperity.
 
 Unfortunately, though the difference between 
 the profit to be made and the interest to be paid, 
 may not be less certain in the one case than in the 
 other ; yet it is not easy to show, in a manner suf- 
 ficiently palpable for the conviction of the gene- 
 rality of mankind, what will be the exact profit 
 made of the money left in the hands of the public, 
 supposing it not to be drawn out for the purpose of 
 discharging the national debt. It is easy to apply 
 calculation to a case stated of a particular private 
 debtor, whose art, trade, or occupation is known, 
 and whose profits can be ascertained, so as directly 
 to make the comparison between the interest which 
 he pays for money, and the return made from the 
 peculiar nature of his commerce or handicraft. 
 
 But even the imagination cannot apply any esti- 
 mate of probable accuracy to the profits which 
 might or might not be made of the money now 
 raised by taxes, if it were suffered to remain with 
 the public, by the gradual abolition or sudden ex- 
 tinction of all the taxes imposed for the payment of 
 the interest and the discharge of the capital of the 
 national debt. 
 
 It is sufficient for our purpose to say, what will 
 probably be readily assented to, that it would be 
 applied to all the various objects to which the in- 
 dustry or the enterprise, tlie prudence or the folly 
 of man can, in this industrious and enterprising, 
 this prudent and extravagant country, apply money; 
 and that it would be producing, in all the various 
 
 Ji 2
 
 ways in which profit can be produced, a greater 
 return than the common interest of money, varying 
 according to the varying nature of its application; 
 but upon the whole, finally increasing the capital of 
 the country in a proportion exceeding the common 
 rate of interest as much as the risk Avhich is en- 
 countered, or the ingenuity or labour which is em- 
 ployed in its application, exceeds the risk, the inge- 
 nuity, or the labour of the money-lender. This in- 
 creased risk, this superadded labour, these applied 
 talents, must be paid for; and that profit is the su- 
 perlucration which goes to increase the increasing 
 capital of a flourishing country. Many false specula- 
 tions will be made, many losses will doubtless be 
 incurred; but the dangers of the one, and the actual 
 deficiencies of the other, must be made up b}' the 
 greater profitis of successful adventures. 
 
 It will be said, I know, by some, But a great 
 proportion of this money, if not paid in the form of 
 taxes, would have been spent in luxury and extrava- 
 gance, and ivould not have been employed in increasi?ig 
 the capital of the nation. 
 
 Doubtless the employment of the money now 
 paid in the form of taxes would be very different, 
 according to the situation and disposition of the 
 persons to whom they should happen in the first 
 instance to be remitted. As a large proportion of 
 the taxes is paid by those who live upon income, 
 derived either from land or from the interest of 
 money, or from annual salary, and wllo have neither 
 the habits nor the opportunity of improving their
 
 capital by trade, it might very well happen that what 
 was remitted to these classes would in many in- 
 stances be applied to the acquisition of some addi- 
 tional luxury or elegance, in many to the purchase 
 of such of the necessaries, or at least of the rea- 
 sonable comforts of life, of which an increasing 
 taxation had deprived them. 
 
 In others the amount of the remitted taxes 
 would enable the persons relieved to make propor- 
 tionable accumulations of capital, which, being 
 either laid out in the purchase of stock, would, 
 while they contribute to raise the price of the pub- 
 lic funds, disengage other capitals, to be employed 
 in the gainful pursuits of manufacture or trade, or, 
 by being lent immediately at decreasing rates of in- 
 terest to the industrious, would contribute to assist 
 and promote all the arts of reproduction. But all 
 that part of our taxes which is paid by these classes, 
 which by their industry are continually adding 
 (even under the pressure of the present circum- 
 stances) to the capital of the country, would in the 
 first instance furnish them with the immediate 
 means of adding to that increasing capital. 
 
 And even that money which we may suppose to 
 have been employed in the worst manner, in pur- 
 chasing the useless luxuries of life, does in fact put 
 in motion the useful activity of the industrious; 
 and by enabling them to advance the arts of super- 
 lucration, tend still to increase the growing capital 
 of the country. 
 
 B 3
 
 Though it gives to the purchaser a superfluity 
 which he does not want — though it is to him the 
 pander of riot and debauch ; yet it is the occasion 
 of industry and of prudent accumulation in others ; 
 it is the cause of improving wealth and augmenting 
 population to the country. 
 
 Better and worse modes of employing money 
 may certainly be devised, and it were to be desired 
 that no man should make an improper use of his 
 wealth ; but he can bestow it in no manner, unless he 
 locks it up in his chest, which will not ultimately, 
 in a mere financial point of view, be advantageous 
 to the country in which it is employed. By what- 
 ever means it comes into circulation, whether as the 
 price of luxuries, useless and even pernicious to the 
 acquirer; whether it be exchanged for indispens- 
 able necessaries, or immediately employed by the 
 industry of the manufacturer or the speculation of 
 the merchant, it nmst finally tend to increase the 
 productive powers, and with them the capital of 
 the country. 
 
 By adding to the quantity of circulating wealth, 
 it tends proportionably to lower the 7^ate of interest^ 
 and thereby enables the British manufacturer to 
 extend his operations, and, by reducing his prices, 
 to meet the foreigner even in his own market. It 
 increases the exports of British, and diminishes the 
 imports of foreign manufacture, augmenting in both 
 cases the resources of the country ; while, by fur- 
 nishing to the British consumer the means of ac-
 
 quiring the commodities at a lower price, it spreads 
 ease and afiluence through the whole community *. 
 
 * It may be no very unamusing nor unprofitable speculation, to 
 consider and trace the progress of a given sum of money, in the two 
 cases of extravagant and lavish expenditure, or of useful productive 
 employment in the first instance. 
 
 Let us suppose, then, that by a remission of taxes, or an excess 
 of income beyond what is necessary for ordinary expenditure, two 
 individuals are each in possession of 5000/. per annum, after satis- 
 fying all their reasonable wants. Let us suppose that the first of 
 those individuals shall squander this surplus on an increased number 
 of animals and of domestics ; that he lavishes it in multiplying the 
 indulgences and vanities of his table or of his conch ; that his super- 
 fluity is scattered on the turf or at the gaming-table j that it is 
 wasted in a ridiculous prodigality of dress or equipage, or mis- 
 applied in a vain and fantastical pretension to a taste for the fine 
 arts. Let us suppose on the other hand, that an equal sum is in 
 the first instance employed by a more prudent individual in all the 
 gainful arts of trade, of manufacture, and of commerce, producing 
 immediately a great return to the individual and to the public. Still 
 the difference is more trifling than at first sight might be ima- 
 gined. In a moral view the difference is great indeed ! But in a 
 financial view, it is not possible for a man so to squander his money 
 at not to produce advantage to the public. If he be inclined to 
 make a bad use of it, perhaps, the faster he gets rid of it the better; 
 the sooner it will fall into the hands of those who will know how to 
 employ it properly. 
 
 If money be easily acquired by those whose business is gain, its 
 price will fall in proportion to the facility with which it is acquired ; 
 and increasing circulation and wealth, by whatever means produced, 
 or from whatever cause derived, cannot fail of lowering the price 
 of interest, and vivifying all the branches of reproductive industry. 
 
 But let us for a moment examine the passage of this money 
 through all the different channels of extravagance. 
 
 A man cannot purchase and maintain a great number of useless 
 horses, without essentially promoting the labours of the farmer and 
 
 U 4
 
 8 
 
 Such would be the effect of the remission of the 
 whole, such the proportionate effect of the remis- 
 sion of any part of the existing taxes; not only the 
 sum remitted would produce its interest, and that 
 a greater than simple interest, namely, that arising 
 from the profits of trade and manufactures, but its 
 effect would be felt on the whole capital of the 
 nation, by a reduction of interest in proportion to 
 the amount of the sum thrown into circulation. But 
 in like manner as the remission of taxes would tend 
 
 breeder, nor without putting in action a greater quantity of labour, 
 without being the cause of a greater quantity of produce being 
 raised j and ultimately increasing the wealth and population of the 
 countiy. 
 
 In like manner he who maintains a great number of domestics, 
 maintains those who must be fed and clothed, and to feed and 
 clothe whom a great number of persons must be employed ; and 
 •those who employ them will either accumulate capitals from the 
 profits, or extend farther their gainful operations in culture and 
 manufacture. 
 
 In either case the immediate tendency is by bringing a larger 
 quantity of money into circulation and use, to diminish the rate 
 of interest, and to increase the produce of the country. 
 
 So is it of all the other extravagant means of wasting money. 
 Though squandered in the first instance, it soon finds its way into 
 the hands of those who employ it usefully and gainfully, and the 
 difference is only a difference in point of time and of first employ- 
 ment, and that difference is scarcely perceptible. The money 
 which is not in the first instance employed in reproduction, is em- 
 ployed in exciting and paying for those reproductions. That which 
 is not yet a capital in the hands of the cultivator or manufacturer, is 
 that which pays the interest in shape of profit for the capital emr 
 ployed by them, and becomes in the next instance a part of hi^ 
 acgqmulatiqg capital.
 
 .9 
 
 to lower the rate of interest on the whole capital of 
 the nation ; so the avoiding the unnecessary imposi- 
 tion of new taxes would prevent the increase of the 
 rate of interest, in proportion to the quantity. 
 
 The reverse of this effect is that wiiich I con- 
 ceive has heen produced by the plan which has 
 been adopted for the redemption of the national 
 debt. 
 
 By appropriating thereto the produce of taxes 
 not wanted, for the discharge of the interest of 
 debt, a larger sum than is necessary is taken from 
 the circulation of the country; the immediate effect 
 of which must necessarily be to increase in that pro- 
 portion the rate of interest, while the relief which 
 is to be expected from this operation is remote and 
 distant ; since, notwithstanding the purchases hi- 
 therto made, the burden of the faxes, the exaction 
 from the circulation, is to be continued till a certain 
 arbitrary proportion of the debt shall have been 
 liberated. It is, I know, very generally supposed, 
 and by those the most conversant in the practical 
 part of these operations, that this operation of pur- 
 chasing stock, increases its price and proportionably 
 lowers the rate of interest. 
 
 Whatever may be the apparent effect of this 
 operation in the stock market, at the moment of 
 actual purchase, when, no doubt, the considerable 
 sums which are vested must produce an effect upon 
 the price; yet a little reflection will, I think, con- 
 vince a candid mind that the withdrawinj*; tour 
 inillious of money froni the public market, or from
 
 10 
 
 the general circulation of the country in the form 
 of taxes, must at all times fully counteract at least 
 the effect of pounng those very four millions back 
 again into that very market. It should do that in 
 fact, and something more in proportion to the time 
 which is lost in the passage of this money out of 
 the pockets of the subject, through the hands of 
 collectors and receivers into the Exchequer, and 
 thence to the commissioners, till it gets back again 
 into the pockets of the subject. During the whole 
 of this time, in which no profit is made of it, it is 
 lost to the community, and the price of what 
 remains in circulation is comparatively enhanced. 
 The effect which it must have, either in reducing 
 or in preventing the increase of the price of 
 stocks by its subduction from circulation, is pro- 
 duced gradually, and therefore imperceptibly, ante- 
 cedent to the purchase : the effect of rise, which is 
 produced by the purchase, is sudden, and at the 
 moment of purchase; and therefore, though less 
 considerable upon the whole on striking the balance, 
 yet it is palpable, and is therefore the only effect 
 obvious to common observation : to this operation 
 has therefore been attributed a great part of that 
 progressive rise in the stocks which was the effect 
 of the improving state of the country, because that 
 rise was seen to take place, as was natural it should, 
 by leaps and bounds, at the moments in which the 
 purchases were made on account of the public. 
 
 Let me not, however, be supposed to mean that 
 no increase whatever in the price of stock has been
 
 u 
 
 the result of these purchases, made by money thus 
 withdrawn from the public : so far as the establish- 
 ment of, and perseverance in this plan has tended 
 to create an opinion of the public ability and re- 
 sources, so far it may, I believe, have had some ef- 
 fect upon the price * : but a similar effect would, in 
 my judgment, have been produced, and in a better 
 mode, by taking off taxes to the amount of any 
 existing surplus, which would have equally shown 
 the existing resources and ability of the country. 
 
 The great fallacy in examining this important 
 question, seems to arise from the habit which is so 
 general in considering the subject, of separating the 
 public funds from the other objects on which mo- 
 ney can he employed. 
 
 It is said. You raise the stocks by bringing so much 
 money into the market ; that is, I suppose, the stock 
 market; but in fact the market in which stocks, 
 land, and every other commodity are sold, is but one, 
 and the capital which is employed therein, is but 
 one, that of the public. 
 
 Out of that market has the Legislature taken 
 that portion of the public capital which it has de- 
 termined to employ in the purchase of stock : into 
 that general market does it again return when it 
 
 * There is one price of stocks which depends upon the amount 
 of the real wealth of the nation, its land, its produce, its industry ; 
 that is, their solid value. The other price of stocks depends on opi- 
 nion; that is, on the idea which is entertained of the permanency of 
 these resources, of the probability of their increase, or the danger 
 of their diminution. This ii> their imaginary value.
 
 12 
 
 lias been so employed ; and the loss of the public at 
 first view in this operation, is the time for which it 
 has been withdrawn and unprofitably employed. 
 Let us examine this with a little more detail. 
 
 Such parts of every man's wealth as are not 
 necessary for his personal expenditure, whether 
 it consist of permanent capital, or surplus of in- 
 come convertible into capital, may be employed ei- 
 ther in the purchase of stocks, in tlie purchase of 
 land, or in loan by way of mortgage on land, either 
 directly in manufactures, trade, or agriculture, or 
 in loan to others for those purposes; and the greater 
 the sum is wliich arises from the capital and the 
 surplus income of all the individuals composing the 
 public, available to any or all of these purposes, the 
 higher generally will be the price of land or stocks, 
 the greater will be (other circumstances being the 
 same) the produce of manufactures, trade, and agri- 
 culture, and the lower will be the interest of money. 
 If a considerable portion of this capital, or of the 
 surplus convertible into capital, should, by the ope- 
 rations of war or any other cause, be diverted alto- 
 gether from all tliese objects, the price of land and of 
 stocks will fall, the produce of manufactures, trade, 
 and agriculture will be checked : but if, by any 
 forced speculation, that considerable portion should 
 be diverted generally from all these objects, to be 
 vested exclusively in any one of them; for instance, 
 jn the stocks ; the effect in the first subduction must 
 be to diminish the value of both land and stocks, 
 and to check the produce of manufactures, trade, 
 and agriculture; and though it may momentarily
 
 13 
 
 appear to raise tlie price of stocks, at the time of 
 purchase, yet must even that effect be counteracted 
 by the tendency which money in circulation has, 
 like water, to find its own level, and to fill up the 
 voids occasioned by the drawing- it off from those 
 objects for which its use is wanted. The money 
 obtained by individuals from the sale of stock to 
 the public, will go to replace that proportion which 
 has been withdrawn from the purchase or mort- 
 gage of land, or from the promotion of industry, 
 till all things are restored to their natural level, ex- 
 cepting so far as that natural level shall have been 
 lowered by the time which has been lost in the 
 operation, namely, that time during which the mo- 
 ney thus withdrawn has been unproductive. The 
 same thing would and must happen, if, instead of 
 employing this money in the purchase of stock, the 
 Legislature should determine to direct its applica- 
 tion to the purchase of land, or to the promotion of 
 any species of industry. The money so directed 
 must set free equal sums of money at present vested 
 in those objects, and these would go to replace the 
 voids made by the legislative subduction of it from 
 its natural place, till the level was again restored, 
 and till stocks, land, and industry, had again reco- 
 vered their due proportion of that circulating ca- 
 pital which gives value and activity to the whole. 
 
 The market is only one: the wealth which gives 
 value, activity, or existence to the objects which 
 are to be found in that market, is one mass ; and no 
 part of that mass can be forcibly diverted to any
 
 14 
 
 particular object in that market, without producing 
 a sensible effect upon the whole. 
 
 The part which is withdrawn must for the time 
 lower the general level ; when restored, it will raise 
 it : but the time spent in the withdrawing and re- 
 storing must be paid for, and that is a loss to the 
 community. 
 
 The man who has this day received 97 pounds 
 for his stock, which he bought at 54, has 97 pounds 
 to lay out in land, or in the promotion of any branch 
 of industry ; and each of these objects, unless at- 
 tended by other peculiar circumstances of disad- 
 vantage, must feel the, effect of this increase of 
 price. If that 97 pounds be laid out in the pur- 
 chase of land, it gives the seller the disposal of an 
 equal sum for the purposes of industry or of other 
 expenditure ; the general circulation feels the im- 
 pulse ; and whether the operation be of increase or 
 diminution, it pervades the whole circle. 
 
 If the four millions now taken by Government 
 for tlie purposes of reimbursement were left in the 
 hands of the public, they would still give value to 
 stocks and to land, even while they would, in the 
 most beneficial manner, supply the calls of labour, 
 ingenuity, and speculation. 
 
 If it be contended, that the purchase of stock, 
 as now carried on, has a more immediate tendency 
 exclusively to raise its price, it must at the same 
 time be allowed that it, by so doing, creates an 
 enormous, increasing obstacle to its own progressive 
 operation. While the continuation of unnecessary
 
 15 
 
 old taxes, or the imposition of unnecessary new 
 taxes, actually increases the price of all commodities, 
 in a decree which is incalculable, the amount of 
 the relief which is sought is obvious, comparatively 
 small, and certainly remote. 
 
 It is said, I know, by others, in defence of this 
 system, that the money paid in taxes, of which a part 
 is employed in the purchase of stock, a part in the pay- 
 ment of the interest of our debt, and the remainder in 
 defraying our civil and military establishments, returns 
 again immediately into circulation, and that its absence 
 is not felt during the short time which it employs to 
 pass from the pocket of the subject into the Exchequer, 
 and from thence back again into the pocket of the sub- 
 ject. 
 
 If that be really so, then is the whole question 
 at once at an end ; for, if this temporary subduction 
 of money from the circulation be in itself no evil, 
 and if the means by which it is raised be no evil, nor 
 the cause of evil, then, as the capital of the debt 
 itself is not demandable, and the payment of inte- 
 rest is supposed to be attended with no inconveni- 
 ence, there can be no reason for this application of 
 money, to discharge a capital which we are not 
 bound to pay, in order to get rid of the payment of 
 interest, which is no burden. 
 
 A moment's reflection will, however, show us 
 that money must be subject to the common law by 
 which every other commodity is bound, and that 
 the greater the demafid there is for it, the higher will 
 be its price. The more numerous the calls arc upon
 
 16 ' 
 
 it, in proportion to its quantity, the more will its 
 value be enhanced, and the higher will the interest, 
 which is its price, be raised on the loan. 
 
 During the time that any given sum is with- 
 drawn from circulation, that which remains in it 
 will be advanced in value and price, in proportion 
 to the time and to the quantity withdrawn : but 
 mark the extensiveness of the operation : one mil- 
 lion withdrawn for- three months increases the price 
 of the whole circulating capital of the nation. If 
 sixteen millions were sufficient to defray all the an- 
 nual expenses of the nation, and it is thought expe- 
 dient to raise tv/enty on the subject, it is evident 
 that the price of interest on the whole capital of 
 the nation must rise in proportion to the greater 
 sum annually taken out of circulation. 
 
 But this is far from all; this is by far the least pre- 
 judicial part of its operation ; the money is and must 
 be principally raised from articles of consumption. 
 A tax laid on any one of these, in any stage of 
 its manufacture or production, increases its price 
 much beyond the amount of the simple tax laid 
 thereon : even if the tax could be laid on in the last 
 instance, when the commodity having received its 
 finish for use, is about to pass from the dealer to 
 the consumer ; still the dealer must be paid a profit 
 upon the tax which he has paid in advance, as well 
 as upon any other part of his capital employed in the 
 manufacture, production, or purchase of the article. 
 The consumer, therefore, pays two per cent, for one 
 that is received bv the tax-gatherer. This i$ too
 
 17 
 
 apt to be the case where the tax is laid on in the 
 last instance; but if, unfortunately, the nature of 
 the commodity be such that it becomes necessary 
 to lay the tax in the earlier stages of the manufac- 
 ture or on the raw material, the goods themselves 
 come loaded to the consumer with a tenfold in- 
 crease on the tax. Nor is this all; but as every 
 individual consuming the article, and who himself 
 carries on any other branch of trade, must, in his 
 calculations of profit and loss, also reckon the 
 price which he has paid for the articles which he 
 necessarily consumes, and many of which are so 
 taxed, he too must be repaid in his profits the 
 price of all these taxes, and a profit on the money 
 expended upon them, till by action and reaction 
 the prices of all, even the untaxed commodities of 
 life, are enhanced to the consumer beyond the 
 powers of calculation. 
 
 Hence the enormous and increasing prices paid 
 by Government for every thing furnished to the 
 army and navy; hence the necessity of increas- 
 ing the salaries of all the civil and the pay of all 
 the military servants of the Crown ; hence the 
 enormously increasing expense of every individual 
 in the community far outweighing that remote re- 
 lief which we are taught to look for at a distant 
 period; hence the present general distress of all; 
 hence the circle of every man's comfort and conve- 
 nience is narrowed and contracted, the spring of 
 increase is depressed and kept down, and the sources 
 ot' reproduction are obstructed, 
 
 c
 
 18 
 
 Some there are, and those not inconsiderable ia 
 number, nor wanting in ingenuity, who, observing 
 that the increase of the riclies of the nation has ap- 
 peared to keep pace with the accumulation of debt, 
 have been led to frame an hypothesis, that the debt 
 itself was the cause of the increasing wealth of the 
 nation, nay even that the debt was itself that in- 
 creased wealth. 
 
 If this were really so, it would at once be an 
 unanswerable argument against any attempt to dis- 
 charge that debt; for, with the debt the wealth itself, 
 or the cause of the wealth, must be annihilated : 
 but even these persons are for paying off the debt. 
 
 A moment's reflection might have convinced the 
 favourers of this hypothesis, that the funds lent to 
 Government must have existed in the persons lend- 
 ing them or supplying them, previous to their being 
 so supplied ; and although these funds are brought 
 forward in a more ostensible shape, when they be- 
 come a part of the debt of the nation to the indivi- 
 duals who originally furnished the money, or to 
 those who by purchase have taken their places as 
 creditors of the nation ; yet that the funds which 
 compose the capital of any loan, must have actually 
 existed in the country before they were lent to Go- 
 vernment, and that no new capital is added to the 
 national wealth by the creation of a national debt ; 
 in short, that burning powder, expending ball, con- 
 suming hemp, iron, and timber, are not the means 
 of enriching the nation, though the effects which 
 xnav be produced by a successful employnik^t of
 
 19 
 
 these instruments of war may have augmented the 
 national resources — may have opened new and ex- 
 tensive fields of exertion to the ingenuity and enter- 
 prise of the nation — may have obtained foreign do- 
 minions of infinitely greater value than all the ex- 
 pense which has been incurred in their acquisition. 
 
 These are the fortunate circumstances which 
 have led to this strange hypothesis, devised by in- 
 genious but refining men, to solve the difficulty 
 which seems to have puzzled so many, of a nation 
 growing rich under accumulating burdens — of a 
 nation bafiling the predictions of its wisest states- 
 men, by its energy and valour in war, by its acti- 
 vity and enterprise in peace. 
 
 Singular it is, that so many of those who have 
 acquired a reputation for political sagacity, should, 
 in calculating the resources of the nation, have al- 
 ways reasoned upon a fixed and limited quantum 
 of wealth and power; that they never should have 
 taken into their consideration the possibility of any 
 increase of those resources — the possibility of the 
 increase of those dominions — the possibility of the 
 addition of new relations of foreign trade — the pos- 
 sibility of an immense increase of domestic ma- 
 nufacture, of domestic agriculture, and of domestic 
 population. 
 
 But the debt is still a debt incurred by the na- 
 tion, though, by incurring tliat debt, more tlian its 
 value may upon the whole have been acquired. It 
 is still a mortgage upon the national property and 
 upon the national industry, though the greater part 
 
 c a
 
 20 
 
 of the loan may have been furnished, and may still 
 be held, by the inhabitants of this empire. The 
 four hundred millions composing the national debt 
 are indeed the wealth of the individual creditors of 
 the nation : but that wealth would have existed in 
 those individuals, if the nation had never borrowed 
 one farthing of the money, excepting so far as the 
 lenders may have made gainful bargains with the 
 public*; and the nation would have been the richer 
 by the absence of tlie whole debt, excepting so far 
 as the expenditure of that money has enabled the 
 nation to carr}^ on successful wars, and thereby to 
 extend the bounds of its commerce and the limits 
 of its empire. 
 
 Were all this otherwise, the road to national 
 
 * A reflection occurs here, which may at first sight appear a 
 paradox : it is this — of the sum composing the national debt, that 
 part which has been given for nothing, that which has been the 
 unlawful gain of contractors or faithless agents of any description, 
 supposing them to be residents in Britain, is that which has least 
 impoverished the nation, if we are to suppose the whole to have 
 been imprudently expended, and without a suitable equivalent, 
 arising either from conquests made, or from the defence or preser- 
 vation of what we actually possess ) for that which is really ex- 
 pended in the consumption of all the implements of war is, to a 
 certain degree, expended in the absolute and unprofitable destruc- 
 tion of so much of real value, of so much of the national la- 
 bour, of so much o foreign merchandise brought in by the ex- 
 portation of national wealth : whereas, the gain which has been 
 unjustly and fraudulently acquired by faithless agents or contractors, 
 for which no value has been furnished, is oiily a transfer of national 
 Wealth into the pockets of so many unworthy individuals, without 
 any such destruction of valuable commodities, labour, or wealth.
 
 21 
 
 wealth would be easy, and the most extravagant 
 minister be in fact the most economical; loss would 
 be gain, and profusion riches. 
 
 But, say others (and they, too, men of ability 
 and considerable exjjerience in mercantile and pecu- 
 niary transactions), " the proof that the national debt 
 is a capital created by the debt itself, and which would 
 not have e.visted without it, will be found in this — anni- 
 hilate the debt, and you at once annihilate the capital 
 which it represents: it is gone; and the wealth of those 
 who were proprietors of stock is diminished in propor- 
 tion to the share which they had in it; the wealth of 
 the nation is diminisJied by the sum a7inihilated.'' The 
 answer is short: If you annihilate the capital of 
 the debt, you at the same time annihilate the inte- 
 rest of that debt, which is now raised by taxes im- 
 posed on the community at large. 
 
 The liberated income of the community, taken 
 generally, would be therefore improved to the very 
 same amount as the incomes of the proprietors of 
 stock, taken collectively, would be diminished : the 
 relief given to the debtor would be exactly equiva- 
 lent to the injury done to the creditor in pecuniary 
 amount. 
 
 If, to supply the extravagance of the necessities 
 of B. I have lent 20,000/, on his estate, for which 
 he is to pay me 1000/. per annum ; and by any 
 flaw in the proceedings he could set aside the mort- 
 gage without repaying me the capital lent, he would 
 in fact annihilate my capital, so far as I am con- 
 cerned : but his estate becomes liberated to an 
 
 c 3
 
 equal amount, and his capital is improved (unjustly 
 indeed) by a sum equal to the debt which he had 
 incurred. 
 
 Just so would it be under similar circumstances 
 between the public and its creditors. 
 
 The capital, indeed, is not demandable from the 
 public, according to the terms on which the greater 
 part of the capital has been borrowed * : but a dis^ 
 charge from the obligation of paying the interest 
 due on the capital, is equivalent to an acquisition of 
 so much capital as that interest represents. 
 
 But as, by annihilating the debt, you do not 
 annihilate the capital which it represents ; so, by 
 paying the debt, you do not enrich the nation. The 
 community at large being at the same time debtor 
 and creditor to itself, the payment must be made 
 from the members of the community generally, to 
 those particular members of that community who 
 are holders of the stock. 
 
 It is evident, there can be no increase of wealth 
 to the nation by such a transaction ; but there may 
 be great inconvenience and distress occasioned by 
 the mode of carrying this operation into effect. 
 
 If a considerable part of the debt is due to fo- 
 reigners, two questions may arise upon that part of 
 it which is repaid to them : the first question is, 
 Whether more is not paid to them than was originally 
 received? and the second, Whether more projit could 
 not actually be made of the money by letting it remain 
 
 * Excepting in the €««« of the Loyalty loan.
 
 25 
 
 with the public f and the difference which may arise 
 upon these two points will be the positive loss or 
 benefit. 
 
 There is still a third, and that ^ more important 
 question, which is more peculiarly the subject of 
 the present essay, and that is, JFhether we do not 
 risk the loss of' all our advantages^ the stoppage of all 
 our resources, by attempting to pay more at once than 
 we have the means of' discharging. 
 
 The almost miraculous effects attributed to the 
 powers of compound interest, have been another 
 great and fertile source of error in the consideration 
 of this subject. 
 
 No doubt whatever can be entertained of the 
 accuracy of the principle of those calculations 
 which tend to show the progressive effects of cer- 
 tain sums of money laid out annually or half-yearly 
 at compound interest; the effect of which is to 
 augment every year, or every half-year, the capital 
 sum by the interest of the sums discharged or 
 bought up within the period. 
 
 *' That o?ie penny, put out at our Saviout^'s birth 
 to five per cent, compound interest, would in the year 
 1781 have increased to a greater sum than would be 
 contained in a mass of solid gold, two hundred millions 
 times greater than our earth," given, as it is, on the 
 authority of an able calculator*, who no doubt took 
 the pains of making the computation, though pre- 
 sented in a shape to excite a certain degree of sur- 
 
 * Price on Public Credit, vol. i. p. 228. 
 C 4
 
 24 
 
 pris^, is almost as well entitled to our ready assent 
 as the acknowledged result of two and two. 
 
 It is natural that an arithmetician should think 
 that he had done much when he has presented to 
 us such an arithmetical result: the powers of ad- 
 dition are within his province ; and if he is accu- 
 rate in his use of numbers, and in the consequences 
 which he deduces from them, we have nothing far- 
 ther to require from him. 
 
 But it does appear a little extraordinary that so 
 ynany acute and profound politicians, that statesmen 
 of such transcendent abilities, should, in their ec- 
 stacies at the effect of compound interest in thedis-. 
 charge of debt, have forgotten that the very money 
 which, applied to the discharge of debt, is capable 
 of producing such marvellous effects by the powers 
 of compound interest, is capable of producing at least 
 equal effect, if suffered to remain in the hands of the 
 public for the purposes of industry ; that it is capable 
 of producing infinitely greater effects when so em- 
 ployed, inasmuch as, in the discharge of debt, it only 
 works at the rate of from three to seven per cent, 
 according to the price of stocks ; but if left with 
 the public for the purpose of reproduction, it could 
 and would have produced compound interest, at the 
 rate of the usual gains of trade, working at from 
 five to twenty per cent. : for that the money now 
 employed in the discharge of debt would and must 
 have been eventually employed in reproduction, if 
 left in the hands of the public (whatever had beei^ 
 its first destination), has been already sufficiently 
 shown.
 
 25 
 
 But even this arithmetical effect of compound 
 Interest was, during the peace, more than effectually 
 counteracted by the rise of stock : and it actually 
 required, in the last year of the peace, a larger 
 sum to purchase one hundred pounds of three per 
 cent, consols, at the price of that day, than the 
 average amount of the price of 100/. of three per 
 cent, consols : in the first year adding thereto the 
 amount of the compound interest thereon down to 
 that period. 
 
 The first purchases in August 1786, were made 
 at the price of seventy-six. The average of one 
 year from that time was about 751. for 100/. of three 
 percent, consols. One million would at that price 
 purchase of three per cent. 1,333,333/. The price 
 rose towards the beginning of the year 1792, to 
 ninety-five ; and there had been liberated of inte- 
 rest the sum of 245,736/. : which added to the 
 appropriated million, would only have purchased 
 1,311,301/. of stock, being 22,032/. of capital in 
 stock less than the original million would have pur- 
 chased. 
 
 If the peace had continued, and the operation 
 had been pursued under circumstances favourable to 
 the revenue and to the general prosperity of the 
 country, it is not improbable that a rise at a similar 
 rate would have continued on all the funds, till the 
 apprehension of a redemption, at par, of any one of 
 them should begin to be felt; and if so, to that 
 extent the effects of compound interest would have 
 ))een entirely counteracted; recourse would then,
 
 probably, have been had to better and other modes 
 of relieving the public of its burdens, which the 
 rise of any stock above par could not fail to suggest. 
 
 It is further said in support of this plan, that 
 one of its peculiar recommendations is, that its ejects 
 will be the greatest and most beneficial in time of ivar. 
 
 It is undoubtedly true, and extremely obvious, 
 that aa hundred pounds laid out in the purchase of 
 stock will buy a greater quantity of such stock 
 in time of war than in time of peace, in proportion, 
 to the depreciation of the price of stock which hap- 
 pens to be the consequence of the war. 
 
 But here, again, we are led into a considerable 
 error by looking only to one side of this question. 
 
 Had this plan of reimbursement not been pur- 
 sued through the w^ar, the sums now applied to the 
 discharge of debt, might have been appropriated 
 either to defray so much of the expenses of the 
 year, or still more beneficiall}^ to have defrayed to 
 their extent so much of the interest of loans made 
 during the war, and have obviated to that extent 
 the baneful effect which we have before traced to 
 be the result of the imposition of all taxes. 
 
 Had these sums been applied in the first of 
 these modes, certainly the least beneficial of the 
 two, namely, to make good so much of the supply 
 of the year, it is not, I think, difficult to show, that, 
 upon an average, it would have been the occasion 
 of a considerable saving to the public. 
 
 In the first place the loans of the year would 
 have been diminished by so much—a circumstance
 
 27 
 
 of some importance, inasmuch as the terms of the 
 loans are always more disadvantageous to the public 
 in proportion to their extent : and although this 
 circumstance may be in great measure counter- 
 acted by the purchase of stock within the year, 
 yet the result upon the whole will be found to be 
 unfavourable. 
 
 But the most material circumstance is, that 
 whenever the public borrows, it must ahvays give 
 a premium to the money-lender, to induce him to 
 lend his money, over and above the interest which 
 the current price of stock will at that time aiford : 
 the necessary consequence of which is, that a 
 greater burden is incurred by borrowing any given 
 sum of money than will be got rid of by laying 
 out an equal sum in the purchase of stock. 
 
 The price paid for 100/. borrowed, is greater 
 than the interest liberated by laying out that very 
 100/. in the purchase of stock, by the whole of the 
 bonus or premium given ; or, to speak with precision, 
 by such pari of the bonus as shall remain a premium 
 to the money-lender at the end of the year, after 
 making allowance for such fall as may have 
 taken place in the price of stock in tbe course of 
 the year, which the bonus is intended to cover 
 and to counterbalance with profit : so that, if we 
 suppose (as for the most part has been the case, 
 from the beginning of the war) that the money 
 which has enabled us to continue the purchases of 
 stock, has been derived from the loans of the seve- 
 ral years of the war, the result of the two opera/-
 
 28 
 
 tions of borrowing and purchasing has been, that 
 the burden of the public has been increased by the 
 difference between the price given in borrowing and 
 the interest Hberated by purchasing, or by a capital 
 sum equivalent to or represented by that difference: 
 and this, besides such expenses as are attendant 
 upon all loans, which are incurred at the Bank on 
 the receipt of subscriptions, and which come not 
 into the pocket of the money-lender. 
 
 The case would not be different, if it could be 
 shown, that the whole of the money employed in 
 the purchase of stock, had indeed been the produce 
 of surplus revenue, and of the new taxes imposed 
 for the purpose of raising the additional one per 
 cent, appropriated to the discharge of new debt. 
 From whatever source the sum is derived, its effect 
 will be the same; and it is clear, that, if arising 
 either in part or in the whole, from taxes instead 
 of loan, it had been applied to the services of the 
 year, instead of being employed in the purchase of 
 stock, it would have saved to the public the amount 
 of the homis paid on the loan of a sum equal to 
 itself, after allowing for such deductions as it may 
 be necessary to make for the fall of the price of 
 stock purchased in the course of the period in which 
 the instalments of the loan are paid off. 
 
 To illustrate this by a recent example. In the 
 agreement for the loan made on or about the 26th 
 of April 1797, confirmed and established by the ^7 
 Geo. III. c. 57, the three per cent, consolidated an- 
 nuities were taken at the price of fifty ; that is, in
 
 29 
 
 othet- words, the lender, for every 50/. advanced, was 
 entitled to 100/. of three per cent, consolidated an- 
 nuities *. 
 
 The profit or bonus to induce the lender to ad- 
 vance his money, consisted, 
 
 1st, Of a long annuity amounting to 6s. 6d. per 
 cent, reduced afterwards, on account of the diminu- 
 tion of the Imperial loan, to 6s. and reckoned at 
 fourteen years' purchase. 
 
 2dly, Of the discount on paying up the several 
 instalments in advance. 
 
 3dly, Of anticipation of interest commencing 
 either at periods prior to any payments being made, 
 or prior to the payments of certain proportions of 
 the loan. 
 
 The whole of this bonus, so composed, was stated 
 by the Chancellor of the Exchequer to amount to 
 61. I7s. for every 100/.; and, deducting therefrom 6d. 
 on account of the reduction of the long annuity (at 
 fourteen years' purchase being equal to 7s.), it will be 
 found to have been 6/. lO^-. for 100/* 
 
 It is clear from this statement, that, unless the 
 fall of the stocks should amount within the year to 
 61. \0s. on the value given in stock for every 100/. 
 in money, that is, 31. 5s. on ever}^ 100/. of three per 
 cent, consols ; or, in other words, unless the three per 
 cent, consols given at 50/. should, in the course of 
 the year, fall to, and be on the average purchased at 
 467. \5s. that the lender must be a gainer by his 
 
 * It it unnecessary to notice here the price at which the 4 per 
 cents were taken j as that does not vary the case, and the tmnsac- 
 tion was in fact grounded on the price of th'^ S per cents.
 
 So 
 
 bargain to the amount of a sum equal to the differ- 
 ence between 46/. 15^. and the price at which upon 
 an average the three per cent, consols shall have 
 been sold. 
 
 The public will, of course, lose in the proportion 
 that the lender gains : and the sum received by the 
 public on loan, if laid out in the purchase of stock, 
 would purchase a sum greater or less than the stock 
 created by the loan, in proportion to the difference 
 between 46/. 15^. (the sum to which it ought to fall 
 to make it an even bargain), and the price at which 
 the stock shall on an average have been purchased. 
 
 I believe it may be estimated, that the average 
 price of three per cent, consols, from the period of 
 making the loan to this hour, has been about 48/. 10*. 
 The difference between this sum and 46/. 15*. is 
 J/. 155.; or 31. lOs. upon every 100/. received, is 
 the amount of the proportion of the sum by which 
 the national debt will have been unnecessarily hi- 
 therto increased within this year, by the operation 
 of borrowing in the market such part of the loan as 
 might have been furnished by the commissioners for 
 reducing the national debt. 
 
 A sum equal to 31. \0s. for every 100/. would 
 therefo.'-e, if this statement is correct, have been 
 saved upon near four millions, if that sum, now ap- 
 propriated to the purchase of stock, had been applied 
 to the services of the year ; being a sum equal to 
 140,000/. 
 
 To this may be added a sum of 800/. for every 
 million, which is paid to the Bank for the trouble
 
 51 
 
 of receiving subscriptions from the money-lenderg, 
 and which would probably be saved, if the loan 
 were from the public to the public. 
 
 It is clear the money-lenders must, upon the 
 whole, always liave this advantage ; for, if it were 
 otherwise, no money would be lent to the necessi- 
 ties of the public. If, in any one year, tlie depre- 
 ciation of stock should happen to be much greater 
 than the calculations of the money-lender may have 
 taught him to hope, he would expect that the mi- 
 nister should perhaps come to his aid, in that very 
 year, by an increase of bonus, as has sometimes, 
 and not uneconomically, been done ; or he would 
 take care, in the following year, to exact such 
 terms as should effectually cover the loss or the 
 disappointed profits of the foregoing year. 
 
 Fortunately, since the above was written, we 
 have been put in possession of an authentic do- 
 cument, which incontrovertibly shows that a greater 
 allowance was here made for the fall of stock than 
 was necessary, and that in fact the public has been 
 a loser in this transaction to the full amount of the 
 bonus given, upon so much of the loan as could 
 have been supplied by the money in the hands of 
 the commissioners. I allude to the paper presented 
 to the House of Commons by the Bank, giving 
 an account of the receipt and expenditure of the 
 fund for the reduction of the national debt, from Feb. 
 3, 1797, to Jan. 31, 1798. 13y this paper it appears 
 that 3,369,218/. received by the commissioners, and 
 laid out on the purchase of stock, did actually pur-
 
 32 
 
 chase within that period only 6,751,557/. of 3 per 
 cents: so that, upon the whole, a price was given, 
 equal to 50/. 1*. 3d. for every 100/. of stock; al- 
 though, by the loan of May 1797, 100/. of 3 per 
 cent, stock was created for every 50/. of cash re- 
 ceived, and a bonus moreover given of near 7 per 
 cent. True it is, that in the part of the year pre- 
 ceding the loan, from the 3d of Feb. to the 11th of 
 May, the funds were something higher than they 
 have since been ; but if the average be drawn sub- 
 sequent to that time, it is believed that the result 
 would not give a price of stock purchased much 
 under 50/. 
 
 If this be really so, then will the public have 
 been loser by the whole of the bonus upon 
 3,369,218/. which, at 7 per cent, would have been 
 235,844/. Is it by such means that we are to keep 
 up the price of our stock? 
 
 Private men, whose circumstances oblige them 
 either to purchase or to grant annuities, know that 
 they must submit in either of those operations to 
 give a profit to the dealer in those articles, who will 
 always take advantage of their necessities, of which- 
 ever description they happen to be. This advantage 
 has, I believe, in practice, been sometimes estimated 
 at an average at the rate of two years' purchase ; 
 which the individual making the application is 
 obliged to pay to the dealer in the commodity, over 
 and above the calculated value of the article. This it 
 is which constitutes the profit of the vendor ; whe- 
 ther it be of an annuity for a given sum, or of a
 
 33 
 
 given sum for an annuity. It is the price which 
 necessity pays for relief: it is the profit which 
 enahles the speculator to give that relief with rea- 
 sonable security. 
 
 The public cannot in its greater necessity expect 
 to be better treated than private individuals, who 
 may proceed in a quieter manner, and who have 
 often the opportunity of concealing the extent and 
 the pressure of their wants. 
 
 But if it be true, as we have seen, that a million 
 borrowed in any year of war, will upon the whole 
 create a greater burden to the public, than that very 
 million laid out in the purchase of stock would re- 
 move (on account of the necessary profit of the 
 money-lender); or, in other words, if it be true, that 
 it will always cost the public in a year of wai\ more 
 than a million of money to buy off within the year 
 the debt incurred by the payment of a million in the 
 form of loan into the Exchequer ; let us examine 
 what will be the effect of the appropriation of 
 annual sums during peace to buy up the remainder 
 of the debt incurred during war, which shall not 
 have been discharged in the course of the war. 
 
 In the Appendix to the first Report of the Com- 
 mittee of Finance, presented to the House of Com- 
 mons on the 31st •March 1707, marked I. 5, 6, 7, 
 8, 9, 10, 11; and in the Supplementary Appendix to 
 that Report, to which wc nmst beg to refer, will be 
 found several calculations presented by the Secre- 
 tary to the Commissioners for reducing the national 
 debt, tending to show th« operation of the fund 
 
 D
 
 S4 
 
 created for the reduction of the national debt, upon 
 the several suppositions there stated, of buying up 
 the 3 per cents at 50, 55, 60, 65, 70, 75, 90, and 
 at par. 
 
 A sufficient number of cases are there sriven to 
 elucidate this part of the subject ; and if either of the 
 suppositions there made should be exactly realized 
 by the event, no doubt the effect stated as the result 
 of the calculation would be the true one. 
 
 If the commercial prosperity and political inde- 
 pendency of this country shall survive the war, as 
 under the blessing of Providence, if we are not 
 wanting to ourselves, we may confidently trust they 
 will, the prices of stock during the peace must be 
 progressively much higher than those at which the 
 money expended during the war has been bor- 
 rowed. 
 
 This has universally happened in times of 
 former peace, and must again happen, whenever 
 the enemy shall allow us to enjoy tranquillity, unless 
 the sources of our prosperity and of our independ- 
 ence should be cut off, by our submitting to terms 
 which are inconsistent with our security at home, 
 and the permanent existence of our trade abroad. 
 
 Should such terms (which nought but our pu- 
 sillanimity can seal) be imposed upon us, in the 
 midst of our almost unceasing triumphs over an 
 enemy whose defeat and whose boasting are equally 
 familiar to us; in this case any mode of discharg- 
 ing our debt or relieving the burdens of the public 
 will be impracticable. But granting that degree of 
 
 3
 
 35 
 
 prosperity which is necessary to enable us gra- 
 dually to discharge the capital of our debt, and the 
 progressive increase in the price of stock is the 
 natural consequence. 
 
 It would therefore have been extremely useful, 
 if, when those tables were formed which show the 
 different periods in which both the old and new 
 debt would, under the different suppositions, be 
 paid off, another set of calculations had been added, 
 tending to show, by a comparison between the 
 prices at which the several sums had been borrowed, 
 and those at which, under the several suppositions 
 therein stated, they would be paid off, what would 
 in fact be the sum actually paid by the public for 
 every 100/. received neat into the Exchequer. 
 
 Such a calculation should have stated : 
 
 1st, The total of each loan ; 
 
 2d, The deductions to be made therefrom, as 
 well on account of discount and advance of interest, 
 as on account of any other bonus or advantage given 
 to the money-lender; 
 
 3i\, All other expenses attendant on the loan ; 
 
 4th, The neat sum paid into the Exchequer; 
 
 5th, The capital stock created by the loan ; 
 
 6th, The interest to be given, as well in perpe- 
 tual annuities as in annuities for lives or terms of 
 years ; 
 
 7th, The expense of purchasing such a capital, 
 or rather of buying up the interest given for each 
 loan, whether in the form of perpetual imnuities, or 
 for terms of years or lives, under the several sup- 
 
 I) 2
 
 36 
 
 positions as to the rise of stocks made in the former 
 calculations. 
 
 Such a comparison as this would have done more 
 than a thousand arguments to enlighten the public 
 as to the impolicy of this mode of endeavouring to 
 diminish the public debts : it would then have been 
 palpably seen, that, according to the example of the 
 progressive improvements in the price of stocks in 
 times of former peace, after making every suitable 
 allowance for the effect of the pressure of a greater 
 load of debt, that the price of stock must probably 
 so rise, as that from 10 to 100 per cent, would be 
 paid for every 100/. borrowed upon a 3 per cent, 
 fund. 
 
 On the 8th of July 1768 (being five years and 
 five months after signing the definitive treaty of 
 peace of Paris, which terminated the seven years 
 war), the 3 per cent, consolidated annuities had 
 risen, if my information is correct, to 94|. 
 
 The feverish and unsettled state of Europe, and 
 the political situation of this country, as well with 
 relation to its foreign dependencies in the East and 
 West Indies and in America, as with relation to the 
 European powers, was such as to prevent any further 
 advance in the price of stocks, notwithstanding 
 that full six millions of debt were in this interval 
 paid off by the produce of the Sinking Fund * till 
 
 * The total diminution of debt between 1762 and 17/5, 
 amounted to 10,739,793/. See Sinclair, Part II. p. 93.
 
 37 
 
 the circumstances which led to the American war 
 produced a considerable depreciation. 
 
 The events of that war finally reduced'the stocks 
 to 63^j at which price they were sold in March 
 1782. The victory obtained in the West Indies on 
 the 12th of April of that year, the brilliant and 
 successful relief of Gibraltar, with the firm and un- 
 shaken countenance which Britain opposed to all 
 her enemies, probably prevented any farther depre- 
 ciation during the remainder of the war concluded 
 by the peace signed at Versailles, on the 3d of Sep- 
 tember 1783; though no less a sum than 1 15,269,992/. 
 was added to the funded debts of the nation by 
 the expenses of this war, independent of an increase 
 in the unfunded debt, which probably amounted to 
 two or three millions. 
 
 Of this total sum, 88,400,000/. had been already 
 funded about the end of April 1783, four months 
 previous to the signature of the definitive treaty of 
 peace : the remaining 26,869,992/. were funded 
 subsecjuent to the signature of the treaty, though 
 the debt was wholly incurred during the war, and 
 subject to an annual payment, in the shape of inte- 
 rest and management, amounting to 4,862,661/. 
 
 Indeed, the lowest price of stocks, in the month 
 of April 1783, when the last loan during the war 
 was made, was 63f ; but they fell again in January 
 1784 to 531; and (probably owing to the deficien- 
 cies of the revenue, and to the arrears still out- 
 standing) they were in the month of January 1785, 
 so low as 54 1 .
 
 38 
 
 In the month of June 178.5, taxes were imposed 
 to equaHze the revenue with the expenditure, and 
 the outstanding navy bills and ordnance debentures 
 to the amount of about ten millions were funded. 
 From that period stocks began to rise pretty rapidly, 
 and in the month of December of the same year 
 had already reached 7 3 J. On the 26th of May 
 1786, the royal assent was given to the bill for ap- 
 pointing commissioners for the reduction of the 
 national debt. In the month of August following 
 the first purchases were made at about 15. 
 
 In the month of March 1792, being eight years 
 and six months from the signature of the treaty of 
 peace, and about seven years and two months from 
 the time of the final liquidation and adjustment of 
 the arrears of the war, the stocks had arisen to 97|. 
 
 Five years of war, and an addition of 156 mil- 
 lions of debt, had in April 1797 reduced the price 
 of stocks to 50. They have since fallen so low as 
 47| in January 1798. 
 
 But they were actually at 53* in January 1797, 
 when only 88,840,122/. of new debt had been 
 funded out of about 1 10 millions of debt which had 
 been then incurred. 
 
 From the increasing activity of the country in 
 all its agricultural, manufacturing, and commercial 
 speculations, of which there are every where such 
 abundant symptoms, and of which, among others, 
 some proofs may be found in the interesting Report 
 made on the 28th of April 1797, by the Secret Com- 
 mittee of the House of Lords, it is not, I think.
 
 39 
 
 unreasonable to suppose, if the debt of the pre- 
 sent war should double that which existed before 
 it began, that even in that case an equal period of 
 uninterrupted peace would again raise the stocks to 
 the price which they had reached in the month of 
 March 1792. 
 
 In the 255th page of the Report above alluded 
 to, is recorded an opinion of the greatest authority, 
 That the balance of our trade on a medium of four 
 years preceding 1796, was upwards of 6,000,000/. 
 per annum in our favour: that the profits of our 
 East and West India trade were 4,000,000/. per 
 annum, exclusive of those of our fisheries. It 
 would be extremely difficult to form an idea, much 
 more to found any calculation, of the increase of 
 national capital at home, which must in part have 
 been the fruit of so great external advantage, in 
 part the result of that activity, industry, and capital 
 which is wholly occupied in the supply of the 
 home market. It shows itself in all the improve- 
 ments which are made in our agriculture and in ou. 
 manufactures — in all the numerous additional com^ 
 munications perfected or undertaken — in the inclo- 
 sure and cultivation of wastes and commons — in the 
 draininer and embankment of flooded lands — in the 
 extension and embellishment of our towns and 
 cities — in the solidity and splendour of numerous 
 buildings, dedicated either to local or general pur- 
 poses of benevolence, or to those of municipal ad- 
 ministration — in the excavations of our ports and 
 
 D 4
 
 40 
 
 harbours — in the projection of new moles- — in the 
 construction of new docks and basins — in the in- 
 crease of every description of vessel which moves 
 on the waters, and of everv vehicle which is made 
 to move on the land — in the obviously improving 
 aspect and increasing population of the country. 
 
 These are a part only of the symptoms of our 
 internal improvement ; and though it may be diffi- 
 cult, if not impossible, entirely to separate the effect 
 of our home, from that which is produced by our 
 foreign trade, yet I think I should put a low value 
 on the mass of our interior meliorations, if I should 
 estimate the increase of national capital wholly aris- 
 ing from them as only equal to the balance of our 
 foreign trade. 
 
 If, then, the balance of our trade and the profits 
 of our foreign possessions, as above stated, be 10 
 millions and a half, and the addition of our fisheries 
 make our exterior industry equal to 12 millions ; and 
 we are justified in adding as much more for those 
 exertions of our industry which relate solely to do- 
 mestic improvement, we shall have a sum of 24 mil- 
 lions as the annual superlucration of the country, 
 which would in nine years, the period above alluded 
 to, add to the capital of the country 216 milhons 
 sterling. 
 
 The debt previous to the war was 238 millions, 
 valued in March 1792 at 97|: considering the whole 
 here, for the sake of conciseness, as a 3 per cent. 
 sujck ; the debt which we suppose may be added
 
 41 
 
 by the war, is also 238 million:); making in the 
 whole 476 millions. The 3 per cents are now worth 
 48|, or about half what they were worth in 1792. 
 The pressure of war alone may be supposed to 
 make a difference of nearly one fourth in their 
 value, so that we may expect to see them, if no 
 addition beyond what I have stated should be made, 
 nearly at 60, so-soon as peace shall be concluded, 
 and the arrears of war finally discharged. Should 
 they, in fact, reach 60 soon after the final adjust- 
 ment of the arrears of war, we shall then have 37^ 
 per cent, on 476 millions to make good, in order to 
 bring them to their former price : 37^ per cent, on 
 476 millions amounts to 178,500,000/. ; to make 
 good which sum, in nine years an annual superlu- 
 cration of iy,833,333/. would be sufficient. 
 
 That we shall attain that height of prosperity, 
 if the peace we make be neither derogatory to our 
 honour, nor detrimental to our security and solid 
 interests, if it be in fact such as we have a right to 
 expect from the relative positions in which we now 
 stand, no one who knows the energy of this coun- 
 try, and sets a due value on its resources, can doubt. 
 
 Should this prove a well-founded hope and 
 expectation, and should the stocks attain their 
 former value within the period alluded to, it must 
 be self-evident, that, if (as we have before shown) 
 it is disadvantageous to purchase stock during 
 war, it will be still more disadvantageous to do it 
 during peace, in proportion to the greater price 
 which the stock* may bear during peace, when com-
 
 42 
 
 pared with the price they bore at the time of bor- 
 rowing. 
 
 Should, in fact, the rise of stocks be as we have 
 stated ; should they in the course of nine years from 
 the termination of the expenses, and the full reim- 
 bursement of the arrears of the war, be again at 97§, 
 and should the average price of the purchases made 
 within the period be about 75, it is clear, that, com- 
 paring this price with the average price of all the 
 loans made during the war, without taking into the 
 account the bonus given on every loan, we must 
 purchase at a very great disadvantage. 
 
 We have already sufficient materials to decide 
 that the average of all the loans has been consider- 
 ably below the price of 60, and every additional 
 loan must have the effect of reducing that average 
 price still lower. 
 
 Taking 60, however, as the average of the loans, 
 for the sake of simplicity in the calculation, and 
 setting it against 75, the supposed average price of 
 the purchases in the first nine years; it is clear that 
 15/. will be paid on every 60/. received ; that is, one 
 fourth, or 25 per cent, on the money borrowed. 
 
 It is also clear that the stocks being then sup- 
 posed to be at 97^ ; that is, at 37^ above 60 ; we 
 must pay at the rate of 62| per cent, for every 100/. 
 of stock that we buy up at that price ; or, in other 
 words, 62/. 10^. premium for every 100/. in money 
 obtained by the creation of stock at the price of 60. 
 
 If we then suppose the stocks to rise to par, the 
 sum paid in premium lor every future purchase
 
 4.5 
 
 would be 66j per cent. ; or, in other words, we 
 should pay 166/. 135.4^. for every 100/. over and 
 above the premium or bonus given in the first in- 
 stance to the original lender of the money *. 
 
 Would the guardians of any minor, whose estate 
 is loaded with a heavy debt, or the counsellors of 
 any distressed man, advise him to attempt to get rid 
 of his pecuniary embarrassments, by a plan which 
 should become daily more onerous to him in propor- 
 tion as his credit increased? 
 
 It is in the hour of difficulty and of great pecu- 
 niary wants, that hard conditions must be submitted 
 to : but for a debtor voluntarily to forge such 
 weighty chains for Jiis own neck, is a degree of 
 infatuation seldom met with in private life. 
 
 By what strange fascination has it happened, 
 that a whole public with their eyes open should 
 imagine, that it sees in such a plan the re-establish- 
 ment of the public credit, the restoration of the 
 public weal? 
 
 It is possible, that the increasing wealth and 
 energy of the nation may be sufficiently great to 
 enable it to surmount even the accumulating diffi- 
 culties of this ill-conceived plan : but 
 
 " If to come in you do go out. 
 
 The way you take is strangely round about." 
 
 The mode is still a bad mode; and so long as it 
 shall be in operation, so long will it contribute to 
 
 * See Appendix A.
 
 44 
 
 weigh down and depress that vigour, which it is in- 
 tended to animate and revive. 
 
 It is the cause of preventing an immense acces- 
 sion of new wealth, while the object of the pro- 
 iiioters of it is, by discharging old debts, to elevate 
 and exalt the powers of the country. 
 
 But it is said, this plan tends to keep up the price 
 of stocks, by bringing so much money regularly into 
 the stock market ; and that without it you must ha'ce 
 borroived at a much higher rate of i?iterest. But 
 out of what chest is it then taken ? For, unless 
 there are secret hoards, and it were possible by 
 taxes to get at thetn, and then only for this purpose, 
 the money was in the market before, and is diverted 
 by taxes from the employment to which it would 
 have been put, to be employed in the purchase of 
 stock, and thence to find its way ultimately to the 
 use from which it has been forcibly diverted. 
 
 A man who has money may either hoard it, 
 spend it, or lend it, or lay it out in the purchase of 
 land or stock, or employ it in trade. 
 
 Provided he does not do the first of these things, 
 it is perhaps not very material, in a financial point 
 of view, which of the other means he employs to 
 get rid of it. 
 
 If he spends it lavishly, by giving activity ta 
 the industry of others, he will be the unsuspecting 
 cause of increase to the community by his extra- 
 vagance, and of accumulation by his dissipation : 
 if he lends it to the prodigal, the same effects will 
 follow as if he had scjuaudered it himself: if he
 
 45 
 
 buys land, the seller of the land is put into posses- 
 sion of so much money, with which he may either 
 purchase stock, which he may employ in trade, 
 lend on private security, or squander : if he buys 
 stock, the seller of the stock is put into possession 
 of so much money, which he again may employ in 
 either of the modes before pointed out; and, in 
 whichever mode he employs it, it goes to fill up 
 the vacancy made by withdrawing it, to restore the 
 equihbrium, and complete the level, which money, 
 like water, is always seeking for itself 
 
 The miser's treasure may be inclosed in his 
 chest, as the hidden things of nature are locked up 
 in the bowels of the earth : the drain is no sooner 
 cut up to the source, than the liberated stream forces 
 its way out, and spreads itself over the surface, car- 
 rying plenty as it rolls along, till it finds its general 
 level in the sea, whence it is again pumped up by 
 the star of day to be shed in fructifying showers 
 over the land. Such is the eternal circle of the 
 wonderful but simple machinery of the creation, 
 such the analogous round of the beneficent powers 
 of circulation. 
 
 The price of money does not alone depend on 
 the abundance or scarcity of it in the market, but 
 also on the goodness of the security which the bor- 
 rower is enabled to give. The better the security', 
 the lower, other circumstances being similar, will 
 be the price of interest; or, in other words, the higlier 
 the degree of credit, the lower the rate of interest. 
 
 Public credit is founded on tlie public opinion
 
 46 
 
 which is entertained of the ability to pay, and on 
 the good faith and punctuaHty which have been ob- 
 served in paying. 
 
 Thus it is that the price of stocks, therefore, 
 when compared with that of other securities for 
 money, depends upon the opinion which is enter- 
 tained of the comparative sohdity of that security. 
 
 If it be thought equally solid with other securi- 
 ties, and more convenient, it will give a lower rate 
 of interest in proportion to the estimated value of 
 that convenience, and the stock will rise. If the 
 precariousness of the times be such as to overba- 
 lance, in the general opinion, that convenience, the 
 public will be obliged to give a higher rate of inte- 
 rest for money lent on that security, and the price 
 of stocks will fall. 
 
 But it will only fall in proportion to the opinion 
 entertained of its comparative solidity when con- 
 trasted with private security : that proportion will 
 be increased or diminished by the facility or diffi- 
 culty with which the increasing burdens thrown on 
 the public are observed to be borne. 
 
 Thus every thing which tends to give confi- 
 dence in the resources of the country must have a 
 considerable influence on the price of stocks ; and 
 that a plan by which it shall appear that the coun- 
 try has the ability, not only to discharge its current 
 expenses, and the interest of its debt, but also to 
 reimburse annually a part of the capital, should 
 have the effect of inspiring a confidence in the re- 
 sources of the country, is also true, so long as it
 
 47 
 
 shall appear that the money destined for the pur- 
 poses of reimbursement is raised with facility. 
 
 The best proof which can be given of the ability 
 to pay, is perhaps actual payment; but if such a 
 measure should be carried so far as to discover a 
 difficulty in raising the sums necessary for the cur- 
 rent services, together with those pledged to reim- 
 bursement, such a discovery must operate very dis- 
 advantageously to public credit. ^ 
 
 We have already seen that the effect supposed 
 to be produced on the stocks by bringing so much 
 money regularly into the stock market, is, to say 
 the least of it, considerably over-rated; and that in 
 fact it is not unreasonable to suppose that this ap- 
 parent effect must be gradually and imperceptibly 
 counteracted by the previous subduction of that 
 very money out of that very market into which 
 it is afterwards poured for the purchase of stock : 
 nay, that it is most reasonable to suppose that the 
 four millions, of which the present Sinking Fund 
 consists, whether it be supplied by the actual pro- 
 duce of the taxes laid on for tliat purpose, whether 
 it be furnished by the loans of the year, or composed 
 partly of one and partly of the other, cannot be 
 withdrawn for a time from the general circulation, 
 to pass through the hands of collectors and receivers, 
 into the pul)lic treasury, and thence into the hands 
 of the commissioners, to be laid out in tlic purchase 
 of stock, without sensibly affecting tlie quantity, and 
 therefore the price of money in the market ; that 
 hence infallibly a depreciation in the price of stocks 
 must take place ; and that the time for which this
 
 48 
 
 mone}' is withdrawn must be a loss to tlie commu- 
 nity, which will be paid for by a degree of depre- 
 ciation outweighing the increase of price occa- 
 sioned by the purchase of stock. 
 
 If the money at this time employed in this pur- 
 chase should, in fact, from the deficiency of taxes, 
 be in great measure supplied by the loans of the 
 year, there is good reason to suppose, that it must 
 either be derived immediately from the public funds 
 of the country, where good opportunities of sale 
 have occurred, previous to the making of new loans, 
 or (which comes to the same thing) it must be money 
 withheld from the stocks, where it would be other- 
 wise placed by persons who keep it up for the pur- 
 pose of loan ; knowing that they can make a greater 
 advantage of it by lending it to Government than 
 by vesting it immediately in the public funds at the 
 current price of the day. 
 
 If the money employed in these purchases be 
 supposed to be wholly and entirely the fair produce 
 of the taxes laid on for that purpose, still it is 
 money which, if not taken from the subject by 
 means of taxes, would have probably found its way 
 to the public funds either directly, as the small ac- 
 cumulations of the individuals who pay the taxes, 
 or more circuitously as the accumulations of those 
 with whom the payers of the taxes would have 
 expended it; or lastly, by increasing the mass 
 of general circulation, it would have been the 
 occasion of other monies finding their way to the 
 public funds; or (which is tantamount) by low-
 
 49 
 
 ering generally the price of money (that is, its in- 
 terest), it would have had the effect of increasing 
 the nominal value of all other capital, and of rais- 
 ing the price of the public funds. 
 
 There can be but little doubt, I believe I might 
 say there can be no doubt, but that, if the four 
 millions now composing the Sinking Fund were to 
 be appropriated towards furnishing so much of the 
 supply of the year, it would at least have an equal 
 effect towards keeping up the price of stock gene- 
 rally, as if it had been laid out in the purchase of 
 existing slock, and that a part only of the supply of 
 the year were to be furnished by the money-lender. 
 There can be but little doubt but that its effect 
 upon the whole upon the state of our finance would 
 be more beneficial, and that in proportion to the 
 terms on which the four millions would be obtained 
 from the Commissioners when compared with those 
 which would be exacted by the money-lender. 
 There would be this farther advantage, that if sup- 
 plied by the Commissioners, onl}- four millions 
 would be taken out of circulation : but, in the other 
 case, eight millions would, in the course of the 
 year, suffer a temporary subduction ; namely, the 
 four millions raised by taxes for the purchase of 
 stock and four millions of loan. 
 
 From the measures* which has been recently 
 adopted, it should seem that an opinion is enter- 
 
 * Alluding to ,the measures proposed for the service of the year 
 1798, of tripling the assessed taxes, and calling upon the public, at 
 the lanne tiine, for voluntary contributions. 
 
 I
 
 40 
 
 tained, that fifteen millions taken out of the pockets 
 of the subject by taxes, will not have an equal ef- 
 fect in depreciating the public funds, as if the same 
 sum had been taken out of the pockets by loan. 
 A close investigation of the subject would perhaps 
 lead to the conviction, that the effect must in great 
 measure, if not altogether, be the same, and that it 
 is almost the same money that would in either case 
 be supplied. 
 
 Such payers of the tax, whose income exceeds 
 their expenditure, would probably have all, through 
 their bankers, taken part in the loan, or have vested 
 their surplus in tlie stocks. 
 
 Those payers of the tax, whose income is only 
 equal to their necessary expenditure, will either be 
 obliged to borrow to pay the tax (and they will 
 probably borrow of those very persons who would 
 otherwise lend to Government), or they will be 
 obliged to sell stock to make good their payments, 
 or they will withdraw their money from private 
 securities, and the individuals from whom they 
 withdraw it will be obliged in their turn to sell 
 stock, or borrow from those who would otherwise 
 vest their property in stock or loan ; or lastly, the 
 payers of the tax will make retrenchments, which 
 must put the dealers in the articles retrenched in 
 one or other of the situations alluded to. 
 
 But whether fifteen millions be taken by forced 
 or voluntary loan, by taxes or by gift, it is not les& 
 fifteen millions withdrawn from circulation; and its
 
 ^1 
 
 effect on the funds will be eventually the same, 
 under whatever title it be withdrawn. 
 
 The instances of payments towards the assessed 
 taxes and contribution, of which it happened to 
 me to know any thing, were these. 
 
 The first was that of a gentleman of extensive 
 property, who had to congratulate himself that his 
 last year's receipts had been larger than usual, and 
 had put him in possession of a surplus in his ban- 
 ker's hands, which he had intended to have vested 
 in the funds, but would now pay into the Bank as 
 his own contribution. 
 
 The second was that of a Peer, who, with a large 
 family and considerable incumbrances, had to la- 
 ment, that as his income was hardly adequate to his 
 necessary expenditure, and retrenchment impracti- 
 cable, he would be obliged to reduce that income 
 by selling out of the stocks so much as would be 
 necessary to pay his assessments. 
 
 The third was that, of a bachelor, whose fortune 
 was far beyond his wants, but whose exceedings 
 were always directed to purposes of generosity and 
 benevolence. This gentleman's liberal mind could 
 not miss the opportunity of giving scope to his pa- 
 triotic feelings; but, to satisfy them, it became ne- 
 cessary to have recourse to his funds ; and a consi- 
 derable sum derived from the sale of stock was 
 among the first oflcrings to the service of the 
 public. 
 
 A fourth is that of an individual, who will not 
 only contribute liberally to the service of the public 
 
 I 2
 
 52 
 
 on bis own account, but whose kindness leads him 
 to discharge assessments of ^ near relation. The 
 means of making these payments v/ill be furnished 
 partly by surplus in the hands of his banker, partly 
 by sale of stock; and the remainder from money 
 which had been lent on private security, which is 
 now paid in. 
 
 To a fifth his banker furnishes the whole sum. 
 
 These are not imaginary cases ; but they happen 
 to be the only real cases which have come to my 
 knowledge, and of which I am able to speak dis- 
 tinctly. 
 
 But I hear around me of a variety of others, 
 where a retrenchment is intended to be made, by 
 the giving up of a rented house, the putting down 
 of carriages and horses, the discharge of servants, 
 or the renunciation of some article of expense, 
 which can with the least difficulty be spared. 
 
 Were we to trace an hundred or a thousand 
 cases, they would be for the most part of one or 
 other of these descriptions, and resolvable in point 
 of effect into one or other of these cases, viz. 
 
 1. A subduction of money actually vested, or 
 about to be vested, in the public funds. 
 
 2. Of money lent on private security. 
 
 3. Of the profits of bankers, by taking surplus 
 money out of their hands. 
 
 4. Retrenchment of articles of expenditure. 
 We have already shown how quickly the three 
 
 first of these cases affect the public funds ; and the 
 fourth cannot fail ultimately of producing a similar 
 
 2
 
 6$ 
 
 effect, in proportion to the sum saved by retrench- 
 ment. 
 
 The article retrenched cannot be given up with- 
 out a diminution of the profits, and therefore of 
 the means, of the tradesmen who have been used 
 to furnish the article. Their small accumulations 
 will therefore find their way in reduced quantities to 
 the funds ; or, to carry on their trade, they must 
 either draw additional money out of the funds, or 
 borrow from those who withdraw it from thence, 
 or who withdrawing it from private securities will 
 oblige those from whom they withdraw it to have 
 recourse finally to the funds. Or lastly, their trade 
 being diminished, their means of paying present 
 and future taxes will be narrowed, and the general 
 circulation will and must feel the effect of this di- 
 version of the national wealth by tax, as much as 
 if it had been made by loan. But it may be said, 
 You have enumerated many cases of that description 
 of payers whose payments are large, and the sum 
 of whose payments forms by its amount a capital 
 in itself. But what will you say to all those loyal 
 donations of the navy and army, to those which, so 
 much to their credit, the servants in many families 
 are now making? These are the savings from pay 
 or wages, and would have never appeared in the 
 form of capital. Let us look a little to the probable 
 expenditure of the greater part of this money, if it 
 had not been so honourably dedicated to the service 
 of the public. 
 
 Two millions of pots of porter left upon the 
 r 3
 
 64 
 
 hands of the brewers, by disappointing them of so 
 much of their expected return in cash, will oblige 
 them to shorten their cash with their bankers, or 
 to call in other small capitals, lent either on public 
 or private security; or to borrow to make good the 
 deficiency ; or, lastly, to narrow their trade. - 
 
 The case here is the same as that of the other 
 retrenchments above alluded to : and in whatever 
 manner the money be taken out of the hands of the 
 public, its effect upon general circulation and upon 
 the price of the stocks will be nearly if not exactly 
 the same *. 
 
 Let us, however, examine how the fact stands 
 
 * Under the peculiar circumstances of the time in which these 
 donations of the army and navy have been made, perhaps we may 
 consider them in a somewhat different point of view, than if they 
 had been given before the late increase of pay. That increase has 
 been so recent, that it may be supposed that the brewers and distil- 
 lers (to whom the greater part of that increase would infallibly go) 
 will not as yet have much increased their operations on their stock 
 in consequence of the increased demand which may already have 
 takep place, and will not therefore feel much prejudice by the dimi- 
 nution of demand which may be the consequence of the patriotic 
 donations. 
 
 On the other hand, the gift to the public follows so quick upon 
 the gift of the public to the two military services, that it acts as a 
 reduction of the estimates of the year for those services-: and, if the 
 amoupt on the whole should be equal to the late increase of pay, it 
 would put things just where they would have been, if the increase 
 of pay had not taken place. But had these voluntary contributions 
 been made from savings of the ancient pay of the army and navy, 
 the manufacturers of liquors would not have failed to have felt the 
 effect in proportion to the zeal of the contributors, and the conse- 
 quences which we have above described would have followed.
 
 5S 
 
 with regard to the supposed effect of keeping up 
 the price of stock. 
 
 We have before seen, that the debt incurred by 
 the American war amounted to 115,269,992/.; being 
 the stock created on account of the sum of 
 92,940,034/. which had been borrowed by the pub- 
 lic. For this stock an interest was paid in perpe- 
 tual annuities, and in annuities for terms or lives, 
 amounting to 5,006,442/. independent of a sum of 
 64,400/ for management. 
 
 If we take a period in the present war, when 
 nearly a similar amount of stock had been created, 
 we shall find, that about the close of the year 1796, 
 the debt incurred amounted to 110,415,896/. of 
 capital stock ; that the money borrowed was 
 79,654,295/. ; and the interest paid on the capital 
 created, amounted to the annual sum of 3,843,244/. 
 independent of the expenses of management, and 
 of the one per cent, on the capital appropriated to 
 the reduction of the debt. Two circumstances are 
 obvious in this comparison : the one, that the pub- 
 lic received a larger sum proportionally in the for- 
 mer period than in the latter, for nearly an equal 
 quantity of stock ; the other, that a higher rate of 
 interest appears to have been given in the former 
 period than in the latter. 
 
 But with the view of instituting a clearer com- 
 parison, it is necessary to state, that in the sum of 
 5,006,442/. given as interest in the first period, is 
 included a sum of 869,623/. of annuities for terms 
 or for lives ; about one half being for single lives or 
 
 £ 4
 
 56 
 
 for terms not exceeding thirty years, and the re- 
 mainder for terms not exceeding eighty years. 
 
 In like manner, in the latter period, in the sum 
 of 3,843,244/. given as interest, is included a sum 
 of 229,041/. given for terms of years not exceed- 
 ing 661. It ^vill be convenient, therefore, to de- 
 duct the amount of these annuities for terms or 
 lives, in both instances, *from the amount of the 
 annual interest ; and to convert them into capital, 
 to be added in each case to the capital of the debt 
 incurred within the respective periods, increasing 
 the capital in both instances, as we diminish the an- 
 nual interest. Deducting, therefore, 669.623/. (the 
 amount of all the annuities for terms or lives in th^ 
 first period) from 5,006,442/. (the sum of all the 
 interest granted), leaves the remaining interest of 
 that period on which we shall hereafter calculate, 
 
 4,156,819/. 
 
 In like manner, deducting 229,041/. (the sum of 
 all the annuities for terms in the second period) from 
 3,843,224/. (the sum of all the interest granted in 
 that period), will leave the amount of perpetual an- 
 nuities on which we sliall hereafter calculate, 
 3,614,203/.* 
 
 We then find by the tables t, that the va- 
 lue of all the annuities composing the sum of 
 869,623/. estimated according to their several du- 
 rations, and reckoning money at 5 per cent, 
 amounts to a capital sum of 15,025,228/. which, 
 
 ♦ Appendix B, Case III. f Appendix C, and B. I.
 
 57 
 
 added to 1 15,269,992/. the sum of the debt incurred 
 in the first period, makes a capital of 130,495,220/. 
 Estimating in hke manner the several annuities for 
 terms composing the sum of 229,041/. we find that 
 they amount to a capital of 4,388,510/.; which 
 being added to 110,415,896 (the sum before men- 
 tioned as the debt incurred in the second period), we 
 have the sum of 1 14,804,4(J67. as the capital of debt 
 incurred in the second period, and our statements 
 will be as follows : 
 
 Annual Interest, 
 after deducting 
 Money borrowed. Debt created. Annuities for 
 
 Terms or Liv«g. 
 
 First period, 92,^0,034/. — 130,495,220/. — 4,136,819/. 
 
 Second period, 79,654,000/. — 114,804,406/. — 3,614,203/. 
 
 Comparing together the money borrowed in each 
 period with the debt incurred in each, whoever will 
 take the trouble of working the sums, will find 
 that 92,940,034/. (the sum received in the first 
 period) is to 130,495,220/. (the debt created) as 
 79,654,000/. (the sum borrowed in the second period) 
 is to 111,840,557/. But the debt created in the 
 second period was equal to 114,804,206/. : there is 
 therefore a difference in favour of the first period, 
 amounting to 2,963,849/. If the annuities for terms 
 or lives be converted into capital, at the present 
 price of money, reckoning it at six per cent.*, the 
 difference will be more considerable : for in that 
 case the value of all the annuities in the first pc- 
 
 • Appendix D. B. II.
 
 58 
 
 liod would be 12,927,117/.; which, added to the 
 capital of debt, would make 128,197,109/.: and 
 the value of all the annuities for terms in the se- 
 cond period would be 3,729,974/. ; which, added 
 to the capital of debt created, would amount to 
 114,145,870/.: and these sums, compared with the 
 money borrowed in the respective periods, would 
 leave a dilFerence of 4,274,870/. in favour of the first 
 period*. 
 
 Pursuing this comparison of the two periods 
 still further, as to the permanent interest created in 
 each as set against the sums borrowed in each, put- 
 ting out of the question in both cases such parts of 
 the interest given as consists in annuities for terms 
 or lives (which we have already accounted for by 
 converting them into capital), and we shall find the 
 result to be as follows : — 92,940,034/. (the sum bor- 
 rowed in the first period) is to 4,136,819/. (the per- 
 manent interest created) as 79,654,000/. (the sum 
 borrowed in the second periodj is to 3,545,450/. 
 But the interest incurred in the second period was 
 3,614,203/. and it exceeds the proportion of the in- 
 terest incurred in the first period by an annual sum 
 
 of 68,753/. t 
 
 It is fair, however, to state, that we have not 
 yet taken into our consideration all the circum- 
 stances which are necessary to form a just and an 
 exact comparison : for, of the debt incurred in each 
 of these periods, a part is in three per cents, a part 
 
 * Appendix B. II. f Appendix B, III.
 
 so 
 
 in four per cents, and a part in five per cents. Un- 
 less, therefore, the proportions of each had been the 
 same in each period, the result must be varied by 
 the difference of these proportions. And accord- 
 ingly we find, by reducing the four and the five 
 per cents in each period into three per cent, stock, 
 that the whole capital created in the first period would 
 be represented by 138,099,986/. of three per cent, 
 stock*; to which if there be added 12,927,117/. 
 (the value of the annuities for terms and lives, 
 reckoning, as in the last instance, money at its pre- 
 sent price of six per cent.), the whole of the debt 
 incurred in the first period would amount to 
 15 1,027, lOS/. of three per cent, stock f. Applying 
 the same mode of reduction to the second period, 
 we have a capital of 124,205,020/. of three per cent, 
 stock as the amount of the debt then incurred ; the 
 comparison will then stand thus : — 92,940,034/. 
 (the money borrowed in the first period) is to 
 151,027,103/. (the debt incurred) as 79,654,000/. 
 {the money borrowed in the second period) is to 
 129,439,511/. But the debt incurred in the second 
 period was only equal to 124,205,020/. : and the 
 difference therefore, in favour of the second period, 
 will be equal to 4,234,491/. of a three per cent, 
 stock. But we must recollect here, that, in the 
 comparison of the permanent interest given in the 
 two periods, we had a permanent annuity of 68,753/. 
 by which the interest given in the second period 
 
 * Appendix E. f Appendix B. V.
 
 60 
 
 exceeded the proportion of the permanent interest 
 given in the first : that annuity represents a capital 
 in three per cent, stock of 2,291,766/.; which, de- 
 ducted from 5,234,491/- (the sum last stated as the 
 difference of the debt incurred in the two periods), 
 would leave only 2,942,725/. as the final balance 
 between them, and in favour of the latter period. 
 
 Hitherto we have confined ourselves to the com- 
 parison of the debt incurred in the American war, 
 with that which had been incurred previous to the 
 1st of January 1797. We had selected that period 
 as one in which the amount of the sum borrowed 
 came the nearest to the sum borrowed in the Ame- 
 rican war, though in fact it fell short of the whole 
 sum borrowed on account of that war by above 
 thirteen millions*. But, if we extend our inquiry 
 to the 1st of January 1798, a period when the sum 
 borrowed in the present war had amounted to 
 111,973,035/. and the value of the annuities for 
 terms (reckoning money, as before, at six per cent.) 
 had amounted to 4,435,979/- we shall find that the 
 total of the debt incurred, if reduced and valued as 
 before, would amount to 1 87,69 1-,096/. of three per 
 cent, stock. But 92,9^0,034/. (the sum borrowed 
 on the American war) is to 151,027,103/. the debt 
 incurred, as 111,973,035/. (the sum borrowed in (he 
 present war previous to the 1st of January 1798) 
 is to 181,955,637/. ; leaving a difference in favour of 
 the former period of 5,738,459/. 
 
 * Appwidix B. VI. and D.
 
 61 
 
 It is true that above nineteen millions more have 
 been borrowed in the latter period than in the for- 
 mer; which must have an effect upon the price at 
 which we can expect to borrow : but we shall not 
 be accused of a desire to misrepresent or to exag- 
 gerate, when we venture to state as the result, that 
 there does not appear to be any sensible difference 
 between the terms on which we have borrowed in 
 the present war, compared with those on which we 
 borrowed in the former, notwithstanding the ex- 
 pected effect of the fund appropriated to the pay- 
 ment of the national debt. 
 
 We have already observed, that the higliest price 
 to which stocks had risen between the German and 
 American war was in July 1768, when the three per 
 cents were at 971. We have also shown, that the 
 lowest price to which they fell during the American 
 war was 53|. At this price they were reported to 
 have been sold on some one day in March 1782 : 
 they did not, however, then remain at that price, 
 nor did they even sink quite so low again, though a 
 considerable addition was afterwards made to the 
 debt. 
 
 Take this, therefore, as tlie lowest point of 
 depreciation, and our statement would be, that the 
 borrowing of nearly ninety millions of money had 
 sunk the three per cents 41|, namely, from 94| 
 to 53i. 
 
 6 
 
 The rapidly improving state of the country had, 
 in the month of March 1792, again raised the three 
 per cents to 97i* Between that period and the »8t
 
 62 
 
 of January 1797, the public had borrowed near 
 eight}^ millions, and the three per cents were at 
 531 ; being lower than they ever were during the 
 American war, and in fact a depreciation from the 
 point from which the}^ fell equal to 44J ; though 
 the money borrowed and debt incurred in the latter 
 period were considerably less than in the former. 
 
 It is true that the stocks had actually fallen in 
 the American war to the point of 53| in thq month 
 of March 1782, when probably the money borrowed 
 had not exceeded fifty-seven millions and a half. 
 But that was a moment of peculiar political de- 
 spondenc}^ upon the overthrow of the Administra- 
 tion which had carried on the war; when the navies 
 of the enemies were almost entire, and before the 
 victory of the 12th of April had revived the hopes 
 and the confidence of the nation. But as with a 
 considerable addition of debt they never afterwards 
 sunk so low, I think it is not unfair to state this as 
 the lowest point of depreciation to which the whole 
 debt incurred by the war had reduced the price of 
 stock. 
 
 On the other hand, the depreciation in the pre- 
 sent war has not stopped at 531, hut gradually made 
 progress in proportion to the increase of demand on 
 the public purse, till it had reached the price of 47^. 
 
 From this lowest point, the energy and the spi- 
 rit which have been displayed in the present moment, 
 evincing the resolution and resources of the coun- 
 try, seem happily to have raised it; and will, I 
 trust, by their continued and increasing display, sup-
 
 -63 
 
 port it to an happy and an honourable termination of 
 the war. 
 
 We must not however forget, that, during all 
 this depreciation, the Sinking Fund had been ra- 
 pidly increasing, and at the moment of the greatest 
 depression had actually reached the amount of 
 3,300,000/. And yet this sum, great as it is, could 
 not avail to prevent the progress of depreciation 
 from keeping pace with the addition of debt, in an 
 equal proportion at least to what has taken place in 
 former wars. 
 
 But it may be said, thaty with the additioiial bur- 
 den thrown upon the country by the American war^ it 
 would be unreasonable to expect that the Sinking Fund 
 should, even in its present increased state, have the 
 power of prevejiting a depreciation in the present wary 
 equal to what took place in the former ; since the 
 weight of the burden then incurred, added to those of 
 the present day, must have a tendency to break down 
 public confidence, which, if not supported by the efects 
 produced, and prospect offered, by the Sinking Fundy 
 •would have been annihilated, and the stocks have borne 
 no price at all. 
 
 The latter is an assertion which may certainly 
 always be made, and which it must be difficult ab- 
 solutely to disprove, without actually making the 
 experiment, by applying so much of the Sinking 
 Fund as may be necessary to supply the interest of 
 the loans to be made within the year. But we have 
 given many reasons to show the improbability, at
 
 least, of this supposed effect of the Sinking Fund, 
 and the impoHc\' of the present appropriation. 
 
 We shall content ourselves here with remarking: 
 shortly, that in our former wars the Sinking Fund 
 has heen universally applied to the services of the 
 year, without producing any such extraordinary 
 depreciation hy such diverted application ; that our 
 credit depends upon our ability to pay the taxes, 
 which are, pledged for the interest of our debt, or 
 which may be necessary for the services of the 
 year; that the possibility of our having a Sinking 
 Fund for the discharge of the capital, depends upon 
 our ability to bear additional taxes for that pur- 
 pose ; that if it is manifest that our burdens sit 
 lightly, and are borne with ease, our credit will be 
 good, and our funds will maintain their price, whe- 
 ther we establish or continue the Sinkins; Fund for 
 the purchase of debt, or not But if it should 
 appear, either that we cannot discharge the interest 
 of our debt and the current services of the year, or 
 that, by establishing the Sinking Fund for the re- 
 duction of the debt, we have undertaken more than 
 we can with ease perform, our credit will fall in 
 proportion to the extent of the discovery which is 
 made of our inability; that, although it might hap- 
 pen, after all the pains that have been taken to per- 
 suade the nation that its salvation depends upon the 
 invariable application of this fund to the purchase 
 of debt, that the first relinquishment of a plan so 
 long persisted in, and whose virtues have been so 
 piuch extolled, would produce a temporary depreci-
 
 65 
 
 ation of the price of stocks, yet this depreciation 
 would be infinitely more serious and permanent, and 
 probably subversive of all our interests and hopes, 
 if, by attempting more than we can perform, we 
 should discover our utter inability to supply the ne- 
 cessary means, and be obliged, by overstraining our 
 resources, to submit, from financial weakness, in the 
 moment of all our external success against the 
 enemy, to terms of ignominious, disadvantageous, 
 and insecure peace. 
 
 We proceed now to answer the other part of the 
 allegation, namely, that the addition of the burden 
 imposed in the American war must occasion a greater 
 depression upon the loans of the present war thati took 
 place in that war. 
 
 This argument would undoubtedly be just, if it 
 could be supposed that the nation had remained 
 stationary, in point of wealth and resources, from 
 the termination of the American to the commence- 
 ment of the present war. 
 
 But, in the first place, of the debt existing at 
 the termination of the American war, near ten mil- 
 lions and a half had been bought up at the begin- 
 ning of this war ; and the sum which liad been ac- 
 tually purchased amounted, on the 31st of January 
 1798, to 29,427,132/. and would now amount to 
 above thirty millions ; all of which is a diminution 
 of so much of the then existing, or of the since im 
 posed, burden : and, from whichever of these masses 
 it be taken, it must have an equal effect upon the 
 question of present depreciation, either as lessening
 
 66 
 
 the old burden or the new. Whichever, therefore, 
 we make the period of our comparison, it would be 
 fair to take the whole of the sum then bought up 
 as a reduction of so much of the old or of the new 
 burden; it matters not which. 
 
 Thirty millions are nearly equal to one fifth 
 part of the whole debt incurred in the American 
 war, according to our former statement, on the 
 supposition of the whole sum borrowed, being re- 
 duced to a three per cent, stock. 
 
 Besides these thirty millions bought up, above 
 1 1 8,000/. of yearly annuities have in the mean time 
 nearly expired ; and about 558,000/. are rapidly ap- 
 proaching to the term of their expiration, of which 
 we shall here take no further notice. 
 
 The whole of the money actually expended 
 during the Americen war amounted, as we have 
 seen, to less than ninety-three millions ; one fifth 
 part of which is equal to nearly fourteen millions 
 and two thirds : deducting this sum from the whole 
 sum expended, we have seventy-four millions and 
 one third as the remaining undischarged burden of 
 the American war. 
 
 No one who has at all considered the subject of 
 the increasing trade, manufactures, and general in- 
 dustry of this country ; no one who has looked into 
 the numerous and satisfactory documents which we 
 have upon this subject ; but least of all would those 
 who are the most disposed to controvert the general 
 argument which is here attempted, doubt but that 
 these seventy-four millions have been more than
 
 67 
 
 abundantly replaced to the country since that pe- 
 riod. 
 
 It would be sufficient to show, that this re- 
 placement has been effectuated previous to the mo- 
 ment in which we now write ; for it must be evi- 
 dent, that if they have been made good at this 
 hour, then are we now as well able to bear any ad- 
 dition of burden as if the American war had never 
 taken place. 
 
 If the nation has since increased its available 
 capital by a sum equal to the amount of what was 
 spent in that war, then are we at this moment, in 
 point of means, as if the American war had never 
 been. 
 
 Whoever looks into the Report of the House of 
 Lords, which we have before cited, must be abun- 
 dantly convinced of that fact. If it be true, as is 
 there stated on the best authority which we can 
 procure upon the subject, that the balance of our 
 external trade, and the profits of our East and West 
 Indian trade together, amounted annually, on an 
 average of the four years preceding 17.96, to ten 
 millions and a half; and from the account in the 
 Appendix of that Report, there is every reason to 
 suppose that the average of the years 1796 and 
 1797 is still higher*; then shall we have, in the 
 
 • By an Account, laid upon the table of the House of Com- 
 mons, it appears, that the imports into Great Britain, exclusive of 
 those from the East Indies, were, in 1707^ l6,998,'43l/. ; and that 
 the exports of British manufactures were 1 7,268, 80"l} of foreign 
 manufactures 1 1,946,234/. — making a total of exports 29,2] 7,041/. 
 
 F 2
 
 68 
 
 last six years alone, a siiperlucration from without 
 of srxty-three of these seventy-four millions, exclu- 
 sive of the profits of our fisheries : and no one who 
 has at all observed what has at the same time been 
 passing within, will, I think, be disposed to doubt, 
 but that the small remaining part of the seventy- 
 four millions has been added to our wealth, by im- 
 provements which have been taking place in this 
 very period of war in Great Britain itself. 
 
 But when we look back to the period of the 
 termination of the American war, and trace the 
 progress of our industry from that period to the com- 
 mencement of this war; when we see that even in 
 that period our annual imports had increased from 
 thirteen to nineteen millions, our exports from fif- 
 teen to twenty-four millions, estimated even accord- 
 ing to the old and long-established rates of our 
 Custom-house ; when we reflect on all the other in- 
 dications of increasing wealth and prosperity which 
 surround us on every side, and which have so 
 abundantly multiplied and extended themselves du- 
 ring the same period, we cannot, I think, hesitate in 
 pronouncing, that the whole of the money expended 
 during the American war, the whole of the ninety- 
 three millions, was more than replaced to the coun- 
 try at the commencement of this war, and that the 
 rise of stocks, which took place from the moment 
 that the peace price was finally settled to the period 
 of their greatest elevation, was the genuine and so- 
 lid effect of an increased capital, and not the arti- 
 ficial consequence of a plan of redemption.
 
 09 
 
 We are indeed not to suppose that the whole of 
 tlie money actually expended in any war is an 
 absolute loss to the country. It must be obvious, 
 that the only part which can be considered as abso^ 
 lute and unqualified loss, is that which is paid to 
 the foreigner for the materials of war. That which 
 is paid as profit to the British merchant is merely a 
 transfer from the public to an individual; that 
 which is paid for unproductive labour, as the wages 
 of soldiers and seamen, is probably a diversion of 
 so much of the capital of the nation from some pro- 
 fitable employment : but the money itself is not 
 lost to the nation ; it is the price of so much labour 
 thrown away, which would otherwise perhaps have 
 been employed in increasing the national stock ; it 
 is in so much a check to the progress of improve- 
 ment. But, notwithstanding this unprofitable em- 
 ployment of so much of the national labour and 
 capital, the productive industry of the country may 
 still have been sufficient to preserve a balance in its 
 favour, and even under these circumstances to have 
 made some addition to the national wealth. 
 
 In like manner, the supplies of arms, clothing, 
 and provision, which arc furnished to our troops 
 and to our sailors from the stores of our own in- 
 dustry, are a waste of so much of our wealth : but 
 so much only of this waste of materials and of la- 
 bour can be carried to the head of positive loss 
 within each year of war, as, combined with the sum 
 Arising from the other branches of our war cxpen- 
 
 F 3
 
 70 
 
 diture, shall exceed the actual gains of industry 
 within the year. 
 
 There can therefore be no doubt but that a very 
 considerable sum must be deducted from the appa- 
 rent expenditure of the war, if we wish to show 
 that which is our present consideration, namely, the 
 amount of that sum by which the neat wealth of 
 the whole of the individuals composing the nation 
 is collectively less than it was at the commence- 
 ment of the war, in which such an apparent ex- 
 penditure has been made. 
 
 What the proportion of that deduction should 
 be, it would be very difficult to show or to con- 
 jecture : but I should think that it was not hazard- 
 ing much to say, that of the ninety-three mil- 
 lions expended during the war, not above one half 
 was a positive loss to the nation ; or, in other 
 words, that, at the conclusion of the war, the ca- 
 pital of the nation was not diminished by a capital 
 sum greater than forty-seven millions. 
 
 If there be good grounds for this mode of rea- 
 soning, who is there that can doubt whether the 
 whole of these forty-seven millions had been re- 
 placed by the activity of the country previous to the 
 breaking out of the present war ? 
 
 But we have already seen, that even if it were 
 true that the country had remained stationary du- 
 ring all the period which preceded the war, yet that 
 the events of war have thrown into our hands such 
 an increase of commerce, that sixty-three millions 
 out of the seventy-four have been replaced in the
 
 71 
 
 last six years, independent of the profits of our 
 fisheries, and independent of any interior improve- 
 ments. 
 
 That our capital is in fact greater now than it 
 was during the American war, may, I think, be in- 
 ferred from a circumstance of great notoriety, 
 namely, that during that war the depreciation of 
 value on all property was general, that the price of 
 land fell in the same proportion with the stock; but 
 that in the present war the depreciation has been in 
 a much greater .proportion upon stock than upon 
 land ; while land has kept nearly its former value, 
 the depression of stock is beyond the example of 
 former times. This must arise from some circum- 
 stance particularly affecting this species of pro- 
 perty; and that circumstance I conceive to be the 
 unnecessary load of taxes laid on to discharge, at 
 a disadvantage, the capital of the debt, rendering 
 it difficult to devise or collect the taxes which are 
 requisite to defray the interest of necessary loans. 
 
 But the fair and plain result of the whole is, 
 that there is at this moment a greater capital to give 
 value to land and stock, taken together, than ap- 
 peared during the American war. 
 
 It is not so difficult to institute some inquiry, 
 and to form some calculation and comparison, upon 
 this subject, as it may at first sight appear. 
 
 The land-tax, at four shillings in the pound, ac- 
 cording to the old valuation, produces two millions 
 per annum. If those four shillings were a real fifth 
 of the rent, then would the rental of the kingdom 
 
 F 4
 
 7S 
 
 be equal t6 teti millions sterling. There are few 
 places in the kingdom that have remained so sta- 
 tionary in value since the first imposition of that 
 tax, as that these four shillings now amount to 
 above one tenth of the annual value. In the greater 
 part of the northern counties, in some parishes in 
 the metropolis, and in the whole of Scotland, it is 
 supposed not to be above one fortieth, and in some 
 of these it does not even reach that proportion. 
 So that I conceive the annual rental of the king- 
 dom may safely be put at forty millions instead of 
 ten. If we value these forty millions at the price 
 at which land sold in the latter part of the Ameri- 
 can war, namely, at twenty-five years' purchase, the 
 total value of the land at that moment would have 
 amounted to 1,000,000,000/. 
 
 The national debt, at the conclusion of that 
 war, amounted to upwards of two hundred and 
 thirty-seven millions; consisting of one hundred and 
 eighty-two millions of three per cents, 3,660,000/. 
 of three and a half per cents, thirty-two millions 
 of four per cents, 17,800,000/. of five per cents, 
 and about 1,300,000/. of annuities for terms or 
 lives*. 
 
 If we value the three per cents at fifty-four, 
 which is rather higher than their lowest price during 
 the war, and value the other funds at the relative 
 prices which they bore to the three per cents, when 
 they were at 54, the total value in money would 
 have been about 156,818,372/. which added to the 
 
 • Appendix F.
 
 73 
 
 value of the land would amount in 4-ound numbers 
 to about 1 157 millions. 
 
 Calculating, in like manner, the value of the 
 land of this country at the present day according to 
 its average price, which cannot (I believe from any 
 information I have been able to collect) be stated 
 lower than twenty-eight years' purchase, the amount 
 would be 1 120 millions *. 
 
 Stating the national debt as it stood on the 11th 
 of May 1797, at 397,020,106/. consisting of 
 303,637,750/. of 3 per cents, forty-five millions 
 of 4 per cents, forty-eight millions of 5 per cents, 
 and about 1,600,000/. of annuities for terms or lives, 
 and valuing the 3 per cents at their present price 
 of 50, and the other funds at their respective re- 
 lative prices, we shall have a total of two hun- 
 dred and thirty millions, which added to the value 
 of the land, make together a sum of one thousand 
 three hundred and fifty millions, and may be consi- 
 dered as the amount of the present capital of the 
 nation, which gives to the lands and to the stocks 
 their present value. There are certainly many other 
 great articles which go to make up the sum of the 
 national wealth, all of which would, upon a minute 
 investigation, be found to have increased consider- 
 ably in the latter of these periods, but it is sulhcient 
 for our purpose to have compared these two prin- 
 cipal component parts of the national wealth, and 
 
 * It has since appeared (if I mistake not) from the property- 
 tax assessments, that the rental of the kingdom of Great Britain 
 amounted to 52 millions, which would make the value of the laod, 
 at twenty-eight years' purchase, 1456 millions
 
 74 
 
 the comparison (if it be justly made) would show 
 us an increase of capital in those two branches 
 alone, or rather indicated by the present value of 
 these two branches, of one hundred and ninety-three 
 millions sterling, since the American war, being at 
 the rate of near thirteen millions a year for a period 
 of fifteen years. 
 
 When we consider what an increase of circula- 
 tion the events and circumstances of this very war 
 have occasioned, and what an increase of trade 
 they have thrown into our hands, I am by no means 
 disposed to think that this sum exceeds what may be 
 reasonably supposed to have been the superlucration 
 of the countr}'^ during this period. 
 
 This result is at once a confirmation of the 
 former supposition, arising from our imports and 
 exports, and is itself confirmed and strengthened by 
 that very view of our trade. 
 
 The general conclusion is, that although our 
 national wealth be improved, since the termination 
 of the American war, by a sum more than double 
 the amount of the ninety-three millions expended 
 in that war, yet have the stocks, which it has been 
 our object to support by the plan of redemption, 
 sunk in the present conflict to a lower. price with 
 relation to land, to a lower price when compared with 
 the money borrowed and ejipended, to a lower price 
 when compared with the existing capital of the 
 nation, so far as we are enabled to judge of it by 
 any criterion within our reach, than they ever did 
 during the American war.
 
 75 
 
 With the view of inculpating the Minister for 
 the non-performance of the engagements into which 
 the Emperor had entered, for furnishing an annual 
 sum to buy up annually, after the example of our 
 Sinking Fund, a portion of the Imperial stock, an 
 argument was attempted to be raised in the House 
 of Commons, upon the relative price in the market 
 of the Imperial 3 per cents, being at that time 
 about 3 or 4 per cent, lower than our 3 per cents. 
 
 This difference of price, it was contended, was 
 owing to the non-performance of that agreement. 
 This argument, if it had been true, might be sup- 
 posed to have been urged with some weight against 
 the author of the present appropriation of the Sink- 
 ing Fund. But it was not strictly founded in fact. 
 
 Every one conversant with the stock market 
 knows, that the different species of our own stock 
 bear proportionally a higher or a lower price in the 
 market, according as they are considered as more or 
 less marketable ; and that, cceteris paribus, they are 
 more or less marketable, according to the quantity 
 there is of each ; and that in fact the most market- 
 able of all is that of which there is the greatest 
 quantity, namel}', the 3 per cent, consols. It is that 
 fund in which all the operations of the Stock Ex- 
 change are performed, and it is these operations 
 which tend materially to raise their relative jjrice. 
 
 But a stock, which, from its small quantity, may 
 be considered as a sleeping stock, in which little or 
 nothing is done, will be proportionably at a much 
 lower price, though it gives the same interest.
 
 76 
 
 Tluis, for instance, tlie million fund of 1726, though 
 giving 3 per cent, interest, has always been one, two, 
 or three per cent, lower than the three per cent, 
 consols. 
 
 There are other reasons which contribute to keep 
 down the proportionate price of other species of 
 stock not necessary to be detailed here. 
 
 So well apprised of this truth are all persons 
 dealing in stock, that the Austrian loan was actually 
 agreed for (if I am rightly informed) at a price cor- 
 responding to the difference which- it has since 
 borne in the market (namely, 3 or 4 per cent, below 
 the consols), and this notwithstanding it is guaran- 
 teed by this country. 
 
 It might, indeed, have been expected, that this 
 stock would have suffered a greater depreciation 
 from the failure of payment of the dividends at the 
 stipulated time: but it has, in fact, kept its relative 
 value, notwithstanding this failure. And if it 
 could be at all considered as a fund reposing upon 
 a separate basis from our own, it would furnish an 
 argument against the supposed beneficial effects of 
 the Sinking Fund : since, notwithstanding the non- 
 performance of that purchase, this stock keeps its 
 relative price and value in the market*. 
 
 It is, I believe, fairer to consider this stock as 
 bottomed upon the same foundation with our own ; 
 and that as a purchase in the 3 per cents would ex- 
 tend whatever effect it has in raising stock propor- 
 
 * Since this was written the Comraissioners have made a pur» 
 chase in this stock.
 
 77 
 
 tionably over every other species of British stock, so 
 would its effect be felt in the price of this stock, 
 which ultimately reposes on British security. 
 
 Disdaining, therefore, to make use of an ar- 
 gument whicli might be furnished to us by 
 others, but which we do not conscientiously think 
 we have a right to employ, we cannot help no- 
 ticing a circumstance belonging to the price of 
 funds of another country transferable in this, 
 which should tend to show that the purchase of 
 our stock has not, in fact, been the true cause of 
 the ultimate rise of its value. The price of the 
 American funds has, if we are correctly inform- 
 ed, always borne, till the late extraordinary depre- 
 ciation of our funds, nearly the same proportion 
 to them in the market ; rising, as our stocks rose, 
 and falling as they fell in similar gradations. The 
 American funds have no other relation to this coun- 
 try, or to its funds, or its capital, than the common 
 relation which all marketable commodities have to 
 each other. If the rise in the price of our stock 
 had been the effect of the purchases made in it 
 alone, and not the eff'ect of the general increase of 
 capital of the country, it would not have afi^ected 
 the price of any external conmiodity, like the Ame- 
 rican stock : but that stock rose in proportion as 
 our own rose, because the increase of the same ca- 
 pital gave an increasing value to each. 
 
 During the course of the last i'ew months, how- 
 ever, I am told that circumstances are somewhat 
 changed, and that the American funds, like our own
 
 land, liave kept tlieir price, while the depreciation 
 of the British funds has continued, notwithstand- 
 ing the increased action of the Sinking Fund. Pro- 
 bably the same cause which has kept up the price 
 of our land has given also the relative preference to 
 the American funds; an opinion more generally dif- 
 fused of the impracticability of raising by taxes, 
 the money necessary to defray the accruing burdens; 
 some of which, and those to a great amount, we 
 have gratuitously and unnecessarily, and I think 
 prejudicially, imposed upon ourselves ; and a senti- 
 ment of some difficulty in bearing even the existing 
 necessary taxes, coupled as they are with those 
 which are so imprudently superadded. 
 
 For it cannot be too often repeated, our great 
 difficulty lies here in the want of ability to bear ad- 
 ditional taxes ; and if the unnecessary Sinking Fund, 
 now amounting to four millions, were applied to dis- 
 charge the interest of future necessary loans, a sen- 
 timent of comparative ease and facility would per- 
 vade all our operations ; our apprehensions would be 
 exchanged for confidence, our weakness and lan- 
 guor into strength, animation, and despatch. 
 
 I know that it may be said, that the perilous na- 
 ture of the present contest, and the successes of the 
 French, are such as to have caused an miusual depres- 
 sion of the funds. 
 
 If we compare in this respect the two periods 
 between which we before drew a comparison as to 
 the relative price of stocks, namely, the year 1782, 
 and the commencement of the year 1797, we shall 
 
 2
 
 79 
 
 find, I believe, that our relative situation was upon 
 the whole more favourable in the latter period than 
 the former; particularly. as to all circumstances of 
 trade, commerce, and foreign possessions, and to all 
 those circumstances which increase and vivify cir- 
 culation, and should therefore tend to raise the 
 stocks. 
 
 In 1782, we were contending alone against 
 France, Spain, Holland, and America, in open hos- 
 tility. We had Prussia, Russia, Sweden, Denmark, 
 and I believe Naples, leagued together against us 
 by the treaty of the armed neutrality : we had lost 
 the greater part of our West Indian islands except 
 Jamaica, and we had acquired the possession of the 
 French unproductive island of St. Lucia. 
 
 We had taken most of the French, and a few of 
 the Dutch possessions in the East Indies, but we 
 had lost Trincomale. The navies of the enemy were 
 in a great measur€ entire: we had not a single 
 ally or friend. 
 
 In January 1797, the Emperor, our ally, still 
 gave full employment to the whole land force of 
 France, and had been eminently successful against 
 it in Germany, though he had suffered great re- 
 verses on the side of Italy : but we had taken all 
 the Dutch and French settlements in the East In- 
 dies, except Batavia and the island* of Mauritius 
 and Bourbon. 
 
 We had moreover complete possession of Marti- 
 nico, St. Lucia, Tobago, Trinidada, with the Dutch 
 colonies of Dcmerara, Essequibo, and Berbice; and 
 the produce of all these foreign possessions was
 
 80 
 
 circulating through our markets, increasing our na- 
 vigation, and augmenting the profits of our com- 
 merce. The island of St. Domingo was lost to 
 France; her navy in great measure annihilated: 
 those of Spain and Holland effectually blocked up 
 in their ports by our triumphant fleets. 
 
 In short, so far as a comparison can be drawn 
 between the political and the commercial, and there- 
 fore financial circumstances of the two periods, it 
 appears to be abundantly in favour of the latter pe- 
 riod; and 3'et, notwithstanding those advantages, 
 notwithstanding the powers and extent of the Sink- 
 ing Fund invariably applied to the redemption of 
 debt, the stocks had experienced a more consider- 
 able depreciation than at any period during the 
 former war. 
 
 True it is, that our enemy has acquired a pre- 
 ponderance upon the continent of Europe, which 
 cannot fail of producing its effect upon our funds, 
 as it does upon our political security; and were it 
 not indeed for this circumstance, there is every rea- 
 son why the price of our stocks in the present day 
 should be as high as they were during the first 
 year of the war. The acquisitions which we have 
 made in territory and trade appear to be fully equal 
 to the expenditure which we have incurred in mo- 
 ney : these, however, are in fact matters, between 
 Avhich it is difficult to institute any close compari- 
 son ; and all that we think it necessary to contend 
 for is, that the funds are not comparatively higher in 
 the present day, than they wew in the former war;
 
 81 
 
 and if that cannot be shown, then have we reason to 
 doubt the advantage of a plan, whose merit was to 
 consist in keeping up the price of the stocks be- 
 yond what could be obtained from the ordinary 
 modes of finance; 
 
 We are, however, ready to go still further, and to 
 hazard an opinion, that if the effect of this purchase 
 of stock could be (as it is supposed) materially to 
 alter the price of stock, by raising and maintaining 
 it above that natural level which the M^ealth and 
 resources of the country would produce and justify, 
 the artificial rise of stock, and consequent depre- 
 ciation of the value of money, wculd be prejudi- 
 cial, as presenting a false idea of solidity, grounded 
 upon an insecure basis, and disturbing the natural 
 order and proportion of things. 
 
 The interest given for money vested in stocks, 
 should always bear its true proportion to that given 
 by other modes of investment, according to the 
 solidity of the security and the convenience belong- 
 ing to the form and place of deposit. 
 
 This proportion it would always maintain, if not 
 tampered with : and so long as there is good faith 
 in the nation, and ability to fulfil existing engage- 
 ments, the public stocks will always be higher in 
 price, and the interest produced by their purchase 
 proportionably lower, than that given by any other 
 species of security, except in the actual moment of 
 the pressure of public exigency. 
 
 To give them a false value by directing to their 
 purchase a greater quantity of money than would
 
 82 
 
 naturally find its way thither, is to produce a de- 
 ception, of which the baneful effects will at some 
 time or other be felt. 
 
 Had we been contented to have paid only the 
 interest of the debt which we have incurred, and 
 taken off taxes to the amount of any surplus which 
 the increasing wealth and energy of the country had 
 from time to time furnished, the relief would have 
 been immediately felt through the whole commu- 
 nity by the reduction of the price of those articles, 
 which the imposition of such taxes had increased : 
 while the sums thrown back into circulation, would 
 at the same moment have lowered the price of inte- 
 rest, raised the price of stocks, and ultimately vivi- 
 fied all the channels of industry, and, by extending 
 the sources of reproduction, rendered us more able to 
 bear fresh burdens by the acquisition of the new 
 capitals, to which it would have given birth. 
 
 Thus every tax taken off would be doubly the 
 means of rendering all the remaining taxes more 
 productive : for, as these would on the average be a 
 certain proportion of the means of every individual, 
 according as those means were increased, would the 
 produce of the remaining taxes also increase. If 
 these should on the whole amount to a tenth part 
 of every man's income, then would any given sum 
 thrown back into circulation by the suppression 
 of taxes, produce again to the public the tenth of 
 the amount from the remaining taxes, minus the 
 proportion of tiie tax taken off, independent of such
 
 83 
 
 increase as the public would derive from the in- 
 creased powers of reproduction. 
 
 Those who, in 1792, ceased to pay the taxes on 
 candles, female servants, carts, and wagons, had 
 in fact 200,000/. more to spend ; and if the amount 
 of the then remaining taxes was equal to a tenth of 
 their incomes, they in spending it must still have 
 furnished from that source 20,000/. as a new surplus 
 to the public revenue. 
 
 Still another advantage would be derived from 
 the abolition of taxes to the amount of any surplus, 
 in preference to the unnecessary augmentation of 
 that surplus by the imposition of additional taxes. 
 The nature, the amount, and the regulations, neces- 
 sary for re-establishing the taxes which had been 
 taken off, would all be known, whenever a different 
 situation of things should require their re-imposi- 
 tion. Accustomed burdens appear the lightest: 
 and the revival of all taxes, after a temporary 
 relief, would be more cheerfully acquiesced in, 
 than the imposition of new in addition to the ac- 
 cumulated load and continued pressure of preceding 
 years. 
 
 We should always bear this truth in mind, that 
 the onlif burden felt by the people is the interest of the 
 debt, which it is obliged to pay in the form of taxes ; 
 that it is comparatiTely immatei^ial what the nomiyial 
 amount of the capital of the debt is, pro^vided the inte- 
 rest be not increased, nor any onerous engagements of 
 reimbursement made. 
 
 6 2
 
 84 
 
 If a man who has acquired some reputation in 
 the arithmetical world had not actually doubted, it 
 might have been supposed impossible to have found 
 a man * so gravely wild, as to have doubted, whe- 
 ther the reduction of interest which took place in 
 1717 and 1727, but particularly by that famous ope- 
 ration of Mr. Pelham in 1750, amounting, in the 
 aggregate, to near 1,300,000/, of annual saving, had 
 been advantageous to the public : but if interest be 
 the burden, whatever shall leduce that interest, with- 
 out substituting new and more onerous engagements, 
 must in fact reduce the burdens of the people ; and 
 it will do it equally with a discharge of capital pro- 
 portioned to such a reduction of interest. 
 
 If 32 millions of four per cents could at this mo- 
 ment be reduced exactly to three, such reduction 
 would be equivalent to a discharge of eight millions 
 of debt, though the nominal capital should continue 
 to be the same. 
 
 The natural and simple means of reducing the 
 interest of money, so far as it is affected by taxes, 
 will be by seizing such opportunities as shall offer, 
 of taking off taxes to the amount of any surplus 
 which may exist in the receipt above the expendi- 
 ture, and by avoiding the imposition of such taxes 
 as are unnecessary to defray the annual expenses of 
 the public. 
 
 But it may be said, /*, then^ this debt to go on ac- 
 
 * Price on Public Credit, p. 188.
 
 H5 
 
 cumulatitig for ever ? Is no attempt to he made for 
 the reduction of the capital? Certainly not so: but 
 it may be fairly doubted whether there can be an 
 advantage in any attempt to reduce the capital, un- 
 less either its price in the market should be below 
 what it was borrowed at, or unless it should be 
 above par. It will hardly be below the price at 
 which it was borrowed, but in the case of a greater 
 want of money : and we have already seen that 
 when that want exists is not the time for paying off 
 old debts, since a g-reater debt is accumulated bv 
 the new than is got rid of by a discharge of the 
 old. 
 
 There will remain, therefore, alone the case of 
 the stocks being above par, in which the capital 
 may be reduced with advantage, if the rise of any 
 particular stock should be such as to enable the 
 public to borrow at a lower rate of interest than is 
 given for the stock which may have so risen. 
 
 But as the interest is the only burden, if there 
 were not some convenience in matter of account, 
 as well in the transactions of individuals with each 
 other, as between individuals and the public, to 
 preserve the remembrance of the capital for which 
 any specific sum in the shape of interest is given, 
 it should seem that the capital might be wholly left 
 out of the question. 
 
 We should, perhaps, for public purposes, intro- 
 duce a juster notion of our situation, if, instead of 
 describing our debt as amounting to 3^)4 millions, 
 we should say that the annual charge upon the na- 
 
 G 3
 
 8(> 
 
 tional wealth amounted to about 15 millions : of 
 which near a million and a half is in annuities for 
 lives or terms of years, and the remainder in perpe- 
 tuity. 
 
 These 15 millions constitute our incumbrance, 
 and it is this load which we should endeavour to 
 diminish. The only good eifect which the purchase 
 of stock could have produced by raising the price 
 (supposing that such were its ultimate effect), would 
 have been to have given opportunities of lessening 
 the incumbrance, by lowering the rate and amount 
 of this interest : in every other view all the opera- 
 tions of purchase are in themselves disadvantageous, 
 unless we can suppose that there can exist in the 
 public great means of purchasing, the stocks re- 
 maining at a very low price ; or that borrowing 
 more than we actually want, can contribute to keep 
 up the price of our stock and of our credit, pro- 
 vided thg excess of what we borrow beyond our 
 wants be applied to the discharge of our debt. 
 
 But how, then, is the relief from our burdens to 
 be obtained? By a reduction^ of the interest in 
 times of peace. How is that to be accomplished ? 
 By the increasing prosperity of the country. If the 
 resources of tlie nation be in time of war equal to 
 the discharge of its ordinary expenses, in addition 
 to the interest of its augmented debt, they will, in 
 time of peace, naturally raise the revenue above the 
 amount of that interest and of those expenses. If 
 the revenue should so exceed, the abolition of taxes 
 to the amount of that excess, will not only render
 
 87 
 
 the remaining taxes more productive, but will at 
 the same time raise the funds. 
 
 Whenever those funds which are at the highest 
 rate of interest shall be above par, then will be the 
 moment to reduce the rate of interest, either by ac- 
 tually borrowing, or by showing the power of bor- 
 rowing at a lower interest, and thereby inducing 
 the holders of such stock to accept of a lower rate. 
 If even no species of stock should rise above par, 
 opportunities may still be taken of diminishing the 
 rate of interest on stocks which are increasing in 
 value by the amount of i, |, |, or any other frac-^ 
 tioual part of unit per cent, when an integer cannot 
 be obtained. 
 
 Possibly, though not probably, opportunities 
 may be afforded of converting with advantage 
 stocks of a low denomination in respect of interest, 
 into stocks of a higher denomination, with the view 
 to a subsequent diminution of interest on a conti- 
 nuance of the same prosperous circumstances. 
 
 Still the reduction of the nominal capital by 
 conversion, is in this case an operation subservient 
 to the diminution of interest, and is in no degree 
 important, but as it may more certainly lead to 
 such diminution. It may even become a matter of 
 doubt, whether, under any circumstances, it would 
 be desirable to discharge the whole of the national 
 debt. There is so much of convenience in the de- 
 posit and transfer of money upon national security, 
 that it would perhaps be on the whole better to re- 
 tain undischarged a portion of the national debt ^t 
 
 G 4
 
 88 
 
 a low interest, rather than force the money of the 
 nation into less secure funds in other countries, for 
 want of a safe deposit in this. The interest of the 
 diminished debt vv^ould remain in the mean time 
 like an ancient quit-rent upon an estate, bearing no 
 proportion to the improved value of tlie domain ; 
 not felt, and hardly known to the owner who pays 
 it to his neighbour. 
 
 It is a great recommendation of the mode of 
 operating by taking off taxes to the amount of any 
 given surplus revenue, that you are sure of deriving 
 an advantage commensurate with the improvement 
 of the cn^cumstances of the country : whereas, in 
 the conversions of stock before alluded to, the mo- 
 ney-lender, if money must still be borrowed for the 
 purpose of converting stock of a low denomination 
 into stock of a higher denomination, will still ex- 
 pect a profit on his bargain ; he will still expect to 
 be paid for the accommodation which he gives to 
 the public; or the stockholder will expect a douceur 
 for converting his stock into a form more conducive 
 to the public advantage, 
 
 It may upon the whole, indeed, be fairly doubted 
 whether any mode of operating is really eligible, 
 when compared vvith that of abolition of taxes and 
 reduction of interest, unless any given species of 
 stock shall have risen above par. 
 
 Great lamentations have not unfrequently been 
 made by political writers, and great clamour raised 
 against those ministers who, in times of necessity.
 
 have tliought it more advisable to avail themselves 
 of any part of the unappropriated Sinking Fund, 
 than to make new loans to the like amount. They 
 have done it for the best of reasons; to avoid laying 
 unnecessary new burdens upon the subject ; if they 
 had not made use of this resource, other taxes must 
 have been imposed to defray the interest of the new 
 debt, the compound interest of which taxes would 
 liave been at least equal to the compound interest 
 supposed to be derived from the operation of the 
 Sinking Fund : they must besides have paid a bo7iu^ 
 to the money-lender, greater or less in proportion 
 to the price of stocks, the facility of borrowing, 
 and the state of public credit. 
 
 But the object which has been chiefly attended 
 to, in making the loans which compose the greater 
 part of our national debt, has been, how to obtain 
 the money at the lowest price in point of interest, 
 and with no view towards reimbursement. 
 
 This object it is which has induced ministers to 
 prefer the 3 per cent, consols for the great bulk of 
 their loans ; because this being the more market- 
 able stock, is always comparatively higher than any 
 other species of stock. If reimbursement had been 
 always the object, it should seem that it would have 
 been much more prudent never to have created a 
 greater capital in stock than had been received by 
 the public in cash, and to have |)aid an interest, 
 either of perpetual annuity, or for terms, or mixed 
 of both, according to the price of the day, and the
 
 90 
 
 agreement which could have been made with the 
 money-lender. The return of peace would have 
 enabled the public to ease itself gradually of those 
 burdens, in point of interest, to which the necessi- 
 ties of war had obliged it to submit, without being 
 exposed to pay the enormous premiums which the 
 rise of stocks during peace creates to the money- 
 lender or stockholder, who is reimbursed by sale. 
 
 It is, perhaps, inexpedient to enact any general 
 laws upon a subject which puts on so many varying 
 aspects ; but if any general law could be advisable, 
 and it is determined that we are to go on with the 
 plan for repurchasing the national debt, it would, I 
 think, be necessary to prevent by law the ruin- 
 ous mode of making loans which has been hitherto 
 pursued — ruinous, at least, so far as relates to the 
 means of reducing the capital of the debt. 
 
 A law which should enact, that, in making a loan, 
 the nominal debt incurred should in no case be 
 greater than the sum actually received by the pub- 
 lic, would, I think, be a beneficial measure. In other 
 words, that the capital added to the debt should 
 not be greater than the sum of which the public 
 should have the benefit, at whatever rate of interest 
 it might be necessary to borrow: for it is a mere 
 delusion, if reimbursement by repurchase of stock 
 is to make part of our plan, to suppose that the 
 money will eventually be borrowed at a lower rate, 
 or for a lower premium, though borrowed on a fa* 
 vourite stock, if at the same tune a capital is added
 
 91 
 
 to the debt of nearly double the amount of the sum 
 received. 
 
 On tlie other hand, I conceive that it may be 
 found extremely inconvenient, if not perilous, in 
 time of war, to be under the necessity of raising 
 more on the public, than the mere interest of the 
 money borrowed ; and that on the cheapest terms 
 on which it can be negotiated, without any regard 
 to the species of stock created at the moment. 
 
 The whole success of a war may depend upon 
 the ability to carry it on for another year, and that 
 may be rendered impracticable by the burdens pre- 
 viously and unnecessarily imposed. A provision 
 which should tend in any degree to cramp the ope- 
 rations of war, when once the country is unfortu- 
 nately engaged in it, may become dangerous in the 
 extreme to its security. If the plan of redemption 
 had been established and invariably adhered to from 
 the first creation of the stocks, we should, it is true, 
 at this hour have redeemed no inconsiderable por- 
 tion of the debts with which we are n6w burdened: 
 but the redemption would have been obtained by 
 bavins: continued considerable additional burdens 
 on the subject, down to this time, from which the 
 nation has been free. And who can tell whether 
 the continuation of those very burdens might not 
 have palsied the vigour which was displayed, blasted 
 the glories which were reaped, and wholly prevented 
 the brilliant and substantial successes which were 
 obtained in the war which ended in 1763; or ex- 
 posed this country to fall a sacrifice to the united
 
 - 92 
 
 powers of France, Spain, Holland, and America, in 
 the war which ended in 1783? 
 
 We should have got rid of a debt of 74,571,000/. 
 burdened with an interest of 2,396,717/. It is not 
 so easy to calculate what it might have cost us to 
 make that redemption, and wholly impossible to re- 
 duce to numbers the untold and incalculable mil- 
 lions which the money left in the hands of the 
 public has in the mean time produced: and of what 
 avail would all our calculations, all our redemptions 
 have been, if one service being thereby starved, 
 one vigorous exertion checked, we had fallen a prey 
 to our eternal rival, by too great an attention to a 
 speculative question of finance? 
 
 It would have been utterly impossible for this 
 country to have withstood the power of Louis the 
 XlVth, XVth, and XVIth, if the expedient of 
 funding had not been devised ; it will be utterly 
 impossible for it to resist the more colossal power 
 of the tyrants who have risen upon the ruins of 
 the ancient monarchy, but through the aid of the 
 same funding system. It was the happy expedient 
 of the greatest hero and the wisest politician of this 
 century, which he for a short time illumined (of 
 the immortal William), to enable Europe to with- 
 stand the ambitious attacks of a despotic monarchy. 
 It must be the resource of the present moment 
 against the more violent, more rancorous, more insa- 
 tiable ambition of republican — no, I cannot dig- 
 nify it with that name— of revolutionary anarchy.
 
 9$ 
 
 Let us, however, examine a little more closely, 
 what would have been our actual situation had this 
 plan of reimbursement been adopted and invariably 
 adhered to, from the commencement of the debt to 
 this hour. 
 
 If we take as the basis of our calculation, that 
 one per cent, on the capital borrowed, will pa}' off 
 the sum borrowed in forty-five years, it will follow, 
 that at the commencement of the present war at the 
 beginning of the year 1793, the debts incurred in 
 the war which terminated in 174S, by the peace of 
 Aix la Chapel le, would have been paid off, and that 
 the interest thereof, amounting to 2,396,717/. would 
 have been deducted from the interest which was 
 payable on the national debt, in 1793, being 
 
 ^9,205,588 
 2,396,717 
 
 Leaving therefore 6,808,871 
 
 To this sum should be added the inte-1 
 
 rest of money actually paid off, > 400,000 
 
 between 1762 and 177^ J 
 
 Together 7,208,878 
 And also the interest accruing from al 
 
 reduction of capital, to the amount 
 
 of 3,721,472/. which took place 
 
 between 1748 and 1755, together^ 664,287 
 
 with the saving arising from 
 
 Mr. Pelham's operation in 1750, 
 
 amounting in tlie whole to
 
 94 
 
 And moreover, one per cent, on the^ 
 capital of 187,380,9967. and on the 
 estimated value at the end of forty- 
 five years of 778,7167. of long an- J- ^1,948,339 
 nuities created in the German and 
 American wars, amounting together 
 to an annual sum of 
 
 The final result would have been, thati 
 
 we should have paid, in 1793, an- J- 9,857,497 
 nually , j 
 
 Instead of 
 
 And the million 
 
 Being a difference of*. 
 
 9,205,588 
 1,000,000 
 
 10,205,588 
 9,857,497 
 
 348,091 
 
 And we should actually have extinguished the 
 whole of the debt incurred before 1748, being about 
 64 millions more than was actually extinguished in 
 1793. Considerable progress would at the same 
 time have been made in extinguishing the debt in- 
 curred between 1755 and 1763. 
 
 Had this plan been first thought of at the com- 
 mencement of the war of 1 756, and pursued to this 
 moment without remission, we should at this hour 
 have been paying annually two millions more than 
 
 "* Appendix G.
 
 95 
 
 we now pay for the interest and discharge of debt *. 
 Whether it would have been possible for the country 
 at this moment to have borne that accumulation of 
 taxes, in addition to those which it must still incur, 
 I will not venture to pronounce : but it will be readily 
 allowed me, that the additional pressure would have 
 been inconvenient. It will, I know, be here triumph- 
 antly said : " True it is, that in the first of these 
 cases which you have stated, the sum which we 
 should at this moment annually pay, would not be 
 very considerably less than what is actually paid ; 
 and that in the last case we might have had a con- 
 siderable additional sum to pay beyond what we 
 now pay ; but what would have been the situation 
 of our funds ? They in the mean time would have 
 risen to such a height by the effect of the reim- 
 bursement, that we should have borrowed at a much 
 lower rate of interest, and our annual incumbrances 
 would by those means have been doubly lessened. 
 A smaller interest would have been incurred for our 
 loans, and a smaller capital being created, the one 
 per cent, thereon would not have amounted to so 
 large a sum. Considerable deductions must, there- 
 fore, be made from your statement in the last case, 
 and the proportion of those deductions would be 
 annually increasing as the operations of the Sinking 
 Fund became more powerful, and as we approached 
 nearer to the year 1808, when, according to tb.ese 
 calculations, the wholeof the debt incurred previous 
 to 1763 would be paid off. 
 
 * Appendix H.
 
 96 
 
 The degree of weight which will be given to 
 this argument must depend upon the degree ot" suc- 
 cess wliich we may liave had in convincing our 
 reader, tliat tl)c accumulations of the nation derived 
 from the use of this very money, which must have 
 been taken out of their hands, to apply to the pur- 
 poses of redemption, will, in the mean time, have 
 produced much greater sums than could have been 
 paid off by purchase : that the nation is in fact 
 doubly and trebly richer now, and, therefore, better 
 able to bear any additional burdens, than it would 
 have been, had this system been invariably pursued ; 
 that its credit, which depends upon its wealth, its 
 strength, and its punctuality, must therefore be 
 greater, and its funds consequently higher. 
 
 If there is any strength and solidity in the argu- 
 ments which have been used to support this propo- 
 sition, it becomes highly important in the situation 
 in which v^e now stand, that we should altogether 
 get rid of the fears which the nominal amount of 
 the capital of our debt seems to have inspired, that 
 we should seriously think of the great and sole evil, 
 the amount of the annual sums levied on the people i?i 
 thej'orm oj taxes; that we should wholly disregard the 
 additions to the capital, provided we can thereby pre- 
 vent any unnecessary additions to the annual im- 
 posts ; that we sliould be assured that all our diffi- 
 culties are small when compared with what may 
 arise from the pressure of these, on our inability or 
 ability to bear which depends all our weakness, all our 
 strength : that we should put out of sight, and out of 
 thought, the debt which is not demandable from us.
 
 to occupy ourselves with the means of paying the 
 annual rent which we have given our hond faith- 
 fully to discharge. Tins is our obligation, whose 
 increase we must endeavour as much as possible to 
 prevent, in order to economize the resources of the 
 nation. Abundant opportunity of lessening and 
 contracting the extent of this obligation will occur, 
 if the hour of tranquillity and of prosperity shall 
 return; but we shall run a great risk of putting off 
 the hour of tranquillity, or of precluding.the return 
 of prosperity, if, by taking upon us, in the time of 
 contest, greater burdens than we can conveniently 
 bear, we should narrow our defence or contract our 
 offensive operations, within the limits which active 
 and vigorous war with a formidable, an implacable, 
 and an exterminating foe may demand. 
 
 Cruel, indeed, would be our lot, if, after having 
 been in an unexampled manner successful, where* 
 ever we have been singly engaged against that foe; 
 after having wrested from him nearly all his foreign 
 dominions, and some of the most valuable of those 
 of his allies ; after having seen our navy crowned 
 with more than ordinary tiiumphs, in every sea and 
 in every clime, where our enemies have dared to 
 appear; we should now shrink from the contest, 
 panic-struck by arithmetical numbers, and a funded 
 capital which is as harmless as the cipliers of which 
 it is composed. 
 
 In plain terms, our debt is a debt of 15 millions 
 a year; and this sum we are engaged to pay by the 
 sweat of our brows from the culture of our soil,
 
 ,^8 
 
 from the profits of our arts, our industry, and our 
 commerce ; and we are well able to fulfil our en- 
 gagement. 
 
 We have moreover at this instant four millions 
 of annual revenue in our hands, applicable imme- 
 diately to the raising of any farther sums which 
 may be wanting to prosecute the war with vigour 
 and eflflct, without laying one sixpence additional 
 on the subject. 
 
 Should returning peace (as may reasonably be 
 hoped, if the war is vigorously maintained) bring 
 with it hours of prosperity and splendour, the means 
 will soon be found of lessening the burdens of the 
 public by lowering the interest of the debt; and an 
 increased revenue from increasing resources will 
 enable us, by taking off the taxes, to sow the seeds 
 of future wealth, while we diminish the weight of 
 present burdens. 
 
 Should unfortunately the termination of the 
 war bring with it ignominy, and its attendants in- 
 security, humiliation, and degradation, we should 
 vainly look for the means of continuing the onerous 
 plan for the redemption of debt. 
 
 We have before had occasion to observe, that 
 the borrowing of money on perpetual annuities, or 
 annuities for terms, to defray great national ex- 
 penses, was first resorted to when this country had 
 to contend with a powerful enemy whose ambition 
 tlireatened the liberties of all Europe. It had then 
 been found impossible to raise within the year sums 
 adequate to defray the expenses necessary to assert
 
 V9 
 
 the iftilependence, and lo iiiaintaia the laws, the li- 
 berties, and tl^e religion of this country. If those 
 sums had not been then obtained, we had been en- 
 slaved ; and the invaluable blessings we now enjoy 
 are the fruits of the loans then made. Their con- 
 tinued preservation, and the acquisition of the 
 greater part of our foreign possessions, are due to 
 the successful employment of the same resource, in 
 subsequent contests with the same ambitious enemy. 
 To this expedient we in fact owe, under the bless- 
 ing of Providence, all that we now possess of power, 
 wealth, and constitutional liberty and happiness. 
 
 We have now to struggle with infinitely 
 more powerful, more ambitious, and more impla- 
 cable foes, than the monarchs of France — with 
 enemies whose power is grounded upon the acqui- 
 sition of territory made by the former legitimate 
 sovereigns of their country, and whose ambition is 
 nurtured and increased by the additions to that ter- 
 ritory which they liave themselves made; while 
 their love of blood, rapine, anarchy, and desolation 
 has been cherished and sharpened by the unrestrain- 
 ed and unpunished license with which they have 
 been permitted to indulge in spreading confusion 
 and disorder through too large a portion of the 
 earth. 
 
 Were we to neglect to employ the same means 
 which were so successfully used by our ancestors, 
 which have been so powerfully exerted by ourselves 
 on former emergencies, we may bid adieu to our 
 independence as a nation, to our liberty and security 
 
 H '2
 
 100 
 
 as individuals : we may bid adieu to that flourish- 
 ing trade and commerce which, wafting to us the 
 wealth of both Indies, increases the means or the 
 comfort of every individual among us, either by 
 furnishing him witii objects of immediate and in- 
 nocent gratification, or by giving a greater value 
 to his possessions, to his skill, or to his labour : we 
 may bid adieu to all those flourishing establishments 
 of interior manufacture, and of all those improve- 
 ments in agriculture which are at once the cause and 
 the effect of our power as a nation, of our wealth 
 and of our freedom as individuals. 
 
 Such having been the advantages which we 
 have derived from loans, such having been the ne- 
 cessities which compelled us to resort to them, it is 
 somewhat singular, that at this day, on the close of 
 the fifth, and on entering into the sixth year of the 
 most expensive war which we ever carried on, the 
 idea of raising a considerable portion of the supply 
 within the year, and of reimbursing the whole 
 within three years, should have been taken up by 
 those who have hitherto experienced some difficulty 
 in finding taxes to pay even the interest of the 
 money borrowed. 
 
 It must be evident, on reflection, that taxes will 
 be levied with facility or difficulty, in proportion 
 to the state and extent of the unencumbered capital 
 of the country : that, independent of extraneous 
 circumstances which may operate upon them, such 
 as panic from the fear of invasion, &c the funds
 
 10] 
 
 will rise or fall in proportion to that apparent faci- 
 lity or difficulty. 
 
 The argument used for raising the supplies 
 within the year by taxes, instead of having recourse 
 to the usual mode of funding, is, that, if the sum 
 wanted were funded, it would, by adding so much 
 additional loan to tlie national debt, tend to depress 
 the stock too much, and oblige you to borrow at too 
 high a rate of interest. 
 
 But, in truth, if the money wanted for the 
 aupply of the year be taken out of the pockets of 
 the subject by taxes, it will reduce the capital of 
 the nation by so much : the effect of which upon 
 the funds, must be equivalent to that which wruld 
 be produced by adding an equal sum to tiie debt. 
 If the nation has to offer a certain capital as the 
 security for a certain debt, it should seem, that the 
 effect upon the value of the funded debt will be the 
 same, whether I increase the debt by an addition of 
 a certain number of millions, or take an equal num- 
 ber from this security. 
 
 And as to borrowing at a high rate of interest, 
 the public, or the individuals who compose it, must 
 borrow : the public can the more readily borrow, 
 because it is enabled to give any rate of interest 
 which the exigencies of the times make necessary: 
 but the individuals composing the public can only 
 give an interest limited by an injudicious law, and 
 will therefore be compelled to sell at a very depre- 
 ciated value, their lands, their stocks, or their goods, 
 to supply those extraordinar}' demands which their 
 
 H 3
 
 102 
 
 income will not furnish, and which they cannot 
 borrow at five per cent, while the public gives seven. 
 
 The case becomes still more cruel if the whole 
 of this burden is taken from the shoulders of the 
 public at large, to be thrown exclusively upon a very 
 small portion, though it be on the most opulent part 
 of the community. For, although the individuals 
 composing this higher class may as individuals pos- 
 sess larger incomes than any individuals who are to 
 be found in the other classes of society, yet will the 
 whole of their property, taken collectively, bear a 
 small proportion to the property of the nation at 
 large. 
 
 We profit nothing from the example of France, 
 whose financial embarrassment and distress was 
 brought on by engagements to make certain reim- 
 bursements, at stated periods, of short date ; the 
 Revolution was the consequence of her inability to 
 fulfil those engagements; and it may be feared, that 
 if we push our system of taxation for this purpose 
 of repayment too far, or abandon the cause in which 
 we are engaged too soon, from the impossihility of 
 maintaining at the same time the expenses of war 
 and the projects of reimbursement, the horrors of 
 French anarchy may also overtake us. 
 
 Happily, whatever legislative provisions we may 
 have made for the gradual extinction of the debt; 
 we have, I believe, in only one, and that a recent 
 instance *, pledged ourselves to the stockholder to 
 
 * The voluntary loan made in 1797) of 18 millions psjable in 
 two years after peace.
 
 103 
 
 reimburse hini at a stated time and price. I cannot 
 however, without the most serious apprehension, 
 observe the fixed determination which seems to 
 direct us, not only to persist in the general measure 
 of tlifi purchase of stock, but to force it forward 
 with redoubled power, and by every possible means, 
 and as it were to stake our whole existence upon 
 this gratuitous payment of money which no man 
 demands, and which we thus onerously .raise and 
 ruinously pay. 
 
 As money is usually borrowed by the public 
 when it is dear, and paid off when it is cheap (for 
 we have already seen that the debt is upon the whole 
 rather increased than diminished by repayments in 
 time of war *), and as the capital stock, created by 
 the several loans, has been selected for the most part 
 with the view of obtaining the money at the lowest 
 possible rate of interest, and with no view to the 
 plan of redemption, it has happened, the three per 
 cent, stock being the groundwork of all these ne- 
 gotiations, and the stock principally given, that, 
 upon an average, the public has not received above 
 sixty for every hundred pounds of three per cent, 
 stock, the greater part of which, if we were to suc- 
 ceed in our plan of reimbursement, must be paid 
 off at par j". 
 
 ♦ Page 27 & seq. 
 
 f The last loan indeed was made at 50, with a bonus of near 
 Beven per cent. ; and, at the present price of stock, a capital of three 
 per cents must be created, for the receipt of 45/. 46/, 471- or 48/. at 
 the utmoat. 
 
 H 4
 
 104 
 
 But we cannot hope to succeed eventuallv' in our 
 reimbursements, unless our years of peace shall bear 
 a greater proportion to our years of war than the 
 chronological table of our history during the pre- 
 sent century authorizes us to expect. 
 
 Ninety-seven years have passed away, of which 
 forty-one have been years of war, and fifty-six* 
 only years of peace. Of the last fifty-seven years, 
 one half have been years of war, and we are now in 
 the fourth which has taken place within that period. 
 The present state of Europe can afford little hope 
 that wars will be less frequent in the century which 
 is to come than they have been in that which is al- 
 most past. Between forty and fifty years is the 
 time allotted by calculation to the reimbursement 
 of the loan of each year of war ; the reimbursement 
 of one war will hang heavy, therefore, upon those 
 which may succeed it; and still, long as is the 
 time and onerous as the annual payments will be, 
 we can scarcely look forward to any hope of com- 
 plete success, unless great opportunities are given 
 of reducing the rate of interest. 
 
 We have already shown, that the reimburse- 
 ments in time of war increase our burdens and our 
 debt, instead of alleviating the one and lessening 
 the other; that in time of peace they are the occa- 
 
 * Sixteen years of war, and about five of peace, are to be added 
 to the list since this was written, making fifty-seven of war, and 
 sixty-two of peace, in one hundred and nineteen years; and of 
 the last seventy-eight years, forty-four have been year? of waf. ' '
 
 105 
 
 sion of our paying cent, per cent, more than we have 
 received. 
 
 Had we been satisfied, at the conclusion of the 
 former war, to have applied to the purpose of pur- 
 chase such sums alone as the natural spring of in- 
 creasing prosperity should have given us, as a sur- 
 plus beyond the necessary expenditure of tlie year, 
 and had gradually taken off taxes to the amount of 
 the interest of the debt bought up, to such an ex- 
 tent of purchase, accompanied by such a progressive 
 relief from taxes, I could see or make no violent 
 objection. It would have established our credit, 
 at the same time that it relieved us : it would, by 
 easing the subject, have led the way, in the most 
 natural manner, to further relief, by reduction of 
 interest and augmentation of revenue. 
 
 It would have inspired individuals with a cheer- 
 ful confidence in the actual resources, and a ready 
 compliance with the future demands of the nation. 
 
 The plan we are pursuing gives no hopes of re- 
 lief, no expectation of redemption. Galled by the 
 continued pressure of increasing burdens, we have 
 only the perspective of sinking under their weight, 
 without reaching the goal, at which we should ea- 
 sily and certainly arrive, with such loads as are 
 adapted to our strength, and such as we are bound 
 to curry. 
 
 " Give me a fl'lckum," said Archimedes, *' cDid I 
 will raise the xtorld.'" — " Give me taxes,'' says the Fi- 
 nancier, " and I will not onlif defray the e.rpenses of
 
 106 
 
 the present war^ but I will pay the. debts of all liars 
 that have preceded it." 
 
 Little does he think of the effect which his 
 accumulation of taxes will have upon the com- 
 munity for whose benefit he would impose them. 
 He would pay the debt, but would ruin the nation : 
 too much alike in this to the French philoso- 
 pher, whose tender prospective humanity can, with- 
 out a fear or a pang, scourge the millions of his 
 own day with more dreadful afflictions than ever 
 before desolated mankind, to procure for their un- 
 known descendants the Elysium of their speculative 
 Utopia. 
 
 The Acts of the 26 Geo. III. c. 31, and 32 Geo. 
 III. c. 55, for the reduction of the national debt, 
 have pronounced, that the fund then first appro- 
 priated to this discharge shall accumulate, till it 
 amounts to the sum of four millions, including the 
 original million so applied : a provision which ap- 
 pears to be founded upon no true principle. 
 
 Operations of finance, whether they consist in 
 the imposition or the abolition of taxes, should be 
 as gradual as the nature of the case will permit. A 
 spring which is too suddenly charged will easily 
 break ; a weight too suddenly removed ma}^ easily 
 disorder the machine. 
 
 The united empire of Great Britain and Ireland 
 ;afFords a consoling example of the extent of the 
 burdens which may be gradually imposed upon an 
 ,active, industrious, and free people, without over-
 
 107 
 
 powciiiig, as it should seem, the spring of their in- 
 creasing resources. 
 
 Whenever the revenue of the country has been 
 unequal to defray its annual expenditure, including 
 the interest of its debt, taxes have been imposed, 
 for the purpose of rendering the income equal to the 
 outgoings. Whenever the certain income of the 
 country shall become superior to its expense, the 
 readiest and most natural way of giving relief to 
 the subject will be by taking off taxes to the amount 
 of that certain excess. It would be advantageous, 
 too, to remove those taxes, so far as may be con- 
 sistent with the consideration of the fitness or un- 
 fitness of the taxes themselves, in the contrar}' or- 
 der in that which they were imposed. The last 
 load is always the most felt, and should be the first 
 removed; the prices of the articles taxed return 
 more easily to tlieir former rates when the duration 
 of the tax has not", by its long continuance, too 
 much incorporated its addition with the original 
 price of the commodity. 
 
 But why should we stay till three millions are 
 liberated before we give three grains of relief? Three 
 millions form an arbitrary sum, for whose adoption 
 I can devise no solid reason, and against which 
 many solid reasons may, I conceive, be urged, whe- 
 ther this plan be pursued in time of peace or in 
 time of war. 
 
 If in time of peace, taxes should not be taken 
 off gradually and in proportion to the extinction of 
 capital and the liberation of interest ; the time might
 
 come when so considerable an accumulation niio-ht 
 tempt either Government or the nation itself to 
 some improper enterprise. 
 
 Should this not happen, yet as taxes must then 
 be taken off, should they be suddenly removed, and 
 how can it then be otherwise? a convulsion might 
 be thereby occasioned in the fortunes of men, which, 
 operating upon their manners and upon their mo- 
 rals, might in some points of view be almost as 
 pernicious as that which might be produced by their 
 too sudden imposition. 
 
 Should this accumulation have taken place in 
 time of war, as is actually the case to a considerable 
 extent, it would be grievous indeed, if, having this 
 resource in our hands immediately applicable to the 
 raising of new loans, we should shrink from the 
 contest, for want of resolution so to apply it, or 
 from an obstinate and dangerous adherence to a 
 ruinous plan indiscreetly adopted, and from a sense 
 of our inability to lay new burdens, while we dare 
 not or will not make the proper use of those which 
 are already laid. 
 
 It would indeed be a melancholy circumstance, 
 if, having this powerful instrument in our hands, 
 the smallest portion of the interests of the cpuptry 
 should be sacrificed to an apprehension that we 
 have not abundant means to induce our enemy to 
 listen to such terms as are consistent with our li- 
 berty, tranquillity, independence, and security. 
 
 There is still another reason which should weigh 
 with us in our determination upon this subject.
 
 109 
 
 Whenever, from the increasing prosperity of the 
 country, the produce of the revenue considerably 
 surpasses the annual exigency of the state, and the 
 interest of money consequently experiences a re- 
 duction, it is but strict justice that this natural re- 
 duction of interest should be accompanied with an 
 abolition of the superfluous taxes. Should this not 
 take place, those who live on the interest of money 
 (and they compose a very large and interesting class 
 of His Majesty's subjects, and are a description of 
 persons in every point of view entitled to the tender 
 protection of the Legislature) would have reason to 
 lament the increasing prosperity of their country. 
 Their incomes will have been lessened at a moment 
 when their expenses will probably have been in- 
 creased. 
 
 The abundance of money not only tends to 
 lower the price of interest, but it has also a tendency 
 to raise the price of many, though not invariably 
 of all the necessaries of life. 
 
 In so doing it sensibly affects the fortunes, nar- 
 rows the means, and contracts the comforts not only 
 of all those who live on the interest of money, but 
 of all who are maintained by certain stated incomes, 
 whether derived from fixed annuities, or received in 
 the shape of military pay or civil salary; in short, 
 of all tiiose whose incomes do not necessarily in- 
 crease with the increasing prosperit}' of the country, 
 but whose expenses are necessarily increased by the 
 growing wealth of their more fortunate fellow-citi- 
 ici). More need not, perhaps, be urged to induce u»
 
 i»0 
 
 rather to adopt such measures as will atford only 
 justice to the most necessitous part of the commu- 
 nity, while it gives ease and comfort to the whole of 
 the present generation in preparing wealth and 
 power for posterity. 
 
 There is, however, another important considera- 
 tion which comes forcibly in aid of this argument. 
 
 Every Englishman who, previous to this war, 
 traversed any part of the Continent, but more par- 
 ticularly of France, must have been struck with the 
 numbers of his own countrymen of moderate for- 
 tunes, who ranking, however, in the class of the 
 ricli, have been drawn most unwillingly to expatriate 
 themselves, to seek under less happy and less genial 
 governments the accommodations adapted and ne- 
 cessary to their situation in life, which the pressure 
 of taxes enhancing the price of all articles of com- 
 mon life deprives them of the means of procuring 
 for themselves or their families in their native 
 country. 
 
 I think that I should be much within compass 
 when I suppose that the money spent by persons of 
 this description, who are obliged to sojourn in differ- 
 ent parts of the Continent, has not been less than a 
 million sterling annually, previous to this war. What 
 it may amount to when the new burdens which the 
 war has necessarily superadded to those which, with 
 a view to the redemption of the capital of the 
 debt, we have voluntarily undertaken, it may be dif- 
 -iicult to foretell ; but there can be no doubt that the
 
 Ill 
 
 amount will at least be proportionably extended; it 
 may be feared, that the proportion will be consider- 
 ably increased *. 
 
 There is a degree of pressure, which can be 
 easily borne by all; there is a point beyond which 
 the sturdiest shoulders, the firmest minds, are unable 
 to resist. 
 
 When we reflect that every 25/. of the income 
 so spent abroad would have maintained the family 
 of a labourer at home, we shall not, I think, be far 
 from drawing the conclusion which is not yet, per- 
 haps, sufficiently understood, though it begins, in 
 some degree, to be felt, that we shall best consult the 
 interests of the poor by enabling the rich to live. 
 
 Nor is the financial efi'ect the most important 
 part of this subject. The comforts and advantages 
 which are derived to the poor by the residence of 
 the families of the country gentlemen among them, 
 are innumerable and inestimable. Their health, 
 their morals, their minds, are all improved by the 
 precept, by the advice, by the example, and by the 
 assistance of their hereditary patrons, to whom they 
 have been taught to look with respect, and from 
 whom they have been used to derive comfort in af- 
 fliction, counsel in trouble, sober correction in irre- 
 gularity, aid in distress. Nor is this all : while the 
 children of our gentry are educated in foreign 
 
 • I have it from the highest authority, that the sums drawn by 
 our countrymen on the Continent in the first months of the peace 
 in the year 1815, were at the rate of upwardi of 5 millions a year.
 
 112 
 
 countries and in foreign habits, it is but too nmcti to 
 be apprehended that if ever they are enabled to re- 
 turn to the country from which they sprang, they 
 will come back with minds slightly impressed with 
 the advantages of the British constitution, with 
 very inadequate ideas of the perfection of our equal 
 laws, of the value of our well-poised liberties, and 
 of the purity of our holy religion. 
 
 That they will return either bigots in their faith 
 or despots in their politics, or, what is not less to 
 be dreaded in these days, that they will bring with 
 them hearts totally divested of all religious senti- 
 ment, and minds void of all love for, or correct ideas 
 of the benefits of social order and rational liberty : 
 these are not ideas taken up at this moment, 
 but which have been seriously entertained, narrowly 
 scrutinized, and deliberately weighed, from the first 
 moment of the establishment of the fund for the 
 payment of the national debt; but which an ob- 
 scure individual has thought it unavailing to urge 
 against the united weight of those great authorities 
 who have concurred in establishing this fund. 
 
 The pressure of the present moment has, how- 
 ever, unfortunately come in aid of his voice, and has 
 imperiously urged him to lay before the public some 
 of the grounds on which the firm and deep-laid con- 
 viction of his own mind is built; a conviction, which, 
 after much attentive consideration, and close inves- 
 tigation of this important and complex subject, has 
 only been rivetted and confirmed by every thing
 
 113 
 
 which has passed, and by every thing which has 
 been done in this matter, since the plan was unfor- 
 tunately first adopted. 
 
 He knows full well how easily he may be over- 
 powered by the eloquence of those who have em- 
 braced a contrary, and, as he thinks, a fatally erro- 
 neous system. He is not vain enough to think that 
 he can have produced conviction in others, upon all 
 the points which he has stated with tlie view of 
 illustrating his subject, and of strengthening his 
 argument. He is frank enough to confess, that it 
 is not improbable that many errors may be disco- 
 vered in so extensive and complex a discussion : 
 but he will, at the same time, in justice to himself 
 and from respect to his reader, assert, that there is 
 not one error in which he will not be happy to re- 
 ceive correction if he has erred. He will go farther : 
 it will give him much more real satisfaction to find, 
 that all thinjj-s are "oinir riyht, than to have the mi- 
 serable pride of thinking that he alone has seen the 
 truth, and that public measures are in this respect 
 blindly conducted. But stretching his powers of 
 consideration as far as they are capable of being 
 extended, he is irresistibly drawn to this conclu- 
 sion, from the whole of these premises; namely, that 
 in the present circumstances and situation of the 
 country, it will be far more adrisable to apply the 
 interest liberated by the purchase of national debt, to- 
 gether v'ith so much as may be necessary of' the re- 
 mainder of the fund now dedicated to its farther Ube-
 
 114 
 
 ration J to the purpose of any new loaiiy rather than 
 have recourse to any new taxes for that purposey or to 
 the still more precarious and oppressive measure of 
 raising within the year^ any considerable part of the 
 money wanted for the supply y by any new and extraor' 
 4inary mode of taxation.
 
 115 
 
 CONCLUSION. 
 
 1819. 
 
 In the Report of the Committee of Finance, which 
 sat in 1791, it appeared tliat the whole e.vpenditure of 
 the country at that time, including the annual mil- 
 lion appropriated to the redemption of the national 
 debt, did not exceed 15,912,597/. 
 
 It appears, by the returns made of the poor rates 
 in the year 1786, that their average amount in the 
 three preceding years was <2, 167,749/. Making to- 
 gether little more than eighteen millions*. 
 
 In the First Report f made by the Committee 
 of Finance, in the present session, it appears that 
 the totai expetiditure of the present year is estimated 
 at no less a sum than 68,079,882/. 
 
 By the returns made to Parliament in the year 
 1817, of the amount of the poor ratc6\ it appears, if 
 1 recollect aright, that they had reached, in 1816, 
 the sum of 8,000,000/.; together, upwards of 76 mil- 
 lions. In the sum, however, of 68,079,882/. stated by 
 the Committee of Finance as making " the total ex- 
 
 * £15,912,597 
 
 2,167,749 
 
 1 8,090,346 
 f First Report, page 12, 
 I 2
 
 116 
 
 penditure of this year, is included, for Shiking Fund 
 towards the redemption of tlie debt, about 
 16,061,000/. (a sum greater thmi the total expendi- 
 tm^e of the year 1790) ; leaving the actual expendi- 
 ture, exclusive of the Sinking Fund, at 52,018,200/. 
 which, contrasted with a revenue of 54,000,000/. 
 will give a surplus of revenue applicable to the ex- 
 tinction of debt of 1,981,200/." 
 
 The result of these calculations is, that if the 
 Sinking Fund system is to be maintained to its full 
 extent as now prescribed by positive statute, it will 
 require no less a sum than 14,079,882/. * to be bor- 
 rowed or to be raised by taxes, to produce the sum 
 applicable by law to the redemption of debt in the 
 present year* 
 
 When such has been the enormous increase of 
 the public burdens in the course of the last twenty- 
 nine years — when it has been necessarily accompa- 
 nied with an increase in the price of almost all ar- 
 ticles necessary either to the support or to the com- 
 fort of man, of the pay of the army and navy, and 
 of all the civil servants of the Crown (the Ministers 
 and officers of State only excepted) — when it has 
 augmented generally the price of all labour, render- 
 ing it difficult for the ingenuity of our manufac^ 
 turers, and impossible for the industry of our far^ 
 mers, to compete with foreigners in the foreign 
 
 * £68,079,882 
 54,000,000 
 
 14,079,882
 
 117 
 
 markets — when the numerous petitions which have 
 been presented to Parliament in this and in the last 
 session against many of our existing taxes, those 
 on coals, salt, leatiier, windows, and agricultural 
 horses, have strongly evinced the impatience with 
 which the present load is borne — when the nume- 
 rous and continual emigrations of the higher orders 
 to the continent of Europe, and of the lower and 
 industrious orders to America, have but too clearly 
 shown the difficulty which these large classes of 
 our countrymen have found of subsisting with 
 comfort under the present pressure, no friend to his 
 country, no friend to humanity, would willingly 
 increase those difficulties and that distress, by un- 
 ntcessarilxj adding to the present oppressive load of 
 taxes. 
 
 When it is recollected, too, with what eagerness 
 (to use no stronger expression) the property-tax 
 was got rid of, I can with difficulty believe that 
 any man will, under the present circumstances of 
 the country, be rash enough to reimpose it, or inge- 
 nious enough to devise other taxes to fill up this 
 deficiency of above fourteen millions : and if we 
 have recourse to borrowing, taxes to no less a sum 
 than the amount of 700,000/. must be found to 
 pay the interest ; and this operation must be re- 
 peated every year, by new loans and new taxes to 
 a similar amount. 
 
 The income of the country actually exceeds its 
 wcaww?/ expenditure by near two mill'wm sterling: 
 with this existing sur])lus wc may and ought to 
 
 I J^
 
 rest well satisfied : and we shall best consult the 
 interests of the stockholder, as well as of the com- 
 munity at large, by not attempting more than we 
 can perform, in making a painful efibrt to uphold a 
 delusive system, which is not adapted to our cir- 
 cumstances, and of which the consequences may be 
 fatal. 
 
 Sacred as it has been the fashion to represent 
 the Sinking Fund, I believe it will be found that 
 the interest of all the loans, without exception, 
 which have been made since the year 1812*, have 
 been taken from the funds, which, by preceding 
 acts, had been appropriated to the Sinking Fund : 
 and the Ministers who have successively advised 
 these measures, have acted most wisely in having 
 recourse to them, although they have not been 
 bold enough to avow what they were doing, for 
 fear of encountering the prejudice so strongly ex- 
 cited, and so long maintained, respecting the invio-t 
 lability of the Sinking Fund. 
 
 The two Houses of Parliament have quietly and 
 prudently acquiesced in these measures from a sense 
 of the extreme difficulty, if not impracticability, 
 of finding new objects of taxation, and from the 
 apprehension of laying on a burden beyond the 
 powers of the country to sustain. 
 
 If there be any truth in the principles which it 
 has been the object of the foregoing pages to de- 
 velope ; and if that truth has been presented in a 
 
 * See 53 Geo. III. c. 35, ct seq.
 
 manner to produce conviction, that which from the 
 year 1812 to the present time has been done par- 
 tially and covertly, should now be done openly 
 and manfully to the full extent, by at once aban- 
 doning the vain and onerous attempt to lessen the 
 public burdens by the purchase of stock, whether 
 the funds to effect these purchases be obtained by 
 iijL\f LOANS or by new taxls. 
 
 I 4
 
 A r r E N D I X. 
 
 APPENDIX A. 
 
 Table, showing the probable Effect of applying in Time of 
 Peace One per Cent, on the Capital of One Million of .i 
 per Cent. Stock (borrowed at the Price of 30/. for every 
 100/. of Stock), to the Purchase of the Capital created by 
 such Loan. The One per Cent, amounting to 10,000/. 
 
 Sums applied 
 
 annually to the 
 
 Purchase of 
 
 Stock. 
 
 Years of 
 Purchase. 
 
 Supposed 
 Price of 
 Stock. 
 
 Amount of 
 Stock purchased. 
 
 Sums to be applied id 
 
 each Year, including 
 
 the Interest of the 
 
 Stock redeemed. 
 
 £ 
 10,000 
 
 10,600 
 11,178 
 
 11,737 
 12,278 
 
 12,804 
 
 1798 
 
 1799 
 
 1800 
 
 1801 
 1802 
 
 1803 
 
 1 
 
 1 
 
 at 50 
 
 at 55 
 
 at 60 
 at 65 
 at 70 
 at 75 
 
 £ 
 20,000 
 
 19,273 
 
 1 8,630 
 18,057 
 17,540 
 17,066 
 
 £ 
 10,000 
 Interest 1 ^ 
 liberated J 
 
 10,600 
 
 11,178 
 Interest 55g 
 
 11,737 
 Interest 541 
 
 12,278 
 Interest 526 
 
 12,804 
 InlciC!»t 510 
 
 13,314
 
 122 
 Appendix A, continued. 
 
 Siinii applied 
 
 uniiiially lo the 
 
 Turchase of 
 
 Stock. 
 
 Years of 
 Puiclmse. 
 
 Supposed 
 Price of 
 Stock. 
 
 Amount of 
 Stock purchased. 
 
 Sums to be applied in 
 
 each Year, including 
 
 the Interest of Stock 
 
 redeemed. 
 
 13,314 
 
 1804 
 1805 
 I8O6 
 I8O7 
 1808 
 I8O9 
 1810 
 1811 
 1812 
 1813 
 
 at 80 
 at 85 
 at 90 
 at 95 
 at 100 
 at par 
 ditto 
 ditto 
 ditto 
 ditto 
 ditto 
 ditto 
 ditto 
 
 £ 
 
 16,642 
 
 16,249 
 15,887 
 15,549 
 15,237 
 15,693 
 16,161 
 16,644 
 17,142 
 \7fi55 
 18,183 
 18,726 
 19.287 
 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 
 £ 
 13,314 
 498 
 
 13,812 
 
 13,812 
 486 
 
 14,298 
 
 14,298 
 
 474 
 
 14,7/2 
 15,237 
 
 14,772 
 465 
 
 15,237 
 456 
 
 15,693 
 
 15,693 
 468 
 
 id,i6l 
 
 16,161 
 
 483 
 
 16,644 
 
 16,644 
 498 
 
 17,142 
 
 17,142 
 513 
 
 17,655 
 
 17,655 
 528 
 
 18,183 
 
 181 
 
 4 
 
 18,183 
 543 
 
 18,726 
 
 181 
 
 5 
 
 18,726 
 561 
 
 19,287 
 
 )8l6 
 
 19,287 
 576 
 
 
 
 
 10,863
 
 \':3 
 
 Appendix A, continued. 
 
 Sums applied 
 
 annunlly to the 
 
 Purcliase of 
 
 Stock. 
 
 1 
 
 Years of 
 Purchase. 
 
 Supposed 
 Price of 
 Stock. < 
 
 Amount of 
 $tock purchased. 
 
 Sums to be applied in 
 
 each Year, including 
 
 the Interest of Stock 
 
 redeemed. 
 
 £ 
 19,863 
 
 20,457 
 
 21,069 
 21,699 
 22,347 
 23,016 
 23,706 
 24,41/ 
 25,149 
 25,902 
 26,6;9 
 
 27,477 
 28,299 
 
 1 
 I8I7 
 
 1818 
 
 I8I9 
 
 1820 
 
 J821 
 
 1822 
 
 1823 
 
 1824 
 
 1825 
 
 1826 
 
 1827 
 
 1828 
 
 1829 
 
 at par 
 
 ditto 
 
 ditto 
 
 ditto 
 
 ditto 
 
 ditto 
 
 ditto 
 
 tJ 
 
 ditto 
 
 ditto 
 
 ditto 
 
 ditto 
 
 ditto 
 
 £ 
 
 19,863 
 
 20,457 
 
 21,069 
 21,699 
 22,347 
 23,016 
 23,706 
 
 24,417 
 25.149 
 25,902 
 26,679 
 V>-i17 
 28,299 
 
 Interest 
 
 Interest 
 
 Interest 
 
 Interest 
 
 Interest 
 
 Interest 
 
 Interest 
 
 Interest 
 
 Interest 
 
 Interest 
 
 Intereitt 
 
 Interest 
 
 Interest 
 
 £ 
 19.863 
 594 
 
 20,457 
 612 
 
 21,06q 
 630 
 
 21,699 
 648 
 
 22,347 
 669 
 
 23,016 
 690 
 
 23,706 
 711 
 
 24,417 
 732 
 
 25,149 
 753 
 
 25,Q02 
 
 171 
 
 26,679 
 798 
 
 27,477 
 
 822 
 
 28,299 
 846 
 
 29,145
 
 
 12 
 AppendisQ A 
 
 1 
 
 , continued. 
 
 
 
 Slims iip|>lir(! 
 
 nnnuallj to the 
 
 Puicliast; ol" 
 
 Stock. 
 
 Years of 
 Pcirthasc. 
 
 Supposed 
 Price of 
 Slock. 
 
 Amount of 
 Slock purchased. 
 
 Sums to be applied in 
 
 each Year, iucludiiig 
 
 the Interest of Stock 
 
 redeemed. 
 
 4^ 
 
 29,145 
 30,018 
 30,918 
 31,845 
 
 32,799 
 
 33,780 
 
 34,791 
 35,832 
 36,906 
 38,013 
 39,153 
 
 1830 
 1831 
 1832 
 1833 
 1834 
 1835 
 1836 
 1837 
 1838 
 1839 
 1840 
 
 at par 
 ditto 
 ditto 
 ditto 
 ditto 
 ditto 
 ditto 
 ditto 
 ditto 
 ditto 
 ditto 
 
 £ 
 
 29,145 
 
 30,018 
 30,918 
 31,845 
 
 32,799 
 
 33,780 
 
 34,791 
 35,832 
 36,906 
 38,013 
 39,153 
 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 Interest 
 
 £ 
 
 29,145 
 
 873 
 
 30,018 
 900 
 
 30,918 
 9V ^ 
 
 31,845 
 954 
 
 32,799 
 981 
 
 33,780 
 
 i,oii 
 
 34,791 
 1,041 
 
 35,832 
 1,074 
 
 36,906 
 1,107 
 
 38,013 
 1,140 
 
 39,153 
 
 962,801 - 
 
 would purchase in 
 43 years 
 
 |- 1,012,901 of 3 per Cents.
 
 225 
 
 Appendix A, continued. 
 
 In stating 500,000/. as the sum received by the public, bri 
 creating one million of 3 per cent, stock, no deduction is made for 
 discount, long annuity, or any other circumstance forming the 
 bonus to the money-lender, and which in the budget of the 26th of 
 April \797> when the 3 per cents were taken at 50, were stated 
 all together to amount to about 6L. l^s. per cent. There must also 
 be deducted, a sum equal to 800/. for every million, which is paid 
 to the Bank for receiving subscriptions. 
 
 £ 
 
 There should, therefore, be deducted from 500,000 
 
 For the bonus a sum equal to ....... i £34,250 
 
 And. for payment to the Bank 400 
 
 ' • 34,650 
 
 The neat sum received by the public will, therefore, 
 
 not exceed ^ 465,350 
 
 To redeem which in 43 years, upon the supposition 
 made of the progressive rise of stocks in time 
 of peace, would require 962,801 
 
 From which deducting the sum received 465,350 
 
 There would remain a premium of more than double 
 
 the sum received , 497,45 1 
 
 If the bonus be reckoned at 61. lOs. on account of the 
 deduction of 6d. from the long annuity, reckoned 
 at 14 years' purchase, it would reduce the premium 
 paid, to 495,701 
 
 Being considerably more than cent, per cent, !
 
 126 
 APPENDIX B. 
 
 Comparison between the Debt incurred in the American 
 War, and that incurred in th« War of the French Kevolutiun 
 to the End of the Year 179^, in respect of the Advautage- 
 ousness or Disadvantageousness of the Terms on which they 
 were respectively incurred. 
 
 Money borrowed in 
 the American War. 
 
 Debt created in 
 ditto. 
 
 Money borrowed 
 in French Revo- 
 lution to End of 
 1796. 
 
 Debt created. 
 
 £ 
 
 92,940,034 
 Add the Long and 
 Short Annuities, 
 and those for 
 lives, converting 
 them into capi- 
 tal, reckoning 
 money at 5 per 
 cent. . . •• 
 
 Then say, as 
 
 1 15,269,992 
 
 15,025,228 
 
 130,495,220 
 
 £ 
 79,054,000 
 
 110,415,896 
 
 4,388,510 
 
 114,804,400 
 
 92,940,034 is to 1 30,495,220,80 is 79,654,000 to 111 ,840,557 
 
 Difference in favour of the first period 2,963,849 
 
 11. The same Coujparison, repeated, converting the Long and 
 Short Annuities, and those for Lives, into Capital, reckoning 
 Money at its present Price of 6 per Cent. 
 
 Money borrowed in 
 the American War. 
 
 £ 
 92,940,034 
 Annuities for") 
 terms or years, j 
 converted into i 
 capital, reckon- j* 
 ing money at 6 , 
 per cent J 
 
 Then say, as 
 
 Debt created ir 
 ditto. 
 
 £ 
 115,269,992 
 
 12,927,117 
 
 128,197,109 
 
 Money borrowed 
 
 in French Revo 
 
 lution to End of 
 
 1796. 
 
 £ 
 79,6.04,000 
 
 Debt created. 
 
 £ 
 110,415,896 
 
 3,729>9/^4 
 
 114,145,870 
 
 92,940,034 is to 128,197,109,sois79>654,000 to 109,87l>000 
 Difference in favour of thf first period 4,274,870
 
 127 
 
 Appendix B, continued. 
 
 III. Comparison between the Money received and Interest 
 given in the two Periods, subtracting the Annuities tor Terms 
 or Lives, already accounted for by converting them into Ca- 
 pital Stock . 
 
 Money borrowed. 
 
 Interest given. 
 
 £ 
 5,0061,442 
 
 £ 
 7 9,65 4, OCX) 
 
 £ 
 3,843,244 
 
 £ 
 92,940,034 
 Deduct annuities"' 
 for terms of years 
 or lives, convert- 
 ed above into ca- 
 pital 
 
 Tlien say, as 
 
 92,940,034 is to 4,136,819, so is 79,654,000 to 3,545,450 
 
 Difference in favour of the first period 68,753 
 
 869,623 
 
 4,136,819 
 
 Money borrowed. 
 
 Interest created. 
 
 229,041 
 
 3,614,203 
 
 IV. Comparison on the Supposition, that the 4 and 5 per 
 Cents are converted into 3 per Cent. Stock, and that the Long 
 and Short Annuities, and those for Lives, are converted into 
 Capital, reckoning Money at 5 per Cent. 
 
 Money borrowed. 
 
 Capital created in the 
 American War, 
 
 converting the Whole 
 
 into 3 i»er Cent. 
 
 Stock. 
 
 Money borrowed 
 in French Revolu- 
 tion to End of 
 17SG. 
 
 Capital created 
 for Do. and Do, 
 
 converting the 
 
 Whole into a 
 
 3 per Cent. Stock, 
 
 £ 
 
 92,940,034 
 ^ Annuities for 
 terms of years or 
 lives , 
 
 } 
 
 138,099,986 
 15,025,228 
 
 £ 
 79,654,000 
 Annuitiesfor"> 
 terms of > 
 years. ... J 
 
 £ 
 120,475,046 
 
 4,388,510 
 
 153,125,214 
 
 124,863,556 
 
 Then say, as 
 
 92,940,034 is to 153,125,214,50 is 79,654,000 to 
 
 Capital ere 
 
 /apital cre-"^ 
 ated in lal- > 
 ter period J 
 
 131,235,541 
 12-1, 863, fi6u 
 
 DiiFerence in favour of latter period 6,37 1 ,985 
 
 * Ste Appendix C.
 
 Appendix B, continued. 
 
 V. Comparison on the Supposition, that the 4 and 5 per Cents 
 are all converted into 3 per Cents, and the Annuities for 
 Terms or Lives converted into Capital, reckoning Money at 
 its present Value of 6 per Cent. 
 
 Money borrowed. 
 
 Capital in 3 per 
 Cent. Stock. 
 
 Money borrowed. 
 
 Capital in 3 per 
 Cent. Stock. 
 
 £ 
 
 92,940,034 
 
 * Annuities for 
 
 terrasof years or 
 
 lives 
 
 } 
 
 £ 
 138,099,986 
 
 12,927,117 
 
 151,027,103 
 
 £ 
 79,654,000 
 * Annuities'! 
 for terms > 
 of years . J 
 
 £ 
 120,475,046 
 
 3,729,974 
 
 124,205,020 
 
 Then say, ^a 
 
 92,940,034 is to 15 1,027,103,80 is 79,654,000 to 
 
 Capital ere 
 ated in lat 
 ter period 
 
 '■} 
 
 129,439,511 
 124,205,020 
 
 Difference in favour of latter period 5,234,491 
 
 Ni B. The difference in point of interest in favour of 
 the first period amounted to 68,753/. which con- 
 verted into a 3 per cent, stock, by multiplying ^ 2,291,766 
 by 33i, will give a sura to be deducted from the 
 difference _ 
 
 Leaving a balance in favour of the latter period 1 _ ,„ ^„, 
 valued in 3 per cent, slock J 
 
 See Appendiit E.
 
 129 
 
 Appcndijf B, continued. 
 
 VI. Comparison of the Debt incurred in the American War, 
 with that incurred in the present War, down to the 1st of Ja- 
 nuary 1798, converting the 4 and 5 per Cents into a 3 per 
 Cent. Stock, in both Cases ; and, also, adding thereto the 
 Annuities for Terms or Lives, converted into a 3 per Cent. 
 Capital, according to the supposed Value of Money at the 
 present Moment, reckoned at 6 per Cent. 
 
 Money borrowed in 
 American War. 
 
 I Money borrowed 
 Capital created in in War of French 
 
 3 per Cents. 
 
 Revolution to 
 IstJan. 1798. 
 
 92,940,034 
 
 Then say, as 
 
 £ 
 151,027,103 
 
 £ 
 111,0/3,036 
 * Add for 
 annuities 
 for terms 
 
 } 
 
 £ 
 183,258,117 
 
 4,435,979 
 
 187,694,096 
 92,940,034 is to 151,027,103,50 is 11 1,973,035 to 181,955,637 
 
 Difference in favour of the former period . . 5,738,459 
 
 — " » 
 
 * S«e Appendix E.
 
 130 
 
 APPENDIX C. 
 
 Value of Amiultles for Terms of Years or Life, grantcil diuhig 
 the American War, reckoning Money at 5 per Cent. 
 
 
 Years. 
 
 Annuity 
 
 Term. 
 
 Years' 
 
 Value in Cajiital. 
 
 
 
 granted. 
 
 
 Purchase. 
 
 
 
 
 £ 
 
 
 
 £ 
 
 1777 
 
 Premium 
 
 25,000 
 
 10 
 
 '7 72 
 /Too 
 
 193,000 
 
 1778 
 
 — 
 
 147,150 
 
 30 
 
 1 'i 3 7 
 
 2,261,695 
 
 
 Life Annuities 
 
 2,849 
 
 forLife. 
 
 15 
 
 42,735 
 
 mg 
 
 — 
 
 257,181 
 
 29 
 
 ISt'^-V 
 
 3,993,710 
 
 
 Life Annuities 
 
 5,318 
 
 forLife. 
 
 15 
 
 ■ 79.770 
 
 1780 
 
 — 
 
 217,500 
 
 80 
 
 ^9t'^% 
 
 4,260,825 
 
 1782 
 
 — 
 
 118,125 
 
 78 
 
 i9A=o 
 
 2,309,343 
 
 1783 
 
 — 
 
 80,000 
 
 77 
 
 19t^A- 
 
 1,562,400 
 
 1784 
 
 — 
 
 16,500 
 
 7^ 
 
 19/0% 
 
 321,750 
 
 
 869,623 
 
 
 
 15,025,228 
 
 Value of Annuities for Terms of Lives, granted in the War of 
 the French Revolution, reckoning Money at .5 per Cent. 
 
 Years. 
 
 Annuity 
 granted. 
 
 Term. 
 
 Years' 
 Purcliase. 
 
 Value in Capital. 
 
 I79^t — 
 1795 ~ 
 
 1706 f 58,500-64^1 
 ^^^^\ 20,582-63|J 
 
 £ 
 63,49s 
 86,461 
 
 79.082 
 
 64 
 
 19A% 
 
 i9Ty^ 
 
 19x^0 
 
 £ 
 1,219,796 
 1,657,457 
 
 1,511,257 
 
 ^797 — 
 
 229,04 1 
 
 43,500 
 
 62| 
 
 19T|-a 
 
 4,388,510 
 852,600 
 
 
 272,541 
 
 
 
 5,241,110
 
 131 
 
 APPENDIX D. 
 
 Value of Annuities for Terms of Years or Lives, granted 
 dining the American War, reckoning Money at 6 per Cent. 
 
 Years . 
 
 Annuity 
 granted. 
 
 Term. 
 
 Years' 
 Purcliasc. 
 
 Vahte in Capital. 
 
 1777 — 
 
 1778 — 
 
 Life Annuities 
 
 1779 — 
 
 Life Annuities 
 
 1780 — 
 
 1782 — 
 
 1783 — 
 
 1784 — 
 
 £ 
 
 25,000 
 
 147,150 
 
 2,849 
 
 257,181 
 
 5,318 
 
 217,500 
 
 118,125 
 
 80,000 
 
 16,500 
 
 10 
 30 
 
 Life 
 
 29 
 Life 
 80 
 78 
 
 n 
 76 
 
 7-^M^ 
 13-^ 
 12 
 
 10 5 9 
 
 12 
 
 16tV% 
 l6-A«o 
 
 16tVo 
 
 16^% 
 
 £ 
 
 1 84,600 
 
 2,024,784 
 
 34,188 
 
 3,495,089 
 
 63,816 
 
 3,588,750 
 
 1,946,700 
 
 1,317,600 
 
 271,590 
 
 1 
 
 869,623 
 
 1 
 
 
 12,927,117 
 
 Value of Annuities for Terms of Years granted in War of 
 French Revolution, reckoning Money at G per Cent. 
 
 Years. 
 
 Annuity 
 g^rantcd. 
 
 Term. 
 
 Years' 
 I'urchasc. 
 
 Value in Capital. 
 
 179-1 — 
 
 1795 — 
 
 i-ofi f 5 8,500- 64 n 
 
 ^'y° 120,582— 63|/ 
 
 £ 
 
 63,49s 
 86,461 
 
 79,082 
 
 66| 
 
 65 i 
 
 64 
 
 i6tV^ 
 
 i(5-.Vo 
 
 £ 
 1,035,652 
 1,408,449 
 
 1,285,873 
 
 1 797 — 
 
 229,041 
 43,500 
 
 62| 16/,V 
 
 4,388,510 
 706,005 
 
 
 272,541 
 
 1 
 
 4,435,979 
 
 K 2
 
 132 
 
 appp:ndix e. 
 
 American War Debts, 
 The 4 and 5 per Cents being converted into a 3 per Cent. Stock. 
 
 
 3 per Cent. 
 
 4 per Cent. 
 
 5 per Cent. 
 
 
 £ 
 
 £ 
 
 £ 
 
 1776 ~ 
 
 2,150,000 
 
 — 
 
 
 1777 — 
 
 — 
 
 5,000,000 
 
 
 1778 — 
 
 6,000,000 
 
 — 
 
 
 1779 — 
 
 7,000,000 
 
 — 
 
 
 1780 — 
 
 — 
 
 12,000,000 
 
 
 1781 — 
 
 18,000,000 
 
 3,000,000 
 
 
 1782 — 
 
 13,500,000 
 
 6,750,000 
 
 
 1783 — 
 
 12,000,000 
 
 3,000,000 
 
 
 1784 — 
 
 6,000,000 
 
 3,000,000 
 
 
 Navy Bills 
 
 
 
 6,879>34l 
 
 1785. 
 
 
 
 Navy, Victualling,'^ 
 
 
 
 
 Transport, and Ord- > 
 
 — 
 
 — 
 
 10,990,651 
 
 nance Bills J 
 
 
 
 
 64,650,000 
 
 32,750,000 
 
 17,869,992 
 
 32,750,000 of 4 per Ct.= 
 
 43,666,666| 
 
 
 
 17.869,992 of 5 per Ct.= 
 Total reduced to3 perCt.= 
 
 29,785,320 
 
 
 
 138,099,9S6| 
 
 
 

 
 133 
 
 Appendix E, continued. 
 
 Debts incurred in the War of French Revolution, to Jan. 1, 
 *1797, exclusive of Loyalty Loan, 
 
 The 4 and 5 per Cents being converted into a 3 per Cent. Stock. 
 
 
 3 per Cent. 
 
 4 per Ceut. 
 
 6 per Cent, 
 
 1/93 — 
 
 6,250,000 
 
 
 
 1794 — 
 
 11,000,000 
 
 2,750,000 
 
 1,926,52^ 
 
 1795 — 
 
 18,000,000 
 
 6,000,000 
 
 1,609,897 
 
 1796 — 
 
 21,595,800 
 
 ^ 
 
 
 
 4,500,000 
 8,934,200 
 
 ( 
 
 4,414,074 
 
 
 1,859,625 
 
 ) 
 
 
 1797. Navy Bills, Vic-^ 
 
 
 
 
 tualling and > 
 
 16,441,175 
 
 764,861 
 
 2,030,596 
 
 Transport J 
 
 
 
 
 Exchequer Bills . . 
 
 i>999^m 
 
 104,432 
 
 270,202 
 
 90,580,499 
 
 9,619,293 
 
 10,241,294 
 
 , 9,619,293 of 4 per Ct.= 
 
 12,825,724 
 
 
 
 : 10,24 1,294 of 4 perCt.= 
 
 17,068,823 
 
 
 
 120,475,040 
 
 Add of Debt funded in 
 
 179;. 
 Loyalty Loan .•••••••• 
 
 
 
 
 
 
 20,124,848 
 
 11th May. 
 
 18,125,000 
 7,250,000 
 
 2,900,000 
 
 2,900,000 of 4 per Ct. 
 
 3,866,666 
 
 
 
 20,124,843 of 5 per Ct. 
 
 33,541,305 
 
 
 
 183,258,017 
 
 12,519,293 
 
 30,366,137
 
 134 
 
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 ri <s Oi!0 CO O CO 
 
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 133 
 
 APPENDIX Ci. 
 
 £ 
 
 .5 Jan. 1793. Interest of the national debt 9/205,588 
 
 Of which there existed of the debt incurred previous 
 to 1/48, and which would therefore have been 
 paid off in 1793 2,896,717 
 
 Interest of debt as it would have existed 5 Jan. 1/93 0,808,871 
 
 To the latter sum should however be added the interest 
 of 10,739,793/. which was actually discharged be- 
 tween 1762 and 1775, and which would in the 
 case supposed have remained as an annual charge 400,000 
 
 And also the interest accruing from a reduction of ca- 
 pital to the amount of 3,721,472/, which actually 
 took place between 1748 and 1755, together with 
 the saving arising from Mr. Pelham's operat-ion in 
 1750, to the amount in the whole of 664,287 
 
 Add also one per cent, on a capital of debt created in 
 the two wars, namely. 
 
 On the capital created in war of 1755, 
 
 being £72,111,004 
 
 On the capital created in American war, 
 
 being 1 15,269,996 
 
 1,873,809 
 
 187,380,992 
 
 And one per cent, on the estimated value, at the end of 
 forty-five years, of 'iT^J'^^^- Lung Annuities, 
 created in the two wars, being about 1 10,530 
 
 The sum annually paid 5 Jan. 1793 £9,205,588 
 
 The animal million 1 ,000,aX) 
 
 (},'^'o1A'dl 
 
 Sum paid in 1793 10,20.^),588 
 
 Sum which would have been due in 1793 9.857,-497 
 
 Ditlerencc 348,091
 
 ^56 
 APPENDIX H. 
 
 £ 
 Interest of debt and charges of management, as they 
 have stood from May 11, 1797^ after the com- 
 pleting the second loan of that year 15,131,405 
 
 Interest on 10,739,703/. which was actually discharged 
 between 1762 and 1775, and which would, in 
 this supposed case, have remained as an annual 
 charge 400,000 
 
 One per cent, on present capital £397,1/2,144 
 
 One per cent, on the sum discharged of. . 10,739,793 
 
 4,079,129 
 
 407,912,937 
 
 One per cent, on estimated value, at the end of forty- 
 five years, of 1,044,590/. of Long Annuities now 
 existing, about 149,227 
 
 19>759,841 
 
 Interest of debt and charges of manage- 
 ment, from May 1797 £15,131,465 
 
 Annual million and one per cent, on debt 
 
 created 2,628,329 
 
 17,759,794= 
 
 Sum which would have been now annually payable 
 
 more than is actually paid 2,000,017 
 
 THE END. 
 
 S. GosNtLL, Phnter, Liule Uucea Street, LoiuIor.