markitect-main/examples/infospace-with-history/artifacts/sources/book-5-chapter-03.md

id, title, book, chapter, artifact_type

id	title	book	chapter	artifact_type
book-5-chapter-03	OF PUBLIC DEBTS.	5	3	content

CHAPTER III. OF PUBLIC DEBTS.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  In 1707, those duties were still further prolonged, as a fund for new
  loans, to the first of August 1712, and were called the third general
  mortgage or fund. The sum borrowed upon it was £983,254:11:9¼.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  On the 31st of December 1697, the public debts of Great Britain, funded
  and unfunded, amounted to £21,515,742:13:8½. A great part of those debts
  had been contracted upon short anticipations, and some part upon annuities
  for lives; so that, before the 31st of December 1701, in less than four
  years, there had partly been paid off; and partly reverted to the public,
  the sum of £5,121,041:12:0¾d; a greater reduction of the public debt than
  has ever since been brought about in so short a period of time. The
  remaining debt, therefore, amounted only to £16,394,701:1:7¼d.

  In the war which began in 1702, and which was concluded by the treaty of
  Utrecht, the public debts were still more accumulated. On the 31st of
  December 1714, they amounted to £53,681,076:5:6½. The subscription into
  the South-sea fund, of the short and long annuities, increased the capital
  of the public debt; so that, on the 31st of December 1722, it amounted to
  £55,282,978:1:3 ⅚. The reduction of the debt began in 1723, and went on
  so slowly, that, on the 31st of December 1739, during seventeen years-of
  profound peace, the whole sum paid off was no more than £8,328,554:17:11
  ³⁄₁₂, the capital of the public debt, at that time, amounting to
  £46,954,623:3:4 ⁷⁄₁₂.

  The Spanish war, which began in 1739, and the French war which soon
  followed it, occasioned a further increase of the debt, which, on the 31st
  of December 1748, after the war had been concluded by the treaty of
  Aix-la-Chapelle, amounted to £78,293,313:1:10¾. The most profound peace,
  of 17 years continuance, had taken no more than £8,328,354, 17:11¼ from
  it. A war, of less than nine years continuance, added £31,338,689:18: 6
  ⅙ to it. {See James Postlethwaite’s History of the Public Revenue.}

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

  On the 5th of January 1775, the funded debt of Great Britain amounted to
  £124,996,086, 1:6¼d. The unfunded, exclusive of a large civil-list debt,
  to £4,150,236:3:11 ⅞. Both together, to £129,146,322:5:6. According to
  this account, the whole debt paid off, during eleven years of profound
  peace, amounted only to £10,415,476:16:9 ⅞. Even this small reduction of
  debt, however, has not been all made from the savings out of the ordinary
  revenue of the state. Several extraneous sums, altogether independent of
  that ordinary revenue, have contributed towards it. Amongst these we may
  reckon an additional shilling in the pound land tax, for three years; the
  two millions received from the East-India company, as indemnification for
  their territorial acquisitions; and the one hundred and ten thousand
  pounds received from the bank for the renewal of their charter. To these
  must be added several other sums, which, as they arose out of the late
  war, ought perhaps to be considered as deductions from the expenses of it.
  The principal are,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  The practice of funding has gradually enfeebled every state which has
  adopted it. The Italian republics seem to have begun it. Genoa and Venice,
  the only two remaining which can pretend to an independent existence, have
  both been enfeebled by it. Spain seems to have learned the practice from
  the Italian republics, and (its taxes being probably less judicious than
  theirs) it has, in proportion to its natural strength, been-still more
  enfeebled. The debts of Spain are of very old standing. It was deeply in
  debt before the end of the sixteenth century, about a hundred years before
  England owed a shilling. France, notwithstanding all its natural
  resources, languishes under an oppressive load of the same kind. The
  republic of the United Provinces is as much enfeebled by its debts as
  either Genoa or Venice. Is it likely that, in Great Britain alone, a
  practice, which has brought either weakness or dissolution into every
  other country, should prove altogether innocent?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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