Part 3

But who will see without grief, 2,000,000 interest due to foreign States! 2,000,000 in specie carried out every year from _England_! _England_ yearly stript of 2,000,000 of her money!!! It will be seen hereafter in what that money consists. Yet with personal stocks so real, so considerable, so clear, what can prevent _Great Britain_ wresting from the foreigner, the share he claims in the national debt? The reason is obvious: the owner of landed property, or the farmer, who hopes to get six _per cent._ of the stock which he lays out upon his lands, instead of vesting them in the funds, envies not the foreigner who is glad to get 5, 4, or even 3 _per cent._ On the other hand, the merchant who trades by commission, and who has an opportunity of placing in the colonies his money at 5 _per cent._ interest, which is raised to 8 and 9 by his commissions for sale and purchase procured therewith, cannot wish himself in the situation of a stranger, whose stock in the _English_ funds brings him in, not above one half of that sum. It is still less an object of envy for the manufacturers, or owners of ships, who, from their manufactories or shipping, clear 10 or 12 _per cent._ of the monies laid out by them: the projectors of all kinds likewise flatter themselves, that the stock employed in their undertakings will produce 15 _per cent._ To sum up the whole in much fewer words, the prospect of 3 or 4 _per cent._ is not likely to tempt any one, who is in hopes of getting a two, three, or even four-fold interest. And in fine, the public funds, in any country whatever, will never be more or less than a lucky, _or rather a providential_, resource for those who have neither talent, power, nor leisure, to place their money to better advantage.

Now, would the abolishing of such a resource turn to the profit of the State, even supposing it to be effected by the justifiable means of a general reimbursement, were the case possible? I have too often reflected on the subject, too often revolved it over and over, I have viewed it under too many points, not to be sensible how far above my strength it is to discuss the matter in all its parts; I shall nevertheless venture to throw out some thoughts, which to me seem likely to render somewhat problematical a question which, at first sight, does not appear anyways difficult to resolve.

This question is not, whether it would be more advantageous to the State, not to have contracted a debt of 238 millions; but whether, since it is incurred, it would be profitable to discharge it. To doubt of the former, would be absurd: 238 millions thrown away almost entirely, within the space of 90 years, to forward destructive schemes, now no otherwise compensated than by a double devastation of the same kind, in a neighbouring kingdom, which by a treble population was able to support it, would certainly have been better bestowed, in both countries, either on the lands, whose revenues and number of cultivators would have increased, or in the improvement of the trade and arts, the stock and _chef-d’œuvres_ of which would thus have been multiplied. But the debt being once incurred, let us suppose that the 238 millions, which are vanished, should return into the Exchequer, would it be proper or not to pay it off? Thus stands the question.

_Thoughts on Imposts and Reimbursements.—The Accumulation of public Treasure considered as the Means of preventing Taxation._

The present impost in England, as the case is almost every where, consists of two parts widely different from each other: the one is certainly burdensome, but necessary;—of this hereafter. Might not the other, which concerns the national debt, however grievous it may appear, be considered as an useful establishment, so long as it shall be presumed that the increase of the national wealth, and its being divided amongst a greater number of individuals, is an advantage to the State; “or, in other words, until it shall appear evidently, that the welfare of the State requires that each of its members should lay out annually all that he is able to spend?” Before I attempt to deliver my opinion on these two subjects, I shall suppose the reimbursement possible, and resolved upon.

Nine millions of taxes, to pay off the annual interest of the debt, compose nearly one seventh of the landed revenue. These taxes, gradually laid on such objects of consumption as are supposed most likely to bear them, must have raised their price by one seventh, or something more; and that really, justly, and I think necessarily. The reader will perceive that I speak of the objects of taxation collectively, since some of them bring to the Exchequer twice their intrinsic value. The reimbursement being effected, would they fall back to their primitive value?—Yet this must be, in order to reap the pretended advantage; and this, in my opinion, would be of no manner of service. I shall endeavour to prove it; and then we shall examine whether the effect would not be more than doubtful.

It would be no easy matter to assign, for certain general facts, any other cause than the force of Nature; who, in the end, gets the better of all the regulations that thwart her. But let any one examine whether there be a single untaxed object, which, from 90 years back, or, to speak more to the purpose, from the origin of the national debt, is not raised more than one seventh, above the nominal value it had at that period. It is therefore sufficiently probable that the taxes have been felt, not only by the consumer of the taxed commodities, (according to the laudable intentions of Government) but also by the whole nation, by all the individuals that compose it:—And this, in my opinion, is equally just and unexceptionable.

Yet, it may be urged, that this increase in price is to be ascribed to the greater quantity of specie in circulation. Granted. In this case, a falling-off in the prices, accruing, as it is supposed, from a decrease in the taxes, which is represented as the effect of a reimbursement, cannot then take place:—besides, as the sequel will show, the taxes unavoidably bring in, one way or the other, even in the first year, the whole money required to pay the same. I shall argue on both suppositions. Is the increase in the prices owing to the taxation? It appears, evidently, that the taxes bring in the sums necessary to pay them, since they are actually and annually paid:—This money, then, must be withdrawn from the circulation, in order to lower the prices. Is this increase the effect of an augmentation of the specie? Then it will be necessary, in order to ascertain the primitive price, to recall from the circulation all the money which has been introduced since, and in spite of the taxes. Now if, in spite of the taxes, a country abounds with money, how should it not be so, supposing no duties had been laid?—How can the abolition of the taxes prevent the introduction of cash?—How will it come to pass, that the mass of specie being increased, the prices shall not be raised?—And if all of them augment, in a fair proportion, who will gain by it, who will suffer?

Be it supposed, nevertheless, for this is my main object, that the abolition of the taxes will lower the price of the mass of taxed commodities.—The same force of nature, which, without the intervention of any one, had raised the generality of untaxed objects up to the rate necessary to balance the imaginary value, which the tax added to the others, would operate in a contrary sense, and diminish, insensibly, the price of those articles which might have been overlooked:—What would be the advantage accruing to the State from a general and proportionable decrease?—Let us not think yet of the pretended profit that would result therefrom, in favour of trade, with relation to foreign competition: this matter requires a particular article. The only business now in hand, is to examine, whether, in case the reimbursement should be effected, this general decrease of prices, which I have just granted, could be effectually obtained.

The reflections which I have hitherto laid before the reader, suppose that the refunded 238 millions would irrevocably be transferred from the Exchequer into the hands of those unfortunate individuals who might have been forced to receive their reimbursement. But one must live. Government could not carry injustice so far as to compel them to bury, or cast into the deep, that precious metal, ripped up at so great an expence from the bowels of the earth. What consequence would then ensue, if that immense sum put into circulation, not in _England_ alone, where such an addition of specie would, in less than six months, occasion a six-fold rise of prices, but over all _Europe_, where probably treble that stock never was in circulation?—The price of every commodity would treble, or at best double, perhaps universally.—What advantage could the State, or individuals, derive from such unavoidable, general, and proportionable rise?—Were the reimbursement practicable, instead of effecting it, I should vote for laying out the 238 millions in erecting a colossus of gold and silver, to be a standing monument of public gratitude towards those whose œconomy and confidence have served the State in its needful circumstances.

The absurdity which might be imputed to such an idea I shall partly do away, by stating the effects of laying up treasures, as has been the fancy of several princes, and which is supposed profitable by Mr. _David Hume_, who, methinks, ought to have been one of the first to rest assured of its inutility, after his excellent observations on money.

I shall suppose that the _English_ government had preserved, seven years ago, the 60 millions and upwards, expended during the last war; and that, instead of laying those taxes so highly complained of, they had annually laid out of the Exchequer, the 12, 15, 20,000,000 sterling, which successively produced the last debt: what might have been the result?

First, If the very useless prohibition of the exportation of specie, however it _might_ be profitable to those who could export it, could have possibly been put in force, 60 millions of real cash added, in a country where 20 millions perhaps are sufficient for circulation, must have doubled at least the price of every thing; a consequence diametrically opposite to what it was intended to effect. Would it not, in some respect, have ruined the Bank, by rendering useless its nominal stock, in lowering the interest of its real one, and reducing, in fine, its abilities so much below the level of public wants, when the general prices, two-fold increased, would have raised, in the same proportion, that of every engagement?

Secondly, The evil would have been less fatal than I describe it, if the prohibitory law, as all those that militate against justice and common sense, had been evaded; but the gold hoarded up heretofore, and now supposed to be circulated over _England_, would, by succession, have passed into _France_: and the latter, in order to continue the war, would have borrowed, even of the _English_, at four, and presently at three _per cent._ the monies which she could not procure at less than seven or eight _per cent._ Now money growing more common in _France_, the prices would be, as in _England_, and soon after every where else, increased in the same proportion; for it is essential to observe, that those two nations are too rich, their correspondence too extensive, their activity kept up by too many branches of industry, for them not to regulate the markets all over _Europe_: it is probable that both are now too enlightened any longer to refuse receiving it, not one from the other, but from Nature herself, who, constantly provident, ever above the reach of untoward regulation, at all times unbiassed in bestowing her favours, or equipoising one by the other, would settle, only a little later, notwithstanding all efforts to the contrary, that equilibrium necessary to the general good of Society, of which it is glorious enough for those two countries to constitute the preponderant parts.

Thirdly, Independent of this general and inevitable repartition of the 60 millions laid up heretofore, the 10, 15, and 20 millions, which _England_ has found yearly, during the last war, in the purse of her subjects, were, beyond doubt, that portion of capitals, which the circumstances of such a war as the last was, would have rendered useless in the hands of the lenders, had government found in the Exchequer those sums which were obtained by way of a loan. Can it be doubted but that this portion, useless in _England_, in the supposition of a prior accumulation of money, would equally have been sent into _France_, on the first prospect of placing it to advantage?—It would have been carried there, just as the _Dutch_ had formerly sent into _England_ the dormant part of their capitals, and would send it any where, at all times when sure of benefiting by it, were it even against the interest of the _United Provinces_, saying with _Camilla_, in _Corneille_’s Tragedy of the _Horatii_,

“Rome, si tu te plains que c’est-là te trahir, “Fais toi des ennemis que je puisse haïr.”

It will appear by the sequel, that I am as far from cutting off such resources, as are deemed infallible, and dictated by prudence, in order to support with vigour a necessary war, as I am from raising the least doubt concerning the right of waging war, be it ever so unprofitable and unjust. My only intention was to prove, that treasures hoarded up in time of peace, and scattered afterwards during a war, in order to avoid taxation, would raise much higher the prices of everything, than taxes of any kind whatever could raise them. And I do now say—make war as long as you please, but do not accumulate for the purpose of waging it. Your monies, locked up in your strong chests, could not be sheltered from every kind of accidents; and whilst you can boast of subjects equally brave and industrious, you will never want money, nor means to carry on any war you may undertake: but then you must submit to that augmentation of prices, which must naturally follow. I flatter myself I shall be able to prove, that this very increase is subject to no manner of inconvenience.

_On the grievous, but necessary part of the Impost._

Which part of the impost is truly hurtful to the wealth of nations? A standing army of 50,000 men in time of peace, both for the sea and land-service, and 50,000 more employed, either upon the different objects relating to those services, or to maintain good order and public tranquillity, or intrusted with the collection of the revenue, are evidently 100,000 men, taken in _England_ from that last class which, though _last_ in point of rank, is nevertheless the sole instrument of the national riches. Now, out of the _given_ number of 9 millions of inhabitants, 6 millions only constitute this precious, this productive class; the other 3 millions consist merely of consumers: from the 6 millions, allowed in the productive class, deduct 4 millions of children, old people, and women, half of whose life is taken up with the cares and incumbrances of a domestic nature; of this truly profitable class 3 millions only will then remain. A hundred thousand men, all stout, vigorous and skilful, constantly withdrawn from that class, occasion a vacuum of about a twentieth in the productions of the land, and of the arts, that is to say, (for there should be no illusion in the case) the twentieth part of the possible wealth. That portion of the impost, which is set apart for the subsistence of those 100,000 men, is therefore, in some manner, burdensome; since society is thus deprived, not only of the produce of their industry, but also of that part of other people’s labour which they consume without contributing towards it: but amends are amply made for those indispensable privations, by the property being better secured, and enjoyed in full tranquillity. Besides, that part of Society, which suffers most thereby, does not belong to the productive class; the latter, as has been already observed, is, in the richest as well as in the poorest countries, ever reduced to that pittance which is but just necessary to keep up industry. Nations the most free differ in this point from those who groan under the most slavish despotism, only by the insolence with which this scanty pittance, if refused, is insisted upon in a free country, and the humble manner in which it is sued for in the others. The difference of natural talents, displayed in their utmost energy, suffices to establish, sooner or later, amongst the freest people, that enormous disproportion of wealth which gives offence elsewhere, only because it is not always the proof or reward of labour, abilities, and œconomy.

Let any circumstance whatever, either well or ill judged, occur, which may determine the nation to complete to 200,000 the 50,000 sailors and landsmen that are sufficient in time of peace; 150,000 more men will be taken from the productive class, which must, of course, occasion a second vacuum, viz. the productions with which they would have enriched or amused their country. But the loss will not end here; other 300,000 men, many more perhaps, from the same class, constantly busy, during the war, in preparing the intended destructive plans, will unavoidably occasion a farther loss of four or five other twentieths in the other enjoyments of peaceable times, to which, had not other occupations interfered, they would have contributed: and if the war should last for 3, 4, or 10 years, it is evident that, in the latter supposition, the nation must lose all that increase of wealth which would have been effected, had the principal, swallowed up by the war, been differently employed. This loss is considerable, immense, and never can be retrieved; for what was then omitted, will never be done; what will be effected, might equally have been so, without preventing the productions which would already have taken place.

All these _deficits_ in wealth, occasioned by the war, are a substantial loss; and the prospect would be dispiriting indeed, were not the rival nation in the very same predicament. But will this grievous loss be after the peace active, as it were, and felt by the community longer than the time required for the 2, 3, or 400,000 men, employed during the war in forwarding the destructive schemes, to resume their peaceable occupations; or till the number of them, who shall have died in _America_, the _Indies_, of the scurvy, or at the fatal tree, be replaced by the ordinary course of population?—This I cannot conceive by any means: some of the reasons, which I have to adduce, will be found in the reflections I am about to present on the second part of the impost, which seems to me not less useful than the first is necessary: all my other arguments will appear in the other parts of this work. If it can be concluded from the _ensemble_, that all the evils brought about by a bad or ill-fated administration, are naturally, and without expence, compensated under a wise ministry, and that the most barbarous and most extravagant of them all could have no other means of ruining the nation than by destroying the people; then, made easy on the effects of the national debt, we shall have courage enough to acknowledge, that it is as sacred in the hands of those, who, having furnished the value, are in possession of the vouchers, as the crown on the head of the monarch; and we shall enjoy the freedom of mind necessary to infer, that although Providence often seems to leave to chance the destiny of some individuals, yet it is very far from being indifferent to all that concerns the whole species[2].

_Of that part of the Impost, which is more useful than grievous._

The part of taxation, which now remains to be considered, is that which, at every instant, presents to any one, a secure and useful employ of all the capitals at his disposal, and of all the savings which prudence hath induced him to make. The utility of the public funds, which are nothing else but the national debt, might seem established by these few words; but further details are necessary.

I have adopted the estimate by which _England_ is supposed to contain 9,300,000 inhabitants; one-third cultivates the land, one-third is engaged in manufactures, and of the remaining third, 600,000 at most share among them the neat produce of cultivation and the arts, in proportion to the capitals with which they keep in play those two engines of opulence. All the remaining part of the people, as dependents under whatever denomination, look, for their subsistence, to the friendship, humour, pride, or wants of the 600,000 proprietors.

Out of 70 millions, at which the landed revenue throughout _Great Britain_ is computed, 33 millions are absorbed by the unavoidable expences, and accessary charges attending cultivation, or annexed to the property. The proprietors share among themselves 20 or 25 millions; the other 12 millions go through the hands of farmers, as a very equitable recompence for their trouble, and as a liberal interest for a personal stock of 120 millions necessary to the produce of the revenue. (Vide Mr. _Arthur Young_.) On the best use possible of these last 120 millions, solely depends the increase of landed profits: but it is only by degrees, and the concurrence of favourable circumstances, that the landed property can effectually receive the increase of the capital, which is calculated to augment that produce.—Does it conduce to the interest of the State, that, till then, the farmer should keep inactive the capital appropriated to so material an object, or that he should lay it out to improve the lands before it is wanted, or that, waiting for the instant of need, he should employ it in such manner as not to have it at command when the needful time is arrived?—This question cannot be answered, I think, but in the negative; and it appears to me, that, on this point at least, I may assert positively, that an establishment, which puts into the hands of the farmer, at the very juncture when he wants it, that portion of his capital which had hitherto been useless, _and which however was, till then, (owing to such an establishment) advantageous to some one else_, is, of all others, the most profitable, wherever the object is, to give to every capital that degree of activity and utility of which it is susceptible. Therefore, a reimbursement which would deprive the _capitalists_, farmers, and active proprietors, of a resource equally safe and profitable, would not only prove fatal to the order of citizens especially interested in the landed revenue, but to all those who, whilst the money intended for the improvement of land, is unapplied, make use of it in some advantageous speculation, which becomes important to the arts, and to commerce.