Part 5
The downfall of _England_ was foretold at her very first loan. This prophecy did not destroy the means of funding, on a very solid basis, in the year 1762, that part of the national debt, till then unfunded. Now I would ask the man, whom I should know to be most intimately persuaded of the dreadful effect that must be produced by a debt of 64,234,595_l._ incurred from 1754 to 1762, in addition to a still heavier one, contracted since the time when the total amount of the landed revenue was rated at 32,000,000, and the value of the lands only at 320 millions, that is to say, at about double the value of the whole national debt as it stands at present: I would ask that man, I say, whether, between the years 1763 and 1775, he has been able to discover in any parts of _England_, one single symptom of decay, either in agriculture or commerce, any diminution of public or private enjoyments, or less insolence amongst the common people, by which one may surely judge of the alterations which may happen in their circumstances. This general observation may suffice to make us look on the period of 1775, as presenting a state of things, which, supposing it had been prolonged, could not have held out any alarming prospect. Every one worked or enjoyed, and every body was paid. All this, methinks, might have continued on the same footing to the end of the world, without any alteration on the former or subsequent fortune of any one, such only excepted, as industry, activity, imprudence, and foresight, must occasion in all countries where justice is blind, and has but one scale.
I readily acknowledge, that at that period a grievous war broke out, which did not conclude till 60 millions, nominally 100, had been added to the old debt, or, to come more directly to the point, till the nation had been loaded, or, if you please, crushed under the enormous weight of three additional millions interest to be paid annually. But in what manner will those three millions, so heavy, so dreadful, affect the interested parties? In my judgement, it will be the same with this additional burden, as it has been with the six millions which the said parties were wont to pay before the last war. It certainly must have been felt at first by every body, except the trading part of the nation, whose first operation ever was to add to the price of the taxed commodities, both the amount of the tax, and the benefit of the advance to the consumer. (AND THIS IS STRICTLY CONSONANT WITH JUSTICE.) Now these consumers are of two sorts, viz. the proprietor of lands, and the proprietor of money: the latter must also be considered under a two-fold point of view, as a capitalist for himself, or as a dependant who receives the money from either of the two proprietors. The proprietor of money, from the nature of this instrument of trade, is a being merely passive; twenty shillings, which he is paid for interest, can _currently_ enable him to purchase such articles only as _currently_ sell for 20 shillings. If the taxes had increased, by one tenth, the price of all the commodities which he used to consume before the war of 1755, it is clear, therefore, that in 1763 he had lost one tenth of all his _possible_ enjoyments: I say possible; for the monied man, I speak in general, saves enough, annually, to strike an advantageous balance against the inconveniences _inseparable_ from his capital; I mean that progressive and unavoidable depreciation of money, so long as there will be mines opened, and taxes to discharge. But he can effect it with the greater ease, as his stock often returns 5 _per cent._ whilst the capital of the landed proprietor brings him in hardly four, and often less.
The _dependent_ proprietor of money had also his resource; he, by degrees, obtained an increase of salary; (AND THIS IS STRICTLY CONSONANT WITH JUSTICE.)
Neither was the landed proprietor without his resource: he gradually raised the price of his goods, and would have increased it to the level of the whole amount of the produce of industry; (AND THIS WOULD HAVE BEEN STRICTLY CONSONANT WITH JUSTICE.) But nature very often anticipates the execution of that very equitable measure, by another operation which is as infallibly the consequence of peace, as taxes are the effect of war, ever since the abolishing of personal service. The 10, 15, 20 millions, which government had borrowed during the war, were nothing more than a part of the capitals which in happier times might have been laid out in the improvement of cultivation and industry. Peace brought them back to their destination; an increase in the quantity of the produce of lands was the consequence; and an equal increase in the demands of the productions of industry, occasioned by the former, kept up the price of every thing, _by facilitating to the one, the means of purchasing what the other wanted to dispose of_, and by presenting an increase of resources to that increase of population, which as certainly results from peace and plenty, as mortality does from war and scarcity.
I now return to the three millions interest brought upon this nation by the last war; and I demand, what reason can prevent similar effects resulting from similar causes?
Yet, in order to obtain a complete idea of the whole burden of this _formidable_ debt, we must suppose that the full amount of it was contracted during the last war; and then we shall see how many millions of guineas it would really cost _England_ to pay off for ever the interest of all her successes and miscarriages from the beginning of this century, if the 9 millions of taxes should be now established in order to supply the interest of the debt of 238 millions.
It will appear hereafter, that 9 millions of taxes laid on the articles of consumption, would increase, by about 14 millions, the price or nominal value of the whole produce of industry, rated upon supposition at 56 millions. Now it seems to me equally unjust and impossible, that the total amount of the produce of agriculture should not thereby be increased in the like proportion: I beg to be allowed this supposition, until I assign my reasons for it, and bring proofs sufficiently positive to ascertain the fact.
Be it supposed, then, that the collective revenue of land and industry do amount to 112 millions, independent of the taxes.
Let us equally suppose that 40 millions sterling, in cash and paper currency, would be necessary and sufficient for the circulation of the said 112 millions.
Fourteen millions, in taxes, and in the advanced prices which must follow, are one eighth of 112 millions revenue, which, by the necessary rise in the price of every thing, is carried to 126 millions. Now, 5 millions in cash and paper currency, are likewise one eighth part of the supposed 40 millions necessary for home circulation.—It would then cost _England_ only 5 millions in cash and paper, once found, to secure for ever, and in the most permanent manner, the interest of a debt of 238 millions, the very idea of which shook the firm nerves of the _Walpoles_, the _Humes_, and of the many experienced men, on whose authority it was no weakness to tremble, before investigating a matter, which nobody, in my judgement, had hitherto attempted to examine.
All the operations of Nature are slow, gradual, imperceptible; and how is it possible to trace her out in her progress, when, in the measures which lead her to the general good, she has recourse only to that multitude of private interests which seemingly tend to destroy it? Yet, in order that we may form some idea of her operations in the point in question, let us execute, in an instant, that which she would effect in half a century, if it were possible within that space of time to incur a debt of 420 millions, without any augmentation or decrease taking place in the landed revenue.
_First Hypothesis._
Let us suppose, that, instead of appropriating the capitals that have disappeared, either to undertakings relative to agriculture and industry, (which would have trebled the real revenue,) or to those wars, either successful or grievous, that have left behind them only a frivolous or bitter recollection—let us suppose, I say, that Government should have, till this day, thought of nothing but making public establishments, and that every contributor to the public expence, being permitted at last to live up to the full rate of his means, should find the fruit of his former privations, in a multitude of monuments, such as the most luxuriant fancy can conceive, from the wisest disposal of the capitals, and of the time necessary to incur a national debt, the interest of which, added to the increase resulting from the taxes, should amount to 32 millions, upon an aggregate revenue of 64 millions, in which agriculture and industry should have an equal share. Such, nearly, was the state of the nation, under _William_ and _Mary_, as we have already observed.
The tax laid on the produce of industry would double the 32 millions: this is just; nor can it be doubted; for there is not a manufacturer, whose goods or produce have just been taxed, but will acknowledge this truth. Besides, the _British_ Parliament avows it. What remains now, is to convince the landed proprietors, that by doubling also their 32 millions revenue, they injure no one whatever. It is needless to prove, that if they act otherwise, if they be only passive when the manufacturers are so justly active, they must be reduced to plough those lands that acknowledge them for their lords.
Previous to the tax, the 32 millions landed revenue, used to cost, annually, to the landlord and farmer, 9 or 10 millions, paid to the cultivators, and laid out in other expences. Such is the rate; nearly one third of the revenue, (See _A. Young_’s Political Arithmetic.) Before the tax, industry must have laid out amongst the handicraftsmen, nine or ten of her 32 millions.
By doubling, therefore, the price of labour in agriculture and industry, the labouring people of both, will, under the numbers 18 or 20, have what they had before under those of 9 or 10; and these two great engines of national wealth will no ways be clogged.
As for the two _capitalists_ in land and industry, it is clear that each of them will have exactly the faculty of preparing, buying, selling, consuming, and saving, under the denomination of 30, 40, 60, &c. all that they could prepare, buy, sell, consume, and save, under that of 15, 20, 30, &c.
Before we attend to the lender, let us advert to the State; and let it be observed, that _in the case where 20 millions of cash and paper currency would have sufficed for the circulation and national transactions of all kinds, at a time when both revenues amounted to 64 millions, it is enough to find out 20 millions more, whenever, by the effect of taxation, those said revenues are raised from 64 to 128 millions; and from the instant that those 20 millions in cash and paper currency are obtained, you may flatter yourselves to have established, ~funded~ most firmly and for ever, the interest of a national debt of 420 millions, the interest of which, would at 5 per cent. amount to 21 millions_.
It is not yet time to examine what influence so considerable a rise, in the price of every thing, might have upon the foreign trade; but let us turn our thoughts to the interest of the stockholder, who has so generously lent his money. It will be said, that he is evidently injured: _the interest due to him on account of his loan, was equal to two-thirds of the landed revenue: the land is mortgaged to the creditors of the state: two-thirds of the neat revenue belong therefore in fact to the lender. A few years more, employed in erecting useful buildings, bridges, causeways, &c. the whole landed revenue must have been absorbed, and the lender have entered into possession._
Such is nearly the result of Mr. _Hume_’s reasoning on this pretended _mania_ of supplying the wants of the State, by mortgaging its revenue. Let me be permitted to urge a few words in answer, on behalf of the landed proprietor.
Whatever use the sums borrowed are put to by government, in this respect the nation and the lender stand nearly in the same predicament as two individuals who should have set up an undertaking at a joint expence: when it is completed, each of them first takes back his capital, before they share the profits. In point of national enterprises, is war the object? The profit is existence and glory, if the war has proved successful. Are public establishments in prospect? Then the lender shares in their utility and comfort. Has the employing of the capital been productive neither of glory, nor public establishments? In a word, is the State reduced to its primary and bare existence? The capital lent will not, at least, be lost to the lender, _if administration think fit to observe how little it costs to be just_; and the lender, on his part, will reflect, that he should not have been a greater gainer, had he buried his treasure during the time of national distress and that, had he lent it to individuals, he might have lost it entirely.
What I have just said, will, I think, suffice to refute the extravagant pretensions which Mr. _Hume_ is pleased to suppose in the lender. What I shall add, will also be sufficient, I hope, to quiet the scrupulous minds of those who might entertain some doubts on the injustice of despoiling the landed proprietor; I mean, the injustice of any kind of spoliation, but that which may be the consequence of his own extravagance.
That man who gives up his land for the annual quit-rent of a quarter of wheat, and two shillings when the wheat was at four shillings only, supposed he had entitled himself and his heirs to an income of a quarter and a half of wheat; yet his representatives enjoy, at this day, only one quarter, and the 18th or 20th part of another.—Will these insist, that the meaning of the landlord having been to secure, and that of the tenant to grant, such a portion of the landed revenue, as might be at all times equal to a quarter and a half of wheat, it is unjust to act in direct opposition to the intention of the contracting parties? This objection would appear very forcible, and yet would go no further than to prove, that, when a proprietor gives up his land for an annual consideration, he ought to stipulate that it should be paid in kind, if he means to keep up to the same income; if not, the landlord must be referred to the terms of his contract.
The state-creditor stands in a far more disagreeable predicament; he cannot even suppose, on his part, an intention hostile to the general good. Whoever lends to the State, knows that the latter cannot pay the interest it submits to, but by taxes, which, in the long-run, affect every thing alike; and that one must cease to be a consumer, if he would forbear coming in for his share. Now, whilst the exigency of the State requires fresh loans, and course additional taxes, whoever advances of the stock, the interest of which is paid by means of those very taxes, cannot entertain any hopes of avoiding their effect, unless it be for a short period, which depends entirely on the adopted scheme of finance. Some of these schemes extend, others shorten the round such taxes must go through, before the burden falls equally on every shoulder, _and becomes null by its universality_. I say _null_, all injustice set aside, which is inseparable from some sorts of taxes, of which I shall speak hereafter; but, I add, _strictly null_, even in regard to the lender, although the price of every article be raised, whilst his revenue alone continues on the same standard. And I ground my opinion on the following reason, which appears to me unanswerable: The difference between the interest of money, and that of landed property, is always a sufficient indemnity to the monied man for the rise, occasioned by the taxes, on the prices of the produce of land and industry; but _nothing can compensate the landed proprietor for that pretended increase of wealth called Money, or that supposed poverty known by the name of Taxes, but a proportionable increase in the price of his goods_[3]. A word more on the lender. One may take the part of that important individual, who accumulates those savings by which the State is to profit. It is allowed, I say, to support such a man even against the State, when the State attempts to reduce him by an useless reimbursement, by an _unnatural_ operation; but he should be assigned his real rank in the State, that he may not complain of the _natural_ reductions. In this case, I think, we should be more just, more humane, and more equitable, than Mr. _Hume_, when, in the continuation of the scheme of national loans, he offers to the posterity of the present owners of landed estates, no other prospect than that of serving, as coachmen, the descendents of their footmen, and no other means of averting the prophecy—but _a bankruptcy_. (_Vide_ _Hume’s Public Credit_, Essay IX.)
_Reflections on the two foregoing Articles._
If it were very true, though upon the first blush rather strange, that after an operation so simple as that of increasing the price of the whole mass of commodities, or rather suffering it _naturally to increase_, in proportion as the taxes and the effects produced by them enhance the price of all the products of industry, which are to bear those taxes—were it true, I say, that after so plain, so simple an operation, it would suffice, in order to secure for ever, in the most efficacious manner, the payment of the interest on any given national debt whatever, to find, _once for all_, in cash and paper, a sum which would exactly be, to the mass of the specie and paper already in circulation, as the interest of the debt, and the reactions of which I shall speak in the sequel, are to the mass of the two revenues—were it equally true, that those who are to be paid that interest, should, _after these two previous data_, have nothing in the world to dread but the reimbursement of a principal, the interest of which should appear so oddly secured, it would then be impossible not to confess, that _England_ has hitherto been a prey to great uneasiness, with very little foundation.
It would then be necessary to conclude, that all other nations were greatly in the wrong to think that _England_ had any reason to be alarmed.
It must, in this case also, be acknowledged, that _France_, in 1720, very unreasonably cut asunder the _Gordian_ knot of her difficulties, by declaring in substance that she owed no longer 15 millions _Tournois_ of the debts which she had contracted; since, without so barbarously cutting the knot, and thereby effecting the ruin of thousands of wretched beings, she would have secured their fortune by imposing without mercy, or rather with judgement, a tax of 75 millions on all the produce of industry, which this tax would not have raised by one twentieth part; whilst an _Arrêt_ from the council, permitting _then_ the exportation of grain, which was not allowed till 50 years after, would have proved more than sufficient to enhance, as it must have done, the price of commodities, in order to make amends to the landed proprietors for the increase which they would have found in the products of industry.
Above all, it would be necessary to admit, that no minister, in any country, could, for the future, without a horrid perverseness, without a want of judgement bordering upon insanity, propose, neither all together nor separately, expedients as shameful as they would prove useless; and that no individual could hereafter dread such measures, without being guilty of folly. What a security, then, for the Subject! what an advantage to the State! what a _facility_ for Administration!
Under this point of view, the idea I start deserves to be examined; but I once more entreat the reader not to pronounce finally upon it, until it has undergone the full exposition which I propose to give it. Nor shall I think I have written in vain, if I succeed only in making it appear so feasible, as to induce some abler hand more deeply to investigate it. Where is the man who would not wish to find it true? where is the man who could have an interest in finding it otherwise? I confess, perhaps to my shame, that it has engrossed my attention for a long series of years; I apply it to every thing, I square it with every thing; and the more I consider it under all the suppositions which my fancy suggests, the more I compare these suppositions with all the facts which it is possible to ascertain, and which seem to bear any relation to the subject, the more am I convinced, not only that the matter stands thus, but even that it is impossible it should be otherwise.
In fact, if I return to _Great-Britain_⸺
It would be absurd to suppose, that the taxes necessary to discharge the debt incurred during the late war, exceed the twentieth part of the value of the products both of foreign and national industry, consumed within the country. In this case, is it not impossible that the additional tax of a twentieth, in whatever manner it may be assessed on the mass of those products, should not enhance, by a twentieth, the value of this very mass? Let us call it a fifteenth; all kind of reaction included.
Is it not impossible that this additional fifteenth on the price of the products of industry, be not followed, sooner or later, by an equal augmentation on the productions of the earth, unless the proprietors of land should submit to diminish, by one fifteenth, their own consumption,—the home consumption (_the only one that secures the prosperity of the State_) and diminish it, in order to increase, by so much, the exportation, according to the ideas commonly adopted which would be as contrary to the facts that I shall adduce hereafter, as it would prove hostile to the interest of the State, to the interest of the proprietors, and would operate in direct opposition to the spirit of the tax, _which is certainly to produce its own amount, without taking the trouble, every year, of going in search of it to ~Lisbon~_.
Is it not impossible that the augmentation of one fifteenth, upon the price of every produce in circulation, should require any thing above an additional fifteenth, in the sums which had been hitherto sufficient for _brokerage_, and the transports of all kinds of property?
Is it not impossible that this fifteenth, both in new specie and paper currency, once obtained, the interest of the latter part of the debt should not be very firmly established, _funded_, without any one being the worse for it, _if the price of labour increases like that of its produce_?