LIBRARY 
 
 OF THE 
 
 UNIVERSITY OF CALIFORNIA. 
 Accession 9.9.4.3.7 Ctes 
 
THE NATIONAL DEBT 
 
 FINANCIALLY CONSIDERED. 
 
TO 
 
 THIS ESSAY, 
 
 THE PRIZE OF 
 
 TWO HUNDBED GUINEAS, 
 
 WAS 
 
 UNANIMOUSLY AWARDED 
 
 BY THE ADJUDICATORS APPOINTED 
 
 BY THE SOCIETY OF ARTS, 
 
 JULY, M.DCCC.LVIII. 
 
1'HIXB ESSAY- SOCIETY OF ARTS. 
 
 THE 
 
 NATIONAL DEBT 
 
 FINANCIALLY CONSIDERED. 
 
 EDWARD CAPPS. 
 
 LONDON : 
 GROOMBRIDGE AND SONS. 
 
 M DCCC.LIX. 
 
 [The Author reserves the right of Translation. \ 
 
GENERAL 
 
 LONDON : 
 
 PBINTED BY WERTHEIJiJSK AND CO., 
 FINSBURY CiRCUS. 
 
TO 
 
 HENRY JOHNSON, ESQ., 
 
 THIS ESSAY, 
 
 THE RESULT OF HIS PATRIOTIC MUNIFICENCE, 
 IS 
 
 RESPECTFULLY DEDICATED 
 
 V 
 
 BY 
 
 THE AUTHOR. 
 
 99437 
 
PREFACE. 
 
 TN the early part of the year 1857, a public 
 announcement was made by the Council 
 of the Society of Arts, that a sum of Two 
 Hundred Guineas had been placed in their 
 hands for the purpose of promoting an inves- 
 tigation into the financial condition of the 
 country the desired investigation to take 
 the form of an ' Essay on the present Finan- 
 ' cial Position of the Country, as affected by 
 ' recent events, in which the principle of a 
 6 Sinking Fund should be discussed, and also 
 6 an investigation made as to the best mode 
 ' of gradually liquidating the National Debt.' 
 The competing Essays to be delivered to the 
 Society of Arts on or before the jist day of 
 December in the same year. 
 
Vlll PREFACE. 
 
 The Essays having been sent in at the 
 appointed time, were submitted to the inves- 
 tigation of the chosen adjudicators ; who, 
 in the month of July, 1858, gave their 
 award, which was reported by the Journal 
 of the Society of Arts, in the following 
 terms : 
 
 ' Mr. J. T. Danson, Fellow of the Statistical Society, 
 ' Mr. Charles Neate, Professor of Political Economy in the 
 ' University of Oxford, and Mr. Jacob Waley, Professor 
 
 * of Political Economy in University College, London, the 
 ' adjudicators appointed by the Council of the Society of 
 
 * Arts, have reported that they have unanimously selected 
 ' the Essay marked ' E. C. S.' as deserving the award of 
 ' the prize of Two Hundred Guineas, placed in the hands 
 ' of the Council by Mr. Henry Johnson.' 
 
 As it was one of the conditions of the com- 
 petition, that the author of the successful 
 Essay should have the privilege of publishing it 
 if he desired to do so, he begs now to submit it 
 to the notice of the public ; and, in doing so, 
 deems it necessary to state, that, not being a 
 litterateur by profession, but a person regularly 
 occupied during eight or nine hours of each 
 
PREFACE. IX 
 
 day in the ordinary avocations of commer- 
 cial life in the City of London, he has had no 
 other time for its composition than that 
 afforded in detached and fragmentary por- 
 tions before and after the regular business 
 hours of each day. He is quite aware that 
 this circumstance does not exempt him from 
 the consequences of fair and candid criticism 
 of the principles or philosophy of his Essay ; 
 but it may, perhaps, be accepted as some 
 apology for any slight errors which may be 
 detected in any of the statistics given ; the 
 various public statements of which cannot 
 always be harmonised, without the devotion 
 of much more time than it was in the power 
 of the author to give. 
 
 With regard to the subject matter of the 
 Essay, and, more especially with reference to 
 the propositions for the liquidation of the 
 National Debt, which the Author submits to 
 public consideration it may, at first sight, 
 appear somewhat visionary to propose the 
 payment of the Debt without calling for con- 
 tributions from any quarter to effect that 
 
PREFACE. 
 
 object. But it must be remembered, that we 
 already have all the separate elements which 
 are essential to the production of the wealth 
 which is needed for the redemption of the 
 Debt, and that these elements merely require 
 putting together to produce the desired re- 
 sult. Capital, labour, and land, with ade- 
 quate protection of life and property, are all 
 the elements that political economists recog- 
 nise as being essential to the production of 
 wealth to any extent ; and of each of these 
 we possess a surplus, which requires profit- 
 able employment, and which may find such 
 employment in the very process of furnishing 
 the fund for the liquidation of the Debt. It 
 is not by any financial juggle that the Debt is 
 to be got rid of, but by the employment of 
 resources which we fortunately possess in 
 abundance. 
 
 It may not be out of place if the Author 
 notices it as a somewhat singular coincidence 
 that, since this Essay was written and deli- 
 vered to the adjudicators, the Government 
 have taken some important steps in the very 
 
PEEFACE. XI 
 
 direction pointed out and recommended in its 
 remedial part. The actual abolition of the 
 East India Company's rule over Hindostan, 
 and the prospective and announced abolition 
 of the monopoly of the Hudson's Bay Com- 
 pany over a great portion of the territory of 
 North America, will remove some of the diffi- 
 culties which stood in the way of the trial of 
 the plan recommended. The very founda- 
 tions of the empire on the shores of the 
 Pacific, which the Author contemplated as a 
 possible occurrence at some future time (see 
 page 170) are, at this moment, being laid by 
 the formation and establishment of the new 
 colony of British Colombia, an expedition 
 under Colonel Moody having just left our 
 shores for the purpose of accomplishing the 
 object. To open up to profitable colonization 
 the magnificent country which lies between 
 the eastern boundary of this new settlement 
 and the western portions of Canada, would be 
 an enterprise worthy of the abilities and the 
 devotion of the most accomplished of our 
 statesmen ; and, if made subservient, at the 
 
Xll PKEFACE. 
 
 same time, to the redemption of the Debt, 
 worth any amount of expense that it might 
 entail. 
 
 Not the least gratifying feature connected 
 with the colonisation of this portion of our 
 empire is the discovery of the rich gold de- 
 posits with which it appears to abound. As 
 long as the public mind is profoundly im- 
 pressed with the conviction that money must, 
 necessarily, be made of gold, so long is it of 
 great importance that ample supplies should 
 be forthcoming to carry on with facility the 
 continually augmenting commerce to which 
 successful colonisation gives birth ; though 
 whether such conviction is founded upon a 
 correct idea of the real nature and proper 
 functions of money, is, we think, open to the 
 gravest doubts. 
 
 There is one branch of the financial con- 
 dition of the country affected by the National 
 Debt which, for want of sufficient time, the 
 author was unable to touch upon ; namely, 
 that connected with our foreign trade. There 
 does not appear to be any general agreement 
 
PEEFACE. Xlll 
 
 among public men and public writers, as to 
 the main point to be aimed at in the prose- 
 cution of our trade with foreign countries ? 
 Ought we to aim at an excess of exports, or 
 an excess of imports ? Has the trade which 
 we have been carrying on with other nations 
 for the last fifty years resulted, on the whole, 
 in a fair exchange of equal values on the part 
 of the respective trading parties ? Has the 
 marvellous change which has taken place, 
 within that period, with respect to ' Official ' 
 and ' Declared ' Values, been entirely brought 
 about by the mere lapse of time, rendering 
 the ' Official Scale of 1696' utterly inappli- 
 cable to values of the present day ; or is the 
 change to be attributed wholly, or in part, to 
 the influence of our other fiscal and monetary 
 arrangements ? These are points which cer- 
 tainly ought to be examined in any work 
 professing to treat of the general financial 
 position of the Country ; but it was quite im- 
 possible for the Author of this Essay to enter 
 upon them with the very limited time at his 
 disposal. Should the present little work, 
 
XIV PREFACE . 
 
 however, be as favourably received by the 
 public as by the eminent men who have given 
 their unanimous award in its favour, the 
 Author may be encouraged to embrace the 
 first opportunity which occurs of submitting 
 his thoughts on the above subjects to public 
 consideration. 
 
CONTENTS. 
 
 Part First. 
 
 THE STATISTICS, HISTORY, AND OPERATION OF THE 
 NATIONAL DEBT. 
 
 CHAPTER I. 
 
 Introductory Chapter. 
 
 PAGE. 
 
 Introductory Remarks i 
 
 CHAPTER II. 
 On the Origin of the National Debt. 
 
 1694. Bank of England 5 
 
 First Portion of the present National Debt 5 
 
 Litigation with Charles II 6 
 
 Introduction of Loans 6 
 
 Sale of Annuities 7 
 
 Loans under William III. and Queen Anne 7 
 
 Low State of Public Credit 8 
 
 Sale of Exchequer Tallies 8 
 
 Permanent Debt 8 
 
 Grants of Perpetual Annuities 9 
 
xvi CONTENTS. PART I. CHAR III. 
 
 CHAPTER III. 
 
 Further History of the Debt to the Year 1797, and the 
 Money Value of that which was borrowed. 
 
 PAGE. 
 
 George I. Reduction of the Debt 1 1 
 
 George IT 1 1 
 
 Improvident Mode of creating Funded Stock . . . . 1 2 
 
 Loans in a 3 per cent. Stock 13 
 
 1781. Resolutions of the Commons 14 
 
 Reckless Terms for a Loan of 12,000,000 15 
 
 Lottery Tickets 16 
 
 Author's discovery of this Mode of contracting Loans . 1 7 
 
 Dr. Price's Opinions 17 
 
 Loans of 1759 and 1762 18 
 
 Sir J. Sinclair's Account 18 
 
 Dr. Hamilton's Statement 19 
 
 Reasons for 3 per cent. Loans 20 
 
 Comparative Advantages of 3 per cent. Loans .... 21 
 The Advantages of 3 per cent. Loans do not counterba- 
 lance their Injustice 22 
 
 Uncertainty of the Value borrowed in William III.'s Reign 2 3 
 
 Increase of Debt under Queen Anne 23 
 
 George I. and II ( 24 
 
 Douceurs to Contractors 24 
 
 American War of 1776 . 24 
 
 Increase of Debt in 1776 and 1786 25 
 
 French Revolution 25 
 
 Average Rate at which the Loans were contracted from 
 
 1793 to 1816 26 
 
 Debt in 1793 27 
 
 Amount of artificial Increase, besides an Increase re- 
 deemed by the Sinking Fund 27 
 
CONTENTS. PART I. CHAP. IV. xvi 
 
 PAGE. 
 
 Debt paid and Debt created for every 100 money, 
 
 from 1793 to 1816 28 
 
 Marshall's Account 29 
 
 Loan of 1816 29 
 
 Total Amount of artificial Enhancement of Debt ... 29 
 
 Variation of Accounts 30 
 
 Statement of Debt in 1833 31 
 
 Items of Debt 32 
 
 Total Amount of Debt 33 
 
 CHAPTER IV. 
 
 What was the Value really borrowed by the State, in the Con- 
 tracting of the National Debt, up to the Year 1816. 
 
 Increase of Debt 34 
 
 What is a Pound '? 35 
 
 Debt at Close of French war 35 
 
 Peel's Definition of a Pound 36 
 
 Bullionist Opinions 36 
 
 Peel's Definition unsatisfactory 36 
 
 And, in fact, not true 37 
 
 Payments by Tale of Silver Coin restricted 37 
 
 Variation of the Pound 37 
 
 General Thompson's Notice 38 
 
 General Thompson's View of a ' Pound " 39 
 
 General Thompson's Resolutions 39 
 
 What is Value? 42 
 
 The real Standard of Value 43 
 
 Corn the Standard of Value 43 
 
 Horner 43 
 
 b 
 
xviii CONTENTS. PART I. CHAP. V. 
 
 PAGE. 
 
 Locke 43 
 
 John Taylor 43 
 
 Dr. Adam Smith 43 
 
 Gold and Silver no Standards of Value apart from the 
 
 Price of Provisions 44 
 
 Proper characteristics of a Standard 45 
 
 Difference between a Standard and a Measure .... 45 
 
 Standard of English Measure . . . . 46 
 
 John Taylor's Essay on the Standard of Value .... 46 
 
 Real Amount of the Debt in Corn 47 
 
 Price of Wheat before 1793 47 
 
 Price from 1793 to 1816 47 
 
 Cora Value of the Debt 48 
 
 Real Value of Debt in 1797 48 
 
 The Fundholder of the last Century no cause to complain 49 
 
 CHAPTER V. 
 
 History of the Debt from 1816 to 1857. 
 
 Alterations in the Debt 51 
 
 Irish and English Exchequers 51 
 
 Raising Loan of 3,000,000 51 
 
 Redemption of Stock 52 
 
 Funding of Exchequer Bills 53 
 
 Bank of Ireland 53 
 
 Diminution of Debt 54 
 
 Reduction of Navy 5 per Cents. 54 
 
 Alteration of the Sinking Fund 54 
 
CONTENTS. PART I. CHAP. VI. xix 
 
 PAGE. 
 
 Annuity proposed by Vansittart 55 
 
 Failure of Mr. Vansittart . . . 56 
 
 The Dead Weight 56 
 
 The Emperor of Germany's Debt commuted .... 56 
 
 Reduction of 4 per Cents 57 
 
 Prosperity in 1824 57 
 
 Mr. Hume's Resolutions 58 
 
 Proposed Alteration of Sinking Fund 59 
 
 Funding Exchequer Bills 59 
 
 Reduction of New 4 per Cents 59 
 
 Reduction of Old 4 per Cents 59 
 
 Emancipation Grant 60 
 
 Funding of Exchequer Bills 60 
 
 Reduction of 3^ per Cents 61 
 
 Distress in Ireland 61 
 
 Mr. Gladstone's Plan 62 
 
 Loan for the Russian War in 1855 63 
 
 Provision for Redemption of Debt 64 
 
 Loans since 1855 65 
 
 Foreign Guarantees 65 
 
 Sardinian Loan 65 
 
 Debt for War against Russia 66 
 
 CHAPTER Vl. 
 
 Change produced by the National Debt in the System of 
 Taxation of the Country. 
 
 Ancient Taxes, direct 68 
 
 Change to indirect Taxation 68 
 
xx CONTENTS. PART I. CHAP. VII. 
 
 PAGE. 
 
 Origin of the Excise Duties 69 
 
 Excise Duties in 1790 70 
 
 Comparison of direct and indirect Taxes 70 
 
 General Discontent with the Income Tax 71 
 
 The Times on the Income Tax ....71 
 
 Antagonism of Taxation and Currency 72 
 
 Results of our Systems of Taxation and Currency . . .73 
 
 CHAPTER VII. 
 
 The Antagonism pi^oduced by the National Debt between our 
 Systems of Taxation and Currency. 
 
 Indirect Taxation 74 
 
 Influence of Taxes on Prices 74 
 
 Soap an Example 75 
 
 Producers as Producers should not pay Taxes, only as 
 
 Consumers 76 
 
 Proper Effect of indirect Taxes practically lost sight of . 77 
 
 CHAPTER VIII. 
 
 Operation of the National Debt upon the Currency of the 
 Kingdom. 
 
 Action of the Bank on the Currency 78 
 
 Exchequer Tallies 78 
 
 Goldsmiths' Notes 78 
 
 Our ancient Currency 79 
 
 Sir W. Davenant 79 
 
 Revolution of 1688 80 
 
 Conduct of the Bank 80 
 
CONTENTS. PART I. CHAP. X. xxi 
 
 PAGE. 
 
 Contraction of the ancient Currency 8 1 
 
 Contraction of Currency between 1698 and 1714. ... 82 
 
 Injurious Effects of undue Contraction . ...... 82 
 
 Depression of Prices 83 
 
 Lowering of Wages 84 
 
 Policy of the Bank 84 
 
 Remarks on our Foreign Trade 85 
 
 CHAPTER IX. 
 
 Two popular Fallacies respecting the Debt. 
 
 Popular Fallacies 86 
 
 Wealth of the Country gg 
 
 Effect of Mortgage exemplifying the Debt 87 
 
 CHAPTER X. 
 
 On the Sinking Fund. 
 
 Schemes to reduce the Debt 
 
 * ' ' 9 
 
 .... 90 
 Plan proposed in 1 7 1 6 
 
 History of the Sinking Fund I 
 
 Ricardo on the Sinking Fund 
 
 Mr. Pitt's Sinking Fund 95 
 
 Mr. Fox's Amendment 
 
 Sinking Fund of 1792 
 
 Mr. Pitt's Explanations 9 g 
 
 Ricardo's History 8 
 
xxii CONTENTS.-PAKT II. CHAP. I. 
 
 Lord Sidniouth's Proposal in 1802 98 
 
 Change in 1807 99 
 
 Vansittart's Proposal in 1 8 1 3 100 
 
 Vansittart's Resolutions 100 
 
 Lord Sidmouth's Arrangement rescinded 102 
 
 Sinking Fund up t& 1823 102 
 
 Alteration in 1823 103 
 
 Alteration in 1829 103 
 
 Fallacy of supporting a Sinking Fund by borrowing . . 1 04. 
 Causes of the Failure of the Sinking Fund . . . . .105 
 
 Dr. Hamilton's Views 105 
 
 Mr. Hume's Views 107 
 
 Mr. Hume's Resolutions 108 
 
 Proper Foundations of a Sinking Fund 109 
 
 Present Views of a Sinking Fund 109 
 
 Part Second. 
 
 THE PRESENT FINANCIAL CONDITION OF THE COUN- 
 TRY, AND SUGGESTIONS FOR IMPROVING IT. 
 
 CHAPTER I. 
 
 Comparison of our Present and Prospective Condition with 
 that of Former Years. 
 
 Retrospective View of the Debt 115 
 
 Sir J. Sinclair's History 1 1 6 
 
 Extracts from Sinclair's History 1 1 6 
 
CONTENTS. PART II. CHAP. I. xxiii 
 
 PAGE. 
 
 Public Lamentations respecting the Debt 117 
 
 Lord Macaulay's Account of the Effect of the Debt on 
 
 the Nation 118 
 
 Fallacy entertained as to the Debt 120 
 
 State Embarrassment not National Ruin 121 
 
 Impolicy of taking People from Productive Industry . .121 
 
 Hindrances to Production the Road to Ruin 122 
 
 Our Wealth increases faster than our Debt 123 
 
 A more hopeful View . 123 
 
 Wealth of the Kingdom 124 
 
 Gregory King's Estimate 1 24 
 
 Dr. Beeke and Sir W. Pulteney's Estimate 124 
 
 Colquhoun's Estimate 1 24 
 
 Conjectured Wealth of the Kingdom at the present Time 125 
 
 Wealth of the Kingdom 126 
 
 Mr. Porter's Estimate of Personalty 126 
 
 Mr. Porter's Statement respecting Real Property . . .127 
 
 Colquhoun's Statement 127 
 
 Revenue of the Kingdom 128 
 
 Mr. W. R. Smee's Statement 128 
 
 Our Wealth still capable of Extension 129 
 
 Increase of National Wealth 129 
 
 Mitigation of the Burden of the Debt 129 
 
 Nature of our Increased Wealth 130 
 
 What the National Wealth consists of 131 
 
 Importance of Promoting the Increase of Wealth . . .132 
 
 Evil Effects of the Panic of 1857 133 
 
 Reports of the Fall of Prices in 1857 134 
 
 The Philosophy of Production 135 
 
 Encyclopaedia Britannica on the Production of National 
 
 Wealth 135 
 
 Absurdity of the Cry of Over-production 136 
 
xxiv CONTENTS. PART II. CHAP. II. 
 
 PAGE. 
 
 Mr. Ricardo on Over-production 136 
 
 Soundness of Mr. Ricardo's Views , 138 
 
 It is not Over-production that afflicts us 139 
 
 Nature of National Income 139 
 
 Average Income of Families 139 
 
 Distribution of Increased National Income 140 
 
 No Fear of the Industry of the Country, if allowed free 
 
 Scope 141 
 
 Effect of the Gold Discoveries 142 
 
 Decline in the Exchangeable Value of Gold . / . . .143 
 
 CHAPTER II. 
 
 Plans heretofore suggested for the Liquidation of the National 
 Debt. 
 
 Plans for the Liquidation of the Debt 144 
 
 Actual Payment of the Debt 145 
 
 Such Payment neither possible nor desirable . . . .145 
 Transfer of a Portion of every Person's Property . . .146 
 
 Such Transfer not practicable 147 
 
 Payment by Instalments 147 
 
 The new 3 per Cents cannot be redeemed at present . .148 
 Payment of the Debt unfair to the present Generation, and 
 
 more burdensome than paying the Interest . . .149 
 Conversion of the Debt into Terminable Annuities . .149 
 Universal Objection to Terminable Annuities . . . .150 
 
 Redemption of the Debt by a Sinking Fund 151 
 
 Reduction of the Debt by Conversion into another Stock i5z 
 Something else wanted 153 
 
CONTENTS. PART II. CHAP. III. xxv 
 
 CHAPTER III. 
 
 Proposals for the Liquidation of the National Debt. 
 
 Various Modes may be simultaneously employed . . . 1 54 
 
 Our Money System should be reformed 155 
 
 Payment of the Debt by Property not at all probable .156 
 Diminishing Annuities as well as Terminable . . . .157 
 Such Annuitants to have proper Compensation . . . .158 
 
 Plan proposed . . 158 
 
 Land in its present State valueless 1 6 1 
 
 Desirable Results 162 
 
 Main Points that we have to consider 164 
 
 Abundance of Capital to carry out the Plan 165 
 
 Suitable Colonies for the Plan 165 
 
 Hudson's Bay Company's Territory 166 
 
 Sir Alexander Mackenzie 166 
 
 Mr. Montgomery Martin ,..166 
 
 Commissioner of Crown Lands 167 
 
 Saskatchewan District 167 
 
 Sir J. Franklin . 168 
 
 Sir George Simpson 169 
 
 America uses her Lands to pay her Debts 170 
 
 The separate States cede their Rights to the Federal 
 
 Government 171 
 
 Government Survey 172 
 
 Townships 172 
 
 Sales by Auction 173 
 
 Sales at the Land Offices 173 
 
 Construction of Roads, etc 173 
 
 Debt paid off 1 74 
 
 We surely can do what America has done 174 
 
 c 
 
ixvi CONTENTS.-PART II. CHAP. IV. 
 
 PAGE. 
 
 India a suitable Field 175 
 
 Effect on Slavery 175 
 
 The End to be attained worthy of Effort 176 
 
 Postscript, with the President's Message 177 
 
 Rumour respecting the East India Company 179 
 
 CHAPTER IV* 
 
 Summary. 
 Conclusions arrived at 1 8 1 
 
 CHAPTER V. 
 Concluding Remarks. 
 
 Our present State a hopeful one 185 
 
 Expiration of Long Annuities 183 
 
 Cessation of ' Dead Weight Annuity' 186 
 
 Unsatisfactory State of our Money System 186 
 
 Any Distress we at times experience must arise from 
 
 artificial Causes 187 
 
PAKT I. 
 
 THE 
 
 STATISTICS, HISTORY, AND OPERATION 
 OF THE NATIONAL DEBT. 
 
THE 
 
 NATIONAL DEBT FINANCIALLY 
 CONSIDERED. 
 
 CHAPTER I. 
 
 INTRODUCTORY REMARKS. 
 
 express and contemplated purpose of this CHAP.I. 
 Essay being that of a thorough examination of introduc- 
 the general financial condition of the kingdom, with marks. 
 a view to its practical improvement, it would not, we 
 presume, at all accomplish the ends for which it was 
 projected, if it were confined to a mere history or 
 recital of the past and present income and expend- 
 iture of the country, and its present debts and lia- 
 bilities. To be of practical service, it must have a 
 much wider scope, a more comprehensive range. 
 Where erroneous principles of finance have been 
 acted upon, they must be pointed out, and their evil 
 results laid bare, that a repetition of them may be 
 guarded against. If, in any quarter, or by any 
 possible mode of procedure, a greater amount of 
 prosperity may be attained, than is at present en- 
 joyed, the possibility and mode of such attainment 
 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED- 
 
 CHAP - ! - should be clearly stated. In this investigation, the 
 toryRe- c " National Debt will necessarily form the most promi- 
 nent subject of enquiry; for to it is the country in- 
 debted for all that is peculiar and extraordinary in its 
 financial condition. Were it not for this debt, the 
 finances of this rich country would necessarily be in 
 the most flourishing condition ; and if, by any means, 
 this debt can be gradually liquidated, very little 
 enquiry need be made, or anxiety felt, respecting 
 the ordinary annual obligations and disbursements of 
 the country. 
 
 Seeing, then, that the National Debt exerts so 
 important an influence upon the present financial 
 welfare of the nation at large, we shall endeavour to 
 give our readers a thorough comprehension of it in 
 its financial, but not in its political aspect ; by tracing 
 its rise, history, and progress from the earliest period 
 to the present day by investigating the modes of 
 contracting it, the endeavours to redeem it by the 
 Sinking Fund, its influence upon our Taxation and 
 Monetary Systems, and the modes suggested for its 
 redemption. It is only by a careful examination of 
 these points, at least, that we can arrive at anything 
 like an adequate conception of the bearing of the 
 National Debt upon the financial condition of the 
 kingdom. 
 
 The opinions which have been formed respecting 
 the nature of the influence which this debt has 
 exerted, and still exerts, upon the welfare of the 
 
OPINIONS AS TO THE NATIONAL DEBT. ; 
 
 country, have been of the most contradictory cha- CHAP. i. 
 
 racter. While one party has stigmatised it as the introduc- 
 tory Re- 
 chief source of the misery which has afflicted the marks - 
 
 humbler, and clogged the operations of the wealthier 
 classes, another party has lauded it, as the successful 
 agent of distributing wealth, which, but for it, would 
 have lain useless and unemployed. While one has 
 considered it a deduction from the real wealth of the 
 country, the country being, by just its amount, the 
 poorer, the other has considered it as actually adding 
 so much capital to the country, the country being, 
 by its amount, just so much the richer. While one 
 has denounced the debt as putting the country, in a 
 great degree, in the power of the foreign proprietors 
 of its public funds ; another has hailed it as an addi- 
 tional security to the country, by making it the 
 interest of the foreigner to promote its welfare and 
 prosperity. As far as these conflicting opinions 
 affect the financial aspect of the Debt, the author of 
 this essay will endeavour to investigate them. As far 
 as they are political in their bearing, he will endea- 
 vour to avoid them. One great and general point he 
 will aim at, namely, to steer as clear as possible of 
 the two extremes of making this essay, on the one 
 hand, a mere repertory of statistics and facts without 
 any principles for making an application of them ; 
 and, on the other, of presenting a mere abstract 
 generalisation of principles, without corresponding 
 facts and figures to test their truth. 
 
^THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 ciiA. i. The present is a highly favourable opportunity for 
 tr<^c-"<Jthe investigation of this subject ; and it is to be hoped 
 . --that all parties engaging in it will feel that a solemn 
 and responsible duty rests upon them to rise superior 
 ^to the mere dissemination of party and prejudiced 
 iyiews, and that, avoiding as much as possible fore- 
 gone conclusions, they are bound conscientiously to 
 
 ^w Xfc *^t 
 
 ^engage in its investigation with a view to the deve- 
 lopment of truth alone. *^ *<-> 
 
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CHAPTER II. 
 
 ON THE ORIGIN OF THE NATIONAL DEBT. 
 
 HP HE National Debt is generally supposed to have CHAP. ir. 
 
 had its origin in the establishment of the Bank ^ 
 of England in the year 1694 ; the sum of 1,200,000 England. 
 then advanced on loan by the Bank to the Govern- 
 ment being usually considered as forming the first 
 item of the debt now owing by the nation. This is 
 not, however, a correct supposition ; the earliest con- 
 tracted portion of the present debt being, in fact, a 
 sum of 664,263, part of a larger sum which had 
 been advanced by various bankers and merchants to 
 Charles II., and which that monarch, by shutting up 
 the Exchequer, on the 2nd of January, 1672, refused 
 to pay. The entire sum so detained was 1,328,526, 
 for which, upon its detention, Charles promised to 
 pay 6 per cent, interest; and for a few years he per- 
 formed his promise. Shortly, however, before his 
 decease, the payment of the interest was stopped; 
 and the unfortunate creditors had to apply to the 
 Courts of Law to enforce a settlement of their claim. 
 Then ensued a protracted struggle in the Courts of 
 Law and Equity, which lasted for about fourteen 
 
 

 CHAP. II. 
 
 Litigation 
 with 
 Charles II. 
 
 i 
 % 
 
 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 years, at the end of which time a kind of compromise, 
 most disgraceful to the Government, was effected, by 
 means of which it was, in the year 1699, enacted, 
 that one-half only of the stipulated interest of 6 per 
 cent, should be paid, and that the entire debt itself 
 should at any time be redeemable by the payment of 
 one-half of the principal. This payment has never 
 yet been made ; and the sum of 664,263 still forms 
 the earliest contracted portion of the present Na- 
 tional Debt. It does not now, however, appear as a 
 separate item, it having been subsequently incorpo- 
 rated with the South Sea Stock. 
 
 With the foregoing exception, the National Debt 
 can scarcely be said to have had an existence prior 
 to the establishment of the Bank in 1 694 j nor, in- 
 deed, was the money, borrowed for the service of the 
 State, consolidated into a permanent fund or debt 
 for some years after this event. At first, the sup- 
 plies required by the Government were raised by 
 borrowing money in anticipation of the revenue to 
 be derived from various taxes, it being expected that 
 the produce of these taxes would fully redeem the 
 liabilities thus incurred. It, however, frequently 
 happened, that the taxes produced less than the 
 amount of money borrowed in anticipation of them; 
 and the deficiency thus caused amounted, in a few 
 years, to several millions sterling. During the reign 
 of William and Mary, the practice also prevailed of 
 raising money by temporary annuities, these being 
 
 
ON THE ORIGIN OF THE NATIONAL DEBT. J 
 
 granted both for short terms of years, and for one, CHAP. u. 
 
 two, or three lives, the Government paying the sale of An- 
 nuities. 
 
 most extravagant terms for the accommodation thus 
 afforded. It was these annuities that thus first pre- 
 pared the way for, and gradually introduced, the 
 permanent funding system; for many of them, 
 though only granted in the first instance for short 
 periods, were afterwards extended to a period of 
 ninety-six years, the holders of them only paying 
 for this great prolongation four and a half years' 
 purchase on the amount of the annuity. 
 
 Colquhoun calculates that the sums borrowed Loans under 
 
 William III., 
 
 during the reign of William and Mary amounted to 
 44,100,795, while the taxes which were to have 
 redeemed the 'sums so borrowed, produced only 
 34,034,518. The deficiency thus occasioned, with 
 other liabilities incurred, made the National Debt, 
 at the decease of William, to amount to 16,394,702, 
 and the interest to 1,310,942. 
 
 During the reign of Anne, the credit of the nation and under 
 
 Queen 
 
 sank to a very low ebb ; and the Government was Anne. 
 much embarrassed by the great quantity of its float- 
 ing securities which were in circulation. This is, 
 however, not much to be wondered at. It was but 
 natural that, for many years after the glorious Revo- 
 lution, and while there were still two great parties 
 in the country intent upon subverting each other, 
 much distrust and uncertainty should prevail whe- 
 ther the new order of things would be permanently 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 n. established. As long as there was any doubt about 
 this, it was plainly a question whether the securities 
 of the de facto Government were really trustworthy. 
 This feeling, combined with a financial embarrass- 
 ment on the part of the Government, so great as to 
 induce it to grant annuities for one life for nine 
 years* purchase, for two lives for eleven years* pur- 
 chase, and for three lives for twelve years* purchase, 
 sank the credit of the State so low, that its securities 
 were at a discount of 40, 50, and even 60 per cent, 
 in the market. To relieve itself from this state of 
 perplexity and embarrassment, the Government 
 gladly allowed the Bank to purchase Exchequer 
 Tallies and other securities to the amount nominally 
 of more than one million sterling, at the enormous 
 discount just mentioned, and upon condition of with- 
 drawing them from circulation to add them to its 
 8 
 
 capital as so much money lent to the Government, 
 ''' and for which the Government agreed to pay the 
 Bank 6 per cent, interest on the whole nominal 
 amount. 
 
 A much larger quantity of these Public Securities 
 was bought up and funded in a similar way by the 
 East India and South Sea Companies a fund hav- 
 ing been formed by the latter company about the 
 year 1710 of 9,471,325, the interest of which, at 
 6 per cent., amounted to ^568,279 per annum. 
 
 Thus arose the permanent public debt of the 
 country a debt unparalleled in history, whether 
 
 Nfr 
 
Anntutie 
 
 ON THE OKIGIN OF THE NATIONAL DEBT. < 
 
 we consider its amount, the extraordinary modes CHAP.II. 
 resorted to in contracting it, or the vast influence it 
 has exercised on the destinies of individuals, of the 
 nation, and of the world at large. 
 
 At the death of Anne, the total debts of the nation. Grants of 
 
 ' Perpetual 
 
 funded and unfunded, were, as has been calculated Annuities. 
 by Sir John Sinclair, 54,145,363, and the annual ' 
 interest payable thereon, ^3,351,358. From the 
 circumstances we have just detailed, we think we 
 are warranted in coming to the conclusion, that this 
 was the period when the National Debt was first 
 accepted and considered as an established institution 
 of the empire. Hitherto the loans had, in a great 
 degree, been looked upon by the public as temporary 
 in their nature the annuities being for short periods 
 or for lives. Now, however, perpetual annuities were 
 granted ; and, henceforth, the public debts were 
 generally considered as practically irredeemable, 
 though many persons were still sanguine enough to 
 believe, that by the operation of a sinking fund, or 
 by other devices, plenty of which were tendered by 
 ingenious men, the burden might yet be removed 
 from the shoulders of the nation altogether. How 
 futile this expectation was, our further investigations 
 will demonstrate, though it is not at all clear, but 
 that, with proper efforts made during the succeeding 
 and comparatively peaceful reign of George I., the 
 greater part, if not the whole, of the debt might have 
 been paid off. We doubt, however, whether any 
 
TO THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. u. permanent good would have arisen from a partial 
 redemption of the public burdens. Could the whole 
 have been paid off, and no nucleus left for future 
 engagements to cluster around, the experience which 
 the nation had already had of the disastrous way in 
 which money had been raised in a time of necessity, 
 and the alarm which had been diffused throughout 
 the empire at what was then considered the over- 
 whelming weight of the public debt, might have 
 induced it to come to a resolution to prohibit in 
 future the raising of money upon annuities, either 
 temporary or perpetual, and to provide for the ex- 
 penses of each year in each year. We think that 
 there is good ground to believe, that this is perfectly 
 practicable where no previous weight of debt hangs 
 over a nation. 
 
II 
 
 CHAPTER III. 
 
 FURTHER HISTORY OF THE DEBT TO THE YEAR 1797, 
 AND THE MONEY VALUE OF THAT WHICH WAS BOR- 
 ROWED. 
 
 T?OR many years subsequent to the period at which C IIAP - " r . 
 we have now arrived, there was little or no George i. 
 
 Ke-iuction 
 
 addition made to the amount of the Public Debt. of the Debt - 
 In the succeeding reign of George I. there was, on 
 the contrary, a small diminution effected, to the 
 amount of about two millions in the principal, as 
 well as a much larger proportionate reduction in the 
 interest, the latter being reduced by more than one 
 million sterling per annum. During the first twelve 
 years also of the reign of George II., and until the George n. 
 war with Spain broke out, a further diminution of 
 about five millions was effected, so that when the 
 Spanish war commenced in 1739, the national debts, 
 funded and unfunded, did not quite amount to 
 47,000,000 sterling. During the nine years, how- 
 ever, that this war lasted, an addition of no less than 
 31,000,000 was made to the debt, which was thus 
 raised from 47,000,000 in 1739, to 78,000,000 in 
 1748, the interest being correspondingly increased 
 
I 2 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, in. f rom i ess than 2,000,000, in the former period, to 
 upwards of 3,000,000 per annum in the latter. 
 
 This great increase is more especially worthy of 
 om a ^tention and consideration, inasmuch as it was 
 partly owing to a most injurious practice resorted to 
 at that time, and which has, subsequently, prevailed 
 to so fearful an extent as to add, unnecessarily, 
 several hundred millions to the capital of the debt. 
 The practice referred to is that of borrowing money 
 by creating a stock bearing a lower nominal rate of 
 interest than that generally prevailing at the time 
 the money is borrowed ; the borrower, who, in this 
 case, was the Government, receiving, in consequence, 
 a less amount of money in exchange for this stock. 
 By this means, a much larger amount of debt or 
 stock is created than the money received for it ; and 
 though, possibly, it may make but little difference at 
 the time the transaction first takes place, yet should 
 the nation ever be in a condition to pay off its incum- 
 brances, it can only do so by paying off all that 
 nominal excess for which it has been made liable. 
 To make this more intelligible to the general reader, 
 we will suppose a case by way of illustration. 
 
 Let us suppose, then, that the Government wants 
 to borrow a sum of 10,000,000 sterling to carry on 
 a war, or for any other purpose, and that the current 
 rate of interest prevailing at the time, for money 
 lent upon good security is 5 per . cent. The simple 
 and obvious mode is to borrow the <io s ooo,ooo at 
 
LOANS IN A 3 PER CENT. STOCK. 13 
 
 the current rate of interest, by creating a stock CHAP. in. 
 bearing an interest of 5 per cent., which would then 
 be called a 5 per cent, stock, and for every 100 of 
 which the government would be able to obtain 100 
 in money. This, we say, would be the simple and 
 obvious mode ; and, by adopting it, no more stock or 
 debt would be created than money received. 
 
 Let us next suppose that, instead of doing this, 
 the Government, either because it has been accus- 
 tomed to do so, or because the wealthy people 
 who lend money like it best, determines to borrow 
 the 10,000,000 required, in a 3 per cent, stock, 
 being a rate of interest 2 per cent, lower than the 
 current rate prevailing at the time. Now, what is 
 the result? Just this : the parties who lend the 
 money, or, in other words, bargain for and purchase 
 the stock, would naturally say, " We cannot give so 
 much for a 3 per cent, stock as we can for a 5 per 
 cent. one. For a 5 per cent, stock, we can give .100 
 for every .100 stock, but if it is to be only a 3 per 
 cent, stock, we can only give 60 money for it. By 
 adopting this mode, therefore, the Government must 
 necessarily create more stock or debt than the money 
 it receives for it ; for it must create i oo debt for 
 every 60 money. In the case under consideration, 
 the Government would not be able to obtain the 
 10,000,000 it wanted, without creating upwards of 
 1 6 millions of debt; the full amount of which the 
 country would be rendered liable to pay, should it 
 
14 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. m. ever be in the position, or have the wish, to pay off 
 
 the stock thus created. 
 i78i. As an officially authenticated specimen of this mode 
 
 Resolutions 
 
 ^ ^ orrow i n g money, and certainly one of the most 
 flagrant on record, we insert the resolutions of the 
 House of Commons of March 8th, 1781, author- 
 ising a loan of twelve millions sterling, towards the 
 supply granted to His Majesty in that year : 
 
 < Resolved, * March 8th, 1781. 
 
 * That towards raising the supply granted to 
 ( His Majesty, the sum of 12,000,000 be raised by 
 ' annuities, and the further sum of 480,000 by 
 ' lottery, in manner following that is to say : 
 
 4 That every contributor to the said twelve mil- 
 < lions shall, for one hundred pounds contributed and 
 ' paid, be entitled to the principal sum of one hun- 
 ' dred pounds in annuities after the rate of three 
 ' pounds per centum ; and to an additional principal 
 1 sum of fifty pounds in like annuities, after the rate of 
 ' three pounds per centum, and also to a further prin- 
 ' cipal sum of twenty -five pounds in annuities, after 
 ' the rate of four pounds per centum, respectively, 
 4 to commence from the fifth day of January, 1781. 
 
 ' That the sum of twelve millions to be contributed, 
 ' as aforesaid, together with the additional capital of 
 4 fifty pounds to every one hundred pounds advanced 
 4 and paid, amounting to six millions, making toge- 
 ( ther, in the whole, eighteen millions in annuities 
 
IMPROVIDENT LOAN OF 1 78 I. 
 
 1 after the rate of three pounds per centum, be from CHAP. in 
 ' the time of their commencement added to. and Reckless 
 
 Terms for 
 
 ' made one joint stock with, the three pounds per 
 { cent, annuities, consolidated by the Acts of the llonSl 
 ' afth, 28th, 29th, 32nd and 33rd of George II., and 
 ' by several subsequent acts, and charged upon the 
 ' Sinking Fund, and shall be payable and transfer- 
 ' able at the Bank of England at the same time, and 
 ' in the same manner, and subject to the like re- 
 ' demption by Parliament, as the said three pounds 
 ' per centum consolidated annuities are payable and 
 ' transferable there, and redeemable by Parliament. 
 
 ' That the annuity, in respect of the said addi- 
 ' tional sum or capital of twenty-five pounds, to which 
 ' every contributor of one hundred pounds contri- 
 ' buted as aforesaid shall be entitled, making together 
 ' in the whole three millions, to carry an interest and 
 ' annuities after the rate of four per centum shall 
 ' be paid at the Bank of England for one quarter of 
 ' a year from the fifth day of January, 1781, to the 
 * fifth of April following, and from that time shall be 
 ' added and make one joint stock with certain annui- 
 ( ties after the rate of four pounds per centum which 
 { were consolidated by an Act of the last session of 
 ' Parliament, and shall also be charged upon the 
 ' Sinking Fund, and shall be payable and transfer- 
 ' able at the Bank of England at the same time and 
 ' in the same manner and subject to the like redemp- 
 f tion by Parliament as the said consolidated four 
 
1 6 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. m. < pounds per centum annuities are payable and trans- 
 ' ferable there and redeemable by Parliament. 
 
 Tickets ' That every contributor towards raising the said 
 
 ' sum of twelve millions shall, for every one thousand 
 ' pounds contributed, be entitled to four tickets in a 
 ' lottery to consist of forty-eight thousand tickets, 
 ' amounting to four hundred and eighty thousand 
 
 * pounds to be distributed into prizes for the benefit 
 ' of the proprietors of the fortunate tickets in the 
 ' said lottery, which shall be paid in money at the 
 ' Bank of England to such proprietors upon demand, 
 
 * as soon after the first day of March, 1782, as certi- 
 ' ficates can be prepared, without any deduction 
 ' whatsoever.' 
 
 Thus, for the purpose of effecting a loan of twelve 
 millions sterling, the Government pledged the coun- 
 try to pay to the parties who advanced the money, if 
 ever the stock should be redeemed, twenty- one mil- 
 lions sterling, with the present additional advantage 
 of lottery tickets worth 40 per 1,000 of capital 
 advanced, and of antedating the payment of the 
 interest by about a quarter of a year. The lottery 
 tickets were not, however, absolutely given without 
 equivalent, as the holders had to pay an additional 
 10 each for the four tickets; but it was neverthe- 
 less a great advantage to be able to share in the 
 chances of a lottery in which the whole of the money 
 received for tickets was given back to the holders of 
 the fortunate tickets in prizes. 
 
IMPROVIDENT LOANS. I 7 
 
 When the writer of this essay first discovered, CHAP. in. 
 many years ago. that this was the mode resorted to Author's 
 
 discovery of 
 
 in contracting the principal part of the loans, he of 
 
 first thought he must have made some mistake ; as loans - 
 it appeared to him quite impossible that a mode of 
 finance, so destructive to the welfare of succeeding 
 generations, could have been pursued. Finding, 
 however, upon repeated investigation, full confirma- 
 tion of the fact as now stated, he next thought he 
 had made a discovery scarcely known to any one 
 else; and, under this impression, communicated to 
 the public, by letters in the public journals and 
 otherwise, the knowledge he had obtained. More 
 extensive reading and research have, however, made 
 him acquainted with the fact, that the system of 
 finance now explained was well known to, and justly 
 reprobated by, some of the principal authorities who 
 have written on such subjects, a few of whose remarks 
 he will now subjoin. 
 
 Dr. Price writes : ' In order to raise two millions, ** 
 
 opinions. 
 
 ' the legislature created last year a new capital in 
 ' the 3 per cent, consolidated annuities of 2,150,000. 
 ' Every share of 77 los. in this new capital was 
 * valued at 65 175. 6c?., or every 100 stock at 
 ' 85. For the whole new capital, therefore, Go- 
 ' vernment has received in money 1,827,500. This 
 ' new capital the public may be obliged to redeem at 
 f par ; in which case 322,500 (being the difference 
 ' between 1,827,500 and 2,150,000), that is, 17^- 
 
 c 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, in. p er cen t. w in "be p a id by the public more than it 
 f has received. In this transaction, therefore, the 
 
 * Government has acted as a private person would 
 ( act, who, in order to raise 850 on a mortgage, 
 ' should promise for it 30 per annum (or 3^ per 
 ' cent, interest), and 150 (that is, ly-J per cent. 
 ' nearly) over and above the principal when the 
 4 mortgage came to be discharged. 
 
 ire? 1 f * ^ n *759 tne ^ tn vear f tn e l as ^ war ' *he lenders 
 ' of 6,600,000 were granted a capital in the 3 per 
 ' cents, of 7,590,000, together with the profits of 
 
 * the lottery. 
 
 1762. ( Again in 1762, in order to raise 12,000,000, 
 
 * every contributor of 80 was entitled to a capital 
 ' of 100, to bear 4 per cent, interest for nineteen 
 ' years, and afterwards to become redeemable, and 
 4 to bear interest at 3 per cent/ 
 
 Dr. Price calculates that, in this instance, 4,800,000 
 was needlessly added to the capital of the debt. 
 
 Sir John Sinclair writes thus : 
 sir j. sin- < It was during this period (viz., from 1779 to 
 
 clair's ac- 
 
 count. i 1748), that a practice, which began in the reign of 
 ' Queen Anne, of adding an artificial to the real 
 ' capital, was first carried to any great height. The 
 e funds are now considered as a permanent species of 
 ' property, which it was supposed the nation could 
 ' never totally redeem ; and it was, therefore, thought 
 ' better to dispose of a certain quantity of a 3 or 4 
 ' per cent, stock, and thus to make a bargain at one 
 
IMPROVIDENT LOANS. 19 
 
 ' determinate interest, than to establish new funds CHAP, in. 
 
 ' at different rates in proportion to the fluctuation of 
 
 ' the value of money, which, during a long war, was 
 
 ' perpetually increasing. The plan was, at first, less 
 
 ' pernicious than it has since proved. The price of 
 
 ' stocks, during this whole period, did not greatly 
 
 ' differ from the capital. Indeed, until the rebellion 
 
 * of 1745, the 3 per cents, had never been below 89. 
 ' But the same practice has since been pursued, 
 ' when these funds sold at little above one-half of 
 ' their nominal value; and the State has acknowledged 
 f itself indebted in a hundred pounds, when perhaps it 
 ' only received sixty. The ignorant might be thus 
 ' deceived into an opinion, that we were borrowing at 
 ' a lower interest than, in fact, was t\e case. We 
 ' have dearly paid, however, for this imaginary advan- 
 ' tage, by a great and solid addition to our national 
 ' incumbrance. How much of our present debts 
 4 ought to be attributed to this destructive mode of 
 ' raising money will be the subject of future in- 
 
 * quiry/ 
 
 Dr. Hamilton, to whom the credit is due of first Dr. Hamil- 
 ton's state- 
 pointing out the fallacy of a sinking fund, unless it meut - 
 
 were derived from, and sustained by, a surplus re- 
 venue, says : ' It has been maintained in the House 
 ' of Commons on the part of the Ministry ; and, if we 
 ' mistake not, even admitted by the Opposition, that 
 ' it was the duty of a financier to raise the loan at 
 ' the least annual expense it could be procured for, 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, in. < without regard to the amount of the nominal capital. 
 'We apprehend that this opinion is indefensible, 
 ' except upon the supposition that all views of dis- 
 ' charging the national debt, or any part of it, are 
 ' for ever laid aside, and that the measures founded 
 ' upon it, are very pernicious. The nation ought to 
 ' pay no more in discharge of debt than the sum 
 
 * borrowed, together with the interest during the 
 ( time the debt subsists. By the system now fol- 
 ' lowed, it pays, besides, the excess of the capital 
 ' assigned above the sum borrowed in case the re- 
 ' demption be at par. Or, if the price of the funds 
 
 * enables the Commissioners to redeem the debt on 
 { lower terms, the nation pays, in addition to the 
 6 sum borrowed, the difference between the price of 
 
 * stock at the times of borrowing and paying, which 
 ' is always great/ 
 
 Reasons for It will now, probably, be asked upon what grounds 
 
 3 per cent. 
 
 loans. could so pernicious a mode of borrowing money be 
 upheld by its apologists. The reply is, that, as a 
 3 per cent, stock was generally preferred to a 4 or 5 
 per cent, stock by the astute financiers who con- 
 tracted for the loans, the Government was able to 
 obtain the money it wanted on slightly better terms, 
 as regards the amount of annual interest to be paid 
 for it, by borrowing it in a 3 per cent, stock than in 
 a 4 or 5 per cent, stock. The reason, again, for this 
 preference on the part of the loan contractors for a 
 3 per cent, over a higher description of stock was 
 
3 PER CENTS. PREFERRED BY LOAN CONTRACTORS. 21 
 
 this : that there was a better chance of any rise in CHAP. HI. 
 
 value of which the stock might be susceptible, being 
 secured to themselves, than there would be if the 
 loan were effected in a higher stock. It must be 
 borne in mind that all descriptions of stock are re- 
 deemable at par, and that if they rise above par, that 
 is, if 100 stock becomes worth more than 100 
 money, the Government has the privilege of taking 
 the stock from the holders, and giving them money 
 instead, or, in other words, of redeeming or paying 
 it off or it may so arrange as to get the interest 
 reduced. Now this advantage on the part of the 
 Government, as against the parties who lend the 
 money, is more likely to be secured by the Govern- 
 ment in a 5 per cent, than in a 3 per cent, stock ; 
 inasmuch as a 5 per cent, stock will sooner rise 
 above par than a 3 per cent., and thus afford the 
 Government an opportunity of redeeming it, or re- 
 ducing the interest upon it. Did the various stocks 
 in the market bear prices in exact proportion to the 
 respective amounts of interest payable on them, their 
 respective prices would range as follows : When the 
 5 per cents, were at 95, the 4 per cents, would be at 
 76, and the 3 per cents, at 57. Now, it is evident compara- 
 
 .,,. 11 T -i tive advan- 
 
 that if the funds rise generally in value, the 5 per tages of 3 
 
 . percent. 
 
 cents, at 95 will sooner rise above 100, or par, than loans - 
 the 3 per cents, at 57 will, and be sooner liable, 
 therefore, to be paid off, or have the interest reduced. 
 Any rise in value which the 3 per cents, might attain, 
 was, therefore, more likely to be permanently secured 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. in. to the holders of the stock than an equal rise in a 5 per 
 cent, stock would be ; and, for this reason, the 3 per 
 cent, stock was preferred, and terms, a shade better 
 could be obtained by the Government, by negocia- 
 ting the loans in it, than in a higher description of 
 stock. 
 
 Theadvan- The slight advantage thus obtained is not, how- 
 
 tages of 3 
 
 percent, ever, for a moment to be considered as counter- 
 
 loans do not 
 
 balancing the impolicy and the injustice of the 
 
 injustice, proceedings we have been describing. If it be 
 doubtful whether we have any right whatever to 
 relieve ourselves of a present burden by throwing 
 even a portion of it on posterity, seeing that each 
 succeeding generation has its own troubles to en- 
 counter, and its own peculiar burdens to sustain, it 
 surely cannot be a question, that, at any rate, we 
 have no right artificially to enhance the principal of 
 that debt to an immense extent, for the sake of 
 saving ourselves a little additional interest on the 
 money expended for our present use. Justice would 
 rather seem to require that additional interest, in the 
 shape of a temporary annuity, should be paid for a 
 time by the generation whose interests were more 
 immediately subserved by the money borrowed; in 
 order that posterity might, at any rate, have but a 
 portion of the burden to sustain. 
 
 Having entered into this explanation of the mode 
 adopted in contracting a great part of this debt, we 
 shall be better able to comprehend the nature of its 
 progress, the history of which we now resume. 
 
HISTORY OF THE NATIONAL DEBT. 2J 
 
 As there is a great deal of uncertainty about the CHAP. in. 
 exact value received by the Government of William uncertainty 
 
 of the value 
 
 and Mary, in exchange for the national indebtedness 
 which it contracted, we shall assume that, in this reign> 
 reign, no artificial capital was created, but that full 
 value was obtained for the debt incurred. The 
 amount of the debt at the death of William stood 
 thus : 
 
 s. d. 
 
 Due on account of the bankers' debt . 664,263 o o 
 
 Due to the Bank of England . . 1,200,000 o o 
 
 Due to the East India Company . . 2,000,000 o o 
 Annuities for years (capital sums) . . 2,584,265 6 o 
 Annuities for lives (capital sums) . . 3 j 2 53 6 3 
 
 Deficiencies and sums charged upon va- 
 rious duties and taxes which were not 
 mortgaged for the discharge of the 
 said deficiencies .... 5,814,04.1 n 3 
 
 Other deficiencies and loans . . . 1,162,4.86 18 8 
 Army and Navy debts .... 2,660,016 19 5 
 Subsidies due to the Elector of Hanover, 
 
 etc 9,375 o o 
 
 16,394,702 i 7 
 
 During the reign of Queen Anne the debt was increas e of 
 
 debt under 
 
 increased from 16,394,702 is. ;d. to 54,145,363 
 us. 4d. by cash raised on perpetual annuities or 
 annuities for lives on the same for 99 years and 
 by funding various deficiencies, tallies, and debts. 
 That portion of the capital of the debt which was 
 created by the perpetual annuities, and for which 
 permanent stock was given, amounted, according to 
 
24 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP-HI- Marshall's tables, to 18,037,115, for which the sum 
 of 15,313,405 only was received; showing an excess 
 of debt or stock created beyond the money received, 
 of 2,723,710. 
 
 George i. During the reign of George I. and for the first 
 
 George ii. twelve years also of that of George II., no additional 
 debt, as has already been observed, was contracted ; 
 but during the period which elapsed from 1740 to 
 1762, at which latter period the seven years' war 
 terminated, the debt was raised to 146,682,849, the 
 artificial capital created beyond cash received being 
 / 2,896,000. 
 
 Douceurs to This seems a very moderate addition of artificial 
 
 contractors. 
 
 capital, considering the magnitude of the sums 
 raised. The reason of this is to be found in the fact, 
 that various premiums and douceurs were given to 
 the contractors for the loans between the years 1756 
 and 1763, which Sir John Sinclair estimates to have 
 been equal to about 13 millions sterling. As these 
 premiums were either payments at the time, or life 
 annuities granted, they do not affect the present 
 amount of the debt, and do not, therefore, enter into 
 our present calculation/ 
 
 ^ e now P ass on * *k e y ear I 77^ > > a ^ wm>c h time 
 the war with our American colonies commenced; 
 and we had not long been engaged in this struggle 
 before the Debt was enormously increased, especially 
 as the excess of stock created beyond cash received 
 proceeded to an extent, and with a rapidity hitherto 
 unknown. 
 
HISTORY OF THE NATIONAL DEBT. 25 
 
 Between the years 1776 and 1786 stock was created, CHAP. in. 
 according to Sir John Sinclair, to the extent of increase of 
 
 debt in 1776 
 
 115,269,992, while the cash received for it was and1786 - 
 only 91,815,324, shewing an excess of stock or 
 debt over cash received of 23,454,668. Dr. Ha- 
 milton calculates the stock created to have been 
 115,267,993, and the cash received 91,763,842, 
 thereby making the excess of stock to be 23,504, 15 1, 
 leaving no doubt but that the debt must have been 
 artificially increased at this period by about 23 J 
 millions or 26 per cent, excess on the cash actually 
 received. We have already, as a sample of the mode 
 in which money was raised at this period, given in a 
 former part of this chapter, the particulars of the 
 loan of 1781, by which 21 millions of stock was 
 created for 12 millions cash received. At the con- 
 clusion of this war, or, rather, at the beginning of 
 1787, the National Debts funded and unfunded 
 were, it has been calculated, 249,210,896, of which 
 239,200,719 was funded and 10,010,1 77 unfunded 
 debt. 
 
 We now come to the period of the French revo- French EG- 
 lutionary war, which may be considered to have ex- v 
 tended, with short intervals, from 1793 to the battle 
 of Waterloo in 1815. It was during this period that 
 the pernicious system of financing which we have 
 been describing received its fullest development, and 
 reached its greatest proportions the magnitude of 
 the operations of this period so far transcending all 
 previous transactions of the like nature, as to make 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. in. the latter sink into utter insignificance in the com- 
 parison. It would be tedious, and comparatively 
 useless, to detail minutely the terms and circum- 
 stances of each loan. It will be sufficient to say, 
 that, taking an average of all the loans from the 
 year 1793 to the year 1816, upwards of 173 of debt 
 was created, for every 100 money received. Mar- 
 sna ^ gives the following as the rate at which the 
 loans were contracted in each year : 
 
 Average 
 rate at 
 which the 
 loans were 
 
 1816. 
 
 Year. 
 
 Money received. 
 100. 
 
 Stock created for every 
 100 money. 
 
 1793 
 
 IOO 
 
 146*65 
 
 J 794 
 
 IOO 
 
 I57-07 
 
 J 795 
 
 IOO 
 
 163-30 
 
 1796 
 
 IOO 
 
 180*42 
 
 1797 
 
 IOO 
 
 2I5-52 
 
 1798 
 
 IOO 
 
 207-44 
 
 1799 
 
 IOO 
 
 I77'00 
 
 1800 
 
 IOO 
 
 158-50 
 
 1801 
 
 IOO 
 
 1 74^4 
 
 1802 
 
 IOO 
 
 I32-I7 
 
 1803 
 
 IOO 
 
 J 73'55 
 
 1804 
 
 IOO 
 
 185-00 
 
 1805 
 
 IOO 
 
 177-20 
 
 1806 
 
 IOO 
 
 167-70 
 
 1807 
 
 IOO 
 
 159-20 
 
 1808 
 
 IOO 
 
 162-67 
 
 1809 
 
 IOO 
 
 161-39 
 
 1810 
 
 IOO 
 
 152-67 
 
 1811 
 
 IOO 
 
 166-53 
 
 1812 
 
 IOO 
 
 180-00 ' 
 
 1813 
 
 IOO 
 
 184-87 
 
 1814 
 
 IOO 
 
 154-17 
 
 1815 
 
 IOO 
 
 191-52 
 
 being an average, for the whole period, of 173*3 
 stock created for each 100 money received. 
 
HISTOEY OF THE NATIONAL DEBT. 27 
 
 Let us now apply these particulars to ascertain CHAP. in. 
 the artificial increase of the debt during the period 
 now under consideration : 
 
 The funded debt in the beginning of the year 
 1793 stood at 229,614,446. In the corresponding 
 period of the year 1816 it stood at 816,311,939, 
 being a net increase, during those twenty-three years, 
 of 586,697,493. If this additional debt or stock 
 were created, as Marshall states, at the rate of 173 
 for every 100 cash, it follows that the Country only ln 
 received 339,131,500 instead of 586,697,493, and 
 that the additional 247,565,993 was thus saddled 
 upon the Country, by its being artificially added to 
 the capital of the debt, by the mode of raising the 
 money.* 
 
 The case, as against the Country, was, indeed, besides an 
 
 ' ' increase, re- 
 
 somewhat worse than this ; for, in addition to the 
 net increase of the debt up to the year 1816, as just fund ' 
 described, we must bear in mind that a great deal of 
 the debt had been redeemed by the sinking fund, 
 which redemption was not effected upon the same 
 terms as those upon which the debt had been con- 
 
 * We state the matter thus somewhat hypothetically ; 
 because, as some small portion of the debt was contracted in 
 le 5 per cents, and some in the 4 per cents., that portion 
 id not probably artificially enhance the capital of the debt 
 the same extent as those loans did which were raised in a 
 3 per cent, stock. It seems, however, clear, that the annual 
 charges which were created were equal to the imposition of a 
 capital debt of 173 in a 3 per cent, stock for every 100 
 money received during the war. 
 
 
28 
 
 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. in. tracted, but upon terms much more unfavourable to 
 the Country. Marshall shows that while ^173 of 
 debt was contracted for every 100 money received, 
 only 163 of debt was discharged for every 100 
 money paid. The following table shows the amount 
 of stock redeemed in each year for each 100 paid. 
 We have also placed the preceding table in juxta- 
 position with it that the comparison may be made at 
 a glance : 
 
 Debt paid 
 and debt 
 created for 
 every 100 
 money, from 
 1793 to 1816. 
 
 Year. 
 
 J 793 
 
 J 794 
 
 1795 
 
 1796 
 
 1797 
 
 1798 
 
 1799 
 
 1800 
 
 1801 
 
 1802 
 
 1803 
 
 1804 
 
 1805 
 
 1806 
 
 1807 
 
 1808 
 
 1809 
 
 1810 
 
 1811 
 
 1812 
 
 1813 
 
 1814 
 
 1815 
 
 Stock redeemed for every 
 100 money paid. 
 
 Stock created for every 
 100 money received. 
 
 Average - 163.32 
 
HISTORY OF THE NATIONAL DEBT. 29 
 
 The very last transaction in loans, at the conclu- CHAP.III. 
 sion of the war, shows the impolicy of the mode of Marshall's 
 
 account. 
 
 financing then in vogue in a very striking light. 
 Marshall says : 
 
 ' The only loan created in 1816 was 3, 000,000 Loan of 
 
 * from the Bank of England. That,, with the surplus 
 1 of the loans raised in 1815, supplied the means 
 ' of applying 13,047,317 in 1816 to the purchase 
 ' of stock at an average rate of 62 for 3 per cent. 
 ' stock, while in the preceding year 62,640,000 of 
 
 * 3 per cent., and 3,600,000 of 4 per cent, stock, 
 
 * was created for only 35,689,803 net money re- 
 ' ceived, being at the rate of little more than 50 of 
 ' money received for every 100 of 3 per cent, stock 
 ' created.' 
 
 Paying a price of 62 for an article, and then 
 valuing it only at 50 when you pay it away, or, in " 
 other words, contracting a debt of 62, in order to 
 discharge obligations to the amount of 50, needs 
 no comment, especially as we shall have to take up 
 the subject again when we treat of the sinking 
 fund. 
 
 The total artificial enhancement of the debt Total 
 
 ^ amount of 
 
 up to the year 1816 appears to have been about Jjjjjjjjijj 
 276,665,703, or, at any rate, equivalent to that e bt! f 
 amount in a 3 per cent, stock, namely 2,723,710 in 
 the reign of Queen Anne, 2,896,000 in the reign of 
 George II. 23,500,000 during the American war, 
 and 247,565,993 during the Great French war. 
 
JO THE NATIONAL DEBT FINANCIALLY CONSIDEKED. 
 
 CHAP, in. It is, perhaps, necessary here to remark, that 
 variation of various statements of the amount of the National 
 
 accounts. 
 
 Debt have at different times been published, which 
 differ considerably from those given above. It is, 
 indeed, scarcely possible for any private individual to 
 arrive at the exact amount of former times, as the 
 accounts seem to vary considerably, even when de- 
 rived from official sources. This may possibly have 
 arisen, in some degree, from changes made from time 
 to time in the mode of keeping the public accounts, 
 as also from the returns having been made at differ- 
 ent periods of the same year ; but the principal part 
 of the discrepancies arises, we believe, from the same 
 items not being all embraced in the various calcula- 
 tions which have been made. Thus one person will 
 take the funded debt alone, while another will include 
 the unfunded debts. Of the unfunded debts, some 
 will probably reckon only the outstanding Exchequer 
 Bills, while others will include the Navy and all 
 other outstanding debts existing at the time. In 
 many cases, the debt on account of Ireland is 
 included other calculations exclude it. For many 
 years there was a debt of about ^85,000,000 on the 
 Emperor of Germany's account this was also in- 
 cluded in some accounts and excluded from others. 
 Some statements of the debt do not include the long 
 and short annuities, while others capitalise them at 
 their supposed value, and put down the sum as part 
 of the National Debt. If we only take the year 
 
HISTORY OF THE NATIONAL DEBT. 3 I 
 
 1823 as an instance, we shall find that while one set CHAP, in. 
 of official statements makes the funded debt, on the 
 5th January, 1823, to be 791,806,312, the Chan- 
 cellor of the Exchequer in his speech on the Budget 
 in the same year, stated it to be 796,530,144 on 
 the very same day. But it was about this time, that 
 a convention was entered into with the Emperor of 
 Austria, by which the Emperor of Germany's debt 
 was commuted; and it is possible, that, while this 
 debt was included in one statement, it was excluded 
 from the other. 
 
 Again take the year 1833, January 5th, as ano- statement 
 ther example. One set of accounts makes the funded isss. 
 and unfunded debt to amount to 781,378,549, while 
 another statement puts them down at 789,474,422. 
 Upon examining the two accounts, we find that they 
 both agree in making the unredeemed funded debt 
 754,100,549 ; and the difference is in the unfunded 
 debt, which stands in one statement as ' Exchequer 
 Bills outstanding 5th January, 1833, 27,278,000,' 
 and in the other as c unfunded debt and other demands 
 outstanding, 35,373> 8 73-' * 
 
 * Even the late Mr. G. E. Porter, whose official position at 
 the Board of Trade, gave him the utmost possible facility for 
 ascertaining correctly everything connected with the Public 
 accounts, had to complain of their inadequacy. Alluding to 
 the financial statement annually made in the House of Com- 
 mons by the Chancellor of the Exchequer, he says : ' The 
 ' details of these Budgets would consequently throw but little 
 ' light upon the financial condition of the country, even if 
 
5 2 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. in. It is in this way, we think, that the principal part 
 of the variations of the different statements is to be 
 accounted for. We believe, however, that the tables 
 we have previously given approach very closely to 
 the truth, and are accurate enough to answer all the 
 purposes for which they are inserted in this Essay. 
 
 items of As it may be interesting to some to see a detailed 
 statement of the National Debt for one year, we 
 insert such statement of the funded debt for the year 
 1833, being the year we have just been commenting 
 upon with reference to the seeming discrepancy in 
 the amounts given of the unfunded debt. 
 
 National Debt on the $th January, 1833. 
 GREAT BRITAIN. 
 
 Capital of unredeemed debts. 
 
 Debt due to the South Sea Company, at 
 
 3 per cent 
 Old South Sea Annuities 
 New South Sea Annuities 
 South Sea Annuities 1751 
 Debt due to the Bank of England . 
 Bank Annuities created in 1726 . 
 Consolidated Annuities 
 Reduced Annuities , 
 
 Total bearing interest at 3 per cent. 
 
 . 3,662,784 
 
 2,460,830 
 523,100 
 14,686,800 
 874,949 
 
 347,458,93! 
 . 123,029,913 
 
 8 
 
 2 
 2 
 
 
 
 7 
 
 5 
 
 ${ 
 
 7 
 
 10 
 
 
 
 
 ; 
 
 3 
 
 . 496,195,179 
 
 5 
 
 *i 
 
 ' they had been preserved in an authentic form, which has 
 ' not been done. Any statements of the kind that could be 
 ' offered, must be drawn from unauthorised publications in 
 t which they have been given without regard to methodical 
 ' arrangement, while, as regards some years of the series, we 
 1 should seek in vain for any statement whatever.' 
 
HISTORY OF THE DEBT. 33 
 
 Capital of unredeemed debts. CHAP. III. 
 
 Brought forward . . 496,195,179 5 af 
 
 Annuities at 3 per cent. 18 1 8 . . 12,350,801 16 i amount of 
 
 Reduced Annuities ditto . . 63,453,824. 2 i J 
 
 New 3 \ per cent. Annuities . .137,613,820 7 2 
 
 4 per cent. Annuities created in 1826 . 10,796,340 o o 
 
 New 5 per' cent. Annuities . . 462,736 13 4 
 
 Great Britain . . . 720,872,702 3 icf 
 
 IRELAND. 
 
 Irish Consolidated Annuities at 3 per 
 
 cent ........ 2,803,780 1 8 4 
 
 Irish Reduced Annuities ditto . 162,062 6 2 
 
 ,3 i os. per cent. Debentures and Stock 14,605,670 3 ir 
 
 Reduced 3^ per cent. Annuities . . 1,234,509 4 3 
 Debt due to the Bank of Ireland, at 4 
 
 percent ....... 1,615,384 12 4 
 
 New 5 per cent. Annuities . . . 6,661x0 
 Debt due to the Bank of Ireland, at 5 
 
 percent ....... 1,015,384 12 4 
 
 Total United Kingdom . . . 754,100,549 10 2| 
 
 Unfunded debts of all kinds . . 35,373,873 6 
 
 Having now brought up the general account of 
 the Debt to the year 1816, we shall pause in its 
 history, until we have examined the real value bor- 
 rowed, which is by no means truly expressed, when 
 we state it, merely as so many '.pounds sterling/ 
 
34 THE NATIONAL DEBT FINANCIALLY CONSIDERED- 
 
 CHAPTER IV. 
 
 WHAT WAS THE VALUE REALLY BORROWED BY THE 
 STATE, IN THE CONTRACTION OF THE NATIONAL 
 DEBT, UP TO THE YEAR l8l6. 
 
 CHAP, iv. TT7E have seen, by our previous investigations, that 
 the method adopted in contracting the loans, 
 has had the effect of swelling the nominal capital of 
 the National Debt by at least 276 millions sterling 
 beyond the sums actually borrowed. Great, how- 
 ever, as is this imprudent amplification of the debt, 
 it yet by 110 means expresses all the difference be- 
 tween the value lent, and the value for which the 
 Country has been made liable. This, again, has been 
 increased * by the various alterations of the mone- 
 tary system of the Country in the first place, by 
 the Bank Restriction Acts of 1797 and subsequent 
 years and, secondly, by the measures of the late 
 Sir Robert Peel in 1819 and 1844. We propose, 
 therefore, to examine, and to ascertain, if possible, 
 what was the real value lent to the nation, stripped of 
 
 * Increased as respects the loans contracted between 1797 
 and 1 8 1 6, but diminished as respects those previously con- 
 tracted. 
 
WHAT is A 'POUND'? 35 
 
 these artificial enhancements. This value stood re- CHAP.IV. 
 
 corded, at the conclusion of the French war, as 816 
 millions of pounds, reckoning the funded debt only ; French war - 
 but this is a very loose and unsatisfactory description 
 of the extent and real value of the Debt contracted, 
 and as existing at that time ; for it will give us no 
 clear idea of it, unless we first know what the value 
 of these pounds was. Even the metallic pound has 
 been of all values and descriptions, ranging from 
 twelve ounces of silver to less than one ounce * but 
 every one conversant with these matters knows very 
 well that the pound during the time that the greater 
 portion of this debt was contracted, was not, prac- 
 tically, a metallic pound at all, but merely a piece of 
 paper issued by the Bank of England, of no intrinsic 
 value whatever, but alone valuable in the proportion 
 that it would purchase commodities. A very ready 
 reply might, indeed, be given to any enquiry touch- 
 ing the value of the National Debt, if the answer 
 given by the late Sir R. Peel to his own celebrated 
 question, ' What is a pound,' were accepted and coin- 
 cided in without qualification. This answer was, 
 that, ' according to practice, according to law, ac- 
 1 cording to the ancient monetary policy of this 
 ' country, the meaning of a pound is neither more 
 ' nor less than a certain definite quantity of gold 
 ( with a mark upon it to determine its weight and 
 
 * Iii the year 1550, in the reign of Edward VI., some money 
 was coined so as to contain but 16 dwts. 16 grs. of silver in 
 the pound sterling. 
 
3 6 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAR iv. t fi neness / Could we implicitly bow to, and accept 
 nSonofa i}l denn ition, it would follow, that, as this certain 
 definite quantity' was, theoretically, though not 
 practically, during the whole of the time that the 
 debt was being contracted, 5 dwts. 3 grs. of gold,* 
 and as the debt amounted, at the close of the war, to 
 8 1 6 millions of pounds, so that debt must necessarily 
 be 816 million times 5 dwts. 3 grs. which will be 
 found to amount to about 6,401 tons avoirdupois of 
 gold, of standard fineness. 
 
 This is the view taken by the school of economists 
 
 of which the late Sir Robert Peel was so eminent a 
 member and leader, and it is now upheld by Lord 
 Overstone, Mercator of the Times, and others of 
 similar sentiments. Every pound of the Debt they 
 consider to be 5 dwts. 3 grs. of gold that, and that 
 alone. In their view, the obligation to pay back such 
 pounds as these, either in the payment of the inter- 
 est, or the repayment of the principal of the debt, 
 was either expressed or implied in all the engage- 
 ments entered into by the Government with the 
 fundholders. 
 Peel's defi- Notwithstanding the great names which endorse 
 
 nition unsa- 
 
 tisfactory, this doctrine, the above definition of the ' pound ' 
 
 * The above must be taken with some qualifications ; as 
 Sir Robert Peel was in error when lie said ' a pound ' was, even 
 by the practice, the law. and the monetary policy of this 
 Country, ' neither more nor less ' than a definite quantity of 
 gold with a mark upon it, etc., for there were other legal 
 pounds besides this, as we shall shortly describe. 
 
WHAT is A 'POUND'? 37 
 
 does not appear to be a satisfactory and conclusive CHAP, iv. 
 one, to many parties. Men of thoroughly practical, 
 as well as philosophic and scientific minds, have en- 
 tirely rejected it ; nor, indeed, is it precisely true, in amUnjact, 
 fact, as a matter of ordinary history. For it was not 
 until the year 1816, after the whole of the debt 
 which we have been describing was contracted, that 
 5 dwts. 3 grs. of gold was thus, exclusively, made 
 the legal ' pound' sterling. Previous to 1816, the 
 English pound sterling was, or might be, one of 
 several things, at the option of the payer, for in- 
 stance (with the exception of ten years from 1774 to 
 1784) it might be, for debts to any amount, either : 
 i st. 20 shillings of the silver coinage, however 
 
 worn that coinage might be; or, 
 2ndly. The silver coinage, by weight, at 5/2 per 
 
 ounce; or, 
 
 3rdly. 20 parts out of 21 of the current guinea, 
 that is 5 dwts. 3 grs. of the then current gold 
 coinage equal therefore, to the present sove- 
 reign. 
 During the ten years from 1774 to 1784, the silver Payments 
 
 J / / t / tJ b y tale O f 
 
 by tale of coin, was restricted to payments of not restricted! 
 more than 25 at a time ; but at 5/2 per ounce it 
 was still a legal tender, at all times, and to any 
 amount. 
 
 It is not, therefore, strictly and historically true, Xf ri p tion d cf 
 that, ' according to practice, according to law, ac- 
 4 cording to the ancient monetary policy in this 
 
38 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, iv. < Country, the meaning of a "pound" is neither more 
 Thomson's ' nor ^ ess ^ [iSiIi a cer t am definite quantity of gold,' etc. 
 notice. But though the economists of Sir R. Peel's school, 
 
 as a body, concur in, and maintain his definition of 
 the Pound, even they are not, at all times, unani- 
 mous in their adhesion to it. "When gold was first 
 discovered to exist in such abundance in Australia as 
 well as in California, Colonel (now General) Thomp- 
 son gave notice in the House of Commons of his 
 intention to move a series of resolutions, by which he 
 sought to establish the principle, that the ' Pound ' 
 was not, necessarily, a certain definite quantity of 
 gold ; and that it would be unjust to the National 
 creditor, that he should, in the event of the abun- 
 dant production of gold Causing it to fall to one-half, 
 or one quarter of its present exchangeable value, be 
 liable to have his claim on the Nation cancelled by 
 the payment to him of 5 dwts. 3 grs. of gold for 
 every ' Pound ' owing to him. Fearing the loss that 
 might accrue to the fundholder through maintaining 
 inviolate the * Pound ' of Sir R. Peel, the gallant 
 colonel sought to establish the principle recognised 
 in a corn-rent, namely, that the value of a rent or 
 sum should be calculated so as to yield to its reci- 
 pient, upon the average, so much corn, and not as 
 securing him, invariably, so much gold. This was 
 so remarkable a defection from the principles hitherto 
 so unswervingly maintained by this school of eco- 
 nomists, that, to avoid possibility of mistake, or 
 
COLONEL THOMPSON'S VIEW OF A 'FOUND'. 39 
 
 suspicion of misrepresentation, we shall insert the CHAP.IV. 
 resolutions given notice of by Colonel Thompson, at 
 full length. 
 
 They were the following, viz. : 
 
 ' i . That it is the duty of the Government to take General 
 
 Thompson s 
 
 ' measures to guard against the possible effects of the rcsolutions - 
 ' increasing production of the gold mines upon the 
 ' holders of the National Securities. 
 
 ( 2. That the contract with the holders of the Na- 
 1 tional Securities ought to be substantially fulfilled. 
 
 ' 3. That the contract substantially was, to pay 
 ( them annually the twentieth, or other declared 
 ' fractional part of the real value received. 
 
 c 4. That the community has no interest in de- 
 1 frauding the fundholders to serve the payers of the 
 ' taxes, as would be distinctly visible if every man 
 ' was a fundholder in the same proportion that he is 
 * a tax-payer. 
 
 * 5. That the allegation that the fundholder has 
 ' been overpaid in consequence of what is denomi- 
 1 nated " Peel's Bill" is a misstatement dependent 
 1 upon reckoning all who have been overpaid, and 
 e taking no account of all who have been underpaid ; 
 ' the truth being that, on taking both together, there 
 ' is, on the lowest estimate, a balance of eight mil- 
 ' lions and a half, which, on an equitable adjustment, 
 ' would be due to the fundholders. 
 
 ' 6. That if the discovery of new gold mines should 
 
40 
 
 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, iv. * go on, it will lead to a diminution in the value of 
 Thompson's ' *^ e P rec ^ ous me tals like that which occurred in the 
 resolutions. < Ye {g n O f Elizabeth, and periods subsequent, in con- 
 ' sequence of the discovery of America. 
 
 ' 7. That it is no argument against the imminence 
 1 of this result, that commercial men show no symp- 
 ' toms of alarm ; because, to the general operations 
 ' of commerce it is indifferent whether gold is dear 
 ' or cheap, for the simple reason that every man pays 
 ' it away at the same rate that he receives, and vice 
 ' versa. 
 
 ( 8. That the derangement which, from such a 
 ( cause, would be made in the property of the fund- 
 ' holders, and all old creditors and mortgagees, ought 
 to be prevented by the same means which, as far as 
 applied, were effectual in the time of Elizabeth 
 namely, by application of the principle of a corn 
 rent. 
 
 1 9. That the application of that principle would 
 be effected by the issue of a paper currency not 
 convertible upon demand, but issuable only to such 
 amount as should be from time to time directed by 
 Act of Parliament, on evidence produced, that the 
 price of wheat had, for the average of a certain 
 period, been below - shillings per quarter; 
 any contravention of such acts in respect of issuing 
 more than therein directed to be dealt with as in 
 cases of forgery; the amount of such authorised 
 issue to be debited to the Exchequer and applied to 
 the Consolidated Fund. 
 
COLONEL THOMPSON'S VIEW OF A 'POUND'. 41 
 
 * 10. That the efficiency of such inconvertible CHAP, iv. 
 e paper is evidenced by the experiment of 1797, when ^^ on , s 
 ' the paper maintained its value without depreciation, ^solutions. 
 ' except what was the necessary consequence of the 
 
 ' premeditated over-issues. 
 
 ' 1 1 . That the belief in the necessity of the com- 
 ' munity providing and purchasing nineteen millions 
 
 * of gold to be kept in cellars, is a superstition of the 
 ' same nature as if a manufacturer in Manchester, or 
 ' a merchant in Liverpool, should think he could not 
 
 * maintain his credit without a similar precaution. 
 
 * 12. That in any community the collection of a 
 ' treasure of this kind is impolitic and dangerous, as 
 ' holding out temptation to invasions from abroad 
 ' and to coups d'etat at home. 
 
 '13. That in a settled and highly-civilized com- 
 ' munity there is no more necessity for the instru- 
 1 ment of exchange to be framed of materials equal 
 ' in value to the amount concerned, than for a bond 
 ' or other obligation to be traced upon a plate of gold 
 ' of the value of the amount at issue. 
 
 ' 14. That such a paper money as proposed might 
 ' be issued gradually, and the other paper withdrawn ; 
 1 thereby preventing the danger of sudden change. 
 
 '15. That it is expedient to attend to the ques- 
 4 tion before any public excitement is raised by cur- 
 4 rent events.' 
 
 In these resolutions, and especially in the third, 
 
42 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, iv. General Thompson contends, and, as we think, very 
 properly, that the real value is the point to be looked 
 at and that it is this, which, as a matter of justice, 
 ought to be carefully secured to the national creditor. 
 But the question arises, that, as this real value must 
 be expressed somehow or other in material things, 
 how, if it is not to be expressed in, or described as, 
 so much gold, is it to be expressed, and in what is it 
 to be described ? ' Gold/ says the General, is not ' the 
 real value ;' and, notwithstanding the possible pay- 
 ment of the fundholder in gold, the contract may 
 yet not be ' substantially fulfilled/ What, then, is 
 the real value ? And what will, in any case, be e a 
 substantial fulfilment ' of the contract. 
 
 what is We might here go into an examination of the 
 
 abstract question of ' value ' a question which has 
 engaged the attention of some of our most eminent 
 political and social philosophers; but, waiving all 
 pure abstractions, we think we may say, that the 
 plain and practical answer to this question is given 
 by General Thompson himself. He, in effect, says, 
 * Take care that the fundholder has as much corn 
 ' returned to him as he lent' that is, as we under- 
 stand it, as much of the ordinary necessaries and 
 comforts of life as he lent, for this is what is really 
 intended, corn being the most appropriate commodity 
 in which to express the idea, from its being the 
 foundation of the production of all other necessaries 
 and values. If you do not accomplish this, you do 
 
THE REAL STANDARD OF VALUE. 43 
 
 not ' substantially fulfil ' the contract ; but, if this be CHAP.IV. 
 done, the contract is fulfilled. He, therefore, evi- ^^J of 
 dently considers corn to be the true and natural value - 
 standard of value, and in this he is corroborated by 
 the highest authorities, some of whom we quote : 
 
 Mr. Horner. ' Corn is the great and paramount Homer. 
 1 standard of all value/ * 
 
 Locke. ' That wheat in England does come near- Locke. 
 ' est to a standing measure is evident, by comparing 
 ' wheat with other commodities, money, and the 
 yearly income of land in Henry VII.'s time and 
 < now.' 
 
 Mr. John Taylor. < In the most important pro- John Taylor 
 
 * duction of the earth, we find a standard of value 
 ' which nothing has ever given us reason to regard as 
 ' subject to change. Such is corn, or whatever con- 
 ' stitutes in any country the principal food of its 
 ' inhabitants, which of all the productions of the 
 
 * earth is the most important.' 
 
 And Dr. Adam Smith, though theoretically main- Dr. Adam 
 
 Smith. 
 
 taining that labour was the true standard of value, 
 was yet obliged to take refuge in the practical fact, 
 that that quantity of corn, or of the necessaries of 
 life, which labour could command, was the standard 
 
 * We quoted this from memory, but we have since met 
 with the exact words ; they are as follows, viz. : ' Corn is 
 
 * the admitted standard of all values, the precious metals 
 ' being the practical measure.' Par. Deb. New Series, vol. ix. 
 909, 910. 
 
44 
 
 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, iv. 
 
 Gold and 
 
 silver no 
 
 standards 
 
 of value 
 
 Provisions. 
 
 by w hich the value of that labour itself must be 
 determined. He says : ' Labour, like commodities, 
 ' may be said to have a real and a nominal price. 
 ' The real price may be said to consist in the quantity 
 ' of the necessaries and conveniences of life, which 
 ' are given for it : its nominal price is the quantity 
 1 of money. The labourer is rich or poor, is well or 
 ' ill rewarded in proportion to the real, not to the 
 ' nominal price/ 
 
 In addition to these authorities, we may, ourselves, 
 
 
 
 at once see. that the degree of subsistence which is 
 afforded, and not the amount of gold or silver which 
 ig give ^ to any party, is the true test of the value of 
 any payment for goods or services made to them, and 
 is, therefore, the natural standard of value. For 
 instance, it would afford no decisive or satisfactory 
 information respecting the degree in which labourers 
 were well or ill paid, in any country, if it were 
 merely stated that they received so much gold, or so 
 much silver, without anything else being taken into 
 the account. This statement would, evidently, be 
 incomplete and indecisive, unless the price of provi- 
 sions were also given. It is this which would really 
 and ultimately determine the value of the wages 
 paid them. We "could not safely conclude that a 
 man who receives 53. a day in one country was twice 
 as well paid as another who, in another country, 
 received only 2s. 6d. a day for it might happen that 
 the man who received but 2s. 6d. actually received 
 
THE REAL STANDARD OF VALUE. 45 
 
 more value than the other ; inasmuch as, while re- CHAP. iv. 
 ceiving less silver, he was obtaining more bread and 
 cheese. The standard of the value of the remunera- 
 tion is, unquestionably, therefore, neither silver nor 
 gold, but subsistence, which, if expressed by one 
 commodity, is best expressed by that which is, em- 
 phatically, the staff of life, corn. 
 
 Further the standard of any quality is that, Proper cha- 
 
 J ^ J racteristics 
 
 which, upon being appealed to, finally and absolutely d a stand ~ 
 decides, without the necessity of any further refer- 
 ence, respecting the degree of that quality in other 
 objects. No appeal lies from its decision, or it could 
 not be the standard. If further reference have to be 
 made, then that is the standard to which ultimate 
 reference must be made. Now, we have seen, that 
 gold and silver do not ultimately determine the point 
 of value they are not, therefore, standards of that 
 quality. But corn is, for no reference beyond it can 
 be made. The degree in which any person, or class 
 of persons, is able to procure the necessaries, conve- 
 niences and luxuries of life, is an unfailing index 
 of the value of the payments made to him, or 
 to them, by society. It is not possible to go beyond 
 this. 
 
 But some persons, from not distinguishing between Difference 
 the character of a standard and that of a measure 
 
 and a mea- 
 
 may imagine that the fluctuating nature of the supply sure - 
 of corn from season to season must quite unfit it for 
 a standard of value. Not so ; this circumstance only 
 
46 THE NATIONAL DEBT FINANCIALLY CONSIDEKED. 
 
 CHAP, iv. unfits it for a practical measure of value, but does 
 not disqualify it for a standard, for it by no means 
 follows that, because a thing is unfit for a measure, 
 it is therefore unfit for a standard. A barleycorn is 
 the original standard of the English measures, inch, 
 foot, and yard, yet no one thinks of using barleycorns 
 as measures of length. So likewise with corn; though 
 it is the only true and proper standard of value, it 
 cannot be conveniently used as a common measure of 
 value. Were we writing an essay on the currency 
 question, we should have to enter largely into this 
 point ; but, as we have at present merely to touch 
 upon it incidentally, we content ourselves with re- 
 commending any of our readers who may wish to see 
 this part of the subject largely and fully discussed, 
 to make themselves acquainted with the able works 
 
 John Tay- of Mr. John Taylor, especially his ' Essay on the 
 
 lor's Essay 
 
 on the Standard and Measure of Value/ l Essay on 
 
 Standard of 
 
 Value. Money/ and other works, in which all the branches 
 of monetary science are investigated, and its true 
 principles developed with great acumen and scholar- 
 ship. This is not necessary, however, for our present 
 purpose. We are merely desirous, just now, of so 
 far alluding to these things, as to enable us to judge 
 of the real value in the necessaries and conveniences 
 of life, which the Country received for the debt which 
 it contracted, taking wheat as their proper exponent. 
 To this immediate point we now address ourselves. 
 During the century which elapsed from the com- 
 
REAL AMOUNT OF THE DEBT IN CORN. 47 
 
 mencement of the debt to the beginning of the CHAP, iv. 
 French revolutionary war, the average price of wheat t of 
 was, as nearly as possible, 363. per quarter or 43. 6d. before 1793> 
 a bushel. The debt contracted during this period stood, 
 nominally, at the beginning of 1793, at 229,614,496, 
 from which we must deduct .29,119,710, being the 
 amount artificially added to the debt by the mode of 
 borrowing adopted. This will leave a balance of 
 200,494,786, which, being reduced into wheat at 
 365. per quarter, gives the real sum borrowed, in the 
 necessaries of life, as 111,385,992 quarters of wheat. 
 
 From 1707 to 1816, the price of wheat may be Price from 
 
 1793 to 1816. 
 
 reckoned at about 8os. per quarter. The debt con- 
 tracted during this period, was, as we have seen in a 
 former chapter, nominally 586,697,433, but really 
 only 339,131,500; which also being reduced into 
 quarters of wheat at 8os. a quarter, gives a further 
 amount borrowed of 84,782,875 quarters; and, adding 
 this to the former amount, we arrive at a grand total 
 of 196,168,867 quarters of wheat as the real, true, 
 and just amount of our National Debt, as it stood at 
 the close of the French war, if measured in the real 
 and natural standard of value. It is this, or the 
 equivalent of this, that the fundholder parted with to 
 become the creditor of the nation, and to the repay- 
 ment of this, he is, at least, fairly entitled, if the 
 contract with him be, as Colonel Thompson expresses 
 it, ' substantially fulfilled/ 
 
 What strikes us the most forcibly in this view of 
 
48 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, iv. the case, is this : That though we are accustomed 
 of the'ilebt * ^^ ^ ^at portion of the Debt which was con- 
 tracted between 1793 and 1816, as of far greater 
 magnitude than that which previously existed, seeing 
 it stands recorded as 586 millions sterling, while the 
 previous debt was only 229 millions, yet it is, in truth, 
 of much less amount, being only as 84 millions of 
 quarters of wheat in the latter period to 1 1 1 millions 
 of quarters in the former. The overwhelming burden 
 of our debt does not arise from the magnitude of the 
 amount most recently borrowed, as is generally sup- 
 posed, but from the financial and monetary mis- 
 management of our statesmen. 
 Real value Further, it appears that the whole real value of the 
 
 of Debt in 
 
 1797. debt contracted previously to the Bank Restriction 
 
 Act of 1797, was 200,494,786 in money, and equal 
 to 111,385,992 quarters of wheat. Taking the money 
 value at which this now stands recorded to the credit 
 of the fundholder, namely 229,614,496, and reck- 
 oning it in wheat at its present price of three bushels 
 to the pound sterling, or 2 133. 4d. a quarter, it 
 would not amount to more than 86,105,436 quarters 
 of wheat, which would be less than the fundholders 
 of the eighteenth century lent, and in favour of the 
 Country, to the amount of 25,270,556 quarters of 
 wheat ; which, at the present price, would be equiva- 
 lent to 67,388,149 6s. 8d. sterling. 
 
 On the other hand, it appears that the whole real 
 value of the debt contracted between 1797 and 1816, 
 
REAL VALUE OF THE DEBT IN CORN. 49 
 
 was 339,131,500, or 84,782,875 quarters of wheat; CHAP.IV. 
 that this sum now stands to the credit of the fund- 
 ladders at 586,697,433 stock ; that this is worth, 
 at 90, the present price of consols, 528,011,490, 
 and in wheat 198,004,308 quarters ; a balance of 
 113,221,433 quarters of wheat, or 301,923,821 
 6s. 8d. in money ; * against the Country and in favour 
 of the fundholders of the present century. This is 
 the amount which has been artificially added to the 
 weight of the National Debt, by the mode of bor- 
 rowing adopted, and by the change in the value of 
 the pound made by the Currency Acts of 1819 and 
 1844. 
 
 We are not, however, to conclude, that because The fund- 
 holder of 
 the fundholders of the last century could now only the last 
 
 * century no 
 
 obtain 86,105,436 quarters of wheat instead of 
 111,385,992 quarters, the amount originally lent, 
 they are, therefore, underpaid, and that a balance is 
 fairly due to them. This is not the case, as a very 
 few words will make plain. That they cannot now 
 obtain so much corn with the dividends received by 
 them, is owing to circumstances which affect every 
 other British subject as well as themselves, and the 
 effects of which, they are bound to participate in as 
 well as everybody else. What is it that causes their 
 pounds to be of diminished value? What lessens 
 their purchasing power ? Is it not the rise that has 
 
 * Reckoning the value of 113,221,433 quarters of wheat at 
 the present price of 533. 4d. a quarter. 
 
 
 
50 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. iv. taken place in the price of wheat arid other commo- 
 dities ? And what has caused this rise ? Is it not 
 the expenses entailed upon the community at large 
 by the wars which have caused heavy taxes necessa- 
 rily to be laid upon commodities to meet those ex- 
 penses ? Is not every one else now obliged to pay 
 535. 4d. a quarter for wheat, instead of 363., the price 
 at which the money was borrowed? There is no 
 diminution in the value of the pounds they lent, 
 other than that they purchase less commodities 
 because these commodities are enhanced in price by 
 taxation. And this is a loss that every one, fund- 
 holder or not, is obliged to bear : and the fundholder 
 of the 1 8th century has no more reason than any one 
 else to complain that his pound of dividend will not 
 realise him as much of commodities as it did during 
 the century in which he lent it. 
 
5 1 
 
 H 
 
 CHAPTER V. 
 
 HISTOllY OF THE DEBT PROM l8l6 TO 1857. 
 
 AVINGr traced the real value borrowed by the CHAP. v. 
 Nation in the contraction of the National Debt Alterations 
 
 . in the debt. 
 
 up to the year 1816, we now resume its history from 
 that period to the present time. We shall state the 
 principal alterations which have been made, having 
 reference to the debt, as nearly as possible year by 
 year, as we think that that will be the most clear 
 and convenient mode of proceeding. 
 
 1817. The English and Irish Exchequers were Irish and 
 
 English Ex- 
 consolidated, in pursuance of the bill passed in the chequers. 
 
 preceding session of Parliament, for that purpose. 
 
 1818. .3,000,000 were raised for the service of Raising of 
 
 3,000,000. 
 
 the State, by increasing the interest payable on a 
 certain portion of the debt, but without increasing 
 the capital of that portion. This was effected by 
 transferring 27,000,000 of 3 per cent, stock into 
 31 per cents., the parties subscribing for such 3! per 
 cent, stock paying a sum of 11 as a premium for 
 
5 2 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. v. each 16100 3 per cent, stock so converted into 3^ per 
 cent. At the same time provision was made for the 
 funding of 27,000,000 of Exchequer Bills. The 
 Chancellor of the Exchequer, in proposing these 
 measures, said, that { the addition to the funded debt 
 ' in consequence of the propositions which he had to 
 ' submit would be about 34,900,000 of stock, which, 
 f however, would only produce an augmentation of 
 ' the nominal capital of the public debt beyond the 
 ' money actually raised to the amount of between 
 ' 4,000,000 and 5,000,000, being the difference 
 ' between the above sum of 34,900,000 and that of 
 ' of 30,270,000 either of money to be paid or of 
 * unfunded debt to be reduced/ The real result of 
 this year's financial proceedings, including the opera- 
 tions of the Sinking Fund, appears to have been an 
 increase of the funded debt of 15,124,910, it having 
 risen from 776,742,403 on the 5th Jan. 1818, to 
 791,867,313 on the 5th Jan. 1819, and a decrease 
 of the unfunded debt of 13,677,356, it having 
 fallen from 66,772,364 in the former period to 
 53,095,008 in the latter. 
 
 of 3 stock tion I $ I 9- The financial operations of this year were 
 the contraction of two fresh loans of 12,000,000 
 each; one from the Commissioners of the sinking 
 fund ; the other, by public competition. Stock was, 
 however, redeemed by the sinking fund, and the un- 
 funded debts reduced; so that on the 5th Jan. 1820, 
 
HISTORY OF THE DEBT FROM l8l6TOl857. 5J 
 
 the debt, funded and unfunded, was diminished by CHAP. v. 
 1,5 73,517 ; the respective amounts being : 
 
 Funded debt 794,980,481 
 
 Unfunded debt .... 48,408,323 
 
 Total . . 843,388,804 
 
 1820. During this vear 7,000,000 of Exchequer Funding of 
 
 Exchequer 
 
 Bills were funded in a 5 per cent, stock, 99 of such Bins. 
 stock having been given by the Government for every 
 100 Exchequer Bills subscribed. 12,000,000 were 
 borrowed from the sinking fund. We have also to 
 record another instance of the persistence of the 
 Government in that injudicious mode of borrowing 
 money which we have previously seen such reason to 
 condemn. For, in addition to the loan from the 
 sinking fund, another loan of 5,000,000 was nego- 
 tiated in a 3 per cent, stock, by which 142 45. of 
 stock was created for every 100 money received. 
 
 At the end of this financial year, namely, Jan. 5, 
 1821, the funded debt stood at 801,565,310 and the 
 unfunded debt at 43,535,621, being an increase . 
 upon the whole of 1,712,127. 
 
 1821. During this year an increase was made to Bank of 
 the debt, by an increase of the capital of the Bank of 
 Ireland, amounting to 5,000,000 Irish currency. 
 There was also a loan from the Commissioners of the 
 sinking fund of 13,000,000. 
 
54 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. v. Reckoning, on the other hand, the redemption of 
 Diminution the debt by the sinking fund, and the diminution of 
 the unfunded debts, there appears to have been, on 
 the balance of the year, the favourable result of a 
 diminution of the funded and unfunded debts of 
 13,543,448 the amount on the 5th Jan. 1822, being 
 831,557,493 against 845,100,931, the amount at 
 the corresponding period of the preceding year. 
 
 Reduction 1 822. In this year, the operation was effected of 
 
 of Navy . 
 
 5 per cents, reducing the navy 5 per cents, to 4 per cents ; the 
 result of which was to secure an annual saving, in- 
 cluding the charges of 1,230,000; but increasing, 
 on the other hand, the nominal capital of the debt, 
 by 7,472,423 sterling. At the same time the Irish 
 5 per cents, were reduced in the same manner. 
 
 At the end of the financial year there was only a 
 net increase of the funded and unfunded debts to the 
 amount of 1,734,589, though, in addition to the 
 above-named artificial increase of the capital of the 
 debt, there was another similar increase of 2,365,655 
 by transference of 3 per cent, stock on account of the 
 East India Company. This generally favourable re- 
 sult was owing to the operation of the sinking fund. 
 
 Amount of funded and unfunded debts Jan. 5, 1823, 
 833,292,082. 
 
 Alteration 1823. The year 1823 was a very busy and import- 
 ing Fund, ant financial year. In the first place, the principle 
 
HISTORY OF THE DEBT FROM l8 1 6 TO 1857. 55 
 
 upon which the revenue of the sinking fund was CHAP. v. 
 founded, was entirely altered; but, as the alteration 
 thus effected will have to be more fully described 
 when we treat of the Sinking Fund, we shall not now 
 more fully allude to it. In the second place, this 
 was the year in which the annuity commonly called 
 the ' Dead Weight ' had its origin. This annuity 
 was the result of an attempt to distribute more 
 equally, through a number of years, the burden of 
 the naval and military pensions, which had become 
 due to those engaged in the late wars, or to their 
 families. The amount of these pensions was about 
 5,000,000 annually, and the object of the then 
 Chancellor of the Exchequer, Mr. Vansittart, was to 
 mitigate that burden for the time being, by throwing 
 a portion of it upon posterity. 
 
 It must be understood, that though these pensions Annuity 
 were heavy at the time, yet, being for lives, they vansittart. 
 would, in the natural course of things, have become 
 less and less burdensome every year, by the progres- 
 sive falling in of the lives of the parties interested in 
 them ; but the Chancellor was indisposed to wait for 
 this, and his first proposition was for Parliament to 
 grant a fixed annuity of 2,800,000 for 45 years, to 
 those parties who would undertake to pay into the 
 Treasury, year by year, during the 45 years, such 
 sums as would, according to the tables of mortality 
 then existing, be sufficient to pay the pensions which 
 would become payable in each year by the State. 
 
56 THE NATIONAL DEBT FINANCIALLY CONSIDERED- 
 
 CHAP. v. The scheme was, however, an entire failure. It 
 Failure of gave universal dissatisfaction. In vain did the Chan- 
 tart cellor try the Bank of England, the South Sea Com- 
 pany, and private capitalists. Not one would take 
 the contract, and the Chancellor was obliged to with- 
 draw the scheme, as no one would meddle with it in 
 the shape first presented. 
 
 The Dead Mr. Vansittart subsequently brought forward a 
 second plan, which was partially successful. This 
 was, to invest in the hands of trustees an annuity of 
 2,800,000 for 45 years, to be derived from the con- 
 solidated fund, and the trustees were to provide the 
 funds necessary to pay the annual pensions, by selling 
 portions of this annuity when they found it necessary 
 to do so. The Bank of England contracted for a 
 portion of this annuity; that is, they purchased 
 from the Trustees to the extent of 585,740 per 
 annum, which amount the Bank of England still 
 receives and will continue to do so until the year 
 1867, when the annuity expires. This is the annuity 
 commonly known by the name of the Dead Weight. 
 The funded and unfunded debts at the end of this 
 year amounted to 831,063,786, showing a decrease, 
 during the year, of 2,228,296. 
 
 1824. During this year an arrangement was made 
 's debt with the Emperor of Austria, by which the debt, 
 commonly called the Emperor of Germany's debt, 
 and which had been incurred by money raised in 
 
HISTORY OF THE DEBT FROM l8l6TOl857. 57 
 
 London for his use in the years 1795 and 1797, was CHAP. v. 
 commuted. The principal of the debt amounted to 
 about .6,000,000, and it was now agreed to accept 
 .2,500,000 from the Emperor of Austria in full dis- 
 charge of our claim. The arrangement being made, 
 it was transferred and made part of our own debt by 
 incorporating it with the 3 per cent, consols. The 
 amount actually paid into the Exchequer did not 
 exceed 2,200,000, the remainder being deductions 
 by way of discount and per centages. We therefore 
 took upon ourselves a burden of about 6,000,000, 
 for the sake of 2,200,000. Out of the money thus 
 received 300,000, was appropriated to the repairs 
 of Windsor Castle, and 500,000 to building new 
 churches. 
 
 In this year, also, the 4 per cents., amounting to Reduction 
 about 75,000,000 were reduced to 3! per cent. Cents - 
 saving on the annual charges arising from a capital 
 of 75,000,000, the sum of 375,000 per annum, 
 and without increasing the nominal capital of the 
 debt. 
 
 This was a year of great commercial prosperity ; Prosperity 
 and the finances of the Country participated in it to 
 a great extent, the reduction of the debt funded and 
 unfunded being no less than 13,38 1,68 1, the amount 
 on the 5th Jan. 1825, being 817,682,105 against 
 831,063,786, the amount on the preceding 5th Jan. 
 
 1825. Nothing affecting the National Debt oc- 
 
 1 
 
 OF THE 
 
 UNIVERSITY 
 
5^ THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. v. curred this year worthy of record ; notwithstanding 
 that, in other respects, it was a year of great financial 
 excitement. 
 
 n strong contrast to the preceding year, 
 the year 1826 was remarkable for the length and 
 frequency of the debates in Parliament upon the 
 financial condition of the Country, and the minute- 
 ness with which every matter touching the National 
 Debt, taxation, and revenue was investigated and 
 discussed. The Chancellor of the Exchequer encoun- 
 tered the strongest opposition upon presenting his 
 budget. The accuracy and truth of his statements 
 were impugned both by Mr. Maberly and Mr. Hume ; 
 the latter of whom brought forward a string of forty- 
 five resolutions, embracing almost every subject con- 
 nected with the finances of the Nation, asserting, 
 among other things, that there had been no reduction 
 whatever in the amount of the National Debt since 
 the war ; denouncing the sinking fund and the princi- 
 ples upon which it was founded ; and reprobating, in 
 strong terms, the arrangement made for the payment 
 of the Naval and Military pensions. Much error 
 was mixed with much truth in Mr. Hume's asser- 
 tions and resolutions, and the Chancellor succeeded 
 in carrying his Budget. The resolutions of Mr. Hume, 
 as far as they concerned the sinking fund, were very 
 admirable, and corroborate the remarks we have 
 made respecting the injudicious mode adopted by the 
 
HISTORY OF THE DEBT FROM l8l6TOl857. 59 
 
 Government in contracting the loans. These reso- CHAP. v. 
 lutions we shall give in extenso, when we come to ~~ 
 treat of the sinking fund. 
 
 The debts funded and unfunded amounted, at the 
 close of the financial year, to 811,896,834. 
 
 1827. Nothing of financial importance this year. 
 Debts funded and unfunded 807,744,338. 
 
 1828. In this session of Parliament there was Proposed 
 
 alteration of 
 
 another change proposed respecting the amount to 
 be in future devoted to keeping up the sinking fund : 
 this alteration we shall explain when treating of that 
 fund. 
 
 Debts funded and unfunded 804,782,428. 
 
 1820. During this year Exchequer bills were Funding 
 
 Exchequer 
 
 funded to a considerable extent. Bills. 
 
 Debts funded and unfunded 800,728,375. 
 
 i8?o. In this year, the operation was effected of Reduction 
 
 . of New 4 
 
 reducing the new 4 per cents, to a 3^ per cent, stock, per cents. 
 diminishing the annual charge of the public debt by 
 the amount of 777,443. 
 
 1831, 1832, 1833. Nothing to record. 
 
 1834. The 4 per cents, of 1826 were this year 
 
 notion 
 
 reduced to 33 per cents., and added to, or consoli- cents. 
 
60 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. v. dated with the New 35 per cents. ; but the dissen- 
 tient holders of this stock were so numerous, that 
 the Chancellor of the Exchequer was obliged to make 
 application to the Commissioners of the sinking fund 
 for pecuniary assistance, to enable him to pay them 
 off. By this aid he was enabled to complete the 
 operation. The stock held by the dissentients 
 amounted to 4,600,000. To pay this off, a resolu- 
 tion was passed on the gth of June, directing the 
 Commissioners for the Reduction of the National 
 Debt to pay the amount out of the funds held by 
 them under the Savings' Bank Act : and that the 
 dissented stock should, from the loth October follow- 
 ing, be deemed to be converted into an equal amount 
 of New 3^ per cents., which was accordingly done. 
 
 Emancipa- In this year also, arrangements were made for the 
 grant of 20,000,000 sterling to the West India 
 planters for the emancipation of the slaves. The 
 payment being made in some degree conditional upon 
 the bona fides of the planters ; deferred interest was 
 to be provided for by unpaid balances from the 
 ist August, 1834. The payments on account of this 
 compensation-money extended, therefore, through 
 several subsequent years. 
 
 Funding of 1 8 35 1830. Nothing of financial importance 
 
 Exchequer . . 
 
 Bills. affecting the debt occurred until this latter year, 
 when 4,000,000 of Exchequer Bills were funded. 
 The Bank of England subscribed half a million ster- 
 
HISTORY OF THE DEBT FROM I 8 l6 TO 1857. 6 I 
 
 ling of these bills, for every 100 of which it received CHAP. v. 
 109 55. 2d. of a 3 per cent, stock. The remaining" 
 3,500,000 were subscribed by the public, but upon 
 terms slightly less favourable to the Country, 110 
 of stock being given for every 100 of Exchequer 
 Bills subscribed. 
 
 Debts funded and unfunded, 5th January, 1840, 
 ^793^55,448. 
 
 1840 1844. In the latter year, the 3* per cents., Reduction 
 
 of 3i per 
 
 amounting to about 250,000,000, were converted Cents. 
 into a 3$ per cent, stock, with a further prospective 
 conversion into a 3 per cent, stock in the year 1854. 
 This reduction was accompanied, however, with a 
 guarantee against any further reduction or redemp- 
 tion, until after the year 1874. The diminution in 
 the charges of the debt, thus effected, would, it was 
 calculated, be 625,000 per annum in the year 
 
 1854. 
 
 Debts funded and unfunded, Jan. 5th, 1845, 
 
 1845, 1846, 1847. The next important occurrence Distress in 
 affecting the amount of the debt was the provision Ir 
 made in 1847, for alleviating the distress in Ireland 
 caused by the failure of the potatoe crop. The sum 
 of 8,000,000 having been granted out of the consoli- 
 dated fund for the relief of this distress, a loan to 
 that amount was negotiated with the two houses of 
 
62 THE NATIONAL DEBT FINANCIALLY CONSIDEKED. 
 
 CHAP. v. Rothschild and Baring. The same system of creating 
 ~ more debt than the amount of money received was 
 still persevered in, 89 los. of money only being 
 received for every 100 stock created. This was 
 strongly animadverted upon by Mr. Hume and 
 Mr. Williams at the time, who objected to the 
 Country being saddled with a debt of 8,938,947 for 
 8,000,000 money received. 
 
 Debts funded and unfunded, January 5th, 1848, 
 796,612,497. 
 
 1848. Authority given by the House of Commons 
 to raise 2,000,000 by Exchequer bills or by loan. 
 
 Debts funded and unfunded, 797,792,749. 
 
 1849. Nothing occurred affecting the debt. 
 
 Mr. Giad- 1850 1854. Mr. Gladstone brought forward a 
 n ' plan for the conversion of South Sea and other 
 minor Stocks into New 3^ and 2j per cents., which, 
 however, was not very successfully carried out. He 
 likewise introduced an entirely new species of secu- 
 rity, namely, Exchequer bonds to bear interest at the 
 rate of 2| per cent, for a period not exceeding 10 
 years, and 2j per cent, afterwards, payable half- 
 yearly. The Bonds were to be, for a period not 
 exceeding 40 years, irredeemable ; after that time, 
 they were to be redeemable at par, either at the 
 option of the Government alone, or at the option of 
 
HISTORY OF THE DEBT FROM l8l6 TO 1857. 63 
 
 the Government and the holder of the Bond as might CHAP. v. 
 ultimately be decided upon. 
 
 Debts funded and unfunded : 
 
 Funded . . 751,645,818 on 31 st March, 1855. 
 
 Unfunded (?)* 
 
 1855. We now come to the loan of 16,000,000, Loan for the 
 
 Russian war 
 
 raised for the purpose of carrying on the late Russian ^ 1855 - 
 war, and in this, one of the latest affairs of the kind, 
 we rejoice to find the nearest approach yet made to 
 the proper mode of borrowing money by the Govern- 
 ment, when the stock in which it is raised is of a 
 lower denomination than will secure its being sub' 
 scribed for at par. The terms upon which this loan 
 was negotiated were : 100 money to be received by 
 the Government for every 100 stock created; but, 
 as a 3 per cent, stock was not worth 100 in the 
 market, the extra price required was given in an 
 annuity of 143. 6d. per cent., terminable in 30 years. 
 This, we repeat, was a great improvement upon pre- 
 vious modes of borrowing. We hold, that, notwith- 
 standing the slightly less favourable terms in which 
 money may be raised, yet the true and sound prin- 
 ciple is, in any case, to get a stock subscribed for at 
 par at least, and to pay a higher rate of interest, if 
 money be dear at the time. It is the plain, simple, 
 and straightforward way of proceeding ; and it gives 
 the minister the opportunity, when money falls in 
 
 * Reliable authority for this amount was not accessible in 
 time for publication. 
 
.64 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. v. value, of reducing the interest on the stock without 
 the least semblance of injustice paying a high price 
 for that which is dear while it is dear, and paying a 
 lower price for it when the article falls in value. 
 The next best plan to this, is probably that adopted 
 by the Chancellor of the Exchequer, Sir G. C. Lewis, 
 in this case; namely, the partial adoption of the 
 principle of terminable annuities to supplement the 
 stock given when 100 of that stock is not worth 
 100 in the market. Terminable annuities, it would 
 indeed be advantageous to the nation to give alto- 
 gether for money raised by loan ; but it is found, in 
 practice, thai money to any very great extent, cannot 
 be raised in this way unless upon the most exorbitant 
 terms ; as it is a security which is not acceptable in 
 the market, constantly and surely declining in value 
 as is inseparable from its nature. 
 Provision To this loan of 16,000,000 was attached a pro- 
 
 for redemp- 
 tion of debt, vision for its redemption, somewhat after the nature 
 
 of a sinking fund. It was made imperative upon the 
 minister of the day, within twelve months after the 
 conclusion of peace, to provide a sum of 1,000,000 
 per annum for the purpose of gradually extinguishing 
 this addition to the National Debt. 
 
 The table, pp. 66, 67, taken from Ayres' c Financial 
 Register,' a valuable work recently published, shows 
 the payments to be made in accordance with the 
 terms of the Act authorising the loan ; also pay- 
 ments on account of two subsequent loans, and 
 Mr. Gladstone's Exchequer Bonds. 
 
HISTORY OF THE NATIONAL DEBT. 65 
 
 1856. Since the 16,000,000 loan was contracted, CHAP.V. 
 two other loans of 5,000,000 each have been nego- J^ 8 s 
 tiated ; in raising which the Government have again 
 resorted to the old mode of creating more stock than 
 the amount of money received. The first of these 
 loans has added 555,416 133. 4d. unnecessarily to 
 the capital of the debt m 2s. 2d. of 3 per cent, 
 stock having been created for every 100 money 
 received. By the second loan of 185,000,000 the 
 sum of 376,458 6s. 8d. has been thus factitiously 
 added 107 los. 7d. of stock having been created 
 for 100 money. At the same time that the first 
 loan of 5,000,000 was negotiated, 3,000,000 of 
 Exchequer Bills were funded on terms which added 
 333,250 of artificial capital to the amount of the 
 Debt. By these transactions, therefore, the sum of 
 1,265,125 has been added to the Debt beyond 
 money received. 
 
 In addition to the foregoing responsibilities we Foreign 
 
 guarantees. 
 
 have guaranteed, conjointly with France, a loan of 
 4,000,000 to the Turkish Government, for which 
 Messrs. Rothschild were the contractors, in August, 
 
 i8 55 . 
 
 On the other hand, we have lent to Sardinia Sardinian 
 2,000,000, from the Consolidated Fund, at 3 per 
 cent, interest. A small portion of this has been 
 repaid; the balance still owing stands to our credit; 
 and may, therefore, be considered as lessening the 
 real balance of the National Debt by its amount. 
 
66 
 
 CHAP. V. 
 
 * A Ter- 
 minable 
 Annuity of 
 ^116, 000 is 
 payable in 
 respect of 
 the loan of 
 ^16,000,000 
 in Consols, 
 per Act 18 
 Vie. c. 18, 
 which will 
 cease iu 
 1885. 
 
 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 Return ' showing the Liabilities in respect to Debts, Funded and Unfunded, 
 Acts 17 Vic. c. 23; 18 Vic. c. 18; 18 & 19 
 
 In what year 
 payable. 
 
 Exchequer 
 Bonds. 
 
 LOANS. 
 
 Act 18 Vic. c. 18. 
 
 Act 19 Vic. c. 6. 
 
 Act 19 Vic. c. 21. 
 
 Sterling. 
 
 7,000,000. 
 
 16,000,000.* 
 
 5,000,000. 
 
 5,000,000. 
 
 
 Act 17 Vic. c. 23. 
 
 
 
 
 1857 
 1858 
 1859 
 
 2,000,000 
 
 2,000,000 
 
 2,000,000 
 
 1,000,000 
 I ,OOO,OOO 
 
 250,000 
 250,000 
 
 250,000 
 250,000 
 250,000 
 
 
 6.000,000 
 
 
 
 
 
 18&19Vic.c. 130. 
 
 
 
 
 
 
 1,000,000 
 
 
 
 
 1860 
 
 . . . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1861 
 
 . . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1862 
 
 . . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1863 
 
 . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1864 
 
 . . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1865 
 
 . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1866 
 
 . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1867 
 
 . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1868 
 
 . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1869 
 
 . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1870 
 
 . . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1871 
 
 . . 
 
 1,000,000 
 
 250000 
 
 250,000 
 
 1872 
 
 . . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1873 
 
 . 
 
 1,000,000 
 
 250,000 
 
 250,000 
 
 1874 
 
 . 
 
 . 
 
 250,000 
 
 250,000 
 
 1875 
 
 . 
 
 . . .' 
 
 250,000 
 
 250,000 
 
 1876 
 
 . 
 
 . . . 
 
 250,000 
 
 250,000 
 
 1877 
 
 . 
 
 . . 
 
 250,000 
 
 . . 
 
 1878 
 
 
 
 
 
 to 
 
 . . 
 
 . . 
 
 . . 
 
 . 
 
 1885 
 
 
 
 
 
 From 
 
 
 
 
 
 1886 
 
 
 
 
 
 In addition to the above liabilities, the Funded and Unfunded Debts have 
 
 1st. The Funded Debt has been increased by a funding of 3,000,000 of 
 
 2nd. Exchequer Supply Bills issued, viz. : outstanding at the 
 
 Ditto previous to the commencement of the 
 
 Increase, bearing interest 
 
 TREASURY CHAMBERS, nth February, 1857. Annual charge at the 
 
DEBT FOR WAR AGAINST RUSSIA. 67 
 
 incurred for the service of the War, to be redeemed in pursuance of the CHAP. V. 
 Vic. c. 130; and 19 Vic. c. 6 & 21. 
 
 Principal pay- 
 able in each 
 year. 
 
 Charge in each year for addi- 
 tional Funded and Unfunded 
 Debt, calculated at existing 
 rates. 
 
 Total Sum pay- 
 able in each 
 year. 
 
 Years. 
 
 
 1,460,500. 
 
 
 Sterling. 
 
 2,250,000 
 
 1,421,000 
 
 3,671,000 
 
 1857 
 
 3,500,000 
 
 1,324,000 
 
 4,824,000 
 
 1858 
 
 3,500.000 
 
 1,207,000 
 
 4,707,000 
 
 1859 
 
 2,500,000 
 
 I,IO8,OOO 
 
 3,608,000 
 
 1860 
 
 1,500,000 
 
 1,043,000 
 
 2,543,000 
 
 1861 
 
 ,500,000 
 
 997,000 
 
 2,497,000 
 
 1862 
 
 ,500.000 
 
 950,000 
 
 2,450,000 
 
 1863 
 
 ,500,000 
 
 903,000 
 
 2,403,000 
 
 1864 
 
 ,500,000 
 
 856,000 
 
 2,356,000 
 
 1865 
 
 ,500,000 
 
 810,000 
 
 2,310,000 
 
 1866 
 
 ,500,000 
 
 763,000 
 
 2,263,000 
 
 1867 
 
 ,500,000 
 
 716,000 
 
 2,216,000 
 
 1868 
 
 ,500,000 
 
 669.000 
 
 2,169,000 
 
 1869 
 
 ,500,000 
 
 623,000 
 
 2,123,000 
 
 1870 
 
 ,500,000 
 
 576,000 
 
 2,076,000 
 
 1871 
 
 ,500,000 
 
 529,000 
 
 2,029,000 
 
 1872 
 
 ,500,000 
 
 481,000 
 
 1,981,000 
 
 1873 
 
 500,000 
 
 451,000 
 
 951,000 
 
 1874 
 
 500,000 
 
 437,000 
 
 937,000 
 
 1875 
 
 500,000 
 
 423,000 
 
 923,000 
 
 1876 
 
 250,000 
 
 411,000 
 
 661,000 
 
 1877 
 
 
 407,500 
 
 407,500 
 
 1878 
 
 . . . 
 
 291,500 
 
 291,500 
 
 to 
 
 
 
 
 1885 
 
 
 
 
 From 
 
 
 
 
 1886 
 
 been increased since the commencement of the war, as follows : 
 
 Exchequer Bills, the annual charge of which is . . . . 99,997 
 
 present date 21,049,700 
 
 war (April 1st, 1854) 16,008,700 
 
 at 2d. per cent, per diem 5,041,000 
 
 present time 191.558 JAMES WlLSON. 
 
68 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAPTER VI. 
 
 CHANGE PRODUCED BY THE NATIONAL DEBT IN THE 
 
 ^ 
 
 P 
 
 SYSTEM OF TAXATION OF THE COUNTRY. 
 
 CHAP. vi. T)REVIOUS to the formation of the National 
 
 Tax Debt, the taxes imposed upon the people were, 
 
 Direct. principally, of a direct kind, such as subsidies, fines, 
 hearth-money, first-fruits and tenths, land taxes, poll 
 taxes, etc. ; the only indirect taxes being some small 
 customs' duties under the heads of tunnage and 
 poundage ; unless, indeed, we consider that the sale 
 of monopolies, which was practised to a considerable 
 extent, partook of the nature of indirect taxes. But, 
 concurrently with the contraction of the Debt, was 
 Change to established a great and permanent alteration in the 
 Taxation, system of taxation, namely, the change from a system 
 of almost entire direct taxation, to one in which the 
 principal part of the revenue was obtained by means 
 of duties placed upon commodities. For this change 
 we are, in the first instance, indebted to the Long 
 Parliament, which, in 1643, commenced the system 
 of excise duties by levying them upon liquors, and 
 afterwards extending them to other articles. There 
 was, indeed, at the time, a solemn declaration made, 
 
OKIGIN OF THE EXCISE DUTIES. 69 
 
 that the excise duties should last no longer than the CHAP. vi. 
 war that, at its conclusion, they should be discon- ~ 
 tinued ; but the system was found too convenient to 
 allow of this engagement^being faithfully observed. 
 In the meantime, the National Debt gradually arose ; 
 and, instead of the abolition of the excise being 
 effected, it was found not only necessary to continue 
 it, but to extend it much in the same proportion in 
 which the debt was increased. 
 
 During the reigns of William III., Anne, George I., Excise 
 George II., and the first fifteen years of that of 
 George III., the excise duties nearly sufficed to meet 
 the payments on account of the Public Debt. But 
 the almost constant state of war in which the 
 country was involved during the subsequent portion 
 of George III/s reign, and the rapidity with which 
 the Debt accumulated, rendered the excise duties at 
 last utterly inadequate to meet the charges of the 
 Debt, which now well-nigh absorbed the whole of the 
 customs' duties also. The following tabular state- 
 ment will show up to what period the excise almost 
 sufficed to meet the payments on account of the 
 debt : 
 
 Payments on account Received from 
 
 Reign of of the Public Debt. Excise Duties. 
 
 William III. 13,961,458 13,649,328 
 
 Anne . . 22,523,351 20,859,311 
 
 George I. . 41,218,879 about 32,000,000 
 
 George II. . 93,347,134 93,747,167 
 
 George III. | annual. annual. 
 
 1762 4,840,821 4,592,528 
 
70 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. vi. at about which comparative amounts, these items 
 remained till the American war broke out in 1776. 
 
 conclusion of the American war in 1 790, 
 
 we find that the excise fiuties are no longer able 
 to meet the charges on account of the debt; for, 
 while the annual interest of the debt has ad- 
 vanced to 9,669,435, the excise duties reach only 
 to ^6,707,555, leaving a deficiency of 2,961,880 on 
 the year ; and the disproportion becomes greater and 
 greater, until at last, in the year 1816, we find that 
 though the excise and customs' duties have advanced 
 to the enormous sum of 34,000,000, yet the interest 
 of the huge debt well nigh swallows up the entire 
 amount. 
 
 ?E son Had tne change thus effected been merely that of 
 T?xe dir ct the substitution of indirect taxation for direct, as the 
 main source of revenue, we should not have thought 
 it worth while to have made it a branch of our inves- 
 tigation ; there being good grounds for contending, 
 that indirect taxation, abstractedly speaking, is not, 
 per se, more obnoxious to objections than direct taxa- 
 tion is. Many and forcible are, no doubt, the objec- 
 tions to taxes levied upon the products of industry ; 
 but there are as many others, and those equally 
 forcible, to taxes levied upon property or upon in- 
 come. However equitable, theoretically speaking, 
 the latter system may be, there are fatal and almost 
 insurmountable objections to it in practice. In the 
 first place, even those who most approve of it, as 
 
 
GENERAL DISCONTENT WITH THE INCOME TAX. J I 
 
 respects the equity of the principle, have yet the CHAP.VI. 
 most unconquerable aversion to the carrying of it out 
 into practice. So strongly was this feeling of aver- 
 sion manifested at the beginning of the last session 
 of Parliament, that the minister was obliged to give 
 way, and to adopt a reduced rate of income tax. 
 The privacy of one's own affairs, also, a thing dear 
 to Englishmen, is so rudely disturbed by it, that it 
 appears a kind of sacrilegious violation of its sanc- 
 tity. Englishmen, in fact, revolt against it in their 
 inmost feelings. In the second place, it is justly 
 obnoxious to the charge of being liable to great 
 evasion that it proves, in practice, to be unjust, 
 while it is most equitable in theory. It is, indeed, 
 notorious, that the tax is not paid in fair proportion 
 to their ability by those who contribute to it. 
 Contrary to all sound policy, the conscientious mem- 
 bers of society are mulcted to a much greater extent 
 than the unscrupulous ; and a premium is unavoid- 
 ably held out to dishonesty and trickery. The 
 Times of February 5th, 1857, ^ as the following re- 
 marks on this point : 
 
 ' Shall we make it (i.e. the income-tax) permanent? The Tims 
 
 on the In- 
 
 6 That would be to make injustice, impolicy, and come Tax - 
 
 c discontent permanent to attach a character of 
 
 * durability to measures only tolerated upon the 
 
 ' express assumption of their being transitory. Look 
 
 e at the debates on Tuesday evening, and observe the 
 
 1 terms in which the tax is spoken of. Look at the 
 
72 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. vi. < speeches made all over the country respecting it 
 ' the notorious inequality of its incidence, and the 
 ' impossibility (as it seems to many) of finding any 
 ' way to equality. What shall we do with it, then? 
 f What its very nature and character suggests keep 
 1 it for times and seasons as exceptional and as ano- 
 ( malous as itself for periods when money is wanted 
 * in mighty lumps, aad when, so long as it is found, 
 ' nobody asks how in other words, for the needs of 
 
 ^ * s no *> therefore, in consequence of any opinion 
 rency. ur that we entertain, that direct taxation is practically 
 superior to indirect, that we characterise the change 
 from direct to indirect taxation, as one of the most 
 momentous results arising from the formation of the 
 National Debt, but because the consequences of such 
 change did not stop at this. The mere substitution 
 of the one for the other would have been, compara- 
 tively, a minor matter, and but of little importance ; 
 but mighty results have followed, little dreamt of at 
 the time, and even as yet but very imperfectly 
 understood. These results are, first, the antagonism 
 produced between our systems of Taxation and 
 Currency by the change. Secondly, the withdrawal 
 of a great proportion of the credit-circulation of the 
 country, by the permanent establishment of the cor- 
 poration of the Bank of England as a creditor of the 
 nation. And, thirdly, the disadvantages with which 
 we have been made to contend in the prosecution of 
 
OUR SYSTEMS OF TAXATION AND CURRENCY. 7J 
 
 our foreign trade. To produce a conviction in the CHAP. vi. 
 mind of the reader, of the truth and soundness of 
 the conclusions we are prepared to draw from these 
 important facts, and to understand their full bearing, 
 it will first be necessary to refer to certain well- 
 established principles, which never fail, when properly- 
 stated, to carry conviction with them, and without 
 which we should become entangled in endless per- 
 plexity. 
 
74 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAPTER VII. 
 
 THE ANTAGONISM PRODUCED BY THE NATIONAL DEBT 
 BETWEEN OUR SYSTEMS OF TAXATION AND CUR- 
 RENCY. 
 
 CHAP. vii. < TNDIRECT taxation/ what is it? 
 
 Answer. Taxation imposed, not directly, but 
 indirectly, upon the parties who are intended to pay it. 
 The precise difference between direct and indirect 
 taxation, is just this : That the direct tax is levied 
 immediately upon the individual who has to pay it, 
 without the intervention of any other person; while 
 the indirect tax is not so levied, but is first charged 
 upon some other person, who has to transfer it to the 
 individual on whom it is intended ultimately to fall. 
 It is therefore called ' indirect ,' because it arrives 
 indirectly, and through the medium of another, at 
 the party really aimed at by the tax, the vehicle of 
 conveying it to the ultimate payer being the goods 
 on which the tax is placed, in the shape of excise 
 or of customs duties. 
 
 influence of The necessary and contemplated result, then, of 
 
 Taxes on 
 
 Prices. this kind of taxation is, that the price of goods is 
 increased by the duties placed upon them; and it 
 
NATURE OF INDIRECT TAXATION. 75 
 
 must be borne in mind, that these duties do not CHAP.VII. 
 operate merely to the extent of the express tax upon 
 any given commodity, but with all the multiplied 
 force derived from the various duties imposed upon 
 almost every article used in the manufacture of the 
 commodity. Observe how the system operated under 
 the accumulated duties placed upon every article 
 during the great French war, to meet the enormous 
 charges of the debt created by that war. Take the 
 article soap, for instance ; the express duty upon it 
 was 3d. per pound, but this was not the full extent 
 to which indirect taxation affected the price of soap; 
 the soap had to be made in a factory, almost every 
 article used in the construction of which, was taxed; 
 taxed bricks taxed timber taxed glass, and so on. 
 All the raw materials of which the soap was com- 
 posed were taxed; taxed tallow taxed barilla 
 taxed salt, etc. The workmen making the soap 
 lived in taxed houses, and had to consume taxed 
 articles of all descriptions for their support; and 
 these multiplied duties all entered into, and formed 
 component parts of the price of the soap, which, con- 
 sequently rose from yd. or 8d. per pound, to is., and 
 even more. 
 
 That which holds good with regard to soap, applies soap an 
 
 example. 
 
 also to every article manufactured or produced under 
 the same conditions. The necessary, just, and un- 
 disputed effect, therefore, of a system of indirect 
 taxation, is to raise the prices of commodities in any 
 

 CHAP. VII, 
 
 Producers 
 as producers 
 should not 
 pay Taxes, 
 only as con- 
 sumers. 
 
 Indirect 
 Taxation 
 ought to 
 enhance 
 Prices. 
 
 
 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 community in which it is employed; and that, in 
 proportion to the pressure and extent of such taxa- 
 tion. If any steps are taken by which such rise in 
 prices as indirect taxation calls for, is prevented 
 taking place if any arrangements are made, by 
 which such results are defeated this injustice is 
 committed, that the tax is made to stop at the party 
 upon whom it is first levied, he being thereby debarred 
 from transferring it to the party who ought to pay it, 
 and upon whom, professedly, it is levied. This is 
 unjust ; the producers of the goods are not the parties 
 aimed at in the imposition of the tax, but the con- 
 sumers of them. The producers are intended to act 
 only as convenient mediums or instruments, by means 
 of whom, the Government may more readily collect 
 the duty from the consumer. In fact, they act, or 
 ought to act, as mere tax-gatherers for the Govern- 
 ment, it being the consumer who should, of right, 
 pay the tax in the higher price he has to give for the 
 article. 
 
 The first conclusion we draw, then, is this : that 
 the indirect taxation to which the National Debt 
 gave birth, and which progressed with the Debt, until 
 both reached such enormous dimensions, called for 
 and rendered necessary a proportionally higher rate 
 of price than previously existed, for the commodities 
 which were subjected to such taxation. 
 
 This is a conclusion which, we believe, will not, by 
 any one, be impugned; the correctness of it being 
 
NATURE OF INDIRECT TAXATION. 77 
 
 universally admitted theoretically. We lament, how- CHAP, vn. 
 ever, to say. that, in practice, this conclusion has Proper effect 
 
 A m of Indirect 
 
 been very much lost sight of, and the result is, 2SBS" 
 production of a great portion of those embarrass- sight of - 
 ments which afflict us as an industrial community, 
 as our subsequent investigations will, we think, very 
 clearly make manifest. To obtain the higher prices 
 which indirect taxation renders necessary, the mone- 
 tary system of the country must be of such a nature 
 as will admit of these higher prices being obtained. 
 As soon as indirect taxation began to be employed as 
 a principal means of raising a revenue, additional 
 facilities in the money system, in grder to express 
 and represent the higher prices became indispens- 
 able. Unfortunately for the welfare and comfort of 
 the productive classes, a totally different policy was 
 forced upon the Government by the circumstances 
 of the times, and the establishment of the Bank of 
 England, in connection with the difficulties in which 
 that establishment shortly felt itself involved. With 
 increasing debt, and additional indirect taxation, the 
 facilities of the circulating medium were contracted. 
 To the consideration of this point, we shall devote 
 the next chapter. 
 
7 8 THE NATIONAL DEBT FINANCIALLY CONSIDERED, 
 
 CHAPTER VIII. 
 
 OPERATION OF THE NATIONAL DEBT UPON THE 
 CURRENCY OF THE KINGDOM. 
 
 CHAP.vm. rpo understand the effects of the National Debt on 
 
 u^Bank tne Currency of the Kingdom, through the opera- 
 
 ?ency e l r " tion of its offspring, the Bank of England, we must 
 
 take a hasty survey of the monetary system of the 
 
 Country at the time of the 'establishment of the 
 
 Bank. 
 
 Exchequer The legal-tender currency, or money of the King- 
 
 Tillies 
 
 dom, had, from the time of Henry I., consisted 
 sometimes of the silver coins alone, and sometimes 
 of the silver and gold coins, together with the Ex- 
 chequer Tally, which was receivable at the Exchequer 
 in payment of taxes. 
 
 Goldsmiths- I n addition to these legal-tender moneys, there 
 were other supplementary instruments of Exchange, 
 which, though not legal tender, yet helped to facili- 
 tate the transactions of commerce, and to economise 
 the use of coin. These were : first, the notes of 
 the goldsmiths, the bankers of that period, which 
 notes were acknowledgments of sums deposited with 
 
 
 
 
OUR ANCIENT CURRENCY. 79 
 
 them for security ; and, secondly, bills of exchange, CHAP.VIII. 
 
 both foreign and inland. The advantage of being 
 
 able to negociate bills of exchange, as at the present 
 
 day, had, however, up to this period, been confined 
 
 to foreign bills; inland bills not having, hitherto, 
 
 been recoverable by law, if held by any other person 
 
 than the drawer. For a short period, also, another 
 
 aid to the circulating medium had been employed, in 
 
 the shape of Exchequer Bills of as small amounts as 
 
 $ and 10 each, and not bearing interest. 
 
 We may form some idea of the quantity of these sir w. 
 
 ... . Davenant. 
 
 kinds oi credit currency in circulation at the time of 
 the establishment of the Bank of England, by referring 
 to what Davenant, a member of the then Board of 
 Trade, writing in 1698, says : ' We had/ he re- 
 marks, ' upwards of 14,000,000 in tallies, lottery 
 f tickets, bank stock, malt tickets, and securities of 
 1 the like nature, which went from hand to hand, 
 
 ' having their foundation in the public faith 
 
 ' In this kind of currency/ he adds, ' the landlord 
 ' received his rent duly, the farmer sold the product 
 1 of his land at a high rate; wool, tin, lead, and 
 ' leather, bore a great price ; and, which was of great 
 
 * consequence, the manufactures of the kingdom 
 ' went on cheerfully.' Again he remarks : ' Of 
 ( late, when the coin grew so corrupted, the gold and 
 ' silver did, as it were, but minister in the market, 
 ' while all great dealings were transacted by tallies, 
 
 * bank bills, and goldsmiths' notes. Paper credit did 
 
8o 
 
 
 CHAP.VIII 
 
 Revolution 
 of 1688. 
 
 
 Conduct of 
 the Bank. 
 
 
 
 
 
 
 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 * not only supply the place of running cash, but 
 4 greatly multiplied the Kingdom's stock.' 
 
 A fatal blow was, however, given to the credit 
 currency by the civil contest engendered by the 
 Revolution of 1688. As we have already remarked, 
 in the beginning of this Essay, the distrust and un- 
 certainty which prevailed for many years, whether 
 the new regime would be firmly and finally established, 
 tended to throw discredit upon all securities issued 
 by the de facto Government, which securities fell, 
 consequently, to a great discount, and were bought 
 up, as before detailed, by the Bank, the East India 
 Company, and the South Sea Companies. 
 
 As far as the Bank was concerned in this matter, it 
 was not to blame. The Bank is not even now a national 
 establishment, in the proper sense of the term, but a 
 private one; and its own interests have, of course, 
 the first claim upon its attention and its regard. If 
 this be its duty now, it must have been pre-eminently 
 so at its first foundation, and during the weakness of 
 its infancy ; and we have no right to expect that the 
 Bank would have acted otherwise than it did. Its 
 whole capital being lent to the Government at 8 per 
 cent, interest, and, being prohibited from borrowing 
 or owing more than the amount of its capital, as 
 well as from dealing in any commodities except gold 
 and silver bullion, it issued its notes for the discount 
 of mercantile bills, and for the transaction of other 
 banking business. This, therefore, brought a new 
 
CONTRACTION OF THE ANCIENT CURRENCY. 8 I 
 
 species of currency into circulation, which, if it had CHAP.VIII. 
 been superadded to that already existing, would have 
 furnished those additional facilities in the circulating 
 medium that the new system of indirect taxation 
 required would have materially assisted in pro- 
 moting the welfare of trade and industry, and have 
 given a stimulus to manufactures, agriculture, and 
 commerce, which could never have been derived 
 from the scanty resources of a mere metallic system 
 of money. Unfortunately, however, for productive 
 industry, the steps which the Bank found it neces- 
 sary, in a short time, to take for its own safety and 
 advantage, had a most disastrous effect upon the 
 welfare of the productive classes, which may easily 
 be conceived, when we state that the effect of the 
 measures already described, and of others to which 
 recourse was had, was to displace the old credit cur- 
 rency of the Exchequer to many times the amount 
 of the circulation of the Bank itself. The Bank was 
 not to blame for this. It had its own credit to sup- 
 port; and no doubt the measures which were adopted 
 were essential for the safety of the establishment. 
 The Bank itself shared, at first, in all the suspicion 
 and want of confidence which prevailed throughout 
 the nation ; and it is no wonder that, when its own 
 notes were at a discount of 20 per cent., it became a 
 prime object with the Bank to restore the credit and 
 value of them by helping most materially to reduce 
 the other credit circulation of the Kingdom, in which 
 
 G 
 
82 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP.VIII. it was aided, as we have seen, by the South Sea and 
 
 East India Companies. 
 Contraction The extent of the contraction of the credit cur- 
 
 of Currency 
 
 ^tween rency of the Country, thus brought about, may be 
 judged of by the fact, that though Davenant had, in 
 1698, estimated it at 14,000,000, so soon after as 
 the death of Queen Anne, in 1714, the circulation of 
 the Bank and Exchequer Bills together did not 
 amount to more than 6,000,000. 
 
 I ffecuof S Thus did the circulating medium of the Country 
 ?ractk>n? n " undergo contraction precisely at the time that the 
 new system of taxation rendered expansion necessary, 
 such expansion being required in order to express 
 the higher prices which the system of placing taxes 
 on commodities called for ; thus was that antagonism 
 between our systems of currency and taxation first 
 engendered, which has ever since, with the exception 
 of the period between 1797 and 1812, produced 
 those monetary convulsions which so frequently 
 agitate and destroy the prosperity of the industrial 
 classes, and which will continue periodically to afflict 
 us, as long as that antagonism is suffered to con- 
 tinue. The immediate effect at the time was to 
 bring down the price of agricultural produce to a 
 much lower point than had probably been known 
 for hundreds of years before, and to reduce in pro- 
 portion the remuneration of the agricultural in- 
 terest. We append, in a note on the following page, 
 a table constructed from the communication of 
 
CONTRACTION OF CURRENCY DEPRESSED PRICES. 83 
 
 Sir G. Shuckburgh Evelyn to the Royal Society in CHAP.VIII. 
 1798,* which goes to show that the price of wheat 
 for 450 years previous to the establishment of the 
 Bank had been upwards of 508. per quarter, reduc- 
 ing the money prices of the various periods into 
 money of the present day. We do not, however, 
 much rely upon this table, as we think that the 
 times to which it refers are too remote, and the 
 prices of those times too fluctuating from year to 
 year differing, likewise, as the prices did in dif- 
 ferent parts of the Country at the same time to 
 make it wise to place too much reliance upon it. 
 But it is not necessary to depend upon this state.- 
 ment, as we have access to perfectly reliable accounts 
 
 Tears. 
 
 1250 
 1350 
 1450 
 1550 
 1600 
 
 * PRICE OF WHEAT 
 
 Grs. No. of 
 Recorded in Is. at Grains 
 Price. the dif. in recorded 
 dates. price. 
 s. d. 
 i 7f Grs. 270 445 - 
 i io ,, 240 450 - 
 15 180 255 - 
 i \o\ 100 187 - 
 4 2 96 384 - 
 
 PER BUSHEL. 
 
 Proper- R e Hncpd Price in our 
 tion of T~ TTV present 
 Gold to SJJ Gold 
 Silver. Grams ' currency. 
 s. d. 
 - 10 = 44 = 7 4 
 - 12 = 38 = 6 4 
 - 10 = 25 =42 
 - 6 = 31 = 5 2 
 - ii = 35 = 5 10 
 
 1625 
 
 4 
 
 ii 
 
 .. 93 45 6 - 
 
 - *3 = 35 = 5 10 
 
 1650 
 
 5 
 
 6 
 
 ., 93 5" - 
 
 - 14 = 36 = 6 o 
 
 1675 
 
 4 
 
 6 
 
 93 418 - 
 
 - 14 = 30 = 5 o 
 
 1700 
 
 4 
 
 9h 
 
 ,,93 444 - 
 
 - 15 = 30 = 5 o 
 
 
 
 
 9)50 8 
 
 1720 
 
 4 
 
 41' 
 
 1 Average in our 
 
 1740 
 
 3 
 
 8 1 
 
 present money Average price 5 6 per 
 
 1760 
 
 3 
 
 9*| 
 
 4/1 per bushel, bushel, or 44/ per quarter, 
 
 1780 
 
 4 
 
 5* 
 
 1 or 32/8 per qr. in our present money. 
 

 84 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. viii. of more recent date, which quite prove the depress- 
 ing effect which this contraction of the circulating 
 medium had upon the price of wheat. Thus, if we 
 refer to M'Culloch's Commercial Dictionary, we shall 
 find, that while the price of wheat for half a century 
 before the establishment of the Bank had been 453. a 
 quarter, it fell, on an average of the next sixty -five 
 years, and until the Bank had extended its circula- 
 tion by the issue of 10 notes, to 383. per quarter 
 a fall of nearly is. per bushel, on an average, as we 
 have said, of sixty -five years. 
 
 Lowering of The same effect was produced in labourers' wages ; 
 for, according to an average of the three authorities, 
 Malthus, Barton, and Sir G. Shuckburgh, the 
 wages for a week's labour, from 1646 to the end 
 of the century, were i oz. i dwt. 3 grs. of fine silver; 
 while, from the latter period to the year 1760, they 
 were only 1 3 dwts. 9 grs. Reckoning the silver at 
 both periods at 55. per ounce, the wages in the first 
 would have been 53. 3^d. per week; while, in the 
 latter, they would have been only 45. 8d. per week. 
 
 Policy of the This, then, was a most momentous change a 
 
 Bank. 
 
 change produced by the policy which the Bank of 
 England found it necessary to pursue : and, as the 
 Bank itself was called into existence by the National 
 Debt, we may fairly call it a consequence of that 
 debt. The system of indirect taxation was equally a 
 consequence of that debt ; and thus do we owe to 
 one and the same source two conflicting and 
 
 
REMARKS ON OUR FOREIGN TRADE. 
 
 antagonistic systems, the one of taxation, and the CHAP.VIIL 
 other of currency, whose inharmonious, and, indeed, 
 irreconcileable operations have, we believe, produced 
 most of the mischief from which we have so many 
 years been suffering. 
 
 APPENDIX TO CHAPTER VIII. 
 
 We had intended at this point to have written a Appendix. 
 chapter upon the effect of our National Debt on 
 our Foreign Trade, through the enhancement of 
 the prices of our commodities by the system of 
 indirect taxation to which the Debt gave birth. 
 Having, however, left this to be written last, we find 
 that we have not now time to take it up before this 
 Essay must be delivered ; and it is a subject of so 
 much magnitude and importance, that it would 
 require a considerable volume of itself to do it jus- 
 tice. We may, however, just state, in few words, 
 our impression that the antagonism between our 
 systems of taxation and currency has done us much 
 harm in our Foreign Trade that it has afforded 
 the foreigner a much better market, in our country, 
 for his productions, than we have enjoyed, in his 
 country, for ours that, by the fluctuations which 
 are produced in the prices of commodities, com- 
 bined with a fixed and unvarying quantity of gold 
 in the English pound of account, the foreigner is 
 enabled to secure an undue advantage in his trans- 
 actions with us. 
 
86 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 
 CHAPTER IX. 
 
 TWO POPULAR FALLACIES RESPECTING THE DEBT. 
 
 CHAP. IX. ~ 
 
 
 nPHERE are two antagonistic and conflicting falla- 
 Popuiar c i es respecting the National Debt, which are 
 
 very prevalent. The first is, that funded property 
 forms as much a portion of the wealth of the country, 
 and is therefore to be reckoned among its assets, as 
 lands, houses, or any other description of tangible 
 property. The second, which is precisely the oppo- 
 site of the former, is, that the debt is a subtraction 
 or deduction from the wealth of the country; that 
 the country is so much the poorer for it. Neither 
 the one nor the other is correct ; for the truth is, that 
 the country, with the trifling exception which we 
 shall hereafter name, is neither the richer nor the 
 poorer for the existence of the Debt ; and that, con- 
 sequently, both the opinions we have mentioned as 
 being prevalent, are erroneous ; which we shall now 
 proceed to show. 
 Wealth of With regard to the first we have seen estimates 
 
 the Country. 
 
 made of the total wealth of the country, in which, 
 after the enumeration, as a portion of the wealth of 
 
FALLACIES RESPECTING THE DEBT. 87 
 
 the nation, of lands, houses, raw materials, and CHAP. ix. 
 manufactured products of all descriptions, there has 
 been an item inserted of * Funded Property/ which 
 has been considered as, of itself, an actual property, 
 separate from, and in addition to, all other wealth. 
 Now the debt, or the funds, though a property to the 
 parties who hold them, are not so to the nation as a 
 whole ; for they are only a mortgage upon the rest of 
 the property of the country, and by just so much as 
 they are property to the holders, they are an incum- 
 brance and a diminution of the value of the things 
 so mortgaged or encumbered. 
 
 It is precisely a parallel case to the following: 
 
 A is worth 10,000 in the shape of an estate of Effect of 
 
 . . mortgage 
 
 that value. B is worth 5,000 in money. A mort- ?* ei j,~ 
 gages his estate to B for 5,000, and spends the Debt - 
 money unproductively. Let now a valuation be made 
 of the amount of the property of A and B jointly, 
 and we shall find that the amount of their united 
 wealth is just the value of the estate, and nothing 
 more. The estate is worth 10,000, 5,000 of 
 which belongs to B as mortgagee, and 5,000, the 
 value of the equity of redemption, to A as mortgagor. 
 The mortgage in no wise adds to the value of the 
 estate; and though it is a property to B as mort- 
 gagee, it is, to the same extent, a diminution to A 
 of the value of the estate. 
 
 It is the same with the National Debt. The 
 whole country and its productions are mortgaged to 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 CHAP. ix. the fundholder to the extent of about one-seventh of 
 
 their value ; and, though such funds form a property 
 to the holders of them, they are only so in the 
 character of a mortgage, which reduces the value of 
 the property mortgaged to its proprietors by just the 
 amount of the mortgage. In taking, therefore, any 
 account, or making any valuation of, the total wealth 
 of the country, funded property must not be put 
 down as an item, unless you make a corresponding 
 deduction, on the other hand, from the value of the 
 property of which it forms a mortgage. 
 
 With reference to the opposite opinion, that the 
 National Debt is a subtraction from the total wealth 
 of the country ; it appears to us that this opinion is 
 almost as unfounded as the other, and would be 
 equally so, if it were not possible that a small portion 
 of the debt may be owned by foreigners. No doubt 
 the country has received an equivalent, some time or 
 other, from the foreigner, for the debt so owned by 
 him; but as that equivalent would be included in 
 any schedule of material property we might make, 
 his claim, as far as it goes would be a deduction from 
 the amount of our total wealth, and must be allowed 
 for in making any strict and accurate calculation. 
 But with reference to the great bulk of debt held by 
 the people of this country, it is only, as we said 
 before, a mortgage held by one portion of the nation, 
 which gives that portion a right to participate and 
 share in the general stock. A mortgage neither 
 
 
FALLACIES KESPECTING THE DEBT. 89 
 
 makes the value of an estate or of a country more nor CHAP. ix. 
 less ; it is merely a question of the proportionate 
 division of such estate or country among other people 
 besides the original owners. A, before he mortgaged 
 his estate, possessed the whole value of it 10,000 
 when he mortgaged it to B, the estate remained of 
 the same value; but that value was then divided 
 between A and Bj in portions of 5,000 each. 
 
 It is the same with the National Debt : the wealth 
 of the country is of the value of 6,000,000,000 
 both with the debt and without it. The difference is, 
 that without a debt of 800,000,000, everybody 
 would possess his property without liability to deduc- 
 tion on account of the mortgage while with it, we 
 are annually called upon for the payment of the 
 interest, and may be called upon, at any time, for 
 the payment of the principal. 1 * 
 
 The whole value of the country is possessed by the 
 whole of its people, and that value is neither made 
 more nor less by a change in the mode of dividing 
 it among the people. 
 
 * Not by the proprietors of the funds, but by the Govern- 
 ment, 
 
90 THE NATIONAL DEBT FINANCIALLY CONSIDERED, 
 
 CHAPTER X. 
 
 ON THE SINKING FUND. 
 
 CHAP. x. TT may naturally be supposed that the 160 years 
 
 I 
 
 schemes to A which have elapsed since the commencement of 
 
 reduce the 
 
 Debt. the National Debt, have not been allowed to pass by 
 without urgent recommendations having been made 
 to attempt its reduction, and well-intended efforts to 
 carry these recommendations into effect. As we 
 have already remarked, in the commencement of this 
 Essay, it was not until about the period of Queen 
 Anne's decease, that the public debts were looked 
 upon as being otherwise than temporary in their 
 nature; and the consequence was, that, until that 
 time no systematic efforts were made to effect their 
 diminution. As soon, however, as they began to 
 assume the character of a permanent burden upon 
 the country, steps we*re taken, and attempts made, to 
 accomplish this desirable purpose. 
 
 Plan pro- The first systematic attempt of the kind was made 
 1710. in the year 1716; for in that year, and in the pre- 
 ceding year, the revenue was divided into various 
 classes or funds ; each fund being charged with the 
 
HISTORY OF THE SINKING FUND. 9! 
 
 payment of certain portions of the regular disburse- CHAP.X. 
 ments of the Government. There were thus : 
 Firstly, what was called the f Aggregate Fund/ upon 
 which were charged the Civil List, the debt due to 
 the Bank of England, and other debts; secondly, 
 the 'South Sea Fund'; and, thirdly, the 'General 
 Fund ' ; the two latter funds being principally appro- 
 priated to the payment of the interest of the South 
 Sea debt. After this provision for the discharge of 
 the ordinary claims upon the country, it was decided 
 upon that a fourth fund should be formed, to be 
 called the ' Sinking Fund,' into which should be paid 
 all the surpluses of the other three funds. The Act 
 of Parliament (3 George I.) which established it, 
 described its purpose and operations thus : 
 
 ' All the moneys to arise from time to time, as well 
 ' of the excess and surplus of an Act made this 
 ' session for redeeming the funds of the Bank of 
 1 England ; and of the excess or surplus, by virtue of 
 1 one other act made likewise this session for redeem- 
 * ing the funds of the South Sea Company, as also of 
 ' the excess or surplus of the duties and revenues by 
 ' this Act appropriated, as aforesaid ; and the over- 
 ' plus moneys of the said general fund, by this Act 
 ( established, shall be appropriated to the discharging 
 ' of the principal and interest of such national debts 
 e as were incurred before the 25th of December, 
 ' 1716, and declared to be national debts; and to or 
 f for no other use, intent, or purpose whatever/ 
 
92 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP.X. This fund was, therefore, called < The Sinking 
 lumi ng F un <V because appropriated to the purpose of ' sink- 
 ing the public debts;' and, though it is generally 
 called ' Sir Robert Walpole's Sinking Fund/ its real 
 author was the Earl Stanhope. The adoption of the 
 plan by Sir K. Walpole was the cause of his name 
 being attached to it, he being the minister at the 
 time. 
 
 It appears to us that the idea which then prevailed 
 was, that the cost of the peace establishment of the 
 kingdom would not exceed 2,000,000 per annum, 
 and that the land-tax and the malt-duty would amply 
 provide for this expenditure, they being exempted 
 from payment into either of the before-mentioned 
 funds. The ordinary current expenditure of the 
 country being thus provided for, and the civil list 
 charged upon the ' Aggregate Fund/ it was intended 
 that the surpluses of the other portions of the revenue 
 should be faithfully and inviolably applied to the 
 redemption of the public debts. And here we may 
 remark that the Sinking Fund, at its commencement, 
 was founded upon the true principle upon which 
 alone a Sinking Fund can be judiciously and soundly 
 established; namely, that of providing a surplus 
 revenue by ordinary taxes, and not a surplus by 
 borrowing money for the purpose. Had this prin- 
 ciple been strictly adhered to throughout the period 
 of the operations of the Sinking Fund, there would 
 have arisen none of the debates and discussions 
 
HISTORY OF THE SINKING FUND. 93 
 
 which have so long agitated the economical world, CHAP. x. 
 and which have called in question the propriety and 
 soundness of any Sinking Fund, however founded. 
 It is the principle which, having long neglected, we 
 have of late years again reverted to, and which is in 
 operation at the present moment. 
 
 The Sinking Fund having been thus established 
 upon the surplus of revenue beyond expenditure, was 
 augmented, from time to time, by the surpluses 
 being made greater through the reduction of the 
 interest on these National Debts. The interest on 
 these Debts had already been reduced i per cent., 
 about the time the Sinking Fund w^as first projected. 
 An additional saving of i per cent, was effected in 
 1727; and in 1749 and 1750, a still further saving 
 of half per cent., with the prospective reduction of 
 another half per cent, in the interest of the debt, at 
 the end of seven years, for one portion of the Debt, 
 and of five years for another portion. 
 
 The following account of the first operations of ^ icardo on 
 
 the Sinking 
 
 the Sinking Fund, is that given by the eminent Fund> 
 economist, David Ricardo, in the ' Encyclopaedia 
 { Britannica/ 
 
 ' This Sinking Fund was, for some time, regularly 
 ' applied to the discharge of debt ; the sums applied 
 ' from 1716 to 1728, amounted to 6,648,000, being 
 ' nearly equal to the additional debt contracted in 
 1 that time. From 1728 to 1733, 5,000,000 more 
 ' were paid. The interest of several loans contracted 
 
94 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. x. ' between 1727 and 1732 was charged upon surplus 
 
 ( duties, which, according to the original plan, ought 
 
 the Sinking 
 
 Fund. f to have been appropriated to the Sinking Fund. 
 
 ' Soon after, the principle of preserving the 
 ' Sinking Fund inviolable was abandoned. In 1733, 
 ' 500,000 was taken from that Fund, and applied 
 
 * to the service of the year. In 1734, 1,200,000 
 
 * was taken from the Sinking Fund for current 
 { services; and in 1735, it was anticipated and mort- 
 ' gaged. 
 
 ' The produce of the Sinking Fund, at its com- 
 f mencement in 1717, was 323,437. In 1776, it 
 
 * was at its highest amount, being then 3,166,517. 
 1 In 1780, it had sunk to 2,463,017. The Sinking 
 ' Fund would have risen higher had it not been de- 
 
 * pressed, especially in the latter period, by various 
 ( encroachments ; it was charged with the interest of 
 6 several loans, for which no provision was made, and 
 ' in 1772, it was charged with an annuity of 100,000 
 ' granted, in addition, to the Civil List. During the 
 6 three wars which were waged while it subsisted, 
 1 the whole of its produce was applied to the expense 
 ' of the war; and even in time of peace, large sums 
 
 * were abstracted from it for current services. Ac- 
 1 cording to Dr. Price, the amount of public debt 
 ( paid off by the Sinking Fund since its first aliena- 
 ' tion in 1733, was only 3,000,000 paid off in 1736 
 ' and 1737 3,000,000 in the peace between 1748 
 ' and 1756 2,500,000 in the peace between 1763 
 ' and 1775 in all, 8,500,000. 
 
HISTORY OF THE SINKING FUND. 95 
 
 ( The additional Debt discharged during these CHAP, x. 
 ' periods of peace, was effected, not by the Sinking 
 
 * Fund, but from other sources. Fund - 
 
 ' On the whole, this Fund did little in time of 
 f peace, and nothing in time of war, towards the 
 ' discharge of the National Debt. The purpose 
 1 of its inviolable application was abandoned, and 
 ' the hopes entertained of its powerful efficacy 
 ' entirely disappointed. At this time, the nation 
 
 * had no other free revenue, except the Land and 
 ' Malt Tax granted annually; and as the Land 
 ' Tax during peace was then granted at a low rate, 
 ' their produce was inadequate to the expense of a 
 ' peace establishment, on the most moderate scale. 
 ' This gave occasion to encroachments on the Sinking 
 ' Fund. Had the Land Tax always been continued 
 
 * at four shillings in the pound, it would have gone 
 ' far to keep the Sinking Fund during peace in- 
 ' violate/ 
 
 This fund terminated in 1786, when Mr. Pitt's 
 Sinking Fund was established. 
 
 In order to the establishment of this Sinking Mr. Pitt's 
 
 Sinking 
 
 Fund, Mr. Pitt first appointed a Committee of the Fund. 
 House of Commons, to enquire into the ordinary 
 receipts and expenditure of the country. From the 
 investigations of this Committee, it appeared, that, 
 provided the country kept out of war, there would 
 be an annual surplus of income over expenditure, of 
 upwards of 900,000. This surplus he proposed to 
 
96 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, x. increase to 1,000,000 per annum, by levying a 
 sinkfn tts sma ^ additional duty on spirits, by placing a new 
 Fund. duty on powder and pomatum, and by making a 
 change in the mode of measuring timber imported 
 from abroad, which, together, he calculated would 
 furnish the additional 100,000 required to make 
 the surplus 1,000,000 annually. This surplus he 
 proposed to vest in certain Commissioners, by quar- 
 terly payments of 250,000 each, the money so 
 lodged with them to be laid out in the purchase of 
 stock, in their own names, as trustees for the public. 
 To ensure the faithful fulfilment of this purpose, he 
 proposed that these quarterly payments to the Com- 
 missioners should take precedence of all other pay- 
 ments out of the Exchequer, save and except the 
 interest of the National Debt itself. 
 
 This annual 1,000,000 was to be allowed to ac- 
 cumulate at compound interest, by adding the divi- 
 dends on the stock which it purchased, and also by 
 the life annuities which might fall in, until it should 
 amount to the sum of 4,000,000 per annum. This 
 sum, Mr. Pitt calculated that the Sinking Fund 
 might reach, by the plan proposed, in about twenty- 
 eight years. 
 
 The terms of Mr. Pitt's motion were, ' That the 
 1 sum of one million be annually granted to certain 
 * Commissioners, to be by them applied to the pur- 
 ' chase of stocks, towards discharging the public debt 
 4 of the country ; which money shall arise out of the 
 
HISTORY OF THE SINKING FUND. 97 
 
 ' surpluses, excesses, and overplus moneys composing CHAP. x. 
 e the Fund, commonly called the Sinking Fund/ 
 
 This motion was carried without a division ; but Mr. FOX'S 
 
 Amend- 
 
 many very grave objections were taken to the mea- ment - 
 sure by the opposition; and upon its being considered 
 in Committee, Mr. Fox, disapproving of the arrange- 
 ment by which this annual 1,000,000 was to be 
 made unalienable from the Sinking Fund, proposed, 
 as the best corrective or qualification of its tendency, 
 a clause empowering the Commissioners to accept of 
 so much of any future loan as they should have cash 
 belonging to the public in their hands to pay for. 
 This he thought the best counteraction of the prin- 
 ciple which had been adopted, and of which he dis- 
 approved, namely that of making the Sinking Fund 
 unalienable under any circumstances whatever. The 
 clause thus brought forward by Mr. Fox, was accepted 
 by Mr. Pitt; and the bill, having passed both Houses 
 of Parliament, received, shortly afterwards, the royal 
 assent. 
 
 In the year 1792, an additional Sinking Fund was sinking 
 
 Fund of 
 
 formed by devoting a portion of each loan raised, to 1792> 
 the extent of i per cent, on the nominal amount of 
 the loan. This Sinking Fund was to have special 
 reference to the loans which might be contracted 
 subsequent to its establishment ; and by its opera- 
 tion it was calculated that every loan contracted 
 thereafter might, at the very furthest, be redeemed 
 in forty-five years from the date of its contraction. 
 B 
 
90 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, x. Notwithstanding the impressive terms in which 
 Mr. Pitt's Mr. Pitt had brought forward his proposition for 
 tions. establishing his Sinking Fund, the explanations he 
 gave of the necessity for keeping it intact, and his 
 indignant denunciations of any parties who might 
 hereafter divert it from its intended purpose, no long 
 time elapsed before an important deviation from the 
 plan laid down was effected, as the following addi- 
 tional extracts from Mr. Bicardo will show : 
 
 wsTo r 4' 8 * * n *ke y ears *79^ X 799> anc * J 8oo, a deviation 
 
 * was made from Mr. Pitt's plan of providing a Sink- 
 ' ing Fund of I per cent, on the capital stock created 
 ' by every loan ; for the loans of those years had no 
 ' Sinking Fund attached to them. The interest was 
 s charged on the war taxes ; and, in lieu of a i per 
 ' cent. Sinking Fund, it was provided that the war 
 ' taxes should be continued during peace, to be then 
 
 * employed in their redemption, till they were all 
 ' redeemed. 
 
 Lord Sid- < I n 1802, Lord Sidmouth, then Mr. Addington, 
 
 mouth's 
 
 in f was Chancellor of the Exchequer. He being de- 
 ' sirous of liberating the war taxes from the charges 
 ( with which they were encumbered, proposed to 
 ' raise new annual permanent taxes for the interest 
 ' of the loans of which we have just spoken, as well 
 ' as for that which he was under the necessity of 
 'raising for the service of the year 1802; but he 
 ' wished to avoid loading the public with additional 
 
 * taxes for a i per cent. Sinking Fund on the capitals 
 
HISTORY OF THE SINKING FUND. 99 
 
 f created by those loans, and which capitals together CHAP, x. 
 ' amounted to 86,796,375. To reconcile the Stock- 
 ' holder to this arrangement, he proposed to rescind 
 1 the provision which limited the fund of 1786 to 
 ' 4,000,000, and to consolidate the old and the new 
 
 * Sinking Funds; i. e., that which arose from the 
 ' original 1,000,000 per annum, with the addition 
 ' made to it of 200,000 per annum, subsequently 
 ( granted, and that which arose from the i per cent. 
 ' on the capital of every loan that had been con- 
 ' tracted since 1792. These combined funds, he pro- 
 ' posed, should from that time be applied to the 
 1 redemption of 'the whole debt without distinction ; 
 
 * that the dividends arising from the stock purchased 
 ' by the Commissioners for the reduction of the 
 ' National Debt should be applied in the same man- 
 
 * ner ; and that this arrangement should not be 
 ' interfered with till the redemption of the whole 
 ' debt was effected.' 
 
 With the exception of a temporary change effected change m 
 by Lord Henry Petty in 1807, and which lasted for 
 one year, no alteration of importance was made in 
 the Sinking Fund till the year 1813, when Mr. Van- 
 sittart reverted as nearly as possible to the original 
 principle of Mr. Pitt's arrangement of 1792, which 
 devoted i per cent, on all loans contracted to the 
 purposes of the Sinking Fund. The arrangement of 
 1802 was thus superseded, so far as it went, to secure 
 the application of the whole of the then existing 
 
100 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. x. Sinking Fund,, and the dividends arising therefrom, 
 Mr. van- to the redemption of the Public Debt ; and which 
 
 sittart's 
 
 ?si3 salin application for that purpose was to have continued 
 until the whole of the then existing debt had been 
 redeemed. The plan now adopted by Mr. Vansittart 
 was this : that if a loan or loans for any one year 
 exceeded in amount the sum which would be ap- 
 plicable in that year for the redemption of the Debt 
 by the Commissioners, then the interest of one-half the 
 excess should first be transferred to the Commissioners 
 of the Sinking Fund; and that i per cent, upon the 
 remainder of the loan should be payable to them, 
 according to Mr. Pitt's previous arrangement. 
 
 The resolutions more immediately bearing upon 
 this part of the subject were the following : 
 
 vansittart'3 < 6. That, in order to carry into effect the pro- 
 resolutions. 
 
 ' visions of the said acts of the 32nd and 42nd of the 
 ' king, for redeeming every part of the National 
 ' Debt within the period of forty-five years from the 
 ' time of its creation, it is also expedient, that, in 
 
 * future, whenever the amount of the sum to be 
 f raised by loan, or by any other addition to the 
 ' public funded Debt, shall, in any one year, exceed 
 ' the sum estimated to be applicable, in the same 
 
 * year, to the reduction of the Public Debt, an annual 
 ' sum, equal to one-half of the interest of the excess 
 ' of the said loan, or other addition beyond the sum 
 4 so estimated to be applicable, shall be set apart out 
 
 * of the moneys composing the Consolidated Fund 
 
HISTORY OF THE SINKING FUND. IOI 
 
 ' of Great Britain, and shall be issued at the receipt CHAP. x. 
 ' of the Exchequer for the Governor and Company vansittarfs 
 
 * * resolutions. 
 
 * of the Bank of England, to be by them placed to 
 ' the account of the Commissioners for the reduction 
 ' of the National Debt ; and upon the remainder of 
 ( such loan or other addition, the annual sum of 
 ' i per cent., on the capital of all perpetual redeem- 
 f able annuities created in respect thereof, according 
 ' to the provisions of the said act of the 32nd year of 
 c His present Majesty. 
 
 ' 7. That, in order to prevent the increase of the 
 ' Public Debt by means of Exchequer Bills annually 
 ' renewed, or other unfunded Government Securities 
 ' bearing interest, it is expedient that, on the 5th day 
 f of January in every year, an account be taken of 
 ' all such Exchequer Bills and other Government 
 ' Securities, outstanding and charged upon funds not 
 4 deemed capable of making good the same, within 
 ' one year from such 5th day of January ; and that 
 ' a sum equal to i per cent, thereupon be granted 
 ' out of the supplies of such year to the said Com- 
 ' missioners for the reduction of the National Debt. 
 
 ' 8. That for the purpose of giving effect to the 
 
 * above resolutions, it is expedient that the said Ace 
 ' passed in the 42nd year of His present Majesty be 
 ' amended. 
 
 ' 9. That it is expedient to make provision that an 
 ' annual sum of 867,963, being equal to i per cent. 
 ' on the capital stock created in respect of several 
 
102 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. x. ' loans raised by virtue of divers Acts passed in the 
 vansittart's ' 38th, 39th, 40 th, and 42nd year of His present 
 1 Majesty, and for the interest and charges of which 
 ' provision was made in the said 42nd year of His 
 * Majesty, shall be set apart out of the moneys com- 
 ' posing the Consolidated Fund of Great Britain, and 
 ' shall be issued at the receipt of the Exchequer to 
 ' the Governor and Company of the Bank of England, 
 ' to be by them issued to the Commissioners for the 
 ' reduction of the National Debt/ 
 
 sSmouth's ^ nus was n t om "y Lord Sidmouth's arrangement 
 
 ment ge ^ I ^ 2 rescm ded; but, by the seventh resolution, the 
 
 rescinded. un f un( j e ^ j)^ was ma( } e to contribute its quota of 
 
 I per cent, to the Sinking Fund, as well as the 
 
 funded Debt, which heretofore had not been the 
 
 case. 
 
 Iradupto From this time until the year 1823, no alteration 
 of importance was made in the method of managing 
 the Sinking Fund. In that year, however, a great 
 change was introduced ; namely, the payment to the 
 Commissioners of a fixed sum annually out of the 
 Consolidated Fund, in lieu of all other payments. 
 From and after the 5th April, 1823, all stocks and 
 annuities standing in the name of the Commissioners 
 were to cease and determine the stocks were to be 
 cancelled, and the interest, of course, ceased to be 
 paid out of the Consolidated Fund. In place of the 
 revenue hitherto accruing to the Commissioners from 
 these sources, a fixed annual sum of 5,000,000 was 
 
HISTORY OF THE SINKING FUND. 1 03 
 
 arranged to be paid them by quarterly payments CHAP.X. 
 from the same 5th April, 1823. 
 
 The bill enacting this measure, repealed also the Alteration 
 provision which had previously been in force, to the 
 effect that, whenever the Commissioners became pos- 
 sessed of capital stock equal to that created by any 
 loan since 1786, and which stock so possessed should 
 yield an interest equal in amount to the charge 
 entailed by such loan, then the stock created by such 
 loan should be considered as cancelled. It was now, 
 on the contrary, provided that no stock shall be can- 
 celled ' until the interest of the Debt redeemed by 
 ' the application of the said sum of 5,000,000, and 
 1 of the growing interest thereof, should, together 
 ' with the said sum, have accumulated to a sum, the 
 * annual amount whereof should not be less than the 
 ' one hundredth part of the then existing unre- 
 c deemed Funded and outstanding Unfunded Debt 
 ' in Exchequer Bills unprovided for taken together/ 
 
 The last alteration which we shall have to record Alteration 
 
 in 1829. 
 
 was consequent upon the Act of 10 George IV., 
 cap. 27, which came into operation on the 5th of 
 July, 1829, which enacts that the sum thenceforth 
 annually applicable to the reduction of the National 
 Debt of the United Kingdom, shall be the sum 
 which shall appear to be the amount of the whole 
 actual annual surplus revenue, beyond the expendi- 
 ture of the said United Kingdom. 
 
 Having thus historically sketched the principal 
 
IO4 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. x. changes in the mode of managing the Sinking Fund 
 Fallacy of which have obtained since its first institution in 
 
 supporting 
 
 1716 y navm g seen how utterly it has failed to dimi- 
 burden of which it was intended 
 
 to mitigate, let us now shortly investigate its prin- 
 ciples, with the view of discovering the cause of its 
 failure. Through the investigations, in the first 
 instance, of Dr. Hamilton, the fallacy of any Sinking 
 Fund which is not entirely supported by a clear sur- 
 plus revenue, unaided by money borrowed for the 
 purpose of maintaining the said Sinking Fund, has 
 been most clearly and satisfactorily established. We 
 believe that all subsequent economists whose views 
 are entitled to the slightest attention, quite agree in 
 the conclusions at which Dr. Hamilton arrived. The 
 matter is, indeed, palpable to the plainest under- 
 standing, that no benefit can possibly accrue to the 
 revenue of a state by borrowing money of one set of 
 persons, say in a 3 per cent, stock, in order to pay off 
 the same kind of stock held by other persons. On 
 the contrary, a loss must inevitably arise, inasmuch 
 as the money cannot be borrowed, but by creating a 
 greater debt than that which will be discharged by 
 its means. We have shown, when treating of the 
 history of the Debt, that while 100 in money paid 
 by the Government in redeeming the Debt, only 
 operated to discharge 163 of Debt, the very bor- 
 rowing of the 100 entailed a new debt upon the 
 country of 173, which was, in effect, adding 10 to 
 
CAUSES OF THE FAILUKE OF THE SINKING FUND. 105 
 
 the capital of the Debt for every 100 so employed CHAP.X. 
 by the Sinking Fund. The only time at which new 
 loans can be advantageously contracted to pay off 
 old loans,, is when the current rate of interest in the 
 market sinks below the rate at which the loan was 
 originally contracted. At such times, money may be 
 borrowed at a lower rate of interest, and may be 
 advantageously employed in paying off those loans 
 for which a higher rate of interest has hitherto been 
 paid. But this was not the nature of the operations 
 of the Sinking Fund, during the time that it was 
 carried on under Mr. Pitt's arrangement, of the 
 devotion of i per cent of all loans raised to its sup- 
 port. It was maintained by actually creating a 
 greater debt than it discharged; and it added, there- 
 fore, to the evil which it was professedly established 
 to correct. 
 
 Dr. Hamilton says. ' We are told that these opera- Dr. Hamil- 
 ton's views. 
 ' tions [i.e., of the Sinking Fund] have succeeded 
 
 1 beyond expectation, and that the whole Debt exist- 
 ' ing in 1786, amounting to 238,000,000, is already 
 ' paid off. This is altogether fictitious and delusive; 
 ' we may pay off as much Debt as we please at any 
 1 time, by borrowing. But the only real alteration 
 ' in the state of our finance, is the difference between 
 1 the debt contracted and the debt paid off; and 
 ' while the former of these exceeds the latter, our 
 e situation is growing worse, to the extent of that 
 1 difference. 
 
106 THE NATIONAL DEBT FINANCIALLY CONSIDEEED. 
 
 CHAP, x. ( A private gentleman whose estate is encum- 
 Dr. Hamii- e bered. may, if he have any credit, pay off all his 
 
 ton's views. V ' r J 
 
 ' debt every year, by borrowing from other hands; 
 ' but if he spend more than his free income, his em- 
 ' barrassments will continually increase ; and his 
 
 * affairs are so much the worse by being conducted 
 ' in this manner, from the fees he pays to his agents. 
 1 The absurdity of deriving any satisfaction from 
 ( this annual discharge of his debts, will appear still 
 ' stronger, if we suppose him, instead of borrowing 
 
 * from other hands, only to renew the securities to 
 
 * the same creditors annually; paying a fee to the 
 1 agents, and a douceur to the creditors themselves, 
 ' on the renewal. All these observations are equally 
 4 applicable to the debt of a nation, conducted as 
 ' ours is. It would not be impracticable or very 
 
 * difficult, to redeem our whole debt in any year, if 
 ( the measures we follow be redemption. It would 
 ' only require a large loan every month, and the 
 
 * large sums we were thus enabled to pay, would 
 
 * supply the funds for these loans. Our capitalists 
 ' would be well pleased to promote these loans, as 
 ' they would derive a bonus from each. Such a sys- 
 ' tern would be ruinous in the extreme ; and the 
 ( system we follow is the same on a smaller scale, 
 ' and is, therefore, only pernicious in a less degree. 
 
 c In the year 1786, our Funded Debt was 
 ' 238,000,000. We have paid all this off, but 
 ' we have contracted (exclusive of the loans of 1813) 
 
CAUSES OF THE FAILURE OF THE SINKING FUND. 1 07 
 
 ' a new debt of .574,000,000. Does not this CHAP, x. 
 
 * amount to the same as that we have paid no Dr. Hamil- 
 
 ton's views. 
 
 c debt at all, but contracted an additional debt of 
 ' 336,000,000.' 
 
 The case, as we have seen, is worse than is here 
 stated by Dr. Hamilton, inasmuch as the new Debt 
 of 574,000,000 was contracted upon terms more 
 unfavourable to the country than those upon which 
 the old Debt of 238,000,000 was discharged were 
 favourable. 
 
 Mr. Hume, in the session of 1826, put this matter J * r - Hume's 
 before Parliament in a light which many persons 
 may consider as extremely clear and convincing. 
 He asserted : 
 
 * That no nation or body corporate, in their col- 
 ' lective capacity, can derive pecuniary benefit or 
 ' advantage of any kind, by merely trading with 
 t themselves ; and, therefore, the Sinking Fund sys- 
 1 tern of Great Britain, established solely for the 
 ' purpose of the nation trading in its own obliga- 
 ' tions, was founded in fallacy, and has been main- 
 ' tained by delusion. That the Sinking Fund system 
 ' is not only useless for any beneficial purpose to the 
 ' state, but highly objectionable from the loss it oc- 
 
 * casions, and from its direct tendency to promote 
 ' a system of speculation and gambling, altogether 
 ' inconsistent with the well-being of the country, 
 1 and ought, therefore, to be abolished.' 
 
IO8 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. x. This, he said, was proved : 
 
 f By enormous charge of management ; by im- 
 ' mense loss of actual capital between 1794 and 
 ' 1817, amounting to not less than 35,000,000. 
 
 ' On one occasion, Government wanted to borrow 
 1 5,000,000 only. An individual would have gone 
 ' into the market, and raised that sum on the best 
 ' terms he could; but because of the necessity of 
 ' providing for this delusive Sinking Fund, the 
 
 * Government on that occasion raised a very much 
 
 * larger sum, and upon terms, unfortunately disad- 
 ' vantageous in proportion to the amount of such 
 < loan.' 
 
 Mr. Humo's Mr. Hume then moved resolutions to the effect : 
 
 resolutions. 
 
 ' i. That the deficiency of revenue as compared 
 1 with the expenditure of the country from the loth 
 ' of October, 1797, to 5th January, 1817, was 
 ' 393,000,000. 
 
 ' 2. That to supply this deficiency of 393,000,000, 
 ' no less than 618,163,857 of money was raised by 
 ' loans and Exchequer Bills from 1793 to 1816 
 f inclusive. 
 
 < 3. That of this 618,163,857, only 188,522,348 
 ' had been paid to the Commissioners for the E/educ- 
 { tion of the National Debt, leaving the enormous 
 ' sum of 136,641,517 totally unaccounted for. 
 
 f 4. That in the year 1815, annuities of different 
 
 * denominations were created equal to 102,787,334 
 ' of a 3 per cent, stock, for which only 53,819,786 
 
PROPER FOUNDATIONS OF A SINKING FUND. 109 
 
 ' of money was received, being at the rate of 100 CHAP. x. 
 ' of stock created for every 52 7s. 2d. of monev Mr. Hume's 
 
 J D " calculations. 
 
 * received. 
 
 * 5. That it appears that the Commissioners have, 
 ' between 5th Jan., 1824, and 5th Jan., 1825, pur- 
 ' chased 3,627,225 of 3 per cent, stock, for which 
 ' they have paid 3,416,031, being at the rate of 
 e 94 33. 5d. for every 100 of such stock, at a loss 
 ' of 41 i6s. 3d. of money for every 100 of stock 
 
 * repurchased, as compared with 1815. 
 
 * In short, for about twenty-four years, while we 
 
 * had been borrowing, say at 5 53., we had been re- 
 ' purchasing at about 4 ios.' 
 
 We have not gone into a minute investigation of 
 these calculations of Mr. Hume ; but, 011 a broad 
 and general view, they seem strongly to corroborate 
 the calculations we have given in a former chapter, 
 explanatory of the recklessness with which the 
 capital of the debt was created ; nor are they with- 
 out their use in showing the inefficiency of the Sink- 
 ing Fund in alleviating the burden of the Debt. 
 
 It seems now to be admitted, on all hands, that Present 
 
 . views of a 
 
 the only legitimate foundation upon which a sound sinking 
 Sinking Fund can be based, is that of an excess of 
 ordinary revenue over ordinary expenditure. In 
 order, therefore, to the carrying out of this intelligi- 
 ble and unimpeachable principle, it is essential that 
 those steps be more especially taken, which tend to 
 
HO THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, x. develop and increase the general wealth of the 
 Country. It i fr m the increase of this wealth that 
 the Government alone can look for that revenue 
 which will yield the necessary surplus for the main- 
 tenance of a Sinking Fund. All arrangements which 
 have a tendency to hinder the production of wealth, 
 and to prevent the constant and steady employment 
 of laborious industry, must steadily and upon prin- 
 ciple be discountenanced and discouraged. Every 
 idle man is, for the time being, an unproductive 
 consumer and annihilator of the national wealth. 
 He consumes without producing ; and it needs but 
 the continuation of this process long enough, and 
 by a sufficiently large proportion of the population, 
 to bring the nation to beggary, and to annihilate the 
 fund from which the Government can alone derive 
 the means of either reducing the Debt, or paying its 
 annual interest. It is by the utmost possible increase 
 of all material productions of course, in proper 
 proportions to each other, and beyond the necessary 
 consumption of the parties producing them that 
 the only fund can be accumulated by which the 
 national incumbrances may be liquidated. This 
 would doubtless, in time, be done, if unnatural hin- 
 derances and checks were not permitted to interfere ; 
 for every industrious man, sound in mind and body, 
 has the power conferred upon him by his Maker of 
 producing a much greater quantity of wealth of 
 
PROPER FOUNDATIONS OF A SINKING FUND. Ill 
 
 some kind or other than what is necessary for CHAP. x. 
 the support of himself and family. It is the ag- p re sent 
 gregate of such productions which forms the sinkLg a 
 
 Fund.* 
 
 real annual wealth or income of the Nation ; the 
 money of the Country being the mere tool or instru- 
 ment by which the relative value to each other of 
 these productions is determined, and the productions 
 themselves exchanged for each other. And it is the 
 surplus of these productions adding to, and forming 
 part of, the permanent capital of the Country, which 
 furnishes, or ought to furnish, the annually in- 
 creasing fund, from which the Government may 
 draw the supplies necessary for the gradual redemp- 
 tion of the Debt. 
 
 A Sinking Fund derived from such a source is most 
 legitimate and most admirable. We have thought it 
 unnecessary to go into the various elaborate calcu- 
 lations which have been made, demonstrating the 
 futility of a Sinking Fund which depends for its 
 maintenance upon money borrowed for its support, 
 as we think it sufficient for the general purpose of 
 this Essay to have exhibited the principle, that no 
 benefit can possibly accrue from discharging a debt, 
 when such discharge can only be effected by incur- 
 ring another and much larger debt. Those who 
 wish to enter minutely into such calculations cannot 
 do better than carefully peruse Dr. Hamilton's ad- 
 mirable ' Inquiry concerning the Rise and Progress, 
 
1 1 2 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. x. etc., of the National Debt/ and also Mr. Ricardo's 
 able ' History of the Sinking Fund/ in the Encyclo- 
 pedia Britannica, to both of which works the writer 
 has been greatly indebted while prosecuting the pre- 
 sent inquiry. 
 
PART II. 
 
 THE PRESENT FINANCIAL CONDITION OF 
 THE COUNTRY, 
 
 AND 
 
 SUGGESTIONS FOR IMPROVING IT. 
 
CHAPTER I. 
 
 COMPARISON OF OUR PRESENT AND PROSPECTIVE 
 CONDITION WITH THAT OF FORMER YEARS. 
 
 TT^E have hitherto seen, in connection with the CHAP.I. 
 
 National Debt, nothing but what is of a cheer- Retrospect- 
 ive view of 
 
 less and depressing nature : Debt contracted without the Debt - 
 adequate value being received for it, and Debt re- 
 deemed at a similar sacrifice. We are liable, never- 
 theless, while looking at the dark side of the picture, 
 to overrate the unfavourable circumstances in which 
 we are placed, and to forget that, although our 
 Debt far transcends the largest amount borne by 
 preceding generations, our means to bear it have 
 increased in at least an equal degree. From the 
 time of the accession of Queen Anne, when the Debt 
 was 16,000,000, to the termination of the great 
 French war, when it exceeded 800,000,000, every 
 successive addition to its amount has given rise to 
 the loudest lamentations, and produced the strongest 
 convictions that we had gone to the utmost extent 
 of our possible means that further addition was 
 not only thought rash to the extreme of madness, 
 but that it was, in fact, absolutely impossible. 
 
Il6 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. i. Sir John Sinclair, in his ( History of the Public 
 
 si,, j. gin. Revenue/ gives some quotations which appear at the 
 
 lii'Sory. present time almost amusing, from the dolefulness 
 
 which pervades them, considering the comparatively 
 
 small amount of Debt which called forth these dismal 
 
 complaints. We subjoin a few, as a kind of antidote 
 
 to despondency on our parts, as we think we shall be 
 
 able to show that the condition of the Country at 
 
 the present time is not a whit more irretrievable 
 
 than it was at the time these complaints were made. 
 
 We begin with an extract from a work printed in 
 the year 1710: 
 
 Extracts ' Are we not almost driven to the very brink of de- 
 sinciair's < struction ? Our treasures are riotously wasted : our 
 
 history. 
 
 ' constitution in danger of being subverted ; and the 
 ' nation almost in general corrupted ! Yet is it not 
 ' a strange and wonderful thing, that, while the nation 
 ( is almost bankrupt, wealthy men should shoot up 
 ' in several offices like mushrooms ; and, while the 
 ' Government was endangered to be beggared, that 
 ' all its servants should riot in such wealth and 
 ' plenty, that the bare handling of a brush in any 
 ' office was a ready way to a plentiful fortune ; as 
 f if the public treasure had been thrown in there 
 ' only for the officers to brush it into their own 
 ' pockets.' 
 
 1722. ' Can it be proved that a free people can 
 ' taste the high enjoyments that flow from property 
 
PUBLIC LAMENTATIONS RESPECTING THE DEBT. I I J 
 
 ' and liberty, when loaded with numerous Duties CHAP.I. 
 ' and immersed in Debts of such a magnitude that the ^J* * 18 
 ' discharging thereof is almost impracticable with the History. s 
 
 * safety of the nation ? And that our credit and repu- 
 4 tation is growing and increasing, notwithstanding 
 
 * we are likely to be driven to the unavoidable choice 
 ' of two melancholy extremes, viz., the blotting out 
 ' of our books, and an effacing, as irretrievable, of an 
 ' infinite number of creditors, who have lawful and 
 ' just claims upon us ; or, the paying of debts by 
 
 * virtue of wild schemes ; and, by that means, to 
 
 * sink under a final bankruptcy ? Ought not such a 
 ' people to reflect, with horror and anguish of heart 
 ' at any, who either by mismanagement or villany, 
 ' have reduced them to so terrible an ebb/ 
 
 1736. f The vast load of debt under which the 
 ' nation still groans, is the true source of all those 
 ' calamities and gloomy prospects of which we have 
 
 * so much reason to complain.' 
 
 The ' vast load of debt ' here alluded to was under 
 fifty millions. 
 
 1749. * Our Parliamentary aids from the year 
 1 1740 exclusively, to the year 1748 inclusively, 
 ' amount to ^55,522,159 i6s. 3d., a sum that will 
 e appear incredible to future generations, and is so 
 ' almost to the present. Till we have paid a good 
 ' part of our Debt, and restored our country in some 
 
Il8 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 Extracts 
 from 
 Sinclair's 
 history. 
 
 ' measure, to her former wealth and power, it will be 
 1 difficult to maintain the dignity of Great Britain, 
 ' to make her respected abroad, and secure from 
 f injuries, or even affronts, on the part of her neigh- 
 ' bours/ 
 
 Lord 
 
 Macaulay s 
 
 ?heeffect f of 
 
 1776. ' I suppose there is no mathematical, still 
 ' less an arithmetical, demonstration, that the road to 
 
 * the Holy Land was not the road to Paradise, as 
 ' there is that the endless increase of National Debts 
 
 * is the direct road to National Ruin. But having now 
 ( completely reached that goal, it is needless, at present, 
 'to reflect on the past. It will be found in the 
 ' present year, 1776, that all the revenues of this 
 ' island, north of Trent, and west of Reading, are 
 ' mortgaged or anticipated for ever/ 
 
 A small volume might be filled with extracts of a 
 8 ^ n * nature ; but, as they are so ably epitomised 
 . 11 by Lord Macaulay, in his fourth volume of the 
 History of England, we will give his Lordship's 
 summing up, in preference to making any more 
 quotations. 
 
 ' At every stage in the growth of that debt, the 
 
 * Nation has set up the same cry of anguish and 
 1 despair. At every stage in the growth of that debt 
 ' it has been seriously asserted, by wise men, that 
 
 * bankruptcy and ruin were at hand. Yet still the 
 f debt went on growing; and still bankruptcy and ruin 
 ( were as remote as ever. When the great contest 
 
PUBLIC LAMENTATIONS RESPECTING THE DEBT. IlQ 
 
 f with Lewis XIV. was finally terminated by CHAP. i. 
 ' the peace of Utrecht, the Nation owed about L^d 
 e 50,000.000 : and that debt was considered, not account of 
 
 ' the effect of 
 
 * merely by the rude multitude, not merely by fox- ^ Debt ou 
 ' hunting squires and coffee-house orators, but by 
 
 ' acute and profound thinkers, as an incumbrance 
 1 which would permanently cripple the body politic. 
 ' Nevertheless trade flourished ; wealth increased ; 
 1 the nation became richer and richer. Then came 
 ( the war of the Austrian Succession, and the debt 
 
 * rose to 80,000,000. Pamphleteers, historians, 
 c and orators, pronounced that now, at all events, our 
 ' case was desperate. Yet the signs of increasing 
 ' prosperity signs which could neither be coun- 
 f terfeited nor concealed, ought to have satisfied 
 ' observant and reflecting men that a debt of 
 ' 80,000,000 was less to the England which was 
 ' governed by Pelham, than a debt of 50,000,000 
 ( had been to the England which was governed by 
 1 Oxford. Soon war again broke forth ; and, under 
 4 the energetic and prodigal administration of the 
 1 first William Pitt, the Debt rapidly swelled to 
 
 * .140,000,000. As soon as the first intoxication of 
 ' victory was over, men of theory and men of busi- 
 
 * ness almost unanimously pronounced that the fatal 
 ' day had now really arrived. The only statesman, 
 
 * indeed, active or speculative, who did not share in 
 1 the general delusion, was Edmund Burke. David 
 ' Hume, undoubtedly one of the most profound 
 
I 2O THE NATIONAL DEBT FINANCIALLY CONSIDEEED. 
 CHAP. i. ' political economists of his time, declared that our 
 
 ' madness had exceeded the madness of the Cru- 
 
 Lord 
 
 accwmtoi? ' saders. Richard Coeur de Lion, and Saint Lewis 
 
 the Debt ou ' had not gone in the face of arithmetical demon- 
 
 the nation. 
 
 ' stration. It was impossible to prove, by figures, 
 ' that the road to Paradise did not lie through the 
 f Holy Land ; but it was possible to prove, by 
 ' figures, that the road to National Ruin was through 
 ' the National Debt. Adam Smith saw a little, and 
 ' but a little, further. He admitted that, immense as 
 ' the burden was, the nation did actually sustain it, 
 ' and thrive under it in a way which nobody could 
 'have foreseen. But he warned his countrymen not 
 ' to repeat so hazardous an experiment. The Limit 
 
 * had been reached. Even a small increase might be 
 ' fatal. 
 
 ' It can hardly be doubted that there must have 
 ' been some great fallacy in the notions of those who 
 f uttered, and of those who believed that long suc- 
 ' cession of confident predictions, so signally falsified 
 ' by a long succession of indisputable facts. To 
 
 * point out that fallacy is the office rather of the 
 ' political economist than of the historian.' 
 
 Fallacy We think it not difficult to solve the problem here 
 
 entertained 
 
 Debt the ^ e ^ ^ or solution, nor to point out the fallacy which 
 Lord Macaulay intimates, but abstains from exposing. 
 The fallacy we conceive to be this : that of con- 
 founding the embarrassments of the Government, 
 which is a mere portion of the nation, with the entire 
 
STATE EMBARRASSMENT NOT NATIONAL RUIN. 121 
 
 nation itself; and the concluding that, because a CHAP. i. 
 Government cannot pay its way, and is, conse- Fallacy 
 quently, bankrupt, therefore the nation must needs JJtothc 
 be bankrupt also. Now a nation, as a whole, can 
 never be utterly ruined in the way so confidently 
 predicted in the extracts we have before given, inas- 
 much as Providence has mercifully put it out of the 
 power of any nation to ruin itself by forestalling 
 future supplies. No nation can, in any one or more 
 years, consume the produce of future years ; and thus 
 leave the people of the latter period without the 
 means of subsistence. Providence gives a nation its 
 income year by year, and only one year at a 
 time; and that upon the application of the proper 
 amount of labour and industry for the production of 
 the income. In this respect, we are all placed in 
 similar circumstances to those of a spendthrift son, 
 whose parent will not trust him with his entire 
 fortune, but who metes it out to him year by year, 
 month by month, or week by week, if necessary; 
 and who has made such an arrangement that nothing 
 that the son can possibly do can divert the periodical 
 income from its intended destination to himself. 
 
 There is. indeed, one mode of action which a impolicy o 
 
 taking peo- 
 
 Government or a Nation may adopt, which will bring ple | ro 
 ruin for a time upon the Country at large, and that industr y- 
 is, by so diverting the labour of the people from 
 productive to unproductive pursuits, as shall prevent 
 the realisation, in succeeding years, of the ordinary 
 
122 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP - i- and natural income of the country. We can, for 
 instance, imagine the possibility of a nation being so 
 misled as to divert a large portion of its labour from 
 the task of tilling the soil and the manufacturing of 
 necessary articles of use, in order that that labour 
 may be devoted to the production of the materiel of 
 war. It would necessarily follow, that a large por- 
 tion of the soil would remain untilled ; and that por- 
 tion of the natural income which is usually derived 
 from the soil remain undeveloped. In like manner, 
 the same abstraction of labour from ordinary manu- 
 facturing pursuits would prevent the production of 
 that portion of the annual income of the country 
 which is derived from manufactures. By a persist- 
 ence in this course of procedure, a nation might be 
 deprived of its annual income, and, for the time 
 being, be ruined. But as long as the labour of the 
 country is employed in producing, to its fullest ex- 
 tent, all that the country is capable of furnishing 
 as long as the latent wealth of the nation is being 
 developed as much as possible no embarrassment of 
 the Government can produce absolute ruin to the 
 Hindrances great mass of the people. Hinder, indeed, the pro- 
 tk)Suie U road duction of wealth so mismanage matters, that either 
 
 to ruin. 
 
 the soil is thrown out of cultivation, or factories are 
 closed, mills are stopped, mines shut up, and the pro- 
 ductive labour of the country doomed to enforced 
 idleness, and ruin will quickly supervene. But this 
 was not the effect produced by the National Debts at 
 
OUR WEALTH INCREASES FASTER THAN OUR DEBT. I 2 3 
 
 the time these complaints were penned. On the CHAP. i. 
 contrary, every addition to the debt gave rise to 
 more strenuous exertions to overcome the difficulties 
 which such addition to our incumbrances produced 
 every fresh necessity gave birth to new efforts to 
 meet and overcome that necessity ; and the wealth of 
 the Country, despite the debt, went on gradually and 
 surely increasing. 
 
 But, having looked so long on the dreary side of A more 
 
 hopeful 
 
 the subject, let us now turn our attention to that view. 
 which is more cheering and hopeful. We stated, at 
 the commencement of this chapter, that our means 
 had at least kept equal pace with our liabilities : 
 and that this was no random remark, will, we think, 
 be evident, when we examine the figures and sta- 
 tistics which bear upon this point. If, on comparing 
 the amount of the Debt at different periods from its 
 commencement up to the present time, with the 
 total wealth of the Country at the same periods, we 
 find that we are now in a better position to deal 
 with the Debt than we were at any former period, 
 we shall exhibit sufficient cause for viewing the sub- 
 ject with more complacency and calmness than we 
 should otherwise be disposed to do. 
 
 Let us, then, see what are the actual statistics of 
 the subject. 
 
 Several estimates of the total wealth of the nation 
 have been made during the last 150 years, the fol- 
 lowing being some of the principal, viz. : 
 
I 24 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP - L Gregory King, about the year 1700, estimated 
 wealth the total wealth or capital of the kingdom as being 
 Kingdom, of the value of 615.000.000 sterling. The National 
 
 Gregory 
 
 Stmiate Debt being at this period about 15,000,000, there 
 would remain a clear sum, after all liabilities were 
 satisfied, of 600,000,000 sterling. The population 
 of Great Britain and Ireland was, it is supposed, at 
 this period about 8,000,000; and, if so, the sum of 
 600,000,000 would be equal to 75 of capital per 
 head of the population. 
 
 Dr.Becke's One hundred vears after this period. Dr. Becke 
 
 ard Sir W. 
 
 ^timated the total national wealth at 2,500,000,000 ; 
 but as Sir W. Pulteney had, only a few years before, 
 estimated it at 2,000,000,000, we think it better to 
 take the medium between the two, and set down the 
 national wealth at this period as of the value of 
 2,250,000,000. From this must be deducted 
 450,000,000, the amount of the National Debt, 
 which would leave a clear surplus of 1,800,000,000. 
 The population being at this time about 16,000,000, 
 it would follow, that there was 110 of capital per 
 head of the population, as compared with 75 of the 
 former period. 
 
 In 1812, the wealth of the country had increased, 
 
 according to Dr. Colquhoun, to 2,736,640,000; and 
 the Debt had also increased to 670,000,000. De- 
 ducting the one from the other, and reckoning the 
 population at 18,000,000, this sum would shew 115 
 of capital for every individual of the population. 
 
OUR WEALTH INCREASES FASTER THAN OUR DEBT. I 25 
 
 And now, in the year 1857, ^ seems generally to be CHAP. i. 
 thought that the sum of 6,000.000.000 is a mode- Conjectured 
 
 wealth 
 
 rate and fair estimate of the extent of the national of. the 
 
 Kingdom at 
 
 wealth of the United Kingdom. The Debt we may 
 take, in round numbers, as being j8oo, 000,000, and 
 the population as being 30,000,000. The result of 
 these figures is, that there is 170 capital per head 
 of the population, as compared with 115 in 1812 
 110 in 1800 and 75 in 1700. 
 
 We have deducted the amount of the Debt at each 
 period from the gross amount of the national wealth, 
 for the purpose of shewing what clear surplus is left 
 per head, after all liabilities are discharged. But in 
 a strict calculation of the total wealth of the country, 
 such a deduction does not need to be made. For 
 though the debt is owing by the Nation at large to 
 its creditors, and the Nation is, in one sense, the 
 poorer for it; yet those very creditors themselves 
 form part of the Nation; and that which forms a 
 debt against the country, also forms the capital and 
 wealth of those very individuals, and must be put 
 down as forming part of the wealth of the country. 
 In fact, the same item stands upon both sides of the 
 account as a debit against the country, and as a 
 credit as regards the individual proprietors of the 
 claim against the country. It may as well, there- 
 fore, be left out of the account ; and the actual 
 wealth or capital of the country may be taken at the 
 
I 26 THE NATIONAL DEBT FINANCIALLY CONSIDERED* 
 
 CHAP. i. full gross amounts as before given, which will then 
 wealth give the following results : 
 
 Kingdom. 
 
 s. d. 
 
 In the year 1700, 77 o o'j 
 
 1800, 140 o o (of capital per head 
 
 1812, 152 o or of population. 
 
 1857, 200 O o) 
 
 These calculations go to show, that during the 
 present century the wealth of the country, per indivi- 
 vidual, has increased one-third; and that the total 
 wealth of the country, viewed without reference to 
 the increase of population, has more than doubled. 
 And that there is good reason to believe that such is 
 actually the case, the following statements, we think, 
 will strongly indicate. 
 
 The first corroborative evidence that we shall offer, 
 is an extract from * The Report of the Select Com- 
 
 * mittee of the House of Commons on the Law of 
 4 Partnership,' in 1851. 
 
 The Report says : 
 Mr. Porter's < Mr. Porter, one of our best authorities on sta- 
 
 estimate of 
 
 personalty, i tistical subjects, calculates the amount of personal 
 e property in Great Britain to have nearly doubled in 
 
 * thirty years, and to amount, in 1845, to upwards 
 4 of 2,200,000,000, from 1,200,000,000 in 1815.' 
 
 If personal property amounted to 2,200,000,000 
 in 1845, we may fairly reckon it to have increased to 
 3.000,000,000 by the year 1857. 
 
OUR WEALTH INCREASES FASTER THAN OUR DEBT. I 2J 
 
 The second quotation we make refers to real CHAP, i 
 estate, and is taken from the same author's work wealth 
 ' On the Progress of the Nation/ sect. 2. It exhibits Kingdom. 
 the increased value of the real as distinguished 
 from the personal property of the Kingdom, as 
 evidenced by the increased revenue derived there- 
 from. 
 
 ' With scarcely any exception, the revenue drawn Mr. rorter's 
 
 statement 
 
 f in the form of rent from the ownership of the soil, JJJf 6 * 11 ** 
 ' has been at least doubled in every part of Great perty> 
 ' Britain since 1790.' 
 
 Now, if we compare this statement with the cal- 
 culation of Dr. Colquhoun, they, together, will very 
 strongly corroborate the correctness of the estimate 
 of 6,000,000,000 as being about the total wealth of the 
 United Kingdom. 
 
 Thus, Dr. Colquhoun stated the total wealth, real coiquhotm's 
 
 statement. 
 
 and personal, to be 2,700,000,000, at about the 
 same period of time that Mr. Porter asserted that the 
 personal wealth of the nation was 1,200,000,000. 
 Now, if we deduct the 1,200,000,000 personalty 
 from the 2,700,000,000 total wealth, it will leave 
 1,500,000,000 as being the value of the real estate; 
 and if this real estate has been doubled in value by 
 the application of science to agriculture, and by the 
 conversion of barren wastes into fruitful fields, the 
 total value of real estate will be 3,000,000,000, or 
 thereabouts. Add this to the former item of 
 3,000,000,000 for personalty, and the sum will be 
 
128 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. i. 6,000,000,000 as the amount of the entire wealth of 
 
 the nation. 
 
 Revenue This calculation appears also to be borne out by 
 Kingdom, the marketable or saleable value of the real estate of 
 the kingdom, founding our estimate of that value 
 upon the rental derived from it. From all the ac- 
 counts we have seen, we think that the rental of the 
 real estate of the United Kingdom, lands and houses, 
 cannot be put down at less than 100,000,000 per 
 annum. The value of this at thirty years' purchase, 
 a very fair price for real estate, will give3,ooo,ooo,ooo 
 as the saleable value of the real property of the 
 country. 
 
 If we turn from the capital to the income of the 
 country, the same kind of increase is manifested. 
 In Francis's ' History of the Bank of England/ we 
 are informed that the annual income of the country, 
 in the year 1796, was estimated to be ^233,308,800; 
 and that in the year 1846, half a century afterwards, 
 Mr.w.R. Mr. W. R. Smee, in his pamphlet on the income 
 
 Smee's r r 
 
 statement, tax, calculated it to be 488,000,000, which is more 
 than double the former amount. This was eleven 
 years ago ; and now we think we may fairly conclude 
 that the present income of the nation is between 
 500,000,000 and 600,000,000 a year. 
 
 But the present great increase of the wealth of 
 the nation at large, is not the only hopeful feature 
 to dwell upon. If with our comparatively inferior 
 powers of production, we have been able, during the 
 
OUR WEALTH STILL CAPABLE OF EXTENSION. 129 
 
 last fifty years, to double the total wealth of the CHAP. i. 
 country, what may we not expect to accomplish by increase of 
 the industry of the next fifty years? So amazingly wealth. 
 have our powers of production been developed and 
 increased during the more recent portion of that 
 period so multiplied and extended our means of 
 transport and communication so wonderful the ap- 
 plications of science to productive and economical 
 purposes that it is not extravagant to conclude 
 that it will not require another fifty years to repeat 
 the process, but that we may again double our 
 wealth within the ensuing thirty years. This, of 
 itself, would be equivalent to reducing the amount 
 of the Debt one half. 
 
 And this is one of the principal points to be aimed Mitigation 
 
 of thebur- 
 
 at. We should steadily keep in view, that the in- 
 crease of the stock of the nation, is equivalent to a 
 reduction of the Debt. A person whose expenses 
 fully equal, or exceed, his income, may be as effec- 
 tually relieved from his embarrassment by an increase 
 of his income as by a reduction of his expenditure. 
 Distribute a given weight over a greater surface, and 
 the pressure upon each individual portion of that 
 surface becomes mitigated. The weight of Debt 
 which we now sustain, will, in like manner, become 
 mitigated, when it is extended over a greater portion 
 of wealth and a greater number of individuals, both 
 of which will be the result of our natural and in- 
 
I JO THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP - * evitable progress, if we are not so unwise as actually 
 
 to hinder this result taking place. 
 
 owX?** -^ or what has been the nature of the increase 
 wealth. which has taken place during the last fifty years? 
 We describe it as the income of the country having 
 increased from 250,000,000 annually, to between 
 500,000,000 and 600,000,000. What is the 
 nature of that wealth which has grown from 
 2,500,000,000 to 6,000,000,000 what is this 
 6,000,000.000 of wealth? To describe this accu- 
 rately, we should have to make a schedule or inven- 
 tory of the items which composed the wealth of the 
 nation at these two respective periods. We should, 
 in this schedule, see that so many more hundreds of 
 thousands or millions of acres of land have been 
 brought into cultivation, which were formerly waste ; 
 we should see, that even that land which was in culti- 
 vation at the first period, by the application of 
 labour to it, and the incorporation of labour with it, 
 had so increased in fertility, as to be enabled to pro- 
 duce a double amount of crops ; we should see that, 
 in the former period, there were say 2,000,000, of 
 houses, and that now there were 4,000,000. That, 
 in like manner, there were, in present stock and in 
 annual production, two tons of iron, copper, tin, 
 coal, etc., etc., to one ton of the former period ; that 
 a similarly enlarged stock existed of all kinds of 
 textile fabrics cottons, cloth, linen, and silks; 
 
WHAT THE NATIONAL WEALTH CONSISTS OF. IJ 
 
 that there was double the number of oxen, sheep, CHAP - 
 piers, horses, etc. In this way, we should have to go Nature of 
 
 our in- 
 
 through every article of consumption and use ; and 
 we should discover, that this enlargement of wealth 
 from 2,500,000,000 to 6,000,000,000, was either 
 a greater quantity of the productions before named, 
 or an ability to produce a greater quantity; that 
 this addition of 3,500,000,000 to the national 
 wealth, was nothing more than a greater stock of all 
 articles of consumption and use, and the increased 
 power which the nation possessed, in the shape of 
 improved land, machinery and implements, to pro- 
 duce in larger quantities periodically all the articles 
 necessary for man's subsistence and use. Money 
 itself, though forming but a small and insignificant 
 portion of this wealth, would likewise exhibit an 
 increase ; the amount of gold and silver at the first 
 period, in coin and in plate, did not probably exceed 
 50,000,000; it now, in all probability, approaches 
 100,000,000. Let the mention of this last item be 
 duly pondered over, and let it teach a necessary les- 
 son to those who are misled by the mistaken notion 
 that money forms the wealth of the individual or 
 the nation. We see how far it does so, nationally 
 speaking we see what it amounts to ; it is 
 100,000,000 out of 6,000,000,000; there are 
 5,900 millions, not money, but money's worth, and 
 100 millions money. It would be a sad day for 
 those who consider themselves worth their 10,000 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. i. or 20,000 apiece, if there were no other stock in 
 the country to justify their title to be considered 
 persons of property, than the mere money of the 
 country ; for this, equally divided, would not amount 
 to more than 2 per head. 
 
 importance It is clear, then, what we must expect, and what 
 
 of promot- , / .1 
 
 ing the we must aim at, 11 we are to increase the present 
 
 increase of 
 
 wealth. wealth of the country from 6,000, 000,000 to 
 12,000,000,000, and by this means effectually 
 lessen the weight of the National Debt. It can 
 only be done in the way indicated above. The soil 
 of the nation, which in the middle of the i8th 
 century, produced only two quarters of wheat per 
 acre on the average, and which in the middle of the 
 1 9th century, has been made to produce four quar- 
 ters, must, by the end of this century, be made to 
 produce eight quarters per acre ; a result which, we 
 believe, will be brought about long before the time 
 spoken of. There must be double the quantity pro- 
 duced of every description of useful commodities; 
 double the quantity of food, of raiment, of house- 
 accommodation double the quantity of fabrics and 
 manufactures of all descriptions, part for our own 
 consumption, and part to exchange for the products 
 of other lands. The greater the quantity that can 
 be produced, the greater the wealth. We can only 
 increase our wealth by increasing these productions ; 
 we can only become poor by diminishing production. 
 While we are writing this, a tremendous commer- 
 
THE PANIC OF 1857. 1 33 
 
 cial and monetary panic has arisen in London and in CHAP. i. 
 the provinces, which, like all previous convulsions of Evii effects 
 
 of the Panic 
 
 a similar kind, has a direct tendency to repress the of 1867 - 
 creation of wealth, and consequently to impoverish 
 the country. That which is now taking place is di- 
 rectly antagonistic to the policy we desire to recom- 
 mend. . Let us listen to a few extracts from different 
 journals published during the last few days, and let 
 us candidly reflect whether the permission or the 
 production of such convulsions as this, is a likely 
 mode of producing national prosperity by an increase 
 of wealth. 
 
 From the GLASGOW DAILY MAIL. 
 4 We regret to learn that the list of unemployed 
 ' continues to increase. This was to be expected, 
 
 * the stagnation in the money-market necessitating 
 ' the dismissal of miners, weavers, ship-builders, and 
 ' factory -workers.' 
 
 From the LIVERPOOL COURIER. 
 * It is difficult to conceive a more wanton sacrifice 
 ' of property than that inflicted upon every trading 
 ' community during the early five days of last week. 
 4 Under the crushing influence of this unmodified 
 ( Bank Bill, from Saturday till Friday, the value of 
 ' produce descended rapidly and ruinously. The 
 
 * value of the stock of cotton in this town alone, fell 
 
 * 300,000 in four days; scarcely an article of pro- 
 duce escaped ; and therefore, no man engaged could 
 
IJ4 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. i. c fly from the fearful consequences of his necessities. 
 Reports of f Securities of all kinds were similarly and unna- 
 
 < turallv forced down, with precisely the same results 
 ' to those who wanted money for their engagements/ 
 
 From the SCOTSMAN. 
 
 ( There has been no organized movement by the 
 ' spinners to bring about working short time ; but in 
 { nearly every instance, the working time will be 
 * reduced from 60 hours per week, to 40.' 
 
 During every commercial and monetary panic with 
 which this country has been afflicted, extracts from 
 the public press, like these, could be given by the 
 score and the hundred. Under our present arrange- 
 ments, these lamentable results are perhaps unavoid- 
 able, and the cessation of the employment of labour, 
 and of the creation of wealth for the time, the 
 only step that can be taken. But there must be 
 something very faulty in these arrangements, to 
 make so great an anomaly expedient. It is not 
 natural, and, we believe, not necessary. We are 
 aware that some economists look upon these con- 
 vulsions as being as necessary as a thunder-storm to 
 purify the commercial atmosphere, and give fresh 
 life and vigour to the industrial public ; but we are 
 impressed with no such conviction. We believe the 
 cessation of labour and production to be a calamity, 
 and a loss that nothing can replace. We believe 
 that the true philosophy of the question is correctly 
 
THE PHILOSOPHY OF PRODUCTION. 1 35 
 
 given in the following quotations from the able CHAP. i. 
 article. England, in the ' Encyclopaedia Britannica.' 
 
 J 
 
 * To the wisdom of Parliament the country must 
 
 * look up for those salutary regulations which shall W eXth? ual 
 
 * remove every obstruction in both countries that may 
 ' be opposed to the means of obtaining from the 
 
 * capital, skill and labour of the people, the greatest 
 ' possible returns which are attainable ; by giving a 
 
 * proper direction to the industry of the labouring 
 e classes, and by such encouragements as shall render 
 it not only universally efficient, but productive to the 
 
 * highest degree that is possible. 
 
 1 Millions of individuals in all countries pass 
 ' through life without being aware, that the food 
 ' which nourishes them, the clothing which covers 
 ' them, the habitations which shelter them from the 
 ' inclemency of the weather, and all the other con- 
 ' veniences and comforts which they enjoy, proceed 
 ' from the labour of the people employed in agricul- 
 ' ture, mines, and minerals in manufacture and 
 
 * handicraft employments and in trade, commerce, 
 ' navigation, and fisheries. 
 
 * It is by the labour of the people employed in 
 
 * various branches of industry, that all ranks of the 
 ' community in every condition of life, annually 
 ' subsist; and it is by the produce of this labour 
 
 * alone, that nations become powerful in proportion 
 ' to the extent of the surplus which can be spared for 
 
 * the exigencies of the state. It is by the increase or 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP - L ' diminution of the produce of this labour that states, 
 tilery of f ' kingdoms, an d empires, flourish or decay. 3 
 auction?" And that any real embarrassment and mischief 
 need necessarily flow from too great a production of 
 commodities, and a consequent accumulation of 
 capital is, we think, clearly disproved by Ricardo, 
 who, in endeavouring to allay the fears of those who 
 thought that the great accumulation of capital ac- 
 cruing from the too rapid operation of the Sinking 
 Fund would lead to the production of such vast 
 quantities of goods, that no profitable markets could 
 be found for them, speaks thus : 
 Mr. mcardo ( Now the doubts of those who speak of the mis- 
 
 on Over- 
 
 production. ' chievous effects of the great accumulation of the 
 
 * Sinking Fund, proceed from an opinion they enter- 
 ' tain, that a country may possess more capital than 
 ' it can beneficially employ, and that there may be 
 
 * such a glut of commodities, that it would be im- 
 
 * possible to dispose of them on such terms as to 
 
 * procure to the producers any profit on their capital. 
 4 The error of this reasoning has been made manifest 
 ' by M. Say, in his able work " Economic Politique," 
 4 and afterwards by Mr. Mill, in his excellent reply 
 ' to Mr. Spence, the advocate of the doctrines of the 
 ( Economistes. They show that demand is only 
 ' limited by production ; whoever can produce has a 
 ' right to consume, and he will exercise his privilege 
 ' to the greatest extent. They do not deny that the 
 ' demand for particular commodities is limited, and, 
 
THE PHILOSOPHY OP PRODUCTION. 1 37 
 
 * therefore, they say, there may he a glut of such CHAP, i. 
 ' commodities : but in a great and civilised country. Mr. mcardo 
 
 'on Over- 
 
 * wants, either for objects of necessity or luxury are production. 
 ' unlimited, and the employment of capital is of equal 
 
 ' extent with our ability of supplying food and ne- 
 
 * cessaries for the increasing population, which a 
 ( continually augmenting capital would employ. 
 ' With every increased difficulty of producing addi- 
 ' tional supplies of raw produce from the land, corn 
 4 and other necessaries of the labourer would rise. 
 ' Hence wages would rise. A real rise of wages is 
 ' necessarily followed by a real fall of profits ; and, 
 ' therefore, when the land of a country is brought to 
 ' the highest state of cultivation, when more labour 
 ' employed upon it will not yield in return more food 
 ' than what is necessary to support the labourer so 
 ' employed, that country is come to the limit of its 
 ' increase both in capital and population. 
 
 e The richest country in Europe is yet far distant 
 ' from that degree of improvement ; but if any had 
 
 * arrived at it, by the aid of foreign commerce, even 
 
 * such a country would go on for an indefinite time 
 ' increasing in wealth and population ; for the only 
 
 * obstacle to this increase would be the scarcity and 
 ' consequent high value of food and other raw pro- 
 
 * duce. Let these be supplied from abroad in ex- 
 ' change for manufactured goods ; and it is difficult 
 ' to say where the limit is at which you would cease 
 1 to accumulate wealth, and to derive profit from its 
 
IJ 8 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 cnAP - ! * employment. This is a question of the utmost 
 soundness importance in political economy/ 
 
 These sentiments are, throughout, pervaded by a 
 sound philosophy; and to minds capable of, and 
 satisfied with, grasping great and general principles, 
 they will be abundantly satisfactory. The great 
 mass of mankind, however, engaged as they are in 
 the daily occupations of life, need a more common- 
 place and practical explanation of the matter. In 
 opposition to the sound teaching just quoted by us, 
 they believe, for they have been taught so to believe, 
 that poverty and distress may be caused by an over- 
 production of wealth ; and that many of the evils 
 which afflict us as a community are really owing to 
 this cause.* Before such persons we would place the 
 following statement of facts as they exist, and ask 
 them whether they can, after perusing it and ponder- 
 ing over it, still retain such an opinion; whether 
 they can really bring themselves to believe that our 
 perplexities arise from too great a production of 
 commodities. 
 
 For what is the income of the Nation ? What is 
 the nature and amount of the fund which furnishes 
 
 * "We are not here speaking of relative over-production ; 
 that is, the over-production of some goods beyond their fail- 
 proportions with other goods, for this may happen ; but of a 
 positive over-production of all things, which is only another 
 term for expressing a general increase in the wealth of a 
 community. 
 
IT IS XOT OVER-PRODUCTION THAT AFFLICTS US. 139 
 
 subsistence to all classes, and how much does it CHAP. i. 
 allow to each 011 an average ? Nature of 
 
 iN ational 
 
 Let us see : and let us first reckon it in the ordi- income. 
 nary way, that is, in money ; that being the most 
 compatible with our ordinary modes of thought. 
 
 The income of the country, if reckoned in money, 
 though really and ultimately in goods, may be taken, 
 as we have before stated, at about 500,000,000 a 
 year. 
 
 The population may be taken, in round numbers, Average 
 
 .,..-,, Income of 
 
 at 30,000,000. Allowing hve individuals to form, on Families. 
 the average, one family, it follows that there are 
 6,000,000 of families in the country. 
 
 These 6,000,000 families have 500,000,000, 
 yearly, to divide among them. What is this for 
 each family of five persons? Just 83 6s. 8d. per 
 annum. 
 
 Now we do not suppose that the most practical 
 man in the world will come to the conclusion that 
 the families of this country are distressed by the fact 
 of their having so large a sum as 83 6s. 8d. per 
 annum to subsist upon ; seeing that they are five in 
 number and live in a highly -taxed country ; and 
 that their circumstances would really be bettered, 
 if their income were reduced to 50 instead of 
 83 6s. 8d. The thing is so absurd on the face of 
 it, that we are sure that even he would at once 
 exclaim ' 83 6s. 8d. is little enough indeed they 
 would be better off if they had double that sum/ 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP - * Is it indeed so ? Then the production of the country 
 must be proportionally increased in quantity to allow 
 of it. Before each family of five persons can have 
 double the former sum, or 166 133. 4d. a year, 
 the income of the country must be raised from 
 500,000,000 to i, 000,000,000 a year; and the 
 capital stock of the country must be raised from 
 6,000,000,000 to 12,000,000,000. And if this 
 were done, what would this 12,000,000,000 capital 
 stock and 1,000 ,000,000 of annual income arising 
 from it and labour conjointly, consist of? Simply 
 and purely this : the income would consist of a 
 double quantity of all the productions which are used 
 and consumed by the people at large; and the capital 
 would partly consist of an increased stock of these 
 productions, and partly of an ability to produce an 
 increased quantity. We defy any man to prove, 
 that it can consist of anything else, reckoning the 
 income as we ought to reckon it, to be that which 
 people ultimately obtain for consumption and use. 
 Nor is this the whole of the case. To afford this 
 166 135. 4d. a year to each family, not only must 
 the present productions be doubled in quantity, but 
 they must be doubled compared with the augmented 
 population. If we were to double the quantity of 
 productions, and the population were also to double 
 at the same time, it would afford no additional in- 
 come to each family ; ten loaves among ten people, 
 and twenty loaves among twenty people is the same 
 
IT IS NOT OVER-PRODUCTION THAT AFFLICTS US. 141 
 
 thing to each one. We must not only, therefore, CHAP. ' 
 double the whole annual production of the nation, 
 but we must double the productions to each 
 individual family before such family can have 
 166 133. 4d. a year, instead of 83 6s. 8d. 
 
 What becomes, then, of the silly, and, thank God ! 
 the now obsolete cry of 'over-production'? Well 
 might the writer in the * Encyclopaedia Britannica ' 
 say, that the point to be effected was to obtain 
 ' from the capital, skill and labour of the people, the 
 greatest possible returns which are attainable ' to make 
 the industry of the country ' productive to the highest 
 degree possible? This, and this only, is the way to 
 increase the national wealth ; this, and this only is 
 the way to provide the increased stock necessary for 
 the redemption of the National Debt. 
 
 We have not the slightest fear, that if the industry NO fear o f \\ 
 
 " the induttiy 
 
 of the country were allowed to have a free and clear f the 
 
 Country, if 
 
 course, it would soon furnish the fund to redeem the free 
 
 Debt from the clear surplus of taxes alone. And we 
 do not see any reason to despair. Every year fresh 
 accessions are made to the cause of freedom ; and we 
 have firm faith that knowledge and improvement will 
 continue steadily to advance, till all that is erroneous 
 in principle, and baneful in operation, will pass away. 
 There is one remaining point that we have not yet 
 touched upon, affecting our present and prospective 
 condition as compared with that of former times, 
 namely the discovery of gold in such vast quantities 
 
142 THE NATIONAL DEBT FINANCIALLY CONSIDERED, 
 
 C HAP - i- in California and Australia. If the production goes 
 Gofdd? s f - the on as ** h as hith erto done, and if gold, as appears 
 yer ^ p ro k a iji e) ^ e discovered in other quarters, it will, 
 doubtless, after a few years, make a mighty difference 
 in the pressure of our debt. It is believed by many 
 eminent investigators of these subjects, that gold has 
 already considerably depreciated in value, compared 
 both with silver and with commodities in general, 
 and it may be so, notwithstanding that gold as 
 money, is found to be, at the present time,* of higher 
 value than ever, regarding it as a borrowable and 
 lendable article for which interest has to be paid. 
 Not so much difference, however, has taken place in 
 its exchangeable value as might have been expected, 
 considering that about 200,000,000 sterling have 
 been added to the general stock of the world. The 
 rapid absorption of this amount, and the scarcity 
 still felt, seem, however, to prove one thing: the 
 utter insufficiency of the monetary supplies of the 
 world properly and conveniently to carry on its vastly 
 augmented commerce. The additional supply of 
 gold, immense as it has been, has been absorbed by 
 the world's commerce, as a parched and thirsty 
 desert would drink up the most abundant of the 
 tropical floods. But we doubt whether this will 
 continue to be the case, if the production of gold 
 goes on at the same, or at an augmented rate. The 
 most parched soil would ultimately become saturated 
 
 * November, 1857. 
 
DECLINE IN THE EXCHANGEABLE VALUE OF GOLD. 143 
 
 by continuous floods, and the continued production CHAP. i. 
 of gold must, we think, greatly lessen its exchange- 
 able value in a few years' time. This, as regards the 
 country in general, will have a very favourable influ- 
 ence in diminishing the burden of the debt, though 
 the fundholder will correspondingly suffer. 
 
144 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAPTER II. 
 
 PLANS HERETOFORE SUGGESTED FOR THE LIQUIDATION 
 OF THE NATIONAL DEBT. 
 
 TN 
 
 entering upon the subject of the liquidation of the 
 National Debt, it will be first advisable to examine, 
 3bt- briefly, a few of the plans which have been hereto- 
 fore suggested for the accomplishment of that pur- 
 pose. 
 
 These plans are : 
 ist. The actual payment of the Debt, in whole or in 
 
 part, by a contribution to be made. 
 2nd. Its conversion into terminable annuities. 
 3rd. Its redemption by a sinking fund. 
 4th. The conversion of its capital from, say a 3 per 
 cent, stock, into a stock bearing a higher rate 
 of interest, and reducing the nominal capital 
 in the same proportion. 
 
 Most of the plans which have been submitted to the 
 public may be classed under one or the other of 
 these heads. 
 
 With regard to the first, i. e., the actual payment 
 of the Debt, the slightest reflection will show us, 
 that an actual payment at once, and as the law 
 
'j PROMPT PAYMENT OF THE DEBT IMPOSSIBLE. 
 
 '45 
 
 requires, is simply an impossibility. 
 
 stands, whatever payment is made must be made in 
 
 As the law now CHAP.II. X v 
 
 gold, according to the standard of 5 dwts. 3 grs. of Debfc - 
 
 Id for every pound, or in Bank notes convertible 
 into such gold pounds on demand. 
 
 H N - We have already shewn, in a former chapter, that 
 j ^the quantity of gold that would be required to dis- 
 
 the Debt at once would be upwards of 6,000 y ^ $ <\ 
 . _ _ ns a quantity which we suppose does not exist ^S.^ 
 ^ A on the surface of the whole globe, whatever may 
 the concealed treasures of its interior. It is, there-* 
 ore, clearly impossible in the nature of things, ^ ^ N 
 * ? a literal fulfilment of the existing law should be ac-* 
 w^ ^ complished in an actual payment of the Nationals 
 V $ Debt outright. 
 
 A But as this is not a possible 
 
 H i neither would it be a desirable one, if possible, for^tf ssil 
 those who would be entitled to payment. If they^ 11 ^' 
 really could be paid in gold, it would be their ruinj 
 A literal fulfilment of the terms of the contract to 
 the whole extent of the debt would consign them 
 beggary, so far as their property consisted of their ?N 
 ^jk claims against the country. For what would be the>>S 
 JVvalue of gold if 6,000 tons could, by some unforeseen,^ 
 ^ jand, at present, unimaginable, means, be provided byS$ 
 the Government for the discharge of the claims of the 
 ^national creditor. It is a problem that we have no * 
 ffiaeans of solxjjg i^but a$ it would in^rease^ 
 v ^gom in tn$ country by djt i^st^jwejve or fift 
 
 x ^^ > Jv \i v S^ T* ^ .'. * Vfv< ^v 
 
 > 
 
 ble 
 
 >ut a 
 )untry by ^t i^st^jwejye 
 
 o\! i X L\ s p^ 
 
 ^ '> > tv ? ? f 
 
1 46 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. ii. its present amount, we think that the least effect it 
 /would have, would be to bring gold down to the 
 present value of silver. If so, the national creditor 
 would, in effect, receive but a little more than a 
 shilling in each gold pound so paid to him. Of all 
 4 persons, then, the owners of the Debt would be the 
 last to wish for a literal fulfilment of the terms of the 
 ' contract, if such fulfilment could, by any means, be 
 made possible. 
 
 T tiou r f fa -^ Ut m ight ft n t t> e P a id by a transfer of a fair 
 proportion of every person's property, to be applied 
 
 perty> to this purpose ? This idea has been entertained ; 
 and instances have not been wanting of noble-minded 
 individuals, of considerable property, coming forward 
 and expressing themselves ready to contribute their 
 share, upon the way being pointed out to them, and 
 upon its being adopted as a general measure. We 
 do not say that no way could be found to carry out 
 the plan; but it would be an exceedingly difficult 
 matter, considering how property is held in this 
 country, to detach in a formal and legal manner, 
 say, a one seventh portion, from the remainder, and 
 to devote it to the payment of the debt. The com- 
 plications arising from family settlements and other 
 arrangements, from mortgages, and from different 
 forms of tenure, would render such a separation 
 almost impossible with reference to real property; 
 while with reference to many descriptions both of 
 real and personal property it would be absolutely 
 
GRADUAL PAYMENT OF THE DEBT. 147 
 
 impossible to make such a division. Under any cir- CHAP.II. 
 cumstances, some descriptions of personal property suchtrans- 
 must either he exempted, or subject to redemption practicable. 
 or commutation ; for it would verge upon the ridi- 
 culous to suppose that all our necessary domestic 
 furniture and utensils should be made subject to the 
 impost ; yet they form a very considerable item in 
 any schedule of the national wealth. 
 
 If. then, the first mode of payment would be im- Payment by 
 
 " * instalments. 
 
 possible, and the second so difficult and inconvenient 
 that it would at once be rejected, we see only one 
 other mode of actual payment : that of spreading the 
 payment over a number of years, and taking care 
 absolutely to cancel a portion of the debt every year, 
 in order that the dividends or interest of so much of 
 it might cease. This, of course, could only be done 
 by coming upon the property of the nation for the 
 annual instalments necessary for the purpose. In 
 fact, it would be a kind of additional property tax, 
 to last until the Debt was extinguished ; and if the 
 public be really in earnest to accomplish such extinc- * 
 tion of the debt, they must prepare to dispose of as 
 much of their property every year, if such disposal 
 were necessary to raise the means, as would pay 
 their annual instalment. Suppose that a sum of 
 10,000,000 were annually realised in this way from 
 property, in addition to the payment from the Con- 
 solidated Fund of the amount that would have been 
 payable for dividends on the stock so redeemed, a 
 
148 THE NATIONAL DEBT FINANCIALLY CONSIDEKED. 
 
 CHAP. n. debt of 800,000,000 eould be annihilated in less 
 than fifty years, even if the stock had to be paid off 
 at par. But we question the necessity and the jus- 
 tice of paying off the stock at par. No doubt that if 
 a serious intention of paying off the debt were enter- 
 tained, and such intention were steadily acted upon 
 for a few years, the stocks, as they became scarcer 
 through the gradual redemption, would rise in price 
 till they were at par. But we think the Government 
 would be to blame to permit of this. There seems 
 no reason why Parliament should not empower the 
 Government t make a present purchase of all the 
 stocks at a fair and just price, taking all things into 
 account such stock to be paid for in annual instal- 
 ments, as above described. If this were done, and 
 the price fixed upon for the 3 per cents, were 90, 
 the Debt might be paid off in about forty years. 
 
 Is there any reason, then, why this should not be 
 done? Are there any objections to such a measure? 
 
 We think there are : 
 The new In the first place, so far as the new -2 per cents. 
 
 3 per cents r 
 
 cannot be are concerned, which amount to nearly 250,000,000, 
 at present. fo e na ti O n is pledged by the financial arrangements 
 of 1 844 not to redeem the stock until after the year 
 1874. Whatever might therefore be done, unless 
 with the consent of the holders, it must be compul- 
 sory, and as real a violation of national faith as 
 though the debt were sponged out, though not, of 
 course, to the same extent. 
 
GRADUAL PAYMENT OF THE DEBT. 149 
 
 Secondly, we think it unfair to throw such an CHAP n. 
 additional burden upon the present generation, sad- Payment of 
 died as it has been with so vast a load of debt, con- "^ fair to , 
 
 the present 
 
 tracted, in the first instance, in the reckless manner g eneration > 
 we have described, and afterwards intensified by the 
 changes made in the money system of the country. 
 The debt has been, already, more than paid by the 
 present generation, if a fair estimate of its proper 
 and original value were made, and the real value of 
 the payments made on account of it also fairly con- 
 sidered. 
 
 Thirdly, because a redemption of the debt in this 
 manner would be more burdensome to the present 
 generation than continuing to pay the interest of 
 the debt. Most people would prefer to have the 
 capital still left in the hands of the stock-holders, and 
 pay an interest of 3! per cent, for it, than redeem it 
 at such a sacrifice. 
 
 In the last place, we think we see a better plan of 
 proceeding, which will gradually liquidate the debt, 
 not only with manifest and salutary benefit to our- 
 selves, but without throwing an undue portion upon 
 our children. We shall enter into a consideration of 
 this plan, as soon as we have given the other points 
 named a little examination. 
 
 We now proceed to consider the second 
 which has been recommended for the ultimate liqui- 
 dation of the debt ; namely, * the conversion of it Al 
 ' into terminable annuities/ 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. n. This plan is so advantageous, that it would have 
 conversion been long since adopted, had it been found possible 
 
 of the Debt * 
 
 _. , . _ 
 
 accomplish it. But so great an objection exists to 
 Annuities. an y f un( j w hich, year by year, decreases in value, 
 that to a very large class of holders such a stock 
 would be altogether inadmissible. All corporate and 
 public bodies, as well as trustees, and those who wish 
 to make a permanent provision for any purpose 
 whatever, have an unconquerable aversion to such a 
 stock. It is owing to this objection on the part of 
 the public, that so small a portion of the National 
 Debt has been contracted in terminable annuities: 
 The present Chancellor of the Exchequer did, in- 
 deed, partially employ this method in raising the 
 16,000,000 loan in 1855; but it was only a subor- 
 dinate and supplementary, or rather complementary, 
 S?ectio?to P art ^ *^ e * ransac ^ on - Generally speaking, it has 
 been f un d tnat money cannot be raised by termina- 
 ble annuities on any but the most extravagant terms ; 
 and the same objection would operate to prevent any 
 voluntary conversion of the debt, except upon terms 
 that would not be thought of. With regard to small 
 portions of the debt, the holders of which might 
 voluntarily offer to accept a terminable annuity 
 upon moderate terms, there could be no objection 
 to the plan being adopted, though we fear few offers 
 would be made. 
 
 But, while admitting its general advantageousness, 
 we think that even this mode of liquidating the 
 
SINKING FUND INEFFICACIOUS AND SLOW. K N I; 
 
 debt, if it could be carried out, would still be open C^P. 
 to the objection that it would throw an additional 
 burden upon the present generation; for no termi- 
 nable annuity would be taken in exchange for a 
 perpetual one, unless a higher annual interest were 
 paid to the annuitants during the time the annuity 
 continued. It is useless, therefore, to think of ter- 
 minable annuities, if we want any present relief 
 from the burden of the Debt. t Vj" 
 
 With regard to the third plan, namely, f the re- Jg^J*^ 1 
 ' demption of the Debt by means of a Sinking ^^ hlk ^ 
 ' Fund/ as we have, in a former portion of this ^ 
 essay, explained our views with regard to this, it will \^ v 
 be unnecessary to repeat them here. Still we may ^ ^\ 
 just remark, that a Sinking Fund, in some form or *\ ^ 
 other, has been in operation since the year 1716 A ^ 
 and but little effect has been produced by it in the V 
 reduction of the Debt. First, because in order to * 
 pay off debt, fresh debt has been created to a larger ^^ 
 amount than that paid off; and secondly, because 
 the stock was not cancelled when redeemed, but left 
 in the hands of the commissioners. This proved too 
 great a temptation for the various ministries and 
 parliaments, and led to the appropriation of the fund 
 for current 
 
 will be essential to attend to these two points: \L 
 first, that the Sinking Fund be sustained by surplus 
 
 expenses. In the future management of >5 ' \^ 
 Sinking Fund operations, therefore, it \v ^ ^ 
 
 8 
 
 v 
 revenue, without that revenue having been raised by O 1 A 
 
I f2 THE NATIONAL DEBT FINANCIALLY CONSIDEKED. 
 
 CHAP n. borrowed money: and secondly, that the stock re- 
 deemed by such Sinking Fund be immediately can- 
 celled, and not left in the hands of commissioners. 
 With these provisoes, a Sinking Fund may legiti- 
 mately assist in lessening the national incumbrances, 
 though it never can have any great effect, while our 
 present system of money is maintained. Could the 
 currency of this country be so arranged as to effect 
 the abolition of those commercial convulsions or 
 panics, which periodically prostrate our productive 
 powers, we should soon see a large surplus revenue 
 from ordinary sources, and the Sinking Fund would 
 become an important instrument to effect the reduc- 
 tion of the Debt. 
 Reduction With reference to the mode of reducing: the 
 
 of Debt by 
 
 fuuTIuother National Debt by the conversion of it into a stock 
 bearing a higher rate of interest, the capital of the 
 debt being reduced in the same proportion, we think 
 this could not be done without entailing a somewhat 
 larger burden upon ourselves at present, nor without 
 giving a guarantee that no advantage should be 
 taken of this new stock rising to, or beyond par, to 
 redeem it before a given number of years had elapsed. 
 This mode is, therefore, also open to the same objec- 
 tion as the others: that we should increase the 
 present burden of the debt for the sake of a diminu- 
 tion of the capital at some future period. 
 
 The fact is, that, arrange our plans as we may, 
 and twist and change our modes of dealing with the 
 
CONVERSION TO A HIGHER DESCRIPTION OF STOCK. 1 53 
 
 debt as we please, there is no possibility of obtaining CHAP. n. 
 an advantage as against the fund-holders with their 
 consent. All plans of this nature are matters of 
 simple calculation. If against the fund-holder, and 
 in favour of the country at large, the fundholder will 
 naturally not agree to them ; if, on the other hand, 
 they are of a nature that will benefit the fundholder 
 at the expense of the nation, how can the country be 
 benefited by adopting them ? Something is wanted ^ ething 
 that will benefit the nation at large, without inflicting wanted - 
 injury upon any one that will mitigate rather than 
 enhance the present burden that will accomplish 
 this desirable end without injuring the fundholder, 
 on the one hand, and without transferring the bur- 
 den to posterity, on the other. Whether this can be 
 done will be the subject of investigation in the next 
 chapter. 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAPTER III. 
 
 PROPOSALS FOR THE LIQUIDATION OF THE NATIONAL 
 DEBT. 
 
 CHAP, in. mHERE appears to be no reason why several diffe- 
 modesma ren * a g enc i es should not be employed, and diffe- 
 
 ren ^ modes of action adopted, for the accomplishment 
 
 ployed. o f t h e liquidation of the National Debt. Indeed, as no 
 one plan would be acceptable to all classes of the 
 national creditors, it is highly desirable that several 
 should be in operation simultaneously. 
 
 While, therefore, we shall attempt to develop one 
 main plan as our principal reliance, we would not 
 wish to lose sight of the before-mentioned modes of 
 operation, but would desire to make them available 
 to the utmost extent of which they are capable. 
 Let the Sinking Fund, for instance, be kept in full 
 operation, based upon the principles we have before 
 stated; and let such a freedom be given and full 
 play allowed to the industry of the country, that a 
 large surplus revenue may be produced, to give 
 soundness and stability to such a Sinking Fund, and 
 greatly to enlarge its operations. 
 
 Still more, and for the accomplishment of the 
 
ACCESSORY MEASURES. 155 
 
 same purpose, do we desire to see the establishment CHAP, in. 
 of a less capricious monetary system ; in order, in our Mo 
 the first place and principally, that the industry of ^for 
 the people may not suffer those ruinous checks and 
 fatal prostrations which the present system permits, 
 if it does not produce ; and secondly, that the large 
 sum of money which we annually pay for the use of 
 the notes of the Bank of England may he saved to 
 the nation, and added to the Sinking Fund to extend 
 its sphere of action. 
 
 Neither can there, we imagine, be any objection 
 to the conversion of the lower description of stock 
 into a stock of nominally higher rate of interest, 
 with a proportionate reduction of the capital; pro- 
 vided this could be done without increasing the gross 
 amount of the interest payable on the debt ; though 
 of the success of such a plan, if it were proposed, we 
 are not at all sanguine. 
 
 But we feel that these are only accessory and 
 supplementary measures, and that they need to be 
 accompanied by something more powerful and com- 
 prehensive; the debt is of too vast a magnitude to 
 be greatly affected by operations of this nature. 
 Not only so, but something also is needed which 
 will tend to lessen the weight of the Debt to the pre- 
 sent generation more speedily than these measures 
 are likely to effect. We believe we have already 
 borne an undue share of the burdens contracted by 
 our fathers, and we see no probability of these 
 
156 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, in. burdens being much mitigated in our time, by such 
 slow processes as that of the Sinking Fund. Could 
 we even be so generous and heroic as to contemplate 
 the payment of the Debt, we think that an actual 
 payment, in any shape or form, by means of a con- 
 tribution from property already realised, would not 
 meet with acceptance. Those who desire to see some 
 plan proposed for the payment of the Debt, do not, we 
 verily believe, contemplate an actual payment ; it is 
 probably the furthest thing from their thoughts. It 
 is more probable that they entertain some indistinct 
 notion, that by some clever financial scheme, the 
 Debt may be got rid of without an actual payment. 
 
 ^ J1( ^ ^ ^ e P a y men * f * ne Debt depended, at any 
 ti me > u P on a contribution of property then already 
 ble ' realised, we should despair of ever seeing such con- 
 tribution voluntarily made, or even submitted to, 
 however rich the nation might at the time be. 
 People's expenses and habits of life, on the one 
 hand, generally keep equal pace with their increased 
 means ; so that even those that are the most easy in 
 their circumstances, seldom find it convenient to pay 
 a large contribution, let it be called for whenever it 
 may. And with regard to those whose habits of 
 expense do not increase with their means, the love of 
 money and the insatiable desire of further accumula- 
 tion, form as great a barrier to voluntary contri- 
 bution as expensiveness does in the former class. 
 Notwithstanding, therefore, that the nation might 
 
PLAN FOR LIQUIDATING THE DEBT. 157 
 
 in a few years double its wealth might possess CHAP. in. 
 1 2,000,000,000 of property instead of 6,000,000,000 
 yet a direct contribution, at any time, for the pur- 
 pose of paying off the Debt, would be felt to be a 
 grievance. 
 
 We are persuaded, therefore, that it is not from 
 property that already exists, or that may arise in the 
 natural order of things, that we are to derive the 
 fund by which the National Debt may be redeemed ; 
 but from property that can be made to exist for the 
 express purpose of paying off the Debt, and the pro- 
 duction of which property will benefit all parties 
 engaged therein. 
 
 We have before remarked, that the substitution of 
 terminable annuities for perpetual, would be highly 
 advantageous for the reduction of the Debt, were it 
 not for the fact that such terminable annuities, con- 
 stantly decreasing year by year in value form a very 
 unacceptable portion of public securities, and find no 
 favour in the market. But this is not all ; even ter- 
 minable annuities, favourable as they would be in the 
 long run, would benefit but a small portion of the 
 present generation; and we feel that we should hardly 
 be content with this. We desire to see the National Diminishing 
 
 Annuities 
 
 Debt not only converted into terminable annuities, *f wel1 a * 
 
 J ' Terminable. 
 
 but into such terminable annuities as shall period- 
 ically decrease in amount. For instance; annuities 
 that on their commencement amounted to 3 per cent, 
 on the capital, we should desire to see reduced to 2| 
 
THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, in. per cent., at the end of the first five years; to 2| per 
 cent., at the expiration of another five years, and so 
 on; so that the "whole annuity might be extinguished 
 in 60 years from its commencement. 
 
 nuitanteto ^ o en ect *his, an adequate and ample compensation 
 
 rompens?* must, of course, be made to those who are the 
 holders of the present stock, or to those to whom the 
 stock may be by them transferred. To meet the 
 case entirely on its own ground, and to provide a 
 compensation exactly suited in its nature to replace 
 the loss which these decreasing terminable annuities 
 would entail, it should be one which would yearly 
 increase in value, while the value of that which it 
 displaced was decreasing. Not that this is absolutely 
 essential to a sufficient and proper compensation, 
 but that it would exactly meet the case on its own 
 ground, and provide a very appropriate remedy for 
 the loss which would arise. 
 
 What, then, do we propose, in order to accomplish 
 this desirable end ? If the debt is to be converted 
 not only into terminable annuities, but into annui- 
 ties which shall periodically and progressively become 
 less and less in amount, what compensation can be 
 devised, so that not only injustice may not be done 
 to, but benefit conferred upon, the present proprie- 
 tors of the debt, or those to whom their claim upon 
 the country may be transferred. 
 
 rian pro- j In few words, we think that the fund is to be 
 
 posed. ii 
 
 Ij found in onr immense colonial empire ; the lands and 
 
PLAN FOR LIQUIDATING THE DEBT. 159 
 
 capabilities of which, comparatively valueless at IFHAP. n 
 present, may be made, under proper arrangements, jfcf 10 ' 
 to furnish ample funds for the redemption of ourll 
 National Debt, were it even twice or thrice its present|j 
 magnitude. 
 
 On introducing this part of our subject, we beg to 
 premise that we contemplate the probable necessity 
 there may be to come to an understanding with the 
 legislatures of the various colonies to whom we have 
 given the right of self-government, in order effect- 
 ually to carry out the plan. Though we are not 
 very well versed in colonial law, as affecting the 
 rights of the mother country to dispose of the un- 
 settled lands, yet with such colonies as Canada, 
 Australia, New Zealand, and New Brunswick, we 
 apprehend it will be necessary to secure the sanction 
 and co-operation of the local legislatures. This 
 sanction and co-operation we feel, however, persuaded 
 there will be no difficulty in securing, inasmuch as the 
 very plan we have to suggest is that which will sup- 
 ply a universally felt want a want which forms the 
 subject of daily discussion in the various papers pub- 
 lished in the colonies, especially in Canada, where the 
 cry daily is, ' How shall we attract capital and 
 labour to our shores? Here we have plenty of raw 
 material lying latent and undeveloped, in the shape 
 of lands, mines, woods, and fisheries ; what can be 
 done to develop this latent wealth and turn it to 
 account ?' 
 
l6o THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, n We think that both parties, the mother country 
 and her colonial offspring, may be mutually bene- 
 fitted by the adoption of a plan of somewhat of the 
 following nature, for the redemption of the National 
 Debt. We merely present the principal points which 
 it is desirable to accomplish, not presuming or at- 
 tempting to indicate the precise course of action 
 which must be adopted to carry the plan into 
 
 (practical working operation. The undertaking would 
 be so vast, and the points to consider so numerous, 
 that it would doubtless require the united wisdom 
 and experience of Parliament and Ministers, both 
 home and colonial, to make the requisite arrange- 
 ments. 
 
 i . Let subscription books be opened for those who 
 would be willing to subscribe towards the redemption 
 of portions of the various public stocks, in sums of 
 100 and upwards. 
 
 2. Let every subscriber be entitled, in the first 
 place, to an annuity terminable as follows. For the 
 first five years after subscription, let the annuity be 
 the amount of the dividend payable, at the time of 
 subscription, on the stock for which he subscribed ; 
 for the following five years let it be one quarter per 
 cent, less ; for the next five years another quarter 
 per cent, less, and so on; the annuity diminishing 
 one quarter per cent, every five years until the said 
 annuity became extinguished. 
 
 3. Let every subscriber, in the second place, be 
 
V 
 
 PLAN FOR LIQUIDATING THE DEBT. 
 
 entitled to an adequate grant or grants of land, in 
 proportion to the amount of his subscription, in any 
 one or more of the colonies of Great Britain, as he 
 may select, in accordance with those regulations 
 which the Government authorities may deem it 
 necessary to adopt. Where the right to grant such 
 land rests absolutely in the Home Government, no 
 great difficulty will occur ; but where such right 
 rests either entirely or in part in the colonial autho- 
 rities, such arrangements must be made with them 
 as will secure their sanction and co-operation. 
 
 4. As the mere grant of land would, if the land 
 were left in its present primitive condition, be com- 
 paratively valueless notwithstanding its capability of 
 being developed into value, let each subscriber be 
 entitled to an advance, for a certain number of years, 
 of a portion of the money subscribed by him ; which 
 portion, with others, should be set apart as a general 
 fund to open up proper access to, and clear, as far 
 as the fund will admit of, the sections of land so 
 granted. The necessary works for this purpose might 
 either be undertaken by the Government, with or 
 without convict labour, or committed to Boards of 
 Commissioners, in whose appointment the subscribers 
 should have a voice, or a certain number of whom 
 the subscribers might absolutely appoint. 
 
 5. Whatever sum, or proportion of the original 
 subscription it might be found necessary thus to set 
 apart, let it form a lien or mortgage upon the land so 
 
162 
 
 THE NATIONAL DEBT FINANCIALLY CONSIDEKED- 
 
 CHAP, in. granted, to be repaid within a given number of years, 
 the subscriber, in the meantime, paying such an in- 
 terest for the advance, as would be equal to that 
 which was payable in the Government stock at the 
 time of his subscription. Subscribers to have the 
 power to redeem the said lien or mortgage at any 
 time within the period named. 
 
 6. Let the remainder of the subscription-money, 
 after the above advance is provided for, be devoted 
 to the purchase of stock for the redemption of the 
 debt ; and let the interest receivable from the sub- 
 scriber on account of such advance go to the pay- 
 ment of the dividends on that portion of stock which 
 cannot at present be redeemed, until the advance is 
 repaid. 
 
 By the plan suggested, the following results, we 
 think, could be secured : 
 Desirable i. The entire liquidation of the National Debt 
 
 results. ... 
 
 within sixty years. 
 
 2. The diminution of the burden of it, in suc- 
 cessive reductions of the interest to the amount of 
 about 8 per cent, each time, once in every five years ; 
 thus giving the present generation some of the benefit 
 of the reduction of the debt. 
 
 3. The profitable employment of that annual sur- 
 plus of capital which the Country ordinarily pro- 
 duces. This surplus, in former times, was much 
 misapplied by means of loans to foreign countries, 
 some of whom do not provide for the interest. In 
 
RESULTS OF THE PROPOSED PLAN. ^163 
 
 later years it has been more or less profitably em- cH\y. in. 
 ployed in supplying the railways with which the J 
 country is now covered ; the necessity for the exten- \ e) 
 sion of which being no longer so imperative. A ]? 
 
 k J4 
 
 4. The conferring upon the owners of the public fc 
 funds, or upon those to whom they may sell their "*4\A 
 claim, a more valuable property in the end than they >A i 
 at present possess in the shape of a share in the ^ ^ 
 public revenue of the country. x ^x 
 
 5. The profitable opening up, to thousands of I 
 young people of all classes, of an opportunity of I ^ f^ 
 making their way in life with a capital comparatively I ^ 
 so small as would be almost useless to them here. f^6 ^ 
 
 6. The developing and bringing into profitable ^ 
 service of the latent capabilities of our vast colonial 
 empire, extending, as it does, to every clime, and ca- 
 pable of producing every kind of raw material needed 
 by our manufacturers and general population. 
 
 And, if thought advisable, 
 
 7. The employment of the criminal portion of the 
 population in labour for the benefit of the commu- 
 nity, both colonial and domestic. 
 
 The above is, we are aware, but a crude outline ; 
 and the plan suggested may not be found to work in 
 the exact mode of action pointed out. But this is 
 not material. The main points are the following; 
 and we doubt not that a practical mode of carrying 
 them into operation can be hit upon. 
 
 We have a great debt to pay. 
 
164 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. in. Scarcely any one is willing to come forward with 
 
 Xat n Jehave ^ P or ^ on ^ t ^ ie P r P er ty he possesses to pay it. 
 to consider. Fortunately, this is not indispensable to the pay- 
 ment. Property sufficient to discharge the Debt, may 
 be expressly produced, for this purpose, in a reason- 
 able time ; and the very process of making this pro- 
 perty may become an incalculable benefit to all classes 
 both to those who are immediately engaged in its 
 production, and to those who are not so immediately 
 engaged. 
 
 The ability to provide this property lies in the pos- 
 session of boundless resources in our colonial empire ; 
 which, however, require English capital and intelli- 
 gence, aided by the power and resources of the 
 Government, to develop them. For the production 
 of any amount of material wealth, raw material, 
 capital, labour, and protection, are all that are re- 
 quired. These are the only elements needed. We 
 possess all of them they need but to be brought 
 together. 
 
 It will be hard if the united intelligence of states- 
 men, and of the country at large, cannot accomplish 
 the practical solution of the problem. 
 
 Sundry inquiries will now arise in the minds of 
 many persons, which it will be necessary to take 
 some notice of, such as : 
 
 ' Can the country provide spare capital enough to 
 ( pav off the debt in this way within sixty years ?' 
 
 f Which are the portions of the colonial empire 
 
THE PRACTICABILITY OF THE PROPOSED PLAN. 
 
 1 that are open to appropriation for such a pur- 
 'pose?' x ~[. 
 
 It will, probably, be a sufficient answer to the 
 
 3 * 
 fc V 
 
 first of these inquiries, to point out, that, in addition 
 to all other modes of investing surplus annual capital, 
 the amount raised for the construction of railways 
 alone, in about fifteen or sixteen years, ending in / 
 1852, amounted to 264,165,680, or something like I 
 ,=18,000,000 a year: the amount authorised to be , 
 raised was 356,610,456. Now the sum actually i 
 raised was double that required to carry out the plan 
 proposed. Less than half that amount, in conjunc- /' 
 tion with other agencies, would suffice to redeem / 
 every particle of the Debt within the time named. / 
 There is no question, then, of the pecuniary ability of 
 the country to carry the plan through, if it be prac- 
 ticable in other respects. 
 
 With regard to the next inquiry, ' Which portions suitable" 
 
 * . colonies for 
 
 4 of the colonial empire are open to appropriation for the P^n. 
 ' the above purposes?' we answer : W 7 ith the co-ope- 
 ration of the local legislatures, all our colonies ; that 
 is, those parts of them not already appropriated 
 Australia, New Zealand, Canada, New Brunswick, 
 British North America generally, the Cape of Good 
 Hope, Natal, and, lastly, but by no means least in 
 importance, India. Without even consulting local 
 legislatures at all, we have, in one portion of our 
 dominions alone, now illegally claimed by the Hud- 
 son's Bay Company, sufficient territory to accom- 
 
1 66 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, in. pHsh gradually all that has been suggested by the 
 
 Hudson's foregoing plan. This territory, which the Hudson's 
 
 territory ^ a y Company now keep in a state of nature, to reap 
 
 a profit from the skins and furs of wild animals, is 
 
 about 500,000 square miles in extent, a great part of 
 
 which is favourable for settlement and agriculture. 
 
 The Saskatchewan River runs through the district, 
 and is navigable for boats from its source in the 
 Rocky Mountains, through a course of 1,400 miles, 
 to its mouth, where it discharges itself into Lake 
 Winnipeg. On the country between Lake Winni- 
 peg and Lake Superior, Sir Alexander Mackenzie 
 says : - 
 
 sir ( There is not, perhaps, a finer country in the 
 
 Mackenzie. < world for the residence of man, than that which 
 
 ' occupies the space between Red River and Lake 
 
 t Superior fish, venison, fowl, and wild rice are in 
 
 4 great plenty ; the fruits are strawberries, plums, 
 
 ' cherries, hazel-nuts, gooseberries, currants, raspber- 
 
 ' ries, pears/ 
 
 ir. Mont- Mr. Montgomery Martin thus describes a portion 
 
 pr<>mery / . i 
 
 Martin, of the country : 
 
 ' Near the portage La Loche, is a precipice up- 
 
 * wards of one hundred feet above the plain, and 
 f commanding a most extensive, romantic, and, ac- 
 1 cording to Mackenzie, ' a ravishing prospect/ The 
 ' eye looks down on the Swan (' Pelican, or clear 
 
 * water') meandering for thirty miles through a val- 
 ' ley about three miles in breadth, and confined by 
 
SUITABLE LANDS FOR THE PLAN. 167 
 
 ' two lofty ridges of equal heights, displaying a most CHAP. HI. 
 
 * delightful intermixture of wood and lawn, which 
 
 c stretch out until the blue mist obscures the pro- 
 
 ' spect. Some part of the inclining heights are 
 
 ' covered with stately forests, relieved by promonto- 
 
 6 ries of the finest verdure, where the elk and the 
 
 ' buffalo enjoy a delicious pasturage. The Swan 
 
 ' River runs eighty miles through such scenery, when 
 
 ' it discharges itself into the Elk or Athabasca River, 
 
 ' in latitude 56 42' north/ 
 
 The following extracts are taken from the Report 
 
 of the Commissioners of Crown Lands of Canada, crown 
 
 Lauds. 
 
 1856, and refer especially to the Red River and 
 the Saskatchewan country : 
 
 ' Including in this territory the valleys of the Saskatche- 
 
 wan district. 
 
 ' Beaver River, the Peace River, and the river Atha- 
 ' basca, as having a common character with it, the 
 ' whole presents an area of 500,000 superficial milgs. 
 ' Its extreme length from the Lake of the Woods 
 
 * westward to the Rocky Mountains is about 900 
 ' miles, and its breadth from the northern boundary 
 ' of the United States to the mouth of Peace River, 
 
 * about 700 miles. This territory, though forming 
 f but one-fifth part of that heretofore rendered avail- 
 ' able for the purpose of hunting only, a little exceeds 
 ( the empires of France and Austria added together. 
 ' The isothermal position of the greater part of it 
 1 resembles Poland/ 
 
 The Commissioner then states, that this area is 
 
1 68 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. in. chiefly prairie land, presenting every facility for 
 farming, without the labour of clearing away dense 
 forests. Roads could easily be made. Near the base 
 of the Rocky Mountains are immense coal-fields, 
 which extend across the territory ; and large rivers 
 can float the coal in all directions. In the western 
 portions, the winters are mild and short. The Red 
 River, which falls into Lake Winnipeg, according to 
 the best American authorities, is navigable, upwards, 
 for steamboats of good size far into Minnesota. 
 
 The Commissioner then quotes from Sir George 
 Alexander Mackenzie : ' All this country, to the 
 ' south branch of the Saskatchewan, abounds in 
 1 beaver, moose-deer, fallow-deer, elks, bears, buf- 
 ' faloes, etc. The soil is good ; and whenever any 
 ' attempts have been made to raise the esculent 
 ' plants, it has been found productive/ 
 
 Sir John Richardson gives lat. 60 on the 
 River of the Mountains, a tributary of the Mackenzie 
 River, as the limit of economical wheat cultivation : 
 4 Oats and barley,' he says, ' yield good crops ; and 
 ' the latter can be profitably cultivated five degrees 
 ' further north/ 
 
 Sir John Franklin says : 
 
 sir John t The land is fertile, and produces with little 
 
 Franklm. 
 
 ' trouble, ample returns of wheat, barley, oats and 
 c potatoes. The ground is prepared for the reception 
 ' of these vegetables about the middle of April, and 
 ' when Dr. Richardson visited this place on the loth 
 
SUITABLE LANDS FOR THE PLAN. 169 
 
 ' May, the blade of wheat looked strong and healthy. CHAP. in. 
 
 ( Beyond the steep banks behind Carlton House, 
 
 ' commences the vast plain whose boundaries are but 
 
 ' imperfectly known ; it extends along the south 
 
 1 branch of the Saskatchewan, and towards the 
 
 4 sources of the Missouri and Assineboine rivers, 
 
 4 being scarcely interrupted through the whole of 
 
 4 this great space by hills or even rising ground. 
 
 f This excellent pasturage furnishes food in abun- 
 
 f dance to a variety of grazing animals.' 
 
 Sir George Simpson gives the following description 
 of the country between Lake Superior and Red 
 River. 
 
 * The river which empties Lac La Pluie into the 
 ' Lake of the Woods, is, in more than one respect 
 * the finest stream on the whole route. From Fort 
 ' Francis (on Lac La Pluie), downward, a stretch of 
 ' nearly 100 miles, it is not interrupted by a single 
 1 impediment, while yet the current is not strong 
 4 enough materially to retard an ascending traveller. 
 4 Nor are the banks less favourable to agriculture 
 ' than the waters themselves to navigation, resem- 
 1 bling, in some measure, those of the Thames near 
 4 Richmond. From the very brink rises a gentle 
 4 slope of green sward, crowned in many places with 
 4 a plentiful growth of birch, poplar, beech, elm and 
 4 oak. Is it too much for the eye of philanthropy to 
 4 discern, through the vista of futurity, this noble 
 4 stream, connecting as it does the fertile shores of 
 
1 70 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. m. ' two spacious lakes, with crowded steamboats on its 
 * bosom, and populous towns on its borders?' 
 
 It may be observed, that British territory runs 
 from the Atlantic to the Pacific, from the river 
 St. Lawrence to the Columbia ; and here is land 
 enough for a colossal empire, if we founded a colony 
 on the shores of the Pacific. 
 
 The 4Qth parallel of latitude running straight 
 across the continent, from the Lake of the "Woods to 
 Vancouver's Island, severs the British dominions in 
 North America from those of the United States. All 
 the country described may be deemed part of Canada. 
 t . Now, as a large part of our National Debt was 
 incurred to obtain and foster these colonies, it 
 appears only wise and just to make them pay 
 back, in a way that will confer additional advantages 
 on themselves, the outlay. So long as the land is 
 unoccupied, it is valueless; and the Provincial 
 Governments would readily accede to any scheme 
 % that would increase their populations. As we before 
 remarked, the question is almost daily agitated in 
 the Canadian papers. The plan we have suggested 
 would meet their wishes. 
 
 America "VVe may say, further, that the plan of redeeming 
 National Debts by the gradual use or sale of unap- 
 propriated land, has been tested by experience in the 
 United States. At the Declaration of American 
 Independence, the Union consisted of only thirteen 
 States. One of the first acts of Congress was the 
 
COURSE PURSUED BY THE UNITED STATES. I 7 I 
 
 settlement of the western territory. In the grants CHAP. HI. 
 originally made to the different colonies of the 
 British Crown, no western boundary had been 
 defined. The majority of the newly-created States 
 insisted that their land stretched out to the Missis- 
 sippi, and even to the Pacific Ocean. Virginia could g 
 plead the right of conquest over vast regions ; Colonel J 
 Clarke, at the head of a small number of Virginians, v 
 having seized some English posts lying between 
 the Ohio and Mississippi. During several years, 
 no effectual arrangement could be concluded satis- 
 factory to all the States. At length, in March 1780, 
 the State of New York ceded its rights to the 
 Federal Government. This act was followed up by 
 an appeal from Congress to the patriotism of the 
 other states, who were invited to imitate so noble an 
 example, Congress pledging itself that whatever was 
 surrendered should constitute a national domain, and 
 be appropriated to the formation of new states, on 
 the same bases as those already in existence. In 
 
 1784, Virginia, whose title to retain what it had 
 conquered was indisputable, surrendered possession 
 of its claims on terms which Congress accepted. In 
 
 1785, Massachusetts yielded its pretensions. In 
 
 1786, Connecticut did so likewise, reserving, how- 
 ever, a considerable tract of country now occupied 
 by the State of Ohio, which, at a subsequent date, it 
 sold to the Union. The two Carolinas next gave up 
 their portions. Finally, in 1802, Georgia abandoned 
 
172 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. in. its claims, on condition that the Federal Govern- 
 ment would expel the Cherokee Indians from her 
 soil, not hy force of arms, but by diplomacy. This 
 amicable negotiation succeeded. Thus a vast national 
 domain was accumulated; Ohio, Indiana, Illinois, 
 Michigan, and Wisconsin, being formed out of the 
 north-western territory. This domain was enlarged 
 in 1803, by the acquisition of Louisiana, purchased 
 of France for 15,000,000 of dollars, and, in 1819, by 
 the addition of the Floridas, purchased of Spain. 
 The United States also bought from the Indians 
 some sections of territory which they had retained 
 within the States and the domain. At first, Congress 
 sold these lands of the domain in very large parcels. 
 In this manner, three great sales were effected, in- 
 cluding 1,397,500 acres, and some smaller ones, 
 amounting, in the aggregate, to 125,000 acres. This, 
 of course, led to forestalling and speculation; and, 
 on the loth May, 1800, the system of land sales 
 was adopted, which still exists with some modifica- 
 tions. We shall describe the principal features of 
 this system. 
 
 Government At the cost of the Federal Government a survey 
 
 Survey. t * 
 
 and plan of the domain was formed and boundaries 
 were fixed. The most considerable division was 
 called the township, which contained a square of six 
 miles, its superficial area being 23,040 acres. The 
 Townships, township was divided into thirty squares, measuring 
 a mile on each side, each of 640 acres, and these, 
 
COURSE PURSUED BY THE UNITED STATES. 173 
 
 again, into quarters or half quarters. The different CHAP. in. 
 sections are numbered, and are easily distinguishable 
 on the plans, and on the ground. Most of the farms 
 or holdings in the newer states, carved out of the 
 north-west territory, are of the dimensions of quar- 
 ters or half quarters. The lands are offered by auc- sales by 
 
 auction. 
 
 tion to the highest bidder, the minimum from which 
 the biddings start being one dollar and a quarter per 
 acre. Every year some forty townships are thus 
 dealt with in each land sale district. Some years 
 since there were forty-two such districts. What is 
 not disposed of by public auction (and it is always 
 the greatest area) is sold in the land offices to any sales at the 
 
 .,,. , , . . . land offices. 
 
 one willing to buy, the minimum price being there 
 also fixed at one dollar and a quarter per acre. Land 
 containing salt-pits or lead is not sold, but retained 
 as the property of the Union. Up to the year 1820 
 these sales were effected on the credit system, which 
 gave rise to a gambling spirit, from which many losses 
 ensued. From that date cash payment has been 
 enforced. In each township one section, that is, one 
 square mile is reserved for the benefit of the primary 
 schools of the district ; moreover, on the produce of 
 the sales, 5 per cent, is specially retained for local 
 purposes, of which 3 per cent, is expended by Con- 
 gress on the construction of roads, and the remaining SonlJ" 
 2 per cent, is paid over to the State in which the r 
 lands are situated, as a fund to promote education. 
 Since the establishment of the national domain. 
 
174 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, in. enormous sums have been paid into the federal trea- 
 sury, from the sales of land,, by which the National 
 Debt has been extinguished ; for the trifle that re- 
 mains is so insignificant that it may be liquidated, 
 from balances in hand, at almost a moment's notice. 
 
 Debt From 1791 to 1835, the United States paid off 
 
 paid off. 
 
 415,968,503 dollars 90 cents, principal and interest, 
 extinguishing the expense of two wars, and the pur- 
 chase of two territories, Louisiana and Florida, suffi- 
 cient to form two empires, without infringing the 
 solemn obligations of government to its creditors in 
 any respect. The whole sum was paid to the last 
 cent. 
 
 What the Americans have done, we surely can do, 
 an d, as we imagine, with even greater ease ; for im- 
 mense as is the extent of the United States territory, 
 it will not bear the slightest comparison with that at 
 the command of this country. We have the advan- 
 tage, too, of possessions in all parts of the world, 
 more easily accessible by sea carriage than the " far 
 west " is to the American pioneer. We do not mean 
 to say that the exact plan adopted by the United 
 States government is to be followed by us. This is a 
 question which cannot be determined by an indi- 
 vidual, but must be left to the combined experience 
 and resources at the command and service of the 
 Government. 
 
 And, if such a plan as this, or one similar to it, 
 could be carried into operation, what a mighty change 
 
SUITABLE TERRITORY IN INDIA. 175 
 
 would at once be commenced with regard to the CHAP.III. 
 general financial condition of the country. Get such 
 a plan into steady working operation, and no further 
 anxious thought need be taken about the liquidation 
 of the debt. Even a sinking fund would not abso- 
 lutely be needed ; and the surplus annually arising 
 from the revenue might be devoted to the repeal of 
 those taxes upon tea, sugar, malt, and other things 
 which bear so heavily upon the great body of the 
 working community, and trench so largely upon their 
 comforts. This would, again, enlarge and extend 
 trade ; keep in constant play our present vast pro- 
 ductive powers ; probably develop new powers of 
 production at present unthought of; and so enlarge 
 the general stock of the kingdom as to afford to 
 every industrious person an ample participation in all 
 that is necessary for a comfortable subsistence, and 
 an enjoyable life. 
 
 India is another fine field; where, but for the India a 
 monopoly of the East India Company, a plan almost fold. 
 identical with the one in operation in the United 
 States might be carried out, and the land actually 
 sold gradually for the purpose of liquidating our in- 
 cumbrances. Nor would this be the only benefit to 
 be derived from so dealing with the land of India; 
 for our manufacturers at Manchester and elsewhere 
 might shortly be made independent of America for 
 supplies of cotton, and a mortal blow be given to Effect on 
 
 Slavery. 
 
 slaveholding. But the monopoly of the East India 
 
176 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. in. Company interposes at present ; and, while this mo- 
 nopoly lasts, it will, doubtless, form an insuperable 
 obstacle to the carrying out of any such arrange- 
 ment. 
 
 But there are plenty of openings in other quarters, 
 for the trial of the plan we suggest, without India ; 
 and what though the subject be vast, and may require 
 great knowledge and experience, both in the colonies 
 and at home, to organise the necessary plans, and 
 the best of administrative talent to carry them out, 
 
 The end to should this discourage us? Ts not the end to be 
 
 be attained . . , 
 
 worthy of attained worthy of the most patient and persevering 
 
 effort. 
 
 effort? What labour could compare, in beneficial 
 result, to that of having successfully inaugurated a 
 plan which should, at once, begin to relieve the 
 country of its heavy burden of taxation and debt, 
 and, in a comparatively short time, entirely free it 
 from the latter? With freedom from debt and 
 onerous taxation, how many other evils would dis- 
 appear not the least of which, financially speaking 
 are, at present, vexatious revenue regulations on the 
 one hand, and inquisitorial proceedings on the other. 
 Here is a field of glory on which statesmen may 
 obtain lasting renown, because they would impart 
 and transmit such lasting benefit, that, by future 
 generations, as well as the present, ' their memories 
 * would indeed be blessed/ 
 
 POSTSCRIPT. About a week after the foregoing 
 
THE AMERICAN PRESIDENT'S REMARKS. 177 
 
 chapter was written, two circumstances occurred CHAP, in. 
 which bear expressly upon the subject of which it Postscript 
 treats, and throw much light upon it. The first is 
 the reception, in London, of the message of the Pre- 
 sident of the United States to the American parlia- 
 ment, which appeared in the London journals of 
 yesterday (Dec. 22nd). In this message are to be 
 found, the following paragraphs respecting the appro- 
 priation of the public lands, the method of which we 
 have been describing. Some of the sentences, sin- 
 gularly enough, are almost verbally the same as we 
 had previously written. 
 
 * Our system for the disposal of the public lands, 
 ' originating with the fathers of the republic, has been 
 ' improved as experience pointed the way, and gradu- 
 ' ally adapted to the growth and settlement of our 
 
 * Western States and territories. It has worked well 
 ' in practice. Already thirteen states and seven terri- 
 4 tories have been carved out of those lands, and 
 c still, more than a thousand millions of acres remain 
 ' unsold. What a boundless prospect this presents 
 ' to our Country of future prosperity and power ! 
 
 ' We have heretofore disposed of 363,852,464 
 
 * acres of the public land. 
 
 ' Whilst the public lands, as a source of revenue, 
 ' are of great importance, their importance is far 
 ' greater as furnishing homes for a hardy and inde- 
 ' pendent race of honest and industrious men who 
 ' desire to subdue and cultivate the soil. They ought 
 N 
 
178 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. in. < to be administered mainly with a view of promoting 
 W * SG ^^ ^ enevo ^ ent policy. In appropriating 
 < them for any other purpose, we ought to use even 
 ' greater economy than if they had been converted 
 
 * into money, and the proceeds were already in the 
 ' public treasury. To squander away the richest and 
 ' noblest inheritance which any people have ever 
 ' enjoyed upon objects of doubtful constitutionality 
 4 or expediency, would be to violate one of the most 
 ' important trusts ever committed to any people. 
 
 * Whilst I do not deny to Congress the power, when 
 ' acting bond fide as a proprietor, to give away por- 
 
 * tions of them for the purpose of increasing the 
 
 * value of the remainder, yet, considering the great 
 ' temptation to abuse this power, we cannot be too 
 
 * cautious in its exercise. 
 
 f Actual settlers, under existing laws, are protected 
 ' against other purchasers at the public sales, in their 
 
 * right of pre-emption, to the extent of a quarter 
 
 * section, or 160 acres of land. The remainder may 
 ' then be disposed of at public, or entered at private 
 
 * sale, in unlimited quantities. 
 
 ' Speculation has, of late years, prevailed to a 
 ' great extent in the public lands. The consequence 
 ' has been that large portions of them have become 
 
 * the property of individuals and companies, and 
 
 * thus the price is greatly enhanced to those who 
 ( desire to purchase for actual settlement. In order 
 ' to limit the area of speculation as much as possible, 
 
THE AMERICAN PRESIDENT S REMARKS. 179 
 
 the extinction of the Indian title, and the extension CHAP. .in. 
 
 ' of the public surveys, ought only to keep pace with 
 
 4 the tide of emigration. menage. 
 
 ' If Congress should hereafter grant alternate sec- 
 ( tions to states or companies, as they have done 
 ' heretofore, I recommend that the intermediate sec- 
 ( tions retained by the government, should be subject 
 ' to pre-emption by actual settlers. 
 
 ' It ought ever to be our cardinal policy to reserve 
 * the public lands as much as may be for actual settlers, 
 ' and this at moderate prices. We shall thus not only 
 ' best promote the prosperity of the new states and 
 1 territories, and the power of the Union, but shall 
 ' secure homes for our posterity for many genera- 
 
 The second circumstance to which we alluded, is, 
 the very general rumour now prevailing, that the pre- 
 sent ministry have come to the resolution of termin- pany 
 ating the sway of the East India Company over the 
 territories of Hindostan, and assuming the govern- 
 ment themselves, which rumour seems to have arisen 
 from what are generally considered semi-official an- 
 nouncements in those journals supposed to be con- 
 nected with the government. If this intention be really 
 entertained, and carried into effect, the monopoly of 
 the East India Company will be broken up, and there 
 will then appear to be no reason why this country 
 cannot follow out almost exactly the plan adopted by 
 the American authorities, in the actual sale of the 
 
l8o THE NATIONAL DEBT FINANCIALLY CONSIDEEED- 
 
 CHAP, in. l an( j s f or the redemption of the National Debt, if 
 thought desirable to do so. We do not desire, how- 
 ever, to speak too confidently upon this point, as we 
 may not rightly interpret the exact position in which 
 the Government would be placed as regards the lands 
 of India ; but we have always understood that but a 
 very small portion of the territory of India was held 
 in fee simple by proprietors ; but that it was almost 
 entirely held by leases of about 30 years' term, from 
 the Company. This information comes too late for 
 us to malie the necessary inquiries, and incorporate 
 the result of them in this Essay, as the time has nearly 
 arrived when it must be sent in. But we think it 
 obvious, that the present mutiny and rebellion must 
 give additional facilities to the Government for the 
 prosecution of any plan of the kind that we have 
 suggested, as a great number of persons must, from 
 the treasonable participation in the rebellion, have 
 set free the Government from all necessity of being 
 over-scrupulous in the confiscation of their estates, 
 although the leases may not have expired. 
 
I 
 
 CHAPTER IV. 
 
 SUMMARY. 
 
 N order to concentrate into a smaller focus the re- CHAP. iv. 
 suits of our enquiry, so as to be able to discern conclusions 
 
 arrived at. 
 
 them at a glance, we think that a summary of the 
 principal points elicited by it, will not here be out of 
 place. 
 
 We think it will be obvious from what has been 
 advanced : 
 
 1. That the general financial position of the 
 country mainly depends upon the public Debt and 
 its management ; and that, apart from this Debt, the 
 country could not be otherwise than in the most 
 flourishing condition, financially considered. 
 
 2. That this Debt has been contracted in a most 
 reckless manner, especially in the period between the 
 latter end of the last century, and the year 1816. 
 That, during this period, the country did not receive 
 in real value, measuring the receipts in the paramount 
 standard of all value, CORN, more than three-sevenths 
 
I 8 2 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, iv. O f the amount now pressing upon us, being in the 
 proportion of 84,782,875 quarters of wheat borrowed, 
 to 198,004,308 quarters now obligatory on us to pay, 
 either in dividends or in principal. 
 
 3. That the National Debt, though it did not 
 originate, yet fostered and strengthened, the system 
 of indirect taxation, and led to its permanent estab- 
 lishment ; so that, at least, two-thirds of the annual 
 revenue of the State are now derived from it. 
 
 4. That a system of indirect taxation naturally 
 raises the prices of the commodities so taxed ; and 
 that, upon the adoption of such a system of taxation, 
 the monetary system ought to have been so expanded, 
 or made of such a nature, as would enable it to ex- 
 press the higher prices thus rendered necessary. 
 
 5. That instead of this result having been per- 
 mitted to follow the creation of the National Debt, 
 and the adoption of the indirect mode of taxation, a 
 precisely opposite result was produced, the system of 
 money having been made more rigid and stringent 
 than theretofore. 
 
 6. That these two contrary modes of action have 
 produced an antagonism between our systems of Taxa- 
 tion and Currency, which, we believe, is at the bottom 
 of all the commercial panics and convulsions we pe- 
 riodically witness. 
 
 7. That the Sinking Fund, as at first established, 
 did nothing towards the redemption of the Debt; 
 
SUMMARY OF THE ESSAY. I J 
 
 inasmuch as it only redeemed Debt, by causing the CHAP. iv. 
 creation of a larger amount of Debt than it paid off. Conclusions 
 
 arrived at. 
 
 That no Sinking Fund is sound unless it be derived 
 from a surplus of ordinary revenue over ordinary ex- 
 penditure ; and also that the stock redeemed by it 
 be immediately cancelled, and not allowed to remain 
 in the hands of the Commissioners. 
 
 8. That notwithstanding all the mistakes we have 
 made, and the recklessness of which we have been 
 guilty, the country is now in a better condition to 
 deal with the Debt than it ever was. 
 
 9. That we have resources enough at home, if 
 we were to allow them sufficiently to develop them- 
 selves, greatly to reduce the National Debt; but 
 that this must be accompanied with such a sacrifice 
 upon the part of the present generation, as would be 
 both unjust and unlikely to meet with general 
 acceptance and support. 
 
 10. That our resources in our colonial empire 
 are amply sufficient to provide for all our liabilities, 
 with advantage to all classes of society and their 
 posterity, and to the injury of none ; and that the 
 present is a singularly favourable time for the 
 inauguration of any plan similar to the one pro- 
 posed. 
 
 11. That this need not absolutely supersede 
 other modes of redeeming the debt ; as we may still 
 employ a Sinking Fund for that purpose, or call for 
 
I 84 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP, v periodical contributions from realized property, if it 
 conclusions be thought expedient so to do. 
 
 arrived at. . 
 
 Having given this snort summary of the principal 
 points elicited by our inquiry, we shall finish all that 
 we can now possibly attempt, by a few general 
 remarks upon the whole subject. 
 
i8 S 
 
 I 
 
 CHAPTER V. 
 
 CONCLUDING REMARKS. 
 
 N offering a few concluding remarks upon the sub- CHAP. v. 
 
 ject of this Essay, namely, the general financial our present 
 
 i . . Tr - . . state a hope- 
 
 condition of this Kingdom at the present time, we fui one. 
 would say, that, looking at it, even without reference 
 to any particular plan for the reduction of the 
 National Debt, we conceive it to be a very hopeful 
 and cheering one, and that it might be much more so 
 were it not for our own wrong-headedness. Our Debt, 
 though stationary in amount, or nearly so, is becom- 
 ing, relatively, less and less every year, from the 
 natural increase of the population, and from the still 
 greater increase of all the commodities which form 
 the wealth of nations. The power of augmenting 
 this wealth is increasing, also, year after year, in a 
 greater and still greater ratio. In addition to these 
 general circumstances of encouragement, there are 
 others of a particular nature, which will operate 
 favourably. In three years' time, the long annuities Expiration 
 will expire ; and as these amount to about 1,290,000 
 per annum, considerable relief will be afforded by 
 
I 86 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. v. tlieir cessation. In little more than nine years, the 
 cessation annuity called the ' Dead Weight' will terminate, 
 weight which will be another relief to the extent of 585,740 
 
 annuity.' 
 
 per annum ; so that, in the natural order of things, 
 there will shortly be a diminution of our annual 
 burdens to the extent of nearly 2,000,000. 
 U::satisfac- The only unsatisfactory thing that we discern is 
 
 tory state of 
 
 our money our system of money. Everything but this has a 
 light and cheerful aspect ; but this seems to be enve- 
 loped in a cloud of obscurity and gloom, which nine- 
 tenths of our senators appear afraid of attempting to 
 penetrate. Yet it would appear clear, that if we 
 have the means of abundantly producing all those 
 commodities which form the fund for the comfortable 
 subsistence of the people, and the power also of 
 almost increasing those means indefinitely, there 
 ought not to be an insuperable difficulty in devising 
 an instrument for the mere exchange and distribu- 
 tion of these commodities. Did any deficiency exist 
 in the power of producing them, it is evident that the 
 people could not be supplied with them, and want 
 and distress would inevitably be the result ; but no no- 
 tion of this kind can be entertained by any person who 
 pays the slightest attention to the subject. What 
 commodity are we deficient in the supply of? What 
 cannot be produced in far greater quantities than at 
 present, if need be? With regard to manufactures, 
 our powers of production are almost illimitable ; and 
 with regard even to corn, the only necessary commo- 
 
CONCLUDING REMARKS. I 87 
 
 dity of which there could be the slightest doubt as CHAP. v. 
 to our capability of materially increasing the quantity, 
 there will be found, upon enquiry, sufficient reason 
 for believing that much more may be produced than 
 can be consumed by our present population. Our 
 country possesses a fertile soil, a climate favourable 
 to health and individual exertion mineral wealth in 
 a far greater degree than most nations an advan- 
 tageous insular situation freedom from those ter- 
 rible convulsions of nature which agitate or destroy 
 many countries and, lastly, a race of inhabitants 
 eminent for their indefatigable industry. We are 
 warranted, therefore, in concluding, that if England, 
 possessing, as she does, these elements of prosperity, 
 and naturally capable as she is of furnishing to her 
 inhabitants every comfort, either by her own produc- 
 tions or by the exchange of those productions for 
 others, if this favoured country be plunged into Any distress 
 
 we at times 
 
 seasons of depression and distress, it cannot arise experience 
 
 urnst aviso 
 
 from natural but from artificial causes; and among fromarti ~ 
 these, we do not see one adequate to produce such 
 tremendous results, but that which pervades all com- 
 merce and forms its life-blood, MONEY. This consi- 
 deration is very consolatory, because that which is 
 caused artificially and by human mismanagement 
 may also be rectified by human agency and exertion. 
 Did our distresses arise from natural causes, such as 
 a bad and intractable soil an unfavourable climate 
 a natural poverty or incapability of producing 
 
 must ariso 
 from arti- 
 ficial causes. 
 
I 8 8 THE NATIONAL DEBT FINANCIALLY CONSIDERED. 
 
 CHAP. v. wealth or, incidentally, from earthquakes, volcanoes, 
 or other convulsions we could apply no possible 
 remedy. But seeing they must arise from some mis- 
 application or want of application of the good things 
 which we are constantly producing, and with which, 
 by the bounty of Providence, we are surrounded 
 on all hands from some mismanagement of our 
 naturally favourable circumstances we feel encou- 
 raged in endeavouring to find out where and in what 
 our error lies, seeing that its rectification is wifhin 
 the limits of our own power. 
 
 THE END. 
 
 WEBTHEIMER AND CO., PBINTER3, CIBCU3 PLACE, FINSBURV. 
 
 
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