Part 12

I shall conclude this subject with observing that we have with regard to taxes an instance of what frequently happens in political institutions, that the consequence of things are diametrically opposite to what we should expect on the first appearance. It is regarded as a fundamental maxim of the Turkish Government that the Grand Seignior, though absolute master of the lives and fortunes of each individual, has no authority to impose a new tax; and every Ottoman prince who has made such an attempt either has been obliged to retract, or has found the fatal effects of his perseverance. One would imagine that this prejudice or established opinion were the firmest barrier in the world against oppression, yet it is certain that its effect is quite contrary. The emperor, having no regular method of increasing his revenue, must allow all the pashas and governors to oppress and abuse the subjects, and these he squeezes after their return from their government; whereas, if he could impose a new tax, like our European princes, his interest would so far be united with that of his people that he would immediately feel the bad effects of these disorderly levies of money, and would find that a pound raised by general imposition would have less pernicious effects than a shilling taken in so unequal and arbitrary a manner.

NOTE, OF TAXES.

Account of the Netherlands, chap. vi.

OF PUBLIC CREDIT.

It appears to have been the common practice of antiquity to make provision in times of peace for the necessities of war, and to hoard up treasures beforehand as the instruments either of conquest or defence, without trusting to extraordinary imposts, much less to borrowing, in times of disorder and confusion. Besides the immense sums above mentioned​ which were amassed by Athens, and by the Ptolemies and other successors of Alexander, we learn from Plato that the frugal Lacedemonians had also collected a great treasure; and Arrian and Plutarch​ specify the riches which Alexander got possession of on the conquest of Susa and Ecbatana, and which were reserved, some of them, from the time of Cyrus. If I remember right, the Scripture also mentions the treasure of Hezekiah and the Jewish princes, as profane history does that of Philip and Perseus, kings of Macedon. The ancient republics of Gaul had commonly large sums in reserve. Every one knows the treasure seized in Rome by Julius Cæsar during the civil wars, and we find afterwards that the wiser emperors, Augustus, Tiberius, Vespasian, Severus, etc., always discovered the prudent foresight of saving great sums against any public exigency.

On the contrary, our modern expedient, which has become very general, is to mortgage the public revenues, and to trust that posterity during peace will pay off the encumbrances contracted during the preceding war; and they, having before their eyes so good an example of their wise fathers, have the same prudent reliance on their posterity, who at last, from necessity more than choice, are obliged to place the same confidence in a new posterity. But not to waste time in declaiming against a practice which appears ruinous beyond the evidence of a hundred demonstrations, it seems pretty apparent that the ancient maxims are in this respect much more prudent than the modern; even though the latter had been confined within some reasonable bounds, and had ever, in any one instance, been attended with such frugality in time of peace as to discharge the debts incurred by an expensive war. For why should the case be so very different between the public and an individual as to make us establish such different maxims of conduct for each? If the funds of the former be greater, its necessary expenses are proportionably larger; if its resources be more numerous, they are not infinite; and as its frame should be calculated for a much longer duration than the date of a single life, or even of a family, it should embrace maxims, large, durable, and generous, agreeable to the supposed extent of its existence. To trust to chances and temporary expedients is indeed what the necessity of human affairs frequently reduces it to, but whoever voluntarily depend on such resources have not necessity but their own folly to accuse for their misfortunes when any such befall them.

If the abuses of treasures be dangerous, either by engaging the state in rash enterprises or making it neglect military discipline in confidence of its riches, the abuses of mortgaging are more certain and inevitable—poverty, impotence, and subjection to foreign powers.

According to modern policy, war is attended with every destructive circumstance: loss of men, increase of taxes, decay of commerce, dissipation of money, devastation by sea and land. According to ancient maxims, the opening of the public treasure, as it produced an uncommon affluence of gold and silver, served as a temporary encouragement to industry, and atoned in some degree for the inevitable calamities of war.

What then shall we say to the new paradox, that public encumbrances are, of themselves, advantageous, independent of the necessity of contracting them; and that any state, even though it were not pressed by a foreign enemy, could not possibly have embraced a wiser expedient for promoting commerce and riches than to create funds, and debts, and taxes without limitation? Discourses such as these might naturally have passed for trials of wit among rhetoricians, like the panegyrics on folly and a fever, on Busiris and Nero, had we not seen such absurd maxims patronized by great ministers and by a whole party among us; and these puzzling arguments (for they deserve not the name of specious), though they could not be the foundation of Lord Orford’s conduct, for he had more sense, served at least to keep his partisans in countenance and perplex the understanding of the nation.

Let us examine the consequences of public debts, both in our domestic management by their influence on commerce and industry, and in our foreign transactions by their effect on wars and negotiations.

There is a word which is here in the mouth of everybody, and which I find has also got abroad and is much employed by foreign writers​ in imitation of the English—and this is “circulation.” This word serves as an account of everything, and though I confess that I have sought for its meaning in the present subject ever since I was a schoolboy, I have never yet been able to discover it. What possible advantage is there which the nation can reap by the easy transference of stock from hand to hand? Or is there any parallel to be drawn from the circulation of other commodities to that of chequer notes and India bonds? Where a manufacturer has a quick sale of his goods to the merchant, the merchant to the shopkeeper, the shopkeeper to his customers, this enlivens industry and gives new encouragement to the first dealer or the manufacturer and all his tradesmen, and makes them produce more and better commodities of the same species. A stagnation is here pernicious, wherever it happens, because it operates backwards, and stops or benumbs the industrious hand in its production of what is useful to human life. But what production we owe to Change-alley, or even what consumption, except that of coffee, and pen, ink, and paper, I have not yet learned; nor can one foresee the loss or decay of any one beneficial commerce or commodity, though that place and all its inhabitants were for ever buried in the ocean.

But though this term has never been explained by those who insist so much on the advantages that result from a circulation, there seems, however, to be some benefit of a similar kind arising from our encumbrances—as, indeed, what human evil is there which is not attended with some advantage? This we shall endeavour to explain, that we may estimate the weight which we ought to allow it.

Public securities are with us become a kind of money, and pass as readily at the current price as gold or silver. Wherever any profitable undertaking offers itself, however expensive, there are never wanting hands enough to embrace it; nor need a trader who has sums in the public stocks fear to launch out into the most extensive trade, since he is possessed of funds which will answer the most sudden demand that can be made upon him. No merchant thinks it necessary to keep by him any considerable cash. Bank-notes or India bonds, especially the latter, serve all the same purposes; because he can dispose of them or pledge them to a banker in a quarter of an hour; and at the same time they are not idle, even when in his escritoire, but bring him in a constant revenue. In short, our national debts furnish merchants with a species of money that is continually multiplying in their hands, and produces sure gain besides the profits of their commerce. This must enable them to trade upon less profit. The small profit of the merchant renders the commodity cheaper, causes a greater consumption, quickens the labour of the common people, and helps to spread arts and industry through the whole society.

There are also, we may observe, in England and in all states which have both commerce and public debts, a set of men who are half merchants, half stock-holders, and may be supposed willing to trade for small profits; because commerce is not their principal or sole support, and their revenues in the funds are a sure resource for themselves and their families. Were there no funds great merchants would have no expedient for realizing or securing any part of their profit but by making purchases of land, and land has many disadvantages in comparison of funds. Requiring more care and inspection, it divides the time and attention of the merchant; upon any tempting offer or extraordinary accident in trade, it is not so easily converted into money; and as it attracts too much, both by the many natural pleasures it affords and the authority it gives, it soon converts the citizen into the country gentleman. More men, therefore, with large stocks and incomes, may naturally be supposed to continue in trade where there are public debts; and this, it must be owned, is of some advantage to commerce by diminishing its profits, promoting circulation, and encouraging industry.

But, in opposition to these two favourable circumstances, perhaps of no very great importance, weigh the many disadvantages which attend our public debts in the whole interior economy of the state; you will find no comparison between the ill and the good which result from them.

First, it is certain that national debts cause a mighty confluence of people and riches to the capital, by the great sums which are levied in the provinces to pay the interest of those debts; and perhaps, too, by the advantages in trade above mentioned, which they give the merchants in the capital above the rest of the kingdom. The question is, whether, in our case, it be for the public interest that so many privileges should be conferred on London, which has already arrived at such an enormous size and seems still increasing? Some men are apprehensive of the consequences. For my part, I cannot forbear thinking that though the head is undoubtedly too big for the body, yet that great city is so happily situated that its excessive bulk causes less inconvenience than even a smaller capital to a greater kingdom. There is more difference between the prices of all provisions in Paris and Languedoc than between those in London and Yorkshire.

Secondly, public stocks, being a kind of paper-credit, have all the disadvantages attending that species of money. They banish gold and silver from the most considerable commerce of the state, reduce them to common circulation, and by that means render all provisions and labour dearer than otherwise they would be.

Thirdly, the taxes which are levied to pay the interests of these debts are apt to be a check upon industry, to heighten the price of labour, and to be an oppression on the poorer sort.

Fourthly, as foreigners possess a share of our national funds, they render the public in a manner tributary to them, and may in time occasion the transport of our people and our industry.

Fifthly, the greatest part of public stock being always in the hands of idle people, who live on their revenue, our funds give great encouragement to a useless and inactive life.

But though the injury which arises to commerce and industry from our public funds will appear, upon balancing the whole, very considerable, it is trivial in comparison of the prejudice which results to the state considered as a body politic, which must support itself in the society of nations, and have various transactions with other states, in wars and negotiations. The ill there is pure and unmixed, without any favourable circumstance to atone for it, and it is an ill too of a nature the highest and most important.

We have, indeed, been told that the public is no weaker upon account of its debts, since they are mostly due among ourselves, and bring as much property to one as they take from another. It is like transferring money from the right hand to the left, which leaves the person neither richer nor poorer than before. Such loose reasonings and specious comparisons will always pass where we judge not upon principles. I ask, is it possible, in the nature of things, to overburden a nation with taxes, even where the sovereign resides among them? The very doubt seems extravagant, since it is requisite in every commonwealth that there be a certain proportion observed between the laborious and the idle part of it. But if all our present taxes be mortgaged, must we not invent new ones? and may not this matter be carried to a length that is ruinous and destructive?

In every nation there are always some methods of levying money more easy than others, agreeable to the way of living of the people and the commodities they make use of. In Britain the excises upon malt and beer afford a very large revenue, because the operations of malting and brewing are very tedious, and are impossible to be concealed; and at the same time, these commodities are not so absolutely necessary to life as that the raising their price would very much affect the poorer sort. These taxes being all mortgaged, what difficulty to find new ones! what vexation and ruin of the poor!

Duties upon consumptions are more equal and easy than those upon possessions. What a loss to the public that the former are all exhausted, and that we must have recourse to the more grievous method of levying taxes!

Were all the proprietors of land only stewards to the public, must not necessity force them to practise all the arts of oppression used by stewards, where the absence or negligence of the proprietor render them secure against inquiry?

It will scarce be asserted that no bounds ought ever to be set to national debts, and that the public would be no weaker were twelve or fifteen shillings in the pound land-tax mortgaged, with the present customs and excises. There is something therefore in the case beside the mere transferring of property from one hand to another. In 500 years the posterity of those now in the coaches and of those upon the boxes will probably have changed places, without affecting the public by these revolutions.

Suppose the public once fairly brought to that condition to which it is hastening with such amazing rapidity; suppose the land to be taxed eighteen or nineteen shillings in the pound (for it can never bear the whole twenty); suppose all the excises and customs to be screwed up to the outmost which the nation can bear, without entirely losing its commerce and industry; and suppose that all those funds are mortgaged to perpetuity, and that the invention and wit of all our projectors can find no new imposition which may serve as the foundation of a new loan; and let us consider the necessary consequences of this situation. Though the imperfect state of our political knowledge and the narrow capacities of men make it difficult to foretell the effects which will result from any untried measure, the seeds of ruin are here scattered with such profusion as not to escape the eye of the most careless observer.

In this unnatural state of society, the only persons who possess any revenue beyond the immediate effects of their industry are the stockholders, who draw almost all the rent of the land and houses, besides the produce of all the customs and excises. These are men who have no connections in the state, who can enjoy their revenue in any part of the world in which they choose to reside, who will naturally bury themselves in the capital, or in great cities, and who will sink into the lethargy of a stupid and pampered luxury, without spirit, ambition, or enjoyment. Adieu to all ideas of nobility, gentry, and family. The stocks can be transferred in an instant, and being in such a fluctuating state, will seldom be transmitted during three generations from father to son. Or were they to remain ever so long in one family, they convey no hereditary authority or credit to the possessors; and by this means, the several ranks of men, which form a kind of independent magistracy in a state, instituted by the hand of nature, are entirely lost, and every man in authority derives his influence from the commission alone of the sovereign. No expedient remains for preventing or suppressing insurrections but mercenary armies; no expedient at all remains for resisting tyranny; elections are swayed by bribery and corruption alone; and the middle power between king and people being totally removed, a horrible despotism must infallibly prevail. The landholders, despised for their poverty and hated for their oppressions, will be utterly unable to make any opposition to it.