Part 8

What may be the immediate effect of a considerable reimbursement, which even solely depends on the produce of taxation, and by no means of a real increase of specie in the nation? It consists in refunding to the lenders a sum which must cease to be useful to them, till it is replaced somewhere else; and obliging them to vest it, without loss of time, on that portion of the debt which is not yet acquitted.—But this privileged portion, which, previous to the reimbursement, was supposed only worth 80, and produced four, (it may be observed that, in the numbers, which I fix upon, I only look for terms to explain my meaning) will be worth 90, and presently 100, yet will not bring in more than four. It may be answered, the stocks rise, public credit increases.—We are not yet come to this point; but the fortune of the repaid stockholders, which does not consist in a nominal capital, but in the revenue it produces, will therefore, in fact, suffer a diminution of one whole fifth. What will then become of that fifth of the taxed objects consumed by them, and which they can no longer purchase?—It will, in my opinion, be necessary either to put a stop to the manufacturing of that fifth, and throw so many hands out of employment, or else lower the prices, yet continue to levy the tax, and then the manufacturer will complain of the burden; or, in fine, this fifth, now useless to the nation, must be exported, and this adds to the first inconvenience resulting from the tax imposed for the reimbursement: for, after all, if taxation operates in the manner it appears at first sight to do, that is, if it diminishes the means of consumption, then, by laying 1,000,000 of taxes appropriated to the liquidation of the debt, you have diminished your home-consumption, it matters not of what articles; you have diminished it, and still more so by the incapacity, to which the creditors paid off are reduced, of consuming that which they did consume previous to the reimbursement. Your exportation, it may be said, is by so much more increased, and enriched.—Granted;—but at whose expence? Who is to profit by it? In what manner are the returns to be made?⸺When foreign trade augments in proportion to the increase of the produce and home-consumption, it is easily conceived, that if the money imported does not exceed the proportion necessary to answer that double increase, the progression being equal every way, each article (money among the rest) will keep up to its value; but if the number of representatives is increased without any addition being made to the objects represented, is not the price of representation thereby diminished? Or, in other words, if you add to the real stock of money in the nation, at the expence of part of your own consumption, (which is the object in question) will not the price of the other parts of that same consumption rise in spite of you?

Besides, by diminishing, in any quantity whatever, the general mass of home-consumption, (and in the present supposition you may well think that it has decreased, both by the tax imposed and the reimbursement made) have the sums appropriated to that part of the consumption, annihilated by you, been withdrawn from the circulation? If not, then by adding thereto the increase of that balance in your favour, which you pretend to receive from abroad, by what means can you prevent a general rise in the prices, in proportion, not only to the quantity of that fatal money imported, but also to that cash, which ought to have been buried under ground, that it might, at least, only prove useless, after the home-consumption has undergone the diminution occasioned by the reimbursement and taxes? This is not all; the unfortunate creditors who have been paid off, already reduced from five parts of what they enjoyed, to four only, will certainly, soon after you shall have put the said balance into circulation, become unable, with the four that remain, to purchase more articles than they could have procured with three, previous to the tax and reimbursement.

Will you pretend to say, that this money does not circulate within the nation? that it becomes the source of a new trade? and that the exporters, instead of over-loading England with that specie, send or carry abroad the value thereof from Spain into France, Germany, and Russia?—that is to say, after having reduced the home-consumption, the exporters, who, rightly enough, are not willing to lose, will contribute to extend the internal consumption of Spain, France, Germany and Russia, and of course the ways and means of these different nations, as well as the produce of their taxes, in the same proportion as those objects have decreased amongst you.—Could this seriously be your intention?

But if it clearly appear, that the execution of the refunding plan would prove equally pernicious in its immediate tendency, both to the creditors who would be compelled to accept of it, and those at whose expence it must be effected, what then might be the case, if the interest of that debt, which ingrosses so much the public attention, being paid by all, were, in fact, paid by no one, but for so long a time as nature, assisted by all the calculations of individuals, may require to correct the errors of those upon a larger scale, made by administration, when administration is capable of making any.

In what manner the Interest of the National Debt will be probably paid off.

It is the most generally received and best respected opinion, that taxes should in preference be laid on the articles of luxury. There is not a man possessed of the least feeling and honesty, who does not approve of this maxim, and whose wish has not often been that the wealthy only should pay the taxes. Canting enthusiasts further add, that the expence and luxury of the rich, prove the ruin of the nation. Be it so. But when the question is, to define what is luxury, in order to subject it to a tax, every individual exclaims, that it begins precisely with those articles which the mediocrity of his means, places above his reach. Instead of laying a tax on beer, would it not be better to increase that on hackney-coaches? says a porter who is stopped at a crossing, by one of the above vehicles; whilst the supposed idler who sits in the coach, and pays for it, exclaims, at the sight of a gilt carriage, that crosses and stops his way: What! 500l. laid out on a single article of luxury! Would it not be better to tax the owner by so much, and apply the produce to the maintenance of fifty poor objects during six months? But, my dear Sir, the manufacturing of this very carriage has maintained a far greater number. If you begin with the man who extracted from the mine, that gold, which, with indignation, you see glittering on the wheels; if it is not beneath you to notice the child employed in driving away the flies that might have hurt the gloss of the varnish when first laid on; and if you end your list only with those who, instead of horses, dragged the carriage into the coach-house of that stately man, whose pomp gives you so much offence; would it have pleased you more if all those hands had been paid for doing nothing? The rich man alone, say you, ought to pay the taxes: but it is impossible that they should be paid by others, “if it be true, that every man, destitute of a capital, can pay nothing but at the expence of the capitalist.”

It would be a difficult matter to trace out, with exactness, the progress of the taxes; but it appears to me, that whatever be the mode of establishing them, there is not a subject who does not contribute his share sooner or later, unless nature should annul the burden, even before the clashing of private interests should have succeeded in settling the division upon equitable principles.

The downfall of England was foretold at her very first loan. This prophecy did not destroy the means of funding, on a very solid basis, in the year 1762, that part of the national debt, till then unfunded. Now I would ask the man, whom I should know to be most intimately persuaded of the dreadful effect that must be produced by a debt of 64,234,595l. incurred from 1754 to 1762, in addition to a still heavier one, contracted since the time when the total amount of the landed revenue was rated at 32,000,000, and the value of the lands only at 320 millions, that is to say, at about double the value of the whole national debt as it stands at present: I would ask that man, I say, whether, between the years 1763 and 1775, he has been able to discover in any parts of England, one single symptom of decay, either in agriculture or commerce, any diminution of public or private enjoyments, or less insolence amongst the common people, by which one may surely judge of the alterations which may happen in their circumstances. This general observation may suffice to make us look on the period of 1775, as presenting a state of things, which, supposing it had been prolonged, could not have held out any alarming prospect. Every one worked or enjoyed, and every body was paid. All this, methinks, might have continued on the same footing to the end of the world, without any alteration on the former or subsequent fortune of any one, such only excepted, as industry, activity, imprudence, and foresight, must occasion in all countries where justice is blind, and has but one scale.

I readily acknowledge, that at that period a grievous war broke out, which did not conclude till 60 millions, nominally 100, had been added to the old debt, or, to come more directly to the point, till the nation had been loaded, or, if you please, crushed under the enormous weight of three additional millions interest to be paid annually. But in what manner will those three millions, so heavy, so dreadful, affect the interested parties? In my judgement, it will be the same with this additional burden, as it has been with the six millions which the said parties were wont to pay before the last war. It certainly must have been felt at first by every body, except the trading part of the nation, whose first operation ever was to add to the price of the taxed commodities, both the amount of the tax, and the benefit of the advance to the consumer. (AND THIS IS STRICTLY CONSONANT WITH JUSTICE.) Now these consumers are of two sorts, viz. the proprietor of lands, and the proprietor of money: the latter must also be considered under a two-fold point of view, as a capitalist for himself, or as a dependant who receives the money from either of the two proprietors. The proprietor of money, from the nature of this instrument of trade, is a being merely passive; twenty shillings, which he is paid for interest, can currently enable him to purchase such articles only as currently sell for 20 shillings. If the taxes had increased, by one tenth, the price of all the commodities which he used to consume before the war of 1755, it is clear, therefore, that in 1763 he had lost one tenth of all his possible enjoyments: I say possible; for the monied man, I speak in general, saves enough, annually, to strike an advantageous balance against the inconveniences inseparable from his capital; I mean that progressive and unavoidable depreciation of money, so long as there will be mines opened, and taxes to discharge. But he can effect it with the greater ease, as his stock often returns 5 per cent. whilst the capital of the landed proprietor brings him in hardly four, and often less.

The dependent proprietor of money had also his resource; he, by degrees, obtained an increase of salary; (AND THIS IS STRICTLY CONSONANT WITH JUSTICE.)

Neither was the landed proprietor without his resource: he gradually raised the price of his goods, and would have increased it to the level of the whole amount of the produce of industry; (AND THIS WOULD HAVE BEEN STRICTLY CONSONANT WITH JUSTICE.) But nature very often anticipates the execution of that very equitable measure, by another operation which is as infallibly the consequence of peace, as taxes are the effect of war, ever since the abolishing of personal service. The 10, 15, 20 millions, which government had borrowed during the war, were nothing more than a part of the capitals which in happier times might have been laid out in the improvement of cultivation and industry. Peace brought them back to their destination; an increase in the quantity of the produce of lands was the consequence; and an equal increase in the demands of the productions of industry, occasioned by the former, kept up the price of every thing, by facilitating to the one, the means of purchasing what the other wanted to dispose of, and by presenting an increase of resources to that increase of population, which as certainly results from peace and plenty, as mortality does from war and scarcity.

I now return to the three millions interest brought upon this nation by the last war; and I demand, what reason can prevent similar effects resulting from similar causes?

Yet, in order to obtain a complete idea of the whole burden of this formidable debt, we must suppose that the full amount of it was contracted during the last war; and then we shall see how many millions of guineas it would really cost England to pay off for ever the interest of all her successes and miscarriages from the beginning of this century, if the 9 millions of taxes should be now established in order to supply the interest of the debt of 238 millions.

It will appear hereafter, that 9 millions of taxes laid on the articles of consumption, would increase, by about 14 millions, the price or nominal value of the whole produce of industry, rated upon supposition at 56 millions. Now it seems to me equally unjust and impossible, that the total amount of the produce of agriculture should not thereby be increased in the like proportion: I beg to be allowed this supposition, until I assign my reasons for it, and bring proofs sufficiently positive to ascertain the fact.

Be it supposed, then, that the collective revenue of land and industry do amount to 112 millions, independent of the taxes.

Let us equally suppose that 40 millions sterling, in cash and paper currency, would be necessary and sufficient for the circulation of the said 112 millions.

Fourteen millions, in taxes, and in the advanced prices which must follow, are one eighth of 112 millions revenue, which, by the necessary rise in the price of every thing, is carried to 126 millions. Now, 5 millions in cash and paper currency, are likewise one eighth part of the supposed 40 millions necessary for home circulation.—It would then cost England only 5 millions in cash and paper, once found, to secure for ever, and in the most permanent manner, the interest of a debt of 238 millions, the very idea of which shook the firm nerves of the Walpoles, the Humes, and of the many experienced men, on whose authority it was no weakness to tremble, before investigating a matter, which nobody, in my judgement, had hitherto attempted to examine.

All the operations of Nature are slow, gradual, imperceptible; and how is it possible to trace her out in her progress, when, in the measures which lead her to the general good, she has recourse only to that multitude of private interests which seemingly tend to destroy it? Yet, in order that we may form some idea of her operations in the point in question, let us execute, in an instant, that which she would effect in half a century, if it were possible within that space of time to incur a debt of 420 millions, without any augmentation or decrease taking place in the landed revenue.

First Hypothesis.

Let us suppose, that, instead of appropriating the capitals that have disappeared, either to undertakings relative to agriculture and industry, (which would have trebled the real revenue,) or to those wars, either successful or grievous, that have left behind them only a frivolous or bitter recollection—let us suppose, I say, that Government should have, till this day, thought of nothing but making public establishments, and that every contributor to the public expence, being permitted at last to live up to the full rate of his means, should find the fruit of his former privations, in a multitude of monuments, such as the most luxuriant fancy can conceive, from the wisest disposal of the capitals, and of the time necessary to incur a national debt, the interest of which, added to the increase resulting from the taxes, should amount to 32 millions, upon an aggregate revenue of 64 millions, in which agriculture and industry should have an equal share. Such, nearly, was the state of the nation, under William and Mary, as we have already observed.

The tax laid on the produce of industry would double the 32 millions: this is just; nor can it be doubted; for there is not a manufacturer, whose goods or produce have just been taxed, but will acknowledge this truth. Besides, the British Parliament avows it. What remains now, is to convince the landed proprietors, that by doubling also their 32 millions revenue, they injure no one whatever. It is needless to prove, that if they act otherwise, if they be only passive when the manufacturers are so justly active, they must be reduced to plough those lands that acknowledge them for their lords.

Previous to the tax, the 32 millions landed revenue, used to cost, annually, to the landlord and farmer, 9 or 10 millions, paid to the cultivators, and laid out in other expences. Such is the rate; nearly one third of the revenue, (See A. Young’s Political Arithmetic.) Before the tax, industry must have laid out amongst the handicraftsmen, nine or ten of her 32 millions.

By doubling, therefore, the price of labour in agriculture and industry, the labouring people of both, will, under the numbers 18 or 20, have what they had before under those of 9 or 10; and these two great engines of national wealth will no ways be clogged.

As for the two capitalists in land and industry, it is clear that each of them will have exactly the faculty of preparing, buying, selling, consuming, and saving, under the denomination of 30, 40, 60, &c. all that they could prepare, buy, sell, consume, and save, under that of 15, 20, 30, &c.

Before we attend to the lender, let us advert to the State; and let it be observed, that in the case where 20 millions of cash and paper currency would have sufficed for the circulation and national transactions of all kinds, at a time when both revenues amounted to 64 millions, it is enough to find out 20 millions more, whenever, by the effect of taxation, those said revenues are raised from 64 to 128 millions; and from the instant that those 20 millions in cash and paper currency are obtained, you may flatter yourselves to have established, ~funded~ most firmly and for ever, the interest of a national debt of 420 millions, the interest of which, would at 5 per cent. amount to 21 millions.

It is not yet time to examine what influence so considerable a rise, in the price of every thing, might have upon the foreign trade; but let us turn our thoughts to the interest of the stockholder, who has so generously lent his money. It will be said, that he is evidently injured: the interest due to him on account of his loan, was equal to two-thirds of the landed revenue: the land is mortgaged to the creditors of the state: two-thirds of the neat revenue belong therefore in fact to the lender. A few years more, employed in erecting useful buildings, bridges, causeways, &c. the whole landed revenue must have been absorbed, and the lender have entered into possession.

Such is nearly the result of Mr. Hume’s reasoning on this pretended mania of supplying the wants of the State, by mortgaging its revenue. Let me be permitted to urge a few words in answer, on behalf of the landed proprietor.

Whatever use the sums borrowed are put to by government, in this respect the nation and the lender stand nearly in the same predicament as two individuals who should have set up an undertaking at a joint expence: when it is completed, each of them first takes back his capital, before they share the profits. In point of national enterprises, is war the object? The profit is existence and glory, if the war has proved successful. Are public establishments in prospect? Then the lender shares in their utility and comfort. Has the employing of the capital been productive neither of glory, nor public establishments? In a word, is the State reduced to its primary and bare existence? The capital lent will not, at least, be lost to the lender, if administration think fit to observe how little it costs to be just; and the lender, on his part, will reflect, that he should not have been a greater gainer, had he buried his treasure during the time of national distress and that, had he lent it to individuals, he might have lost it entirely.