PART 1. The great Advantages of the National Debt, to a certain Amount. How the Commerce or Gaming in the Stocks contributes to the Credit and Circulation of the Public Funds; and what Advan­tages England has derived from thence.

THE national debt of England, and the funds that com­pose it, known under the name of Annuities, ^* have for some time attracted the attention of princes, and the speculation of individuals. Many persons, in France and elsewhere, rely­ing [Page 2] on their correspondents, have engaged in the traffic of the stocks, without being thoroughly acquainted with the nature or object of it. I have been often consulted, and have [Page 3] seen with astonishment, that people of the best understanding were the most at a loss to comprehend the detail of a traffic, which in Holland and England is perfectly understood by heads the most destitute of sagacity. It has been observed that, in the execution of a subaltern post, men, born for great em­ployment, are frequently inferior to the most ordinary capaci­ties. [Page 4] Besides this, there are things which can never be well understood in theory. Practice alone gives us a thorough insight into affairs. To know all the windings of the sera­glio, one must be educated within-side of it. Yet, if I can engage the reader's attention, I hope to speak plainly enough to make myself understood. I myself have been surprised at the detail which this object requires, and how abstracted it seems even to some who have been accustomed to studies infinitely more so. A robust stomach, accustomed to digest a solid food, is often cloyed with a light nourishment that seems to be of the easiest digestion. Another difficulty arises from the terms appropriated to this traffic: some of them are unknown; others must be taken in an acceptation different from the vulgar sense; and this circumstance requires particular attention. The draught of this picture has engaged me in a dissertation upon credit and circulation, more important than the traffic of the stocks. It will flatter me, if they, who search for information upon so important a subject, should find it in this paper; and if my ideas of circulation and credit in general should be of any service to the public. I may be deceived; but it is not my intention to mislead. With respect to facts, I cannot be mistaken, because I advance none which are not certain, and almost of public notoriety.

Strictly speaking, there is nothing, but the metals ² gold, silver, and copper, reduced to money, that is really, and by general agreement, the common measure and universal medium of exchange. Money is the key and instrument by which all [Page 5] our wants are supplied. The real circulation of money, in the daily and domestic expence, which we call Business, is prodi­gious. The same crown piece may have circulated through fifty different hands in the space of twenty-four hours, and repre­sented fifty different things in the course of its circulation. If the fifty persons were to meet at night, they would find, that they had expended and paid fifty crowns, though ^† in fact there had existed but one piece of money. Let it only be observed, that there is not in the whole universe half the money which the expences of the single city of Paris amount to in one year, rec­koning all the expences incurred and paid in money from the first day of January to the last day of December; in all the orders [Page 6] of the state, from the king's household to the beggar, who consumes a pennyworth of bread every day.

This minute circulation is immense, from the multiplicity of simultaneous operations repeated in all quarters, and at every minute. But there is another circulation in gross, supported by credit and paper security, which represents money, as money represents things. The example of the crown piece shows, that a private merchant, ⁴ whose credit is good, inde­pendently of the respite allowed him for the payment of his purchases, may circulate his own paper, avail himself of that of others, and multiply the springs of his commerce in proportion to the facility of circulation. There are oftentimes ten endorse­ments upon the same bill of exchange, which represents the same value to ten different persons. These are important truths: though sufficiently known, they do not deserve to be called trivial. There is another subject less understood, and, perhaps, never thoroughly examined: I mean the analysis of the public funds, and of the stock of trading companies, in that political view in which they ought to be considered by a statesman. I mean to enquire how far circulation and nume­rary ⁵ wealth is augmented by the funds, and to weigh the arguments for and against creating them, with respect to the [Page 7] interest of the state; that is, whether debts are of any service to the state; and afterwards to consider the use and abuse made of them in that traffic, which we call Stockjobbing.

I know there have been great men, who have spoken vaguely upon the subject, and, I may venture to say, without under­standing the merits of the question. My Lord Bolingbroke, and the President de Montesquieu, have considered annuitants, whom they supposed to live in idleness upon the funds, at the expence of the industrious part of the people, as so many hurt­ful members to the state, which, already overwhelmed by the facility of running into debt, is weakened and enervated by sup­porting its creditors.

Whatever truth there may be in such reflexions, I shall demonstrate that great advantages have resulted from the crea­tion of loans, and even from the traffic or game carried on in the funds, when once the nature of it is understood, and the whole subject, combined with all its consequences, shall be thoroughly discussed. The loose and imperfect ideas, which some persons have conceived on this point, have given rise to a number of works, in which the authors have mistaken the nature, circulation, and credit of the English funds, and have done a disservice to France, by leading her into an error upon a most important article. People have been too ready to believe what they ardently wished might be true. When once we set out upon a false principle, the whole system is affected by it.

Who is there that might not be seduced at finding it advanced as a certain fact, in a ^* book much esteemed and very well written, that the Bank of England unites within itself, as in a single point, all the public credit of the nation and all the [Page 8] private credit of individuals? The ⁶ Bank of England has nothing to do with the national debt: it is a bank of circulation, which bears no other relation to government, than a rich indi­vidual bears to the state. A Mount of Piety, a Lombard well established, might perhaps, in time and under a good direc­tion, do very near as much in France as the Bank does in England.

Government is so far from considering the Bank, that, at the beginning of the last war, they did entirely without its assistance. Exchequer bills performed the office of the Bank. The terms, in which the author exaggerates the alarm and distress of the Bank in the year 1745, are no better founded.

[Page 9] ⁷ It is a common mistaken notion that, when stocks fall, it is owing to want of credit. It is absurd and ridiculous to say that credit fails, while government can borrow several millions [Page 10] sterling; but it is natural enough that stocks should fall at a time when very considerable sums are demanded for new loans, and when it appears that, from the continuance of the war, the same operation must be repeated for several years. As money becomes scarce, it becomes more valuable, and rises in price, like any other commodity, in proportion to the demand. The state, having occasion for money, is obliged to give a greater interest. This, for a moment, sinks the old stocks, because every man finds his account in selling out, in order to invest his capital in the new loan, or subscription, which offers him a higher rate of interest. Other accidents make money scarce for a time, and sink the stocks, without its being any way a sign of a defect of credit. When credit really fails, it is impossible to borrow large sums upon any terms; and then, the more we [Page 11] offer, the less we find. England was never in this situation in the last, or the preceding war. An interest of half per cent. more or less, made all the difference. Credit, that is the power of finding funds, however exorbitant, to support the expence of the campaign, never wavered a moment, neither in the year 1744, nor in the last war. ⁸

The Bank, on the other hand, had formerly the precaution to give little premiums to moneyed men, who, upon pressing occa­sions, undertook to furnish specie to be circulated by the Bank in other quarters. The Bank then was always sure of finding funds to pay the bills which poured in upon it; and, even supposing the Bank to have gone to the bottom, which is impossible, ⁹ [Page 12] it has no concern with the national debt, which is not demandable, and never can be reclaimed, as all France, and many writers upon this subject, have very falsely conceived. As long as the interest is paid, there is no other demand. As to the rest, Bank stock is very different from Bank bills. India and South Sea stock are again of a different nature; although these three corporations (the name appropriated in England ¹⁰ to such establishments) have all a credit upon government of many millions sterling in annuities, the capital of which makes part of the national debt, and never can be demanded. ¹¹ The pretended bankruptcy of England has therefore always been [Page 13] imaginary: her debts, never becoming due, and having no critical period to dread, are as if they did not exist. The interest may be a burthen to the state, but never can be the distress of a particular point of time.

Besides, there is annexed to each loan a solid, separate, and distinct security for paying the interest, for which the whole nation in a body is responsible and guarantée, every thing being done with the sanction of parliament. All the different orders of the state are interested in the funds, which constitute one part of their property, and give value to the other. The nobility, who have a large portion of the land, have also a share in the annuities. The proprietors of land have a great concern in the annuities. Tradesmen, merchants, and even mechanics, are all of them annuitants. It is mere declamation to represent the proprietors of the public funds ^* ‘"as men who carry their fortunes in their pocket-books; as drones that devour the honey made by the bees; a race of men, enemies to the plough, and to the landed interest; and, in short, a public pest in every state, where they live in sordid avarice, and labor night and day to accumulate money, to swell their accounts, and to increase the burthen of the state."’ ^†

[Page 14] This whole picture is not only loaded, but entirely false and chimerical. If there existed such a race of men, distinct from the rest of the nation, and able to supply the state, year after year, with twelve millions sterling at four per cent. first, and afterwards for a little more, ¹² they would be intitled to respect rather than insult. But in fact it is the whole English nation in a body, supported by their credit with foreigners, and by a few dealers in the stocks, who contribute not a little to maintain the circulation and credit of this immense volume of annuities. I shall explain this point in the sequel. At present I mean only to consider the annuities of England as a mass of the largest volume, in which there has been the greatest traffic, and which has lately been the subject of great speculation, as it affects the interest of individuals as well as of nations. I shall begin by explaining, more particularly, what these annuities are.

^* Almost all the national debt of England, as I have already observed, consists of annuities arising from different loans made [Page 15] to government. We have seen that this debt is not demandable; that government has fixed no term for discharging it; that a solid and permanent fund is engaged to pay the interest without interruption, the moment it becomes due; and that every thing is done with the sanction of parliament; so that the whole nation may be said to have concurred in creating these annuities, and to have become guarantée and security for the interest. We must not forget, that the state is at liberty to discharge its debts whenever it thinks proper, ¹³ except the last loans, which cannot be redeemed for some years. No embarrassment then can ever arise from being obliged to pay or reimburse at a certain period, as many foreigners have falsely conceived.

The scrupulous and inviolable exactness, with which the interest has constantly been paid, and the idea we have formed of parliamentary faith, have enabled the credit of England to negotiate loans which have astonished Europe. The sinking fund contributes greatly to the support of credit; but credit alone could never have worked the miracle, if it were not for a [Page 16] spring and power of faculty and contribution, by which credit is supplied. It is this power of faculty, this spring, that I mean to explain. The explanation, if I am not mistaken, will throw a new light upon the subject, and correct a number of confused notions, which people of the best understanding have formed upon this important point.

It is not foreigners only who are unacquainted with the nature of the national debt of England; the natives themselves mistake the matter. Many Englishmen, as well as foreigners, consider the debt as a counterpoise to all their successes. Supported by the authority of Lord Bolingbroke, Sir Robert Walpole, Sir John Barnard, and other great men, they look upon the national debt as an unwieldy burthen, that oppresses the kingdom and enervates the power of the state. Their apprehensions, I believe, are founded upon the following principles.—The more a government is indebted, the more the nation must be loaded with taxes to satisfy the interest only; this of itself is a great inconvenience. The second, resulting from the first, is, that increase of taxes raises the price of labour, and injures manu­factures. The third is the tribute paid to foreigners who have property in the funds. The fourth, which has been much and long insisted on, is the spirit of idleness, gaming, and stock­jobbing, introduced into the nation by the traffic carried on in the funds. These four objections seem, at first sight, to justify every declamation against the national debt: yet I think I can demonstrate, from speculation and experience, that what has been said upon this subject is more specious than solid; and that people have talked, without entering thoroughly into the question.

I shall first prove, that the national debt has increased the numerary wealth of the nation; that it is necessary to the [Page 17] support of circulation, by which it was produced, and of the excentric commerce which Europe, and particularly of that which England carries on in the other quarters of the world; in short, that it is highly useful, up to a certain point; that taxes, in a great measure, return into the hand that pays them, and, instead of injuring, are favorable to industry; that the advantages arising from stockjobbing are far superior to the mischief it occasions; that, without the game carried on in the stocks, England would not have had the means of making the efforts she has done; and that this last article has never been well understood by those who have treated of it. They have seen the effects, and have always been ignorant of the causes. These I mean to explain. England is in the situation of a man who finds himself extremely well, breathes freely, and enjoys the most ruddy health; but who is not sufficiently versed in anatomy to know the principles of the health he enjoys. If he be told, that possibly some lurking disorder may be concealed under this florid appearance, he at once takes the alarm, perplexes himself with apprehensions, and is a prey to uneasiness.

Let us come to the fact. I affirm that the national debt has enriched the nation, and I prove it thus. On every new loan the government of England mortgages a portion of taxes to pay the interest, and creates a new artificial capital, which did not exist before, which becomes permanent, fixed and solid, and by means of credit circulates to the advantage of the public, as if it were in effect so much real treasure, that had enriched the kingdom. Let us take for an example the twelve millions borrowed in the year 1760, and see what became of them. Is it not true, that the greatest part of that money was spent within the nation? Nothing but the subsidies, and a part of the sums expended in Germany, can be considered as lost. I say a part, [Page 18] for, even in a war upon the continent, the nation profits by furnishing a variety of articles, as well as by the individuals who are employed there. When they water Germany, they only fertilise a soil, of which their commerce reaps the benefit. The riches of Germany always turn to the account of trading nations. But I content myself with observing, that it is indisputable that a great part of the above loan was employed and circulated within the nation. England then will have preserved a consi­derable share of these twelve millions, dispersed and absorbed in the nation itself; at the same time that the numerary riches of her creditors, who are chiefly English, are augmented by twelve millions, which did not exist before. ^*

If another still more sensible proof be required, that the numerary of about a hundred and thirty millions sterling, which the English nation possesses in annuities, and other factitious funds, would, in a great measure, not have existed, without the creation of these funds, one need only imagine in what would this numerary wealth have consisted, if the funds had never been in being? ¹⁴ Could it have been in money? Exclusive [Page 19] of plate, there is not so much specie in Europe. Could it have been in land? The limits of Great-Britain are not to be extended. Land has already risen greatly in value, and, without an increase of population, will not admit of farther improvement. Could it have been in ships and commerce? These two objects also have their limits, relative to the number of inhabitants. You cannot amass commodities beyond your consumption; and too many merchants are frequently a prejudice to commerce. When once there is as much money employed as the demands of trade call for, the rest is useless. It is not in the nature of things that the commerce of a nation should enlarge continually, and introduce greater and greater sums in a perpetual progression. Where then would these millions have existed, which constitute so great a part of the wealth of the nation? If at all, they must have existed in foreign countries, which would be dangerous, even if it were possible. But no man will maintain such a proposition; especially since it is demonstrated, that the specie, which produced these funds, remained partly in the kingdom, and have successively been employed in every loan.

[Page 20] If it were possible to add these hundred millions (to which nothing but the loans have given an existence) to the current coin, the state would suffer a real repletion of specie, by which its oeconomy would be overturned. For this money, if it were possible for it to exist, would be scattered over the nation, not collected in the Exchequer; it would then entirely lose its quality of a sign; commodities would rise to treble their present price, and all commercial proportion be destroyed. But the supposition is absurd. The principles I lay down resolve the difficulty.

The enormous sum, of which the national debt is composed, never existed at once. This mass of wealth has been successively produced with the same specie, by the magic of credit and circulation, which saves the inconvenience of having so large a sum in specie. The quantity that really exists is sufficient to give an intrinsic value to every portion of the public funds in its turn, without exceeding the limits of an easy and useful circu­lation. The public funds have literally a magnetic virtue with respect to money.

When the proprietors of the old funds undertook to furnish new loans to government, they proceeded thus. They not only found money within the nation by selling their consolidated annuities something per cent. lower, but they mortgaged those annuities to foreigners, and so were enabled to avail themselves of much larger sums, by draughts, than could have been borrowed upon private credit. By these means they for a time swept away almost all the money belonging to foreigners, until circulation had time to recover its level, and the new loans could be divided into a greater number of hands. This is the solution of the great problem, or phaenomenon, in finance. The world has been astonished at seeing eight or twelve millions borrowed for [Page 21] several years successively. It could not possibly have been done, but by the countenance and assistance of the ancient funds, under the auspices of credit and circulation.

Specie communicates its quality to the funds by means of the revenue they produce, but is not increased. The numerary wealth is augmented by the funds acquiring a consistency, and, if I may be permitted to use the term, a fixation, of which money is incapable. It rolls, is dissipated, and passes from one hand to another. It is the Proteus of wealth, or rather wealth is the Proteus of money. But when once a fund is created, the numerary remains, and the contributive faculty increases as well as circulation, and without too great an increase of specie. Current coin is the universal medium of expence. It is only when it communicates its quality to a fixed stock, that the numerary augments and is preserved. This augmentation arises from the credit created by mortgaging a portion of the public revenue. A light tax is drawn from the nation, into whose hands it returns again, with a general benefit to the whole. The reader is requested to consider this principle attentively. It contains a truth demonstrated, palpable, and incontestable, though at first sight not easily conceived. It is equally evident, and of the same nature with the principle already eslablished, that the same piece of money may in one day pass through twenty different hands, and represent twenty times successively its numerary value as a sign. All my reasoning turns upon these two principles. The important truths, which I maintain in opposition to received prejudices, are derived from them.

To make the former principle still more apparent by another example, let us consider Europe collectively. It will appear that the real money expended by the powers at war must remain, for certainly it is not annihilated; and that the sums they borrow [Page 22] upon credit are an addition of numerary wealth, which did not exist before. This addition, created by credit, acquires, by means of credit and opinion, a value both real and artificial, intrinsic as well as of convention; ¹⁵ that it circulates as long as credit subsists, and performs by parts the office of real specie, however chimerical or impossible it may be to realise the whole. May not this be the reason, why the ruin and deva­station of war is sometimes so soon repaired?

Take one example more. It is certain that there are a hundred lords in France and England, whose united property exceeds, in numerary value, the current coin of the kingdom. It nevertheless obtains its value by circulation, and the fortune of every individual, taken separately, is real and solid, although the whole together, that is, the equivalent for it in money, does not appear to exist. Successive loans then are always made with the same identical specie, which, through the medium of these loans, communicates its own value to the new funds or paper created by credit, and returning into general circulation in­creases the power of lending again.

All the millions paid to the king of France, are poured back into the gulph of the nation. The ocean, from whence they sprung, receives them in return, although there may be some basons in the cascade, which, not being in their proper place, may prevent a more useful distribution. But if they were to stagnate at their source, a beneficial circulation would be lost to the public.

[Page 23] The man who cultivates the soil, is he who really suffers by taxes. ¹⁶ Statute labor, ^* imposed upon the peasant, destroys one source of the opulence of France; for it is this part of the nation that in fact nourishes the rest, that gives value to the soil, and increases the numerary wealth. Population is the real riches of the state. The other orders are indemnified for the taxes they pay. Luxury restores what luxury takes away, for [Page 24] vice is tributary from its birth. It is a homage which it owes to virtue.

If we consider the truth of these principles, with the nature, essence, and effect of loans made and applied with judgment, it will be found that, instead of impoverishing, they really enrich the state; that they double the numerary wealth, and of course the power of increasing them. Taxes, for the most part, return into the hand that gives them. It is always the rich, or those who spend money, that pay the taxes in the last resort, as well from their own expences, as by enabling others. They pay so much the dearer for the service and labor of the industrious in the inferior ranks, who frequently make taxes a pretence for greater demands. This circulation necessarily turns to the ad­vantage of industry, which always finds itself indemnified for the pretended burthen laid upon it. The truth of this assertion may be demonstrated thus. ^* The four millions sterling, [Page 25] annually raised by taxes to pay the interest of the funds belonging to the English, produce at least fifteen or twenty millions in circulation, which are laid out for the benefit of industry. That this is true, may easily be conceived from the example of the crown piece, which may change hands twenty times a day, and perform the same daily operation three hundred and sixty-five times a year; and therefore, in the account of that part of the four millions which comes into constant circulation, large allowance is made for that part which may be supposed not to circulate. The revenues, expended by the rich, undoubtedly enable the inferior ranks to engage in other less considerable expences with the same money. To suppress one million of revenue, would therefore destroy a circulation of several millions, and diminish the contributive power of the inferior ranks, by at least twenty millions in the course of the year. I take a year for the general computation, although the ex­ample, already quoted and proved, might possibly exist within the compass of a day, perhaps in less. Upon this footing, the argument is unanswerable, and beyond the reach of all objection. They, who do not thoroughly comprehend the principle, will be unable to follow me through the system.

In considering the second inconvenience, we shall be led to reflections which reduce the first to nothing, and strengthen my system. I affirm, that an advance in the price of labor, and of commodities of the first necessity, is not owing to taxes, but to other causes. This advantage, and even taxes themselves, are a necessary consequence of having a heap of people collected in the [Page 26] great cities by commerce, luxury, and opulence. The true cause of it lies in the nature of that immense commerce produced by the discovery of America. The gold imported from that country necessarily continues the pretended inconvenience. It would be still greater if it did not find a remedy in the augmen­tation of the numerary wealth, and in the circulation of the national debt. Effects, attributed to other causes, have in fact arisen, on one side, from the debasement of the metals in their quality of signs; on the other, from the immense tribute of commodities which America demands from Europe. The mines of Peru have produced two effects, which at first sight appear contradictory. Gold and silver becoming very abundant, and lowering of course in their quality of signs, have given birth to a multitude of new wants, and to a most extensive commerce. But to supply the new demands, which the lowering of the value of money had itself created, it was necessary that the quantity of it should be prodigiously increased. Money then, in its turn, had occasion to be represented by new signs, in order to quicken its own circulation; and the advantages, arising from the multiplicity of signs, are superior to the inconveniences produced by a diminution in the value of the metals.

I affirm, that the positive resources, or metallic wealth of the English nation, would be insufficient to answer the demands gradually produced by the discovery of America, and that the English government could never have borrowed such immense sums, if it had not been for the circulation arising from the creation of these very funds. Credit is protected by credit. Circulation favors circulation; paper and public funds support new paper and new funds, by supplying different loans succes­sively with the same specie, through the medium of circulation, [Page 27] and the traffic in the stocks. As the numerary wealth multiplies continually, the national debt gives nourishment to commerce, and becomes the support and remedy of that luxury, to which, in some instances, it gives birth. It has enriched the nation, and enabled her to pay her taxes. From these principles it follows, that former debts have enabled the nation to contract new ones. The effect of power becomes the cause of it. It is the debase­ment of gold and silver, in their quality of signs, that has trebled the nominal price of commodities. When we say that every thing is dearer, we mean that money is less valuable; and it loses its value, because there is more of it. It may be said that a man, who has an income of three thousand crowns, is not richer now than his ancestor was formerly with a thou­sand; but there are twenty people in Europe, who have three thousand crowns a year, for one who, two hundred and fifty years ago, had a thousand.

The increase of specie was the cause of the first advance in the price of labor, and of commodities of the first necessity. On the other hand, gold and silver, though prodigiously augmented, and become so much more common in Europe, have never­theless stood in need of being represented by new signs, in order to answer the multitude of new demands, which the first abundance of specie gave birth to. Such, in all probability, is the true origin of banks, actions, paper credit, and public funds, and of the facility with which they have been created. ¹⁷ They all serve to augment the numerary wealth, and to fix [Page 28] and collect the riches of individuals, which, in a great measure, would not exist, if it were not for the creation of the funds that compose the national debt, bank stock, and other public securities. I say, they fix and collect the riches of individuals. In effect, money in specie is dissipated and lost; but having communicated its own quality to the signs that represent it, it goes away to perform its office elsewhere, and, supported by credit, still preserves that communicative quality, of which so many experiments have been made in England, without any proportionate increase in the quantity of coin, notwithstanding the prodigious increase of wealth, or of the signs that represent it.

To comprehend the connection of these several truths, we must go back a little, and consider with attention the revolutions, which have gradually taken place in Europe, since the compass enlarged our universe by the discovery of America. The quan­tity of gold and silver increased so rapidly from that period, that it soon lowered their value as signs. Industry found employment on all sides. The external luxury of America indemnified the trading nations of Europe for their own internal luxury now carried to excess, and raised the price of labor in two ways; first, by lowering the value of money, and afterwards by the quantity of manufactures exported to America. This external commerce has at the same time obviated the fatal effect of the advance upon the prince of things. It were to be wished, that we had an equal compensation in point of morals, which since that period have lost more than they have acquired. It is said that there is less simplicity, less truth, in each particular society, though society in general be improved. ¹⁸ Is it possible [Page 29] that political virtue should grow from the extension of moral vice? Be that as it may, the discovery of the new world has certainly caused a notorious revolution, both physical and moral, in the old one. New disorders, new remedies, and new interests, have given, as it were, a new form to the passions. A taste for commerce, colonies, marine, navigation, and fresh discoveries, is become the universal system. The cultivation of arts and sciences is connected with a taste for commerce, and has added a new varnish to the politeness of Europe. The ease, with which a fortune may be acquired, has established a kind of liberty and equality, that brings the different ranks nearer together, and banishes that slavery and debasement, in which a general poverty, compared with the wealth of a very few indi­viduals, seemed to plunge the people. This perhaps is the greatest benefit derived to Europe from the discovery of America. The fortune of the Medicis was exclusive and immense. From a private station, they became sovereigns, and enslaved their country. The subjects of Charles V. and Philip II. on the contrary, drew the means of freedom from the resources of commerce. The world seemed to enlarge under the power of the Spanish monarchy, and in many respects altered its form. A general opulence introduced by the gold and silver of the new world, the multitude of hands employed to supply the new wants and [Page 30] luxury of America, have created new means of subsistence. ^* When the political machines, like the elements of commerce, grew more extensive, vast and complicated, they required springs stronger and more numerous. It became necessary to multiply the circulation of paper, by which the numerary wealth was increased. This was done as it were by instinct, but with fear and trembling. We scarce knew what we were doing, or for what reason. Gold and silver having lost three fourths of their value, a great quantity was required to represent so many things, and to keep the same machines going which money had set in motion. Means of all sorts were to be trebled. Without an augmentation of the signs of value, which form an artificial wealth, neither commerce nor luxury could have subsisted. It is the discovery of America, which, by an extraordinary increase in the mass of gold and silver, has extended commerce, luxury, navigation, and manufactures. There required a greater rapidity of circulation; and by a singular paradox, as money multiplied and grew common, it required so many more signs to represent it. Public funds, paper and stocks, became necessary, sometimes to absorb an excess of specie, and some­times, like a spunge, to be pressed and give it back again. They fix, increase, and collect the numerary in one quarter, while the specie itself circulates in another. The nation is really richer, because it appears so, and furnishes government with greater supplies upon critical and decisive occasions; without precluding, however, the use of proper expedients to relieve the distress that must result from too great a swell of the national debt.

[Page 31] It has been already proved, that every loan increases the numerary wealth. Different loans are always advanced with the same money; the numerary is doubled by the creation of an artificial property, and the state is enriched. The English government, by gradually giving up four millions sterling a year to their own subjects and to foreigners, in return for essential assistance, has enriched the kingdom with more than a hundred millions sterling; whereas not a tenth part of this numerary would have existed, without the creation of the funds. The taxes, drawn from the public to pay the interest, and assigned or mortgaged for this purpose, are poured back again with usury. It may well be said, that the right hand pays the left. It is exactly as if government remitted to the nation a part of the taxes levied upon the nation. Inequality in the distribution does not lessen the profit in the total. ^* This inequality is still corrected by the money which the proprietors of the funds spend themselves, and enable others to spend. A great part of their revenue is employed in favor of industry. Thus every account is balanced, the numerary phantom of artificial riches continues to subsist, produces its effect, supports the proprietors, and is beneficial to others. The mass of representative signs supplies the place of a real, solid property. Every individual may upon occasion convert it into specie, although it would be ¹⁹ impracticable for them all to do it at once; a case that [Page 32] never exists. The same might be said of lands, houses, and all kinds of chattels, which have by no means so ready and quick a circulation as the public funds.

‘"Among commercial nations," says Montesquieu, "that, which possesses the most money, is not the richest and the strongest; but that which has the most money circulating in property and real commodities, by means of representative signs."’ Real money being represented by something else, its numerary quantity increases. This surplus, favored by cir­culation, occasions a kind of overflow, but is soon collected again by the magnetic virtue of commerce and credit, and returns into the same hands, with an increase of power to repeat a like operation every year. The distributive faculty does not wear out, but, instead of being enervated, acquires strength by exertion. It is probable then, and indeed I am thoroughly convinced, that, without the circulation of the old debt, the English government could never have borrowed such large sums as they did in the last war. The more these principles are considered, the more the truth of them will be felt. ^*

[Page 33] ²⁰ Let us proceed to the third and greatest inconvenience of the debt. It is certain, that the powers who borrow become tributary to the foreigner who lends. Yet this inconvenience, [Page 34] real as it is, is nothing in comparison with the advantages of which we have been speaking. Every thing has its inconve­nience. This one however (inferior in itself to the advantages [Page 35] it produces) is still farther extenuated by those derived from the foreigner, who furnishes on demand the sums wanted, part of which are frequently spent in the kingdom. But the point, that most deserves to be considered, is that, without this foreign supplement, by which the measure of power is filled up, which keeps the game alive, and of course promotes cir­culation, England could not have found such extensive resources. The want of this supplement might perhaps have checked and enfeebled all her operations. I shall explain this point in my answer to the fourth objection, touching the spirit of jobbing and traffic in the stocks. The same solution applies to both objections.

I have already observed, that the proprietors of the funds are commonly looked upon as mere book-keepers, who live in idleness at the expence of the industrious. ^* This is a false notion; for the national debt is so voluminous, that it is [Page 36] dispersed all over the nation. Every order of the state has a share in it. There ²¹ is no distinct body of men to do that business, which in another country is called finance. So far is this interest from making them bad subjects, that it attaches them to their country. Every man is bound by an equal [Page 37] obligation to support and favor credit. As for stockjobbers, they are certainly the levers that move the machine. ²² Circulation could not be carried on without them, nor could [Page 38] government have borrowed such large sums, without the traffic in the stocks. The universal turn ²³ for gaming, which stockjobbers have introduced, greatly facilitates the borrowing of money. In Holland, the East India company have actions in some chambers or departments, where there is no traffic, or where there is nothing done. The actions in that department are of the same nature with those of the chamber of Amsterdam, yet bear a much lower price. The same thing happens to a stock called the Million bank, in London. The fact is unquestionable. ²⁴ Whenever a new loan is in agitation in [Page 39] England, the brokers, or dealers in the stocks, draw forth all the money hoarded by individuals, and make it circulate for the service of government. First, the facility of selling stock for time, and of giving and taking premiums upon the same stock, induces many people to employ their money, who would not do it without such advantages. Secondly, there is a great number of moneyed men, both in England and Holland, who are unwilling to run the risques of a war, and therefore will not vest their money definitively in the new funds. Their method is then to lay out ten, fifteen, or twenty thousand pounds sterling in annuities, which they sell, for a stated time, to the dealers in the stocks. By these means they receive good interest for their money, without being subject to variations in the price of the principal, which go to the account of the jobber; and the negociation is continued for years, to the amount of millions. Assisted by this practice, the English government has borrowed sums, which, without the traffic in the stocks, and the ingenious contrivances of stockjobbers, could never have been raised. By such management the English government has not only swept up the money of those who were inclined to vest their money in the stocks, but also of those who had no such inclination. This, I believe, is a secret which government itself was not acquainted with.

The benefit then, derived by government from the dealers in the stocks, is unquestionably immense. If after that I should be asked what I thought of the employment, I should frankly confess, that I would dissuade my children, friends, and relations, from meddling with it. It is a dangerous trade, and has of late [Page 40] been grosly perverted. It requires a man of great knowledge in the business, and who makes it his only occupation. When people engage in it, as it often happens, to repair a broken fortune, or to make one rapidly, they find it a more dangerous game than any other. Many a man, who is supposed to be ruined by stockjobbing, had recourse to it only when he was already, from other causes, in the road to ruin, and, in many cases, might have avoided it, if, instead of employing a method so full of danger and seduction, he had at once cut the mischief to the quick, by a prudent oeconomy, by lowering his establish­ment, by overcoming the vain opinion of the world, and setting himself above it. This point would furnish materials for a long train of reasoning, and a separate treatise.

The traffic in the stocks divides into various branches, and forms a very complicated subject. It may be carried on with prudence, and with a certain profit, where a man only means to make the most of his property without any of the risques of play. If speculations in the funds do not exceed the abilities of the person who speculates, and if he does not suffer himself to be governed by his broker, there is less hazard in this game than any other. I have touched this matter lightly in a separate Essay on Stockjobbing. ²⁵

If, without the traffic in the stocks, the power of the English to raise money had only amounted to two thirds of what the services demanded, those two thirds would probably have been [Page 41] thrown away. The advantages they gained would not have taken place, and their losses would have been as great as their successes have been. When a power is wanted equal to ten, and we possess but five, the proportion is not as two to one, but very often as ten to nothing. We lose all that we employ, because feeble efforts are not only ineffectual, but dangerous, and turn against the party that uses them. Slowness in one degree is the cause of it in a greater, and feebleness produces feebleness. If the English had sent a fleet and army, weaker by one third than it was, to conquer the Havanna, the expedition would have miscarried. Not only the whole expence would have been lost, but that loss would have occasioned many others. Instead of the treasure, and other advantages produced by their success, every circumstance would have been inverted. I do not, there­fore, exaggerate in what I say of the inequality in the proportion. In politics, the effect of doing all that is wanted, compared with doing two thirds of it, instead of being as three to two, is some­times as all to nothing. The whole success depends upon some little supplement of power, to which if stockjobbing and foreigners contribute, or if they are necessary to obtain it, they cannot be too much considered and encouraged. Now it is demonstrated, that, if it were not for the circulation which this gaming excites among foreigners and in the kingdom, moneyed men would never venture to engage so deeply in a new loan, or would not find supplies, with that astonishing and requisite celerity, at the moment they are demanded. It is the ready market that encourages to enterprise, and favors circulation. That produced by gaming is prodigious. It is inconceivable how much it facilitates the means of disposing of funded property at every instant, and for very considerable sums. To this facility, which individuals find in disposing of their property, England is [Page 42] indebted in part for the ease with which such enormous loans have been made, and for the signal successes that have attended them. The benefit therefore is far superior to the inconvenience resulting from stockjobbers and soreign creditors. Both one and the other have been essentially useful to England, and con­tributed not a little to the success of her military operations. This was the point to be proved.

It appears then, that the national debt, far from being an oppressive burthen, has enriched the kingdom, and encouraged commerce; and that the mischief of taxes and imposts is in part fallacious. We have seen the true causes of advance in the price of labor, and commodities of the first necessity. It has been shown how much stockjobbing, and the concern which foreigners have in the funds, contribute to credit and circulation. Particular inconveniencies, which I readily admit, can never balance such signal advantages.

These principles, however, are not to be carried too far. It is possible to accumulate the national debt to a point that would greatly distress the kingdom. There is a maximum of two sorts to be equally avoided. One is the amount of the interest provided for by taxes. The other concerns the mass of paper in circu­lation. I believe we are at a greater distance from the first than the second. It will appear in the course of this work, that all the resources of England, with respect to taxation, are not yet exhausted; whereas it has been believed, that representative signs in paper could not circulate beyond a certain proportion with the current specie. Speculative calculators have limited this proportion to three to one. ²⁰ But uniform experience in [Page 43] England has proved to a demonstration that it may be carried much farther. Still, however, it demands a limitation. One inconvenience occasioned by the enormous mass of paper ^* is, that the price of stocks is more sensibly affected now, than [Page 44] formerly, at the least apprehension of political events. These convulsions are greater than they used to be, and at all times injurious to the public. It is no failure of credit; ²⁷ but the mass being so great, and in so many hands, there are a greater number of sellers, who speculate upon the same event. This is one of the chief inconveniencies of the volume of the national debt. In circulation there is a maximum of power, which cannot be exceeded. The public funds are a realised alchemy; but we must not pierce the crucible. Every thing has its bounds; every thing requires limitation. What the limits of the national debt should be, is more than I can say. Perhaps we already touch the border; ²⁸ perhaps we are still [Page 45] at a distance from it. Yet we wish to ascertain this maximum, this point, which cannot be passed without danger. It is, I think, a difficult problem. The following principles may however lead to the solution of it.

A variety of principles must be combined with exactness, and the result of them considered. I speak of England only. The application may afterwards be made to other powers. ²⁹ We should first compare the mass of gold and silver, with which America annually enriches Europe, with the quantity sunk in Asia. If, by an augmentation of specie, the balance inclines in favor of Europe, we are so much the farther from the maximum. The progress of commerce forms the second combination; [Page 46] particularly that with America, in the consumption of European manufactures and commodities. The more the English improve this branch, the less their debt will be a burthen to them. The third essential article is population and agriculture, which form the natural strength of every state. We all know what physical ^* [Page 47] and moral advantages the English enjoy, to encourage population. The result of these combinations determines whether England be still able to support an augmentation of the public revenue by taxation, without overwhelming the nation, or going beyond its intrinsic power, so that the harmony of credit and circulation may subsist. This equilibrium is not so strictly exact, but that it may bear a considerable weight before it gives way. Notwithstanding all the declamations in France and England on the subject of taxes, they pay much heavier in Holland. Not to reckon other articles, even bread, ³⁰ though [Page 48] of the first necessity and most universal consumption, pays an exorbitant duty; yet it has not much discomposed the springs of commerce and manufactures. I would never advise any other power to have recourse to such an expedient. I mean only to show, that the maximum, which we sometimes appear to touch, may still be considered as in a very distant point of view; since England, with this tax alone, upon the same footing with Holland, might borrow many millions sterling; that is, there [Page 49] would be a fund to pay the interest. It is also certain, that part of the annuities, or interest of the funds, is annually re-invested in the same funds. It follows then, contrary to the common opinion, that the augmentation of the absolute mass of debt is a support, ³¹ rather than a prejudice, to the relative price. ^* No man now hoards his money in a chest, as in former times. All the money circulates. The miser is as useful to the state, as the man of expence. It is only the prodigal, or rather an excess of luxury, that does mischief. The advantage it produces is momentary. It is exactly cutting the tree at the root. The miser, no less than the oeconomist, in sowing for posterity, circulates his fortune, and supports public credit, paper, and the stocks. The excess of specie, beyond what is necessary for daily expence, trade and commerce, flows back upon the funds; and this supply is perpetuated by a circulation of the same specie, which returns periodically, with an increase received from the treasures of the new world. For this reason ³² it [Page 50] is to be presumed, that the rate of interest will be lowered both in England and Holland; and as so moderate an interest will not generally agree with the luxury of individuals, people will endeavour to dispose elsewhere of the overplus of American treasure, savings upon their annuities, and profits in trade. France might have availed herself of this disposition, if she had taken ever so little care to support her credit in the operations of her finances. ³³

I think it however essential to England (and to every other state) to profit by peace, and to make a good use of their sinking fund, by discharging one third of the national debt, and relieving the nation from a part of the taxes. A sinking fund increases as fast as it is applied, and, with the addition of the growing interest multiplied for some years, constitutes a great power for the discharge of debt. But equity requires that there should be a period, at which those taxes should cease, which [Page 51] were only raised to pay the interest of loans that are discharged. I do not know whether this point has ever been much attended to in England; yet it deserves the attention of every power that is in debt to its own subjects. The sinking fund of England, being composed of the surpluses of taxes mortgaged to pay the interest of different loans, must be applied to general reductions, and cannot relieve the nation from the tax imme­diately relative to each loan. Yet when once the discharge of the debt is accomplished, it is both just and necessary to take off the tax created to answer the loan. It would be unjust to continue it.

³⁴ I affirm then that, admitting the hard necessity of sometimes engaging in war, it is indispensably necessary to lighten, as much as possible, the debts of the state in time of peace; though too extensive a discharge of debt would be useless and dangerous, especially when credit is built upon a solid foun­dation. ³⁵ The unshaken stability of public credit in England, proves the truth of these principles. They have the actual evidence of three wars, supported, since the beginning of the present century, with glory and vigor. It is not the splendor of a day, that glitters and is extinguished in the same instant. The state of public credit has always been progressive. Like fire, [Page 52] if not fed, it diminishes. In countries wealthy, and full of resources, such as France and England, every thing may con­tribute to entertain and support it. On the other hand, as trifles support, so a trifle may overturn. Little matters are not to be neglected. The contempt of them may be of the greatest consequence. The most inconsiderable cause may produce the most considerable events. Dealers, jobbers, and gamesters, may contribute to the success of those great operations of finance, by which the fate of nations is frequently determined. It is not the lading that sinks the vessel, but perhaps a little defect in the equilibrium, some trifling excess in the disposition of the weight. A great vessel can no more be built without nails, than without beams. We do not always know what kind of nails are most wanted. We despise or neglect, and do not even suspect that they are necessary.

Experience, a combination of facts, in a word, the actions performed by the English, since the beginning of the present century, and the means they employed, unite in proving, beyond dispute, the truth of these speculative ideas. The observations, made upon this nation by the author of the Bilan, are at best no more than paradoxes, which require a solution. His con­clusions are contradicted by facts. The speculation and conjec­tures of theory can never overturn manifest facts and visible practice. I should also observe, that this author and others, who have followed English writers, are very ill founded in appealing to their authority. ³⁶ The opponents of govern­ment [Page 53] in England are more violent and partial than in any other nation. Their partiality hurries them into the most ridiculous excesses. Their authority therefore, with respect to the strength and revenue of the kingdom, is very equivocal. I agree, that there are defects in the system of administration. Every thing that glitters is not gold. Their advantages perhaps are not so considerable as they appear to be; but, to represent England in the present moment as a declining, enfeebled state, and upon the verge of ruin, is a paradox palpably absurd, and not to be supported.

There is one essential point which I ought not to omit. In order to favor the circulation of the funds, to maintain their value, ³⁷ and of course to reduce the rate of interest, which is the object of finance and the sign of a flourishing credit, one thing is absolutely and indispensably necessary. We have already explained the advantage which England derives from the traffic carried on in the funds. It could never subsist, but for the facility of mortgaging funded property. This operation seems to be for­bidden in France by an extension of the law, which forbids lend­ing upon pledges. This law therefore, the spirit of which never could extend to the funds, should be explained and confined. I do not now enquire whether a Mount of Piety, or a Lombard, might not be of great use to France, and the most effectual means of preventing that shameful usury, by which so many indi­viduals [Page 54] are undone. It is sufficient to remark, that the inconveniencies, apprehended by the legislature, have no relation to the mortgaging of funded property. Neither domestic robberies, nor the disorder which the facility of lending upon pledges may occasion in families, have any reference to this case. Large sums are lent in Holland, at a moderate interest, by men of the strictest honor, and by the richest magistrates, on the security of the funds; and the lenders thereby contribute to keep up the price, as much as if they themselves were buyers. We all know, that when a man is forced to sell property of any kind at a moment's warning, the buyer takes his advantage and lowers the price; whereas the facility of pledging waves the necessity of selling. The owners of stock have time to turn themselves, and are seldom, if ever, obliged to sell at a short notice; by which the price of stocks is frequently sunk for a trifling, inconsiderable object. ^* On the other hand, there are many people who would be willing to buy large quantities of stock upon speculation; but whose money not being come in, or not being able to employ it in this way, they give up all thoughts [Page 55] of dealing in the French funds; whereas, in those of Holland and England, twenty thousand livres in ready money are sufficient to purchase a hundred thousand livres in stock, because it can always be pledged at a moderate interest; so that, instead of paying usurious interest, the stock itself produces a revenue arising from the surplus of twenty per cent. which the borrower had beyond what he borrowed. Some people pledge their stock for a time, having occasion for their money elsewhere ³⁸; others merely and simply to receive a great interest from the surplus, selling their stock to deliver at a stated time, and run­ning no risque. These three numerous classes of men draw a quantity of money into the funds, which would not come in without them. Thus the pledging of stock prevents a large quantity of it from appearing in the market. A great inconve­nience is obviated, or a signal benefit obtained. The number of buyers increases prodigiously, and the number of sellers dimi­nishes. From hence we may conceive the utility of the operation. For the public good, for the good of commerce, credit, and circulation, the laws in France, touching loans upon pledges, cannot be too much softened.

[Page 56] Let us say a word of the Dutch funds. It is to be observed, in the first place, that in France all the funds are confounded under the name of Paper. It is common to say, Paper rises or falls in England. The expression is improper. The funds in England are not in paper, any more than the actions in Holland. For this reason, no man can lose his actions in Holland, nor his funded property in England, as people in France lose their actions in the funds, or India company. Yet in Holland one may lose the obligations, or contracts for which the state is security. These are in paper, some payable to the bearer, but the greatest number to the last owner, with certain deeds annexed to prove the title. There are some obliga­tions secured by the generality, that is, the Seven United Provinces, bearing an interest of three per cent. Particular provinces have borrowed money at a higher interest; but, excepting Holland, they have no great credit. The province of Holland is accountable for the greatest number of obligations, to the amount of many hundred millions of florins. Yet this paper, though it bears but two and a half per cent. interest, is at par, and above it. Many circumstances concur to support this enormous credit. The first is, that the great riches of the Dutch are in money. It is the country, next to England, where there is the quickest circulation both in specie and paper. They have more than the most extensive commerce can employ. The spices, with which they alone furnish all Europe, America, and Africa, maintain and give a periodical increase to this abundant circulation. No other nation has lent so much as the Dutch to England, France, Saxony, and other powers.

The second reason why the paper called Obligation is so much sought after, is that there is a law in Holland, by which the guardians or administrators of the effects of minors, are obliged [Page 57] to lay out the whole produce in obligations, for which the state is security. There is in Amsterdam, and other cities of Holland, a chamber called the Chamber of Orphans. The principal ma­gistrates are at the head of it. When any person dies without a will, they take the direction of the succession, and vest all the produce in obligations. There is much good and much evil in this practice. But it is always a leaven that contributes to support the value and credit of that paper. There are also some Hollanders of the old stock, who have no faith in funds, which they do not see, and who will have all their property in their chests, in paper secured by the state, which they honestly think is the most solid security in the universe. Brokers and notaries have a sort of brokerage upon settling the titles in the different transfers; but this operation is too complicated to admit of a detail.

The actions of the East and West India companies in Holland, and all the royal funds and other actions in England, are transferable, in the respective offices, under the name and to the account of the purchaser, so that he has no paper given him to keep. The books of the office are evidence of the pro­perty. A foreigner trusts nothing to his correspondent. ³⁹ There are even printed lists in England, in which the names of the proprietors of Bank, India, and South-Sea stock, are marked, with one star if they have a capital of five hundred pounds, with two for a thousand, and three for fifteen hundred; [Page 58] but no farther. This we know is a spur to some people to be concerned in these funds, which in England are called Corpo­rations. Such contrivances separately appear of no moment; yet, taken together, contribute more than we are aware of to promote circulation, and of course to the greatness and splendor of the state. What contributes to it much more is the exactness with which the interest, and even life annuities, ⁴⁰ are paid on the day they become due. The delay which people are exposed to in France, under pretence of being paid in alphabe­tical order, has given great disgust to foreigners, to the prejudice of French credit. This method is not practised in London, and I do not know that it is absolutely necessary in France. I see no reason why a thing, so easily done upon the banks of the Thames, should not be done upon the banks of the Seine, in parallel circumstances. It is known beyond a doubt, that the funds are provided at the appointed time as scrupulously as in London. The delay so prejudicial to credit can only arise from the clerks who are employed to pay the money. ⁴¹

The author of the Bilan is mistaken in supposing, that the English East-India company, or any other, sends annually twenty millions of French livres in specie to India in time of peace. In the year 1762 the English company sent no specie to India. They may have sent some during the war they main­tained upon the coast of Coromandel, and in Bengal; yet still I [Page 59] cannot persuade myself that it amounted to so large a sum. This must be exaggerated by at least half. It will be found, that in time of peace, the company, one year with another, does not send above six millions of livres ^* in bullion to India. All that has been said upon this subject, from the time of the Romans to this day, proves too much. I much question whether the India trade was the ruin of the Romans, as the author of the Bilan supposes. Monsieur de Montesquieu, in his excellent treatise upon the causes of the greatness and decline of that people, mentions this circumstance but very lightly, and only as an accessary to others of greater importance. It is sufficient to observe, first, that, even according to Montesquieu, the Romans did not extract such quantities of gold and silver from their mines, as we do from America. With us these metals are commodity as well as sign. To preserve their value as sign, they must be exported as commodity. Secondly, the Romans had no establishments in India, where individuals make immense fortunes, and return with them to Europe. Thirdly, the Romans hoarded their money. Every thing with them contri­buted to choak circulation, of which they had not the smallest idea. They knew nothing of bills of exchange, nor annuities, nor government-paper bearing interest. All business was trans­acted with specie. Taxes returned with difficulty into the hand that paid them; and therefore, with a multitude of resources, they had none when they were most wanted. Loans upon critical occasions were unknown, and would have been impracti­cable. The Barbarians ransomed, or plundered, the empire. They had no expedients of credit to resist unforeseen accidents. These were the reasons of their decline; and my system is [Page 60] supported by them. I do not deny that the India trade may be a commerce of mere luxury to certain powers; but it has been demonstrated, that it is a source of riches to England, and the brightest jewel in the crown. ⁴² The ruinous exportation of specie must, in the first place, be reduced to half the sum stated by the author of the Bilan; the English company recovers from foreigners infinitely more than he admits; and there is a third circumstance, which he does not attend to, and which makes good a part of the loss the nation may suffer by the export of money to India; I mean the immense fortunes acquired by individuals, and by all the persons employed by the company in that country. ⁴³ These Asiatic spunges, per fas et nefas, bring home periodically a part of the treasures of India, without which, Asia, from the time of the Romans to ours, must have exhausted not only all the money of Europe and Africa, but even of America. The truth of this proposition requires no other evidence, but to be expressed. If the author's assertion were [Page 61] true, the money of all the universe must already be in Asia. His system leads to an absurdity; and every system that does so is false. The Dutch East-India company enriches the state, while it impoverishes the proprietors; a paradox that cannot be accounted for but upon the principle which I have just explained. The prodigious and rapid fortunes, acquired by individuals in India, repair the breaches which a commerce, ruinous in itself from the money it exports, may occasion in the state, and even in Europe. We should be happier perhaps if it were possible to do without tea, and other exotic drugs of India, as well as without muslins, and all the useless articles of an excessive and dangerous luxury. But this luxury being once established, it would be still more destructive to purchase the materials of it from foreigners. I believe that Europe, sooner or later, will recover part of the money, which, after wresting it with so much difficulty from America by the hands of Africans, we have wasted upon Asia. Before this great event takes place, I affirm, that the individuals established in India have at all times gleaned a part of the treasure sent thither by the merchants of Europe. It is also true, that the multiplicity of India compa­nies in Europe has produced various inconveniences. The first is, that a greater quantity of specie is exported than is necessary to maintain its value here as a sign, which yet, without the export to Asia, would be too much reduced. ⁴⁴ The second is, that [Page 62] a competition in the purchase of India manufactures, and other exotic commodities, raises the price in Asia; that is, there is more money wanted to buy the same quantity of goods. On the other hand, the same competition subsisting in the sales in Europe, lowers the price of what costs so dear at the fountain head. For this reason the companies no longer make the same profit they did formerly; whereas the persons they employ have the cream of the trade, and succeed better than ever.

⁴⁵ The author of the Bilan pretends that the English buy more than they sell, and have done so for a considerable time. [Page 63] If this were true, the nation would not be in a condition to face so extensive a commerce, which yet is supported with admirable facility. The expedition with which they equip, the number [Page 64] of their vessels, the rapidity of their voyages, and the opulence of their cargoes, contradict every thing he advances, from partial or ill-informed English writers. I still think I see a man of a [Page 65] robust constitution, whom they endeavour to persuade that he is sick.

The author founds his assertions upon the course of ex­change, which seems to be to the disadvantage of the English [Page 66] trade. ^{* 46} But, to make the exchange an exact barometer of the balance of trade between nations, all their commodities [Page 67] must be bartered one against the other, and, after this operation, the difference must be remitted to the winning party. But this is a chimera, and can only be executed in theory. There are a multitude of temporary circumstances and events, that render the exchange an equivocal sign. The strongest proof that it is so, would be the falsehood of the author's own conclusions, even where his observations might be supposed to have been verified. Every man, who has the slightest political knowledge of Europe, must perceive how much he is mistaken. Metaphysics, sup­ported by calculation, are the most plausible and the most fallacious. We lose our understanding by having too much of it, and, by knowing too many things, at last know nothing. Commerce is a game, and it is vain to play with people who have nothing to lose. To win always, with exclusion of every body else, is impossible. Universal commerce is there­fore a mere chimera. Every industrious nation, situated conveniently for trade, has a proportionate share of it. Their opulence is no more durable than a gamester's luck, unless the riches of the soil, and the political administration, contribute to encourage industry, and to support the national commerce. In the natural order of things, the advantage may lie on the side of France. But, as it is the nature of silver and gold to circulate, riches, which give birth to luxury, fre­quently [Page 68] turn to the account of indigent nations, and always to the account of trading nations. This son of Opulence is the father of Poverty. Excess of wealth may one day make the sources of it neglected in England, and pervert the use of it. The kingdom may fall, but the present does not appear to be the moment of its decline.

^* The scarcity of specie on the Royal Exchange, mentioned by the author of the Bilan, frequently proceeds from temporary [Page 69] accidents, which are soon corrected. As the coin is heavier, and of better allay, it is exported by all sorts of means. The English introduce a great quantity of Spanish dollars, and export them again with a small drawback. This has an in­fluence upon the course of exchange. But, as an individual, immensely rich, may find himself short of money, (his current cash being exhausted, perhaps in lucrative undertakings) the same thing may happen to a trading nation. The distress does not last long. A remedy is soon applied by bills of exchange, supported by real property; and it commonly happens that a scarcity is succeeded by a great abundance of specie. This has been constantly observed. Let us hear what Monsieur de Mon­tesquieu says upon the subject.

‘"In the country of commerce, the money that disappeared suddenly, returns, because the states that received it owe it. The scarcity or abundance, which varies the course of exchange, is not a real, but a relative scarcity or abundance. When France, for example, has more need of a fund in Hol­land, [Page 70] than the Dutch have of a fund in France, money is then called cheap in France and scarce in Holland, and vice versâ." He says, that "money is one merchandise more, which Europe receives by way of barter from America, and exports to India. Considering the metals as merchandise, a great quantity of gold and silver is advantageous. It is not so, considering them as signs, because a plenty of them lowers their quality of signs, which is in a great measure founded upon their scarcity."’— ‘"The exchange," he observes in another place, having given men a singular facility in con­veying money from one country to another, money is no sooner scarce in one place, but it flows in, on all quarters, from the places where it was plentiful. The fixing the rate depends upon a compound ratio of the total of things com­pared with the total of signs, and varies as the accidents of commerce incline the balance one way or the other."’

According to Montesquieu, all moveables, such as money, notes, bills of exchange, actions in public companies, ships, &c. are merchandises that belong to the whole world; the nation that possesses the greatest share of these moveables is the richest. That great man knew the principle, but did not perceive the consequences. When he speaks of public funds, he mistakes the nature of them. The object was beneath him, and escaped his attention. He says in another place, ‘"As money is the sign of a thing, and represents it, so every thing is the sign of money, and represents it; and the state prospers, in proportion as, on one side, money is a true representative of things, and as things in return are true representatives of money; that is, when, according to their relative value, a man may have the one as soon as he has the other."’ This [Page 71] is precisely the case of the public debts, of which he speaks so differently in many parts of his works.

If the whole produce of commerce was contained in the amount of the territorial revenue, as the author of the Bilan supposes, ^* what would become of Holland, whose territorial revenue is almost all exhausted in supporting the territory?

It costs the state more to keep the dykes and high roads in repair, than the revenue of the lands amounts to. Yet the produce of commerce and consumption is immense, notwith­standing the parcimonious spirit of the mechanic, who improves upon French sobriety, without the same good effect, for labor is dearer there than in France. Holland is another proof that an exclusive advantage in commerce is a chimera. Her profits arise from the opulence of her neighbours, who would suffer in their turn, if any unhappy revolution were to annihilate the republic. It is the bridge of communication, the common mart, the sup­port of which is essential to the trade of other powers. Whoever is in possession of actions, obligations secured by the state, annui­ties, or other stock in England, converts them into money at one per cent. more or less, according to the market-price at Amster­dam or London. It is a great advantage to the English, that their stocks are current on the exchange of both countries. It is to be wished, that the same commerce were established in favor of the French funds. Perhaps it might not be impracticable. ^†

I have wandered a little from my subject to correct some mistakes, into which the ingenious author of the Bilan has been led by English writers and others, whom I do not respect [Page 72] the less, although they are deceived. No man need blush at mistaking a road, in which Monsieur de Montesquieu has so often stumbled. These excursions do not appear quite foreign from my subject, to which I now return. The several con­clusions of my system unite in this corollary.

I think I have proved on one side, that the gold and silver with which Europe has been overflown since the discovery of America, and on the other, that the augmentation of com­merce, by which the new world is supplied with so many commodities and manufactures of the old one, have occasioned a revolution in the political, moral, and civil system of Europe; that these metals again require new representatives in their quality of signs, because the abundance of them has multiplied the things they represent; that nothing contributes to support circulation more than the national debt of England; that it has increased the numerary, and co-operated in the fixation of riches; that, without the creation of these funds, the three commercial powers would have less numerary wealth, and could not circulate money enough to answer the triple demand of commerce, finance, and luxury; that taxes return in part into the hand that pays them, and circulate with benefit to the public; that of course they are not so mischievous as it is pretended; that the debts of the state are very useful, up to a certain point; that they have their limits, beyond which they might become equally dangerous; that a sinking fund is essential to credit, and necessary to the state; that in time of peace there cannot be too much care taken to discharge a part of the debt, but that it might be dangerous to pay it off entirely. (I think that a proportionate mass of paper should always be kept in circulation, on terms the least burthensome to the state). That the greatest operations depend upon credit. To be useful, it [Page 73] must flourish extremely; if not, it draws no more than the bucket of the Danaides. (Experience shows that the traffic in the stocks contributes greatly to support the credit and circula­tion of the public funds, and that without this traffic England never could have negotiated those considerable loans, to which she owes her astonishing successes). That, to arrive at the same point, we ought, as much as possible, to model our conduct upon theirs; conforming however, in the execution, to the respective principles of government. I have shown that, if it were not for the India trade, money would have sunk still lower in its quality of sign; that a great part of it is recovered by individuals, who acquire riches in India, and bring them back to Europe; that the observations of the author of the Bilan upon the course of exchange are not solid; that the exchange is a false barometer, a deceitful compass, unless attention be paid to all the circumstances observed by Monsieur de Montesquieu; and that, in a word, the national debt has enriched the king­dom, increased its numerary wealth, encouraged circulation, commerce, and industry, and procured the most important successes in war; that nothing but its being carried to excess can annihilate all these advantages; and that such excess may be prevented by means of the sinking fund, the resources of which shall be more particularly explained in the Second Part.

PART II. New Means of increasing the Sinking Fund of England, and paying off Part of the National Debt.

SINCE there has been a general improvement in knowledge, since all the world has taken a share in commerce, and since the principles of finance are no longer mysterious, nor confined to the adept, every thing may be reduced to calculation. Credit, which was formerly no more than a creature of the mind, ¹ an idol worshipped through habit, has obtained a real existence, may be acquired by system, lost by accident, and recovered by principle. But there are prejudices in all our opinions. They are the alloy of reason, and must be respected or destroyed.

England, with fewer apparent resources than France, pos­sesses a more splendid credit. ² The form of government [Page 76] contributes to it. Yet, if France had pursued the same princi­ples in the operations of her finances, the prejudice against her would have been partly removed. At the beginning of the war in 1755 the French funds wore a better appearance than the English. Far from sinking or giving way, the whole mass of paper supported itself surprisingly. The bare creation of a sinking fund had given a consistence as well as a colouring to paper, and subdued the old prejudices, by which credit had been destroyed. But the plan was not sufficiently considered; the principles were not sufficiently combined; accidents were not foreseen. I am persuaded, that credit would have supported itself longer, if, when the sinking fund was created, care had been taken to apprise the public, that the discharge of debt was to be suspended in time of war, with an assurance that this fund should then serve as a collateral security for paying the interest; the exactness and punctuality of which should be inviolable, as it is in England. Every thing should have been done with the concurrence, and under the sanction, of the parliament. From a want of these formalities and precautions, they were stopped by rivulets when they had rivers to pass. In England the use of the sinking fund was more extensive. This machine of wax yielded to the impression of government, and was applied to the current expences of the war. The funds, by which the interest of the debt was secured, proceeded without interruption; they were solid, sufficient, and inviolable; no part of the principal could be demanded. In the midst of a storm, government glided upon a smooth river, while in France they were carried, away by a torrent. The French sinking fund disappeared like a phantom, and credit was annihilated at the moment it was most wanted. This could not have happened if a solid, inviolable security had been assigned for the separate [Page 77] interest of each loan by a particular tax created, as in England, at the time the loan was made. In France the interest upon all the loans is confounded, and charged upon the Aides, Gabelles, ³ [Page 78] and five great Farms, which the people consider as a sea without a shore.

After these facts, shall it be said that the operation of a sinking fund must be suspended in time of war, as contradictory to, and incompatible with, the new loans which the service may require? I am far from thinking so. The principle may be softened, and greater advantages drawn from it. In France, it was only the form that was defective, and this defect prevailed through all the operations of her finances. In France I have often insisted upon the utility of a permanent sinking fund, both in peace and war. The principles I went upon were not entirely rejected. Some use was made of them; but they were neither carried to their extent, nor, in some instances, strictly adhered to. I am of opinion, that all appearances might have been [Page 79] saved, and an equal quantity of debt extinguished, by reducing the interest of the redeemable annuities, or paying off those who might not submit to the reduction.

In the year 1750, the English government, supported by peace, by an abundance of money, by credit, and a good adminis­tration, was able to reduce all the four per cent. annuities, of which there was an immense quantity, ^* to three, offering at the same time to pay off those who should refuse their consent to this arrangement. Government even punished those persons who refused, or hesitated, by declaring that they, who did not come in within a short limited time, should be immediately paid off; whereas the subscribers should enjoy an interest of three and a half per cent. for seven years longer. By these means few people desired to be paid off. The opportunity was favorable, measures were well taken, and there were some millions in reserve. The Bank, India, and South-Sea com­panies, had been apprised of the scheme, and gained over by government, together with some moneyed men, who had nothing better to do with their money. So that an operation, which in theory seemed difficult, if not impossible, was com­pleted with ease, and wonderful success. In some cases it is easier to execute than to conceive. It is certain that, with five millions only, when credit is well managed, the interest of fifty may be reduced, yet without compelling any body, paying off some few, and offering to pay off the rest. Every thing depends upon the opportunity, and method of using it. France was upon the point of being able to seise a like opportunity; but having neglected to make use of it, they have since been obliged to have recourse to less plausible and less honorable expedients. The example I refer to, is a distinguished fact known by the [Page 80] whole world, and might have been followed with advantage. But the moment is past, and cannot be recalled.

Let us turn to England, where the fire of Vesta has never been extinguished. The public saith, with regard to the credit of the funds, has never been violated, or suffered the least diminution. I have shown by what means credit has been so long supported, and proved that the national debt has enriched the nation by increasing its numerary. I have unfolded the prin­ciples of circulation, together with the utility and the necessity of the funds; acknowledging at the same time, that there was a maximum which must be avoided, and that, if wars were to succeed each other, without a considerable discharge of debt in the intervals of peace, the machine might give way, and draw the ruin of the kingdom along with it. For this rea­son, I affirm, that England stands in need of an auxiliary, per­manent, sinking fund, to operate in time of war, as well as peace. Great advantages would result from it, both to the public and to government. Let us suppose for a moment, that, after some years of peace, the mass of the national debt should be diminished by several millions; that when it was reduced, for example, to seventy or eighty millions only, which is very practicable, a war should commence; and that government, during the war, should continue to pay off ⁴ annually a [Page 81] million and a half at par; is it not evident that this would support the current interest, and prevent its rising? An opera­tion of this kind would give elasticity to circulation. The [Page 82] springs of credit would preserve their activity, and the new loans be raised with so much the greater ease, and upon less burthensome terms. The reader is requested to consider that, [Page 83] since the produce of the sinking fund is not sufficient to answer the extraordinary services in time of war, and since it cannot prevent new loans, it is much better to apply it to its true [Page 84] object, by which the price of the old funds is forcibly kept up, the interest of money of course kept under, and a much greater assistance given to the new loans, than if, by applying the [Page 85] sinking fund to the current service, a million less should be borrowed. This is a reflection, not to say a truth, which I submit to the judgment of those who are acquainted with the magic of circulation and credit. They will be able to unfold the infinite advantages, that might result from it to the English nation. Perhaps it may be no more than a chimera of theory. Let us try whether it might not be realised in practice.

To proceed methodically, let us, once again, consider the national debt and sinking fund analytically. Let us weigh the two objects, and reduce them to their exact dimensions. It has been shown that, properly speaking, it is only the interest that can be a burthen to government. The principal is not de­mandable. With respect to government, it may almost be said not to exist, though it has served and enriched the public. Yet, if this principle were abused, taxes would be perpetuated, and multiply; the weight of the funds would break the springs of [Page 86] circulation; credit might fail, and the whole edifice fall to the ground. I affirm that this period is still very distant. If it were near at hand, the mischief perhaps would admit of no remedy. Considering the debt as it stands, it is evident that, notwithstanding the immense increase of capital debt since the death of Queen Anne, the burthen immediately falling on the public has not increased in the same proportion. The nation has continued to borrow sums, the interest of which she would have been unable to discharge, if means had not been taken, consistently with justice and good faith, to reduce the rate of interest; and, although the sinking sund (composed of the surpluses of taxes appropriated to pay the interest, and assisted by voluntary reductions of interest, to which the creditors con­sented rather than be paid off) has not produced all the effect that might have been expected from so wise and necessary an institution, yet it is certain that considerable sums have been paid off, and that public credit has been supported by the expectation of a constant annual reimbursement. A sinking fund increases in proportion as it is employed. The progressive accumulation of annual interest saved by every discharge of debt, and united to the growing capital, in a few years pro­duces a prodigious fund, let the commencement of it, or savings upon the first payments, have been ever so inconsiderable. The geometrical progression of such a fund is immense, and astonishes the imagination. It is a shallow stream that becomes a river as it flows. It is true however that, to avail themselves of this progression, the English have been obliged to continue the taxes, appropriated to pay the interest of old loans, after the principal was discharged. I shall speak hereafter of the means of lessening this inconvenience.

[Page 87] The sinking fund was much more considerable than it is, and amounted to above three millions sterling. But it has been charged with eight hundred thousand pounds a year to sup­port the civil list, ⁵ and to make good the deficiencies of all the appropriated taxes, as well as to secure the interest and principal of the unfunded debt; which is but just. I leave it to the English to calculate to what sum the clear applicable pro­duce of their sinking fund, as it stands at present, may amount. It is certain that if, after the first year, it were every year successively augmented with the interest of the debt paid off, conformably to the nature of its institution, we should see a prodigious increase of its power at the end of a dozen years. If at that time (I speak always hypothetically) the discharge of the old debt was continued in proportion to the power of the fund, the price of stocks could never fall, because the quantity being diminished, and consined to fewer hands, every creditor would have a chance of being soon paid at par. New loans might then with ease be negotiated on moderate terms, and with a trifling douceur to the subscriber. But an operation of this kind, in the present enfeebled state of the sinking fund, would be too tedious. The uncertain continuance of peace, the clamour of opposition, and the enormous mass of the debt, con­stantly represented as a bugbear, make an impression too strong to agree with so slow a remedy. Some operation like that of the [Page 88] year 1750 is wanted, brilliant in appearance, and rapid in its effect, by which all the phantoms, that undermine public credit, and spread uneasiness among the people, might at once be put to flight.

The following, for instance, is an operation, by which I con­ceive twelve millions and a half of the mass of the national debt might be cancelled, that is, they might be converted into a fund so constituted as to discharge itself, by applying 527, 500l. a year out of the sinking fund for a certain number of years, part of which sum would be gradually recovered every year. The method I propose, would be to open a subscription for creating life annuities ⁶ at seven and a half per cent. and [Page 89] to receive at par, either the four per cents. redeemable in 1761, ^* or any of the three per cents. or money, without distinction. As the three per cents. are still at ten per cent. discount, ^† a [Page 90] life annuity at seven and a half per cent. is more advantageous. The confidence reposed in government, and in the good faith of parliament; that extended luxury, which invites almost every man to increase his income; the great mass of the annuities; the wish that possesses many fathers of families to secure some [Page 91] little life annuity to their children, as a resource in case of need; all these motives united would, I am persuaded, in a little time have the effect of converting twelve millions and a half of annuities into life annuities, with the loss of the prin­cipal, and greatly diminish the phantom of the national debt. The interest of the twelve millions and a half thus discharged, viz. of three millions and a half at four per cent. and nine millions at three per cent. would increase the sinking fund in the sum of £.410,000 a year, and with the help of £.527,500 taken from the sinking fund, would pay the life annuities without a new tax. The sinking fund would still remain strong enough to make some farther annual reduction of debt. It would every year acquire new strength by the growing interest of debt so reduced, and by the life annuities gradually falling in by the death of the annuitants. The surplus of interest dispersed through the public would in part return into the old funds, where the annuitants vest their savings. As the mass of stock diminishes, the price rises. Credit acquires new strength, and the formidable body of the old debt being reduced, the circulation of it would be so much the less liable to be embarrassed.

This operation, I should think, might be repeated with success a year or two after the first conversion of principal debt into life annuity, and the most obstinate unbelievers be con­vinced, that it is possible to overcome the colossus of the national debt, and to reduce it to a size which it would be imprudent and dangerous to lessen; for I have demonstrated, that it is absolutely necessary to maintain a considerable circulation of these factitious riches, which were created and are supported by credit, and which credit itself stands in so much need of.

[Page 92] By this scheme it is possible to extinguish twenty-five millions of principal debt, converting them into annuities, which gra­dually discharge themselves, and applying only a part of the sinking fund. The root of this fund would still be preserved, with a new produce from year to year, and soon recover its original condition by the falling-in of the life annuities. It is also to be observed, that as soon as the mass of life annuities is annihilated, the sum of £.527,500 is restored to the sinking fund. The recovery of this sum would begin to be felt even in the first few years, considering the multitude of annuitants, and the great mass of the subscription. Yet there is no fear of the whole subscription's being too great to succeed, as well for the reasons already stated, as because in the first instance it is but ten per cent. upon the national debt. This is certainly very far from being a tenth part of the fortune of in­dividuals, and every man is glad to lay out a small portion of his property in a life annuity. The same operation might pro­bably be repeated twice or thrice after the first attempt had succeeded. The eagerness, with which people in France vested their money in life annuities in ticklish circumstances, confirms me in my conjectures.

When these operations have taken place, some measures should be fallen upon to increase the sinking fund, and to divide it; appropriating one part to a perpetual and permanent ex­tinction of debt, not to be interrupted in time of war; the other, incorporated with the savings on the life annuities as they fell in, not to be applied, nor to subsist beyond the discharge of a certain number of millions; when these are paid off, the nation to be relieved from a proportionate quantity of taxes. There would then be some periods at which taxes would be taken off; an essential point never thought of in England. It belongs to [Page 93] the profound genius of the English, to quicken these principles, and bring them into practice.

Nothing in my opinion could be more effectual, nor less bur­thensome, towards creating an auxiliary and permanent sink­ing fund, than a tax upon collateral successions. ⁷ It may be objected that, as this would be taxing the funds, there would be a violation of public faith. The objection I think is not well founded; this collateral tax, in the first place, has been univer­sally adopted ever since the time of the Romans. It is the mildest, and the least unjust. When once imposed with the concurrence and consent of the nation, under the sanction of parliament, there is nothing to be said against it. It should be softened in degree, and not take place at all with respect to foreigners who have money in the funds; for this would be an [Page 94] injustice, and credit might be affected by it. A tax upon collateral successions, applied strictly to the use of the sinking fund, would considerably diminish the colossus of the debt. It might be continued no longer than till the debt should be reduced to seventy millions sterling; or it might be continued for ever, and the respective taxes, raised to pay the interest of loans, might be abolished as fast as the several loans were paid off. A measure of this kind would gratify the nation, relieve the lower orders of the state, and favor manufactures. We should then have a pleasing prospect before us. ^*

I know there is still a more simple method to create a new sinking fund, or to give a considerable increase to the old one; I mean by an equal land tax. It is admitted in England that, if the land tax were upon a just and equal footing, it would produce double what it does. But is there patriotism enough to submit to a new assessment? I question it. Yet necessity, fear, [Page 95] and policy, may have an influence upon hearts the least patriotic. To support the strength of my assertions it is sufficient to have shown, that resources are not wanting, and that with a wise administration, a well-considered system, and a careful oeconomy, (the most important, though in England the most neglected article of all) this national debt, which is the subject of so much clamor, is in its own nature very different from what it has been represented, and capable, in point of quantity, of a con­siderable diminution; that it depends upon the English nation, not only to obviate the bad consequences of their debt, but to render it still more useful to credit and circulation, by preventing an excessive accumulation, which in time might be fatal.

The strong remonstrances made by the French parliaments on the subject of taxes during the war, though filled with sublime reflections worthy of those venerable bodies, contributed not a little to the diminution of public credit, and to the low price to which all the royal funds were reduced. This could not fail of greatly embarrassing every measure of finance, and perplexing the ministry in their military operations. The writings of persons, who oppose government in England, on the subject of the national debt, have contributed to sink the price of stocks ten per cent. below par, and laid a constant check on every operation of finance. Yet these writings are of a nature widely different from the remonstrances of the parliaments. The authors are, for the most part, apostles without mission; and for one paper written in good earnest to inform the nation, and charitably to warn it against real danger, there are ten that proceed from mere ill humor. The former are excuseable at least, if not praiseworthy. The others have no pleasure, but in discovering the pretended weakness of their country. They [Page 96] make no scruple of prostituting that country which is their common mother, without any use, and merely for their amusement.

Anti-ministerial writers have clamored loudly against the misapplication of the sinking fund, and at government's having lately departed, in some instances, from the invariable rule of appropriating separate funds for the interest of new loans, and having charged the interest of the unfunded debt against the sinking fund. The reproach is not without foundation; but as the instances are of no great importance, the consequences of them have been maliciously exaggerated. The arrears of the war amounted to a considerable sum. The last loan, in 1761, though not sufficient to clear them off, met with so much con­tradiction in the article of the cyder tax, and the opposition was so powerful, that the ministry thought that, in time of peace, the sinking fund might gradually discharge the unfunded debt, as it has done in effect from year to year. ^*

An objection has also been raised against making the sinking fund answerable for the civil list, and for all deficiencies in the given produce of the other funds; but, according to the present system, I do not think the objection founded; especially as, on the other hand, some beneficial articles have been incorpo­rated [Page 97] with the sinking fund, by which, in a little time, it may expect to be augmented.

Yet the clamors of the opposition appear to deserve some attention. No possible method should be neglected to make the sinking fund more effectual, and to give it consistence. The means I have pointed out seem to me not to be neglected. I insist upon the necessity of creating an auxiliary permanent fund of redemption, that may operate equally in peace and war.

A permanent fund of redemption, constantly improving by the interest of the debt it discharges, a tax upon collateral successions, a tax upon the transfer of funded property, ⁸ [Page 98] and periods fixed for lightening the burthen of taxes, are effectual methods to support public credit. The system I proposed in France was not pursued. The reduction of interest should have been made without a direct diminution of the capital, and apparently with the free consent of the proprietors. This, after the peace, was practicable, if a right plan had been pursued. When once the original contracts were violated, there was no remedy. Yet I confess the tax upon transfers, attempted in France, might have been of service, if precautions had been taken not to check circulation. In their present form, they are too heavy, and produce less than a more moderate tax would do, because the transfers are less frequent than they would be. No man regards one per cent. more or less; but five per cent is an object, and fetters all dealings in the stocks. ^*

[Page 99] The quantum of the tax upon collateral successions might be proportioned to the degrees of relation in families, as they are more or less removed. There are powerful reasons, why foreigners should not be subject to it. The same reasons do not hold with respect to the tax upon transfers.

The French government would have done right in exempting the tontines from the dixieme, or tenth penny; because life annuities and tontines have always been considered as an in­violable security; so much so, that when credit gave way, and money was not to be had upon any terms, every body sub­scribed to the life annuities and tontines, and sunk their capital almost at as low a rate of interest, as they might have received from the other funds already in the market, on which a consi­derable profit might have been expected at the peace, and [Page 100] has in effect been made. A prejudice of this sort should have been respected and encouraged, as a resource against an extra­ordinary emergency. The existence of a state is not momentary. Some care should have been taken of posterity. It is not merely removing a symptom. We should go back to the source of the disorder, and endeavour to preserve the vital principles of existence. Empiricism in politics is as dangerous as in medicine.

In the French edicts of the year 1763 it was insinuated, that the plan of discharging the debts of the state was so serious, that it was proposed to extend it to the life annuities and tontines. The intention was excellent, but it produced a contrary effect. Life annuities are not of a redeemable nature. ⁹ To redeem them is, in the first place, against the interest of the state; and, secondly, against the intention and interest of the proprietors. This is less a paradox than it may seem. Redeeming life annuities is against the interest of the state, because the burthen of itself diminishes every year. The fates are inexorable financiers. It was observed to me by a man of character, that life annuities make the pot boil at Paris. The increased income of individuals circulates to the advantage of the revenue. [Page 101] Besides, when this string is touched, the state gives up the only resource it has left in the midst of failing credit and distress. To redeem the life annuities is also contrary to the interest and intention of the proprietors, who purchased them with the sacrifice of their capital. They sunk their money upon these annuities in the heat of the war, when they might have made double the interest of it that they could in time of peace, besides the great chance of the value of their stock rising at the end of the war; whereas they have no opportunity of making the same advantage, in case they should be paid off. They sunk their capital with no other view, but to have an in­violable revenue, which their situation required, on which some have regulated their expences, and many their existence. Others prudently intended to secure some little resource to their children against a moment of distress. To redeem these annui­ties would overturn the principle on which they were created. It would make a prodigious alteration to individuals in the means of their subsistence, and the public would feel the bad effect of it. I know what has been said to the disadvantage of life annuities. There is something specious in the argument, that they are prejudicial to posterity. ^* Every thing has its inconve­niencies. [Page 102] Good cannot exist without evil. But the world, such as it is, the style of the age we live in, our luxury, habits, and customs, make all these evils inevitable. Let us become Spartans, let us remove to Lacedaemon, let us new-model our manners, and adopt those of ancient Greece; I shall then admit the reality of principles contradictory to those I now establish. But, to return to the English.

For the present it is sufficient to observe, that, if in England the necessities of the state should be ever so pressing, yet, before a national bankruptcy, with which the public is unreasonably threatened, could take place, recourse would certainly be had to the expedients I have pointed out, viz. An application of the present sinking fund, a new assessment of the land-tax, a tax upon collateral successions, a light tax upon transfers, a capi­tation, ¹⁰ a small duty upon articles of consumption, upon offices and employments, and an operation of finance, by which, with the assistance of the sinking fund, a portion of capital debt might be converted into life annuities. None of these resources have yet been touched, but all of them will probably be [Page 103] exhausted before the kingdom is reduced to that situation which was prognosticated at the death of king William, when it owed no more than twenty millions sterling. Diogenes, to prove the reality of motion against the sophistry of Zeno, got up and walked. We need only follow the history of facts, to refute by experience every thing that has been said concerning the national debt, since the beginning of the present century. My system is proved by a concurrence of unquestionable facts, which show how much we have been misled and alarmed by phantoms of our own creating. If this Treatise on Circulation had been written seventy years ago, the theory of it would have been every year confirmed by practical evidence. The principles, on which it rests, are demonstrated by experiment concurring with speculation.

Of all the writers, who have been deceived with regard to the national debt, none surprised me more than the celebrated Mr. Hume. I had the honor of knowing him at Paris, and observed with infinite pleasure, that his disposition was superior to his understanding. It is to truth that he is indebted for this elogium. ^* This great man, before the last peace, had written an Essay on Public Credit, which I had not seen when I drew up the first part of my Essay on Circulation. It was mentioned to me afterwards, and I was concerned to find that my own Treatise seemed exactly a refutation of his. He read it some time after at Paris, together with the Letter in which I have endeavoured to prove that the jealousy of commerce is ill understood, and that the true interests of princes are not at variance; and he was pleased to express his approbation of the two essays in terms which I [Page 104] cannot venture to repeat. That sublime genius had also touched the subject of the jealousy of commerce. If he had unfolded the principles of his system more at large, I should have sup­pressed my letter. The hope that he will do it one day or other, and the approbation with which he honored that little treatise, determined me to publish it. I flatter myself, that Mr. Hume will also correct some of his ideas on circulation and public credit. He may be right in a certain sense, when he foretells, that either the nation must destroy public credit, or public credit will destroy the nation. It must undoubtedly happen so, if precautions were not taken. I believe I have made him easy upon that point; yet I cannot refrain from sug­gesting to him, with all the submission due to his understanding, that he advances another proposition, the consequences of which might be as dangerous, as the principles on which it rests appear to me to be questionable. Mr. Hume says, that, if a spunge were applied to the national debt, thousands would be sacrificed to the safety of millions. Without enquiring whether honor is, in any case, to be sacrificed to advantage, I affirm only, that the millions would for a long time feel the sacrifice of the thou­sands. Mr. Hume did not consider, that if three millions sterling, paid in annuities within the kingdom, were suppressed, the suppression of those three millions would stop a circulation that represents perhaps thirty millions in expence; that every order of the state, even to the beggar, would feel the effects of it; and that the source of taxation would be dried up. Consider the example of the circulation of a single crown piece, stated in the First Part of this Work. If such an event should ever take place, people would kneel at the sight of a guinea. We have seen an instance of this distress in France, where things were never carried to that extremity; yet the French funds never [Page 105] had an easy circulation. The constitutions of the two kingdoms are very different. The resources of France are infinite; yet, upon the fall of Law's system, the desolation was almost univer­sal, although the spunge was very far from extending to the whole national debt. In that case commerce would be at a stand; a public bankruptcy would draw along with it the bankruptcy of a great part of the merchants, whose means and credit would be annihilated; industry, for a time, would cease to exist, or be compelled to quit the country; agriculture would feel the con­sequences. The fire would extend far and near, and the confusion become universal. The state, the government, would be without resources. So dangerous a convulsion would bring us to that fatal period, at which the breath of an infant might overturn the state. We might then say, with Montesquieu, that there would be nothing left of the picture of the state except the frame, liable to be broken by the least external effort.

I am persuaded that, when Mr. Hume wrote the above essay, he had not yet made an exact and commercial analysis of circu­lation, of the nature of the funds, and of the effects of annuities. He had been struck with some truths disadvantageous to paper and credit, and which had interrupted the sight of others, calculated to correct the inconveniences attending it. Thus it often happens, that truth leads to error, and error to truth. To arrive at truth, we must separate delusions, and sift falsehood to the bottom. Mr. Hume observed, that multiplying the representative signs lowered the value of specie. But he did not consider the necessity of having such signs to represent the multitude of things, which the abundance of gold and silver has in some measure rendered necessary. Let us new model our manners; let us go twenty centuries back; let us reduce human nature to its primitive condition; let us banish those factitious [Page 106] wants which we have changed into necessities; let us be philo­sophers, and with Diogenes reject the earthen vessel, and drink out of the hollow of the hand; let us be poor and virtuous, and Mr. Hume's principles may then be applied. But since there is no likelihood of such an alteration sor some centuries, we may as well pursue our course, and endeavour to correct abuses. Let us imitate Solon, who gave the Athenians the best laws they were capable of receiving. We must often live with our enemies, and compound with our infirmities. Imperfection is our inhe­ritance, and little inconveniences must be preferred to great ones. Though we may be assured that death will come, let us not kill ourselves for fear of dying. Every state, let its political constitution be ever so well devised, carries within itself the principle of its dissolution. If Rome and Sparta perished, what state can hope to endure for ever? We must not attempt to govern a corrupted people by the same laws which suit a virtuous people. The expression is severe; but the principle of that austere philosopher may be applied to the question before us. England, in all appearance, will suffer the fate of other states that have gone before her. But let us not encroach upon providence. The period seems yet at a great distance.

They, who have undertaken to apologise for luxury, have run into another extreme. Their view of that multiplied circu­lation, which encourages industry and commerce, has not been complete. They did not consider, that circulation is maintained by a daily expence, permanent, solid, and constantly kept up; [Page 107] whereas excessive luxury, by disordering the various springs on which the fortunes of individuals are balanced, and exhausting their resources, is injurious to industry and circulation. The numerary wealth of a great number of individuals is annihilated by a forced luxury, and is not dispersed through the public, as hath been falsely imagined. This is the great point of the question. I do not condemn that expence, or relative luxury, which is proportioned to the means and rank of the individual; but that which confounds all ranks, which renders so many persons the victims of opinion ill understood, makes them glitter for a moment, then banishes them to obscurity, from which they never emerge. This is the luxury which I affirm is destructive.

Excessive luxury in England has given birth to another vice, to which the enormous increase of the debt may truly be ascribed. The character of the nation is to carry every thing to excess; virtue, vice, every quality is pushed to an extreme. The English have no oeconomy in their expences in time of war. They do that with more, which might be done with less. No man, I presume, will venture to deny, that they might have done as much with one third less expence. The immense and rapid fortunes, made by their contractors in Germany, exceed all that we have heard of by the financiers in France. Plunder, waste, and rapine, as we are told, were carried to the highest pitch; and how could it be otherwise, when the annual expence amounted to near three times as much as in the war of 1744? The annual loans were then from three millions to three and a half; in the last years of the late war they were carried to twelve. The efforts, I confess, were more vigorous, and the successes more brilliant; but by no means in that proportion. [Page 108] A prudent oeconomy is the most essential method of all to recover the finances. ^*

The frugality and manners of the Swiss have made the canton of Berne very rich, in spite of a barren soil, and a territory with­out sea-ports, mines, or manufactures. A Venetian ambassador once observed to cardinal Richelieu, that France, in order to be rich and easy, wanted nothing but to know how to spend the money she lost in waste and dissipation. The observation might equally be applied to England.

The English are naturally prodigal. They readily give into extremes, and know nothing of moderation. The legislature will find it so much the more difficult to set bounds to avarice, and to re-establish an oeconomy so necessary to the well-being of their affairs. Sooner or later they will be compelled to have recourse to the means I point out to increase their present sinking fund, and to create another of an auxiliary and permanent nature; to establish a more oeconomical administration, and to adopt a pacific system for the future.

PART III. Of Finances, Taxes, and Agriculture, considered principally with respect to France. Refutation of the Principle, which reduces every thing to the Territorial Produce.

MONSIEUR de Mirabeau, in his Theory of Taxation, affirms, that it would be the philosopher's stone to the state, to make the machine of finance move in regular tracks, not only without exaction, without rigor, or expence, but from a spirit of emulation. He thinks he has discovered the secret, but I fear he is deceived. His heart has misled his understanding. The works of this virtuous citizen, this amiable philosopher, are replete with genius, sublime ideas, and views equally new and profound. True patriotism, humanity, and the friend of mankind, appear in every part of them. Yet, in his Theory of Taxation, I think he has deluded himself with an impracticable system. He first of all thought he saw devouring monsters, and ruin near and inevitable, where at the worst there were only inconveniences, and grievous abuses. The principles he sets out with are sometimes true. In the application to practice, and deduction of consequences, I think he loses his way. Other principles, which he lays down as axioms, are contradicted by experience. Nobody will dispute with him, for instance, that agriculture is the organical action of a state, whose riches belong to the soil; or that restraints upon agriculture debilitate the [Page 110] powers of the state, and retard that action which gives life to its prosperity. It will be admitted that the collection of taxes in France is too complicated, too expensive and severe, and by that means too heavy, and in some articles oppressive. It should certainly be reduced to greater simplicity in the mode; it should be alleviated, and softened in degree; and abuses should be corrected. But to represent France as on the brink of ruin, or to conceive that the taxes, in their present state, far exceed the sphere of the contributive faculty, is an exaggeration, which experience does, and will long, contradict.

The result of the Theory of Taxation amounts to this. First, that a state like France, whose riches belong to the soil, has no real revenue but its territorial produce. Secondly, that taxes should be laid at the source of production. Thirdly, that there should be an entire exemption in favor of labor and industry; that all the present taxes and duties should be abolished, and the very name of finance and farm be proscribed. Fourthly, that a general capitation tax should be established, which, by sup­pressing the expence of collection, may produce more, and cost less. This expence, according to him, absorbs a third of the taxes, and is the cause of general destruction. Fifthly, that this office should be intrusted to the municipal magistrates. Sixthly, the author affirms, that the real revenue of France does not at present amount to any thing near the taxes that are levied, and that loans are ruinous.

This system is almost the same with that of the author of the Bilan with respect to England. I shall therefore confine myself to one general argument on the subject, and examine in a summary way some of Monsieur de Mirabeau's detached maxims, in order to confirm the principles I have already laid [Page 111] down, and throw a new light upon the preceding parts of this work.

The Theory of Taxation dwells much upon the high price of articles of consumption. We have already observed, that the quantity of the metals has lowered the value of money in its quality of sign. A man now, with a much greater numerary wealth, is not richer in proportion than he was a century ago. But it is in vain to say that the mark of silver is nominally worth double what it was in the time of Harry IV. and that Lewis XV. with a greater numerary, is not so rich as his pre­decessors. ¹ There must be some fallacy in the assertion; for [Page 112] every thing is not doubled. The soldier's pay stands as it did in the time of Harry IV. and bread, as well as many other important articles, are nearly at the same rate they were then. Besides, as Voltaire observed, it costs no more at present to be well and agreeably lodged, than it did under Harry IV. A house may be adorned with beautiful glasses of modern manu­facture, [Page 113] at a much lower price than it could have been formerly with the little glasses imported from Venice. Our fine showy silks are not so dear, yet much better than those which we used to purchase of foreigners. Besides this, it cannot be denied, that the number of people, rich and at their ease, is much greater than in the time of Harry IV. nor that the income of many persons is doubled and trebled, which cannot fail of increa­sing the revenue of the prince in the same proportion.

It is also to be observed, that if the first wants, being the most urgent, are supplied out of the first half of a man's income, the power of contribution arising from the other half may not only be double, but quadruple what it would be if he had only half his income. Let me explain myself by an example. A man, whose annual income is fifty thousand crowns, is twice as rich, in point of numerary, as one who has only twenty-five thousand with the same establishment; but his power of faculty and contribution is in a much higher proportion, as well with respect to articles of fancy, as to works of charity, and expences of ornament and vanity; whereas he who has only twenty-five thousand crowns, finds his revenue absorbed in the [Page 114] first wants annexed to his station, supposing him to figure in the world, and to maintain a certain rank or establishment. He has but little left to gratify his fancy. If, therefore, Lewis XV. be not quite twice as rich, nor twice as powerful, as Harry IV. yet, since the numerary of his revenue is doubled, and since he has a greater number of wealthy subjects, he must at all events be considerably superior both in wealth and power. As for those fiscal abuses, imputed to the present age, they have prevailed at all times, and, with a weak administration, enervated, in some degree, the contributive faculty of the subject. It is a fever incident to great states. The seeds of such disorders are as inevi­table as those which undermine the human constitution. Yet the remedy should be sought, and where specifics cannot be found, palliatives may be applied. But I affirm boldly, on a train of reasoning confirmed by experience, that the project, which has so long seduced the world, of reducing all taxes to a single one, by way of capitation, and of abolishing all other taxes whatsoever with the expences of collection, is a chimera in such countries as France, England, and Holland. The attempt was made in Holland in the year 1749, and the fallacy was soon perceived. It was found to be utterly impossible to levy those sums upon the public, which the state had occasion for, by any other means but duties upon articles of consumption, where the tax is confounded with the price. This method is the least felt, and the only one feasible. The inconveniences resulting from it, how great soever they may appear, are far from being so dangerous as they are represented. I have shown the truth of this position in the First Part of this Essay, and in the sequel shall offer fresh proofs in support of it.

Holland itself constitutes a demonstration, that Monsieur de Mirabeau's principles are not well founded. If taxes were not to [Page 115] be collected, but immediately at the source of the subject's revenue, as Monsieur de Mirabeau supposes, and if nothing were to be exacted but a portion of the territorial produce, Hol­land long ago must have ceased to exist. Her alimentary productions are but few; she has scarce any arable land, vine­yards, or woods. On this side all her resources consist in a few meadows; yet the republic pays troops, maintains a marine, and has often figured on a level with the first powers of Europe. Taxes of every kind are heavier than in France or England; yet the state is not ruined by them, but subsists with opulence. If the jealousy of her commerce had not excited such a number of competitors, the state would scarce have felt the effect of the exorbitant taxes levied upon the subject. Bread, an object of the first necessity, pays a duty that nearly doubles the price. Every article of consumption pays more than in France. Capital stock of all kinds, such as houses, actions, contracts, lands, are still more loaded. Yet Holland flourishes, and the machine of finance preserves its course. It is the magic of credit and circu­lation that produces these salutary effects. This credit and circulation are not therefore so mischievous in practice as Mon­sieur de Mirabeau suspects. We must yield to the evidence of a constant, uniform, decisive experience. The opulence of the rich man, through the medium of circulation, supplies the poor man and the beggar wherewithal to pay a tax to the state, in the consumption of the edibles on which he subsists. The beggar obtains the mere physical necessaries of life more easily at Paris, London, or Amsterdam, than at Montauban, York, or Overyssel. Circulation and credit are two springs, the play of which is not thoroughly understood. All the gold and silver of Europe and America, that is wasted in Indostan, does not enrich the inhabitants of that country. The Indians are poor; their [Page 116] princes amass treasures and stop circulation, which has no credit to support it. Taxes upon consumption not only make the beggar, but even animals, beneficial to the revenue, and conse­quently to the state. They, who have been seduce by the idea of a single tax, and of suppressing the various ramifications of taxation, do not know that, in the richest and most opulent states, the number of persons who possess a real fortune (I mean, of those who would be subject to a capitation, and who, in Holland, are called the Capitalists) is very small in comparison with the other inhabitants; whereas the number of those who, without any real fortune, live at their ease, and at a higher expence than common housekeepers, is very considerable. It is their industry, employments, and various talents, that constitute their resources. They are not rich, yet they live as expensively as if they were so. They cannot possibly be taxed in that high proportion, which would be necessary to form an equivalent for the suppression of all other taxes. It has been found impossible. I speak from fact. This point has been thoroughly examined by the ablest financiers in Holland. When the tax is charged upon edibles, the circulating money returns in part into the public treasury, from which it issued. It multiplies as it runs, and cir­culating successively through twenty different hands, enables each of them to continue the expence of the preceding year, and always with the same specie. A great man, who spends a hundred thousand florins a year, at once returns twenty thousand to the public treasury on the head of his first expence; but this is nothing compared to the reverberation of expences, which the inferior ranks, and these again subdivided into still lower orders of men, are, by his magnificence, enabled to engage in; so that, at the end of the year, it is possible that the whole hundred thousand florins may have passed with benefit [Page 117] through the public treasury, and issued out again to supply the various channels of circulation. In spite of all that has been said to the contrary, the annuitants contribute greatly to maintain this happy circulation. Taxes are, in reality, no more than a momentary reversion of certain portions of property, which individuals suffer to pass annually through the treasury, for their own preservation, and which return wholly, or in part, into the hand that pays them. There is a perpetual circle of retribution from the sovereign to the subect, and from the subject to the sovereign. All the declamations, that contradict this definition, prove too much, and lead to the absurd.

We are for ever told, that France and England are undone, though experience shows us that the two kingdoms are still in a flourishing condition. There are enormous abuses, I confess; yet even these abuses prove the vigor of the constitution. The substance saves the form. They will never be corrected by the means of an universal tax, much less by a land tax to be paid in kind; another chimera in our European constitutions. Such modes of taxation might answer in a sacerdotal government. Among a people collected into a small territory, a tithe in kind of the productions of the earth, with the assistance of a small capi­tation, might be sufficient to answer all purposes. But since the powers of Europe have thought it necessary to their tran­quillity at home, and security abroad, to maintain armies and fleets in time of peace, such a plan would be ineffectual. Besides, there is no state now in Europe, except Poland, that consists merely of farmers. Commerce, the fisheries, luxury, paper security, the public funds, various manufactures mul­tiplied in every branch, factitious riches, now constitute the mass of property. In the general system, the secret of administration consists in combining these different objects, without suffering [Page 118] them to interfere with each other. To proscribe, to abolish, or decry them, would be overturning the edifice. But, as the system itself is, in some degree, a new science, ^* we have yet got no farther than the elements of it, and are still groping our way. From hence have arisen the mistakes of so many ingenious people, who have discoursed upon the public funds, credit, and circulation, applying obsolete principles to the present state of taxation, finance, population, and agriculture. Some great genius will, one day or other, discover the true proportion of the new system of policy, by analysing the springs that give it motion, and explaining the internal play of the wheels. In the mean time it will happen, as Monsieur de Mirabeau observes, that, while we endeavour to accelerate the motion of the wheel, the impression will be too heavy upon some parts, and discompose the rest, by which the progress of the machine will sometimes be stopped. In the present state of things, the most important object of all political science is the mode of collecting the revenue; for on this point, undoubtedly, the whole effect of it depends, as well as the harmony of the state. The question is to find out rules clear, exact, and certain; hoc opus, hic labor est.

There is one great inconvenience, attending an universal tax by capitation, which, if in itself it were a practicable measure, would still make it a dangerous one. Such a tax would take too great a quantity of money out of circulation at once, and make specie extremely scarce at every period of collection; which can never happen, as long as it passes through the multiplied channels of consumption. The intervals between receipt and distribution are kept in equilibrium; and this is so true, that [Page 119] in Holland, where the plenty of money has made it a kind of merchandise, specie became extremely scarce, from an accident of the above nature, in the year 1747. To answer the demands of the war, a method had been thought of to raise a large sum of money, without borrowing. All the subjects of the republic were induced to contribute, ² by way of free gift, the fiftieth penny of their whole property at four periods. The amount must of course be considerable. To prevent the inconvenience above mentioned, the treasury were obliged to make out receipts, which they distributed among a number of private persons for the respective periods of paying in the fiftieth penny, in order to prevent that stagnation, or stop of circulation, which must have happened, if so large a sum had been deposited in the treasury at one payment. This paper facilitated circulation, and brought forth specie, which would not have appeared without it.

To amass at once, for any given time, let it be ever so short, a great quantity of money in the public treasury, must necessarily choak circulation, and produce the heaviest inconveniences. [Page 120] This can never happen in the mode of laying the tax upon con­sumption, where the collection is insensible, successive and gradual, and thereby gives time for the money to issue out of the public treasury, and circulate again through the public. A hundred observations, confirmed by experience, prove the truth of what I advance.

Nothing is more changeable than the fortune of individuals. Some are enriched while others are impoverished. A capitation, or universal tax, must be rectified every year; and in the first instance it must be a heavy tax that is an equivalent for all the rest. The machine would be for ever out of order. What an embar­rassment! The impossibility of the project strikes in every view. A capitation can never be any thing but a supplemental measure; it never can produce a tenth part of the tax upon consumption. The utmost use that could be made of it would be to redeem the taxes which interrupt and retard the labor of the plough. In this single view it might perhaps be practicable and beneficial. As for the rest, experience must be our guide. It is certain, that formerly the farmers general in France amassed fortunes with an indecent rapidity; but this abuse is now greatly dimi­nished. We no longer see that opulent quarantine, ³ nor those armies of one part of the nation employed to ruin the other. Among the number of financiers, there are true patriots, men of sense, and virtuous citizens. Their occupation is odious, but it appears to be necessary. Their subalterns sometimes commit acts of atrocious violence. But abuses of this kind exist in armies commanded by the best generals. Many of these financiers and their adherents, when they do not ruin themselves by an ex­cessive, insulting luxury, are, without doubt, highly serviceable [Page 121] to the state. They are enabled to assist circulation and credit, and in spite of all that can be said by people who do not under­stand the principles of finance, it is the combination of those two agents that supports the machine. In Holland, the farms subsist, although the farmers are abolished. Collectors have been substituted in their room. The change of name was intended to satisfy the people, who never can be satisfied. The wisdom and patriotism of the stadtholder, supported by the zeal of the magistrates, have improved the finances, and corrected in part the abuses they were subject to, yet without abolishing the farms. The same thing ought to have been done in France, where the abuses are more considerable, and perhaps more difficult to correct, from the complication of laws and privileges in every province, and their distance from the centre of administration. I have endeavoured to make myself master of the management of the farms in France. It appears to me that misfortunes are often imputed to the farmers general, which it is not in their power to remedy, and which are always exaggerated. Yet, for the welfare of the kingdom, it were to be wished, that proper measures might be taken to remedy these inconveniences, which are not the less dreadful because they appear unavoidable. Heavy taxes are collected in England upon a more simple and less expensive plan. Their method perhaps may be assisted by the constitution and local circumstances of the country. Whether or no it be practicable in France, or whether it be possible to institute that register which all the world talks of, and nobody understands, is a question yet undetermined.

Monsieur de Mirabeau affirms, that the magistrates and municipal officers are the natural collectors of the tribute, which the subjects, in their respective jurisdictions, owe to their sovereign. The idea is seducing, and perhaps the measure may [Page 122] be right. Yet I do not know whether it would not meet with insurmountable difficulties in practice, and whether, after a certain interval, the same things would not be said of them, that are said of the persons now employed in the collection of the revenue. It is not generally admitted that the provinces of France, which remain en pays d'Etat, have any advantage over the rest. I am not sufficiently acquainted with the fact to pro­nounce upon that mode of collection. The minister un­doubtedly perceives the effect of it, and probably knows what to trust to. He will adopt it, if it be such as it is represented. The succession of steps and hierarchical jurisdictions, which Monsieur de Mirabeau would fain proscribe, seem in some degree indispensable in every mode of collection. The increase of expence, arising from them, will be a stumbling-block in every system. As for the rest, I confess, that in the Theory of Taxation there are some sublime ideas, which I admire and respect. All that the author says upon the subject of salt and tobacco seems to deserve the attention of the French ministry. It has often been observed, before Monsieur de Mirabeau, that the produce of duties is in proportion to their lightness. A moderate duty should naturally put a stop to contraband, and save the wasteful expences of management. The over burthen of these expences falls upon the sale of the commodity, and lessens the consumption. These truths appear incontestable; yet in Holland we have often seen, that the diminution of duties at the custom-house has not taken effect, nor prevented contraband. European nations, though Christians, do not always follow the gospel; they do not always give unto Caesar the things that are Caesar's. Every tax, every duty, every custom, is paid with reluctance. We should endeavour to prevent this abuse; for the principles above mentioned appear to me essential. The same [Page 123] thing cannot, in my opinion, be said of his other principles. Such is the necessity, he supposes, of constituting a public treasure. I shall hereafter prove it to be a hurtful, dan­gerous, and useless measure. I have the same notion of his project of abolishing every imposition upon barren property, on stocks, houses, subsistence, employments, deeds, and luxury. It is a patriotic enthusiasm, founded upon metaphysical ideas, which never can be applied to the actual constitution of things. His declamation against the public funds, credit, and circulation, is of the same nature, and has been already refuted. Another observation occurs to me. The sovereigns of Spain and Portugal, with all their treasures of Peru, Mexico, and the Brazils, never conceived the idea of creating these public funds, to which the value of specie might be com­municated, which might collect and give fixation to money, while it circulated elsewhere, and call it in again, in case of need, by the magic of circulation, and the credit imparted to those funds. Who knows whether this may not be precisely the reason why those kingdoms have not been enriched by their mines? There was no prop to support the building, while they were working upon the repairs. Spain and Portugal, depopulated by moral causes, might, I believe, in some degree, have recovered their population and agriculture, if the numerary riches of conven­tion had realised the momentary passage of the gold and silver of their mines. Factitious property would have produced industry, and supplied a fund for improving the soil, with all those natural productions, which, in so fortunate a climate, are ripened by the sun. Commerce, opulence, and circulation, might perhaps have invited a number of new inhabitants of the religion of the country, since the want of a toleration does not admit others to settle there. Even this odious difficulty might have been sur­mounted [Page 124] by interest; whereas, at present, the inhabitants, notwithstanding they pay fewer taxes, are poorer than those of France or England. I do not state this conjecture as the only cause of the disproportion between the actual condition of Spain and Portugal, and the sources of metallic wealth, which both of them possess. I mean only to mark the advantage produced by circulation in countries where the metals are not so plentiful. The miserable state of the Spaniards in Peru and Mexico is a still stronger proof that gold and silver are nothing of themselves, but so far as they readily pass in exchange for articles of necessity and convenience. Monsieur de la Condamine assures us, that the people, who showed him the mines of Peru, were wretches without shoes to their feet.

Spain and Portugal are not in that condition. If, added to the fertility of the soil, and happiness of the climate, the two kingdoms were as well peopled as they ought to be, the pro­ductions of nature and industry, independent of their mines, would make them the most plentiful countries in the world. The exchange of their commodities might even create a com­mercial balance in their favor beyond the produce of their mines. But as this neither is, nor for a long time can be, the case, we must for the present consider the metals as a merchandise of their own growth, and the extraction thereof, to a certain degree, as necessary and useful. I am even inclined to think, that if all the advantages of agriculture, commerce, and manufactures, existed with activity in Spain and Portugal; and if at the same time they were to continue in possession of the gold and silver of Peru, Mexico, and the Brazils; the metals then, by reason of their abundance, might almost always perform their office in person, without factitious signs, or the circulation of paper credit. I am nevertheless persuaded, that such a repletion of [Page 125] specie would produce inconveniences eventually fatal to the manners, and even to the commerce and prosperity of the two nations, and that providence has not undesignedly given them the custody, or rather the distribution, of the treasures of America.

If Portugal had preserved the Moluccas and Ceylon, which it was in possession of before the mines of Brazil were discovered, the harmony of the commerce of Europe must have been destroyed. But if Holland had kept the Brazils, that harmony would still have been maintained. Holland, as we have fre­quently observed, has nothing to give in exchange. Industry, commerce, and spice trade, constitute all her opulence, and are supported by those factitious funds, to which credit gives circu­lation, and which enlarge the contributive faculty of the people to pay the taxes imposed upon them. Taxes follow opulence and ease. Competition in the market, and a greater consump­tion, of course raise the price of provisions. Yet taxes are not to be multiplied without urgent necessity, and every prudent measure of police should be employed to prevent the exorbitant price of provisions. But, to return to my subject.

Many attempts have been made to calculate the proportion that ought to be preserved between specie and paper. It has been a long time fixed at the rate of three to one; that is, that there may safely be three times as much paper in circulation as money. Yet experience has evidently shown, that the quantity of paper may be considerably enlarged, and yet support itself without difficulty. To call this a disproportion is creating monsters on purpose to fight with them. It is contradicting experience, especially as the same pretended disproportion will be found to subsist between money and riches of every sort, such as land, houses, ships, jewels, &c. Yet we are not to con­found bank notes, or bills of credit representing money, with [Page 126] that paper which constitutes the public sunds, and bears interest; although, in some respects, there is a great analogy between them. A much greater quantity of stock may be created than of bank notes. The public funds do not exactly represent specie, though the creation of them augments the numerary wealth. They form a solid property, as much as land or houses, and yield a revenue without repairs or cultivation. The greatest advantage attending them is, that they make money, and that which represents it, circulate with more rapidity. Taken by parts, they may, in a certain sense, be considered as so much ready money, the office of which they frequently perform. A hundred thousand pounds in annuities may be converted into specie in 'Change Alley within four and twenty hours, with scarce any alteration in the price, and millions may be sold for time. These are facts not to be disputed. Of all kinds of pro­perty, this is the only one that partakes, as it were, of the quality of money, at the same time that, by the essence of its nature, it is a solid property. The observation is important, and I believe has not been made before. I shall add but one reflection more; that gold and silver coin has an arbitrary value of convention, and that there is no physical reason why it should represent all commodities, as well as the articles of first necessity, in preference to paper, by which itself is represented. The Indians make the same use of shells; and all the plausible objec­tions to the creation of artificial signs in paper may be applied equally to the metals, which we can neither eat nor drink. But as in the present system a barter of commodities is impracticable, some general medium of exchange is wanted to be the measure of every thing; and this quality no more belongs to metal than it does to stocks and paper, when the circulation of them is [Page 127] supported by credit and good faith, and by the interest they produce.

Monsieur de Mirabeau's principles are much the same with those of the author of the Bilan, to reduce every thing to the territorial produce. Yet I think the fallacy of them appears even from his own statements of the territorial revenue of France compared with experience. His system is open to objections, because it is contradicted by facts. How would it have been possible for France to have exceeded her strength in the article of taxation during so long a period, without having been exposed to some more fatal, and as it were more palpable, political con­vulsions? I shall hereafter make it appear, that the disorders in France have not so much proceeded from taxes, as from the long wars, and the want of credit in borrowing money. I have already proved, that credit and circulation are the only means to correct and soften the severity of taxes, and shall support my opinion by farther evidence. Observation, enquiries, and cal­culations of the territorial revenue, may be of service, if they are properly applied without exaggeration, and if they do not lead to consequences inconsistent with known facts, or to mea­sures either impossible in practice, or whose supposed effect is not justified by experience. Yet, as it is possible that, without Galileo and Kepler, Newton might never have analysed the rays of light, or thoroughly discussed the principles of gravitation, it is to be hoped, that the works of speculative politicians will in like manner assist others in explaining the true principles, on which the sinances should be administered for the welfare and happiness of mankind.

We are children still. Our children perhaps may be men. I cannot comprehend how Monsieur de Mirabeau can lay the whole burthen of taxation upon the territorial produce, after [Page 128] having so clearly demonstrated, that the vexations heaped upon the husbandman destroy those riches which, without such vexations, would be annually renewed; that large tracts of land lie fallow and deserted; that decay of population of course diminishes consumption, which he ought to consider as the source of the sovereign's revenue; that spoliation withers up the soil; that the arbitrary land tax, repairs of the roads, and other vexations, ought to be abolished. Yet he substitutes the same burthen under another denomination, and gives no relief to that part of the nation. He seems to me to contradict him­self, when he proposes to lay the whole tax at the source of production; yet this is his favorite principle. Perhaps it may be my own fault; but I confess my ignorance; I do not understand his system; it appears to me to involve a contradiction. He advances another principle, which, in the abstract, seems nearer to truth, and more important; that no province, or city, or person, shall pretend, by virtue of any privilege or immunity, to be exempted from a general contribution. This is just. But to confine it to a capitation, or personal tax, proportioned to the rent of houses or lodgings, would be insufficient to answer the service, even if it were possible for the tax to be strictly collected. A capitation can be no more than a supplementary measure. He proscribes the only taxes that can ever answer the demands of government, viz. those upon edibles, luxury, and objects of constant use. The reader will find fresh proofs of this assertion in the sequel. All these schemes have been already attempted in Holland, in the year 1748, with a view to substitute one general tax in the room of all the duties upon consumption. Specula­tions of this kind embarrass the finances. They amuse the people with hopes, and make them pay with more reluctance the taxes on which their own welfare and preservation depend. [Page 129] The first principle laid down in the Theory of Taxation, and in the Bilan of England, is, that a cultivating state has no revenue but the produce of the earth, and that the whole is collected within the territorial revenue. This might be true, if there were any state in Europe that confined itself merely to the cultivation of the soil. The state of France, as well as of England, is composed of farmers, shepherds, fishermen, hunters, merchants, manufacturers, artists, and soldiers. Why then should we reduce the various produce of all the branches to the annual return of territorial revenue? Is it not representing the colossus of France under the figure of a skeleton? The principle, that the territorial produce is to be considered as the only source of revenue, has seduced many people; yet it is absolutely false, as well as the consequence drawn from it, that taxes should be laid at the source of production; a maxim de­structive to cultivation, and that counteracts the author's purpose. To prove, with still stronger evidence, that it does so, let us draw a short analytical picture of all the kinds of property, of which a state is composed. We shall then discover from what sources an exact account of the finances of a kingdom is to be collected, and see at once upon what articles taxes may be imposed with the least degree of inconvenience, and in what class each state is to be reckoned.

Landed property is the first. This is incapable of being destroyed; but its value, more or less, depends upon cultivation, and without labor it makes no return. Its productions are neither voluntary, nor gratuitous. They require not only care, but expence; and before they nourish, they employ. But the annual fruits of the earth are consumed, and at the end of the year cease to exist; or, if consumption fails, they putrify, and are lost. The state can only be enriched by the internal con­sumption, [Page 130] and by the surplus exported to foreigners. In this first class I reckon arable lands, woods, and vineyards.

The second kind of property, which Monsieur de Mirabeau has almost forgotten, and yet is very considerable, consists of cattle, and the fields where they are fed. Cattle return more to the earth than they take from it. Some give milk twice a day, which supplies us with cheese. The ox not only con­tributes his labor to our service, but even his flesh and his skin. The sheep furnishes the first elements of the most useful manu­factures. Wool is a source of riches to England and Spain.

The fisheries are a third kind of property. The sea con­tributes to nourish the inhabitants of the earth, as much as the earth itself, with still less expence. The great fisheries form an article of considerable importance in commerce, yet omitted in the Theory of Taxation.

Houses are the fourth. The rent, or the occupation, is so much real revenue. The object itself is perishable, but necessity and luxury keep it in constant repair. The laborer, the mechanic, and the artist, are employed.

The fifth kind of property consists of ships, wares, maga­zines, and in short of that innumerable detail of commercial articles, which furnish subsistence to a prodigious multitude of people, and produce immense sums every year, at the same time that the offices performed by money are multiplied by circulation. The revenue of this branch is of far different importance from that of the territorial produce, to which we are told that every thing should be reduced.

The sixth kind consists of notes, public funds, actions, royal securities bearing interest, the fruits or interest of which are not destroyed by consumption, like those of the earth, but are permanent and unperishable, and multiply in every hand they [Page 131] pass through, yet, under the auspices of credit and circulation, preserve their fertility. This (with submission to those who are unacquainted with the true principles of finance) is the reason why a numerary, exceeding all the money in Europe, is an­nually expended in Paris and London, and why the state can levy so many taxes without ruin to the nation; a paradox, which speculative financiers are unable to comprehend, because they have no true idea of circulation and credit. These are the powers that create and multiply, that give life and activity, that produce and reproduce. They suffer nothing to stop or stag­nate, but remove all obstructions, and circulate the blood through every vein.

The seventh kind of property consists of places of honor, offices and employments. From this source a number of persons are supplied with the means of expence, from which others again derive their subsistence. Industry and circulation are encouraged, and the public revenue improved, even by those who live at the expence of it.

The eighth kind consists of magazines of all sorts, fixtures, jewelry, trinkets, diamonds, gold and silver plate, curiosities, pictures, and books; all which augment the numerary, and, notwithstanding their slow circulation, contribute to support credit, and to prop the building.

The ninth consists of manufactures, principally those for exportation, by which foreigners are laid under contribution, and the subject enriched. Those of Lyons, and other places in France, far from destroying agriculture, encourage it. But this might be the subject of another dissertation, and would lead me too far. In the Elogium of Sully, one of the master-pieces of Monsieur Thomas, there is an argument upon this point, which appears to me too bold.

[Page 132] The tenth is a supernumerary to France. I mean the multitude of foreigners, whom curiosity attracts to Paris, and pleasure detains there. Their expence is a real nume­rary, which not only augments that of the kingdom, but at the same time increases the materials and circulation of specie. Combined with the expences of those, through whom their money circulates, it improves the sovereign's revenue, which, though never stationary in his hands, always exists within the nation. The exorbitant price of furnished lodgings at Paris and upon the road, and the hire of carriages for the use of foreigners, is a kind of territorial produce, created by foreigners, without the charges of exportation.

The eleventh kind of property, consisting of mines of coal, tin, and iron, where there are any, has escaped Monsieur de Mirabeau.

Such is the true picture of the riches of a country, widely different from that impoverished state presented to us in the Theory of Taxation. In this picture the apparent con­tradictions between the objects and the produce of taxes, as well as between the faculties of the subject and the de­mands of the state, are reconciled. The gradation of taxes, according to this faithful representation, should proceed in the inverse ratio to that of Monsieur de Mirabeau's system. The sources of production, the earth and its first harvest, should be loaded least of all. The progress of taxes should follow the detail of consumption, and multiply upon every article of luxury. The mode of collection is another object, the abuses of which I am not qualified to discuss. But taxes return for the most part into the hand that pays them; and this, I presume, is the line of direction upon which the whole mystery of finance dep [...]nds. In time it may be carried to perfection. For the present it is sufficient to observe, that by the assistance of circu­lation [Page 133] the revenues of France amount to at least ten times the sum stated in the Theory of Taxation; and that it is absurd to say, that a man, whose income is but four hundred millions, pays six. If, as it is said, the collection costs near a third of the produce, it is certainly a shameful depredation; but quaere, whether Monsieur de Mirabeau be not again mistaken in his assertion. The principles I adhere to are founded upon facts, and on the uniform experience of England, France, and Hol­land. They do not therefore involve such contradictions as appear upon the face of speculative writings, which flatter the people without giving them any real consolation or assistance, and promise them a relief not to be realised in practice, and which they never can receive. It is the universal remedy, or philosopher's stone, perpetually sought after, and never to be discovered. A nation that would submit to pay heavy taxes without reluctance, and that, as the author supposes, would pay them from a spirit of emulation, and where the application of the revenue should be constantly directed to the public good, without any part of it being diverted, would be a nation of angels, or rather of gods, and such a one as never will exist upon this mass of earth. My own system is reducible to this con­clusion. 1 ^o. That the pretended principle, of confining the whole contributive faculty of taxes entirely to the territorial produce, is fallacious; for, though the landed revenue forms an important article, it is still the smallest portion of the facul­ties of the subject. ^* 2 ^o. That to lay taxes at the source of [Page 134] production would injure agriculture, which ought to be pro­tected and encouraged at its source by every privilege and recom­pence imaginable. 3 ^o. That nothing but articles of consumption and luxury can produce a revenue proportioned to the necessities of the state; and that it is proved by practice and experience, that circulation in a great measure repairs the inconveniences that may be occasioned by taxes. 4 ^o. That the mode of col­lection should be the least expensive or burthensome to the nation, taking particular care not to oppress the farmer; but this is a difficult point. Let me add, 5 ^o. That the state of ex­ports at the custom-house is the thermometer of a flourishing commerce, in a farming and manufacturing nation; that duties upon exports should be moderate; and that exportation, in some cases, should be encouraged by bounties.

Importation is of a different nature. It is a tribute paid to foreigners. In France and England it may be loaded without inconvenience, except the first elements of manufactures, which ought to be free. It is not the same with a power entirely commercial, such as Holland, that buys in order to sell, and to which the carrying trade is essentially necessary. The con­stitution of Holland is singular and peculiar, and the country must be governed by rules that are an exception to all others. It is a phenomenon in politics. History gives us no model of such a constitution. The thermometer of import and export at the custom-house in Holland, is sometimes in an inverse ratio [Page 135] to what it is in other countries. In this place it may be proper to insert a fine observation, which I lately met with in an English author. It is supposed that the bounty, granted by government upon the exportation of corn, is an expence to the state, or that the revenue suffers a diminution of £. 150,000 which the bounty amounts to. But this, says the author, is a mistake; for the custom-house recovers that sum with interest, by that increase in the duties on imports, which arises from a large exportation of corn. A considerable part of this export is exchanged for articles of luxury, which the nation is fond of, and which pay heavy duties at the custom-house. So that the encouragement given to agriculture turns to the profit of the customs. There is another observation equally curious, that the price of corn has not risen in England, since the institution of the bounty, nor even so far back as since the time of Ed­ward III. making allowance for the different value of the mark of silver at the different periods. I have shown that France might follow this example, and encourage agriculture, yet without any diminution of the opulence of England.

Monsieur de Montesquieu observes, that a tax upon persons is the most natural to slavery, and a tax upon merchandises the most natural to liberty, because it does not refer so directly to the person. A capitation can never supply the place of every other tax, on account of the small number of persons on whom it would fall, in proportion to the multitude who, through the medium of consumption, insensibly swell the revenue, at the same time that the very money they pay is furnished in the last resort by the wealthy, on whom alone it is meant that the weight of the capitation should fall. Natural consumption, and even that of luxury, by means of a circulation multiplied [Page 136] through various channels, can alone supply such considerable sums, without exhausting the sources, or stopping the current of circulation.

From what I have said it follows, 6 ^o. That the treasury re­stores to the public the money it receives, increasing the con­tributive faculty by the annuities and pensions it pays. The retribution, however, is not always exactly equal, with respect to individuals, but must be taken in gross. 7 ^o. That the pub­lic funds increase riches, commerce, industry, consumption, and the contributive faculty. They are necessary in themselves, and differ widely from the idea hitherto conceived of them. 8 ^o. That nevertheless the public debt should be redeemed to a certain point, in order to diminish taxes, which always appear to be an evil, constantly magnified by opinion; otherwise, if they were multiplied too far, some great difficulties would arise in the course of those fatal wars, which recur too often. 9 ^o. That the true and exact distribution of all the branches of finance is a science, all the principles of which are not yet understood.

10 ^o. That good order is not destroyed by exacting a con­tribution to the public stock, from all those who possess no capital, but live upon the retribution yielded to their labor. They receive it from the rich, from people in easy circumstances, and even from the state. Their labor becomes a little dearer, but the inconvenience still falls upon those who, it is meant, should bear this portion upon the plan of a single tax. The effect is the same. You only endeavour to alter the form, and the form you wish to substitute can never be adhered to in prac­tice. It is the multitude of little streams that constitute the river. It is the number of subdivisions of classes that alone can [Page 137] supply heavy taxes. The addition of the duty ⁴ is con­founded with the price of the commodity, and in effect is paid by the thing, not by the person. This is order itself, not the confusion of order.

‘""Power," says Monsieur de Mirabeau, "cannot be exerted beyond the natural strength. Efforts that exceed our strength produce weakness."’ This is true; but the prin­ciples themselves show how ill they are applied. France, Eng­land, and Holland more particularly, subsist still, and have subsisted for a considerable time, upon the very system now so much decried. In spite of the dreams of melancholy, they subsist and flourish. Yet this, I must repeat, is no reason why we should not labor, with constant attention, zeal, and ardor, to relieve the people by every possible method, and to proscribe for ever the detestable maxim, current in France in the last century, that vexation and oppression made the people work, and that ease made them indolent and lazy. Nothing but the civil wars, which were but lately ended, could have dictated so barbarous a maxim.

11 ^o. That manufactories should be considered as one of the principal arteries of the public revenue. The exemption granted to raw materials increases the return they make to the treasury.

[Page 138] 12 ^o. To deny, as Monsieur de Mirabeau does, the reality of that successive enjoyment, which credit and circulation procure to every individual with the same specie, and to treat this truth as a plausible fallacious hypothesis, is as much as to affirm, that there is nothing intrinsically valuable but bread and water, and that every thing else is a superfluity of mere convention and opinion. At this rate one might affirm, that the landlord of a thousand acres in fact possesses but two feet when he stands up, and six when he lies down, because this is all the space he occupies. The sophistry is the same. Gold and silver, as signs, have no real intrinsic advantage over the objects, which multiply specie through the medium of circula­tion, and represent it through the medium of credit.

13 ^o. The capital, in every country, is the central focus of consumption and luxury. Some benefits arise from it. The country round the capital is improved. Still however it is said to produce a number of mischiefs. If the population of the metropolis bears no proportion to the rest of the kingdom, the provinces may languish, the limbs of the political body may decay. The reader will see my opinion of the matter in the Fourth Chapter. An administration, that should correct the bad effects of this disproportion, and give life to the provinces, would render an essential service to the state.

14 ^o. The accumulated expence, which the springs of cir­culation enable every individual to support, is the source of taxa­tion. If, as Monsieur de Mirabeau affirms, the total amounts to six hundred and twenty-five millions that circulate through the state, this is the block out of which taxes are cut. He says, he has proved in another place, that the mass of coined ⁵ [Page 139] money in a state ought never to be higher than the level of the total revenue, and that this is a truth long since admitted by every man, who understands the subject. Every thing else, says he, is only circulation. I am not sufficiently acquainted with this great principle, which, after all, may be a false one. But it has been proved that the total revenue considerably exceeds the territorial produce; that the return of circulation, from which he collects his state of expence, is infinitely greater than the mass of specie. Its existence in the public treasury is transitory and successive, but not the less real. The specie does not stagnate in the exchequer, but returns into circulation, and dissipates all the gloomy consequences created by the imagination.

15 ^o. From what has been said, I would not have it un­derstood that I any way deny the importance of agriculture, or the necessity of protecting it. What I affirm is, that to make it the only object, the universal instrument, the general agent, is a mere whim, ⁶ or madness, an ideal being, an abstraction [Page 140] of the mind, produced by patriotism ill understood, and dege­nerating into enthusiasm. It tends to destroy the true principle of finance; and though finance may be an evil, it is as necessary [Page 141] to the state, as eating is to the body. By eating too much, we contract crudities and indigestions.

16 ^o. A continued peace, united with a prudent oeconomy in the collection and application of the revenue, is the only way to relieve the people. Peace removes all impediments, creates plenty, encourages population, increases consumption, extends commerce, and quickens cultivation; while these, in their turn, augment the revenue. Taxes might then be lessened, without diminishing the public revenue, at the same time that the demands of the state would decrease.

17 ^o. A capitation can never be any thing, in practice, but a supplementary measure.

18 ^o. The specious principle of the Theory of Taxation, ‘"That idleness is the loss, and labor the profit of the state,"’ is an axiom without meaning; pompous words, that promise much, and signify nothing. An idle man, whose expence is decent, who pays taxes, who gives wages, whose money cir­culates, who causes a useful consumption, and supplies others with the means of doing the same, is not a burthen to the state. It is mere sophistry under the mask of a sentence. Labor is useful and necessary, but it is not always a profit to the state, unless it be a kind of labor that bears some analogy to the public welfare. The golden mine to the state is honest industry, not mere labor. Many a man labors to his own ruin, as well as to that of the state. So true it is that specious sentences, when thoroughly examined, are frequently no more than sounding expressions. We may reckon in the same class another apothegm of Monsieur de Mirabeau, ‘"That all labor is receipt, and that all idleness is expence, to the exchequer."’ Fine words without reality.

[Page 142] 19 ^o. I must again repeat that, as things are now con­stituted, circulation and credit must be rckoned in the first rank among the means of prosperity.

20 ^o. The eternal opposition, to which the most necessary taxes are exposed, make them at once more burthensome, and less beneficial.

21 ^o. Of all the kinds of property in a kingdom, manu­factures suffer the most by taxes. If the price of labor, or of raw materials, be ever so little raised, it becomes impos­sible to export in competition with foreigners. Yet there are eases, in which a cultivating nation, with a great extent of territory, may flourish, and become as powerful as its condition admits, by the mere industry of an internal commerce, with­out any considerable intercourse with foreigners.

22 ^o. Independent of taxes, wherever there is most wealth, there every thing will be the dearest. From hence I conjecture, that France is not so wealthy as England. The gentry in England, I believe, are much richer than in France; whereas the higher nobility, including the princes of the blood, are richer in France. The middle rank in England undoubtedly has the advantage. The peasant, the laborer, and mechanic, are much more at their ease. Riches in general are much more equally dispersed through the English than through the French people; yet, in particular instances, there may always be exceptions. A single branch of manufacture may decline. Two hundred workmen, distressed and out of employment, make as much clamor with their distress, as if the whole world were perishing with hunger. The echo is repeated on all sides; the enemies of government join the chorus; and they, who listen to their clamors, think every thing is lost. To judge truly, we should extend our view to the whole mass.

[Page 143] 23 ^o. ‘"Political oeconomy," says Monsieur de Mirabeau, "consists in making the people pay as much as possible, yet think they pay as little."’ This can only be effected by taxing articles of consumption, where the tax is confounded with the price.

24 ^o. ‘""To ruin the farmer," says he,is destruction to the alimentary police. The rights of the plough-share should be as sacred as those of the church, and never touched without respect."’ Sed est modus in rebus.

25 ^o. Certainly nothing can be more destructive than the devastation which arises from the oppression of the farmer, and persecution in matter of religion. The ravages of war are transitory, and the soil by degrees recovers from its own ruins. The value of it may be annihilated by the rapine of finance, and I believe it has sometimes happened so in France; but the wisdom of government is employed in correcting this abuse.

26 ^o. Another of Monsieur de Mirabeau's great maxims is, ‘"That it is better to sell the raw materials, than to abate any thing of the first price, in favor of manufactures, which, with respect to profit, have no other object but the price of the labor; a profit which, in fact, is only a return of the money it costs."’ This observation deserves to be considered.

27 ^o. He says, that an unlimited power of imposing taxes would destroy all the rights of property, and, after ruining the nation, lay fetters upon itself. The subject cannot pay beyond his strength. An arbitrary tax could not fail of defeating its own purpose. There must be a proportion between the tax, on one side, and the nature of the thing on which it falls, and the persons who pay it (whether for luxury or necessity) on the other. The produce of the earth undoubtedly arises from a combination of two agents, the labor of man, and the bounty [Page 144] of nature. To separate them, says Monsieur de Mirabeau, is the great object of finance. He thinks that, by his method, he can distinguish between the sheaf that belongs to cultivation, and that which belongs to revenue. But his metaphysics in finance can never be reduced to practice.

28 ^o. He says, that war is the most severe and fatal accident to a state. The revenue of the nation diminishes, while its expences increase. The greatest contribution is demanded when there is the least ability to pay it. To avoid war as much as possible, is the only remedy. The expedient, pointed out by the author, of providing a public treasure against unforeseen accidents, would increase the evil, because a considerable quan­tity of specie locked up would obstruct circulation, the effect of which is proportioned not to the sum, but to its current activity. The treasure must either be very considerable or useless. If it were sufficient to support a war for two years only, it would do the nation incomparably greater mischief, than the evil we endea­vour to avoid. History proves that the reign of dissipation, which usually succeeds the reign of oeconomy, does infinite prejudice to the state. Monsieur de Mirabeau gives no satisfactory answer to these objections. He pretends that the fortunes made, and depredations committed, by the farmers general, are incon­veniences without any mixture of benefit. It is not so; these pretended fortunes circulate through the public.

29 ^o. The indirect channels and strainers, through which taxes are drawn, should be made as simple as possible, in order to reduce the expence of collection. But pulling down the house is not the way to strengthen the foundation.

30 ^o. It is not credit that has ruined the finances of France, as Monsieur de Mirabeau pretends. On the contrary, it was the failure of credit in time of need, that did the mischief, and [Page 145] probably was the chief cause of the late disasters. If credit had been supported as it might have been, France would have been less in debt. At the beginning of the year 1715, the king was obliged to negotiate thirty-two millions in bills, in order to raise eight in specie. ^{* 7} If faith had been kept to the public creditor as inviolably in France, as it has been in England, half the present debt might have been avoided; the rate of interest would have been less than half what it is, and the state have gained infinitely more than it has done by those violent operations, which have annihilated credit. Expensive operations of finance, together with exorbitant interest, arising from nothing but want of credit, have caused debts to be contracted without value received. On one side, the funds to support the war were borrowed at a higher interest; on the other, failure of credit raised the price of every article purchased for the service. In this view the inconvenience is double; not to reckon loss of time, which follows want of credit, and makes every operation ineffectual. To find the supplies at the exact moment, or at the moment afterwards, determines the success of a campaign. Superior credit undoubtedly was the principal cause of the other advantages, which England had over France in the last war, [Page 146] because it enabled the nation to exert and avail itself of the rest. The fact has been confirmed by other proofs in the first Chapter. It depended only upon France herself to have re-established her credit, if peace, so necessary to Europe, could have been firmly secured.

It may be laid down as certain, that the establishment of public funds depends upon the following regulations and cir­cumstances. 1 ^o. That the loans be national; that is, that the body of the nation shall be answerable for them, as in England; and although the French parliament is far from having the same weight in the constitution with that of England, yet the par­liamentary creation of funds, and the security of that august body, would contribute not a little to support the credit of them. 2 ^o. That funds to pay the interest should be secured, without the possibility of interruption; and that every loan should have its separate security. 3 ^o. That the sinking fund be faithfully applied to the discharge of debt, and that its operation be uniform and uninterrupted. 4 ^o. That, in order to gain the confidence of the public, every measure of finance be laid open, and all appearance of mystery banished. 5 ^o. That with the same view an assurance be given to the nation, and to foreigners, with respect to future operations, that their interest shall never be reduced under any pretence whatsoever, without offering to repay the principal; and that the principal shall, at no time hereafter, be subject to any tax or defalcation, as it has happened heretofore; that in this respect the example of the English shall be followed, and that a loan of a hundred shall be always paid off at par, notwithstanding any specious arguments to the contrary; that this essential article shall no longer depend upon the minister's way of thinking. When the security offered [Page 147] by government is intimately united with that of the parliament, the public confidence may then be recovered.

Credit and confidence being restored upon this solid founda­tion, the French government will gain infinitely more by following the same plan inviolably, than they have hitherto gained by operations of a different nature. The rate of interest will be lowered, and when money is wanted, it will be raised without difficulty upon moderate terms. I speak of the future; but what I say is founded upon experience, not upon theory or speculation. It is the history of credit, stated with simplicity, zeal, and honest intentions. There are other measures, by which it is possible to discharge a considerable portion of debt, and to recover credit for a time; but it will fail when the occa­sion is most critical and important. I believe that France might have had some advantages over England, that would in part have compensated for the difference of the two constitutions, and given her a credit and circulation almost as extensive as that of the English, if proper measures had been seriously taken, and the peace had lasted long enough to have carried them into execution. But after all the confusion that has happened, this is not the business of a day.

31 ^o. I have already shown, that excessive luxury is as ruinous to a nation, as an expence, proportioned to the wealth of indi­viduals and their rank in life, is beneficial to it. A man ruined is a fruitful plant withered up, with respect to the public; his numerary wealth does not exist within the nation, as many people think, who do not understand the laws of circu­lation, and the nature of factitious property. Excessive luxury seems to encourage industry for a moment, and abandons it for ever. At the same time it corrupts the manners, enervates the strength, and has always been one of the principal causes of the ruin of a state. It would be an important secret in legislation to [Page 148] find the middle term, at which excessive luxury might be stopped, yet without enacting sumptuary laws to restrain that decent expence, which is allowed to every subject, in proportion to his rank and fortune.

The following quotation from the Spirit of the Laws may also be considered as a general rule. ‘"Taxes may be increased in proportion to the liberty of the subject. As slavery gains ground, they must of necessity be reduced. The rule is taken from nature, and never varies. It operates in every country, from England and Holland, through the various degradations of liberty, until it ends in Turkey. Switzerland seems to be an exception. The Swiss pay no taxes. But there is a particular reason for it, which confirms the rule. In those barren mountains provisions are so dear, and the country so populous, that a Swiss pays four times as much to nature, as a Turk does to the sultan."’ If this principle be as evident as the author affirms, the consequences to be drawn from it would confirm my system of taxation.

If it were possible for England, by means of a continued peace, by the application of the sinking fund, and an increase of commerce, to discharge almost all the national debt, it ought not to be done. It would be highly prejudicial to the kingdom not to preserve sixty millions at least of these fictitious trea­sures. The use and necessity of it has been already proved. If once the debt were reduced to this sum, parliament should relieve the nation from whatever taxes appeared the most bur­thensome, and employ the residue of the sinking fund in the encouragement of manufactures, the settlement of colonies, and in other useful enterprises. A total discharge of the debt would be absolutely against the interest of the nation. I shall be of the same opinion with respect to France, whenever the govern­ment [Page 149] shall have succeeded in giving currency to the royal securities, and in restoring the faith and credit of those securities at a lower rate of interest. This might easily happen in a few years, if, in their future operations of finance, they would follow the system I propose. The French ministry are too well informed not to know the intrinsic contributive powers of the kingdom, and too humane to exact more than its strength can support.

There seems to be an easy way, as far as the nature of the thing will admit, to form a picture or barometer of these powers, by executing the plan laid down by Lewis XIV. in the year 1698, for the information of the duke of Burgundy.

^* ‘"He ordered each of the intendants to draw up a parti­cular description of his province. By this means an exact account of the kingdom might have been obtained, and a just enumeration of the inhabitants. It was a useful work; though all the intendants had not the capacity and attention of Monsieur de Lamoignan de Baville. Had what the king directed been as well executed, in regard to every province, as it was by this magistrate in his account of Languedoc, the collection would have been one of the most valuable monuments of the age. Some of them are well done; but the plan was imperfect, because all the intendants were not confined to the same rules. It were to be wished, that each of them had given, in columns, the number of inhabitants in each election; the nobles, citizens, laborers, artisans, and mechanics; the cattle of every kind; the good, the indifferent, and the bad lands; all the clergy, regular and secular; their revenues, those of the towns, and those of the communities."’

[Page 150] ‘"All these heads, in most of their accounts, are confounded; the several articles are not sufficiently examined, nor stated with exactness, and it is often necessary to search with great care and pains to find what is wanted; though a minister ought to have these things so disposed, as to be able instantly to discover the strength, the necessities, and the resources, of his country. The design was excellent, and would have been of the greatest service, had it been executed with judgment and uniformity."’

I agree with Mr. Voltaire in thinking that such a plan, well executed, would be of considerable assistance. But we are not to flatter ourselves, that it would be possible to ascertain the for­tunes of wealthy individuals resident in cities. The fortune of the merchant, and of the citizen, should always be a mystery with respect to the public. ^* The register which has been so much talked of can never be complete, and in its nature must be subject to a variety of restrictions.

As we have travelled through the whole region of finance, it may be proper to say a word of the clergy. I cannot do better than insert what Mr. Voltaire has said upon the subject.

^† ‘"It is matter of astonishment to all Europe, as well as to France, that the clergy should pay so little, seeing they are supposed to possess a third of the revenue of the whole kingdom. Were this the case, it is past dispute that they ought to bear likewise a third of the public charge, which, one year with another, would come to near thirty millions, independent of the duties on perishable commodities, which they pay in common with the rest of the subjects. But error and prejudice prevail in almost every thing. The church is supposed to possess a third of the whole annual revenue of the kingdom; just as we say at random that Paris contains a [Page 151] million of inhabitants. Were we but to take the trouble of computing the revenues of the bishopricks, it would appear, by the leases granted about fifty years ago, that their whole annual amount at that time was not supposed to exceed four millions, and the commendatory abbies were rated at four million five hundred thousand livres. It is true, the declared estimate of the leases was about a third below the real value; and if to this we add the increase of the landed revenue since, the total sum of the rents of all the consistorial benefices will make about sixteen millions; but we ought to remember, that a confiderable part of this sum goes yearly to Rome, and is so much absolutely lost to the nation. It must be allowed a great instance of liberality in the king towards the holy see, to suffer it to plunder the state of more than four hundred thousand marks of silver in the space of a century; which, in time, could not fail to impoverish the kingdom, did not commerce abundantly repair the loss.’

‘"To these benefices, which pay annates to Rome, we must join the curacies, convents, collegiate churches, and all the other ecclesiastical establishments in the kingdom. If we compute them at fifty millions yearly upon the whole, I believe we shall come pretty near the truth.’

‘"Those, who have examined this matter with the utmost severity and attention, have not been able to extend the revenues of the whole Gallican church, secular and regular, beyond eighty million of livres. The sum is far from being exorbitant, when we consider it as destined to support ninety thousand monks and nuns, and about an hundred and sixty thousand ecclesiastics, which was the number in 1700. And of these ninety thousand monks one third is maintained by alms and masses. There are many conventual monks, who do not cost their monastery two hundred livres a year; there are [Page 152] regular abbots, whose income exceeds two hundred thousand livres. It is this enormous disproportion that occasions so many complaints and murmurs. We are concerned for a country curate, whose laborious discharge of the duties of his profession entitles him only to a scanty income of three, four, or five hundred livres, while a lazy monk, not the less lazy for being made an abbot, enjoys an immense fortune, and exacts pompous titles from those under his jurisdiction. These abuses are much more glaring in Flanders, in Spain, and especially in the catholic circles of Germany, where we sometimes meet with monks who are princes.’

‘"Abuses, by degrees, pass into laws in almost all countries. Were a number of the wifest men to assemble with design to compose a body of laws, what state would be suffered to subsist exactly in its present form?"’

The sketch I have laid before the reader will, I hope, con­vince him that the abuses, which in every country attend the collection of taxes, are frequently exaggerated, and that the means of correcting them are not what the public may conceive. In the Fourth Chapter I shall again insist upon the multitude of classes which form the picture of the state, and upon the frequent wars which have depopulated Europe. It is in vain to take re­storatives, if the convalescent continues to bleed every day. His health and vigor will never be recovered by jellies or cordials. This is exactly the case of Europe with respect to population. Modern writers upon population, commerce and taxes, lament the evil, and prescribe analeptics; but they forget the regimen, without which no medicine can succeed. The regimen is peace. A truth so important cannot be too clearly illustrated, nor repeated too often.

PART IV. New Considerations upon the same Subjects.

IT has long been affirmed, that the kingdom of France, though enlarged by the acquisition of Franche Comté, Alsace, Lor­raine and French Flanders, has not more inhabitants than before those acquisitions were made. We are also told that the unequal distribution of taxes, the confusion occasioned by the Aides and Gabelles, the arbitrary land tax, and repair of the high roads, are the true and only causes of the depopulation of France; and that, in consequence of taxes and oppression, large tracts of land, from which a considerable return was collected before the reign of Lewis XIV. are actually uncultivated. The general cry of the nation cannot be entirely without foundation. Reason, common sense, and experience, tell us, that, when the hus­bandman is oppressed, and the cultivation of the soil costs so much that the produce is hardly sufficient to maintain him, he is compelled to abandon it. It is a general complaint, that all the duties imposed upon the transportation of commodities from one province to another, as well as upon exportation at the custom-house, are so many fetters laid upon sale and con­sumption, and must diminish the revenue by the very means employed to improve it.

Without doubt there is a great deal of truth in these com­plaints. The vexations they refer to must have contributed in part to the waste of so much land; but I cannot persuade [Page 154] myself that they were the principal cause of it. It must rather be attributed to a sudden failure of consumption, arising from a violent and continued depopulation. This depopulation has proceeded chiefly from the long wars which Lewis XIV. carried on with armies much more numerous than ever were kept up by any of his predecessors. Since that period, a single campaign destroys more men than three campaigns in the time of Harry IV. The marine, navigation, and the colonies, prevent the progress of population. The revocation of the edict of Nantz, want of toleration, the multitude of religious of both sexes, and excessive luxury, have done the rest. Wars and colonies have also depopulated England, but not in the same proportion. 1 ^o. Because the refugees have in some mea­sure repaired the breach. 2 ^o. Because there are fewer unmarried persons. 3 ^o. Because their armies, besides being less numerous, have been composed of foreigners. In spite of these advantages depopulation begins to be felt in England. Projects to prevent it signify nothing. The great mischief is not to be repaired but by time and a continued peace, without which every other expedient will be found insufficient, useless, or impracticable.

France and England are as rich in land and money as they can be. Their wealth and power can receive no addition, but by collecting their strength towards the centre of the state. Con­sumption increases circulation. A greater circulation creates new property, and gives life to all the riches of the state. A million of subjects more, settled in Great Britain, would add more to the revenue of the nation, and of the exchequer, and to the power of the sovereign, than all the produce of Canada and the colonies. France could maintain three or four millions more inhabitants. The circulation, produced by this increase of consumption, would be more profitable to the sovereign than [Page 155] the possession of Mexico and Peru. The circulation of specie quickens rapidly as it passes through the inferior ranks. It is the great consumption of the multitude that enlarges the revenue. That part of the people in France has been dimi­nished by wars, and want of toleration. Taxes have height­ened the mischief, and made it more sensibly felt; but they were not the cause of it. The wars of Lewis XIV. and the revocation of the edict of Nantz, have cost more men than all the wars of the two preceding centuries. The depopulation of Germany will be felt in France and England, as well with respect to commerce, as to manufactures. These are losses which a whole century cannot repair. Monsieur Voltaire has observed upon this subject, ‘"That Sir William Petty had proved, that for a nation to increase one twentieth in a hundred years requires the most favorable circumstances. His calculation shows the folly of writers who people the earth with a stroke of their pen, and in a century or two cover the globe with inha­bitants. If it be asked, Why there is a third more people in England now, than in the time of Queen Elizabeth? the answer is exactly, Because England has been in the most favorable circumstances; because multitudes of Germans, Flemish, and French, have established themselves in the country; because it is computed, that sixty thousand monks, ten thousand nuns, and ten thousand secular priests, have been restored to propagation, and to the state; and because popu­lation has been encouraged by plenty. The reverse of what we observe in the pope's territory and Portugal has happened in England. Govern your farm-yard ill, and you will have no poultry. Govern it well, and you will have poultry in abundance."’

[Page 156] Population is not the work of a day. It may be encouraged in time of peace; but continual wars, in the modern style, will defeat every measure that the wisest administration can possibly employ for this important purpose.

I have lately seen a very scarce and curious book, called A Detail of France under the present Reign, printed at Brussels in 1712. It was written about the end of the last century, and printed at Rouen in 1698. ^* This work is attributed to Bois Guillebert, attorney-general in the parliament of Rouen. It contains the substance of Monsieur de Mirabeau's Theory of Taxation, the remonstrances made by the parlia­ments, and all the visionary projects of finance, with which France has been over-run, upon the subject of taxes, duties, customs, agriculture, &c. I shall begin my remarks upon it with one preliminary observation. Though written before those calamities, which attended the latter part of Lewis the XIVth's reign, it represents the kingdom as then upon the verge of destruction. Seventy years have since elapsed, and in the course of that time there has been a period, under the admi­nistration of Cardinal Fleury, at which commerce was carried to its greatest extent, and every thing flourished in the king­dom. Of three wars, which have happened within the last seventy years, the second was ruinous, though accompanied with brilliant successes; the third was very unfortunate. And yet I am convinced that France, after all her disasters, is not in a worse condition than in the year 1698, when the book was first published; though (setting aside the conquests) the state of the kingdom may perhaps be worse than it was in the year 1660. [Page 157] Part of the abuses, particularly the arbitrary land-tax, have been corrected; though it is but lately that the ministry have been seriously employed in going to the bottom of those vexations, which stop the progress of agriculture and commerce. The measures they are now taking will, I believe, in time, produce considerable advantages; but I affirm that, without a lasting peace to encourage population, which of itself increases consumption, and of course must quicken circulation, all the expedients they can adopt will only give a momentary coloring to the surface. The destructive system, on which war has been carried on both by sea and land, since the end of the last century, is the true primordial source of depopulation. The loss of consumption, that follows it, lessens the relative revenue of the sovereign, and the strength of the nation. If it were not for the factitious cir­culation created by loans, the ravages of war, and religious persecution, which have done so much mischief to population and agriculture, would have been still more sensibly felt. Let us consider this important question again, and turn it in every possible shape. We cannot examine it with too much attention.

We vie with each other in praising the Duke of Sully; and God forbid I should undervalue the distinguished merit of that great man. Yet it ought to be considered, that his upright in­tentions were assisted by circumstances, of which the ministers who succeeded him had not the advantage.

France, just relieved from the horrors of a civil war, was in the situation of a robust and vigorous young man, who, after a violent fit of sickness, escapes from the jaws of death with new strength, and a healthier constitution. The kingdom had not been impoverished, because the wars had been carried on chiefly within the country, or immediately upon the frontiers, and with small armies. Spain, in order to support the league, had [Page 158] spent money enough in France to enrich the kingdom. The Huguenots had drawn large quantities of plate out of the churches and monasteries, which was coined and circulated. The seeds of opulence existed every where. To unfold and bring them forward, required nothing but peace and a prudent administration. Sully corrected the abuses which opposed this salutary work, and gave life to every branch of administration. The wants were inconsiderable, the resources were copious, and he availed himself of them all. The splendor of his adminis­tration glitters to this day, and will never be eclipsed in the eyes of posterity. But it would be unjust to expect that his suc­cessors, under circumstances of greater difficulty, should make an equal progress in the same time. France was like a beautiful woman ill dressed, who wanted nothing but a better habit to appear with distinction. Harry IV. had none of that pomp which now is thought essential to the lustre of the crown. Versailles, Marli, Bellevue, which have swallowed up so much money, were not then in existence. The wants of government are multiplied since that time. When sickness and frequent bleeding have weakened the constitution, it is with difficulty the convalescent recovers.

It is also to be observed that, according to the Detail of France, Cardinal Richelieu, who soon succeeded Sully, made an equal pro­gress in improving the finances; the king's revenue having doubled under the Cardinal's administration. He was far from possessing the merit of Sully, but the nerve of the state was still in its vigor. Sully had shown what it was capable of performing. We should apply to him what Montesquieu says of Richelieu, ‘"He drew the principles of the monarchy out of chaos, taught France the secret of her strength, and Spain the secret of her weakness."’ In spite of abuses of administration, the progress of improvement [Page 159] appeared more and more, until the work was completed by Colbert. This was the period of the highest prosperity to France. From that time, the kingdom insensibly lost its strength by abusing it, in the midst, and even in consequence, of the most brilliant successes. They were purchased with the loss of so many men, that the sovereign, though constantly enlarging his dominion, and extending his frontiers, did not increase the number of his subjects. Land lost its value more and more, for want of cultivation and consumption. In these circumstances every tax upon land had a fatal effect; and if commerce and the circulation of government securities had not, in some measure, repaired the mischief, the kingdom would really have been reduced to that deplorable con­dition in which it has been described. The picture, now too much loaded, would then have been true. The fact is, that France has not increased her power in proportion to her conquests; that the oppression of the husbandman, and the difficulties imposed upon commerce, both foreign and domestic, augment the evil; that failure of credit, in borrowing money, has made the matter worse; that the circulation, which still subsists, in some degree repairs the mischief; that these abuses may and ought to be corrected; but that, without a continued peace, no remedy can be effectual.

I find, in the Detail of France, the same principle which I have already refuted; that all revenue is reduced to the territorial produce. This work however contains many excellent observa­tions, though disfigured by exaggeration, or improperly applied. The author sees every object with a microscopic eye, and by constantly mixing error with truth, destroys the utility of his work. It may be true, that the mode of levying a tax (whe­ther land tax, wine duty, or customs) may be more grievous than the tax itself; and these oppressions may be considered as [Page 160] one reason why large tracts of land, which formerly made a great return, are now left uncultivated. The consequences extend to consumption and commerce, and even to population.

The author pretends that, in the year 1696, France had already lost half her wealth, and that the national revenue was less by five hundred millions than it was forty years before. He observes that, from the death of Charles VII. in 1461 to the year 1660, the revenues of the kingdom had gradually doubled every thirty years; whereas it would appear that, since the year 1660, the king's revenue had only increased about a third, (even including the conquests, all which pay a complete tithe to government) and that the national revenue had not quite increased in the proportion of one half. He affirms, that any diminution in the revenue of land always occasions a diminution in the revenue of industry. The cause of the ruin of consump­tion, says he, is the only point we need enquire into. Two things essentially contribute to it; the uncertainty of the land tax, and the duties paid not only upon exportation at the custom-house, but upon conveyance from one province to another within the kingdom. Internal consumption diminishes, exporta­tion is impossible, and the produce of the earth perishes on the spot where it grew. They, who by their employment are exempt from land tax, fling the whole burthen upon the mer­chant and mechanic, who have no fund but their industry. The author proves, by arguments equally solid and ingenious, that the loss reverts even upon the persons who are exempted. He does not blame the taxes so much as the mode of collecting them. He lays it down as a principle, that consumption and revenue are the same, consequently that any check to consump­tion is loss of revenue. The principle is true; but his applica­tion of it is defective, because he considers nothing but the soil. [Page 161] In his eyes nothing else has an existence. 'Bating a few exag­gerations, all that he says is literally true with respect to cultivation, the produce of which might however be reduced to one half, without the whole kingdom's declining in the same proportion. He is deceived in thinking, that abuses are the only cause of depopulation. Long wars are the principal occasion of it. I believe he exaggerates in saying, that a duty, which only produces a hundred thousand livres to the king, destroys a consumption equal to two millions upon the price or the quan­tity. This, in fact, means a diminution of two millions in revenue. ‘"All the provinces (says he) lose for want of a commercial intercourse with each other, and consumption becomes impracticable."’ This abuse undoubtedly was of a most grievous nature; his whole argument upon the subject is clear and satisfactory.

Some of his principles are not so evident. He says, for instance, that it is beyond contradiction, that a diminution in the revenue of land has diminished the revenue of industry. The principle is not universally true. In Holland and Switzerland the barrenness of the soil has improved the industry and reve­nue of the inhabitants. I make this observation, by the bye, to show the fallacy of general rules. The author saw that, from a concurrence of various circumstances, the province of Normandy and the election of Mantes were fallen to decay; and that taxes, provincial duties, and other exactions, were the principal cause of it. He was struck with several abstract truths respecting circulation, consumption, the connection of interests, and social harmony of all the orders of the state. He compared the history of the preceding century with that of his own; and all these ideas, separately true in themselves, mixed with the zeal of patriotism, and fermented in his mind. The [Page 162] volume of every object swelled in his view beyond its solid substance. He exaggerates every thing, and with the surest principles and deepest knowledge misleads the understanding. His idea of the general state of the kingdom was collected from what he saw in Normandy, and the election of Mantes. He says, that the difficulty of communication between one pro­vince and another has sunk the value of their respective produce, at the same time that duties upon exportation have annihilated commerce, and impoverished the kingdom. All this may, in some degree, be true; but to pretend that it has diminished the revenue of the kingdom one half, that it has occasioned an annual loss of fifteen hundred millions, besides destroying millions of subjects, and that all this may be recovered in four-and-twenty hours, and with a few days labor, is to the last degree extravagant. Writers, who have followed him in treating the same subject, have softened his exaggerations, which time had confuted; yet still they almost all go too far, not being able to renounce their first false principle, that every thing is compre­hended in the territorial produce; nor considering, that successive wars have been the chief cause of depopulation, and that con­sumption of course diminished for want of consumers. Yet there are a number of fine and useful remarks in this work, provided we confine them to their true value. The author had a tolerably clear idea of circulation; yet even this he carries too far. He says, for instance, that a hundred crowns, taken from the laborer for the expence of collection, create a loss of five or six thousand livres to the body of the state. He repeatedly asserts, that in his time the revenues of France had sunk above fifteen hundred millions in the space of forty years; whereas the increase of revenue to the sovereign, which occasioned that loss, was not more than a hundred millions. All this proves too [Page 163] much. If in fact there be such quantities of land in France entirely deserted because the produce does not answer the expence of cultivation, I believe that means might be found to cultivate it on the king's account. I am surprised, that nobody has yet seriously thought of carrying such a project into execution. It would appear perhaps to be the most beneficial and practicable scheme that has yet been imagined. The operation of a few millions employed by the king in reinstating his own subjects, who are reduced to misery, and in securing a portion of property to foreigners, would shortly be felt. Assisted by peace and commerce, it would soon restore population, consumption, and circulation, revive the paralytic branches of the state, and in a few years considerably increase the revenue of the sovereign, yet lessen the burthen of taxes. Such a plan of agriculture might be executed in England with still greater ease and expedition. In France there are more obstacles to be removed. The rubbish of old ruins would at first retard the construction of a new building. All difficulties of communication between the provinces, all checks upon exportation, should be previously removed. The oppressions heaped upon the farmer should cease. The privileges, as well as the property granted to foreigners, should be firmly secured. A plan of this nature may be reckoned among the number of political visions. Yet some of my readers may be sensible of the value of it, especially when they observe the success it has already had in the following example. Fre­derick William of Prussia formed the project, and had the good fortune to carry it into execution. His country was a vast desert. With an expence of only twelve millions of florins he cleared the land, built villages, and filled them with inhabitants. He brought whole families from Suabia and Franconia. He invited emigrants from Saltzbourg, and supplied them with the means [Page 164] of settling, and with implements of labor. He formed a new state, which gave him a new power. Europe has felt the weight of it, without profiting by the example. Such an instance is worth more than a hundred treatises upon agriculture and finance. The English have done the same, in many parts of America, that Frederick William did in Europe, with singular advantages to the nation. The premature population of the colonies has not much weakened Great Britain, because the English have had accidents in their favor. The multitude of refugees who settled in England after the revocation of the edict of Nantz, as well as of emigrants from Germany and elsewhere, enabled them to people their colonies without depopulating the mother country. Yet if, on the Prussian plan, they had begun by improving the whole of their soil in Europe, and encouraged population as far as the extent of their territory and commercial advantages might admit, I believe their power would have been fixed upon a more solid foundation. The subsequent settlement of colonies would have proceeded with so much the more rapidity, as the kingdom would then have men to spare, and wanted a vent for the surplus of its subjects. England and France may yet be in this situation, if the divine system of peace should pre­vail through the principal courts of Europe. In the mean time it is absurd to deny, that the English derive essential advantages from their colonies. The apprehension, that the American colonies may one day become independent of the mother coun­try, is, for the present, a mere chimera. That event at least can only be looked forward to in a very distant perspective. Exclusive of the example of the Spaniards, who have long been the subject of these gratuitous predictions, it is certain that the English colonies can never enter into alliances dangerous to the mother country, as well from the connection of their interest [Page 165] with Great Britain, as from the spirit of jealousy and rivalship which prevails among themselves. None of these countries separately can ever arrive at independence, and to unite them is impossible. With a moderate degree of consistency in the administration at home, Great Britain will long preserve her authority over these vast establishments. In theory they may perplex the politician, but the management of them in fact will easily be compassed by a prudent government. From this di­gression, which I thought material, I now return to the attorney general of Rouen.

His account of the finances of France is extremely curious. He says that, after the death of Francis I. Catharine of Medicis, who loved pomp and luxury, sent for Italians to administer the king's revenues, and that the science of finance and raising money by loans was taught by those people. They were ba­nished by Sully, recalled by Mary of Medicis, set aside by Richelieu, and after his death appeared upon the stage again. The parallels drawn by the author between different periods preceding the reign of the financiers, and particularly some historical re­marks upon the time of Francis I. are plausible and seducing. He attributes every thing to a single cause, as Descartes ex­plains all difficulties with the help of subtle matter. Yet he condescends to admit that Francis I. had not quite such nume­rous armies as are maintained at present. Is it not ridiculous and extravagant to compare the necessities of the state and the lustre of the crown, in the reign of that monarch, with the present condition of the kingdom? ¹

[Page 166] Nothing can be more judicious, nor profound, than his remarks upon the exportation of corn. He proves that, the more corn is carried out of France, the less reason there will ever be to apprehend any extreme scarcity; and that the very low price of corn is a sign of indigestion in the state, ari­sing from too great an abundance, and prejudicial to every rank of life. It is a worm that gnaws, and gradually under­mines the state. What he says on this article is deep in itself, and has been confirmed by the experience of France and England. The subject now engages the whole attention of the French ministry, and I believe would have done so long ago, if truth had been represented with less heat, and not pushed to an absurdity; as, for instance, where he says that abuses in these branches, in the first instance, occasioned a real loss to the kingdom of five hundred millions, and that the loss now is treble what it was at first. Exaggerations of this nature have spoiled a picture in itself true and affecting. The same defect prevails through all the writings that have been copied [Page 167] upon this work. An empirical way of representing the disorder has probably retarded the application of a remedy. They assign only one cause for an evil, that springs from a complication of disorders. The chief of these are frequent wars, and the new method of conducting them. By this kind of empiricism, in­stead of healing the wound, they only encourage the patient to expose himself to the same dangers; they inflame the disorder, and make the cure of it impossible. The true cure consists in a regimen, without which no other remedy can operate; and that regimen is peace.

Violent exaggerations being always contradicted by experience, even truth itself at last is suspected, and passes for speculation. If a Spanish or Portuguese Jew, settled at Constantinople or Amsterdam, should affirm, that the unjust expulsion of the people of his religion out of Spain had done great mischief to that kingdom as well as to Portugal, he certainly would have reason on his side. The Jews in Spain and Portugal were a very innocent set of people, quiet subjects, and useful citizens to the state. They were very numerous, and kept industry and com­merce alive. Many of them were men of learning, and much respected. They had even been admitted to a share in the administration. Alphonsus the Fifth of Portugal trusted Abar­banel with the most important employment, and was served by him with zeal, honor, and ability. Our Jew might add, with strict truth, that the expulsion of these people contributed to depopulate Spain and Portugal. He might even observe, that particular cities were ruined by it. All this is very possible; but if his enthusiasm carried him so far beyond the line of truth as to affirm, that the violence offered to the Jews was the single and only cause of the depopulation of Spain, the assertion would be too absurd to be supported. This is exactly the way of rea­soning [Page 168] of the attorney-general of Rouen. He judged of the whole kingdom of France from what he saw in a particular pro­vince, where the effect of fiscal abuses might perhaps have been more sensibly observed. His enthusiasm has carried him as far beyond the truth as our honest Israelite's reasoning about Spain. The prodigious devastation of that kingdom arises from the banishment of the Jews, the discovery of America, the expul­sion of the Moors, the multitude of religious orders, and the frequent wars carried on by Charles V. and his successors. To reduce all these causes to one, is false and ridiculous. A refugee might truly affirm, that the massacre of St. Bartholomew, and the revocation of the edict of Nantes, have been very prejudicial to population, commerce, and industry, in France. The fact is unquestionable; but it would be equally false and ridiculous to pretend, that these events alone occasioned the decline of the kingdom. The vexations heaped upon the farmer may have contributed to it in some measure, though not so much as the revocation of the edict of Nantes, nor any thing like so much as the author pretends. Excessive luxury does its part, and monastic orders contribute not a little. But it is the continued succession of bloody wars that has been the immediate, efficient cause of the depopulation of France. Spain, from a number of peculiar circumstances, is still more depopulated. A variety of causes may concur in producing the same effect. A man, who observes only one of them, is dazzled by the single object before him. With one general solution he accounts for every appear­ance, and leads himself insensibly to the most absurd con­clusions.

A judicious reader, who corrects the errors of exaggeration, will find in this work a number of curious, useful, and solid observations. It is a pity that an author, who sets out with true [Page 169] principles, and the most sublime ideas, should be led astray by enthusiasm. I am inclined to think, that succeeding writers upon the same subject have said nothing material, that may not be found in his treatise. It is true, that, in the discussion of exactly the same questions, it is hardly possible that the ideas of different authors should not sometimes concur. Of all the writings I have seen, no one comes so near as this to my own ideas of circulation. In truth, he is the only author who seems to me to have had a clear conception of the subject. All the other writers, I have seen, wander from the mark. Yet it is possible there may be many excellent performances, which have not come to my knowledge. I have always confined myself to an attentive observation of facts, and to my own meditations. After I had committed my first ideas to writing, I looked for farther instruction from books. My labors, I hope, will not be wholly unprofitable. The welfare of mankind is my object. I have no view to interest or reputation. My career is almost ended, and the world has lost its charms. All I wish, is to leave it with tranquillity. But to return to my subject.

The most exact justice in the distribution of taxes in the interior of the kingdom, and the care to be taken not to establish expensive offices of collection for the sake of a trifling revenue, are objects of such importance, that I persuade myself some remedy must have been thought of in all the time since abuses in these matters have been complained of. We have seen a wretch, who had nothing but his hands to support himself and his family, reduced to such misery as to be obliged to sell even the tools with which he earned his subsistence. The author of the Detail of France affirms, that it was matter of public noto­riety, that these abuses occasioned the annual loss of three hun­dred thousand souls, that perished in misery, particularly infants; [Page 170] that there was not subsistence for half the children of the poor at that age. The mother extenuated with labor and want of nourishment, the infant perishing at the breast for want of milk, and even those of a more advanced age, having nothing to live on but bread and water, without bedding, clothes, or medicine in case of sickness, were all involved in the same wretchedness, and sunk under it. If, instead of three hundred thousand, only twenty thousand souls were annually lost, what glory would it be to a sovereign, what pleasure, what happiness, to be able to relieve so many complicated distresses!—To be the father, the tutelar god of the unfortunate, and to restore them to happiness; this is the only real charm that can alleviate the burthen of a crown. I should think as I do, if all the expence were to be lost to the sovereign, without any return to his revenue, but the happiness of his people; how much more so, when his own interest equally invites him to it! The same operation, that relieved the subject, would give wealth and power to the crown.

The author, sensible of the effect of circulation, judiciously observes that a crown, taken from a man of fortune, is never (he should have said seldom) any more than a crown, as well with respect to the individual, as to the body of the state; whereas, if taken from the indigent laborer, or little tradesman, it anni­hilates at one stroke a consumption equal to a hundred crowns in the course of a year. Among that class of people, every thing perhaps turns upon the single crown. This little sum, constantly reviving from one hand to another, constitutes all their circula­tion. If all his calculations were as exact as this, he would not have computed the annual loss of the state at fifteen hundred millions. Notwithstanding all the corrections added to it, the sum is too extravagant. If the tenth part of the money, spent [Page 171] by sovereign princes in destroying mankind, (out of which a hundred, or two hundred individuals, may perhaps make their fortunes) were applied, for ten years together, in pro­moting the happiness of their own subjects, and of foreign settlers, who might be willing to employ their strength and industry in the improvement of the soil, population would sensibly recover, the earth would be cultivated, and manufactures encouraged. The king's revenue, even with a diminution of taxes, could not fail of improving considerably from the pro­digious increase of consumption, and the quickening of circu­lation through every order of the state.

As long as the state of Europe bears any resemblance to its fabulous origin, depopulation will continue to be felt. In vain may Cadmus sow the dragon's teeth, if the children of the earth are to rise in arms, and employ them in destroying one another. Princes, as well as individuals, look for happiness and advancement at a distance, when perhaps they might find both one and the other at home. Real power is only to be acquired by living in peace with our neighbours, and preserving order and tranquillity among ourselves.

A new work has lately appeared, called the Rural Philosopher, in which there are some very fine observations, though clouded by the enthusiasm of agriculture. The author's whole argument turns upon the same false principle, which I have already refuted in the other Treatise. Every thing is confined to the territorial produce. This is his motto, and the burthen of his song. In his opinion all the rest is fallacy and ruin. Annuitants are nothing but devouring wolves. He does them the honor of placing them in the rank of beggars. Manufactures are per­nicious. Money is a chimera. In short, it is a mere enthu­siasm, borrowing enchanting colors from calculation. These ar­bitrary calculations, on subjects no way susceptible of them, [Page 172] are enough to make reason itself run mad. When Monsieur de Mirabeau, for instance, in supporting his system, finds himself embarrassed by facts, and by the experience of such a nation as Holland, he tells us that that country, which some people call a nation, is only an open factory, where money transactions are carried on upon momentary credit. This is a strange way of treating a people, who formerly defended their liberty against the first power in Europe; who were powerful enough to conquer almost all the Spanish possessions in the East Indies as well as the Brazils, and upon whose resolutions the fate of Europe has frequently depended. Without the assistance of loans and fictitious riches, neither England nor the republic could have carried on so extensive a commerce as they have done, nor supported such enormous expences abroad. Facts and expe­perience are for ever at variance with Monsieur de Mirabeau's general rules. In this new treatise he affirms that, if the national debt were carried to such an extreme, that the state of the annuitant should be chosen in preference to any other, we might then bid adieu to all expence; annuities, commerce, lands, every thing would be alienated, every thing would be overthrown, and fall to ruin. Yet it is to be observed, that land in England is better cultivated, and has risen considerably in value, since the national debt has increased the number of annuitants, or rather of those who have part of their property in annuities, and who for the most part are either men of rank who improve their estates, or capital merchants, or wealthy tradesmen. The author pretends to prove, upon evidence of fact, that annuities are to the profit of him who receives them, and to the detriment of him who pays them.

‘"What creditable family is there that does not consider it as the first object, in matter of business, to pay off every mortgage [Page 173] that incumbers their estate? Is there a father of a family, who wishes for an independent fortune with respect to his expences, and for an idle life with respect to the place of his residence; and do we not hear him affirm, ever since this unhappy custom has prevailed, that, to be at his ease, he must have at least a third of his property placed out at interest? The proof then is, that every man thinks it his interest to lend, but no man to borrow; that annuities are to the profit of him who receives, and to the prejudice of him who pays; and that money lent at interest is ruinous to the borrower. Whatever is inconsistent with the interest of a single family, must be equally inconsistent with the interest of all the families in a state. The state itself is only one great family, formed by the union of several. The separate ruin of each is the aggregate ruin of the nation. The universe is one immense state, composed of great families under the title of nations. The same causes, that destroy a nation, operate equally to the ruin of the world, and of mankind."’

This is an admirable sermon, but unluckily it misses the mark. The principle is not universally true, and the application is defective. Money lent at interest, so far from injuring the borrower, is of service to the merchant, and promotes trade. In Holland, England, and all commercial countries, many of the wealthiest merchants borrow money at three or four per cent. and by employing it in trade make double and triple the profit by it. This advantage, which merchants first met with in Hol­land, has contributed not a little to facilitate commerce, and to the glory and welfare of the state. Monsieur de Mirabeau has no true idea of these matters. The liberty of drawing upon a correspondent, the interest paid him for the money he advances, are so many loans in effect, infinitely to the advantage of the [Page 174] borrower. When the father of a family vests all his property in annuities, (which seldom happens) he then, and only then, may be said to give up all thoughts of business, and to aim at nothing but an independent subsistence. In that case it may be his interest to pay off every debt that incumbers his family. We see then how much the principle must be qualified, to make it true with respect to individuals. The application of it to the state is absolutely false. That which ruins an individual, does not always ruin the state. The money a man lays out for his subsistence, or in articles of luxury, does not return again into his family; whereas the internal expences of a monarch, or of the state, return into the nation, encourage and improve it. The nation in a body pays these expences, or rather lends the money for its own advantage. With the assistance of loans a war may be supported by moderate taxes, in comparison with what the nation would otherwise be obliged to pay, at the same time that the numerary wealth and circulation increase with the debt, as we have already demonstrated. If other obstacles did not lie in the way, we should find that both population and agriculture would be promoted by that quick and easy motion which loans impress upon the springs of a prudent administration. Loans judiciously made, and wisely applied, under favor of peace, constitute the only means of recovering population, and improving the soil.

It is not true that, in the revealed law, God forbids all interest on money borrowed, as usurious. That passage in the Holy Scriptures has never been understood, and has given occasion to many atrocious calumnies against the Jews, which, instead of affecting that people, are so many blasphemies against the word of God. In the Hebrew language there are two expressions; nesseg, which signifies Interest; and tarbit, which signifies Usury. [Page 175] How often has Voltaire affirmed, that, in the maledictions pronounced by Moses against the Jews, he threatens them, that they shall borrow on usury, and not be able to lend on the same terms? The charge is false and scandalous. In the chap­ter of Benedictions, the text says, Thou shalt lend to divers nations, and thou shalt not borrow. In the chapter of Curses, the text says, Thou shalt borrow of divers nations, and thou shalt not lend; without one word of usury or interest. I could not avoid taking notice of so gross a mistake. It is true, however, that among the Jews the rich are forbidden from taking interest of the poor; but Moses does not extend the prohibition to people of fortune among one another. The Jewish government was theocratical, depending merely on the cultivation of the soil, which was distributed among the people with an exact equality. The legislature appointed a jubilee for the abolition of debts, and for the restoration of every family to the lands they had alienated; but insolvent debtors paid for this advantage with the loss of their liberty, until the period of restitution arrived. Their political constitution is no way applicable to Europe. In the same spirit Moses permits the Jews to take interest of strangers; but it is absurd to say, that usury was ever com­manded. Lanochry tassig. Tassig comes from nessig, and can only signify Legal Interest, which they were permitted to take from strangers. Tarbit signifies Augmentation, or Usury, which God never commanded his people to exact. A reproach of this kind is blasphemy in the mouth of a Christian, and folly in the mind of a philosopher. But to return.

An equal distribution of property was much in the spirit of the Greek and Roman legislation. We know what agitation was produced by the agrarian law among the Romans. In our constitutions this chimerical system is given up. The number [Page 176] of new classes created by industry, commerce, and abundance, have established a sort of distribution unknown to the ancients. Through the medium of national loans, the possessors of this new property become co-usufructuaries of the soil, with signal advantage to the state. From the whole of this treatise it appears that they multiply the numerary, quicken circulation, and encourage commerce, manufactures, agriculture, revenue, and population.

Gold and silver are useless in a desert; whereas these metals, or whatever represents them, in a populous country surrounded by polished nations, supply every want, and quicken every resource, by means of a general convention. The wise man had reason to say, "Money answers to every thing." To deny these propositions, is an abuse of truth, and of the understanding, and confounds the simplest ideas. All men cannot be proprie­tors of land. To proscribe the other classes is an insupportable absurdity. The anathema, pronounced against them by the Rural Philosopher, is equally unjust and ridiculous. The num­ber of mere annuitants is very inconsiderable. Their pretended idleness is not supported by the labor of others. They, on the contrary, support that labor by their expence. But these idle annuitants, who have neither land, nor office, nor employment civil or military, are very rare. Interest on money is useful and necessary. Usury is dangerous and destructive. To confound the two objects, is to forbid the use of fire, because it burns those who go too close to it.

The Rural Philosopher is very severe upon manufactures. It is true the manufacturer, the artist, the merchant, and the banker, can more easily remove into another country. Their property is not so intimately attached to the state, or rather to the soil. ‘"Their wealth," says he, is dispersed and unknown. [Page 177] And all riches that depend upon seculation, or are capable of being hoarded, give no hold to the sovereign power."’ This rule however is not universally true. It can only hold with respect to individuals, not to the whole class. For example, half a dozen manufacturers of Lyons, a few merchants belonging to Marseilles, or St. Maloe's, and a banker of Paris, may quit their country without difficulty in the course of a day, and establish themselves elsewhere. In the same manner a landlord may sell his estate, and purchase land in another country; but it is absurd to suppose that all the manufacturers of Lyons, that all the merchants of Marseilles or Bourdeaux, or that all the bankers of Paris, can find occupation elsewhere for their trade, industry, and abilities.

The landlord would be the first to suffer, if the merchant, the mechanic, the annuitant, the nobility, and even the artist of luxury, did not give a venal value to the superfluous produce of the earth, by quickening circulation and con­sumption. To decide this question, or to state it in rational terms, I should be glad that these profound, eternal calculators, who pretend to understand the art of agriculture so thoroughly, would make a simple, exact, and unexaggerated calculation of the number of people necessary to cultivate and improve all the soil of France; that is, as much of it as is suited to the pro­duction of corn, or fit to be laid out in vineyards. The woods are necessary for various uses, and occupy but a few hands. The improvement of the heaths at Bourdeaux is not to be reckoned, while such quantities of good land remain uncultivated. It will not easily be believed how few hands are necessary to make a rich soil produce sufficient nourishment for a great number of consumers. The earth is so fertile, and nature is so bountiful, [Page 178] that multitudes may subsist upon the labor of a few. Nothing but commerce, mutual intercourse, and free exportation, can give a venal value to all the superfluous produce. Every restraint upon the vent of it is injurious to the body of the state, and checks population in other branches. As these classes, so severely proscribed by Monsieur de Mirabeau, multiply in the state, internal consumption will increase, and foreign trade and exportation become so much the less necessary. As manu­factures flourish, the freedom of commerce will improve. An­nuitants, bankers, merchants, and other citizens, will circulate so much the more money, and employ so many more hands in mercantile occupations, which we are told are so unfruitful a soil. Population will improve, and agriculture be much more encouraged, by the consumption of the manufacturer, than population can be encouraged by agriculture. But to return to the calculation. It will be found that, if wars, colonies, and some particular moral causes had not depopulated Europe, the lands in general would have been better cultivated, and their value improved; and that this consumption and value would proceed from the multitude of useful and industrious citizens, whose expence and circulation set every thing in motion. Eng­land in proportion is much better peopled than France, and the soil more improved. Yet their exportation of corn is im­mense. The internal consumption and population of the kingdom might therefore be much greater than they are. But this popu­lation, which of course would increase the class of farmers, could not exist without a proportionate increase in all those classes, against which the enthusiastic apostles of agriculture have pronounced their anathema. I should willingly concur with them in opinion, if they were contented with extolling the [Page 179] immense utility of their favorite object, without excluding others equally useful, and even necessary to the improvement of agri­culture itself. An able calculator might demonstrate that, if other nations did not cavil with the Dutch about those branches of industry which have fallen to their lot, and which in truth are their only inheritance, Amsterdam, Middleburgh, Dort, and Rotterdam, might contain double their present number of inhabitants, with a considerable addition to the general opulence of the republic. Population, which in Holland is much greater in proportion than in any part of Europe, would continue to increase, with prodigious advantage to those nations that culti­vate their soil. This single reflection qualifies all exaggerations, and reduces the question to those terms of policy and reason, which I am endeavouring to establish.

Let us not deceive ourselves. The harmony of a state arises from the agreement of its various parts. They borrow a mutual assistance from each other. Time, that consumes every thing, will correct a number of mistakes. The new world, which now in the philosopher's eye seems useless, hurtful, and even dangerous to the old one, shall one day or other become necessary, when the population of Europe shall be carried to its highest point of improvement. We know that in China the legislature are obliged to check population; the example of China and Holland proves the truth of what I advance. If all the arable land in Europe were laid out in the production of corn, a great part of it, I am convinced, would perish for want of consumers. To create a consumption equal to so extensive a cultivation, we must multiply the population of great cities, towns and villages. There neither should, nor can be, more than one Paris in France, nor one London in England; but there might be, as in China, [Page 180] fifty cities more populous than Lyons, Nantes, Rochelle, and Bourdeaux; and every village might be better inhabited than it is. This is the way to raise the power of the prince, and the value of land; which never can be accomplished but by a con­tinued peace, and by removing those moral obstacles that make it difficult for the farmer to subsist, and counteract population. A free exportation of the produce of the earth is essential. The rest is the work of time, and of a good administration, under which, commerce, manufactures, circulation, and public credit act their respective parts, and all concur in promoting the same purpose. But every branch has its limits and relative proportion to the rest. While they preserve this proportion, they assist, when they depart from it, they destroy one another.

The inhabitants of cities, says Monsieur de Montesquieu, judge of the opulence of a kingdom by the glittering luxury of those who are the ruin of it. They deceive themselves un­doubtedly. At the same time we are not to judge of the state of a whole kingdom from the decay of a single province. The metropolis, we are told, with all its barren opulence, is only a magazine, like ancient Rome, in which the spoils of the pro­vinces are collected; but the difference is very material. Paris and London are inhabited by industrious classes of men, who promote agriculture, commerce, and consumption. The extent of the two cities exceeds their due proportion to the state, which is depopulated by other causes. For this reason, Paris appears, in the philosopher's eye, a mass of several cities transplanted, and which might be more advantageously situated elsewhere. This transplantation, says Monsieur de Mirabeau, can only have been effected by a sort of chymical extraction, considering the loss of all the alimentary juices imbibed by the channels through [Page 181] which they pass, before they reach the capital. The surplus, received by the metropolis, may perhaps be ill distributed, varīable, precarious, and transitory, owing to a concurrence of various effects, which prevent the proportionate population of the kingdom, and the cultivation of the soil. But I affirm that France might be more populous, the land better cultivated, and Paris as great, and even better inhabited, than it actually is; and that, if a due harmony and proportion were preserved in the other parts, the greatness of the capital, and multitude of its citizens, would be an encouragement to agriculture, which must stand still, if it were not for the number of consumers in the different classes of citizens. Such, in short, is my opinion upon this important question.

A number of examples might be quoted, but they would lead me into a detail of the proportions and balance to be preserved in every class. When one class invades another, the prejudice they suffer is reciprocal. The first advantage may seem specious, but the loss of harmony and proportion makes it transitory and destructive. The many passages in history, which show the political inconvenience of too copious a population, would lead us too far. The eternal laws of providence have implanted the seed of generation and perpetuity in every substance, but they seem also to have set bounds to their multiplication. The works of nature subsist by devouring one another. Every thing in its turn is pasture and a grave. Final causes are placed beyond our reach. The quantity of acorns lost or consumed is prodigious. Very few produce oaks. Every thing has its use. Out of a thousand melon-seeds scarce one perpetuates the plant. The attraction, which the Author of nature has annexed to the act that perpetuates our being, is oftener a dream of pleasure, than [Page 182] an effort to immortalise the species. If nature, in some instances, appears too prodigal, it is because we are unacquainted with the immutable laws by which her oeconomy is directed. America perhaps, after depopulating Europe, may serve hereafter to relieve us from too abundant a population.

To make it apparent that there is a maximum in agriculture and population, the reader is requested to employ his imagination upon the following remarks. Suppose, in the first place, that all Europe were as well peopled as it might be. By computation it would contain four or five times as many inhabitants, as it has at present. In that case, it would be indispensably necessary to cultivate every foot of land, in order to maintain such a multi­tude of people; and let it be admitted that, by a superior system of legislation and government, the several classes should be distributed in due gradations; and, in a word, that an exact proportion and harmony should be preserved among all the parts of so many different states. When Europe had once arrived at this period of agriculture and population, what would be the consequence? Must the farther progress of population be stopt? By what means could it be done? We should be compelled to send colonies to America and elsewhere. Even this resource would not be sufficient. The fatal assistance of war would be called in, to supply the office of pestilence and famine. They too in their turn would soon be severely felt. The very population we suppose would introduce them. The annual produce of the earth would be annually consumed by the respective inhabitants of every country. Now it is certain that, after a few years, the harvest fails in all countries. All of them then must successively perish by famine; because every country would want the whole of its own produce for the internal con­sumption [Page 183] of its inhabitants, and could spare nothing for the supply of its neighbours.

Some naturalists pretend, that our terrestrial globe is only sur­rounded by a vegetative crust, gradually exhausted by cultivation, until at last it becomes dry and unfruitful. They tell us that the deserts of Arabia were once a fertile country, and the earliest habitation of mankind. Without sifting the question too mi­nutely, we all know that the earth recovers its youth, and preserves its fertility, by repose. We know with what eager impatient vegetation a new soil rewards the first labors of the plough. To promote the order, harmony, and preservation of the whole, there must be an alternate succession of cultivation and repose; a store of provisions must be reserved; some lands must be fallow; some countries must be uninhabited; it pro­bably does not enter into the design of Providence, that the earth should be equally peopled and cultivated all over. Such a state of perfection and opulence, if it could exist for a moment, would introduce the severest calamities. We know not what our supreme good consists in. Apparent imperfections contribute to the general security. We only see part of the picture, and are dazzled by false lights. Perfection cannot belong to the single part before us, but must result from the whole.

Excessive population has constantly given birth to war, which, turning against its parent, diminishes and destroys it.

To multiply men, says Monsieur de Mirabeau, without mul­tiplying subsistence, is devoting them to the misery of famine. The phenomenon is rare, and can never happen, but through some defect in administration and police. On the other hand, to multiply subsistence without multiplying consumers, is a ruinous chimera, that never can hold above a year. The phy­sical [Page 184] limits of population in any country are not inviolably confined by the produce of its own territory, when trade and navigation prosper, and are assisted by credit, circulation, and fictitious wealth. Let Holland be the example. It is rather true that cultivation is inviolably confined by the internal con­sumption, or precarious foreign exportation. When population exceeds wealth, the defect is inherent in the body of the state. The whole political machine is out of order. Whenever this happens, every part will demand our attention at the same moment. The remedy must be general, and equally applied to every defect. We must then, as Lord Bacon observes upon another subject, endeavour to imitate the great operations of nature, not those of art, which are always slow, feeble, and imperfect. The statuary forms his statue successively by parts; sometimes working upon the head, sometimes upon the limbs; but it is our business to follow the conduct of nature in what­ever she produces; rudimenta partium omnium simul parit et pro­ducit. She at once lays the plan of the whole being, and furnishes all the parts together. Vegetables and animals increase in size, and improve in their strength; but they are the same from the moment they begin to exist. There must be one coercive power to confine the several orders of the state, as the key-stone of the arch holds the building together. In a great kingdom, to preserve the harmony of the state, the good order and prosperity of the nation, agriculture, commerce, manufac­tures, circulation, public credit, internal police, finance, mili­tary establishment, colonies, navigation, marine, and moderate luxury, should proceed together in a reciprocal proportion.

Extent of frontier alone does not constitute the power of a state; but it is a considerable advantage, as it offers a subsistence [Page 185] to a greater number of subjects. Yet number alone, with a mere physical subsistence, is not enough. They must subsist with ease; and, to make a great number subsist with ease, they must be divided into classes. To confine them to the single occupation of agriculture, is impossible. If the population of France were complete, the external vent or exportation of corn would be of little or no use. As things are circumstanced, ex­portation must be considered as a supplementary consumption, in favor of agriculture, or as a remedy for the want of population. This vehicle of commerce supports agriculture, and increases the number of subjects. But the increase of population is not the true secret of government; it consists in maintaining the harmony of parts, and the equilibrium of the whole.