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Chapter 3



In that rude state of society which precedes the extension of
commerce and the improvement of manufactures ; when those
expensive luxuries, which commerce and manufactures can alone
introduce, are altogether unknown ; the person who possesses a
large revenue, I have endeavoured to show in the third book of
this Inquiry, can spend or enjoy that revenue in no other way
than by maintaining nearly as many people as it can maintain. A
large revenue may at all times be said to consist in the command
of a large quantity of the necessaries of life. In that rude
state of things, it is commonly paid in a large quantity of those
necessaries, in the materials of plain food and coarse clothing,
in corn and cattle, in wool and raw hides. When neither commerce
nor manufactures furnish any thing for which the owner can
exchange the greater part of those materials which are over and
above his own consumption, he can do nothing with the surplus,
but feed and clothe nearly as many people as it will feed and
clothe. A hospitality in which there is no luxury, and a
liberality in which there is no ostentation, occasion, in this
situation of things, the principal expenses of the rich and the
great. But these I have likewise endeavoured to show, in the same
book, are expenses by which people are not very apt to ruin
themselves. There is not, perhaps, any selfish pleasure so
frivolous, of which the pursuit has not sometimes ruined even
sensible men. A passion for cock-fighting has ruined many. But
the instances, I believe, are not very numerous, of people who
have been ruined by a hospitality or liberality of this kind;
though the hospitality of luxury, and the liberality of
ostentation have ruined many. Among our feudal ancestors, the
long time during which estates used to continue in the same
family, sufficiently demonstrates the general disposition of
people to live within their income. Though the rustic
hospitality, constantly exercised by the great landholders, may
not, to us in the present times, seem consistent with that order
which we are apt to consider as inseparably connected with good
economy; yet we must certainly allow them to have been at least
so far frugal, as not commonly to have spent their whole income.
A part of their wool and raw hides, they had generally an
opportunity of selling for money. Some part of this money,
perhaps, they spent in purchasing the few objects of vanity and
luxury, with which the circumstances of the times could furnish
them ; but some part of it they seem commonly to have hoarded.
They could not well, indeed, do any thing else but hoard whatever
money they saved. To trade, was disgraceful to a gentleman; and
to lend money at interest, which at that time was considered as
usury, and prohibited bylaw, would have been still more so. In
those times of violence and disorder, besides, it was convenient
to have a hoard of money at hand, that in case they should be
driven from their own home, they might have something of known
value to carry with them to some place of safety. The same
violence which made it convenient to hoard, made it equally
convenient to conceal the hoard. The frequency of treasure-trove,
or of treasure found, of which no owner was known, sufficiently
demonstrates the frequency, in those times, both of hoarding and
of concealing the hoard. Treasure-trove was then considered as an
important branch of the revenue of the sovereign. All the
treasure-truve of the kingdom would scarce, perhaps, in the
present times, make an important branch of the revenue of a
private gentleman of a good estate.

The same disposition, to save and to hoard, prevailed in the
sovereign, as well as in the subjects. Among nations, to whom
commerce and manufacture are little known, the sovereign, it has
already been observed in the Fourth book, is in a situation which
naturally disposes him to the parsimony requisite for
accumulation. In that situation, the expense, even of a
sovereign, cannot be directed by that vanity which delights in
the gaudy finery of a court. The ignorance of the times affords
but few of the trinkets in which that finery consists. Standing
armies are not then necessary; so that the expense, even of a
sovereign, like that of any other great lord can be employed in
scarce any thing but bounty to his tenants, and hospitality to
his retainers. But bounty and hospitality very seldom lead to
extravagance; though vanity almost always does. All the ancient
sovereigns of Europe, accordingly, it has already been observed,
had treasures. Every Tartar chief, in the present times, is said
to have one.

In a commercial country, abounding with every sort of expensive
luxury, the sovereign, in the same manner as almost all the great
proprietors in his dominions, naturally spends a great part of
his revenue in purchasing those luxuries. His own and the
neighbouring countries supply him abundantly with all the costly
trinkets which compose the splendid, but insignificant, pageantry
of a court. For the sake of an inferior pageantry of the same
kind, his nobles dismiss their retainers, make their tenants
independent, and become gradually themselves as insignificant as
the greater part of the wealthy burghers in his dominions.
The same frivolous passions, which influence their conduct,
influence his. How can it be supposed that he should be the only
rich man in his dominions who is insensible to pleasures of this
kind ? If he does not, what he is very likely to do, spend upon
those pleasures so great a part of his revenue as to debilitate
very much the defensive power of the state, it cannot well be
expected that he should not spend upon them all that part of it
which is over and above what is necessary for supporting that
defensive power. His ordinary expense becomes equal to his
ordinary revenue, and it is well if it does not frequently exceed
it. The amassing of treasure can no longer be expected; and when
extraordinary exigencies require extraordinary expenses, he must
necessarily call upon his subjects for an extraordinary aid. The
present and the late king of Prussia are the only great princes
of Europe, who, since the death of Henry IV. of France, in 1610,
are supposed to have amassed any considerable treasure. The
parsimony which leads to accumulation has become almost as rare
in republican as in monarchical governments. The Italian
republics, the United Provinces of the Netherlands, are all in
debt. The canton of Berne is the single republic in Europe which
has amassed any considerable treasure. The other Swiss republics
have not. The taste for some sort of pageantry, for splendid
buildings, at least, and other public ornaments, frequently
prevails as much in the apparently sober senate-house of a little
republic, as in the dissipated court of the greatest king.

The want of parsimony, in time of peace, imposes the necessity of
contracting debt in time of war. When war comes, there is no
money in the treasury, but what is necessary for carrying on the
ordinary expense of the peace establishment. In war, an
establishment of three or four times that expense be. comes
necessary for the defence of the state ; and consequently, a
revenue three or four times greater than the peace revenue.
Supposing that the sovereign should have, what he scarce ever
has, the immediate means of augmenting his revenue in proportion
to the augmentation of his expense; yet still the produce of the
taxes, from which this increase of revenue must be drawn, will
not begin to come into the treasury, till perhaps ten or twelve
months after they are imposed. But the moment in which war
begins, or rather the moment in which it appears likely to begin,
the army must be augmented, the fleet must be fitted out, the
garrisoned towns must be put into a posture of defence; that
army, that fleet, those garrisoned towns, must be furnished with
arms, ammunition, and provisions. An immediate and great
expense must be incurred in that moment of immediate danger,
which will not wait for the gradual and slow returns of the new
taxes. In this exigency, government can have no other resource
but in borrowing.

The same commercial state of society which, by the operation of
moral causes, brings government in this manner into the necessity
of borrowing, produces in the subjects both an ability and an
inclination to lend. If it commonly brings along with it the
necessity of borrowing, it likewise brings with it the facility
of doing so.

A country abounding with merchants and manufacturers, necessarily
abounds with a set of people through whose hands, not only their
own capitals, but the capitals of all those who either lend them
money, or trust them with goods, pass as frequently, or more
frequently, than the revenue of a private man, who, without trade
or business, lives upon his income, passes through his hands. The
revenue of such a man can regularly pass through his hands only
once in a year. But the whole amount of the capital and credit of
a merchant, who deals in a trade of which the returns are very
quick, may sometimes pass through his hands two, three, or four
times in a year. A country abounding with merchants and
manufacturers, therefore, necessarily abounds with a set of
people, who have it at all times in their power to advance, if
they chuse to do so, a very large sum of money to government.
Hence the ability in the subjects of a commercial state to lend.

Commerce and manufactures can seldom flourish long in any state
which does not enjoy a regular administration of justice; in
which the people do not feel themselves secure in the possession
of their property ; in which the faith of contracts is not
supported by law ; and in which the authority of the state is not
supposed to be regularly employed in enforcing the payment of
debts from all those who are able to pay. Commerce and
manufactures, in short, can seldom flourish in any state, in
which there is not a certain degree of confidence in the justice
of government. The same confidence which disposes great merchants
and manufacturers upon ordinary occasions, to trust their
property to the protection of a particular government, disposes
them, upon extraordinary occasions, to trust that government with
the use of their property. By lending money to government, they
do not even for a moment diminish their ability to carry on their
trade and manufactures; on the contrary, they commonly augment
it. The necessities of the state render government, upon most
occasions willing to borrow upon terms extremely advantageous to
the lender. The security which it grants to the original
creditor, is made transferable to any other creditor ; and from
the universal confidence in the justice of the state, generally
sells in the market for more than was originally paid for it. The
merchant or monied man makes money by lending money to
government, and instead of diminishing. increases his trading
capital. He generally considers it as a favour, therefore, when
the administration admits him to a share in the first
subscription for a new loan. Hence the inclination or willingness
in the subjects of a commercial state to lend.

The government of such a state is very apt to repose itself upon
this ability and willingness of its subjects to lend it their
money on extraordinary occasions. It foresees the facility of
borrowing, and therefore dispenses itself from the duty of

In a rude state of society, there are no great mercantile or
manufacturing capitals. The individuals, who hoard whatever money
they can save, and who conceal their hoard, do so from a distrust
of the justice of government ; from a fear, that if it was known
that they had a hoard, and where that hoard was to be found, they
would quickly be plundered. In such a state of things, few people
would be able, and nobody would be willing to lend their money to
government on extraordinary exigencies. The sovereign feels that
he must provide for such exigencies by saving, because he
foresees the absolute impossibility of borrowing. This foresight
increases still further his natural disposition to save.

The progress of the enormous debts which at present oppress, and
will in the long-run probably ruin, all the great nations of
Europe, has been pretty uniform. Nations, like private men, have
generally begun to borrow upon what may be called personal
credit, without assigning or mortgaging any particular fund for
the payment of the debt; and when this resource has failed them,
they have gone on to borrow upon assignments or mortgages of
particular funds.

What is called the unfunded debt of Great Britain, is contracted
in the former of those two ways. It consists partly in a debt
which bears, or is supposed to bear, no interest, and which
resembles the debts that a private man contracts upon account;
and partly in a debt which bears interest, and which resembles
what a private man contracts upon his bill or promissory-note.
The debts which are due, either for extraordinary services, or
for services either not provided for, or not paid at the time
when they are performed; part of the extraordinaries of the army,
navy, and ordnance, the arrears of subsidies to foreign princes,
those of seamen's wages, etc. usually constitute a debt of the
first kind. Navy and exchequer bills, which are issued sometimes
in payment of a part of such debts, and sometimes for other
purposes, constitute a debt of the second kind; exchequer bills
bearing interest from the day on which they are issued, and navy
bills six months after they are issued. The bank of England,
either by voluntarily discounting those bills at their current
value, or by agreeing with government for certain considerations
to circulate exchequer bills, that is, to receive them at par,
paying the interest which happens to be due upon them, keeps up
their value, and facilitates their circulation, and thereby
frequently enables government to contract a very large debt of
this kind. In France, where there is no bank, the state bills
(billets d'etat { See Examen des Reflections Politiques sur les
Finances.}) have sometimes sold at sixty and seventy per cent.
discount. During the great recoinage in king William's time, when
the bank of England thought proper to put a stop to its usual
transactions, exchequer bills and tallies are said to have sold
from twenty-five to sixty per cent. discount; owing partly, no
doubt, to the supposed instability of the new government
established by the Revolution, but partly, too, to the want of
the support of the bank of England.

When this resource is exhausted, and it becomes necessary, in
order to raise money, to assign or mortgage some particular
branch of the public revenue for the payment of the debt,
government has, upon different occasions, done this in two
different ways. Sometimes it has made this assignment or mortgage
for a short period of time only, a year, or a few years, for
example; and sometimes for perpetuity. In the one case, the fund
was supposed sufficient to pay, within the limited time, both
principal and interest of the money borrowed. In the other, it
was supposed sufticient to pay the interest only, or a perpetual
annuity equivalent to the interest, government being at liberty
to redeem, at any time, this annuity, upon paying back the
principal sum borrowed. When money was raised in the one way. it
was said to be raised by anticipation ; when in the other, by
perpetual funding, or, more shortly, by funding.

In Great Britain, the annual land and malt taxes are regularly
anticipated every year, by virtue of a borrowing clause
constantly inserted into the acts which impose them. The bank of
England generally advances at an interest, which, since the
Revolution, has varied from eight to three per cent., the sums of
which those taxes are granted, and receives payment as their
produce gradually comes in. If there is a deficiency, which there
always is, it is provided for in the supplies of the ensuing
year. The only considerable branch of the public revenue which
yet remains unmortgaged, is thus regularly spent before it comes
in. Like an improvident spendthrift, whose pressing occasions
will not allow him to wait for the regular payment of his
revenue, the state is in the constant practice of borrowing of
its own factors and agents, and of paying interest for the use of
its own money.

In the reign of king William, and during a great part of that of
queen Anne, before we had become so familiar as we are now with
the practice of perpetual funding, the greater part of the new
taxes were imposed but for a short period of time (for four,
five, six, or seven years only), and a great part of the grants
of every year consisted in loans upon anticipations of the
produce of those taxes. The produce being frequently insufficient
for paying, within the limited term, the principal and interest
of the money borrowed, deficiencies arose; to make good which, it
became necessary to prolong the term.

In 1697, by the 8th of William III., c. 20, the deficiencies of
several taxes were charged upon what was then called the first
general mortgage or fund, consisting of a prolongation to the
first of August 1706, of several different taxes, which would
have expired within a shorter term, and of which the produce was
accumulated into one general fund. The deficiencies charged upon
this prolonged term amounted to 5,160,459: 14: 9.

In 1701, those duties, with some others, were still further
prolonged, for the like purposes, till the first of August 1710,
and were called the second general mortgage or fund. The
deficiencies charged upon it amounted to 2,055,999: 7: 11.

In 1707, those duties were still further prolonged, as a fund for
new loans. to the first of August 1712, and were called the third
general mortgage or fund. The sum borrowed upon it was

In 1708, those duties were all (except the old subsidy of tonnage
and poundage, of which one moiety only was made a part of this
fund, and a duty upon the importation of Scotch linen, which had
been taken off by the articles of union) still further continued,
as a fund for new loans, to the first of August 1714, and were
called the fourth general mortgage or fund. The sum borrowed upon
it was 925,176:9:2.

In 1709, those duties were all ( except the old subsidy of
tonnage and poundage, which was now left out of this fund
altogether ) still further continued, for the same purpose, to
the first of August 1716, and were called the fifth general
mortgage or fund. The sum borrowed upon it was 922,029:6s.

In 1710, those duties were again prolonged to the first of August
1720, and were called the sixth general mortgage or fund. The sum
borrowed upon it was 1,296,552:9:11.

In 1711, the same duties (which at this time were thus subject to
four different anticipations), together with several others, were
continued for ever, and made a fund for paying the interest of
the capital of the South-sea company, which had that year
advanced to government, for paying debts, and making good
deficiencies, the sum of 9,177,967:15:4d, the greatest loan
which at that time had ever been made.

Before this period, the principal, so far as I have been able to
observe, the only taxes, which, in order to pay the interest of a
debt, had been imposed for perpetuity, were those for paying the
interest of the money which had been advanced to government by
the bank and East-India company, and of what it was expected
would be advanced, but which was never advanced, by a projected
land bank. The bank fund at this time amounted to
3,375,027:17:10, for which was paid an annuity or interest of
206,501:15:5d. The East-India fund amounted to 3,200,000, for
which was paid an annuity or interest of 160,000; the bank fund
being at six per cent., the East-India fund at five per cent.

In 1715, by the first of George I., c. 12, the different taxes
which had been mortgaged for paying the bank annuity, together
with several others, which, by this act, were likewise rendered
perpetual, were accumulated into one common fund, called the
aggregate fund, which was charged not only with the payment of
the bank annuity, but with several other annuities and burdens of
different kinds. This fund was afterwards augmented by the third
of George I., c.8., and by the fifth of George I., c. 3, and the
different duties which were then added to it were likewise
rendered perpetual.

In 1717, by the third of George I., c. 7, several other taxes
were rendered perpetual, and accumulated into another common
fund, called the general fund, for the payment of certain
annuities, amounting in the whole to 724,849:6:10.

In consequence of those different acts, the greater part of the
taxes, which before had been anticipated only for a short term of
years were rendered perpetual, as a fund for paying, not the
capital, but the interest only, of the money which had been
borrowed upon them by different successive anticipations.

Had money never been raised but by anticipation, the course of a
few years would have liberated the public revenue, without any
other attention of government besides that of not overloading the
fund, by charging it with more debt than it could pay within the
limited term, and not of anticipating a second time before the
expiration of the first anticipation. But the greater part of
European governments have been incapable of those attentions.
They have frequently overloaded the fund, even upon the first
anticipation; and when this happened not to be the case, they
have generally taken care to overload it, by anticipating a
second and a third time, before the expiration of the first
anticipation. The fund becoming in this manner altogether
insufficient for paying both principal and interest of the money
borrowed upon it, it became necessary to charge it with the
interest only, or a perpetual annuity equal to the interest ; and
such improvident anticipations necessarily gave birth to the more
ruinous practice of perpetual funding. But though this practice
necessarily puts off the liberation of the public revenue from a
fixed period, to one so indefinite that it is not very likely
ever to arrive ; yet, as a greater sum can, in all cases, be
raised by this new practice than by the old one of anticipation,
the former, when men have once become familiar with it, has, in
the great exigencies of the state, been universally preferred to
the latter. To relieve the present exigency, is always the object
which principally interests those immediately concerned in the
administration of public affairs. The future liberation of the
public revenue they leave to the care of posterity.

During the reign of queen Anne, the market rate of interest had
fallen from six to five per cent.; and, in the twelfth year of
her reign, five per cent. was declared to be the highest rate
which could lawfully be taken for money borrowed upon private
security. Soon after the greater part of the temporary taxes of
Great Britain had been rendered perpetual, and distributed into
the aggregate, South-sea, and general funds, the creditors of the
public, like those of private persons, were induced to accept of
five per cent. for the interest of their money, which occasioned
a saving of one per cent. upon the capital of the greater part or
the debts which had been thus funded for perpetuity, or of
one-sixth of the greater part of the annuities which were paid
out of the three great funds above mentioned. This saving left a
considerable surplus in the produce of the different taxes which
had been accumulated into those funds, over and above what was
necessary for paying the annuities which were now charged upon
them, and laid the foundation of what has since been called the
sinking fund. In 1717, it amounted to 523,454:7:7. In 1727, the
interest of the greater part of the public debts was still
further reduced to four per cent.; and, in 1753 and 1757, to
three and a-half, and three per cent., which reductions still
further augmented the sinking fund.

A sinking fund, though instituted for the payment of old,
facilitates very much the contracting of new debts. It is a
subsidiary fund, always at hand, to be mortgaged in aid of any
other doubtful fund, upon which money is proposed to be raised in
any exigency of the state. Whether the sinking fund of Great
Britain has been more frequently applied to the one or to other
of those two purposes, will sufficiently appear by and by.

Besides those two methods of borrowing, by anticipations and by a
perpetual funding, there are two other methods, which hold a sort
of middle place between them ; these are, that of borrowing upon
annuities for terms of years, and that of borrowing upon
annuities for lives.

During the reigns of king William and queen Anne, large sums were
frequently borrowed upon annuities for terms of years, which were
sometimes longer and sometimes shorter. In 1695, an act was
passed for borrowing one million upon an annuity of fourteen per
cent., or 140,000 a-year, for sixteen years. In 1691, an act was
passed for borrowing a million upon annuities for lives, upon
terms which, in the present times, would appear very
advantageous; but the subscription was not filled up. In the
following year, the deficiency was made good, by borrowing upon
annuities for lives, at fourteen per cent. or a little more than
seven years purchase. In 1695, the persons who had purchased
those annuities were allowed to exchange them for others of
ninety-six years, upon paying into the exchequer sixty-three
pounds in the hundred ; that is, the difference between fourteen
per cent. for life, and fourteen per cent. for ninety-six years,
was sold for sixty-three pounds, or for four and a-half years
purchase. Such was the supposed instability of government, that
even these terms procured few purchasers. In the reign of queen
Anne, money was, upon different occasions, borrowed both upon
annuities for lives, and upon annuities for terms of thirty-two,
of eighty-nine, of ninety-eight, and of ninety-nine years. In
1719, the proprietors of the annuities for thirty-two years were
induced to accept, in lieu of them, South-sea stock to the amount
of eleven and a-half years purchase of the annuities, together
with an additional quantity of stock, equal to the arrears which
happened then to be due upon them. In 1720, the greater part of
the other annuities for terms of years, both long and short, were
subscribed into the same fund. The long annuities, at that time,
amounted to 666,821: 8:3 a-year. On the 5th of January 1775,
the remainder of them, or what was not subscribed at that time,
amounted only to 136,453:12:8d.

During the two wars which began in 1739 and in 1755, little money
was borrowed, either upon annuities for terms of years, or upon
those for lives. An annuity for ninety-eight or ninety-nine
years, however, is worth nearly as much as a perpetuity, and
should therefore, one might think, be a fund for borrowing nearly
as much. But those who, in order to make family settlements, and
to provide for remote futurity, buy into the public stocks, would
not care to purchase into one of which the value was continually
diminishing ; and such people make a very considerable
proportion, both of the proprietors and purchasers of stock. An
annuity for a long term of years, therefore, though its intrinsic
value may be very nearly the same with that of a perpetual
annuity, will not find nearly the same number of purchasers. The
subscribers to a new loan, who mean generally to sell their
subscription as soon as possible, prefer greatly a perpetual
annuity, redeemable by parliament, to an irredeemable annuity,
for a long term of years, of only equal amount. The value of the
former may be supposed always the same, or very nearly the same;
and it makes, therefore, a more convenient transferable stock
than the latter.

During the two last-mentioned wars, annuities, either for terms
of years or for lives, were seldom granted, but as premiums to
the subscribers of a new loan, over and above the redeemable
annuity or interest, upon the credit of which the loan was
supposed to be made. They were granted, not as the proper fund
upon which the money was borrowed, but as an additional
encouragement to the lender.

Annuities for lives have occasionally been granted in two
different ways ; either upon separate lives, or upon lots of
lives, which, in French, are called tontines, from the name of
their inventor. When annuities are granted upon separate lives,
the death of every individual annuitant disburdens the public
revenue, so far as it was affected by his annuity. When annuities
are granted upon tontines, the liberation of the public revenue
does not commence till the death of all the annuitants
comprehended in one lot, which may sometimes consist of twenty or
thirty persons, of whom the survivors succeed to the annuities of
all those who die before them; the last survivor succeeding to
the annuities of the whole lot. Upon the same revenue, more money
can always be raised by tontines than by annuities for separate
lives. An annuity, with a right of survivorship, is really worth
more than an equal annuity for a separate life ; and, from the
confidence which every man naturally has in his own good fortune,
the principle upon which is founded the success of all lotteries,
such an annuity generally sells for something more than it is
worth. In countries where it is usual for government to raise
money by granting annuities, tontines are, upon this account,
generally preferred to annuities for separate lives. The
expedient which will raise most money, is almost always preferred
to that which is likely to bring about, in the speediest manner,
the liberation of the public revenue.

In France, a much greater proportion of the public debts consists
in annuities for lives than in England. According to a memoir
presented by the parliament of Bourdeaux to the king, in 1764,
the whole public debt ot France is estimated at twenty-four
hundred millions of livres; of which the capital, for which
annuities for lives had been granted, is supposed to amount to
three hundred millions, the eighth part of the whole public debt.
The annuities themselves are computed to amount to thirty
millions a-year, the fourth part of one hundred and twenty
millions, the supposed interest of that whole debt. These
estimations, I know very well, are not exact; but having been
presented by so very respectable a body as approximations to the
truth, they may, I apprehend, be considered as such. It is not
the different degrees of anxiety in the two governments of France
and England for the liberation of the public revenue, which
occasions this difference in their respective modes of borrowing
; it arises altogether from the different views and interests of
the lenders.

In England, the seat of government being in the greatest
mercantile city in the world, the merchants are generally the
people who advance money to government. By advancing it, they do
not mean to diminish, but, on the contrary, to increase their
mercantile capitals; and unless they expected to sell, with some
profit, their share in the subscription for a new loan, they
never would subscribe. But if, by advancing their money, they
were to purchase, instead of perpetual annuities, annuities for
lives only, whether their own or those of other people, they
would not always be so likely to sell them with a profit.
Annuities upon their own lives they would always sell with loss;
because no man will give for an annuity upon the life of another,
whose age and state of health are nearly the same with his own,
the same price which he would give for one upon his own. An
annuity upon the life of a third person, indeed, is, no doubt, of
equal value to the buyer and the seller; but its real value
begins to diminish from the moment it is granted, and continues
to do so, more and more, as long as it subsists. It can never,
therefore, make so convenient a transferable stock as a perpetual
annuity, of which the real value may be supposed always the same,
or very nearly the same.

In France, the seat of government not being in a great mercantile
city, merchants do not make so great a proportion of the people
who advance money to government. The people concerned in the
finances, the farmers-general, the receivers of the taxes which
are not in farm, the court-bankers, etc. make the greater part of
those who advance their money in all public exigencies. Such
people are commonly men of mean birth, but of great wealth, and
frequently of great pride. They are too proud to marry their
equals, and women of quality disdain to marry them. They
frequently resolve, therefore, to live bachelors; and having
neither any families of their own, nor much regard for those of
their relations, whom they are not always very fond of
acknowledging, they desire only to live in splendour during their
own time, and are not unwilling that their fortune should end
with themselves. The number of rich people, besides, who are
either averse to marry, or whose condition of life renders it
either improper or inconvenient for them to do so, is much
greater in France than in England. To such people, who have
little or no care for posterity, nothing can be more convenient
than to exchange their capital for a revenue, which is to last
just as long, and no longer, than they wish it to do.

The ordinary expense of the greater part of modern governments,
in time of peace, being equal, or nearly equal, to their ordinary
revenue, when war comes, they are both unwilling and unable to
increase their revenue in proportion to the increase of their
expense. They are unwilling, for fear of offending the people,
who, by so great and so sudden an increase of taxes, would soon
be disgusted with the war ; and they are unable, from not well
knowing what taxes would be sufficient to produce the revenue
wanted. The facility of borrowing delivers them from the
embarrassment which this fear and inability would otherwise
occasion. By means of borrowing, they are enabled, with a very
moderate increase of taxes, to raise, from year to year, money
sufficient for carrying on the war; and by the practice of
perpetual funding, they are enabled, with the smallest possible
increase of taxes, to raise annually the largest possible sum of
money. In great empires, the people who live in the capital, and
in the provinces remote from the scene of action, feel, many of
them, scarce any inconveniency from the war, but enjoy, at their
ease, the amusement of reading in the newspapers the exploits of
their own fleets and armies. To them this amusement compensates
the small difference between the taxes which they pay on account
of the war, and those which they had been accustomed to pay in
time of peace. They are commonly dissatisfied with the return of
peace, which puts an end to their amusement, and to a thousand
visionary hopes of conquest and national glory, from a longer
continuance of the war.

The return of peace, indeed, seldom relieves them from the
greater part of the taxes imposed during the war. These are
mortgaged for the interest of the debt contracted, in order to
carry it on. If, over and above paying the interest of this debt,
and defraying the ordinary expense of government, the old
revenue, together with the new taxes, produce some surplus
revenue, it may, perhaps, be converted into a sinking fund for
paying off the debt. But, in the first place, this sinking fund,
even supposing it should be applied to no other purpose, is
generally altogether inadequate for paying, in the course of any
period during which it can reasonably be expected that peace
should continue, the whole debt contracted during the war ; and,
in the second place, this fund is almost always applied to other

The new taxes were imposed for the sole purpose of paying the
interest of the money borrowed upon them. If they produce more,
it is generally something which was neither intended nor
expected, and is, therefore, seldom very considerable. Sinking
funds have generally arisen, not so much from any surplus of the
taxes which was over and above what was necessary for paying the
interest or annuity originally charged upon them, as from a
subsequent reduction of that interest ; that of Holland in 1655,
and that of the ecclesiastical state in 1685, were both formed in
this manner. Hence the usual insufficiency of such funds.

During the most profound peace, various events occur, which
require an extraordinary expense ; and government finds it always
more convenient to defray this expense by misapplying the sinking
fund, than by imposing a new tax. Every new tax is immediately
felt more or less by the people. It occasions always some murmur,
and meets with some opposition. The more taxes may have been
multiplied, the higher they may have been raised upon every
different subject of taxation; the more loudly the people
complain of every new tax, the more difficult it becomes, too,
either to find out new subjects of taxation, or to raise much
higher the taxes already imposed upon the old. A momentary
suspension of the payment of debt is not immediately felt by the
people, and occasions neither murmur nor complaint. To borrow of
the sinking fund is always an obvious and easy expedient for
getting out of the present difficulty. The more the public debts
may have been accumulated, the more necessary it may have become
to study to reduce them; the more dangerous, the more ruinous it
may be to missapply any part of the sinking fund ; the less
likely is the public debt to be reduced to any considerable
degree, the more likely, the more certainly, is the sinking fund
to be misapplied towards defraying all the extraordinary expenses
which occur in time of peace. When a nation is already
overburdened with taxes, nothing but the necessities of a new
war, nothing but either the animosity of national vengeance, or
the anxiety for national security, can induce the people to
submit, with tolerable patience, to a new tax. Hence the usual
misapplication of the sinking fund.

In Great Britain, from the time that we had first recourse to the
ruinous expedient of perpetual funding, the reduction of the
public debt, in time of peace, has never borne any proportion to
its accumulation in time of war. It was in the war which began in
1668, and was concluded by the treaty of Ryswick, in 1697, that
the foundation of the present enormous debt of Great Britain was
first laid.

On the 31st of December 1697, the public debts of Great Britain,
funded and unfunded, amounted to 21,515,742:13:8. A great part
of those debts had been contracted upon short anticipations, and
some part upon annuities for lives; so that, before the 31st of
December 1701, in less than four years, there had partly been
paid off; and partly reverted to the public, the sum of
5,121,041:12:0d; a greater reduction of the public debt than
has ever since been brought about in so short a period of time.
The remaining debt, therefore, amounted only to

In the war which began in 1702, and which was concluded by the
treaty of Utrecht, the public debts were still more accumulated.
On the 31st of December 1714, they amounted to 53,681,076:5:6.
The subscription into the South-sea fund, of the short and long
annuities, increased the capital of the public debt ; so that, on
the 31st of December 1722, it amounted to 55,282,978:1:3 5/6.
The reduction of the debt began in 1723, and went on so slowly,
that, on the 31st of December 1739, during seventeen years-of
profound peace, the whole sum paid off was no more than
8,328,554:17:11 3/12, the capital of the public debt, at that
time, amounting to 46,954,623:3:4 7/12.

The Spanish war, which began in 1739, and the French war which
soon followed it, occasioned a further increase of the debt,
which, on the 31st of December 1748, after the war had been
concluded by the treaty of Aix-la-Chapelle, amounted to
78,293,313:1:10. The most profound peace, of 17 years
continuance, had taken no more than 8,328,354, 17:11 from it. A
war, of less than nine years continuance, added 31,338,689:18: 6
1/6 to it. {See James Postlethwaite's History of the Public

During the administration of Mr. Pelham, the interest of the
public debt was reduced, or at least measures were taken for
reducing it, from four to three per cent.; the sinking fund was
increased, and some part of the publie debt was paid off. In
1755, before the breaking out of the late war, the funded debt of
Great Britain amounted to 72,289,675. On the 5th of January
1763, at the conclusion of the peace, the funded debt amounted
debt to 122,603,336:8:2. The unfunded debt has been stated at
13,927,589:2:2. But the expense occasioned by the war did not
end with the conclusion of the peace ; so that, though on the 5th
of January 1764, the funded debt was increased (partly by a new
loan, and partly by funding a part of the unfunded debt) to
129,586,789:10:1, there still remained (according to the very
well informed author of Considerations on the Trade and Finances
of Great Britain) an unfunded debt, which was brought to account
in that and the following year, of 9,975,017: 12:2 15/44d. In
1764, therefore, the public debt of Great Britain, funded and
unfunded together, amounted, according to this author, to
139,561,807:2:4. The annuities for lives, too, which had been
granted as premiums to the subscribers to the new loans in 1757,
estimated at fourteen years purchase, were valued at 472,500 ;
and the annuities for long terms of years, granted as premiums
likewise, in 1761 and 1762, estimated at twenty-seven and a-half
years purchase, were valued at 6,826,875. During a peace of
about seven years continuance, the prudent and truly patriotic
administration of Mr. Pelham was not able to pay off an old debt
of six millions. During a war of nearly the same continuance, a
new debt of more than seventy-five millions was contracted.

On the 5th of January 1775, the funded debt of Great Britain
amounted to 124,996,086, 1:6d. The unfunded, exclusive of a
large civil-list debt, to 4,150,236:3:11 7/8. Both together, to
129,146,322:5:6. According to this account, the whole debt paid
off, during eleven years of profound peace, amounted only to
10,415,476:16:9 7/8. Even this small reduction of debt, however,
has not been all made from the savings out of the ordinary
revenue of the state. Several extraneous sums, altogether
independent of that ordinary revenue, have contributed towards
it. Amongst these we may reckon an additional shilling in the
pound land tax, for three years; the two millions received from
the East-India company, as indemnification for their territorial
acquisitions ; and the one hundred and ten thousand pounds
received from the bank for the renewal of their charter. To these
must be added several other sums, which, as they arose out of the
late war, ought perhaps to be considered as deductions from the
expenses of it. The principal are,

The produce of French prizes .............. 690,449: 18: 9
Composition for French prisoners ......... 670,000: 0: 0

What has been received from the sale
of the ceded islands ......................... 95,500: 0: 0

Total, .....................................1,455,949: 18: 9

If we add to this sum the balance of the earl of Chatham's and
Mr. Calcraft's accounts, and other army savings of the same kind,
together with what has been received from the bank, the
East-India company, and the additional shilling in the pound land
tax, the whole must be a good deal more than five millions. The
debt, therefore, which, since the peace, has been paid out of the
savings from the ordinary revenue of the state, has not, one year
with another, amounted to half a million a-year. The sinking fund
has, no doubt, been considerably augmented since the peace, by
the debt which had been paid off, by the reduction of the
redeemable four per cents to three per cents, and by the
annuities for lives which have fallen in; and, if peace were to
continue, a million, perhaps, might now be annually spared out of
it towards the discharge of the debt. Another million,
accordingly, was paid in the course of last year ; but at the
same time, a large civil-list debt was left unpaid, and we are
now involved in a new war, which, in its progress, may prove as
expensive as any of our former wars.{It has proved more expensive
than any one of our former wars, and has involved us in an
additional debt of more than one hundred millions. During a
profound peace of eleven years, little more than ten millions of
debt was paid; during a war of seven years, more than one hundred
millions was contracted.} The new debt which will probably be
contracted before the end of the next campaign, may, perhaps, be
nearly equal to all the old debt which has been paid off from the
savings out of the ordinary revenue of the state. It would be
altogether chimerical, therefore, to expect that the public debt
should ever be completely discharged, by any savings which are
likely to be made from that ordinary revenue as it stands at

The public funds of the different indebted nations of Europe,
particularly those of England, have, by one author, been
represented as the accumulation of a great capital, superadded to
the other capital of the country, by means of which its trade is
extended, its manufactures are multiplied, and its lands
cultivated and improved, much beyond what they could have been by
means of that other capital only. He does not consider that the
capital which the first creditors of the public advanced to
government, was, from the moment in which he advanced it, a
certain portion of the annual produce, turned away from serving
in the function of a capital, to serve in that of a revenue ;
from maintaining productive labourers, to maintain unproductive
ones, and to be spent and wasted, generally in the course of the
year, without even the hope of any future reproduction. In return
for the capital which they advanced, they obtained, indeed, an
annuity of the public funds, in most cases, of more than equal
value. This annuity, no doubt, replaced to them their capital,
and enabled them to carry on their trade and business to the
same, or, perhaps, to a greater extent than before; that is, they
were enabled, either to borrow of other people a new capital,
upon the credit of this annuity or, by selling it, to get from
other people a new capital of their own, equal, or superior, to
that which they had advanced to government. This new capital,
however, which they in this manner either bought or borrowed of
other people, must have existed in the country before, and must
have been employed, as all capitals are, in maintaining
productive labour. When it came into the hands of those who had
advanced their money to government, though it was, in some
respects, a new capital to them, it was not so to the country,
but was only a capital withdrawn from certain employments, in
order to be turned towards others. Though it replaced to them
what they had advanced to government, it did not replace it to
the country. Had they not advanced this capital to government,
there would have been in the country two capitals, two portions
of the annual produce, instead of one, employed in maintaining
productive labour.

When, for defraying the expense of government, a revenue is
raised within the year, from the produce of free or unmortgaged
taxes, a certain portion of the revenue of private people is only
turned away from maintaining one species of unproductive labour,
towards maintaining another. Some part of what they pay in those
taxes, might, no doubt, have been accumulated into capital, and
consequently employed in maintaining productive labour ; but the
greater part would probably have been spent, and consequently
employed in maintaining unproductive labour. The public expense,
however, when defrayed in this manner, no doubt hinders, more or
less, the further accumulation of new capital; but it does not
necessarily occasion the destruction of any actually-existing

When the public expense is defrayed by funding, it is defrayed by
the annual destruction of some capital which had before existed
in the country; by the perversion of some portion of the annual
produce which had before been destined for the maintenance of
productive labour, towards that of unproductive labour. As in
this case, however, the taxes are lighter than they would have
been, had a revenue sufficient for defraying the same expense
been raised within the year ; the private revenue of individuals
is necessarily less burdened, and consequently their ability to
save and accumulate some part of that revenue into capital, is a
good deal less impaired. If the method of funding destroys more
old capital, it, at the same time, hinders less the accumulation
or acquisition of new capital, than that of defraying the public
expense by a revenue raised within the year. Under the system of
funding, the frugality and industry of private people can more
easily repair the breaches which the waste and extravagance of
government may occasionally make in the general capital of the

It is only during the continuance of war, however, that the
system of funding has this advantage over the other system. Were
the expense of war to be defrayed always by a revenue raised
within the year, the taxes from which that extraordinary revenue
was drawn would last no longer than the war. The ability of
private people to accumulate, though less during the war, would
have been greater during the peace, than under the system of
funding. War would not necessarily have occasioned the
destruction of any old capitals, and peace would have occasioned
the accumulation of many more new. Wars would, in general, be
more speedily concluded, and less wantonly undertaken. The people
feeling, during continuance of war, the complete burden of it,
would soon grow weary of it; and government, in order to humour
them, would not be under the necessity of carrying it on longer
than it was necessary to do so. The foresight of the heavy and
unavoidable burdens of war would hinder the people from wantonly
calling for it when there was no real or solid interest to fight
for. The seasons during which the ability of private people to
accumulate was somewhat impaired, would occur more rarely, and be
of shorter continuance. Those, on the contrary, during which that
ability was in the highest vigour would be of much longer
duration than they can well be under the system of funding.

When funding, besides, has made a certain progress, the
multiplication of taxes which it brings along with it, sometimes
impairs as much the ability of private people to accumulate, even
in time of peace, as the other system would in time of war. The
peace revenue of Great Britain amounts at present to more than
ten millions a-year. If free and unmortgaged, it might be
sufficient, with proper management, and without contracting a
shilling of new debt, to carry on the most vigorous war. The
private revenue of the inhabitants of Great Britain is at present
as much incumbered in time of peace, their ability to accumulate
is as much impaired, as it would have been in the time of the
most expensive war, had the pernicious system of funding never
been adopted.

In the payment of the interest of the public debt, it has been
said, it is the right hand which pays the left. The money does
not go out of the country. It is only a part of the revenue of
one set of the inhabitants which is transferred to another ; and
the nation is not a farthing the poorer. This apology is founded
altogether in the sophistry of the mercantile system; and, after
the long examination which I have already bestowed upon that
system, it may, perhaps, be unnecessary to say anything further
about it. It supposes, besides, that the whole public debt is
owing to the inhabitants of the country, which happens not to be
true ; the Dutch, as well as several other foreign nations,
having a very considerable share in our public funds. But though
the whole debt were owing to the inhabitants of the country, it
would not, upon that account, be less pernicious.

Land and capital stock are the two original sources of all
revenue, both private and public. Capital stock pays the wages of
productive labour, whether employed in agriculture, manufactures,
or commerce. The management of those two original sources of
revenue belongs to two different sets of people; the proprietors
of land, and the owners or employers of capital stock.

The proprietor of land is interested, for the sake of his own
revenue, to keep his estate in as good condition as he can, by
building and repairing his tenants houses, by making and
maintaining the necessary drains and inclosures, and all those
other expensive improvements which it properly belongs to the
landlord to make and maintain. But, by different land taxes, the
revenue of the landlord may be so much diminished, and, by
different duties upon the necessaries and conveniencies of life,
that diminished revenue may be rendered of so little real value,
that he may find himself altogether unable to make or maintain
those expensive improvements. When the landlord, however, ceases
to do his part, it is altogether impossible that the tenant
should continue to do his. As the distress of the landlord
increases, the agriculture of the country must necessarily

When, by different taxes upon the necessaries and conveniencies
of life, the owners and employers of capital stock find, that
whatever revenue they derive from it, will not, in a particular
country, purchase the same quantity of those necessaries and
conveniencies which an equal revenue would in almost any other,
they will be disposed to remove to some other. And when, in order
to raise those taxes, all or the greater part of merchants and
manufacturers, that is, all or the greater part of the employers
of great capitals, come to be continually exposed to the
mortifying and vexatious visits of the tax-gatherers, this
disposition to remove will soon be changed into an actual
removing. The industry of the country will necessarily fall with
the removal of the capital which supported it, and the ruin of
trade and manufactures will follow the declension of agriculture.

To transfer from the owners of those two great sources of
revenue, land, and capital stock, from the persons immediately
interested in the good condition of every particular portion of
land, and in the good management of every particular portion of
capital stock, to another set of persons (the creditors of the
public, who have no such particular interest ), the greater part
of the revenue arising from either, must, in the long-run,
occasion both the neglect of land, and the waste or removal of
capital stock. A creditor of the public has, no doubt, a general
interest in the prosperity of the agriculture, manufactures, and
commerce of the country ; and consequently in the good condition
of its land, and in the good management of its capital stock.
Should there be any general failure or declension in any of these
things, the produce of the different taxes might no longer be
sufficient to pay him the annuity or interest which is due to
him. But a creditor of the public, considered merely as such, has
no interest in the good condition of any particular portion of
land, or in the good management of any particular portion of
capital stock. As a creditor of the public, he has no knowledge
of any such particular portion. He has no inspection of it. He
can have no care about it. Its ruin may in some cases be unknown
to him, and cannot directly affect him.

The practice of funding has gradually enfeebled every state which
has adopted it. The Italian republics seem to have begun it.
Genoa and Venice, the only two remaining which can pretend to an
independent existence, have both been enfeebled by it. Spain
seems to have learned the practice from the Italian republics,
and (its taxes being probably less judicious than theirs) it has,
in proportion to its natural strength, been-still more enfeebled.
The debts of Spain are of very old standing. It was deeply in
debt before the end of the sixteenth century, about a hundred
years before England owed a shilling. France, not. withstanding
all its natural resources, languishes under an oppressive load of
the same kind. The republic of the United Provinces is as much
enfeebled by its debts as either Genoa or Venice. Is it likely
that, in Great Britain alone, a practice, which has brought
either weakness or dissolution into every other country, should
prove altogether innocent ?

The system of taxation established in those different countries,
it may be said, is inferior to that of England. I believe it is
so. But it ought to be remembered, that when the wisest
government has exhausted all the proper subjects of taxation, it
must, in cases of urgent necessity, have recourse to improper
ones. The wise republic of Holland has, upon some occasions, been
obliged to have recourse to taxes as inconvenient as the greater
part of those of Spain. Another war, begun before any
considerable liberation of the public revenue had been brought
about, and growing in its progress as expensive as the last war,
may, from irresistible necessity, render the British system of
taxation as oppressive as that of Holland, or even as that of
Spain. To the honour of our present system of taxation,
indeed, it has hitherto given so little embarrassment to
industry, that, during the course even of the most expensive
wars, the frugality and good conduct of individuals seem to have
been able, by saving and accumulation, to repair all the breaches
which the waste and extravagance of government had made in the
general capital of the society. At the conclusion of the late
war, the most expensive that Great Britain ever waged, her
agriculture was as flourishing, her manufacturers as numerous and
as fully employed, and her commerce as extensive, as they had
ever been before. The capital, therefore, which supported all
those different branches of industry, must have been equal to
what it had ever been before. Since the peace, agriculture has
been still further improved; the rents of houses have risen in
every town and village of the country, a proof of the increasing
wealth and revenue of the people; and the annual amount of the
greater part of the old taxes, of the principal branches of the
excise and customs, in particular, has been continually
increasing, an equally clear proof of an increasing consumption,
and consequently of an increasing produce, which could alone
support that consumption. Great Britain seems to support with
ease, a burden which, half a century ago, nobody believed her
capable of supporting, Let us not, however, upon this account,
rashly conclude that she is capable of supporting any burden; nor
even be too confident that she could support. without great
distress, a burden a little greater than what has already been
laid upon her.

When national debts have once been accumulated to a certain
degree, there is scarce, I believe, a single instance of their
having been fairly and completely paid. The liberation of the
public revenue, if it has ever been brought about at all, has
always been brought about by a bankruptcy ; sometimes by an
avowed one, though frequently by a pretended payment.

The raising of the denomination of the coin has been the most
usual expedient by which a real public bankruptcy has been
disguised under the appearance of a pretended payment. If a
sixpence, for example, should, either by act of parliament or
royal proclamation. be raised to the denomination of a shilling,
and twenty sixpences to that of a pound sterling ; the person
who, under the old denomination, had borrowed twenty shillings,
or near four ounces of silver, would, under the new, pay with
twenty sixpences, or with something less than two ounces. A
national debt of about a hundred and twenty-eight millions, near
the capital of the funded and unfunded debt of Great Britain,
might, in this manner, be paid with about sixty-four millions of
our present money. It would, indeed, be a pretended payment only,
and the creditors of the public would really be defrauded of ten
shillings in the pound of what was due to them. The calamity,
too, would extend much further than to the creditors of the
public, and those of every private person would suffer a
proportionable loss; and this without any advantage, but in most
cases with a great additional loss, to the creditors of the
public. If the creditors of the public, indeed, were generally
much in debt to other people, they might in some measure
compensate their loss by paying their creditors in the same coin
in which the public had paid them. But in most countries, the
creditors of the public are, the greater part of them, wealthy
people, who stand more in the relation of creditors than in that
of debtors, towards the rest of their fellow citizens. A
pretended payment of this kind, therefore, instead of
alleviating, aggravates, in most cases, the loss of the creditors
of the public; and, without any advantage to the public, extends
the calamity to a great number of other innocent people. It
occasions a general and most pernicious subversion of the
fortunes of private people; enriching, in most cases, the idle
and profuse debtor, at the expense of the industrious and frugal
creditor ; and transporting a great part of the national capital
from the hands which were likely to increase and improve it, to
those who are likely to dissipate and destroy it. When it becomes
necessary for a state to declare itself bankrupt, in the same
manner as when it becomes necessary for an individual to do so, a
fair, open, and avowed bankruptcy, is always the measure which is
both least dishonourable to the debtor, and least hurtful to the
creditor. The honour of a state is surely very poorly provided
for, when, in order to cover the disgrace of a real bankruptcy,
it has recourse to a juggling trick of this kind, so easily seen
through, and at the same time so extremely pernicious.

Almost all states, however, ancient as well as modern, when
reduced to this necessity, have, upon some occasions, played this
very juggling trick. The Romans, at the end of the first Punic
war, reduced the As, the coin or denomination by which they
computed the value of all their other coins, from containing
twelve ounces of copper, to contain only two ounces; that is,
they raised two ounces of copper to a denomination which had
always before expressed the value of twelve ounces. The republic
was, in this manner, enabled to pay the great debts which it had
contracted with the sixth part of what it really owed. So sudden
and so great a bankruptcy, we should in the present times be apt
to imagine, must have occasioned a very violent popular clamour.
It does not appear to have occasioned any. The law which enacted
it was, like all other laws relating to the coin, introduced and
carried through the assembly of the people by a tribune, and was
probably a very popular law. In Rome, as in all other ancient
republics, the poor people were constantly in debt to the rich
and the great, who, in order to secure their votes at the annual
elections, used to lend them money at exorbitant interest, which,
being never paid, soon accumulated into a sum too great either
for the debtor to pay, or for any body else to pay for him. The
debtor, for fear of a very severe execution, was obliged, without
any further gratuity, to vote for the candidate whom the creditor
recommended. In spite of all the laws against bribery and
corruption, the bounty of the candidates, together with the
occasional distributions of coin which were ordered by the
senate, were the principal funds from which, during the latter
times of the Roman republic, the poorer citizens derived their
subsistence. To deliver themselves from this subjection to their
creditors, the poorer citizens were continually calling out,
either for an entire abolition of debts, or for what they called
new tables ; that is, for a law which should entitle them to a
complete acquittance, upon paying only a certain proportion of
their accumulated debts. The law which reduced the coin of all
denominations to a sixth part of its former value, as it enabled
them to pay their debts with a sixth part of what they really
owed, was equivalent to the most advantageous new tables. In
order to satisfy the people, the rich and the great were, upon
several different occasions, obliged to consent to laws, both for
abolishing debts, and for introducing new tables; and they
probably were induced to consent to this law, partly for the same
reason, and partly that, by liberating the public revenue, they
might restore vigour to that government, of which they themselves
had the principal direction. An operation of this kind would
at once reduce a debt of 128,000,000 to 21,333,333:6:8. In the
course of the second Punic war, the As was still further reduced,
first, from two ounces of copper to one ounce, and afterwards
from one ounce to half an ounce ; that is, to the twenty-fourth
part of its original value. By combining the three Roman
operations into one, a debt of a hundred and twenty-eight
millions of our present money, might in this manner be reduced
all at once to a debt of 5,333,333:6:8. Even the enormous debt
of Great Britain might in this manner soon be paid.

By means of such expedients, the coin of, I believe, all nations,
has been gradually reduced more and more below its original
value, and the same nominal sum has been gradually brought to
contain a smaller and a smaller quantity of silver.

Nations have sometimes, for the same purpose, adulterated the
standard of their coin ; that is, have mixed a greater quantity
of alloy in it. If in the pound weight of our silver coin, for
example, instead of eighteen penny-weight, according to the
present standard, there were mixed eight ounces of alloy; a pound
sterling, or twenty shillings of such coin, would be worth little
more than six shillings and eightpence of our present money. The
quantity of silver contained in six shillings and eightpence of
our present money, would thus be raised very nearly to the
denomination of a pound sterling. The adulteration of the
standard has exactly the same effect with what the French call an
augmentation, or a direct raising of the denomination of the

An augmentation, or a direct raising of the denomination of the
coin, always is, and from its nature must be, an open and avowed
operation. By means of it, pieces of a smaller weight and bulk
are called by the same name, which had before been given to
pieces of a greater weight and bulk. The adulteration of the
standard, on the contrary, has generally been a concealed
operation. By means of it, pieces are issued from the mint, of
the same denomination, and, as nearly as could be contrived, of
the same weight, bulk, and appearance, with pieces which had been
current before of much greater value. When king John of
France,{See Du Cange Glossary, voce Moneta; the Benedictine
Edition.} in order to pay his debts, adulterated his coin, all
the officers of his mint were sworn to secrecy. Both operations
are unjust. But a simple augmentation is an injustice of open
violence; whereas an adulteration is an injustice of treacherous
fraud. This latter operation, therefore, as soon as it has been
discovered, and it could never be concealed very long, has always
excited much greater indignation than the former. The coin, after
any considerable augmentation, has very seldom been brought back
to its former weight ; but after the greatest adulterations, it
has almost always been brought back to its former fineness. It
has scarce ever happened, that the fury and indignation of the
people could otherwise be appeased.

In the end of the reign of Henry VIII., and in the beginning of
that of Edward VI., the English coin was not only raised in its
denomination, but adulterated in its standard. The like frauds
were practised in Scotland during the minority of James VI. They
have occasionally been practised in most other countries.

That the public revenue of Great Britain can never be completely
liberated, or even that any considerable progress can ever be
made towards that liberation, while the surplus of that revenue,
or what is over and above defraying the annual expense of the
peace establishment, is so very small, it seems altogether in
vain to expect. That liberation, it is evident, can never be
brought about, without either some very considerable augmentation
of the public revenue, or some equally considerable reduction of
the public expense.

A more equal land tax, a more equal tax upon the rent of houses,
and such alterations in the present system of customs and excise
as those which have been mentioned in the foregoing chapter,
might, perhaps, without increasing the burden of the greater part
of the people, but only distributing the weight of it more
equally upon the whole, produce a considerable augmentation of
revenue. The most sanguine projector, however, could scarce
flatter himself, that any augmentation of this kind would be such
as could give any reasonable hopes, either of liberating the
public revenue altogether, or even of making such progress
towards that liberation in time of peace, as either to prevent or
to compensate the further accumulation of the public debt in the
next war.

By extending the British system of taxation to all the different
provinces of the empire, inhabited by people either of British or
European extraction, a much greater augmentation of revenue might
be expected. This, however, could scarce, perhaps, be done,
consistently with the principles of the British constitution,
without admitting into the British parliament, or, if you will,
into the states-general of the British empire, a fair and equal
representation of all those different provinces ; that of each
province bearing the same proportion to the produce of its taxes,
as the representation of Great Britain might bear to the produce
of the taxes levied upon Great Britain. The private interest of
many powerful individuals, the confirmed prejudices of great
bodies of people, seem, indeed, at present, to oppose to so great
a change, such obstacles as it may be very difficult, perhaps
altogether impossible, to surmount. Without, however, pretending
to determine whether such a union be practicable or
impracticable, it may not, perhaps, be improper, in a speculative
work of this kind, to consider how far the British system of
taxation might be applicable to all the different provinces of
the empire ; what revenue might be expected from it, if so
applied ; and in what manner a general union of this kind might
be likely to affect the happiness and prosperity of the
differrent provinces comprehended within it. Such a speculation,
can, at worst, be regarded but as a new Utopia, less amusing,
certainly, but no more useless and chimerical than the old one.

The land-tax, the stamp duties, and the different duties of
customs and excise, constitute the four principal branches of the
British taxes.

Ireland is certainly as able, and our American and West India
plantations more able, to pay a land tax, than Great Britain.
Where the landlord is subject neither to tythe nor poor's rate,
he must certainly be more able to pay such a tax, than where he
is subject to both those other burdens. The tythe, where there is
no modus, and where it is levied in kind, diminishes more what
would otherwise be the rent of the landlord, than a land tax
which really amounted to five shillings in the pound. Such a
tythe will be found, in most cases, to amount to more than a
fourth part of the real rent of the land, or of what remains
after replacing completely the capital of the farmer, together
with his reasonable profit. If all moduses and all impropriations
were taken away, the complete church tythe of Great Britain and
Ireland could not well be estimated at less than six or seven
millions. If there was no tythe either in Great Britain or
Ireland, the landlords could afford to pay six or seven millions
additional land tax, without being more burdened than a very
great part of them are at present. America pays no tythe, and
could, therefore, very well afford to pay a land tax. The lands
in America and the West Indies, indeed, are, in general, not
tenanted nor leased out to farmers. They could not, therefore, be
assessed according to any rent roll. But neither were the lands
of Great Britain, in the 4th of William and Mary, assessed
according to any rent roll, but according to a very loose and
inaccurate estimation. The lands in America might be assessed
either in the same manner, or acording to an equitable valuation,
in consequence of an accurate survey, like that which was lately
made in the Milanese, and in the dominions of Austria, Prussia,
and Sardinia.

Stamp duties, it is evident, might be levied without any
variation, in all countries where the forms of law process, and
the deeds by which property, both real and personal, is
transferred, are the same, or nearly the same.

The extension of the custom-house laws of Great Britain to
Ireland and the plantations, provided it was accompanied, as in
justice it ought to be, with an extension of the freedom of
trade, would be in the highest degree advantageous to both. All
the invidious restraints which at present oppress the trade of
Ireland, the distinction between the enumerated and
non-enumerated commodities of America, would be entirely at an
end. The countries north of Cape Finisterre would be as open to
every part of the produce of America, as those south of that cape
are to some parts of that produce at present. The trade between
all the different parts of the British empire would, in
consequence of this uniformity in the custom-house laws, be as
free as the coasting trade of Great Britain is at present. The
British empire would thus afford, within itself, an immense
internal market for every part of the produce of all its
different provinces. So great an extension of market would soon
compensate, both to Ireland and the plantations, all that they
could suffer from the increase of the duties of customs.

The excise is the only part of the British system of taxation,
which would require to be varied in any respect, according as it
was applied to the different provinces of the empire. It might be
applied to Ireland without any variation ; the produce and
consumption of that kingdom being exactly of tho same nature with
those of Great Britain. In its application to America and the
West Indies, of which the produce and consumption are so very
different from those of Great Britain, some modification might be
necessary, in the same manner as in its application to the cyder
and beer counties of England.

A fermented liquor, for example, which is called beer, but which,
as it is made of molasses, bears very little resemblance to our
beer, makes a considerable part of the common drink of the people
in America. This liquor, as it can be kept only for a few days,
cannot, like our beer, be prepared and stored up for sale in
great breweries ; but every private family must brew it for their
own use, in the same manner as they cook their victuals. But to
subject every private family to the odious visits and examination
of the tax-gatherers, in the same manner as we subject the
keepers of ale-houses and the brewers for public sale, would be
altogether inconsistent with liberty. If, for the sake of
equality, it was thought necessary to lay a tax upon this liquor,
it might be taxed by taxing the material of which it is made,
either at the place of manufacture, or, if the circumstances of
the trade rendered such an excise improper, by laying a duty upon
its importation into the colony in which it was to be consumed.
Besides the duty of one penny a-gallon imposed by the British
parliament upon the importation of molasses into America, there
is a provincial tax of this kind upon their importation into
Massachusetts Bay, in ships belonging to any other colony, of
eight-pence the hogshead; and another upon their importation from
the northern colonies into South Carolina, of five-pence the
gallon. Or, if neither of these methods was found convenient,
each family might compound for its consumption of this liquor,
either according to the number of persons of which it consisted,
in the same manner as private families compound for the malt tax
in England; or according to the different ages and sexes of those
persons, in the same manner as several different taxes are levied
in Holland ; or, nearly as Sir Matthew Decker proposes, that all
taxes upon consumable commodities should be levied in England.
This mode of taxation, it has already been observed, when applied
to objects of a speedy consumption, is not a very convenient one.
It might be adopted, however, in cases where no better could be

Sugar, rum, and tobacco, are commodities which are nowhere
necessaries of life, which are become objects of almost universal
consumption, and which are, therefore, extremely proper subjects
of taxation. If a union with the colonies were to take place,
those commodities might be taxed, either before they go out of
the hands of the manufacturer or grower ; or, if this mode of
taxation did not suit the circumstances of those persons, they
might be deposited in public warehouses, both at the place of
manufacture, and at all the different ports of the empire, to
which they might afterwards be transported, to remain there,
under the joint custody of the owner and the revenue officer,
till such time as they should be delivered out, either to the
consumer, to the merchant-retailer for home consumption, or to
the merchant-exporter; the tax not to be advanced till such
delivery. When delivered out for exportation, to go duty-free,
upon proper security being given, that they should really be
exported out of the empire. These are, perhaps, the principal
commodities, with regard to which the union with the colonies
might require some considerable change in the present system of
British taxation.

What might be the amount of the revenue which this system of
taxation, extended to all the different provinces of the empire,
might produce, it must, no doubt, be altogether impossible to
ascertain with tolerable exactness. By means of this system,
there is annually levied in Great Britain, upon less than eight
millions of people, more than ten millions of revenue. Ireland
contains more than two millions of people, and, according to the
accounts laid before the congress, the twelve associated
provinces of America contain more than three. Those accounts,
however, may have been exaggerated, in order, perhaps, either to
encourage their own people, or to intimidate those of this
country ; and we shall suppose, therefore, that our North
American and West Indian colonies, taken together, contain no
more than three millions ; or that the whole British empire, in
Europe and America, contains no more than thirteen millions of
inhabitants. If, upon less than eight millions of inhabitants,
this system of taxation raises a revenue of more than ten
millions sterling; it ought, upon thirteen millions of
inhabitants, to raise a revenue of more than sixteen millions two
hundred and fifty thousand pounds sterling. From this revenue,
supposing that this system could produce it, must be deducted the
revenue usually raised in Ireland and the plantations, for
defraying the expense of the respective civil governments. The
expense of the civil and military establishment of Ireland,
together with the interest of the public debt, amounts, at a
medium of the two years which ended March 1775, to something less
than seven hundred and fifty thousand pounds ayear. By a very
exact account of the revenue of the principal colonies of America
and the West Indies, it amounted, before the commencement of the
present disturbances, to a hundred and forty-one thousand eight
hundred pounds. In this account, however, the revenue of
Maryland, of North Carolina, and of all our late acquisitions,
both upon the continent, and in the islands, is omitted; which
may, perhaps, make a difference of thirty or forty thousand
pounds. For the sake of even numbers, therefore, let us suppose
that the revenue necessary for supporting the civil government of
Ireland and the plantations may amount to a million. There would
remain, consequently, a revenue of fifteen millions two hundred
and fifty thousand pounds, to be applied towards defraying the
general expense of the empire, and towards paying the public
debt. But if, from the present revenue of Great Britain, a
million could, in peaceable times, be spared towards the payment
of that debt, six millions two hundred and fifty thousand pounds
could very well be spared from this improved revenue. This great
sinking fund, too, might be augmented every year by the interest
of the debt which had been discharged the year before ; and
might, in this manner, increase so very rapidly, as to be
sufficient in a few years to discharge the whole debt, and thus
to restore completely the at-present debilitated and languishing
vigour of the empire. In the meantime, the people might be
relieved from some of the most burdensome taxes; from those which
are imposed either upon the necessaries of life, or upon the
materials of manufacture. The labouring poor would thus be
enabled to live better, to work cheaper, and to send their goods
cheaper to market. The cheapness of their goods would increase
the demand for them, and consequently for the labour of those who
produced them. This increase in the demand for labour would both
increase the numbers, and improve the circumstances of the
labouring poor. Their consumption would increase, and, together
with it, the revenue arising from all those articles of their
consumption upon which the taxes might be allowed to remain.

The revenue arising from this system of taxation, however, might
not immediately increase in proportion to the number of people
who were subjected to it. Great indulgence would for some time be
due to those provinces of the empire which were thus subjected to
burdens to which they had not before been accustomed; and even
when the same taxes came to be levied everywhere as exactly as
possible, they would not everywhere produce a revenue
proportioned to the numbers of the people. In a poor country, the
consumption of the principal commodities subject to the duties of
customs and excise, is very small; and in a thinly inhabited
country, the opportunities of smuggling are very great. The
consumption of malt liquors among the inferior ranks of people in
Scotland is very small ; and the excise upon malt, beer, and ale,
produces less there than in England, in proportion to the numbers
of the people and the rate of the duties, which upon malt is
different, on account of a supposed difference of quality. In
these particular branches of the excise, there is not, I
apprehend, much more smuggling in the one country than in the
other. The duties upon the distillery, and the greater part of
the duties of customs, in proportion to the numbers of people in
the respective countries, produce less in Scotland than in
England, not only on account of the smaller consumption of the
taxed commodities, but of the much greater facility of smuggling.
In Ireland, the inferior ranks of people are still poorer than in
Scotland, and many parts of the country are almost as thinly
inhabited. In Ireland, therefore, the consumption of the taxed
commodities might, in proportion to the number of the people, be
still less than in Scotland, and the facility of smuggling nearly
the same. In America and the West Indies, the white people, even
of the lowest rank, are in much better circumstances than those
of the same rank in England ; and their consumption of all the
luxuries in which they usually indulge themselves, is probably
much greater. The blacks, indeed, who make the greater part of
the inhabitants, both of the southern colonies upon the continent
and of the West India islands, as they are in a state of slavery,
are, no doubt, in a worse condition than the poorest people
either in Scotland or Ireland. We must not, however, upon that
account, imagine that they are worse fed, or that their
consumption of articles which might be subjected to moderate
duties, is less than that even of the lower ranks of people in
England. In order that they may work well, it is the interest of
their master that they should be fed well, and kept in good
heart, in the same manner as it is his interest that his working
cattle should be so. The blacks, accordingly, have almost
everywhere their allowance of rum, and of molasses or
spruce-beer, in the same manner as the white servants ; and this
allowance would not probably be withdrawn, though those articles
should be subjected to moderate duties. The consumption of the
taxed commodities, therefore, in proportion to the number of
inhabitants, would probably be as great in America and the West
Indies as in any part of the British empire. The opportunities of
smuggling, indeed, would be much greater ; America, in proportion
to the extent of the country, being much more thinly inhabited
than either Scotland or Ireland. If the revenue, however, which
is at present raised by the different duties upon malt and malt
liquors, were to be levied by a single duty upon malt, the
opportunity of smuggling in the most important branch of the
excise would be almost entirely taken away ; and if the duties of
customs, instead of being imposed upon almost all the different
articles of importation, were confined to a few of the most
general use and consumption, and if the levying of those duties
were subjected to the excise laws, the opportunity of smuggling,
though not so entirely taken away, would be very much diminished.
In consequence of those two apparently very simple and easy
alterations, the duties of customs and excise might probably
produce a revenue as great, in proportion to the consumption of
the most thinly inhabited province, as they do at present, in
proportion to that of the most populous.

The Americans, it has been said, indeed, have no gold or silver
money, the interior commerce of the country being carried on by a
paper currency; and the gold and silver, which occasionally come
among them, being all sent to Great Britain, in return for the
commodities which they receive from us. But without gold and
silver, it is added, there is no possibility of paying taxes. We
already get all the gold and silver which they have. How is it
possible to draw from them what they have not ?

The present scarcity of gold and silver money in America, is not
the effect of the poverty of that country, or of the inability of
the people there to purchase those metals. In a country where the
wages of labour are so much higher, and the price of provisions
so much lower than in England, the greater part of the people
must surely have wherewithal to purchase a greater quantity, if
it were either necessary or convenient for them to do so. The
scarcity of those metals, therefore, must be the effect of
choice, and not of necessity.

It is for transacting either domestic or foreign business, that
gold or silver money is either necessary or convenient.

The domestic business of every country, it has been shewn in the
second book of this Inquiry, may, at least in peaceable times, be
transacted by means of a paper currency, with nearly the same
degree of conveniency as by gold and silver money. It is
convenient for the Americans, who could always employ with
profit, in the improvement of their lands, a greater stock than
they can easily get, to save as much as possible the expense of
so costly an instrument of commerce as gold and silver; and
rather to employ that part of their surplus produce which would
be necessary for purchasing those metals, in purchasing the
instruments of trade, the materials of clothing, several parts of
household furniture, and the iron work necessary for building and
extending their settlements and plantations ; in purchasing not
dead stock, but active and productive stock. The colony
governments find it for their interest to supply the people with
such a quantity of paper money as is fully sufficient, and
generally more than sufficient, for transacting their domestic
business. Some of those governments, that of Pennsylvania,
particularly, derive a revenue from lending this paper money to
their subjects, at an interest of so much per cent. Others, like
that of Massachusetts Bay, advance, upon extraordinary
emergencies, a paper money of this kind for defraying the public
expense; and afterwards, when it suits the conveniency of the
colony, redeem it at the depreciated value to which it gradually
falls. In 1747, {See Hutchinson's History of Massachusetts Bay
vol. ii. page 436 et seq.} that colony paid in this manner the
greater part of its public debts, with the tenth part of the
money for which its bills had been granted. It suits the
conveniency of the planters, to save the expense of employing
gold and silver money in their domestic transactions; and it
suits the conveniency of the colony governments, to supply them
with a medium, which, though attended with some very considerable
disadvantages, enables them to save that expense. The redundancy
of paper money necessarily banishes gold and silver from the
domestic transactions of the colonies, for the same reason that
it has banished those metals from the greater part of the
domestic transactions in Scotland ; and in both countries, it is
not the poverty, but the enterprizing and projecting spirit of
the people, their desire of employing all the stock which they
can get, as active and productive stock, which has occasioned
this redundancy of paper money.

In the exterior commerce which the different colonies carry on
with Great Britain, gold and silver are more or less employed,
exactly in proportion as they are more or less necessary. Where
those metals are not necessary, they seldom appear. Where they
are necessary, they are generally found.

In the commerce between Great Britain and the tobacco colonies,
the British goods are generally advanced to the colonists at a
pretty long credit, and are afterwards paid for in tobacco, rated
at a certain price. It is more convenient for the colonists to
pay in tobacco than in gold and silver. It would be more
convenient for any merchant to pay for the goods which his
correspondents had sold to him, in some other sort of goods which
he might happen to deal in, than in money. Such a merchant would
have no occasion to keep any part of his stock by him unemployed,
and in ready money, for answering occasional demands. He could
have, at all times, a larget quantity of goods in his shop or
warehouse, and he could deal to a greater extent. But it seldom
happens to be convenient for all the correspondents of a merchant
to receive payment for the goods which they sell to him, in goods
of some other kind which he happens to deal in. The British
merchants who trade to Virginia and Maryland, happen to be a
particular set of correspondents, to whom it is more convenient
to receive payment for the goods which they sell to those
colonies in tobacco, than in gold and silver. They expect to make
a profit by the sale of the tobacco ; they could make none by
that of the gold and silver. Gold and silver, therefore, very
seldom appear in the commerce between Great Britain and the
tobacco colonies. Maryland and Virginia have as little occasion
for those metals in their foreign, as in their domestic commerce.
They are said, accordingly, to have less gold and silver money
than any other colonies in America. They are reckoned, however,
as thriving, and consequently as rich, as any of their

In the northern colonies, Pennsylvania, New York, New Jersey, the
four governments of New England, etc. the value of their own
produce which they export to Great Britain is not equal to that
of the manufactures which they import for their own use, and for
that of some of the other colonies, to which they are the
carriers. A balance, therefore, must be paid to the
mother-country in gold and silver and this balance they generally

In the sugar colonies, the value of the produce annually exported
to Great Britain is much greater than that of all the goods
imported from thence. If the sugar and rum annually sent to the
mother-country were paid for in those colonies, Great Britain
would be obliged to send out, every year, a very large balance in
money ; and the trade to the West Indies would, by a certain
species of politicians, be considered as extremely
disadvantageous. But it so happens, that many of the principal
proprietors of the sugar plantations reside in Great Britain.
Their rents are remitted to them in sugar and rum, the produce of
their estates. The sugar and rum which the West India merchants
purchase in those colonies upon their own account, are not equal
in value to the goods which they annually sell there. A balance,
therefore, must necessarily be paid to them in gold and silver,
and this balance, too, is generally found.

The difficulty and irregularity of payment from the different
colonies to Great Britain, have not been at all in proportion to
the greatness or smallness of the balances which were
respectively due from them. Payments have, in general, been more
regular from the northern than from the tobacco colonies, though
the former have generally paid a pretty large balance in money,
while the latter have either paid no balance, or a much smaller
one. The difficulty of getting payment from our different sugar
colonies has been greater or less in proportion, not so much to
the extent of the balances respectively due from them, as to the
quantity of uncultivated land which they contained; that is, to
the greater or smaller temptation which the planters have been
under of over-trading, or of undertaking the settlement and
plantation of greater quantities of waste land than suited the
extent of their capitals. The returns from the great island of
Jamaica, where there is still much uncultivated land, have, upon
this account, been, in general, more irregular and uncertain than
those from the smaller islands of Barbadoes, Antigua, and St.
Christopher's, which have, for these many years, been completely
cultivated, and have, upon that account, afforded less field for
the speculations of the planter. The new acquisitions of Grenada,
Tobago, St. Vincent's, and Dominica, have opened a new field for
speculations of this kind ; and the returns front those islands
have of late been as irregular and uncertain as those from the
great island of Jamaica.

It is not, therefore, the poverty of the colonies which
occasions, in the greater part of them, the present scarcity of
gold and silver money. Their great demand for active and
productive stock makes it convenient for them to have as little
dead stock as possible, and disposes them, upon that account, to
content themselves with a cheaper, though less commodious
instrument of commerce, than gold and silver. They are thereby
enabled to convert the value of that gold and silver into the
instruments of trade, into the materials of clothing, into
household furniture, and into the iron work necessary for
building and extending their settlements and plantations. In
those branches of business which cannot be transacted without
gold and silver money, it appears, that they can always find the
necessary quantity of those metals; and if they frequently do not
find it, their failure is generally the effect, not of their
necessary poverty, but of their unnecessary and excessive
enterprise. It is not because they are poor that their payments
are irregular and uncertain, but because they are too eager to
become excessively rich. Though all that part of the produce of
the colony taxes, which was over and above what was necessary for
defraying the expense of their own civil and military
establishments, were to be remitted to Great Britain in gold and
silver, the colonies have abundantly wherewithal to purchase the
requisite quantity of those metals. They would in this case be
obliged, indeed, to exchange a part of their surplus produce,
with which they now purchase active and productive stock, for
dead stock. In transacting their domestic business, they
would be obliged to employ a costly, instead of a cheap
instrument of commerce; and the expense of purchasing this costly
instrument might damp somewhat the vivacity and ardour of their
excessive enterprise in the improvement of land. It might not,
however, be necessary to remit any part of the American revenue
in gold and silver. It might be remitted in bills drawn upon, and
accepted by, particular merchants or companies in Great Britain,
to whom a part of the surplus produce of America had been
consigned, who would pay into the treasury the American revenue
in money, after having themselves received the value of it in
goods ; and the whole business might frequently be transacted
without exporting a single ounce of gold or silver from America.

It is not contrary to justice, that both Ireland and America
should contribute towards the discharge of the public debt of
Great Britain. That debt has been contracted in support of the
government established by the Revolution ; a government to which
the protestants of Ireland owe, not only the whole authority
which they at present enjoy in their own country, but every
security which they possess for their liberty, their property,
and their religion; a government to which several of the colonies
of America owe their present charters, and consequently their
present constitution; and to which all the colonies of America
owe the liberty, security, and property, which they have ever
since enjoyed. That public debt has been contracted in the
defence, not of Great Britain alone, but of all the different
provinces of the empire. The immense debt contracted in the late
war in particular, and a great part of that contracted in the war
before, were both properly contracted in defence of America.

By a union with Great Britain, Ireland would gain, besides the
freedom of trade, other advantages much more important, and which
would much more than compensate any increase of taxes that might
accompany that union. By the union with England, the
middling and inferior ranks of people in Scotland gained a
complete deliverance from the power of an aristocracy, which had
always before oppressed them. By a union with Great Britain, the
greater part of people of all ranks in Ireland would gain an
equally complete deliverance from a much more oppressive
aristocracy ; an aristocracy not founded, like that of Scotland,
in the natural and respectable distinctions of birth and fortune,
but in the most odious of all distinctions, those of religious
and political prejudices; distinctions which, more than any
other, animate both the insolence of the oppressors, and the
hatred and indignation of the oppressed, and which commonly
render the inhabitants of the same country more hostile to one
another than those of different countries ever are. Without a
union with Great Britain, the inhabitants of Ireland are not
likely, for many ages, to consider themselves as one people.

No oppressive aristocracy has ever prevailed in the colonies.
Even they, however, would, in point of happiness and
tranquillity, gain considerably by a union with Great Britain. It
would, at least, deliver them from those rancourous and virulent
factions which are inseparable from small democracies, and which
have so frequently divided the affections of their people, and
disturbed the tranquillity of their governments, in their form so
nearly democratical. In the case of a total separation from Great
Britain, which, unless prevented by a union of this kind, seems
very likely to take place, those factions would be ten times more
virulent than ever. Before the commencement of the present
disturbances, the coercive power of the mother-country had always
been able to restrain those factions from breaking out into any
thing worse than gross brutality and insult. If that coercive
power were entirely taken away, they would probably soon break
out into open violence and bloodshed. In all great countries
which are united under one uniform government, the spirit of
party commonly prevails less in the remote provinces than in the
centre of the empire. The distance of those provinces from the
capital, from the principal seat of the great scramble of faction
and ambition, makes them enter less into the views of any of the
contending parties, and renders them more indifferent and
impartial spectators of the conduct of all. The spirit of party
prevails less in Scotland than in England. In the case of a
union, it would probably prevail less in Ireland than in
Scotland; and the colonies would probably soon enjoy a degree of
concord and unanimity, at present unknown in any part of the
British empire. Both Ireland and the colonies, indeed, would be
subjected to heavier taxes than any which they at present pay. In
consequence, however, of a diligent and faithful application of
the public revenue towards the discharge of the national debt,
the greater part of those taxes might not be of long continuance,
and the public revenue of Great Britain might soon be reduced to
what was necessary for maintaining a moderate

The territorial acquisitions of the East India Company, the
undoubted right of the Crown, that is, of the state and people of
Great Britain, might be rendered another source of revenue, more
abundant, perhaps, than all those already mentioned. Those
countries are represented as more fertile, more extensive, and,
in proportion to their extent, much richer and more populous than
Great Britain. In order to draw a great revenue from them, it
would not probably be necessary to introduce any new system of
taxation into countries which are already sufficiently, and more
than sufficiently, taxed. It might, perhaps, be more proper to
lighten than to aggravate the burden of those unfortunate
countries, and to endeavour to draw a revenue from them, not by
imposing new taxes, but by preventing the embezzlement and
misapplication of the greater part of those which they already

If it should be found impracticable for Great Britain to draw any
considerable augmentation of revenue from any of the resources
above mentioned, the only resource which can remain to her, is a
diminution of her expense. In the mode of collecting and in that
of expending the public revenue, though in both there may be
still room for improvement, Great Britain seems to be at least as
economical as any of her neighbours. The military establishment
which she maintains for her own defence in time of peace, is more
moderate than that of any European state, which can pretend to
rival her either in wealth or in power. None of these articles,
therefore, seem to admit of any considerable reduction of
expense. The expense of the peace-establishment of the
colonies was, before the commencement of the present
disturbances, very considerable, and is an expense which may,
and, if no revenue can be drawn from them, ought certainly to be
saved altogether. This constant expense in time of peace, though
very great, is insignificant in comparison with what the defence
of the colonies has cost us in time of war. The last war, which
was undertaken altogether on account of the colonies, cost Great
Britain, it has already been observed, upwards of ninety
millions. The Spanish war of 1739 was principally undertaken on
their account; in which, and in the French war that was the
consequence of it, Great Britain, spent upwards of forty millions
; a great part of which ought justly to be charged to the
colonies. In those two wars, the colonies cost Great Britain much
more than double the sum which the national debt amounted to
before the commencement of the first of them. Had it not been for
those wars, that debt might, and probably would by this time,
have been completely paid; and had it not been for the colonies,
the former of those wars might not, and the latter certainly
would not, have been undertaken. It was because the colonies were
supposed to be provinces of the British Empire, that this expense
was laid out upon them. But countries which contribute neither
revenue nor military force towards the support of the empire,
cannot be considered as provinces. They may, perhaps, be
considered as appendages, as a sort of splendid and shewy
equipage of the empire. But if the empire can no longer support
the expense of keeping up this equipage, it ought certainly to
lay it down ; and if it cannot raise its revenue in proportion to
its expense, it ought at least to accommodate its expense to its
revenue. If the colonies, notwithstanding their refusal to submit
to British taxes, are still to be considered as provinces of the
British empire, their defence, in some future war, may cost Great
Britain as great an expense as it ever has done in any former
war. The rulers of Great Britain have, for more than a century
past, amused the people with the imagination that they possessed
a great empire on the west side of the Atlantic. This empire,
however, has hitherto existed in imagination only. It has
hitherto been, not an empire, but the project of an empire ; not
a gold mine, but the project of a gold mine; a project which has
cost, which continues to cost, and which, if pursued in the same
way as it has been hitherto, is likely to cost, immense expense,
without being likely to bring any profit ; for the effects of the
monopoly of the colony trade, it has been shewn, are to the great
body of the people, mere loss instead of profit. It is surely now
time that our rulers should either realize this golden dream, in
which they have been indulging themselves, perhaps, as well as
the people ; or that they should awake from it themselves, and
endeavour to awaken the people. If the project cannot be
completed, it ought to be given up. If any of the provinces of
the British empire cannot be made to contribute towards the
support of the whole empire, it is surely time that Great Britain
should free herself from the expense of defending those provinces
in time of war, and of supporting any part of their civil or
military establishment in time of peace; and endeavour to
accommodate her future views and designs to the real mediocrity
of her circumstances.

Adam Smith

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