THE DECLINE, &c.

NOTHING, they ſay, is more cer⯑tain than death, and nothing more un⯑certain than the time of dying; yet we can always fix a period beyond which man cannot live, and within ſome mo⯑ments of which he will die. We are enabled to do this, not by any ſpirit of propheſy, or foreſight into the event, but by obſervation of what has happened in all caſes of human or animal exiſtence. If then any other ſubject, ſuch, for in⯑ſtance, as a ſyſtem of finance, exhibits in its progreſs a ſeries of ſymptoms in⯑dicating decay, its final diſſolution is certain, and the period of it can be calculated from the ſymptoms it exhibits.

Thoſe who have hitherto written on the Engliſh ſyſtem of finance (the ſun⯑ding [6]ſyſtem) have been uniformly im⯑preſſed with the idea of its downfal hap⯑pening ſome time or other. They took, however, no data for that opinion, but expreſſed it predictively, or merely as opinion, from a conviction that the per⯑petual duration of ſuch a ſyſtem was a natural impoſſibility. It is in this man⯑ner that Dr. Price has ſpoken of it; and Smith, in his Wealth of Nations, has ſpo⯑ken in the ſame manner; that is, mere⯑ly as opinion without data. "The pro⯑greſs," ſays Smith, ‘of the enor⯑mous debts which at preſent oppreſs, and will in the long-run moſt probably ruin, all the great nations of Europe, (he ſhould have ſaid governments) has been pretty uniform.’ But this ge⯑neral manner of ſpeaking, though it might make ſome impreſſion, carried with it no conviction.

It is not my intention to predict any thing; but I will ſhew from data already known, from ſymptoms and facts which the Engliſh funding ſyſtem has already exhibited publicly, that it will not con⯑tinue to the end of Mr. Pitt's life, ſuppo⯑ſing [7]him to live the uſual life of a man. How much ſooner it may fall, I leave to others to predict.

Let financiers diverſify ſyſtems of cre⯑dit as they will, it is nevertheleſs true, that every ſyſtem of credit is a ſyſtem of paper money. Two experiments have already been had upon paper money; the one in America, the other in France. In both thoſe caſes the whole capital was emitted, and that whole capital, which in America was called continental money, and in France aſſignats, appeared in cir⯑culation; the conſequence of which was, that the quantity became ſo enormous, and ſo diſproportioned to the quantity of population, and to the quantity of objects upon which it could be employ⯑ed, that the market, if I may ſo ex⯑preſs it, was glutted with it, and the value of it fell. Between five and ſix years de⯑termined the fate of thoſe experiments. The ſame fate would have happened to gold and ſilver, could gold and ſilver have been iſſued in the ſame abundant manner as paper had been, and confined in the country as paper money always is, by hav⯑ing [8]no circulation out of it; or to ſpeak on a larger ſcale, the ſame thing would hap⯑pen in the world, could the world be glut⯑ted with gold and ſilver, as America and France has been with paper.

The Engliſh ſyſtem differs from that of America and France in this one par⯑ticular, that its capital is kept out of ſight; that is, it does not appear in cir⯑culation. Were the whole capital of the national debt, which at the time I write this is almoſt four hundred mil⯑lion pounds ſterling, to be emitted in aſ⯑ſignats or bills, and that whole quantity put into circulation, as was done in Ame⯑rica and in France, thoſe Engliſh aſſign⯑ats, or bills, would ſink in value as thoſe of America and France have done; and that in a greater degree, becauſe the quantity of them would be more diſpro⯑portioned to the quantity of population in England, than was the caſe in either of the other two countries. A nominal pound ſterling in ſuch bills would not be worth one penny.

But though the Engliſh ſyſtem, by thus keeping the capital out of ſight, is [9]preſerved from haſty deſtruction, as i [...] the caſe of America and France, it ne⯑vertheleſs approaches the ſame fate, and will arrive at it with the ſame certainty, though by a ſlower progreſs. The dif⯑ference is altogether in the degree of ſpeed by which the two ſyſtems ap⯑proach their fate, which, to ſpeak in round numbers, is as twenty is to one; that is, the Engliſh ſyſtem, that of fund⯑ing the capital inſtead of iſſuing it, con⯑tained within itſelf a capacity of endur⯑ing twenty times longer than the ſyſtem adopted by America and France; and at the end of that time it would arrive at the ſame common grave, the Potter's field, of paper money.

The datum, I take for this proportion of twenty to one, is the difference be⯑tween a capital and the intereſt at five per cent. Twenty times the intereſt is equal to the capital. The accumulation of paper money in England is in propor⯑tion to the accumulation of the intereſt upon every new loan; and therefore the progreſs to diſſolution is twenty times ſlower than if the capital were to be emitted and put into circulation imme⯑diately. [10]Every twenty years in the Engliſh ſyſtem is equal to one year in the French and American ſyſtems.

The Engliſh funding ſyſtem began one hundred years ago; in which time there has been ſix wars, including the war that ended in 1697.

1. The war that ended, as I have juſt ſaid, in 1697.

2. The war that began in 1702.

3. The war that began in 1739.

4. The war that began in 1756.

5. The American war, that began in 1775.

6. The preſent war, that began in 1793.

The national debt, at the concluſion of the war, which ended in 1697, was twenty-one millions and an half. (See Smith's Wealth of Nations, chapter on Public Debts.) We now ſee it ap⯑proaching faſt to four hundred millions. If between thoſe two extremes of twen⯑ty-one millions and four hundred millions, embracing the ſeveral expences of all the including wars, there exiſts ſome common ratio that will aſcertain arith⯑metically the amount of the debt at the [11]end of each war, as certainly as the fact is now known to be, that ratio will in like manner determine what the amount of the debt will be in all future wars, and will aſcertain the period within which the funding ſyſtem will expire in a bankruptcy of the government; for the ratio I allude to, is the ratio which the nature of the thing has eſtabliſhed for itſelf.

Hitherto no idea has been entertain⯑ed that any ſuch ratio exiſted, or could exiſt, that could determine a problem of this kind, that is, that could aſcer⯑tain, without having any knowledge of the fact, what the expence of any for⯑mer war had been, or what the expence of any future war would be; but it is, nevertheleſs, true that ſuch a ratio does exiſt, as I ſhall ſhew, and alſo the mode of applying it.

The ratio I allude to is not in Arith⯑metical progreſſion, like the numbers 2, 3, 4, 5, 6, 7, 8, 9; nor yet in geometrical progreſſion, like the numbers 2, 4, 8, 16, 32, 64, 128, 256: [12]but is in the ſeries of one half upon, each preceding number; like the num⯑bers 8, 12, 18, 27, 40, 60, 90, 135.

Any perſon can perceive that the ſe⯑cond number, 12, is produced by the preceding number, 8, and half 8; and that the third number, 18, is in like man⯑ner produced by the preceding number, 12, and half 12; and ſo on for the reſt. They can alſo ſee how rapidly the ſums increaſe as the ratio proceeds. The dif⯑ference between the two firſt numbers is but four; but the difference between the two laſt is forty-five: and from thence they may ſee with what immenſe rapidity the national debt has increaſed, and will continue to increaſe, till it exceeds the ordinary powers of calculation, and loſes itſelf in cyphers.

I come now to apply the ratio as a rule to determine all the caſes.

I begin with the war that ended in 1697, which was the war in which the funding ſyſtem began. The expence of that war was twenty-one millions and an half. In order to aſcertain the expence of the next [13]war, I add to twenty-one millions and an half, the half thereof (ten millions and three quarters), which makes thirty-two millions and a quarter, added to the former debt of twenty-one millions and an half, carries the national debt to fifty-three mil⯑lions and three quarters. Smith, in his chapter on Public Debts, ſays, Thenation⯑al debt was at this time fifty-three millions.

I proceed to aſcertain the expence of the next war, that of 1739, by adding, as in the former caſe, one half to the ex⯑pence of the preceeding war. The ex⯑pence of the preceding war was thirty-two millions and a quarter: for the ſake of even numbers, ſay thirty-two millions, the half of which (16) makes forty-eight millions for the expence of that war.

I proceed to aſcertain the expence of the war of 1756, by adding, according to the ratio, one half to the expence of the preceding war. The expence of the pre⯑ceding war was taken at 48 millions, the half of which (24) makes 72 millions for the expence of that war. Smith (chap⯑ter on public debts) ſays, the expence of [14]the war of 1756 was 72 millions and a quarter.

I proceed to aſcertain the expence of the American war, of 1775, by adding, as in the former caſes, one half to the ex⯑pence of the preceding war. The ex⯑pence of the preceding war was 72 millions, the half of which (36) makes 108 milli⯑ons for the expence of that war. In the laſt edition of Smith (chapter on Public Debts) he ſays, the expence of the Ame⯑rican war was more than an hundred mil⯑lions.

I come now to aſcertain the expence of the preſent war, ſuppoſing it to conti⯑nue as long as former wars have done, and the funding ſyſtem not to break up before that period. The expence of the preced⯑ing war was 108 millions, he half of which (54) makes 162 millions for the ex⯑pence of the preſent war. It gives ſymp⯑toms of going beyond this ſum, ſuppoſing the funding ſyſtem not to break up; for the loans of the laſt year and of the pre⯑ſent year, are twenty-two millions each, which exceeds the ratio compared with the loans of the preceding war. It will [15]not be from the inability of procuring loans that the ſyſtem will break up. On the contrary, it is the facility with which loans can be procured, that haſtens that event. The loans are altogether paper tranſactions, and it is the exceſs of them that brings on, with the accelerating ſpeed, that progreſſive depreciation of funded paper money that will diſſolve the funding ſyſtem.

I proceed to aſcertain the expence of fu⯑ture wars, and I do this merely to ſhew the impoſſibility of the continuance of the fund⯑ing ſyſtem, and the certainty of its diſſo⯑lution.

The expence of the next war after the preſent war, according to the ratio that has aſcertained the preceding caſes will be

• —243 millions
• Expence of the ſecond war 364 millions
• — third war — 546 millions
• — fourth war — 819 millions
• — fifth war — 1228 millions
• — 3200 millions

which, at only 4 per cent, will require taxes to the nominal amount of one hun⯑dred [16]and twenty-eight millions to pay the annual intereſt, beſides the intereſt of the preſent debt, and the expences of govern⯑ment, which are not included on this ac⯑count. Is there a man ſo mad, ſo ſtupid, as to ſuppoſe this ſyſtem can continue?

When I firſt conceived the idea of ſeek⯑ing for ſome common ratio that ſhould ap⯑ply as a rule of meaſurement to all the ca⯑ſes of the funding ſyſtem, ſo far as to aſcer⯑tain the ſeveral ſtages of its approach to diſſolution, I had no expectation that any ratio could be found that would apply with ſo much exactneſs as this does. I was led to the idea merely by obſerving that the funding ſyſtem was a thing in con⯑tinual progreſſion, and that whatever was in a ſtate of progreſſion might be ſuppo⯑ſed to admit of, at leaſt, ſome general ratio of meaſurement, that would apply without any very great variation. But who could have ſuppoſed that falling ſyſ⯑tems, or falling opinions, admitted of a ratio apparently as true as the deſcent of falling bodies? I have not made the ra⯑tio, any more than Newton made the ra⯑tio of gravitation. I have only diſcovered [17]it, and explained the mode of applying it. To ſhew at one view the rapid progreſ⯑ſion of the funding ſyſtem to deſtruction, and to expoſe the folly of thoſe who blind⯑ly believe in its continuance, or who art⯑fully endeavour to impoſe that belief upon others, I exhibit in the annexed table, the expence of each of the ſix wars ſince the funding ſyſtem began, as aſcertained by the ratio, and the expence of ſix wars yet to come, aſcertained by the ratio.

[18]Thoſe who are acquainted with the power with which even a ſmall ratio act⯑ing in progreſſion, multiplies in a long ſeries, will ſee nothing to wonder at in this table. Thoſe who are not acquaint⯑ed with that ſubject, and not knowing what elſe to ſay may be inclined to deny it. But it is not their opinion one way, nor mine the other, that can influence the event. The table exhibits the natural march of the ſunding ſyſtem, to its irre⯑deemable diſſolution. Suppoſing the pre⯑ſent government of England to continue, and to go on as it has gone on ſince the funding ſyſtem began, I would not give twenty ſhillings for one hundred pounds in the funds to be paid twenty years hence. I do not ſpeak this predictively; I produce the data upon which that belief is founded: and which data it is every [19]body's intereſt to know, who have any thing to do with the funds, or who are going to bequeath property to their de⯑ſcendants to be paid at a future day.

Perhaps it may be aſked, that as go⯑vernments or miniſters proceeded by no ratio in making loans or incurring debts, and as nobody intended any ratio, or thought of any, how does it happen that there is one? I anſwer, that the ratio is founded in neceſſity; and I now go to ex⯑plain what that neceſſity is.

It will always happen, that the price of labour, or of the produce of labour, be that produce what it may, will be in pro⯑portion to the quantity of money in a country, admitting things to take their natural courſe. Before the invention of the funding ſyſtem, there was no other money than gold and ſilver; and as na⯑ture gives out thoſe metals with a ſparing hand, and in regular annual quantities from the mines, the ſeveral prices of things were proportioned to the quantity of money at that time, and ſo nearly ſta⯑tionary as to vary but little in any fifty or ſixty years of that period.

[20]When the funding ſyſtem began, a ſub⯑ſtitute for gold and ſilver began alſo. That ſubſtitute was paper; and the quan⯑tity of it increaſed as the quantity of inte⯑reſt increaſed upon accumulated loans. This appearance of a new and additional ſpecies of money in the nation ſoon began to break the relative value which money and the things it will purchaſe bore to each other before. Every thing roſe in price, but the riſe at firſt was little and ſlow, like the difference in units between the two firſt numbers, 8 and 12, compared with the two laſt numbers, 90, and 135, in the table. It was however ſufficient to make itſelf conſiderably felt in a large tranſaction. When therefore government, by engaging in a new war, required a new loan, it was obliged to make a higher loan than the former loan to balance the increaſed price to which things had riſen; and as that new loan increaſed the quanti⯑ty of paper in proportion to the new quan⯑tity of intereſt, it carried the price of things ſtill higher than before.

The next loan was again higher, to balance that further increaſed price; and [21]all this in the ſame manner, though not in the ſame degree, that every new emiſſion of continental money in America, or of aſſignats in France, were greater than the preceding emiſſion, to make head againſt the advance of prices, till the com⯑bat could be contained no longer. Herein is founded the neceſſity of which I have juſt ſpoken. That neceſſity proceeds with accelerating velocity, and the ratio I have laid down is the meaſure of that acceler⯑ation; or to ſpeak the technical language of the ſubject, it is the meaſure of the in⯑creaſing depreciation of funded paper money, and of bank-notes continues to multiply. What elſe but this can account for the difference between one war's coſt⯑ing 21 millions, and another war's coſting 160 millions?

The difference cannot be accounted for on the ſcore of extraordinary efforts, or extraordinary atchievements. The war that coſt 21 millions, was the war of the confederates, hiſtorically called the grand alliance, conſiſting of England, Auſtria, and Holland, in the time of William the Third, againſt Louis the Fourteenth, and [22]in which the confederates were victorious. The preſent is a war of much greater confederacy—a confederacy of England, Auſtria, Pruſſia, the German Empire, Spain, Holland, Naples, and Sardinia, eight powers againſt the French Republic ſingly, and the Republic has beaten the whole confederacy. But to return to my ſubject—

It is ſaid in England, that the value of paper keeps equal with the value of gold and ſilver. But the caſe is not rightly ſtated; for the fact is, that the paper has pulled down the value of gold and ſilver to a level with itſelf. Gold and ſilver will not purchaſe ſo much of any purchaſable article at this day as if no paper had ap⯑peared, nor ſo much as it will in any country in Europe where there is no pa⯑per. How long this hanging together of money and paper will continue makes a new caſe; becauſe it daily expoſes the ſyſtem to ſudden death, independent of the natural death it would otherwiſe ſuffer.

I conſider the funding ſyſtem as being now advanced into the laſt twenty years [23]of its exiſtence. The ſingle circumſtance were there no other, that a war ſhould coſt nominally one hundred and ſixty mil⯑lions which when the ſyſtem began coſt but twenty-one millions, or that the loan for one year only, (including the loan to the Emperor) ſhould now be nominally greater than the whole expence of that war, ſhews the ſtate of depriciation to which the funding ſyſtem has arrived. Its depreciation is in the proportion of eight for one, compared with the value of its money when the ſyſtem began; which is the ſtate the French aſſignats ſtood in a year ago (March, 1795), com⯑pared with gold and ſilver. It is there⯑fore that I ſay, that the Engliſh funding ſyſtem, has entered into the laſt twenty years of its exiſtence. Comparing each twenty years of the Engliſh ſyſtem with every ſingle year of the American and French ſyſtems, as before ſtated.

Again, ſuppoſing the preſent war to cloſe as former wars have done, and with⯑out producing either revolution or reform in England, another war at leaſt muſt be looked for in the ſpace of the twenty [24]years I allude to; for it has never yet happened that twenty years have paſſed off without a war, and that more eſpeci⯑ally ſince the Engliſh government has dabbled in German politics, and ſhewn a diſpoſition to inſult the world, and the world of commerce, with her navy. That next war will carry the national debt to very nearly ſeven hundred millions, the intereſt of which, at four per cent. will be twenty-eight millions, beſides the taxes for the (then) expences of govern⯑ment, which will increaſe in the ſame pro⯑portion, and which will carry the taxes to at leaſt 40 millions: and if another war only begins, it will quickly carry them to above fifty; for it is in the laſt twenty years of the funding ſyſtem, as in the laſt year of the American and French ſyſtems without funding, that all the great ſhocks begin to operate.

I have juſt mentioned that paper, in England, has pulled down the value of gold and ſilver to a level with itſelf; and that this pulling down of gold and ſilver money has created the appearance of paper mo⯑ney's keeping up. The ſame thing, and [25]the ſame miſtake, took place in America and in France, and continued for a conſi⯑derable time after the commencment of their ſyſtem of paper; and the actual depreciation of money was hidden under that miſtake.

It was ſaid in America, at that time, that every thing was becoming dear; but gold and ſilver could then buy thoſe dear articles no cheaper than paper could; and therefore it was not called depreciation. The idea of dearneſs eſtabliſhed itſelf for the idea of depreciation. The ſame was the caſe in France. Though every thing roſe in price ſoon after aſſignats appeared, yet thoſe dear articles could be purchaſed no cheaper with gold and ſilver than with paper, and it was only ſaid that things were dear. The ſame is ſtill the language in England. They call it dearneſs. but they will ſoon find that it is an actual de⯑preciation, and that this depreciation is the effect of the funding ſyſtem; which, by crowding ſuch a continually increaſing maſs of paper into circulation, carries down the value of gold and ſilver with it. [26]But gold and ſilver will, in the long run, revolt againſt depreciation, and ſeparate from the value of paper; for the progreſs of all ſuch ſyſtems appears to be, that the paper will take the command in the beginning, and gold and ſilver in the end.

But this ſucceſſion in the command of gold and ſilver over paper, makes a criſis far more eventful to the funding ſyſtem than to any other ſyſtem upon which pa⯑per can be iſſued; for, ſtrictly ſpeaking, it is not a criſis of danger, but a ſymptom of death. It is a death ſtroke to the fun⯑ding ſyſtem. It is a revolution in the whole of its affairs.

If paper be iſſued without being fund⯑ed upon intereſt, emiſſions of it cannot be continued after the value of it ſepa⯑rates from gold and ſilver, as we have ſeen in the two caſes of America and France. But the funding ſyſtem reſts altogether upon the value of paper being equal to gold and ſilver; which will be as long as the paper can continue carrying down the value of gold and ſilver to the ſame level to which itſelf deſcends, and no longer. But even in this ſtate, that of [27]deſcending equally together, the miniſter, whoever he may be, will find himſelf be⯑ſet with accumulating difficulties; becauſe the loans and taxes voted for the ſervice of each enſuing year will wither in his hands before the year expires, or before they can be applied. This will force him to have recourſe to emiſſions of what are called exchequer and navy bills, which, by ſtill increaſing the maſs of paper in circulation, will drive on the depreciation ſtill more rapidly.

It ought to be known that taxes in En⯑gland are not paid in gold and ſilver, but in paper (bank notes). Every perſon who pays any conſiderable quantity of taxes, ſuch as malſters, brewers, diſtillers (I appeal for the truth of it to any of the collectors of exciſe in England, or to Mr. Whitbread), knows this to be the caſe. There is not gold and ſilver enough in the nation to pay the taxes in coin, as I ſhall ſhew; and conſequently there is not mo⯑ney enough in the bank to pay the notes. The intereſt of the national funded debt is paid at the bank in the ſame kind of pa⯑per in which the taxes are collected. [28]When people find, as they will find a re⯑ſervedneſs among each other in giving gold and ſilver for bank notes, or the leaſt preference for the former over the latter, they will go for payment to the bank, where they have a right to go. They will do this as a meaſure of prudence, each one for himſelf, and the truth or deluſion of the funding ſyſtem will then be proved.

I have ſaid in the foregoing paragraph, that there is not gold and ſilver enough in the nation to pay the taxes in coin, and conſequently, that there cannot be enough in the bank to pay the notes. As I do not chooſe to reſt any thing upon aſſerti⯑on, I appeal for the truth of this to the publications of Mr. Eden (now called Lord Aukland), and George Chalmers, Secretary to the Board of Trade and Plantation, of which Jenkinſon (now called Lord Hawkeſbury) is preſident. [Theſe ſort of folks change their names ſo often, that it is as difficult to know them as it is to know a thief.] Chalmers gives the quantity of gold and ſilver coin from the returns of coinage at the mint; and, af⯑ter [29]deducting for the light gold recoined, ſays, that the amount of gold and ſilver coin is about twenty millions. He had bet⯑ter not have proved this, eſpecially if he had reflected, that, public credit is ſuſpici⯑on aſleep. The quantity is much too little.

Of this twenty millions (which is not a fourth part of the quantity of gold and ſilver there is in France, as is ſhewn in Mr. Neckar's Treatiſe on the Adminiſtra⯑tion of the Finances) three millions at leaſt muſt be ſuppoſed to be in Ireland ſome in Scotland, and in the Weſt-Indies, Newfoundland, &c. The quantity there⯑fore in England cannot be more than ſixteen millions, which is four millions leſs than the amount of the taxes. But ad⯑mitting there to be ſixteen millions, not more than a fourth part thereof (four millions) can be in London, when it is conſidered that every city, town, village, and farm-houſe in the nation muſt have a part of it, and that all the great manu⯑factories, which moſt require caſh, are out of London. Of this four millions in London, every banker, merchant, trades⯑man, [30]in ſhort, every individual muſt have ſome. He muſt be a poor ſhop-keeper indeed, who has not a few guineas in his till. The quantity of caſh therefore in the bank can never, on the evidence of circumſtances, be ſo much as two milli⯑ons; moſt probably not more than one million; and on this ſlender twig, always liable to be broken, hangs the whole fun⯑ding ſyſtem of four hundred millions, be⯑ſides many millions in bank notes. The ſum in the bank is not ſufficient to pay one fourth of only one years intereſt of the national debt, were the creditors to demand payment in caſh, or to demand caſh for the bank notes in which the in⯑tereſt is paid. A circumſtance always li⯑able to happen.

One of the amuſements that has kept up the farce of the funding ſyſtem, is, that the intereſt is regularly paid. But as the intereſt is always paid in bank notes, and as bank notes can always be coined for the purpoſe, this mode of payment proves nothing. The point of proof is, can the bank give caſh for the bank notes on which the intereſt is paid? If it can [31]not, and it is evident it cannot, ſome mil⯑millions of bank notes muſt go without payment, and thoſe holders of bank notes who apply laſt will be worſt off. When the preſent quantity of caſh in the bank be paid away, it is next to impoſſible to ſee how any new quantity is to arrive. None will arrive from taxes, for the taxes will all be paid in bank notes; and ſhould the go⯑vernment refuſe bank notes in payment of taxes, the credit of bank notes will be gone at once. No caſh will arrive from the buſi⯑neſs of diſcounting merchants bills, for every merchant will pay off thoſe bills in bank notes, and not in caſh. There is therefore no means left for the bank to obtain a new ſupply of caſh after the pre⯑ſent quantity be paid away. But, beſides the impoſſibility of paying the intereſt of the funded debt in caſh, there are many thouſand perſons in London and in the country, who are holders of bank notes that came into their hands in the fair way of trade, and who are not ſtock holders in the ſunds; and as ſuch perſons have had no hand in increaſing the demand upon the bank, as thoſe have had, who, for their [32]own private intereſt, like Boyd and others, are contracting, or pretending to contract, for new loans, they will conceive they have a juſt right their bank notes ſhould be paid firſt. Boyd has been very ſly in France, in changing his paper into caſh. He will be juſt as ſly in doing the ſame thing in London; for he has learned to calculate: and then it is probable he will ſet off for America.

A ſtoppage of payment at the bank is not a new thing. Smith, in his Wealth of Nations, book 2, chap. 2, ſays, that in the year 1696, exchequer bills fell forty, fifty, and ſixty per cent. bank notes twen⯑ty per cent. and the bank ſtopt payment.— That which happened in 1696, may hap⯑pen again in 1796. The period in which it happened was the laſt year of the war of king William. It neceſſarily put a ſtop to the further emiſſion of exchequer and navy bills, and to the raiſing of new loans; and the peace which took place the next year was probably hurried on by this circumſtance, and ſaved the bank from bankruptcy. Smith, in ſpeaking of the circumſtances of the bank, upon another [33]occaſion, ſays, (book 2, chap. 2,)—‘This great company has been reduced to the neceſſity of paying in ſixpences.’ When a bank adopts the expedient of pay⯑ing in ſixpences, it is a confeſſion of in⯑ſolvency.

It is worthy of obſervation, that every caſe of failure in finances, ſince the ſyſtem of paper began, has produced a revolution in governments, either total or partial. A failure in the finances of France pro⯑duced the French revolution. A failure in the finance of aſſignats, broke up the revolutionary government, and produced the preſent French Conſtitution. A fai⯑lure in the finances of the old Congreſs of America, and the embarraſſments it brought upon commerce, broke up the ſyſtem of the old confederation, and produced the preſent federal conſtitution. If then we admit of reaſoning by compari⯑ſon of cauſes and events a failure in the Engliſh finances will produce ſome change in the government of that country.

As to Mr. Pitt's project of paying off the national debt by applying a million a year for that purpoſe, while he continues [34]adding more than twenty millions a year to it, it is like ſetting a man with a wood⯑en leg to run after a hare. The longer he runs the farther he is off.

When I ſaid that the funding ſyſtem had entered the laſt twenty years of its exiſt⯑ence, I certainly did not mean that it would continue twenty years and then ex⯑pire as a leaſe would do. I meant to deſ⯑cribe that age of decripitude in which death is every day expected, and life can⯑not continue long. But the death of cre⯑dit, or that ſtate that is called bankruptcy, is not always marked by thoſe progreſſive ſtages of viſible decline, that mark the decline of natural life. In the progreſſion of nautral life, age annot counterfeit youth nor conceal the departure of juvenile abili⯑ties. But it is otherwiſe with reſpect to the death of credit; for though all the approaches to bankruptcy may actually exiſt in circumſtances, they admit of being concealed by appearances. Nothing is more common than to ſee the bankrupt of to-day a man in credit but the day before; yet no ſooner is the real ſtate of his affairs known than every body can ſee he had been inſolvent long before. [35]In London the greateſt theatre of bankrupt⯑cy in Europe, this part of the ſubject will be well and feelingly underſtood.

Mr. Pitt continually talks of credit, and of the national reſources. Theſe are two of the feigned appearances by which the approaches to bankruptcy are concealed. That which he calls credit may exiſt as I have juſt ſhewn, in a ſtate of inſolvency and is always what I have before deſcribed it to be, ſuſpicion aſleep.

As to national reſources, Mr. Pitt, like all the Engliſh financiers that pre⯑ceded him ſince the funding ſyſtem be⯑gan, has uniformly miſtaken the nature of a reſource: that is, they have miſta⯑ken it conſiſtently with the deluſion of the funding ſyſtem; but time is explain⯑ing the deluſion. That which he calls, and which they called, a reſource, is not a reſource, but it is the anticipation of a reſource. They have anticipated what would have been a reſource in another ge⯑neration, had not the uſe of it been ſo anticipated. The funding ſyſtem is a ſyſtem of anticipation. Thoſe who eſ⯑tabliſhed it an hundred years ago, antici⯑pated the reſources of thoſe who were to [36]live an hundred years after; for the peo⯑ple of the preſent day have to pay the intereſt of the debts contracted at that time, and of all debts contracted ſince. But it is the laſt feather that breaks the horſe's back. Had the ſyſtem began an hundred years before, the amount of tax⯑es at this time to pay the annual intereſt at four per cent. (could we ſuppoſe ſuch a ſyſtem of inſanity could have continu⯑ed) would be two hundred and twenty millions annually; for the capital of the debt would be 54886 millions, according to the ratio that aſcertains the expence of the wars for the hundred years that are paſt. But long before it could have reached this period, the value of bank notes, from the immenſe quantity of them, (for it is in paper only that ſuch a nomi⯑nal revenue could be collected) would have been as low or lower than continental paper money has been in America, or aſſignats in France; and as to the idea of exchanging them for gold and ſilver, it is too abſurd to be contradicted.

Do we not ſee that nature in all her o⯑perations, diſowns the viſionary baſis [37]upon which the funding ſyſtem is built? She acts always by renewed ſucceſſions, and never by accumulating additions per⯑petually progreſſing. Animals and ve⯑getables, men and trees, have exiſted ever ſince the world began; but that ex⯑iſtence has been carried on by ſucceſſions of generations, and not by continuing the ſame men and the ſame trees in exiſtence that exiſted firſt; and to make room for the new ſhe removes the old. Every natural idiot can ſee this. It is the ſtock-jobbing idiot only that miſtakes. He has conceived that art can do what nature cannot. He is teaching her a new ſyſtem —that there is not occaſion for men to die—That the ſcheme of creation can be carried on upon the plan of the funding ſyſtem—That it can proceed by continual additions of new beings, like new loans, and all live together in eter⯑nal youth. Go, count the graves, thou idiot, and learn the folly of thy arith⯑metic.

But beſides theſe things, there is ſome⯑thing viſibly farcical in the whole opera⯑tion [38]of loaning. It is ſcarcely more than four years ago that ſuch a rot of bankrupt⯑cy ſpread itſelf over London, that the whole commercial fabric tottered; trade and credit were at a ſtand; and ſuch was the ſtate of things, that to prevent, or ſuſ⯑pend, a general bankruptcy, the govern⯑ment lent the merchants ſix millions in go⯑vernment paper, and now the merchants lend the government twenty two millions in their paper; and two parties, Boyd and Morgan, men but little known, con⯑tend who ſhall be the lenders. What a farce is this! It reduces the operation of loaning to accommodation paper, in which the competitors contend, not who ſhall lend but who ſhall ſign, becauſe there is ſomething to be got for ſigning.

Every Engliſh ſtock-jobber and miniſ⯑ter boaſts of the credit of England. Its credit, ſay they, is greater than that of any country in Europe. There is a good reaſon for this; for there is not another country in Europe that could be made the dupe of ſuch a deluſion. The Engliſh funding ſyſtem will remain a monument of wonder, not ſo much on account of the [39]extent to which it has been carried, as of the folly of believing in it.

Thoſe who had formerly predicted that the funding ſyſtem would break up when the debt ſhould amount to one hundred or one hundred and fifty millions, erred only in not diſtinguiſhing between inſolvency and actual bankruptcy; for the inſolvency commenced as ſoon as the government be⯑came unable to pay the intereſt in caſh, or to give caſh for the bank notes in which the intereſt was paid, whether that ina⯑bility was known or not, or whether it was ſuſpected or not. Inſolvency always takes place before bankruptcy; for bank⯑ruptcy is nothing more than the publica⯑tion of that inſolvency. In the affairs of an individual, it often happens that inſol⯑vency exiſts ſeveral years before bankrupt⯑cy, and that the inſolvency is concealed and carried on till the individual is not able to pay one ſhilling in the pound. A government can ward off bankruptcy long⯑er than an individual; but inſolvency will inevitably produce bankruptcy, whether in an individual or in a government. If then the quantity of bank notes payable [40]on demand, which the bank has iſſued, are greater than the bank can pay off, the bank is inſolvent; and when that inſolven⯑cy be declared, it is bankruptcy.

[41] I come now to ſhew the ſeveral ways by which bank notes get into circulation. I ſhall afterwards offer an eſtimate on the total quantity or amount of bank notes ex⯑iſting at this moment.

The bank acts in three capacities. As a bank of diſcount; as a bank of depoſit; and as banker for the government.

Firſt as bank of diſcount. The bank diſcounts merchants bills of exchange for two months. When a merchant has a bill that will become due at the end of two months, and wants payment before that time, that bank advances that payment to [42]him, deducting therefrom at the rate of five per cent. per ann. The bill of ex⯑change remains at the bank as a pledge or pawn, and at the end of two months it muſt be redeemed. This tranſaction is done altogether in paper; for the profits of the bank, as a bank of diſcount, ariſe entirely from its making uſe of paper as money. The bank gives bank notes to the merchant in diſcounting the bill of ex⯑change, and the redeemer of the bill pays bank notes to the bank in redeeming it. It very ſeldom happens that the real mo⯑ney paſſes between them.

If the profits of a bank be, for example, two hundred thouſand pounds a year (a great ſum to be made merely by exchang⯑ing one ſort of paper for another, and which ſhews alſo that the merchants of that place are preſſed for money for pay⯑ments, inſtead of having money to ſpare to lend to government,) it proves that the bank diſcounts to the amount annually, or 666,666l. every two months; and there never remains in the bank more than two months pledge, of the value of 666,666l. at any one time, the amount [43]of bank notes in circulation at any one time ſhould not be more than to that a⯑mount. This is ſufficient to ſhew that the preſent immenſe quantity of bank notes, which are diſtributed through e⯑very city, town, village, and farm-houſe in England, cannot be accounted for on the ſcore of diſcounting.

Secondly, as a bank of depoſit. To depoſit money at the bank means to lodge it there for the ſake of convenience, and to be drawn out at any moment the de⯑poſiter pleaſes, or to be paid away to his order. When the buſineſs of diſcount⯑ing is great, that of depoſiting is neceſſa⯑rily ſmall. No man depoſits and applies for diſcount at the ſame time; for it would be like paying intereſt for lending money, inſtead of for borrowing it. The depoſits that are now made at the bank are almoſt entirely in bank notes, and conſequently they add nothing to the abi⯑lity off the bank to pay of the bank notes that may be preſented for payment; and beſides this, the depoſits are no more the property of the bank than the caſh or bank notes in a merchant's counting houſe [44]are the property of his book-keeper. No great increaſe therefore of bank notes, be⯑yond what the diſcounting buſineſs admits, can be accounted for on the ſcore of de⯑poſits.

Thirdly. The bank acts as banker for the government. This is the connection that threatens ruin to every public bank. It is through this connection that the cre⯑dit of a bank is forced far beyond what it ought to be, and ſtill further beyond its ability to pay. It is through this connec⯑tion that ſuch an immenſe redundant quantity of bank notes have gotten into circulation; and which, inſtead of being iſſued becauſe there was property in the bank, have been iſſued becauſe there was none.

When the treaſury is empty, which happens in almoſt every year of every war, its coffers at the bank are empty alſo. It is in this condition of emptineſs that the miniſter has recourſe to emiſſions of wh [...]t are called exchequer and navy bills, which continually generates a new increaſe of bank notes, and which are ſported upon the public without there [45]being property in the bank to pay them. —Theſe exchequer and navy bills (being, as I have ſaid, emitted becauſe the trea⯑ſury and its coffers at the bank are empty and cannot pay the demands that come in) are no other than an acknowledgement that the bearer is entitled to receive ſo much money. They may be compared to the ſettlement of an account, in which the debtor acknowledges the balance he owes, and for which he gives a note of hand, or to a note of hand given to raiſe money upon it.

Sometimes the bank diſcounts thoſe bills as it would diſcount merchants bills of exchange; ſometimes it purchaſes them of the holders at the current price; and ſometimes it agrees with the miniſter to pay an intereſt upon them to the holders, and keep them in circulation. In every one of thoſe caſes an additional quantity of bank notes get into circulation, and are ſported, as I have ſaid, upon the public, without there being property in the bank, as banker for the government, to pay them: and beſides this, the bank has now no money of its own; for the money [46]that was originally ſubſcribed to begin the the credit of the bank which at its firſt eſ⯑tabliſhment, has been lent to government, and waſted long ago.

‘The bank (ſays Smith, book 2, chap. 2,) acts not only as an ordinary bank, but as a great engine of ſtate; it receives and pays the greater part of the annuities which are due to the cre⯑ditors of the public.’ (It is worth obſerving, that the public, or the nation, is always put for the government in ſpeak⯑ing of debts.) It circulates (ſays Smith) ‘exchequer bills, and it advances to go⯑vernment the annual amount of the land and malt taxes which are frequent⯑ly not paid till ſeveral years afterwards.’ (This advancement is alſo done in bank⯑notes, for which there is not property in the bank.) ‘In thoſe different operati⯑ons, (ſays Smith) its duty to the public may ſometimes have obliged it, without any fault of its directors, to over ſtock the circulation with paper money,’ bank notes. How its duty to the public can induce it to over ſtock that public with pro⯑miſſory bank notes which it cannot pay, [47]and thereby expoſe the individuals of that public to ruin, is too paradoxical to be explained; for it is on the credit which individuals give to the bank, by receiving and circulating its notes, and not upon its own credit or its own property, for it has none that the bank ſports. If how⯑ever it be the duty of the bank to expoſe the public to this hazard, it is at leaſt equally the duty of the individuals of that public to get their money and take care of themſelves; and leave it to place⯑men, penſioners, government contractors, Reeves's aſſociation, and the members of both houſes of Parliment, who have vot⯑ed away the money at the nod of the miniſter, to continue the credit if they can, and for which their eſtates individual⯑ly and collectively ought to anſwer as far as they will go.

There has always exiſted, and ſtill ex⯑iſts, a myſterious, ſuſpicious connection, between the miniſter and the directors of the bank, and which explains itſelf no otherways than by a continual increaſe of bank notes. Without, therefore, enter⯑ing into any further details of the various [48]contrivances by which bank notes are iſ⯑ſued, and thrown upon the public, I pro⯑ceed, as I before mentioned, to offer an eſtimate on the total quantity of bank notes in circulation.

However diſpoſed governments may be to wring money by taxes from the peo⯑ple, there is a limit to the practice eſta⯑bliſhed in the nature of things. That limit is the proportion between the quan⯑tity of money in a nation, be that quan⯑tity what it may, and the greateſt quan⯑tity of taxes that can be raiſed upon it. People have other uſes for money beſides paying taxes; and it is only a proportion⯑al part of that money they can ſpare for taxes, as it is only a proportional part they can ſpare for houſe-rent, for clothing, or for any other particular uſe. Theſe proportions find out and eſtabliſh them⯑ſelves; and that with ſuch exactneſs, that if any one part exceeds its propor⯑tion, all the other parts [...]eel it.

Before the invention of paper money (bank notes), there was no other money in the nation than gold and ſilver, and the greateſt quantity of money that ever [49]was raiſed in taxes during that period, never exceeded a fourth part of the quan⯑tity of money in the nation. It was high taxing when it came to this point. The taxes in the time of William the Third never reached to four millions before the invention of paper, and the quantity of money in the nation at that time was eſtimated to be about ſixteen millions. The ſame proportions eſtabliſhed them⯑ſelves in France. There was no paper money in France before the preſent revo⯑lution, and the taxes were collected in gold and ſilver money. The higheſt quan⯑tity of taxes never exceeded twenty-two millions ſterling; and the quantity of gold and ſilver money in the nation at the ſame time, as ſtated by Mr. Neckar, from returns of coinage at the mints, in his Treatiſe on the Adminiſtration of the Fi⯑nances, was about ninety millions ſterling. To go beyond this limit of a fourth part, in England, they were obliged to intro⯑duce paper money; and the attempt to go beyond it in France, where paper could not be introduced broke up the [50]government, This proportion therefore of a fourth part, is the limit which the nature of the thing eſtabliſhes for itſelf, be the quantity of money in a nation more or leſs.

The amount of taxes in England at this time is full twenty millions: and there⯑fore the quantity of gold and ſilver, and of bank notes, taken together, amounts to eighty millions. The quantity of gold and ſilver, as ſtated by Lord Hawkesbu⯑ry's ſecretary, (George Chalmers), as I have before ſhewn, is twenty millions; and therefore the total amount of bank notes in circulation, all made payable on demand, is ſixty millions. This enormous ſum will aſtoniſh the moſt ſtupid ſtock-jobber, and overpower the credulity of the moſt thoughtleſs Engliſhman: but were it only a third of that ſum, the bank cannot pay half a crown in a pound.

There is ſomething curious in the move⯑ments of this modern complicated ma⯑chine, the funding ſyſtem; and it is only now that it is beginning to unfold the full extent of its movements. In the firſt part of its movements it gives great powers [51]into the hands of government, and in the laſt part it takes them completely away.

The funding ſyſtem ſet out with raiſing revenues under the name of loans, by means of which government became both prodigal and powerful. The loaners aſ⯑ſumed the name of creditors, and though it was ſoon diſcovered that loaning was government-jobbing, thoſe pretended loaners, or the perſons who purchaſed into the funds afterwards, conceived themſelves not only to be creditors, but to be the only creditors.

But ſuch has been the operation of this complicated machine, the funding ſyſtem, that it has produced, unperceived, a ſe⯑cond generation of creditors, more nu⯑merous and far more formidable, and withal more real than the firſt generation; for every holder of a bank note is a cre⯑ditor, and a real creditor, and the debt due to him is made payable on demand. The debt therefore which the government owes to individuals is compoſed of two parts; the one about four hundred milli⯑ons bearing intereſt, the other about ſixty millions payable on demand. The one is [52]called the funded debt, the other is the debt due in bank notes.

This ſecond debt (that contained in the bank notes) has, in a great meaſure, been incurred to pay the intereſt of the firſt debt; ſo that in fact little or no real in⯑tereſt has been paid by government. The whole has been deluſion and fraud. Go⯑vernment firſt contracted a debt in the form of loans with one claſs of people, and then run clandeſtinely into debt with another claſs, by means of bank notes, to pay the intereſt. Government acted of itſelf in contracting the firſt debt, and made a machine of the bank to contract the ſecond.

It is this ſecond debt that changes the ſeat of power and the order of things; for it puts it in the power of even a ſmall part of the holders of bank notes (had they no other motive than diſguſt at Pitt and Greenville's ſedition bills to controul any meaſure of government they found to be injurious to their intereſt; and that not by popular meetings, or popular ſo⯑cieties, but by the ſimple and eaſy opera⯑ [...]on of with-holding their credit from [53]that government; that is, by individually demanding payment at the bank for every bank note that comes into their hands. Why ſhould Pitt and Greenville expect that the very men whom they inſult and injure ſhould at the ſame time continue to ſupport the meaſure of Pitt and Green⯑ville, by giving credit to their promiſſory notes of payment? No new emiſſions of bank notes could go on while payment was demanding on the old and the caſh in the bank waſting daily away; nor any new advances be made to government or to the emperor to carry on the war; nor any new emiſſion be made of exche⯑quer bills.

"The bank," ſays Smith, (book ii. ch. 2.) "is a great engine of ſtate." And in the ſame paragraph he ſays, "The ſtabili⯑ty of the bank is equal to that of the Bri⯑tiſh government;" which is the ſame as to ſay that the ſtability of the government is equal to that of the bank, and no more. If then the bank cannot pay, the arch⯑treaſurer of the holy Roman empire) S. R. I. A. ^*) is a bankrupt. When folly in⯑vented [54]vented titles, ſhe did not attend to their application; for ever ſince the go⯑vernment of England has been in the hands of arch-treaſurers, it has been run⯑ning into bankrupty; and as to the arch-treaſurer apparent, he has been a bankrupt long ago. What a miſerable proſpect has England before its eyes!

Before the war of 1755 there were no bank notes lower than twenty pounds. During that war bank notes of fifteen pounds and of ten pounds were coined; and now, ſince the commencement of the preſent war, they are coined as low as five pounds. Theſe five pound notes will circulate chiefly among little ſhop-keepers, butchers, bakers, market people, renters of ſmall houſes, lodgers, &c. All the high departments of commerce, and the affluent ſtations of life were already over-ſtocked, as Smith expreſſes it, with the bank notes. No place remained open wherein to croud an additional quantity of bank notes but among the claſs of peo⯑ple I have juſt mentioned, and the means of doing this could be beſt affected by coming five pound notes. This conduct [55]has the appearance of that of an unprin⯑cipled inſolvent, who, when on the verge of bankruptcy to the amount of many thou⯑ſands, will borrow as low as five pounds of the ſervants in his houſe, and break the next day.

But whatever momentary relief or aid the miniſter and his bank might expect from this low contrivance of five pound notes, it will increaſe the inability of the bank to pay the higher notes, and haſten the deſtruction of all; for even the ſmall taxes that uſed to be paid in money will now be paid in thoſe notes, and the bank will ſoon find itſelf with ſcarcely any other money than what the hair powder guinea tax brings in.

The bank notes make the moſt ſerious part of the buſineſs of finance; what is called the national funded debt is but a trifle when put in compariſon with it; yet the caſe of the bank notes has never been touched upon. But it certainly ought to be known upon what authority, whether that of the miniſter or of the directors, and upon what foundation, ſuch immenſe quantities are iſſued. I have ſtated the [56]amount of them at ſixty millions ſterling: I have produced data for that eſtimation; and beſides this, the apparent quantity of them, far beyond that of gold and ſilver in the nation, corroborates therewith. But were there but a third part of ſixty millions, the bank cannot pay half a crown in the pound; for no new ſupply of money as before ſaid, can arrive at the bank, as all the taxes will be paid in paper.

When the funding ſyſtem began, it was not doubted that the loans that had been borrowed would be repaid. Co⯑vernment not only propagated that be⯑lief, but it began paying them off. In time this profeſſion came to be abandon⯑ed; and it is not difficult to ſee that bank notes will march the ſame way; for the amount of them is only another debt un⯑der another name; and the probability is that Mr. Pitt will at laſt propoſe funding them. In that caſe bank notes will not be ſo valuable as French aſſignats. The aſſignats have a ſolid property in reſerve in the national domains; bank notes have none; and beſides this, the Engliſh re⯑venue muſt then ſink down to what the [57]amount of it was before the funding ſyſ⯑tem began; between three and four mil⯑lions. One of which the arch-treaſurer would require for himſelf, and the arch⯑treaſurer apparent would require three quarters of a million more to pay his debts. "In France," ſays Sterne, ‘they order theſe things better.’

I have now expoſed the Engliſh ſyſtem of finance to the eyes of all nations. In doing this, I have done an act of juſtice to thoſe numerous citizens of neutral na⯑tions who have been impoſed upon by that fraudulent ſyſtem, and who have pro⯑perty at ſtake upon the event.

As an individual citizen of America, and as far as an individual can go, I have revenged (if I may uſe the expreſſion without any immoral meaning) the pirat⯑ical depredations commited on the Ame⯑rican commerce by the Engliſh govern⯑ment. I have retaliated for France on the ſubject of finance; and I conclude with retorting on Mr. Pitt the expreſſion he uſed againſt France, and ſay, that the Engliſh ſyſtem of finance ‘is on the [58]verge, nay, even in the gulph of bank⯑ruptcy.’