Bythisoperation，weseehowthetransportationofthebalancemaybecomethebusinessofthecreditorsofthenation-debtor:whichisacircumstancewehavenotasyetattendedto:afewwordswillexplainit。
Whenthecreditorsofthenation-debtorselltheirbills，theymustpaytheexchange，ashasbeensaid。Whentheydrawbillstotheorderofafriendintheplacewherethebalanceisowing，theysuperaddtheexchange。Thistheirdebtorspay:butthentheythemselvesmustbeatthetroubleandexpenceofbringinghomethemoney。
Itisfromthisalternativewhichbothpartieshaveofeithersendingwhattheyowetotheircreditorsinbullion，orofallowingthemtodrawforitattheadditionalexpenceofpayingtheexchange，thatacheckisputtotheextravagantprofitofexchangers:andfromthiscircumstanceariseallthedelicateoperationsofdrawingandremitting。
Intotheseweshallnotinquire:theprincipleonwhichtheydependappearssufficientlyplain，andthisistheprincipalobjectofourattention。
Iproceednowtoconsiderhowfarthosereciprocalprofitsandlosses，betweenmerchantsinthesamecountry，affectthetradeofitingeneral。
Whenthebalanceisfavourable，wehavesaidthattheexporterslosetheexchange，andtheimportersgainit；andbothbeingcitizens，thecountrywouldnotbeconcernedintheirrelativeinterests，wereitnotthattheseinterestsareconnectedwiththatofthecountry，whichreapsgreatbenefitfromthetradeofthosewhodealinexportations，andlossfromtheother。
If，therefore，exchangebefoundtohurtexportation，whenthebalanceisfavourable，inthisrespectthecountryhasaninterestinbringingitaslowaspossible。Butasitmaybesaid，thatsincethereturnofanunfavourablebalancehurtsinitsturntheinterestsofimportation，andfavoursthatofexportation，exchangetherebyoperatesanationalcompensation:I
must，inthisplace，addonereJectionmore，inordertodestroythestrengthofthisargument。
Werethispropositionadmitted，asIamsureitcannot，fromwhatwehavealreadysaid，itwouldaffordnoargumentagainstdoingwhatcanbedone，torenderexchangeaslittlehurtfulaspossibletoexportation，duringthefavourablebalance。Butnextastothequestionitselfofnationalcompensation，Icannotallowthatevenexportersandimportersaretherebybroughtonalevelinpointoftrade:forthisreason，thatsinceitisallowed，thatwhenthebalanceoftradeisfavourable，thepriceofexchangeisalosstothemerchantsexporters；thisexchangeinproportionasitaugments，mustdiscouragemanufacturers，whomusthaveregular，andevengrowingprofits，accordingtotheincreaseofdemand。Thesethemerchantexportercannotafford；
becausehecannotdrawbackfromhisforeigncorrespondents，anyadvanceuponmanufacturesathome，arisingfromdomesticcircumstances。Butwhenuponanunfavourablebalance，themerchantimporterisaffectedbytheexchangeagainsthim；thisadditionalexpencehecandrawback。becausehesellstothosewhoareaffectedbyalldomesticcircumstances。
Letusthereforedetermine，thatitistheinterestofastatetodisregardthiscompensationwhichissaidtobegiventoexportationduringawrongbalance，whichdoessomuchharm；andtoavoidthediscouragementgiventoitbyarightbalance，whichdoessomuchgood。Theonlywaytocompasstheseends，istokeepexchangeasneartoparaspossible。
Couldreciprocaldebtsbealwaysexchangedatpar，andcouldtheexpenceofbringinghome，andsendingabalanceabroad，bedefrayedbythestate，Ithinkitwouldproveagreatadvantagetothetradeofanation。Idonotpretendtosaythat，asmattersstand，thethingispracticable；butasthisisaquestionwhichrelatestomysubject，andseemsbothcuriousandinteresting，Ishallhereexamineit。
Atfirstsight，thisideawillappearchimerical；andsomereadersmaydespiseittoomuch，tobeatthetroubletoreadwhatmaybesaidforit。Ishallthereforesetoutbyinformingthemthattheschemehasbeentried，inagreatkingdominEurope，underagreatminister:IsayitwasattemptedinFrance，intheyear1726，undertheadministrationofCardinalFleuri，andproduceditseffect；althoughitwassoongivenup，foracircumstancewhich，Ithink，nevercanoccurinGreatBritain。
AfterthelastgeneralcoinageinFrance，1726，exchangebecamesounfavourabletothatkingdom，astooccasionageneraloutcry。TheCardinal，toputastoptotheclamour，andtosetexchangetorights，ashethought，orderedSamuelBernard，atthattimeamanofgreatcredit，togivebillsonHollandatpar，toallthemerchants；andinordertoenablehimtoplacefundsinAmsterdam，forthepaymentofhisbills，theCardinalsuppliedthisexchangerwithsufficientquantitiesoftheoldcoin，thencrieddown，andpaidfortheexportationofittoHolland。
Uponthis，exchangeonHollandcametopar；andtheexchangersatParislookedontheoperationwithamazement。Theminister，however，inashorttimediscovered，thatbythishewasundoingwithonehand，whathewantedtoestablishwiththeother。Hethereforestoppedinhiscareer，afterhavingpaid，perhaps，tentimesthebalanceduetoHolland。
Byunfoldingthecombinationofthisoperation，Ishallbebetterabletocastlightonthequestionbeforeus，thaninanyotherway。
WhenthegeneralcoinagewasmadeinFrance，bythearretofthemonthofJanuary1726，alltheoldcoinwascrieddown，andorderedtoberecoined。Themintpriceoffinegoldpermarcwasfixedat536livres14sols6deniers；thatofthesilverat37
livres1sol9deniers。Thesewerethepricesatwhichthemintpaidforbullion，whenofferedtobecoined。ButtheKing，asifhehadarightuponthemetalintheoldcoin，commandedittobedeliveredatthemintatnohigherratethan492livresforthemarcoffinegold，andat34livresforthemarcoffinesilver:
andtocompelthepossessorsofittobringitin，allexportationandmeltingdownwasmadehighlypenal；theavenuesfromFrancewerebesetwithguardstopreventthegoingout；andthemeltingpotswerestrictlywatched。Uponthis，thepossessorsoftheoldcoin，ratherthansellittothemintatsogreatanundervalue，hadrecoursetoexchangersforbillsuponHollandforit:andthesebeingobligedtosenditthitheratagreatexpenceandrisk，exactedaveryhighexchange，which，consequently，affectedthewholetradeofFrance。
PoliticianspersuadedtheCardinal，thatexchangehadgotupsohigh，notfromthediscreditcastontheoldcoin，butbecauseofthewrongbalanceoftrade，andofthealterationwhichhadbeenmadeatthattimeuponthedenominationofthenewcoin:andthatassoonasthebalanceagainstFrancewaspaid，exchangewouldreturntopar。UponthistheCardinalsetBernardtowork，buthesoondiscoveredhismistake；andbyarretofthe15thofJunethesameyear，raisedthemintpriceoftheoldcoin，andthenexchangebecamefavourable。
TheseareallfactsmentionedbyDutot，andyetheneverwillascribetheriseofexchangeinFrancetoanyothercausethantothetamperingwiththedenominationsoftheircoin:anoperationwhichmayrobonesetofpeopleinfavourofanother；butwhichhasverylittleeffectuponexchange，whenothercircumstancesdonotconcur，asinthecasebeforeus。
NowhadthehighexchangeagainstFrancebeenowingtoawrongbalanceuponhertrade，isitnotevidentthattheCardinal’soperationwouldhavesucceeded，thatalldemandsforbillsatSamuelBernard’sofficewouldhavebeenconfinedtotheexactextentofthisbalance；thatthereciprocaldebtswouldhavebeennegociatedbetweenthemerchantsatpar；and，consequently，thatallexpenceuponexchangewouldhavebeensavedtoindividuals，atthesmallchargetogovernmentoftransportingthebalancepaidbythemerchantsatParis，forSamuelBernard’sbills？
Wereprosperoustradingstates，thereforeconductedbystatesmen，intelligent，capable，anduninfluencedbymotivesofprivateinterest，theywouldmakeitaruletobeattheexpenceofsendingoff，andbringinghomeallbalances，withoutanychargeforexchangetothetraders；buttheconsequenceofeitherneglect，orincapacityinthepersonatthehelm，wouldthenmakeittoodangeroustoattempt，atonce，sogreatachangeinthepresentmethodofpayingbalances:butInevermakeallowancesforsuchdefectsinministers，whileIamdeducingtheprincipleswhichoughttodirecttheconductofastatesman。
Ishallnextslightlypointoutthebadconsequenceswhich，uponanunfavourablestateofcommerce，mightresultfromsuchaplan:andwithoutrecommendinganythingtopractice，leavethereadertojudgeoftheexpediency。
Wesee，thatbyastatesman’sgivingbillsatpar，onalloccasions，andbeinghimselfattheexpenceoftransportationandinsurance，inbringinghomeandsendingoffallbalances，exchangewouldofitselfcometopar。
Thefirstconsequenceofthiswouldbe，thetotalannihilationoftheexchangebusiness；andif，afterthis，anyinterruptionshouldhappenbyneglectinthestatesman，trademightsufferconsiderably。
Anotherconsequenceis，thatthemostdestructivetradewouldgoforwardwithoutacheck，aslongasmerchantscouldpaytheparofthebillstheydemandeduponforeignparts:andthistheywouldconstantlybeenabledtodo，whiletherewasneithercoinorpaperincirculation，ashasbeenexplainedintreatingbanksofcirculationuponmortgage。
Theconsequenceofthisagainwouldbe，toobligethestatetopledgetherevenueofthecountrytostrangers，inproportiontothebalanceowing，overandabovetheextentofthemetalstodischargeit。
Nowthequestionis，andthisIshallleavetothesagacityofmyreadertodetermine，whether，asmattersstand，therebeanycheckproceedingfromhighexchangewhichcanpreventthebadconsequencesheresetforth。Isuspectthereisnone。Weseethemostenormoussumslentbynationstonations；raisingtheexchangeagainstthelenders；turningitinfavouroftheborrowers，butneverpreventingtheloanfromgoingforward。DoesnotGreatBritain，aswellasFrance，oweamazingsumstoothernations，attheexpenceofpayingtheinterestoutoftheirrevenue？Andhavenotallthesesumsbeentransactedbyexchangers，whohavemadegreatfortunesbytheoperation？Arenotthemostunfavourablebalancespaidintheordinarymethod？
Aretherenot，already，instrumentsinthehandsofallnations，sufficientfortheirundoing？Howthencantheirruinbeacceleratedbythisalterationinthemodeonlyofperformingthesamething？
Butletitbeobserved，thatourbusiness，inthischapter，istosearchformethodstoadvancetheprosperityofflourishingnations，whohaveabalanceowingtothem；andherewehavebeensettingforththebadconsequenceswhichresultfromthem，tootherswhoareindecay。Everyargument，therefore，drawnagainstthisscheme，infavouroftheidleorprodigal，isanargumentinfavourofit，withrespecttotheindustriousandfrugal。Asallnationsareliabletoalternatevicissitudesofprosperityandadversity，theprinciplesherelaiddown，requiretobecarefullycombinedwithdomesticcircumstances，beforetheybeappliedtopractice。
Itwaswithaviewtothisdistinction，that，inthetitleofthischapter，Ipointedoutthequestionthereproposed，asbeingrelativetothestateofitinaprosperoustradingnation；andI
amnotquiteclearhowfaritmightnotbeadvantageousineverycase:butthisquestionIshallnothereenlargeupon。Whathasbeensaid，will，Ihope，besufficienttopointouttheprinciplesuponwhichthedecisiondepends；andifanystatesmaninclinetotrytheconsequencesofitnowandthen，byanexperiment，nothingissoeasyastodoit，withoutanydetriment。ThisisprovedfromtheoperationperformedbytheFrenchcardinal，ontheoccasionofaveryunfavourableandhighexchange。
Chap。V
How，whenotherExpedientsproveineffectualforthedischargingofBalances，thesamemaybepaidbytheMeansofCredit，withouttheInterventionofCoinorBullion；andwhoarethosewhooughttoconductthatOperationWehavenowappliedtheprinciplesformerlylaiddown，towardsdiscoveringthemostproperexpedientsforremovingorpalliatingthethreeinconveniencestobestruggledwithinregulatingexchange。First，Howtoestimatethevalueofabalancedue:Secondly，Howtopayitwiththecoinorbullionofthecountry:andlastly，Howtopreventthepriceofexchangefromaffectinganythingmorethanthebalancetobepaid，afterallreciprocaldebtshavebeencompensated。
Itremainstoinquire，whatarethemostpropermethodstoacquitwhatanationmayowe，afterithasdoneallitcantopaythevalueoftheirbalanceintheotherway。
Atfirstsight，itmustappearevidentthattheonlymethodhereistogivesecurity，andpayinterestforwhatcannotbepaidinanyothervalue。Thisintheendisconstantlywhatisdonebyeverynation；butastheordinarymethodsofbringingitabout，areveryperplexed，andareattendedwithexpenceswhichraiseexchangetoagreatheight，andtherebyproveaprodigiousdiscouragementtotradeingeneral:itwouldbenosmalladvantage，couldallthislossonexchangebethrownequallyuponeveryclasswithinthestate，insteadofbeingthrownentirelyuponitscommerce。
Asthisistheexpedienttobeproposed，itwillnotbeamisstoobserve，thatforeignbalancesarisechieflyuponfourarticles。First，Thegreatimportationandconsumptionofforeignproductions。Secondly，Thepaymentofdebtsandinterestduetoforeigners。Thirdly，Thelendingmoneytoothernations。And，Fourthly，Thegreatexpenceofthestate，orofindividuals，abroad。
Couldallthebadconsequencesarisingfromthesefourcauses，andthehighexchangeoccasionedbythem，becastuponthatinterestalonewhichoccasionsthem，Ishouldnotproposetolaythewholebodyofthenationundercontributionforrepairingtheloss。
Butiffromthenatureofthething，asmattersstand，thewholebefoundtofallupontrade，withoutapossibilityofpreventingit；inthiscase，Ithinkitwouldbebetterforthenation，incumulo，tolenditsassistance，andtosharetheburden，thantoallowittofalluponthatpartofthebodypoliticfromwhichthewholedrawsitsvigourandprosperity。
Itcannotbedenied，thatwhenaheavybalanceisduebyanation，ithastheeffectofraisingexchangeuponeverydraughtorremittance。Whenbillsaredemandedtopayaforeignclaim，itcannotbedeterminedfromwhichofthefourarticles，justnowmentioned，theclaimhasarisen。Whetherfornationalpurposesornot，theexchangeisthesame，andequallyaffectsthewholeinterestoftrade。
Ifthisbeafairstateofthecase，Ithinkwemaydeterminethatsuchbalancesoughttobepaidbytheassistanceandinterventionofastatesman’sadministration。
Theobjectisnotsogreatasatfirstsight，itmayappear。
Wedonotproposethatthevalueofthisbalanceshouldbeadvancedbythestate:bynomeans。Theywhoowethebalancemustthen，asatpresent，findavalueforthebillstheydemand。
NeitherwouldIproposesuchaplanforanynationwhohad，upontheaverageoftheirtrade，abalanceagainstthem；butif，onthewhole，thebalancebefavourable，Iwouldnot，forthesakeofsavingalittletroubleandexpence，sufferthealternatevibrationsofexchangetodisturbtheuniformityofprofits，whichuniformitytendssomuchtoencourageeverybranchofcommerce。
Wehaveabundantlyexplainedthefataleffectofawrongbalancetobankswhichcirculatepaper；andwehaveshewnhownecessaryitisthattheyshouldperformwhatwehererecommend，tobedonebythestateitself。Thereisthereforenothingnewinthisproposal:itismerelycarryingtheconsequencesofthesameprincipleonestepfarther，andmakingitabranchofpolicy，forgovernmenttobeassistingtotradeinthepaymentofbalances，wherecreditabroadisrequired；andwehaveproposedthatthisassistanceshouldbegivenoutofthepublicmoney。
Thegreatest，andindeed，Ithink，theonlyobjectiontothisscheme，is，thatbyittheconditionofourforeigncreditors，willbebettered，fornovaluereceivedfromthem。ThisIallowwillbethecasewhenthebalanceisagainstEngland:butitwillbecompensatedtothecreditorsbythelosstheywillsustainwhenthebalanceisinherfavour。Butsupposingthereshouldbeabenefittoforeigncreditors，willnotthiscircumstanceraisetheconfidenceofalltheworldintheEnglishfunds？If，uponaproposaltogovernmenttolowertherateofmoneybyrefundingthedebtswhichbearahigherinterestthanwhatmoneycanbeprocuredfor，thecontinentshouldpourherwealthintooursubscription，mightwenotthenmorereadilyexpectasupplyfromthatquarter？Besides，isnotalltheinterestduetoforeigncreditorspaidinbankpaper？Isnotthisdemandableincoin，andwillnotthiscoinbeexported，ifcreditbenotfound？WerethebankofEnglandtokeepasubscriptionopen，atalltimes，inAmsterdam，formoneytobeborrowedthere，onthepaymentoftheinterestinthatcity，whodoubtsbutloansmightbeprocuredatmuchlessexpencethanatpresent，whenwearebeatingaboutforcrediteverywhere，untilbythereturnofafavourablebalanceuponthetradeofEngland，sheshallbeenabledtofillupthevoid。
Ifeelmyowninsufficiencytounfoldthemanyintricacieswhichsuchanoperationmustimply。Ithereforeshallnotattemptwhat，atanyrate，Imustleaveimperfect。Whathasbeensaid，togetherwithwhathasbeenthrownoutonthesamesubject，intreatingofothermatters，issufficienttogiveahint，concerningtheexpediencyoftheplaningeneral。Andastotheobjectionwhicharisesfromthepaymentstothepubliccreditorsabroad，IshallreservethemoreamplediscussionofittillI
cometoconsiderthedoctrineofpubliccredit。
PartIV
OfPublicCreditChap。I
Theprincipleswhichinfluencethedoctrineofpubliccreditarsofew，andsoplain，thatitissurprisingtoseehowcircumstancesshouldpossiblyinvolvethemintheobscurityintowhichwefindthemplungedonmanyoccasions。
Forthebetterclearingthewaytowardsthemainobject，I
shallshewfromexperience，andfromtheprogressofpubliccreditinsomenations，thatthetrueprincipleshavebeenoverlooked，andsoconfoundedwithextraneousobjects，astobeentirelylost。
Thetruemethodofdecyphering，asitwere，thecomplicatedoperationsofstatesmenwithrespecttothisbranchofpolitics，istobringbacktotheirnativesimplicitysuchplansofadministration，as，fromtheinfiniteperplexityofthem，makepeoplebelieve，thattheprincipleswhichinfluencethisdistrictofthescienceliesoinvolved，astorequireapeculiarforceofgeniuseventocomprehendthem。
Byproceedinginthisplaintrack，andbykeepingprinciplesconstantlyinview，themostperplexedsystemsofborrowing，funding，stock-jobbing，coiningandre-coiningofmoney，changingtheweight，fineness，anddenominationsofspecie，circulatingpaperinconjunctionwithit，imposinguponmankindwithbubblesandbankruptcies，andcallingthemoperationsofpubliccredit，mayberenderedintelligibletothemostslendercapacity。
Manyofthesetopicshavebeenalreadyexplained，anddismissed。Thiswillenableustocontracttheplanofwhatremainsinproportiontotheobjectsitistocomprehend。
Publiccreditwehavedefinedtobe，theconfidencereposedinastate，orbodypolitic，borrowingmoney，onconditionthatthecapitalshallnotbedemandable，butthatacertainproportionalpartofthesumshallbeannuallypaid，eitherinlieuofinterest，orinextinctionofpartofthecapital；forthesecurityofwhichpayment，apermanentannualfundisappropriated，withaliberty，however，tothestatetofreeitself，byrepayingthewhole，whennothingtothecontraryisstipulated。
InthisdefinitionIhaveputinanalternative，ofpayingaperpetualinterestforthemoneyborrowed，orofpayingannuallyasumexceedingtheinterest；whichexcessisintendedtoextinguishthecapitalinacertainnumberofyears。Inbothcases，theannualpaymentiscalledanannuity。Whenitisexactlyequaltotheinterestagreedon，itiscalledperpetual；
anddeterminate，whenitisgrantedeitherforlife，orforacertainnumberofyears。
Thesolidityofthissecurityisessentialtotheborrowinguponthecheapestterms:letmesupposeittobeassolidasland-property，andaspermanentasgovernmentitself:whatwilltheconsequencebe？
Ifwesupposegovernmenttogoonincreasing，everyyear，thesumoftheirdebtsuponperpetualannuities，andappropriating，inproportion，everybranchofrevenueforthepaymentofthem；
theconsequencewillbe，inthefirstplace，totransfer，infavourofthecreditors，thewholeincomeofthestate，ofwhichgovernmentwillretaintheadministration。Thefartherconsequencesofthisrevolutionwillfurnishmatterforachapterbyitself。
Iftheborrowingsofastatebeinproportiononlytotheextinctionoftheoldcapitals，orofwhatIhavecalleddeterminateannuities，thenthedebtswillnotincrease。
Whenastatesman，therefore，establishesasystemofpubliccredit，thefirstobjectwhichshouldfixhisattentionistocalculatehowfartheconstitutionofthestate，anditsinternalcircumstances，renderitexpedienttothrowtherevenueofitintothehandsofamoneyedinterest。Isay，thisisthemostimportantobjectofhisdeliberation；becausethesolidityofhiscreditdependsuponit。
If，alltheinterestsofthestatedulyconsidered，thatoftradebefoundtopredominate；lessinconveniencewillbefoundinallowingthemoneyedinteresttoswell:butinmonarchies，wherethelandedinterestiscommonly，andoughttobethemostpowerful，itwouldbedangeroustoerectsoformidablearivaltoit。Inpoliticalbodieseveryseparateinterestwillconsultitsown；andinthecontestbetweenthosewhowillbemadetopay，andthosewhoaretoreceivethetaxes，underthedenominationofcreditors，thesecurityofpubliccreditwillbecomeprecarious。
Fromthiswemayconclude，First，Thatingovernmentswheretheswellingofamoneyedinterestisfoundtothreatenthetranquillityofthestate，careshouldbetakeneithertoestablishasinkingfund，forpayingoff，intimesofpeace，whatmayhavebeenborrowedintimesofwar，ortheplanofborrowingupondeterminateannuitiesmustbeestablished。
Secondly，Ifnaturalcaresbelefttoworktheirowneffects，withoutasystematicalplanofborrowing，theconsequencewillbeabankruptcyandatotalfailureofpubliccredit，atleastforsometime。
Thirdly，Ifastateshouldfindthemassoftheirdebtstoamounttosogreatasumastobeinsupportable，theymighthaverecoursetoatotal，orpartialabolitionofthembyanactofpower。
Fourthly，Iftheyallowtheirdebtstoswellwithoutlimitation，andadheretothefaithoftheirengagements，thewholepropertyofthestatewillbeinconstantcirculation，fromoneclassofmentoanother。
Fifthly，Ifthedebtscontractedbethepropertyofforeigners，thesewilleitherremoveintothecountry，wheretheirfundsarise，ortheproperty，thatis，thedominiumutileofthecountry，willbetransferredfromthenatives。
Theseandmanyothercombinationswillarisefromtheextensionofpubliccredit；andanexaminationintothemostnaturalconsequencesuponeverysupposition，willbethebestwaytoacquireadistinctideaofthesubjectingeneral。Topretendtoforetellanyonecertainchainofconsequences，whichmay，infact，resultfromanyparticularcase，is，Iapprehend，impossible；becauseeveryoneofthemwilldependuponcircumstancestotallyunknown。Theseconsequences，inourwayofexaminingmattersofthiskind，arealltobefoundedUpOnsupposition。Tosupplytherefore，insomemeasure，thisdefect，I
shallfirsthaverecoursetoexamplesofwhathashappenedinthehithertoinfantstateofpubliccredit；andastocaseswhichhavenotasyettakenplace，wemusthaverecoursetoingenuity，andendeavourtoformthemostrationalcombinationswecan。
Chap。II
OftheriseandProgressofPublicCreditWhilethepolicyofStatesdirectedthemtoformtreasures，therewasnooccasionforpubliccredit。ThispolicyprevaileduntiltheriseoftheRomanempire。Thenallthetreasuresoftheworldwereplundered，andthenationswereinslaved。Onthisrevolution，theexigenciesofthatgreatempireweresuppliedfromtheannualtributespaidbyconquerednations。Undergoodreigns，thisannualsupplyswelledthepublictreasure，untilaprodigalEmperorsquandereditaway；andtooktorapineandextortion，tofillupthevoid。
UponthetotaldissolutionoftheRomanempire，Europewasoverrunbybarbarousnations，who，withaslittleindustryasever，supportedtheirpowerbythemilitaryservicesofthewholepeople。
Aftertheestablishmentofthefeudalkingdomsunderthechiefswhofirstlaidthefoundationofthem，arosetheBarons，orprincipalvassals，who，inimitationoftheirchief，erectedsmallprincipalities，whichbydegreesgrewindependent。
Thisdistributionofpowerintomanyhandshadtheeffectofdestroyingallsystematicplansofgovernment。Princeswereobligedtoactaccordingtotheperpetualfluctuationofcircumstances。until，byarevolutionintheirfavour，thepowerofthevassalswasswallowedup，andconfinedwithinthelimitsofamoreregularauthority。
InproportionasthisrevolutiontookplaceamongthenationsofEurope，thesystemoftheirgovernmentresumedamorepermanentform。Justicewasadministeredwithmoreuniformity；
andfromthisinsensiblyaroseabodyoflaws，which，insomecountries，werecalledcustoms:inothers，asinEngland，commonlaw。Warsthenbecamelessfrequent；andthemilitaryservicesnotbeingnecessaryonalloccasions，insensiblybecameconvertedintotaxes，proportionedtotheexigenciesofthetime。
Duringthisperiod，thecoinandpreciousmetalsofEuropewereinagreatmeasure，lodged，inprivatecoffers。Ifwarsbroughtthemforthforashorttime，theysoonfoundtheirwaybackagain。Princesweregenerallypoor；becausetheyweregenerallyextravagant，andspentmoneyasfastastheygotit。Inproportionasindustryandalienationincreased，thecoincameabroad；theinhabitantsbecameeasyintheircircumstances；thestateflourished，andacquiredreputation。Therichesandpowerofastatebeganthentobeestimated，astheyoughttobe，notbytheirtreasureslockedup，butbywhatwasfoundincirculation；thatis，bytheirindustry。Venice，Genoa，andtheHanstowns，settheexample。TheJews，banishedfromFrance，onaccountoftheirextortionsinthetimeoftheholywars，fled，asitissaid，intoLombardy，andthereinventedtheuseofbillsofexchange，fordrawingtheirrichesfromthosecountriestowhichtheydurstnotresortinordertobringthemoff。Interestformoneybegantobeconsideredaslawfulinmanycases:
merchantswereprotectedbyPrinces，forthesakeoftheconsequencesoftradeandindustry:andfromsuchsmallbeginningshasthismightyengineofpubliccreditsprung。
WhilePrincesmortgagedtheirlandsandprincipalities，inordertoobtainasumofmoney，theyactedupontheprinciplesofprivatecredit。Thiswasthecaseinthemoreearlytimes，beforegovernmentacquiredthatsoliditywhichisnecessarytoestablishafirmconfidence。Inproportionasitdrewtowardaregularsystem，thedawnofcreditputonappearancesanalogoustothesolidityofthefunduponwhichitwasestablished。
Thesecondstepwastoraisemoneyuponabranchoftaxesassignedtothelender，forthereimbursementofhiscapitalandinterest。Weshallshewtheconsequencesofthisplanofcreditfromsomeexamples，whichwillfullypointoutallitsinconveniences。
Thisplanofadministrationwasattendedwithsomuchabuse，andsomuchoppression，thatstatesmenbegantodespairofcarryingonpublicaffairsbysuchexpedients；andthereforeconcludedthattheonlywaytoobtainmoneyattheleastexpence，wastoraiseitonthesubjectwithintheyear，oruponwhattheycalledshortfunds。
Atlengthpubliccreditassumeditspresentform。Moneywasborrowedupondeterminateorperpetualannuities:afundwasprovidedforthispurpose:andtherefundingofthecapitalwas，inmanycases，leftintheoptionofgovernment，butneverintheoptionofthecreditor。
Thisisashortviewoftheprogressofpubliccredit。Theprinciplesuponwhichitisbuiltaresofew，thatwereItoconfinemyselftoabaredeductionofthem，littleneworinterestingcouldbesaid。Ishallthereforesteeranothercourse:Ishallcollectthesentimentsofsomeeminentpoliticians，whohaveeitherwrittenupon，oractedintheadministrationofthisbranchofgovernment；andbyapplyingprinciplesaswegoalong，Ishallbeenabledtopointouttheextraneouscircumstanceswhicharesoapttoinvolvethissubjectinobscurity。Hadwenotbeforeoureyesthenumberlessexamplesofthiskind，itwouldhardlybepossibletoconceivehowsogreatconfusion，andsomanycalamities，couldhavefollowedupontheoperationsofpubliccredit。
Chap。III
OfAnticipations，orborrowingMoneyuponAssignmentstoTaxesfortheDischargeofPrincipalandInterest；andoftheSentimentsofDrDavenantonthisSubjectIhavealreadyobserved，thatbythecessationoftheconstantwars，inwhichallEuropewasengagedduringthefeudalgovernmentofthebarons，nationsbegantoenjoysomesortoftranquillity。Uponthisthemilitaryservicesbecameinsensiblyconvertedintotaxes:andasPrincesextendedtheirjurisdictionsoverthecities，whichhadbeenformerlymoreimmediatelyundertheprotectionofthebishopswhoresidedinthem，taxeswereaugmented。Theseimpositionswereveryinconsiderable，withrespecttowhattheybroughtintotheKing’scoffers。Thepolicyinraisingthemwasbad；thefraudsincollectingthemweregreat。
TheseconsiderationsengagedPrincestobeginbycontractingdebts，withaview，afterwardstopaythembytemporaryassignmentstothetaxesimposed。
Fromthisagainensuedthemostterribleextortionsonthesideofthetax-gatherers，sooftencomplainedofbythosewhohavewrittenconcerningtheaffairsofFrance，asweshallseeinthefollowingchapter。
Philiplebel，KingofFrance，wasthefirstwho，in1301，admitted，withgreatpolicy，theinhabitantsofcitiestohaveaseatinthestatesofthekingdom。Heformedthemintoadistinctbody，andcalledthemtiersetat，orthethirdstate，aftertheclergyandthenobility。Hisviewwastofacilitatetherebythejurisdictionhewantedtoestablishoverthosecities，andtoengagethemtoconsenttotheimpositionoftaxesforcarryingonhiswarsinFlanders，andforopposingtheambitiousviewsofBonifaceVIII。Accordingly，thepeoplebegantopaywillingly，whenoncetheyfoundthattheyhadavoteinwhatconcernedthem。
Itakeitforgranted，thateverytax，aboutthattime，wasimposedforaparticularpurpose，andassignedeithertocreditors，ortopeoplewhoadvancedmoneyuponit:becausewearetoldthatthefirstimpositiongrantedbythestatestoaKingofFranceasapermanentbranchofrevenue，wasanexciseuponspirituousliquorsgrantedtoPhilipdeValois，intheyear1345；atwhichtime，however，accordingtoMrd’Eon’sMemoirespourserviral’HistoiregeneraledesFinances，therewerenotlessthantwentytwodifferenttaxesknowninFrance，whichheenumeratesasfollows:
Tailles，complaintes，charges，redevances，coutumes，peages，travers，passages，centiemes，cinquantiemes，魌es，chevauch閑s，subventions，exactions，chevaleries，aides，mariages，toultes，impositions，prisons，servitudes，andnouvellettes。
Thatalltheseimpositionsmusthavebeenmeretrifles，I
gatherfromacircumstanceinthePoliticalHistoryofFrance，mentionedbytheauthorjustcited，whichbeingitselfexceedinglycuriousandtendinggreatlytoconfirmmanythingswhichIhaveadvancedconcerningthesmallcirculationinformertimes，Ishallherebrieflyrelateit。
In1356，John，KingofFrance，appliedtotheStatesfor50，000livres，about9165l。sterling，topayhisarmy。TheStates，besidesseveralothertaxesimposedtopaythissum，grantedhim8deniersonthelivre，or31/3percentuponallmeat，drink，andmerchandise，soldinFrancewithintheyear；
thatistosay，uponthewholealienationsofFrance。Thetax，waslevied，butfellfarshortofthesumrequired，andthedeficiencywasmadeupbyapoll-tax。
CananyexamplebebettercalculatedforforminganotionofthecirculationofFranceatthattime？
Itmaybehereallegedthatthepricesofeverythingwerethensoverylow，thatnojudgmentcanbeformedconcerningthequantityofalienationfromthesmallnessofthesum。Thisobjectionisofnoforce，asIshallpresentlyshew。
WeknowfromtherecordsofthesellingpriceofgraininFrance，whichwasthenremarkablycheapinproportiontotheyearswhichfollowedandwhichhadpreceded，thatin1356，theseptierofwheat，ornearly4Winchesterbushels，soldfor17
sols8deniersofthethencurrency，whichwas12livrestothemarcfinesilver，andaFrenchsoldier’sallowanceforbreadtothisday，is3septiers，ornearly12Winchesterbushelsayear。
Nowletmesuppose，thatthewhole50，000livreshadbeenraisedbythisimpositionof31/3percentor1/30ofthetotalvalueofthesinglearticleofcornsoldatmarket，whichwasfarfrombeingthecase，andthencomparethiswiththenumberofmenwhocouldhavebeensubsistedwithallthecornsoldinFranceatthattime。
If1/30ofthepricewerethetax，thenbymultiplying50，000
livresby30，wehavethevalueofthecornsold；towit，1，500，000livres:dividethissumbythevalueofwhatamanconsumesinayear，towit，3septiersat17sols8deniers，whichmake2livres13sols，andthequotientwillbethenumberofportionsforaman，towit，566，037。Since，therefore，the50，000livrescouldnotberaisedinconsequenceofthetax，itfollows，thatthewholealienationofFrance，atthattime，fellfarbelowthevalueofasmuchwheataswouldhavefed566，037
men。
WhatapoorideadoesthiscommunicateofthestateofEuropesolatelyas400yearsago！Itwouldbeinvaintoseekforexamplestoillustrateanyprincipleofourcomplicatedmodernoeconomyinthehistoriesofthosetimes:theirtaxes，theircredit，andtheirdebts，resembledoursinnothingbutthename。
Ishallnowcomenearerhome，andgiveanaccountoftheideasofpubliccreditformedbyDavenant，whoflourishedaboutthetimeoftherevolutionin1688，whichImaytaketobetheaeraofpubliccreditinEngland。
Nopersonatthattime，whosewritingsIhaveseen，appearstohavesothoroughlyunderstoodthesemattersasDavenant。Hewasamanoftheory，aswellasknowledgeoffacts:hehadanopportunitywhich，andhefewpeoplehave，tobewellinstructedintheoneandtheother；turnedhistalentstothebestadvantageforpromotingtheinterestofhiscountry。Hehaswrittenmanytractsonpoliticalsubjects，which，whencarefullyreadandcomparedwithwhatexperiencehassincetaughtus，castgreatlightuponmanyquestionsrelativetothesubjectofthisinquiry。
Davenant，likeothergreatmenofhistime，wasofopinionthatborrowingmoneyuponwhathecallsshortfunds，wasmuchpreferabletothatuponperpetualinterest；andhethoughtthemostadviseableplanofall，coulditbeaccomplished，wastoraisethemoneywantedwithintheyear。
Men，atthattime，hadaterroruponthemincontractingdebtsforthepublic:theyconsideredthenationastheywouldaprivateman，whoseinterestisone，uncompounded，andrelativetohimselfalone:inthislight，creditorsappearedasformidableasenemies；theywerelookeduponbyministersassuch；andthisgeneralopinionononeside，contributed，nodoubt，tomakethemoniedpeoplelessinterestedinthedistressofgovernment，andmorereadytolayholdofeveryopportunityofimprovingsuchoccasions，fortheirownadvantage。
Governmentwasinconstantwarwithcreditors:whenreadymoneyfailedinEngland，ithadnothingtopaywithbutexchequertallies，uponthetaxesimposed。theseweremuchmoreeasilyissuedthanacquitted。Whenthefirstyear’samountofataxwasengaged，peopleconsideredthesecurityforwhatwastofollowasveryprecarious；consequently，thevalueofitdiminished。
Thismethod，however，succeededfarbetterinpayingoffdebtsalreadycontracted，thanincontractingnewones；andthehardshipsputuponthosewhohadalreadyadvancedmoneytogovernment，andwhowerepaidbyassignmentsupontaxespreviouslyengaged，madepeopleverydiffidentafterwards，exceptuponpropersecurity。ThelimitedformoftheEnglishgovernment，preventedtheviolentproceedingsofministers，withrespecttothepubliccreditors，whichwerecommoninFrance；andthiscircumstancecontributed，nodoubt，toestablishthecreditoftheformeruponthebetterfooting。Butstillthelongexpectationofpaymentforthecapitalandinterest，uponadistantfund，madeDavenantacknowledgethat700，000l。inreadymoneywouldatanytimegofartherthanamillionintallies；andyethethoughtitwasbetterforthestatetoborrowthemillionuponaplanofdischargingthedebtinthreeorfouryears，thantoobtainthe700，000l。attheexpenceofaperpetualinterestof8percent。
ThereweremanymoreconsiderationswhichmovedDavenanttopreferwhathecallsshortfundstoperpetualinterest。
Itwasthegeneralopinioninhistimenothisownindeed，forheendeavouredtoshewthefallacyofitthatmoneyborrowedupontheanticipationofafund，raisedandappropriatedforthedischargeofit，wasnotadebtuponthestate；becauseitdidnotdiminishtheformerrevenue。Wehavearemarkableinstanceoftheprevalenceofthisopinion，inthefamousmemorialpresentedbyM。DesmaretztoPhilipDukeofOrleans，afterthedeathofthelateKingofFrance；whereinheadvanced，thatduringsevencampaigns，from1708tothepeaceofRastad，whilehehadbeenattheheadoftheKing’sfinances，hehadnotincreasedthepublicdebtsbymorethanninemillionsoflivrescapital:andyetwhenhecameintotheadministration，in1708，theKing’sdebtsdidnotamountto700millions；andwehaveseen，thatatthetimeofhisdeath，theywereupwardsof2000millions。ButDesmaretzdidnotreckonthedifference，whichwasnolessthan1300millionsasanydebtatall；becausehehadsettledituponfundsofhisowncreation。Thiswassomuchthelanguageofthetimes，thatnocriticismwasmadeuponit。
Itisremarkable，thatDavenant，ingivinganaccountofthedebtsofEngland，duringtheperiodofwhichhewrites，thatis，fromtherevolutiondowntothepeaceofRyswick，hardlyevertakesnoticeofthesumspaidforinterestuponthem。Themindsofmenatthattimeweretotallytakenupwiththepaymentofcapitals；andprovidedthesecouldbedischargedinafewyears，itwasnomatter，theythought，whattheycostinthemeantime。
Aslongasnationsatwarobservethesamepolicyintheirmethodsofraisingmoney，thewaysinwhichtheyproceedareofthelessimportance:butwhenanyonestatemakesanalteration，bywhichmoremoneyisthrownintotheirhandsthantheycouldformerlyobtain；thiscircumstanceobligeseveryotherstatetoadoptthesamemethod。ThuswhilePrincesmadewarwiththeamountoftheirtreasuresandannualincome，thebalanceoftheirpowerdependedonthebalanceofsuchresources:whentheyanticipatedtheirincomeonbothsides，forafewyears，thebalancewasinproportionstill:when，afterwards，theyadoptedlongfundsandperpetualinterest，thesuppliesincreased；butstillthebalancewasdeterminedasformerly。
Theusefulness，therefore，ofaninquiryintotheprinciplesofpubliccredit，hasnotsomuchforitsobjecttodiscovertheinterestofstatesinadoptingonemodeofcreditpreferablytoanother，astodiscovertheconsequencesofeveryoneinparticular；andtopointoutthemethodsformakingthemseverallyturnouttothebestaccountnotonlyforthestate，consideredasabodypoliticbyitself，butalsofortheindividualswhichcomposeit。
Whensomanydifferentrelationsaretakenin，thesubjectbecomesmuchmorecomplex，andthereforetheconsequenceswhichcanbeguessedonlyatmustbelessdeterminate:butontheotherhand，itopensthemind，andsuggestsmanyhintswhichwithtimemaybeimprovedforthegoodofsociety。
Peoplewhobarelyrelatepoliticalfacts，affordonlyanexcercisetothememory:thosewhodeduceprinciples，andtraceachainofreasoningfromthem，giveexercisetotheunderstanding；
andasasmallsparkmayraiseamightyflame，soahintthrownoutbyaslendergeniusmaysetallthegreatmenofanationonaplanofgeneralreformationandimprovement。
LetusnowtakeaviewofthestateofpubliccreditinEngland，atthepeaceofRyswick；inordertoshewhowDavenantcametobesogreatanenemytolongfunds，andmoreespeciallytoperpetualinterest。Weshallatthesametimepointoutfromwhatcausesproceedsthegreatchangeofsentimentsatpresent。
AtthepeaceofRyswick，thedebtsofEngland，accordingtoDavenant，inhisfifthdiscourseuponthepublicrevenuesandtradeofEngland，stoodat17，552，544l。sterling；callit17
millionsandahalf，aswehavenooccasiontocalculatewithexactness。
Ofthisdebtthecapitalof31/2millionswassunk，ashecallsit；because1，300，000l。wasonlivesat14percentandwhatwasovertomakeupthe31/2millions，wasintendedtoremainaperpetualburthenonthenation。
Forpayingtheinterestofthissum，nolessthan400，000l。
ayearwasnecessary，whichmakesonthewholeabove11percent。
Butthenitmustbeobserved，thatmorethanonethirdofthesumwasuponlivesat14percent:thedebtduetothebank，ofwhichwehavespokeninanotherplace，was1，200，000l。forwhichwaspaid100，000l。ayear，including4000l。allowedforthechargeofmanagement:theremainingmillionwasuponlotterytickets，bearingabout8percentthepriceatwhichthebankhadlent。
Thesecondbranchofdebtswasnear11millions，which，hesays，wereincourseofpayment；becausetheyweresecureduponbranchesofrevenueengagedfordischargingthem。Apartofthisclassofdebtswastobeextinguishedintheyear1700:andwheneverthiswasdone，thenaproportionoftheappropriatedtaxes，amountingyearlytoaboveamillionsterling，wasimmediatelytobetakenoff。
Thethirdclassofdebtswerethosenotprovidedforatall；
whichintheplacereferredto，hemakestoamounttonomorethan3，200，000l。butheafterwardsfindshismistake，andthattheyinfactamountedtoabove5millionsandahalf，whichmakesthedebtsofEnglandatthepeaceofRyswick，tohavebeennear20millions。
Wasitthenanywonder，thatamanwhowishedwelltohiscountry，shouldpreferborrowinguponshortfundsatanyexpencewhateverinthemeantime，ratherthanatperpetualinterest，whenhefoundthatparliamentscouldnotbeprevailedupontoallowanytaxtosubsistoneinstantafterthedischargeofthedebtsforthepaymentofwhichithadbeenappropriated？
Besides，therewasverylittletobegainedbyborrowinguponlongfundsandperpetualinterest，aslongasthelendersconsideredtheiradvantagetoconsistprincipallyingettingtheircapitalsrefunded。
Theplainmatteroffactwas，thattradeatthattimewasonlybeginningtotakerootinEngland，anddemandedfundstocarryiton。Theuseofbanksforturningpropertyintomoney，hadnotthenbeendiscovered。Circulation，consequently，wasconfinedtothecoin；andprofitsontradewereverygreat。Allthesecircumstancesrenderedcapitalsofessentialuse；andtheconsequencewas，toraiseinteresttoanexcessiveheight。
Comparethissituationwiththepresent。Werethecapitalof140millionssterlingthrownbyGreatBritain，inafewyears，intothehandsofthepresentcreditors；wereFrance，ontheotherhand，tothrowinasmuch，whattradecouldabsorbit？
Capitalsnowareofvalue，inproportiononlytotheinteresttheybring；andsolongastheinterestpaidonpublicdebtsissufficienttokeepcirculationfull，andnomore，interestwillstandasitis:whenthisceasestobethecase，asintimeofwar，weseeinterestbeginstorise；andwhen，ontheotherhand，theinterestpaid，provesmorethansufficientfortheusesofcirculation，asuponareturnofpeace，then，fromthesameprinciples，interestmustdiminish。
Davenant，likeanablepolitician，whohadthestateoffactsbeforehim，reasonedaccordingtoactualcircumstances。Whateverwasborrowedonlongfunds，waschargedonthestandingrevenueofthestate，whichparliamentwasveryunwillingtoincreaseinproportiontothechargeslaiduponit。This，ofitself，wasargumentsufficientwithhimtocasthisviewuponshortappropriations，oruponhisfavouriteobject，ofraisingmoneywithintheyear，tosupplytheexigenciesofthestate。
Butinthisoperationhefoundgreatdifficulties。Inhistreatiseofwaysandmeans，articleexcises，whereheissearchingforexpedientstoprovidemoneyforthewar，heplainlyshewsathoroughknowledgeofthisimposition。IthadtakenplaceinEnglandasfarbackasthegreatcivilwar，andformedattherevolutionabout1/3ofalltherevenue:butwhatisveryextraordinary，andwhichatpresentwillhardlybecredited，theexcisehadatthattimetheeffectofsinkingthepriceofthesubjectexcised，insteadofraisingthepriceofwhatwasproducedfromit。Thustheexciseuponmalt，aftertherevolution，hadtheeffectofloweringthepriceofbarley，insteadofraisingthepriceofbeer。
ThiseffectofexcisesDavenantsaw；fromwhichhe，andsincehim，manymorehaveconcluded，thatallexcisesfallultimatelyupontheland。
Thiscircumstance，togetherwithafeelingfortheinterestofthegreatnumberofidlepooratthattime，whomustconstantlysufferbyexcises，engagedDavenanttoproposehavingrecoursetotheland-propertyandpoll-taxes，forraising，withintheyear，thesumsrequiredforcarryingonthewar。
Accordingtohisproposal，therewastobenolessthan3
millionsraisedbyalandtax，besideshalfamillionbyaquarterlypoll，whichmadetogether，above100，000l。morethanallthepermanenttaxesofEnglandputtogether。
AproposalofthiskindcomingfromDavenant，shewsthedifferenceofsituationbetweenthosetimesandthepresent。Onthissubjectmoreistobelearnedbycomparingfacts，thanbyallthereasoningintheworld。
WehaveseenhowcreditstoodinEnglandduringthereignofWilliamIII。Itwastheninitsinfancy，andwassetupontheprinciplesofafreeandlimitedauthority，exercisedbyministersofstate，atalltimesresponsibletoparliamentattheriskoftheirheads，incaseofanyopenviolationofthepublicfaith。Thisisthebestofallsecuritiesagainstthebadexerciseofpower。
WhoeverreadstheadmirablewritingsofDavenant，andcompareshisideaswithwhatexperiencehassincetaughtus，concerningthenatureoftaxesandpubliccredit，willplainlydiscoverthatthegreatdistressofEnglandatthattime，proceededfromthefollowingcauses。
Thewartheywereengagedin，wasfarbeyondtheirpowertoSUppOrt，althoughtheyhadthegreatestpartofEuropetoassistthem。
ThebraveryoftheBritishnationwasillsupportedwithmoney，thesinewsofwar。
Thecoinsoonaftertherevolutionfellintothegreatestdisorder，whichsentitaway；noexpedientwasfoundtosupplyitsplacefortheusesofdomesticcirculation；and，consequently，thefixedrevenuecouldnotbepaid，norindustrycarriedon。
Thepeoplewereunaccustomedtotaxes，tunnageandpoundage，thebranchwithwhichtheywerebestacquainted，andwhichtheyborewiththeleastmurmuring，becauseitwaslittlefeltbyindividuals，togetherwiththeexciseuponbeerandale，thehearthmoney，theposthouse，andwine-licences，composedthewholeofthepermanentrevenueofthestate，andamountedtoaboutonemillionandahalfsterling:besideswhich，theparliamenthadgrantednewcustomsalltoceasebefore1690totheamountofabouthalfamillionmore，uponwines，tobacco，sugar，andFrenchlinnen。Thiswasthestateoftherevenueattherevolution。
OnewouldimaginethatEngland，undersosmallaburthen，mighthavebeenabletomakethegreatestefforts。
WerewenowtograpplewithFrance，undersuchcircumstances，whatsanguinehopesshouldwenotformofsuccess！Thecaseturnedoutwidelydifferent:thefirstbenefitthenationexpectedinconsequenceoftheirlibertyrestored，wasanabolitionofthehearthmoney；ataxwhichraisedoverthewholekingdom，245，000l。Thiswasconsideredasaninsupportableburthen。
SuchsentimentsanddispositionsintheEnglishnation，mighthavebeenasufficientindicationofwhatwastobeexpectedfromthewar；theconsequencesofwhichhad，before1695，producedthefollowingchangesintherevenue。
Thetunnageandpoundage，whichattherevolutionproduced600，000l。wasbythistimereducedto286，687l。
Theexciseuponbeerandale，from666，383l。wasreducedto391，275l。
Thehearthmoneywasabolished。
Thepost-house，from65，000l。wasreducedto63，517l。
Thewine-licences，from10，000l。to5000l。
Thetemporarycustomswhichsubsistedattherevolution，werenowexpired，andhadbeeneithercontinuedbynewgrants，orbyothersofthesamenatureintroducedintheirstead。Theformerhadproduced415，472l。thenewproduced373，839l。
Thelastandmostimportantgrantofall，wasanadditionalexciseuponbeerandale，whichproduced450，000l。
Therevenueattherevolutionproduced，clearofallcharges，2，001，855l。sterling。Arevenueestablishedatprettymuchthesamerate，andnearlyonthesameobjects，withanadditionofanewexcise，whichproduced450，000l。producednetin1694，nomorethan1，570，318l。sothat，deductingthenewexcise，theoldrevenuewasdiminishedinitsproduce，nolessthan1，081，527l。
oraboveonehalf，infiveyearstime。
InacountrylikeEngland，atthattime，taxeswereoflittleusetothestate，andwereanexcessiveburthenonthepeople。
Whatcouldtheybepaidoutof？Notoutofthevalueinthehandsofthepeople；becausetherewasnowayprovidedforturningthisvalueintomoney。Thewholeofthemoneycoinedbeforetheendofthewarin1697，didnotamountto81/2
millions。Itwasnottobeexpectedthatduringthewar，foreigncoinwastocomein，exceptinconsequenceofborrowing；andwemaybeverycertain，thatallthatwasborrowed，andagreatpartofwhathadbeencoinedathome，hadgoneoutfromtheyear1695
to1697。underthesecircumstances，theexchequerissuedtalliesofwood，anotablyexpedientforfacilitatingcirculation！AndthebankofEnglandlentnotonefarthinguponmortgage。allthatwaspossibletoberaisedonthelandandonthepeople，bypound-rate，assessment，andpoll-tax，wasimposed。
Nowletusrecallourprinciplesconcerningcirculation，alienation，andbankinguponmortgage，andcombinethesewithwhatwehavesofrequentlyrepeated，andIthinkdemonstrated，viz。thatinproportiontotheextentofalienation，andthedemandsformoney，acirculatingequivalentshouldbeprovided，soastobereadyatthehandofeverypersonwhohaspropertytopledgeforit；andthendecidewhetheritwasanywonderthatcreditinEnglandshouldhavebeenatsolowanebbatthepeaceofRyswick；thattaxesshouldhavediminishedintheirproduce；
thatinterestshouldhaverisentosuchanextravagantheight；
thatthepeopleshouldhavegroanedunderaloadfromwhichtheycouldnotrelievethemselves。
Undersuchcircumstances，Englandappearstomeinthelightofadumbmanputtothetortureinordertoextortaconfession。
Wereeightorninemillionssterlingincoin，andafewwoodensticks，thetallies，constantlysoldatagreatdiscount，acirculatingvaluesufficienttosupplytheexigenciesofastatewhichwasspendingannuallyattherateoffiveorsixmillions？
Theconsequenceofthistotaldrainofmoney，was，thatpeoplecouldneitherconsumeexciseablecommodities，orpaythetaxeslaidupontheirpersonsandsolidproperty。
Theexcisesfailed，becausethebodyofthepeople，whopaidthem，wereinterruptedintheirindustry，forwantofmoneytocarryonalienation。Thosewhowereliabletothearbitraryimpositions，suchasthelandlords，couldnotpay；becausewhattheyhad，theirland，couldnotbegiveninpayment。
FromwhatIhaveherelaidtogether，wemaydetermine，thatasalienationsamongindividualscannotexceedtheproportionofthecirculatingequivalentofacountry，soastatesmanwhenheintendssuddenlytoaugmentthetaxesofhispeople，withoutinterruptingtheirindustry，whichthenbecomesstillmorenecessarythanever，shouldaugmentthecirculatingequivalentinproportiontotheadditionaldemandforit。
This，accordingtomynotions，cannotbesowellcompassedas，1。byestablishingbanksofcirculationuponmortgage:2。byrelievingthosecompaniesoftheloadofpayingforeignbalancesbygivingbillsatpar，oratasmallexchange:and3。byprovidingfundsabroadforthepaymentofthem，accordingtotheprinciplesabovededuced。
Suchexpedientswillworktheireffect，inanationwherethepublicfaithstandsuponthesolidsecurityofanhonestparliament，anduponthatresponsibilitywhichisfixeduponthosewhoaretrustedwiththeexertionsoftheroyalauthority。
IthinkImayillustratethisoperationbyasimile。
Agentlemanchoosestoformacascadeofthewaterwhichservestoturnhiscorn-mill；consequently，themillstops；butinitsstead，heimmediatelyerectsanotherwhichturnswiththewind。Coinisthewater，bankpaperisthewind，andbothareequallywellcalculatedfortheusetheyareputto。
Chap。V
OfthePresentStateofPublicCreditinGreatBritainWehave，inapreceedingchapter，givenageneralviewofthestateofpubliccreditinEngland，attheendofthelastcentury。Inthis，Ishallbrieflyrunthroughthemostremarkablerevolutions，bothinsentimentsandevents，whichhavesucceededsincethattime。
AttherevolutiontherevenueofEnglandwasabouttwomillionsterling，affectedbytwodebts。Thefirstwascalledthebankersdebt，contractedbyCharlesIIand，byletterspatent，chargeduponhishereditaryexcise，totheamountofupwardsof1，300，000l。Thisdebtwasarbitrarilyreducedtoonehalf，inthelastyearsofKingWilliam，andputat6percentperpetualannuity，tocommencenosoonerthan1706。Theotherwasadebtof60，000l。duetothatPrince’sservants，neglectedtobepaidbyhissuccessor，anddischargedaftertherevolution。
AtthepeaceofRyswick，thenationaldebtamountedtoabout20millions。Thebranchesoftaxessubsistingattherevolution，andcontinuedtillthen，producednomorethanabout800，000l。；
butbyadditionaltaxeslaidoninthereignofKingWilliam，thewholerevenueextendedto3，355，499l。ofwhichaboveonemillionwastoceasebefore1700，ashasbeensaid。Thisreducedtherevenue，atthebeginningofQueenAnne’sreign，tonearlywhatithadbeenattherevolution:outofwhichifwededucttheinterestofthenationaldebtthensubsisting，andtheexpenceofthecivillist，weshalldiscovertheextentofthefundspreparedforengaginginthewarwithFrance；andthenbycomparingthestateofthenationatheraccession，withwhatitwasatherdeath，weshallformageneralnotionoftheprogressofcreditatthatperiod。
TherevenueofEnglandattheaccessionofQueenAnnemaybestatedatabout——2，272，000
Thedebtssubsistingonthe31stofDecember1701，were——6，748，780
Uponwhichtheannualinterestwas——566，165
QueenAnne’scivillist——600，000
Whichtwosumsamountingto——1，166，165
Beingdeductedfromtherevenue，therewillremainforthecurrentserviceofthestate——1，105，835
WhattheexactamountoftherevenueofEnglandwasatthedeathoftheQueen，Icannotjustlysay。Butasitmaybecomprehendedunderthethreegeneralbranchesofcustoms，excises，andotherinlandduties，wemayformaguessatit，thoughimperfectly，Iallow，fromthenumberofarticlesineach。
Atheraccession，thecustomscomprehendedfifteenarticles；
atherdeath，theyamountedtothirty-seven:atheraccession，theexcisescomprehendedtenarticles；atherdeath，theyamountedtotwenty-seven:atheraccession，theotherinlanddutiescomprehendedeightarticles；atherdeath，theyamountedtosixteen，includingthelandtax，thenbecomeinamannerperpetual，althoughlaidonfromyeartoyear。
Atheraccession，thepublicdebtsamountedasabovetonearsevenmillions，atherdeaththeyexceededfiftymillions。
Infourteenyears，fromtherevolutiontoheraccession，themoneygrantedbyparliament，partlyraisedonthesubject，andpartlyborrowed，ortakencreditfor，accordingtothecustomofthetimes，amountedtoabovefifty-fivemillions。Duringthe13
yearsofQueenAnne，themoneygrantedbyparliamentraisedonthesubject，orborrowedasabove，amountedtoupwardsof80
millions。
BythisgeneralsketchIdonotmeantoenterintoexactdetails:factsmustbesoughtforinbookswhichtreatoffacts:
ourchiefobjectistoexaminetheprinciplesuponwhichthepubliccreditwassupported，lettheexactsumofmoneyraisedbewhatitwill。
TheexpencesoftheFrenchwarfirstengagedthenationtorevivethosetaxeswhichhadbeensuppressed；andtoimposemanyothersforaconsiderablenumberofyears，inproportiontothemoneyborroweduponthem，accordingtotheprinciplesoftheformerreign。
In1702，interestwassolow，thatgovernmentgotmoneyat5
percent。Itcontinuedsotill1704，whensomeloansbegantobemadeat6percentandatthisrateitstoodduringthewar。
Butin1706，theexigenciesofgovernmentwerefargreaterthanwhatallthemoneytobeborrowed，orraisedonthesubject，couldsupply。Thisopenedadoortotheabuseofpayingthegrowingdeficienciesuponthetaxeswithexchequerbills，chargeableondistantfunds。Thesefellconstantlytogreatdiscount；andtheunhappyservantsofthestate，whoreceivedtheminpayment，wereobligedtodisposeofthemtopeoplewhocouldwaitforanusuriousreimbursementbyparliament。
Whentheseexchequerbillshadoncegotintothehandsofthemoniedpeople，theyhadinterestwithgovernmenttoengagethebanktocirculatethemat6percentinterest:butasthefundsuponwhichtheyweresecuredhappenedatthattime，1706，tobeengagedfordischargingdebtspreviouslycontracted，thebank，duringthatinterval，couldreceivenopaymentofthisinterestof6percentsotheexpedientfallenupon，wastopaythebankcompoundinterestforallthetalliesandbillstheyweretodiscount，untilthefundsappropriatedshouldberelieved。
Thisexpedient，badasitwas，andburdensometothestateinthehighestdegree，provedofinfiniteservice，bothinestablishingthecreditofexchequerbills，andrelievingthosewhoreceivedpaymentinthem。
Thisoperationwasquitesimilartothoseofbanksofcirculationuponmortgage。ThebankofEnglandwashereemployedinconvertingintomoneyexchequerbills，secureduponthefaithofgovernment。Banksuponmortgageconvertintomoneythepropertyofindividualsuponprivatesecurity。Had，therefore，banksuponmortgagebeenestablishedinEnglandatthistime，allthosewhohadpropertywouldhavegotcreditsfromthem，andwouldhavebeenenabledtherebytopaytheirtaxes，andcarryontheirindustry，withoutdiminishingtheirconsumption。Theexchequerwouldthenhavehadnooccasiontoissuediscreditedbillsandtalliesformakingupdeficiencies；becausetaxeswouldhavebeenproductive，andthestatewouldhavebeenrelievedofthisexcessiveburdenofinterestat6percentaccumulatedquarterlyinfavourofthebank。
Whatextraordinaryprofitmusthaveaccruedtothebankbythisoperation，everyonemustperceive。Theywerenothereprocuringfundstolendatagreatexpence；alltheydidwastoaugmentthequantityoftheirpaperupongovernmentsecurity；
whichtheyknewwellwouldremaincurrentinthecommoncircleofpaymentswithinthecountry；andthepublicborrowingsweresufficienttofurnishcreditforthesumssentoutofthecountry。Inthisviewwemayconclude，thatalmostthewholeaccumulatedinterestpaid，becameapureprofittothebank，aswellasagreataugmentationofthenationaldebt。
Thisoperationofthebankin1706，didnotpreventsubsequentdeficiencies，inthepaymentofthenavy，army，ordnance，andofmanyotherarticles。In1710，theyamountedtoaboveninemillionssterling。Thiswastoogreatasumtobeborrowed；andthebankdurstnotventuretodiscountmorethanwhatdomesticcirculationcouldsupport:sothatafterthisgreatdebthadcirculateduponthediscreditedobligationswhichhadbeenissuedforit，andinthiswayhadfallenagainintothehandsofmoniedpeople，at30and40percentbelowpar，thenewproprietorsofitwereallincorporatedintoonegreatcompany，withagovernoranddirectors，whogot6percentforthewholecapital，withanallowanceof8000l。ayearforchargesofmanagement。
Thusalltheoriginalcreditorsforthesedeficiencieslostthediscount；themoniedpeoplegainedit，andthepublicpaidforall。
Whencreditisinthislanguidstate，everyexpenceofgovernmentmustriseinproportiontothediscreditofthepaperwithwhichtheypay，tillatlastthewholesum，withinterest，accumulation，andexpence，fallsuponthestate，asifeveryfarthingofithadbeenfrugallyexpendedinreadymoney。
ThisisageneralviewofthestateofcreditinQueenAnne’sreign。
Governmenthadnot，asintheformerwar，theinconveniencesflowingfromthedisorderinthecointocombatwith。Thesecontributedmorethananyothercircumstance，toraisethecapitalofthedebtsatthepeaceofRyswick。Circulation，too，wasconsiderablyaugmented，inconsequenceoftheincreaseoftaxes，publicdebts，andtheoperationofthebankincirculatingexchequerbillsandtallies。Yetmoneywasstillscarce，incomparisonofwhatitnighthavebeen，hadpropermethodsbeencontrivedtopreserveituponalevelwiththeoccasionsforit。
Theincorporation，also，ofninemillionscapitalinthehandsofacorporation，whichafterwardswascalledtheSouthSeaCompany，wasanassistancetopubliccredit，byincreasingamoniedinterest，theprincipalviewofwhichwastofillthegovernmentloans，onthelucrativeconditionsofferedforthem。
Andlastofall，thestrictlyadheringtothepublicfaithofengagements，withoutseeking，byactsofpower，toindemnifythestateforthelossesithadbeenobligedtoincur，fromthecircumstancesofthetimes，laidthesolidbasisofnationalcreditforthefuture。
Althoughthemanytaxesaddedtotheformerrevenue，didnotincreaseitinanyproportiontotheloadlaiduponthesubjectduringthiswar，theyserved，however，asagoodfoundationforimprovement，assoonastheeffectsofpeacerestoredthemtotheirfullproduction。Butthesecuritiesaffectingthesetaxeshavingbecomeeveryyeargreater，governmentwasobligedtoengagecertainfundsforthirty-twoyearstocome，andsometimeslonger；andmanybranchesoftaxes，whichformerlyhadbeengrantedforshortterms，werethenmadeperpetual。AfterthepeaceofUtrecht，theexpencesofthestateweregreatlydiminished，andmoneybegantoregorge:sothatintheyear1716，thefirstfoundationofthesinkingfundwaslaid，byopeningasubscriptionforpayingoffabouttenorelevenmillionssterling，atthattime，chargeduponseveralbranchesoftaxes，theproduceofwhichamountedannuallyto724，849l。sterling。
Theproprietorsofthesedebtswereallowedtosubscribeintothisnewfund，ataninterestof5percentredeemablebyparliament:andincasethewholesubscriptionshouldnotfillatthatrate，thebankandSouthSeacompanybecameboundtomakeitup，uponreceivingalikeannuityinproportiontotheirsubscriptions。
Thebankers’debt，ofwhichwehavespoken，theonlypublicdebtowingattherevolution，madepartofthosewhichweretobesubscribedfor。
Thetaxeswhichhadbeenappropriatedforthedischargeofthosecapitals，fromtemporary，weremadeperpetual；withaclauseadded，thatwhenthesurplusofthefund，afterpaymentoftheinterest，haddischargedthecapitalsofallthenationaldebtduethe25thofDecemberinthatyear，thewholeproduceofthefunditselfshouldremainatthedisposalofparliament。