Thesamedispositiontosaveandtohoardprevailedinthesovereignaswellasinthesubjects。Amongnationstowhomcommerceandmanufacturesarelittleknown,thesovereign,ithasalreadybeenobservedinthefourthbook,isinasituationwhichnaturallydisposeshimtotheparsimonyrequisiteforaccumulation。Inthatsituationtheexpenseevenofasovereigncannotbedirectedbythatvanitywhichdelightsinthegaudyfineryofacourt。Theignoranceofthetimesaffordsbutfewofthetrinketsinwhichthatfineryconsists。Standingarmiesarenotthennecessary,sothattheexpenseevenofasovereign,likethatofanyothergreatlord,canbeemployedinscarceanythingbutbountytohistenantsandhospitalitytohisretainers。Butbountyandhospitalityveryseldomleadtoextravagance;thoughvanityalmostalwaysdoes。AlltheancientsovereignsofEuropeaccordingly,ithasalreadybeenobserved,hadtreasures。EveryTartarchiefinthepresenttimesissaidtohaveone。
Inacommercialcountryaboundingwitheverysortofexpensiveluxury,thesovereign,inthesamemannerasalmostallthegreatproprietorsinhisdominions,naturallyspendsagreatpartofhisrevenueinpurchasingthoseluxuries。Hisownandtheneighbouringcountriessupplyhimabundantlywithallthecostlytrinketswhichcomposethesplendidbutinsignificantpageantryofacourt。Forthesakeofaninferiorpageantryofthesamekind,hisnoblesdismisstheirretainers,maketheirtenantsindependent,andbecomegraduallythemselvesasinsignificantasthegreaterpartofthewealthyburghersinhisdominions。Thesamefrivolouspassionswhichinfluencetheirconductinfluencehis。Howcanitbesupposedthatheshouldbetheonlyrichmaninhisdominionswhoisinsensibletopleasuresofthiskind?Ifhedoesnot,whatheisverylikelytodo,spenduponthosepleasuressogreatapartofhisrevenueastodebilitateverymuchthedefensivepowerofthestate,itcannotwellbeexpectedthatheshouldnotspenduponthemallthatpartofitwhichisoverandabovewhatisnecessaryforsupportingthatdefensivepower。Hisordinaryexpensebecomesequaltohisordinaryrevenue,anditiswellifitdoesnotfrequentlyexceedit。Theamassingoftreasurecannolongerbeexpected,andwhenextraordinaryexigenciesrequireextraordinaryexpenses,hemustnecessarilycalluponhissubjectsforanextraordinaryaid。ThepresentandthelatekingofPrussiaaretheonlygreatprincesofEuropewho,sincethedeathofHenryIVofFrancein1610,aresupposedtohaveamassedanyconsiderabletreasure。Theparsimonywhichleadstoaccumulationhasbecomealmostasrareinrepublicanasinmonarchicalgovernments。TheItalianrepublics,theUnitedProvincesoftheNetherlands,areallindebt。ThecantonofBerneisthesinglerepublicinEuropewhichhasamassedanyconsiderabletreasure。TheotherSwissrepublicshavenot。Thetasteforsomesortofpageantry,forsplendidbuildings,atleast,andotherpublicornaments,frequentlyprevailsasmuchintheapparentlysobersenate—houseofalittlerepublicasinthedissipatedcourtofthegreatestking。
Thewantofparsimonyintimeofpeaceimposesthenecessityofcontractingdebtintimeofwar。Whenwarcomes,thereisnomoneyinthetreasurybutwhatisnecessaryforcarryingontheordinaryexpenseofthepeaceestablishment。Inwaranestablishmentofthreeoffourtimesthatexpensebecomesnecessaryforthedefenceofthestate,andconsequentlyarevenuethreeorfourtimesgreaterthanthepeacerevenue。
Supposingthatthesovereignshouldhave,whathescarceeverhas,theimmediatemeansofaugmentinghisrevenueinproportiontotheaugmentationofhisexpense,yetstilltheproduceofthetaxes,fromwhichthisincreaseofrevenuemustbedrawn,willnotbegintocomeintothetreasurytillperhapstenortwelvemonthsaftertheyareimposed。Butthemomentinwhichwarbegins,orratherthemomentinwhichitappearslikelytobegin,thearmymustbeaugmented,thefleetmustbefittedout,thegarrisonedtownsmustbeputintoapostureofdefence;thatarmy,thatfleet,thosegarrisonedtownsmustbefurnishedwitharms,ammunition,andprovisions。Animmediateandgreatexpensemustbeincurredinthatmomentofimmediatedanger,whichwillnotwaitforthegradualandslowreturnsofthenewtaxes。Inthisexigencygovernmentcanhavenootherresourcebutinborrowing。
Thesamecommercialstateofsocietywhich,bytheoperationofmoralcauses,bringsgovernmentinthismannerintothenecessityofborrowing,producesinthesubjectsbothanabilityandaninclinationtolend。Ifitcommonlybringsalongwithitthenecessityofborrowing,itlikewisebringsalongwithitthefacilityofdoingso。
Acountryaboundingwithmerchantsandmanufacturersnecessarilyaboundswithasetofpeoplethroughwhosehandsnotonlytheirowncapitals,butthecapitalsofallthosewhoeitherlendthemmoney,ortrustthemwithgoods,passasfrequently,ormorefrequently,thantherevenueofaprivateman,who,withouttradeorbusiness,livesuponhisincome,passesthroughhishands。Therevenueofsuchamancanregularlypassthroughhishandsonlyonceinayear。Butthewholeamountofthecapitalandcreditofamerchant,whodealsinatradeofwhichthereturnsareveryquick,maysometimespassthroughhishandstwo,three,orfourtimesayear。Acountryaboundingwithmerchantsandmanufacturers,therefore,necessarilyaboundswithasetofpeoplewhohaveitatalltimesintheirpowertoadvance,iftheychoosetodoso,averylargesumofmoneytogovernment。
Hencetheabilityinthesubjectsofacommercialstatetolend。
Commerceandmanufacturescanseldomflourishlonginanystatewhichdoesnotenjoyaregularadministrationofjustice,inwhichthepeopledonotfeelthemselvessecureinthepossessionoftheirproperty,inwhichthefaithofcontractsisnotsupportedbylaw,andinwhichtheauthorityofthestateisnotsupposedtoberegularlyemployedinenforcingthepaymentofdebtsfromallthosewhoareabletopay。Commerceandmanufactures,inshort,canseldomflourishinanystateinwhichthereisnotacertaindegreeofconfidenceinthejusticeofgovernment。Thesameconfidencewhichdisposesgreatmerchantsandmanufacturers,uponordinaryoccasions,totrusttheirpropertytotheprotectionofaparticulargovernment,disposesthem,uponextraordinaryoccasions,totrustthatgovernmentwiththeuseoftheirproperty。Bylendingmoneytogovernment,theydonotevenforamomentdiminishtheirabilitytocarryontheirtradeandmanufactures。Onthecontrary,theycommonlyaugmentit。Thenecessitiesofthestaterendergovernmentuponmostoccasionswillingtoborrowupontermsextremelyadvantageoustothelender。Thesecuritywhichitgrantstotheoriginalcreditorismadetransferabletoanyothercreditor,and,fromtheuniversalconfidenceinthejusticeofthestate,generallysellsinthemarketformorethanwasoriginallypaidforit。Themerchantormoniedmanmakesmoneybylendingmoneytogovernment,andinsteadofdiminishing,increaseshistradingcapital。Hegenerallyconsidersitasafavour,therefore,whentheadministrationadmitshimtoashareinthefirstsubscriptionforanewloan。Hencetheinclinationorwillingnessinthesubjectsofacommercialstatetolend。
Thegovernmentofsuchastateisveryapttoreposeitselfuponthisabilityandwillingnessofitssubjectstolendittheirmoneyonextraordinaryoccasions。Itforeseesthefacilityofborrowing,andthereforedispensesitselffromthedutyofsaving。
Inarudestateofsocietytherearenogreatmercantileormanufacturingcapitals。Theindividualswhohoardwhatevermoneytheycansave,andwhoconcealtheirhoard,dosofromadistrustofthejusticeofgovernment,fromafearthatifitwasknownthattheyhadahoard,andwherethathoardwastobefound,theywouldquicklybeplundered。Insuchastateofthingsfewpeoplewouldbeable,andnobodywouldbewilling,tolendtheirmoneytogovernmentonextraordinaryexigencies。Thesovereignfeelsthathemustprovideforsuchexigenciesbysavingbecauseheforeseestheabsoluteimpossibilityofborrowing。Thisforesightincreasesstillfurtherhisnaturaldispositiontosave。
Theprogressoftheenormousdebtswhichatpresentoppress,andwillinthelong—runprobablyruin,allthegreatnationsofEuropehasbeenprettyuniform。Nations,likeprivatemen,havegenerallybeguntoborrowuponwhatmaybecalledpersonalcredit,withoutassigningormortgaginganyparticularfundforthepaymentofthedebt;andwhenthisresourcehasfailedthem,theyhavegoneontoborrowuponassignmentsormortgagesofparticularfunds。
WhatiscalledtheunfundeddebtofGreatBritainiscontractedintheformerofthosetwoways。Itconsistspartlyinadebtwhichbears,orissupposedtobear,nointerest,andwhichresemblesthedebtsthataprivatemancontractsuponaccount,andpartlyinadebtwhichbearsinterest,andwhichresembleswhataprivatemancontractsuponhisbillorpromissorynote。Thedebtswhicharedueeitherforextraordinaryservices,orforserviceseithernotprovidedfor,ornotpaidatthetimewhentheyareperformed,partoftheextrordinariesofthearmy,navy,andordnance,thearrearsofsubsidiestoforeignprinces,thoseofseamen’swages,etc。,usuallyconstituteadebtofthefirstkind,sometimesinpaymentofapartofsuchNavyandexchequerbills,whichareissuedsometimesinpaymentofapartofsuchdebtsandsometimesforotherpurposes,constituteadebtofthesecondkind—exchequerbillsbearinginterestfromthedayonwhichtheyareissued,andnavybillssixmonthsaftertheyareissued。TheBankofEngland,eitherbyvoluntarilydiscountingthosebillsattheircurrentvalue,orbyagreeingwithgovernmentforcertainconsiderationstocirculateexchequerbills,thatis,toreceivethematpar,payingtheinterestwhichhappenstobedueuponthem,keepsuptheirvalueandfacilitatestheircirculation,andtherebyfrequentlyenablesgovernmenttocontractaverylargedebtofthiskind。InFrance,wherethereisnobank,thestatebills(billetsd’etat)havesometimessoldatsixtyandseventypercentdiscount。DuringthegreatrecoinageinKingWilliam’stime,whentheBankofEnglandthoughtpropertoputastoptoitsusualtransactions,exchequerbillsandtalliesaresaidtohavesoldfromtwenty—fivetosixtypercentdiscount;owingpartly,nodoubt,tothesupposedinstabilityofthenewgovernmentestablishedbytheRevolution,butpartly,too,tothewantofthesupportoftheBankofEngland。
Whenthisresourceisexhausted,anditbecomesnecessary,inordertoraisemoney,toassignormortgagesomeparticularbranchofthepublicrevenueforthepaymentofthedebt,governmenthasupondifferentoccasionsdonethisintwodifferentways。Sometimesithasmadethisassignmentormortgageforashortperiodoftimeonly,ayear,orafewyears,forexample;andsometimesforperpetuity。Intheonecasethefundwassupposedsufficienttopay,withinthelimitedtime,bothprincipalandinterestofthemoneyborrowed。Intheotheritwassupposedsufficienttopaytheinterestonly,oraperpetualannuityequivalenttotheinterest,governmentbeingatlibertytoredeematanytimethisannuityuponpayingbacktheprincipalsumborrowed。Whenmoneywasraisedintheoneway,itwassaidtoberaisedbyanticipation;whenintheother,byperpetualfunding,or,moreshortly,byfunding。
InGreatBritainthelandandmalttaxesareregularlyanticipatedeveryyear,byvirtueofaborrowingclauseconstantlyinsertedintotheactswhichimposethem。TheBankofEnglandgenerallyadvancesataninterest,whichsincetheRevolutionhasvariedfromeighttothreepercent,thesumsforwhichthosetaxesaregranted,andreceivespaymentastheirproducegraduallycomesin。Ifthereisadeficiency,whichtherealwaysis,itisprovidedforinthesuppliesoftheensuingyear。Theonlyconsiderablebranchofthepublicrevenuewhichyetremainsunmortgagedisthusregularlyspentbeforeitcomesin。Likeanimprovidentspendthrift,whosepressingoccasionswillnotallowhimtowaitfortheregularpaymentofhisrevenue,thestateisintheconstantpracticeofborrowingofitsownfactorsandagents,andofpayinginterestfortheuseofitsownmoney。
InthereignofKingWilliam,andduringagreatpartofthatofQueenAnne,beforewehadbecomesofamiliaraswearenowwiththepracticeofperpetualfunding,thegreaterpartofthenewtaxeswereimposedbutforashortperiodoftime(forfour,five,six,orsevenyearsonly),andagreatpartofthegrantsofeveryyearconsistedinloansuponanticipationsoftheproduceofthosetaxes。Theproducebeingfrequentlyinsufficientforpayingwithinthelimitedtermtheprincipalandinterestofthemoneyborrowed,deficienciesarose,tomakegoodwhichitbecamenecessarytoprolongtheterm。
In1697,bythe8thofWilliamIII,c。20,thedeficienciesofseveraltaxeswerechargeduponwhatwasthencalledthefirstgeneralmortgageorfund,consistingofaprolongationtothefirstofAugust1706ofseveraldifferenttaxeswhichwouldhaveexpiredwithinashorterterm,andofwhichtheproducewasaccumulatedintoonegeneralfund。ThedeficiencieschargeduponthisprolongedtermamountedtoL5,160,45914s。91/4d。
In1701,thoseduties,withsomeothers,werestillfurtherprolongedforthelikepurposestillthefirstofAugust1710,andwerecalledthesecondgeneralmortgageorfund。ThedeficiencieschargeduponitamountedtoL2,055,9997s。111/2d。
In1707,thosedutieswerestillfurtherprolonged,asafundfornewloans,tothefirstofAugust1712,andwerecalledthethirdgeneralmortgageorfund。ThesumborroweduponitwasL983,25411s。91/4d。
In1708,thosedutieswereall(excepttheOldSubsidyofTonnageandPoundage,ofwhichonemoietyonlywasmadeapartofthisfund,andadutyupontheimportationofScotchlinen,whichhadbeentakenoffbytheArticlesofUnion)stillfurthercontinued,asafundfornewloans,tothefirstofAugust1714,andwerecalledthefourthgeneralmortgageorfund。ThesumborroweduponitwasL925,1769s。21/4d。
In1709,thosecitieswereall(excepttheOldSubsidyofTonnageandPoundage,whichwasnowleftoutofthisfundaltogether)stillfurthercontinuedforthesamepurposetothefirstofAugust1716,andwerecalledthefifthgeneralmortgageorfund。ThesumborroweduponitwasL922,0296s。
In1710,thosedutieswereagainprolongedtothefirstofAugust1720,andwerecalledthesixthgeneralmortgageorfund。
ThesumborroweduponitwasL1,296,5529s。113/4d。
In1711,thesameduties(whichatthistimewerethussubjecttofourdifferentanticipations)togetherwithseveralotherswerecontinuedforever,andmadeafundforpayingtheinterestofthecapitaloftheSouthSeaCompany,whichhadthatyearadvancedtogovernment,forpayingdebtsandmakinggooddeficiencies,thesumofL9,177,96715s。4d。;thegreatestloanwhichatthattimehadeverbeenmade。
Beforethisperiod,theprincipal,sofarasIhavebeenabletoobserve,theonlytaxeswhichinordertopaytheinterestofadebthadbeenimposedforperpetuity,werethoseforpayingtheinterestofthemoneywhichhadbeenadvancedtogovernmentbytheBankandtheEastIndiaCompany,andofwhatitwasexpectedwouldbeadvanced,butwhichwasneveradvanced,byaprojectedlandbank。ThebankfundatthistimeamountedtoL3,375,02717s。101/2d。,forwhichwaspaidanannuityorinterestofL206,50113s。5d。TheEastIndiafundamountedtoL3,200,000,forwhichwaspaidanannuityorinterestofL160,000—thebankfundbeingatsixpercent,theEastIndiafundatfivepercentinterest。
In1715,bythe1stofGeorgeI,c。12,thedifferenttaxeswhichhadbeenmortgagedforpayingthebankannuity,togetherwithseveralotherswhichbythisactwerelikewiserenderedperpetual,wereaccumulatedintoonecommonfundcalledTheAggregateFund,whichwaschargednotonlywiththepaymentsofthebankannuity,butwithseveralotherannuitiesandburdensofdifferentkinds。Thisfundwasafterwardsaugmentedbythe3rdofGeorgeI,c。8,andbythe5thofGeorgeI,c。3,andthedifferentdutieswhichwerethenaddedtoitwerelikewiserenderedperpetual。
In1717,bythe3rdofGeorgeI,c。7,severalothertaxeswererenderedperpetual,andaccumulatedintoanothercommonfund,calledTheGeneralFund,forthepaymentofcertainannuities,amountinginthewholetoL724,8496s。101/2d。
Inconsequenceofthosedifferentacts,thegreaterpartofthetaxeswhichbeforehadbeenanticipatedonlyforashorttermofyearswererenderedperpetualasafundforpaying,notthecapital,buttheinterestonly,ofthemoneywhichhadbeenborroweduponthembydifferentsuccessiveanticipations。
Hadmoneyneverbeenraisedbutbyanticipation,thecourseofafewyearswouldhaveliberatedthepublicrevenuewithoutanyotherattentionofgovernmentbesidesthatofnotoverloadingthefundbychargingitwithmoredebtthanitcouldpaywithinthelimitedterm,andofnotanticipatingasecondtimebeforetheexpirationofthefirstanticipation。ButthegreaterpartofEuropeangovernmentshavebeenincapableofthoseattentions。
Theyhavefrequentlyoverloadedthefundevenuponthefirstanticipation,andwhenthishappenednottobethecase,theyhavegenerallytakencaretooverloaditbyanticipatingasecondandathirdtimebeforetheexpirationofthefirstanticipation。
Thefundbecominginthismanneraltogetherinsufficientforpayingbothprincipalandinterestofthemoneyborroweduponit,itbecamenecessarytochargeitwiththeinterestonly,oraperpetualannuityequaltotheinterest,andsuchunprovidentanticipationsnecessarilygavebirthtothemoreruinouspracticeofperpetualfunding。Butthoughthispracticenecessarilyputsofftheliberationofthepublicrevenuefromafixedperiodtoonesoindefinitethatitisnotverylikelyevertoarrive,yetasagreatersumcaninallcasesberaisedbythisnewpracticethanbytheoldoneofanticipations,theformer,whenmenhaveoncebecomefamiliarwithit,hasinthegreatexigenciesofthestatebeenuniversallypreferredtothelatter。Torelievethepresentexigencyisalwaystheobjectwhichprincipallyintereststhoseimmediatelyconcernedintheadministrationofpublicaffairs。Thefutureliberationofthepublicrevenuetheyleavetothecareofposterity。
DuringthereignofQueenAnne,themarketrateofinteresthadfallenfromsixtofivepercent,andinthetwelfthyearofherreignfivepercentwasdeclaredtobethehighestratewhichcouldlawfullybetakenformoneyborroweduponprivatesecurity。
SoonafterthegreaterpartofthetemporarytaxesofGreatBritainhadbeenrenderedperpetual,anddistributedintotheAggregate,SouthSea,andGeneralFunds,thecreditorsofthepublic,likethoseofprivatepersons,wereinducedtoacceptoffivepercentfortheinterestoftheirmoney,whichoccasionedasavingofonepercentuponthecapitalofthegreaterpartofthedebtswhichhadbeenthusfundedforperpetuity,orofone—sixthofthegreaterpartoftheannuitieswhichwerepaidoutofthethreegreatfundsabovementioned。Thissavingleftaconsiderablesurplusintheproduceofthedifferenttaxeswhichhadbeenaccumulatedintothosefundsoverandabovewhatwasnecessaryforpayingtheannuitieswhichwerenowchargeduponthem,andlaidthefoundationofwhathassincebeencalledtheSinkingFund。In1717,itamountedtoL323,4347s。71/2d。In1727,theinterestofthegreaterpartofthepublicdebtswasstillfurtherreducedtofourpercent;andin1753and1757,tothreeandahalfandthreepercent;whichreductionsstillfurtheraugmentedthesinkingfund。
Asinkingfund,thoughinstitutedforthepaymentofold,facilitatesverymuchthecontractingofnewdebts。Itisasubsidiaryfundalwaysathandtobemortgagedinaidofanyotherdoubtfulfunduponwhichmoneyisproposedtoberaisedinanexigencyofthestate。WhetherthesinkingfundofGreatBritainhasbeenmorefrequentlyappliedtotheoneortotheotherofthosetwopurposeswillsufficientlyappearbyandby。
Besidesthosetwomethodsofborrowing,byanticipationsandbyperpetualfunding,therearetwoothermethodswhichholdasortofmiddleplacebetweenthem。Theseare,thatofborrowinguponannuitiesfortermsofyears,andthatofborrowinguponannuitiesforlives。
DuringthereignsofKingWilliamandQueenAnne,largesumswerefrequentlyborroweduponannuitiesfortermsofyears,whichweresometimeslongerandsometimesshorter。In1693,anactwaspassedforborrowingonemillionuponanannuityoffourteenpercent,orofL140,000ayearforsixteenyears。In1691,anactwaspassedforborrowingamillionuponannuitiesforlives,upontermswhichinthepresenttimeswouldappearveryadvantageous。
Butthesubscriptionwasnotfilledup。Inthefollowingyearthedeficiencywasmadegoodbyborrowinguponannuitiesforlivesatfourteenpercent,oratlittlemorethansevenyears’purchase。
In1695,thepersonswhohadpurchasedthoseannuitieswereallowedtoexchangethemforothersofninety—sixyearsuponpayingintotheExchequersixty—threepoundsinthehundred;thatis,thedifferencebetweenfourteenpercentforlife,andfourteenpercentforninety—sixyears,wassoldforsixty—threepounds,orforfourandahalfyears’purchase。Suchwasthesupposedinstabilityofgovernmentthateventhesetermsprocuredfewpurchasers。InthereignofQueenAnnemoneywasupondifferentoccasionsborrowedbothuponannuitiesforlives,anduponannuitiesfortermsofthirty—two,ofeighty—nine,ofninety—eight,andofninety—nineyears。In1719,theproprietorsoftheannuitiesforthirty—twoyearswereinducedtoacceptinlieuofthemSouthSeastocktotheamountofelevenandahalfyears’purchaseoftheannuities,togetherwithanadditionalquantityofstockequaltothearrearswhichhappenedthentobedueuponthem。In1720,thegreaterpartoftheotherannuitiesfortermsofyearsbothlongandshortweresubscribedintothesamefund。ThelongannuitiesatthattimeamountedtoL666,821
8s。31/2d。ayear。Onthe5thofJanuary1775,theremainderofthem,orwhatwasnotsubscribedatthattime,amountedonlytoL136,45312s。8d。
Duringthetwowarswhichbeganin1739andin1755,littlemoneywasborrowedeitheruponannuitiesfortermsofyears,oruponthoseforlives。Anannuityforninety—eightorninety—nineyears,however,isworthnearlyasmuchmoneyasaperpetuity,andshould,therefore,onemightthink,beafundforborrowingnearlyasmuch。Butthosewho,inordertomakefamilysettlements,andtoprovideforremotefuturity,buyintothepublicstocks,wouldnotcaretopurchaseintooneofwhichthevaluewascontinuallydiminishing;andsuchpeoplemakeaveryconsiderableproportionbothoftheproprietorsandpurchasersofstock。Anannuityforalongtermofyears,therefore,thoughitsintrinsicvaluemaybeverynearlythesamewiththatofaperpetualannuity,willnotfindnearlythesamenumberofpurchasers。Thesubscriberstoanewloan,whomeangenerallytoselltheirsubscriptionsassoonaspossible,prefergreatlyaperpetualannuityredeemablebyParliamenttoanirredeemableannuityforalongtermofyearsofonlyequalamount。Thevalueoftheformermaybesupposedalwaysthesame,orverynearlythesame,anditmakes,therefore,amoreconvenienttransferablestockthanthelatter。
Duringthetwolast—mentionedwars,annuities,eitherfortermsofyearsorforlives,wereseldomgrantedbutaspremiumstothesubscriberstoanewloanoverandabovetheredeemableannuityorinterestuponthecreditofwhichtheloanwassupposedtobemade。Theyweregranted,notastheproperfunduponwhichthemoneywasborrowed,butasanadditionalencouragementtothelender。
Annuitiesforliveshaveoccasionallybeengrantedintwodifferentways;eitheruponseparatelives,oruponlotsoflives,whichinFrencharecalledTontines,fromthenameoftheirinventor。Whenannuitiesaregranteduponseparatelives,thedeathofeveryindividualannuitantdisburthensthepublicrevenuesofarasitwasaffectedbyhisannuity。Whenannuitiesaregrantedupontontines,theliberationofthepublicrevenuedoesnotcommencetillthedeathofallannuitantscomprehendedinonelot,whichmaysometimesconsistoftwentyorthirtypersons,ofwhomthesurvivorssucceedtotheannuitiesofallthosewhodiebeforethem,thelastsurvivorsucceedingtotheannuitiesofthewholelot。Uponthesamerevenuemoremoneycanalwaysberaisedbytontinesthanbyannuitiesforseparatelives。Anannuity,witharightofsurvivorship,isreallyworthmorethananequalannuityforaseparatelife,andfromtheconfidencewhicheverymannaturallyhasinhisowngoodfortune,theprincipleuponwhichisfoundedthesuccessofalllotteries,suchanannuitygenerallysellsforsomethingmorethanitisworth。Incountrieswhereitisusualforgovernmenttoraisemoneybygrantingannuities,tontinesareuponthisaccountgenerallypreferredtoannuitiesforseparatelives。Theexpedientwhichwillraisemostmoneyisalmostalwayspreferredtothatwhichislikelytobringaboutinthespeediestmannertheliberationofthepublicrevenue。
InFranceamuchgreaterproportionofthepublicdebtsconsistsinannuitiesforlivesthaninEngland。AccordingtoamemoirpresentedbytheParliamentofBordeauxtothekingin1764,thewholepublicdebtofFranceisestimatedattwenty—fourhundredmillionsoflivres,ofwhichthecapitalforwhichannuitiesforliveshadbeengrantedissupposedtoamounttothreehundredmillions,theeighthpartofthewholepublicdebt。
Theannuitiesthemselvesarecomputedtoamounttothirtymillionsayear,thefourthpartofonehundredandtwentymillions,thesupposedinterestofthatwholedebt。Theseestimations,Iknowverywell,arenotexact,buthavingbeenpresentedbysoveryrespectableabodyasapproximationstothetruth,theymay,Iapprehend,beconsideredassuch。ItisnotthedifferentdegreesofanxietyinthetwogovernmentsofFranceandEnglandfortheliberationofthepublicrevenuewhichoccasionsthisdifferenceintheirrespectivemodesofborrowing。
Itarisesaltogetherfromthedifferentviewsandinterestsofthelenders。
InEngland,theseatofgovernmentbeinginthegreatestmercantilecityintheworld,themerchantsaregenerallythepeoplewhoadvancemoneytogovernment。Byadvancingittheydonotmeantodiminish,but,onthecontrary,toincreasetheirmercantilecapitals,andunlesstheyexpectedtosellwithsomeprofittheirshareinthesubscriptionforanewloan,theyneverwouldsubscribe。Butifbyadvancingtheirmoneytheyweretopurchase,insteadofperpetualannuities,annuitiesforlivesonly,whethertheirownorthoseofotherpeople,theywouldnotalwaysbesolikelytosellthemwithaprofit。Annuitiesupontheirownlivestheywouldalwayssellwithloss,becausenomanwillgiveforanannuityuponthelifeofanother,whoseageandstateofhealtharenearlythesamewithhisown,thesamepricewhichhewouldgiveforoneuponhisown。Anannuityuponthelifeofathirdperson,indeed,is,nodoubt,ofequalvaluetothebuyerandtheseller;butitsrealvaluebeginstodiminishfromthemomentitisgranted,andcontinuestodosomoreandmoreaslongasitsubsists。Itcannever,therefore,makesoconvenientatransferablestockasaperpetualannuity,ofwhichtherealvaluemaybesupposedalwaysthesame,orverynearlythesame。
InFrance,theseatofgovernmentnotbeinginagreatmercantilecity,merchantsdonotmakesogreataproportionofthepeoplewhoadvancemoneytogovernment。Thepeopleconcernedinthefinances,thefarmersgeneral,thereceiversofthetaxeswhicharenotinfarm,thecourtbankers,etc。,makethegreaterpartofthosewhoadvancetheirmoneyinallpublicexigencies。
Suchpeoplearecommonlymenofmeanbirth,butofgreatwealth,andfrequentlyofgreatpride。Theyaretooproudtomarrytheirequals,andwomenofqualitydisdaintomarrythem。Theyfrequentlyresolve,therefore,tolivebachelors,andhavingneitheranyfamiliesoftheirown,normuchregardforthoseoftheirrelations,whomtheyarenotalwaysveryfondofacknowledging,theydesireonlytoliveinsplendourduringtheirowntime,andarenotunwillingthattheirfortuneshouldendwiththemselves。Thenumberofrichpeople,besides,whoareeitheraversetomarry,orwhoseconditionofliferendersiteitherimproperorinconvenientforthemtodoso,ismuchgreaterinFrancethaninEngland。Tosuchpeople,whohavelittleornocareforposterity,nothingcanbemoreconvenientthantoexchangetheircapitalforarevenuewhichistolastjustaslong,andnolonger,thantheywishittodo。
Theordinaryexpenseofthegreaterpartofmoderngovernmentsintimeofpeacebeingequalornearlyequaltotheirordinaryrevenue,whenwarcomestheyarebothunwillingandunabletoincreasetheirrevenueinproportiontotheincreaseoftheirexpense。Theyareunwillingforfearofoffendingthepeople,who,bysogreatandsosuddenanincreaseoftaxes,wouldsoonbedisgustedwiththewar;andtheyareunablefromnotwellknowingwhattaxeswouldbesufficienttoproducetherevenuewanted。Thefacilityofborrowingdeliversthemfromtheembarrassmentwhichthisfearandinabilitywouldotherwiseoccasion。Bymeansofborrowingtheyareenabled,withaverymoderateincreaseoftaxes,toraise,fromyeartoyear,moneysufficientforcarryingonthewar,andbythepracticeofperpetuallyfundingtheyareenabled,withthesmallestpossibleincreaseoftaxes,toraiseannuallythelargestpossiblesumofmoney。Ingreatempiresthepeoplewholiveinthecapital,andintheprovincesremotefromthesceneofaction,feel,manyofthem,scarceanyinconveniencyfromthewar;butenjoy,attheirease,theamusementofreadinginthenewspaperstheexploitsoftheirownfleetsandarmies。Tothemthisamusementcompensatesthesmalldifferencebetweenthetaxeswhichtheypayonaccountofthewar,andthosewhichtheyhadbeenaccustomedtopayintimeofpeace。Theyarecommonlydissatisfiedwiththereturnofpeace,whichputsanendtotheiramusement,andtoathousandvisionaryhopesofconquestandnationalgloryfromalongercontinuanceofthewar。
Thereturnofpeace,indeed,seldomrelievesthemfromthegreaterpartofthetaxesimposedduringthewar。Thesearemortgagedfortheinterestofthedebtcontractedinordertocarryiton。If,overandabovepayingtheinterestofthisdebt,anddefrayingtheordinaryexpenseofgovernment,theoldrevenue,togetherwiththenewtaxes,producesomesurplusrevenue,itmayperhapsbeconvertedintoasinkingfundforpayingoffthedebt。But,inthefirstplace,thissinkingfund,evensupposingitshouldbeappliedtonootherpurpose,isgenerallyaltogetherinadequateforpaying,inthecourseofanyperiodduringwhichitcanreasonablybeexpectedthatpeaceshouldcontinue,thewholedebtcontractedduringthewar;and,inthesecondplace,thisfundisalmostalwaysappliedtootherpurposes。
Thenewtaxeswereimposedforthesolepurposeofpayingtheinterestofthemoneyborroweduponthem。Iftheyproducemore,itisgenerallysomethingwhichwasneitherintendednorexpected,andisthereforeseldomveryconsiderable。Sinkingfundshavegenerallyarisennotsomuchfromanysurplusofthetaxeswhichwasoverandabovewhatwasnecessaryforpayingtheinterestorannuityoriginallychargeduponthem,asfromasubsequentreductionofthatinterest。ThatofHollandin1655,andthatoftheecclesiasticalstatein1685,werebothformedinthismanner。Hencetheusualinsufficiencyofsuchfunds。
Duringthemostprofoundpeacevariouseventsoccurwhichrequireanextraordinaryexpense,andgovernmentfindsitalwaysmoreconvenienttodefraythisexpensebymisapplyingthesinkingfundthanbyimposinganewtax。Everynewtaxisimmediatelyfeltmoreorlessbythepeople。Itoccasionsalwayssomemurmur,andmeetswithsomeopposition。Themoretaxesmayhavebeenmultiplied,thehighertheymayhavebeenraiseduponeverydifferentsubjectoftaxation;themoreloudlythepeoplecomplainofeverynewtax,themoredifficultitbecomes,too,eithertofindoutnewsubjectsoftaxation,ortoraisemuchhigherthetaxesalreadyimposedupontheold。Amomentarysuspensionofthepaymentofdebtisnotimmediatelyfeltbythepeople,andoccasionsneithermurmurnorcomplaint。Toborrowofthesinkingfundisalwaysanobviousandeasyexpedientforgettingoutofthepresentdifficulty。Themorethepublicdebtsmayhavebeenaccumulated,themorenecessaryitmayhavebecometostudytoreducethem,themoredangerous,themoreruinousitmaybetomisapplyanypartofthesinkingfund;thelesslikelyisthepublicdebttobereducedtoanyconsiderabledegree,themorelikely,themorecertainlyisthesinkingfundtobemisappliedtowardsdefrayingalltheextraordinaryexpenseswhichoccurintimeofpeace。Whenanationisalreadyoverburdenedwithtaxes,nothingbutthenecessitiesofanewwar,nothingbuteithertheanimosityofnationalvengeance,ortheanxietyfornationalsecurity,caninducethepeopletosubmit,withtolerablepatience,toanewtax。Hencetheusualmisapplicationofthesinkingfund。
InGreatBritain,fromthetimethatwehadfirstrecoursetotheruinousexpedientofperpetualfunding,thereductionofthepublicdebtintimeofpeacehasneverborneanyproportiontoitsaccumulationintimeofwar。Itwasinthewarwhichbeganin1688,andwasconcludedbytheTreatyofRyswickin1697,thatthefoundationofthepresentenormousdebtofGreatBritainwasfirstlaid。
Onthe31stofDecember1697,thepublicdebtsofGreatBritain,fundedandunfunded,amountedtoL21,515,74213s。8
1/2d。Agreatpartofthosedebtshadbeencontracteduponshortanticipations,andsomepartuponannuitiesforlives,sothatbeforethe31stofDecember1701,inlessthanfouryears,therehadpartlybeenpaidoff,andpartlyrevertedtothepublic,thesumofL5,121,04112s。03/4d。;agreaterreductionofthepublicdebtthanhaseversincebeenbroughtaboutinsoshortaperiodoftime。Theremainingdebt,therefore,amountedonlytoL16,394,7011s。71/4d。
Inthewarwhichbeganin1709。,andwhichwasconcludedbytheTreatyofUtrecht,thepublicdebtswerestillmoreaccumulated。Onthe31stofDecember1714,theyamountedtoL53,681,0765s。61/2d。ThesubscriptionintotheSouthSeafundoftheshortandlongannuitiesincreasedthecapitalofthepublicdebts,sothatonthe31stofDecember1722itamountedtoL55,282,9781s。35/6d。Thereductionofthedebtbeganin1723,andwentonsoslowlythat,onthe31stofDecember1739,duringseventeenyearsofprofoundpeace,thewholesumpaidoffwasnomorethanL8,328,35417s。113/12d。,thecapitalofthepublicdebtatthattimeamountingtoL46,954,6233s。47/12d。
TheSpanishwar,whichbeganin1739,andtheFrenchwarwhichsoonfolloweditoccasionedfurtherincreaseofthedebt,which,onthe31stofDecember1748,afterthewarhadbeenconcludedbytheTreatyofAix—la—Chapelle,amountedtoL78,293,3131s。103/4d。ThemostprofoundpeaceofseventeenyearscontinuancehadtakennomorethanL8,328,35417s。11
3/12d。fromit。Awaroflessthannineyears’continuanceaddedL31,338,68918s。61/6d。toit。