There are only three modes of teaching youth the way to well-doing, -- by precept, by example, and by habit at an early age. Precept, without example and habit, has but little weight, yet how can a child have either of these, if the parents are encouraged and assisted in living a vicious life? Nations and individuals should guard---{183} The French, before the revolution, were not be =sic= considered as a more virtuous people than the English, yet there were fewer crimes, and less dissipation amongst the lower orders than in England, and more amongst the higher. The French, particularly the mothers, have less affection for their children, yet they brought them up better, both in habits and in principles.-=-[end of page #226]against those vices to which they find they have a natural disposition; and drinking and gluttony are the vices to which the common people in this country are the most addicted.Whatever other things may be taught, let this truth be instilled into all children brought up to earn their bread, that in proportion to their diligence will be their ease and enjoyment, and that this world is a world of sorrow and grief to the idle and the ignorant; that knowledge does not consist in being able to read books, but in understanding one's business and duty in life, and that industry consists in doing it.Female education, in England, requires as much reform as that of the other sex; but, though the subject is not much less important, it is perhaps still more difficult. It has been remarked, by those who have travelled abroad, that, in other countries, women are in general not better, but rather worse dressed than men of the same rank: in England it is different; for, at an early age, the women are dressed, both as to style and quality of clothes, far above their rank. This might, perhaps, not be difficult to account for, but it undoubtedly is a misfortune, and one that is greatly increased by the mode of education and manner of thinking; for the main and indispensable virtue of that amiable sex excepted, (for which Englishwomen are highly distinguished,) perhaps no women in the world are brought up in a more frivolous unmeaning manner. The French women, with all their vivacity and giddy airs, have more accomplishment; {184} and, as they speak their mind pretty plainly, they have, on many occasions, testified surprise to find English ladies, who had studied music for years, who could scarcely play a tune, and who, after devoting years to the needle, were incapable of embroidering a pin-cushion.Novels, a species of light, insipid, and dangerous reading, are the bane of English female education. They teach a sort of false romantic sentiment, and withdraw the mind from attention to the duties of---{184} The emigrants have taught to ladies of rank, fashions; and to those of an inferior class, arts and industry. The English women did not know half what they could do, till the French came amongst them, about twelve years ago.-=-[end of page #227]life, at a time when it should be taught to learn their high importance. In female education the government should interfere; for the education of the mother will always have an influence on the education of the son, as her conduct in life must have on that of her husband.As one general observation, relative to the education given at most public schools, it may be observed, that, whilst much time is taken up in teaching things that can never probably be of great utility, that species of knowledge that does not belong to any particular class, but which is of the utmost importance, is left to chance and to accident. While a boy is tormented with learning a dead language he is left to glean, as in a barren field, for all those rules of conduct on which the prosperity and happiness of his future life depends. {185}A public education is, in many respects, better than a private one for boys, but, in some things, it is inferior: consequently those who can afford it, and wish to give their sons the most complete education, try to unite the advantages of both, by sending them to a public school, under the care of a private tutor. It is not in the power of the middling classes to do this; but modes should be adopted to give the boys, either by books or public lectures, those instructions, relative to moral conduct, to prudence, behaviour, &c. which a private tutor gives to those under his particular charge.As to female education, it is a difficult subject: one great improvement would, nevertheless, be not to allow above a certain number in any one seminary; to have people of irreproachable conduct over them, and, wherever the parents can, to bring them home at the age of thirteen or fourteen. The public education ought certainly to finish at an early age, and, in all cases, with respect to females, a private is much preferable to a public education. {186}---{185} The most virtuous of the Roman emperors attributed to his preceptors every one of those excellent qualities he possessed. The ancient education of Greece and Rome was very different from that of the moderns.{186} Since this was written, we understand a book for this very purpose is about to be printed, with the professed design of uniting the advantages of a public and private education.-=-[end of page #228]CHAP. III.Of the Effects of Taxation in England.WHAT has been said of the increase of taxes, their tendency to ruin a nation, and bring on its decline, together with the counteraction occasioned by the continuance of necessity, as being applicable to all nations in general, applies, in every sense, to England, and even more to England than to any other nation. Taxes are carried to greater excess than in any other country; and, as England flourishes by trade and manufactures, (the price of which taxes enhance,) they gradually tend to shut foreign markets against us. This has already been explained; we, however, still have to inquire into the particular manner in which it operates upon this country.That the system of taxation, though irregular in England, is less so than in any other country, in proportion to the extent to which it has been carried, is true; but still, however, if a number of the most troublesome and ill-contrived taxes were done away, and others established in their place, it would be a great advantage.Greater danger arises from the augmentation of taxes in a wealthy country than in a poor one, when they stretch beyond the proper line, because the general prosperity hinders the effect from being visible, till it has advanced beyond the power of remedy; whereas, in a poor country, the injury is soon felt.The invention and industry of this country have been most wonderfully increased by the necessity of exertion, under the protection of good laws, which rendered property secure. But we trust too much to our resources, and, like men in health and vigour, are the most likely to injure our constitution.The most part of the arts, in point of manufacturing, seem to have come to nearly the last degree of perfection, so far as abbreviation of labour can carry them. [end of page #229]The division of labour, and the modes of working in the iron and metal branches, have not of late been in any material degree improved in our towns, the most famous for them; and as to any particular gift of bringing things to perfection, or reducing prices, it does not appear to be confined to England. Watches and fire-arms are two of the most ingenious and nice branches of metal manufactures; yet, at Liege, the latter is carried to greater perfection than at Birmingham, and London and Lancashire are outdone by Switzerland, in the former. Those, indeed, are not manufactures of which the taste or form is constantly altering; but they are a proof of the ability to work with equal advantage, both as to quality and price, with the manufacturers of this country.The next great branches are the weaving. For silks, France has always had the advantage of us; and our fine woollen cloths have never equalled those of Louvier and Sedan for quality, although, in point of price, they have the advantage.In linens, we enjoy no particular pre-eminence; and, in the American market, we are beginning to be undersold by those of Silesia. For a second quality of woollen cloth, and for the manufacture of cotton, in all its branches, we still have the superiority; but our great advantage, the cause of the general preference to our manufactures is the long credit we give, which, if it should ever cease to be practicable, would ruin not one, but all our manufactures, nearly at a stroke.It is very natural and very well for Englishmen, who have never been out of their own country, to ascribe to superiority of quality, (and inferiority of price is the same thing,) the great success they have in selling their goods in foreign countries; but such as have had an opportunity to see how it really is, know the contrary; and those who have not, may know it by observing who are the individuals in any branch of business at home that do the most, and they will find it always to be those who have the power of giving the longest credit. It is true that, in the course of time, and by struggling hard, those who have little means of extending their business at first, do it by degrees; but, until they do, they never can, in point of quantity, rival those who give long credit.[end of page #230]In the inability of other nations to give equal length of credit, consists our principal advantage; but we have seen, by the vicissitudes of ancient nations, that the wants of others, or their being behindhand, are but a very insecure tenure for the prosperity of any nation.The exportation of Britain was but inconsiderable at the beginning of last =sic= century, or about one-ninth of what it was two years ago.{187} Previous to the American war, it gradually increased to about three times what it was in the year 1700; that is, in seventy-five years. The progression was pretty regular till the year 1750, when it had risen to nearly double; but, in twenty-five years after, it increased as much as it had in fifty years before. The American war threw it back forty years, but it soon got up again to where it probably would have been, had the American war not intervened; it, however, rose beyond any thing that had ever been seen. It doubled in less than ten years; and, from this, we are led to conclude, that the taxes had not then begun to hurt national industry. But we shall see the reason, for the great increase was not owing so much to any cause inherent in this nation, as to the absolute impossibility of other nations continuing their commerce. We had got all the East and West India trade of the French and Dutch, and America had again become our greatest customer for British manufactures.Capital that could be removed was, in a manner, banished from the continent of Europe, and had taken refuge in England, and a great extent of the continent had been desolated with war. We are not, however, to expect this amazing export trade to continue; indeed, it has already fallen, in one year, as much as it ever rose in any three years; it fell fifteen millions in one year. The taxes may have operated much against our prosperity, without our knowing it, in a crisis of this sort, though they did not absolutely counteract the favourable effect produced by other causes.The commerce of the American states, which were, (like England,) out of the vortex of danger, and secure, increased in fully as rapid---{187} In 1802, the exports amounted to 45,500,000 L. In 1702 to 5,500,000 L.-=-[end of page #231]a manner as ours, and fell off in the same way. We must not then, consider as durable, or owing to ourselves, circumstances that arose out of the general and temporary situation of other nations.It has been said in the general chapter on taxation, and again repeated in that on national debt, that both the one and the other operate, for a certain time, in augmenting the industry and wealth of a country, but that there is some point at which they begin to have a contrary effect; that point, however, being dependent on a variety of circumstances, is not a fixed one, it cannot be discovered by investigation before the time, but it may by symptoms and signs that become visible soon after.It is a sign that a nation has passed the point at which taxes cease to be a spur to industry, when the duties on consumption, or optional duties, which one may avoid paying, by not using the article taxed, become less productive than formerly, and when it is found necessary to lay taxes on land, houses, and such sort of property as can be made to pay, independent of the will of the proprietor.When taxes are laid upon property, not on consumption, it is to be supposed the latter can bear no more. Taxes on property are forced taxes; on consnmption =sic=, they are generally, to a certain degree, voluntary, though not always so.The augmentation of wealth has, in this country, been great, but it has never been regular or uninterrupted; that of taxation has, on the contrary, been uninterrupted, and this is better seen from the chart than from any thing that can be said. There can be no doubt that, though hitherto our increasing prosperity has been so great as to counteract the effect of heavy taxation, yet that the same thing cannot be expected to continue long. How long it may continue, or whether it has not already ceased, or is on the point of ceasing, is uncertain; but there is nothing more positive, than that, if taxes increase, they must, in process of time, crush industry, and, therefore, at all events, they should be kept as low as possible.The whole income of the country is estimated only at 150,000,000 L. The taxes to the state amount to 40,000,000 L. and those for the maintenance of the poor to 5,500,000 L. But this is the mere money ac- [end of page #232] count, without estimating loss of time, trouble, and inconvenience; so that it may fairly and reasonably be put down at one-third of the whole revenue or income of the individuals, yet the complaints are not so loud, and the clamour is not so great, as when they did not amount to one-twentieth of that revenue. This may, however, be accounted for.One-third part of revenue is derived from the state itself, so that there are but two-thirds remain independent of it. The habit of bearing burthens, and experience of the inutility of complaint, are likewise reasons for acquiescence; besides these, we cannot but all be sensible, that complaints were very violent when there was little occasion for them. We cannot deny, that the nation has been prospering for a hundred years, while the cry of ruin has been resounding perpetually in every corner; it is therefore natural to mistrust our fears, and sit in silence, waiting the event.The portion of our expense that consists in interest of money, on which no economy can operate, is so great, that it prevents any hope of much diminution from economy; and, indeed, in the time of peace, no economy that could be practised, more than what has commonly been done, would diminish our burthens one-fiftieth part. Even that would be very difficult, perhaps impracticable; for our free revenue, in time of peace, has not augmented in proportion to the diminution of the value of money; so that, in 1792, the expenses of the state were comparatively less than in the reign of Queen Anne.Economy, then, is not the mode in which we must seek relief in time of peace. To carry on war in a less expensive manner in future, and take a solid and effectual method of reducing our debts, are the means, both of which are treated of in their proper place.The modes of relief then, are three:1. Economy in war.2. A solid and fair method of reducing the present interest.3. Attention, to render the system of taxation as little troublesome, and as fair and equal as possible.[end of page #233]CHAP. IV.Of the National Debt and Sinking Fund.-- Advantages and Disadvantages of both.-- Errors committed in calculating their Effects.--Causes of Error. -- Mode proposed for preventing future Increase.IN no circumstance does the British empire differ so widely from all nations recorded in history, or from any now in existence, as with regard to the national debt.Not only the invention of contracting debt to carry on war is but of recent origin, but no nation has ever carried it to near the extent that it has arrived at in England. The Italian states, in which this mode was first practised, never had the means of carrying it very far. In Spain, France, and Holland, national debt met with obstacles that arrested its progress long before it arrived at the pitch to which it has now come in this country.The interest of the debt is above thrice the free revenue of the country, in time of peace, as that revenue was, previous to hostilities in 1793.Whenever any operation is begun, the result of which is not known, owing to its being new, but which is in itself of great importance; the anxiety it occasions must be great, and, generally, the alarm is more than proportioned to the danger. If ever this truth was exemplified in any thing, it has been with regard to the national debt of England, which has been a continual object of terror since its first creation; not a public terror, merely amongst the ignorant, but the most profound and enlightened statesmen. Calculators, and writers on political economy, have served to augment the uneasiness by their predictions of a fatal termination.While the debt has been augmenting with great rapidity, the wealth and resources of the nation have, at least, augmented equally fast, and the matter of fact has given the lie to all the forebodings of those who [end of page #234] occasioned the alarm. This very extraordinary circumstance merits an investigation.It unfortunately happens, that, where people are deeply interested in a subject, they form their opinion before they begin to examine and investigate, and consequently the mind commences with a bias, and acts under its influence, the consequence of which is, that the conclusion is not so accurate as it otherwise would be. Not that, in calculating with figures, the disposition of the mind can make an unit of difference, the question being once fairly stated; but the previous impression on the mind tends to prevent the fair statement of the question.That an uninterrupted practice of borrowing must end in an inability to pay is a self-evident axiom. It is not a matter that admits of dispute; but to fix the point where the inability will commence is a problem to resolve of a very difficult nature; it is indeed a problem, the re-solution =sic= of which depends upon some circumstances that cannot be ascertained. There are, it is true, certain fixed principles; but there are some points also that depend on events entirely unconnected with the debt, and, in themselves, uncertain. Two great considerations, that operate powerfully, have been omitted by most writers on this subject. The first, is the increased energy of human exertion, under an increased operation of necessity; the second, is the effect that the depreciation of money has, on lessening the apparent burthen occasioned by the interest of the debt. That these two causes, which have not been taken into account, have rendered the calculations erroneous, there is not a doubt; and how far they may still continue to operate is, at this time, as uncertain as ever; but they ought not to be considered as of operation beyond a certain unknown point, else the practice of contracting debt would be capable of infinite extension, which is impossible.But the augmentation of the debt itself is not the only circumstance that excites attention, as intimately connected with the fate of this nation.The increasing wealth and prosperity of the nation, under the heavy load of taxes, of which the debt is the principal occasion, is as much a matter of surprize as the ultimate result is an object of anxiety.So long, however, as the nation is not actually born =sic= down by the [end of page #235] weight of taxes, its wealth must increase; and, what is considered as a very strange phenomenon, is only the natural and necessary consequence of increased taxation.When men inhabit and cultivate land of their own, they are under no necessity of creating any greater value than they consume; but, when they pay RENT and TAXES, they are laid under a necessity of producing enough to supply their own wants, and to pay the rent and taxes to which they are subject. The same is the case with regard to manufacturers in every line of business, for though they do not, perhaps, consume any part of what they produce, (what comes to the same thing is that,) they are obliged to produce as much as will exchange, or sell, for all they want to consume, over and above paying their rent and taxes.Without rent and taxes there are only three things that excite the exertion of man:-- Necessity, arising from natural wants; a love of pleasure; or, a love of accumulation.When a man labours no more than for his mere natural necessities, he is a poor man, in the usual acceptation =sic= of the word, that is, he has no wealth; {188} and a nation, peopled with such men, would justly be called a poor nation. When a man labours for nothing more than what he expends on pleasure, or to gratify his taste and passions, it is still the same, he consumes what he creates, and there is an end of the matter; and, whether he creates much or little, as his consumption is regulated by it, no difference is made to society; but, when rent and taxes constitute a part of the price of every commodity, the consumption of every man, whether he pays any taxes directly or not, himself, is attended with an increase to the revenues of those who receive the rent and taxes, and obliges him to create more than he consumes.---{188} Some philosophers call a man rich, who wants little, and has that little; they are quite right, in their way, but that does not apply here. Perhaps, according to their definition, the Lazzaroni of Naples are richer than the merchants of London; and, a man who is contented in a parish work-house, is, beyond dispute, rich; to say that such a man is wealthy would be absurd, because wealth, with writers on political economy, implies being possessed of real tangible property.-=-[end of page #236]It arises from this, that the aggregate wealth of a people increases with rent and taxes; for, where there are neither, the desire of accumulation is the only thing that increases wealth. {189}It is for this reason, that, by obliging a man to create more than he himself consumes, taxation increases the wealth of a nation; so that the flourishing state of England is a very natural effect of heavy taxation. The misery and poverty of those people who have little or nothing to pay, is equally natural, though it does not astonish one quite so much.As there is nothing in the world without a bound, and a limit, it is clear, that, in laying it down as a principle, that rent and taxes occasion wealth instead of poverty, it is only to be understood, to a certain extent; that is to say, to the length to which the nature of things will admit of the exertion of man augmenting his industry, but not a step farther.To ascertain this point would be to solve a most curious problem; observing, that the solution would, in every case, depend on a great variety of particular circumstances.Something like a general investigation, however, is possible. It will not be accurate, nor is that wanted, but it may lay the foundation for understanding the matter better at a future period.In London, rent and taxes are heavier than in any other part of the kingdom, and in Scotland they are less than in any other; yet, the working people, from all parts of the kingdom, come to London, and from the poorest places, in the greatest numbers. Ireland, Scotland, and Wales, are the poor countries,lightly taxed, and from them---{189} Accumulation is sometimes not a passion, but arises from necessity; by accumulation, is meant the increasing the value of the stock you possess, whether it consists of land, cattle, money, or merchandize.Thus, for example, the Americans are increasing in wealth, from necessity, because their country is becoming better, by being cultivated, in order to produce what is necessary. They cannot have what they want, in the way they wish, without increasing or bettering the property of which they have taken possession.If they had no more rent and taxes than they have, and if this were not the case, they would remain a poor people. Thus, the inhabitants of Syria, of Egypt, of Arabia Felix, formerly the finest countries in the world, having a property that does not better in their possession, and having scarcely either rent or taxes to pay, remain, from generation to generation, creating little, and consuming what they create.-=-[end of page #237]people come, perpetually, to payheavy taxesin London. Yes, but it will be said, in answer, these are poor countries. They are, however, richer than England was in the days of Queen Elizabeth; and, if the nature of things could have admitted of peoplechanging centuries, as theychange countries, the people of the seventeenth century, with light taxes, would have emigrated to the nineteenth century, with all its heavy taxes, just as those Irish and Scotch come to London.This proves that, even in London, the excess of taxes is not yet such as to create a retrograde effect, and it proves it in a very striking manner. Though there may, at first sight, appear something ludicrous in the idea of emigrating from the seventeenth to the nineteenth, from the reign of Queen Elizabeth to that of his present majesty, it is a perfectly fair comparison, and will hold good, examine it as much as one will. The common expression, (and a very significant one it is,) that one part of the country is a century behind another, or twenty years, or fifty years, is exactly the same idea, expressed in other words, for it is a comparison between the changes which a lapse of time makes in one case, and a removal of place in the other. The present times are then better to live in than those of Elizabeth, as London is better than any distant part of the country.That the ability of the nation to sustain a given burthen, for a certain number of years, is no proof of a permanent ability to support it, must be admitted, even if the same annual resources were to continue; but, that permanent ability becomes much less certain, when we consider that the annual resources are perpetually varying, that, therefore, they have so many uncertain quantities, that it is impossible to resolve the problem.As to the effect, with respect to the increasing the burthens of the people, that has been treated under the general head of taxation. Whether the money goes to pay for a ship of war, a regiment of soldiers, or the interest of loans, makes no difference to him who pays the tax; and, indeed, makes little to the general system of national economy, as, in every case, what is paid to the state is employed on unproductive labourers or idle people. That is to say, it is consumed, and never appears again.[end of page #238]National debt, then, so far as it increases the taxes of a country, is like any other national expenditure; and, in maintaining unproductive and idle people, it is also the same; but it has, in another point of view, a different effect, and that effect is an advantageous one.In every nation, the greatest part of the capital is employed, or, as it is called, sunk. Land, houses, machines, merchandize, &c. are the principal employments of capital. As those are transferred from one to another, or as the use or produce of them is paid for, by one to another, money is wanted occasionally; and, if there were no other employments, money must either be lying idle in some persons =sic= hands, till an employment could be found for it, or the possessor of it must begin some enterprise, and sink it himself.But, when money is thus employed, it is no longer in the power of the proprietor; and, though money may be borrowed on such sort of security, it is slowly, and with difficulty. The expense, the inconveniency =sic=, and time necessary, prevent the lenders of money from lending any for occasional purposes on such sort of security; but when a nation borrows, and the stock is divisible and transferable at will, money can always be realized when it is wanted for any purpose that affords a greater advantage than the stock affords. {190}Without this had been one of the effects of national debt, how could the facility of borrowing have increased, {191} as it has done? or how could merchants and individuals raise the sums they now do? {192}---{190} In 1793, 5,000,000 L. was lent to merchants on exchequer-bills. The property, on which the money was secured, was really merchandize, but the lenders would have nothing to do with the goods; government stepped in, and took the goods as a security, creating a stock transferrable, that represented the same goods, and, as if by magic, the money was found in a moment. I know of no operation so fit for elucidating the advantage of national debt as this.{191} Borrowing on life rents is bad, for this reason; where there is no employment of this sort, all money is constantly employed in some sort of trade or enterprise that will produce profit, but cannot be realised. Example, Paris, &c.{192} When money was wanted, in Queen Anne's time, the Chancellor of the Exchequer, (Mr. Montague,) attended by the Lord Mayor and Sheriffs, went about, from shop to shop, to borrow it, much in the way that is occasionally practised by the beadles for a public charity!! Yet England's credit was good, it owed little, the war was popular, and the country rich.-=-[end of page #239]It must be allowed that one hundred millions, or at least a much smaller sum than our debts amount to now, would have produced this effect, and might answer every purpose of this sort, but there is still a consideration arising from the fluctuations in a stock, when it is small, and also from the number of persons possessed of it. People buy in and sell out with total indifference when the quantity is great, and the fluctuations small; but, the moment the funds are agitated, whether in rising or falling, money becomes scarce for those who want it for other purposes.That the number of persons ready to buy and sell must be proportioned, in some degree, to the quantity of stock, is of itself so evident, that it would be useless to enlarge upon it; but it must be granted that the national debt has long ago passed the sum that was necessary to produce this advantage.We find, then, that the evils attending the increase of debt are greatly counteracted by the debt itself, and that, to a certain amount, it is productive of a very considerable advantage to a trading nation. As those who calculated its ill effects, and foretold the ruin it would bring upon the state, did not take into account those circumstances, the result of their enquiries was necessarily wrong, in point of time, though the effect of which they spoke is perfectly certain to take place, if the debt continues to increase. Their reasoning may be compared to that of an astronomer, who observed the position of a planet, but, in his calculations, made no allowance for the refraction of the atmosphere, who would therefore err as to the place of the star, but not as to its existence.Let us now consider the natural consequence, supposing that future increase is prevented by means of the sinking fund established for that purpose. As to the probability of this, it depends on so many circumstances that are concealed in the womb of time, that it would be madness to give any other than a hypothetical solution of the question.If the war continues, and expenses increase nearly as they have hitherto done, great as is the operation of a sinking fund, it will not have time to counteract the evil. If the war stops soon, it will dim- [end of page #240] inish the debt with a most prodigious rapidity, {193} if it continues; the question, whether taxes can be found to pay the interest or not? can only be answered as a matter of opinion, which is, in a case of this sort, equivalent to no answer at all.With respect to the supposed case of the debt augmenting, the observations that apply to that have been made already; they now only remain to be made with respect to the debt being paid off.It has been observed already, in the chapter on Taxation, that the case of taxes being taken off to a great amount would be a new one of sudden and hurtful operation. Wages of labour would be diminished, as well as the burthens on those who live on settled income; it would therefore render people of fixed income more affluent, without giving ease to those who want it; in short, as the augmentation of taxes falls most on people with fixed incomes, so the advantages of this would principally be felt by them; and, as the baneful operation carries a sort of counteracting antidote with it, so, likewise, this beneficial operation would be attended with some drawback and inconveniency =sic=.The diminution of taxes, though the ultimate is not, however, the immediate consequence of the operation of the sinking fund, the efficacy of which depends on the taxes being kept up to their full extent for a considerable time. =sic= The first effect of the fund is, that a large sum, annually expended, as revenue drawn from the subject, is reimbursed to the stockholders, and becomes capital.This would immediately raise the funds, and thereby would counteract the sinking fund itself in a very material degree. Money would become abundant for all the purposes of trade, and it would be difficult---{193} A sort of ridicule has been thrown on the operation of compound interest, because its effects are so amazing as not to be capable of being realized; but, on this subject, two things are to be said,-- first of all, it has never been to the operation during the first hundred years that either incredulity or ridicule have applied, and the sinking fund was never meant to continue to operate so long. Secondly, though there are many drawbacks on the employment of large sums laid out at interest, that diminish, and would at last destroy, the result of the calculation in accumulating; it is not so in paying off debt, where the effect calculated is produced with the greatest certainty.-=-[end of page #241]to find employment for it; and, if the progress continued, part of it would most undoubtedly be sent to other countries, and so be the means of impoverishing this.
There are only three modes of teaching youth the way to well-doing, -- by precept, by example, and by habit at an early age. Precept, without example and habit, has but little weight, yet how can a child have either of these, if the parents are encouraged and assisted in living a vicious life? Nations and individuals should guard
---
{183} The French, before the revolution, were not be =sic= considered as a more virtuous people than the English, yet there were fewer crimes, and less dissipation amongst the lower orders than in England, and more amongst the higher. The French, particularly the mothers, have less affection for their children, yet they brought them up better, both in habits and in principles.
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[end of page #226]
against those vices to which they find they have a natural disposition; and drinking and gluttony are the vices to which the common people in this country are the most addicted.
Whatever other things may be taught, let this truth be instilled into all children brought up to earn their bread, that in proportion to their diligence will be their ease and enjoyment, and that this world is a world of sorrow and grief to the idle and the ignorant; that knowledge does not consist in being able to read books, but in understanding one's business and duty in life, and that industry consists in doing it.
Female education, in England, requires as much reform as that of the other sex; but, though the subject is not much less important, it is perhaps still more difficult. It has been remarked, by those who have travelled abroad, that, in other countries, women are in general not better, but rather worse dressed than men of the same rank: in England it is different; for, at an early age, the women are dressed, both as to style and quality of clothes, far above their rank. This might, perhaps, not be difficult to account for, but it undoubtedly is a misfortune, and one that is greatly increased by the mode of education and manner of thinking; for the main and indispensable virtue of that amiable sex excepted, (for which Englishwomen are highly distinguished,) perhaps no women in the world are brought up in a more frivolous unmeaning manner. The French women, with all their vivacity and giddy airs, have more accomplishment; {184} and, as they speak their mind pretty plainly, they have, on many occasions, testified surprise to find English ladies, who had studied music for years, who could scarcely play a tune, and who, after devoting years to the needle, were incapable of embroidering a pin-cushion.
Novels, a species of light, insipid, and dangerous reading, are the bane of English female education. They teach a sort of false romantic sentiment, and withdraw the mind from attention to the duties of
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{184} The emigrants have taught to ladies of rank, fashions; and to those of an inferior class, arts and industry. The English women did not know half what they could do, till the French came amongst them, about twelve years ago.
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life, at a time when it should be taught to learn their high importance. In female education the government should interfere; for the education of the mother will always have an influence on the education of the son, as her conduct in life must have on that of her husband.
As one general observation, relative to the education given at most public schools, it may be observed, that, whilst much time is taken up in teaching things that can never probably be of great utility, that species of knowledge that does not belong to any particular class, but which is of the utmost importance, is left to chance and to accident. While a boy is tormented with learning a dead language he is left to glean, as in a barren field, for all those rules of conduct on which the prosperity and happiness of his future life depends. {185}
A public education is, in many respects, better than a private one for boys, but, in some things, it is inferior: consequently those who can afford it, and wish to give their sons the most complete education, try to unite the advantages of both, by sending them to a public school, under the care of a private tutor. It is not in the power of the middling classes to do this; but modes should be adopted to give the boys, either by books or public lectures, those instructions, relative to moral conduct, to prudence, behaviour, &c. which a private tutor gives to those under his particular charge.
As to female education, it is a difficult subject: one great improvement would, nevertheless, be not to allow above a certain number in any one seminary; to have people of irreproachable conduct over them, and, wherever the parents can, to bring them home at the age of thirteen or fourteen. The public education ought certainly to finish at an early age, and, in all cases, with respect to females, a private is much preferable to a public education. {186}
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{185} The most virtuous of the Roman emperors attributed to his preceptors every one of those excellent qualities he possessed. The ancient education of Greece and Rome was very different from that of the moderns.
{186} Since this was written, we understand a book for this very purpose is about to be printed, with the professed design of uniting the advantages of a public and private education.
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CHAP. III.
Of the Effects of Taxation in England.
WHAT has been said of the increase of taxes, their tendency to ruin a nation, and bring on its decline, together with the counteraction occasioned by the continuance of necessity, as being applicable to all nations in general, applies, in every sense, to England, and even more to England than to any other nation. Taxes are carried to greater excess than in any other country; and, as England flourishes by trade and manufactures, (the price of which taxes enhance,) they gradually tend to shut foreign markets against us. This has already been explained; we, however, still have to inquire into the particular manner in which it operates upon this country.
That the system of taxation, though irregular in England, is less so than in any other country, in proportion to the extent to which it has been carried, is true; but still, however, if a number of the most troublesome and ill-contrived taxes were done away, and others established in their place, it would be a great advantage.
Greater danger arises from the augmentation of taxes in a wealthy country than in a poor one, when they stretch beyond the proper line, because the general prosperity hinders the effect from being visible, till it has advanced beyond the power of remedy; whereas, in a poor country, the injury is soon felt.
The invention and industry of this country have been most wonderfully increased by the necessity of exertion, under the protection of good laws, which rendered property secure. But we trust too much to our resources, and, like men in health and vigour, are the most likely to injure our constitution.
The most part of the arts, in point of manufacturing, seem to have come to nearly the last degree of perfection, so far as abbreviation of labour can carry them. [end of page #229]
The division of labour, and the modes of working in the iron and metal branches, have not of late been in any material degree improved in our towns, the most famous for them; and as to any particular gift of bringing things to perfection, or reducing prices, it does not appear to be confined to England. Watches and fire-arms are two of the most ingenious and nice branches of metal manufactures; yet, at Liege, the latter is carried to greater perfection than at Birmingham, and London and Lancashire are outdone by Switzerland, in the former. Those, indeed, are not manufactures of which the taste or form is constantly altering; but they are a proof of the ability to work with equal advantage, both as to quality and price, with the manufacturers of this country.
The next great branches are the weaving. For silks, France has always had the advantage of us; and our fine woollen cloths have never equalled those of Louvier and Sedan for quality, although, in point of price, they have the advantage.
In linens, we enjoy no particular pre-eminence; and, in the American market, we are beginning to be undersold by those of Silesia. For a second quality of woollen cloth, and for the manufacture of cotton, in all its branches, we still have the superiority; but our great advantage, the cause of the general preference to our manufactures is the long credit we give, which, if it should ever cease to be practicable, would ruin not one, but all our manufactures, nearly at a stroke.
It is very natural and very well for Englishmen, who have never been out of their own country, to ascribe to superiority of quality, (and inferiority of price is the same thing,) the great success they have in selling their goods in foreign countries; but such as have had an opportunity to see how it really is, know the contrary; and those who have not, may know it by observing who are the individuals in any branch of business at home that do the most, and they will find it always to be those who have the power of giving the longest credit. It is true that, in the course of time, and by struggling hard, those who have little means of extending their business at first, do it by degrees; but, until they do, they never can, in point of quantity, rival those who give long credit.
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In the inability of other nations to give equal length of credit, consists our principal advantage; but we have seen, by the vicissitudes of ancient nations, that the wants of others, or their being behindhand, are but a very insecure tenure for the prosperity of any nation.
The exportation of Britain was but inconsiderable at the beginning of last =sic= century, or about one-ninth of what it was two years ago.{187} Previous to the American war, it gradually increased to about three times what it was in the year 1700; that is, in seventy-five years. The progression was pretty regular till the year 1750, when it had risen to nearly double; but, in twenty-five years after, it increased as much as it had in fifty years before. The American war threw it back forty years, but it soon got up again to where it probably would have been, had the American war not intervened; it, however, rose beyond any thing that had ever been seen. It doubled in less than ten years; and, from this, we are led to conclude, that the taxes had not then begun to hurt national industry. But we shall see the reason, for the great increase was not owing so much to any cause inherent in this nation, as to the absolute impossibility of other nations continuing their commerce. We had got all the East and West India trade of the French and Dutch, and America had again become our greatest customer for British manufactures.
Capital that could be removed was, in a manner, banished from the continent of Europe, and had taken refuge in England, and a great extent of the continent had been desolated with war. We are not, however, to expect this amazing export trade to continue; indeed, it has already fallen, in one year, as much as it ever rose in any three years; it fell fifteen millions in one year. The taxes may have operated much against our prosperity, without our knowing it, in a crisis of this sort, though they did not absolutely counteract the favourable effect produced by other causes.
The commerce of the American states, which were, (like England,) out of the vortex of danger, and secure, increased in fully as rapid
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{187} In 1802, the exports amounted to 45,500,000 L. In 1702 to 5,500,000 L.
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a manner as ours, and fell off in the same way. We must not then, consider as durable, or owing to ourselves, circumstances that arose out of the general and temporary situation of other nations.
It has been said in the general chapter on taxation, and again repeated in that on national debt, that both the one and the other operate, for a certain time, in augmenting the industry and wealth of a country, but that there is some point at which they begin to have a contrary effect; that point, however, being dependent on a variety of circumstances, is not a fixed one, it cannot be discovered by investigation before the time, but it may by symptoms and signs that become visible soon after.
It is a sign that a nation has passed the point at which taxes cease to be a spur to industry, when the duties on consumption, or optional duties, which one may avoid paying, by not using the article taxed, become less productive than formerly, and when it is found necessary to lay taxes on land, houses, and such sort of property as can be made to pay, independent of the will of the proprietor.
When taxes are laid upon property, not on consumption, it is to be supposed the latter can bear no more. Taxes on property are forced taxes; on consnmption =sic=, they are generally, to a certain degree, voluntary, though not always so.
The augmentation of wealth has, in this country, been great, but it has never been regular or uninterrupted; that of taxation has, on the contrary, been uninterrupted, and this is better seen from the chart than from any thing that can be said. There can be no doubt that, though hitherto our increasing prosperity has been so great as to counteract the effect of heavy taxation, yet that the same thing cannot be expected to continue long. How long it may continue, or whether it has not already ceased, or is on the point of ceasing, is uncertain; but there is nothing more positive, than that, if taxes increase, they must, in process of time, crush industry, and, therefore, at all events, they should be kept as low as possible.
The whole income of the country is estimated only at 150,000,000 L. The taxes to the state amount to 40,000,000 L. and those for the maintenance of the poor to 5,500,000 L. But this is the mere money ac- [end of page #232] count, without estimating loss of time, trouble, and inconvenience; so that it may fairly and reasonably be put down at one-third of the whole revenue or income of the individuals, yet the complaints are not so loud, and the clamour is not so great, as when they did not amount to one-twentieth of that revenue. This may, however, be accounted for.
One-third part of revenue is derived from the state itself, so that there are but two-thirds remain independent of it. The habit of bearing burthens, and experience of the inutility of complaint, are likewise reasons for acquiescence; besides these, we cannot but all be sensible, that complaints were very violent when there was little occasion for them. We cannot deny, that the nation has been prospering for a hundred years, while the cry of ruin has been resounding perpetually in every corner; it is therefore natural to mistrust our fears, and sit in silence, waiting the event.
The portion of our expense that consists in interest of money, on which no economy can operate, is so great, that it prevents any hope of much diminution from economy; and, indeed, in the time of peace, no economy that could be practised, more than what has commonly been done, would diminish our burthens one-fiftieth part. Even that would be very difficult, perhaps impracticable; for our free revenue, in time of peace, has not augmented in proportion to the diminution of the value of money; so that, in 1792, the expenses of the state were comparatively less than in the reign of Queen Anne.
Economy, then, is not the mode in which we must seek relief in time of peace. To carry on war in a less expensive manner in future, and take a solid and effectual method of reducing our debts, are the means, both of which are treated of in their proper place.
The modes of relief then, are three:
1. Economy in war.
2. A solid and fair method of reducing the present interest.
3. Attention, to render the system of taxation as little troublesome, and as fair and equal as possible.
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CHAP. IV.
Of the National Debt and Sinking Fund.-- Advantages and Disadvantages of both.-- Errors committed in calculating their Effects.--Causes of Error. -- Mode proposed for preventing future Increase.
IN no circumstance does the British empire differ so widely from all nations recorded in history, or from any now in existence, as with regard to the national debt.
Not only the invention of contracting debt to carry on war is but of recent origin, but no nation has ever carried it to near the extent that it has arrived at in England. The Italian states, in which this mode was first practised, never had the means of carrying it very far. In Spain, France, and Holland, national debt met with obstacles that arrested its progress long before it arrived at the pitch to which it has now come in this country.
The interest of the debt is above thrice the free revenue of the country, in time of peace, as that revenue was, previous to hostilities in 1793.
Whenever any operation is begun, the result of which is not known, owing to its being new, but which is in itself of great importance; the anxiety it occasions must be great, and, generally, the alarm is more than proportioned to the danger. If ever this truth was exemplified in any thing, it has been with regard to the national debt of England, which has been a continual object of terror since its first creation; not a public terror, merely amongst the ignorant, but the most profound and enlightened statesmen. Calculators, and writers on political economy, have served to augment the uneasiness by their predictions of a fatal termination.
While the debt has been augmenting with great rapidity, the wealth and resources of the nation have, at least, augmented equally fast, and the matter of fact has given the lie to all the forebodings of those who [end of page #234] occasioned the alarm. This very extraordinary circumstance merits an investigation.
It unfortunately happens, that, where people are deeply interested in a subject, they form their opinion before they begin to examine and investigate, and consequently the mind commences with a bias, and acts under its influence, the consequence of which is, that the conclusion is not so accurate as it otherwise would be. Not that, in calculating with figures, the disposition of the mind can make an unit of difference, the question being once fairly stated; but the previous impression on the mind tends to prevent the fair statement of the question.
That an uninterrupted practice of borrowing must end in an inability to pay is a self-evident axiom. It is not a matter that admits of dispute; but to fix the point where the inability will commence is a problem to resolve of a very difficult nature; it is indeed a problem, the re-solution =sic= of which depends upon some circumstances that cannot be ascertained. There are, it is true, certain fixed principles; but there are some points also that depend on events entirely unconnected with the debt, and, in themselves, uncertain. Two great considerations, that operate powerfully, have been omitted by most writers on this subject. The first, is the increased energy of human exertion, under an increased operation of necessity; the second, is the effect that the depreciation of money has, on lessening the apparent burthen occasioned by the interest of the debt. That these two causes, which have not been taken into account, have rendered the calculations erroneous, there is not a doubt; and how far they may still continue to operate is, at this time, as uncertain as ever; but they ought not to be considered as of operation beyond a certain unknown point, else the practice of contracting debt would be capable of infinite extension, which is impossible.
But the augmentation of the debt itself is not the only circumstance that excites attention, as intimately connected with the fate of this nation.
The increasing wealth and prosperity of the nation, under the heavy load of taxes, of which the debt is the principal occasion, is as much a matter of surprize as the ultimate result is an object of anxiety.
So long, however, as the nation is not actually born =sic= down by the [end of page #235] weight of taxes, its wealth must increase; and, what is considered as a very strange phenomenon, is only the natural and necessary consequence of increased taxation.
When men inhabit and cultivate land of their own, they are under no necessity of creating any greater value than they consume; but, when they pay RENT and TAXES, they are laid under a necessity of producing enough to supply their own wants, and to pay the rent and taxes to which they are subject. The same is the case with regard to manufacturers in every line of business, for though they do not, perhaps, consume any part of what they produce, (what comes to the same thing is that,) they are obliged to produce as much as will exchange, or sell, for all they want to consume, over and above paying their rent and taxes.
Without rent and taxes there are only three things that excite the exertion of man:-- Necessity, arising from natural wants; a love of pleasure; or, a love of accumulation.
When a man labours no more than for his mere natural necessities, he is a poor man, in the usual acceptation =sic= of the word, that is, he has no wealth; {188} and a nation, peopled with such men, would justly be called a poor nation. When a man labours for nothing more than what he expends on pleasure, or to gratify his taste and passions, it is still the same, he consumes what he creates, and there is an end of the matter; and, whether he creates much or little, as his consumption is regulated by it, no difference is made to society; but, when rent and taxes constitute a part of the price of every commodity, the consumption of every man, whether he pays any taxes directly or not, himself, is attended with an increase to the revenues of those who receive the rent and taxes, and obliges him to create more than he consumes.
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{188} Some philosophers call a man rich, who wants little, and has that little; they are quite right, in their way, but that does not apply here. Perhaps, according to their definition, the Lazzaroni of Naples are richer than the merchants of London; and, a man who is contented in a parish work-house, is, beyond dispute, rich; to say that such a man is wealthy would be absurd, because wealth, with writers on political economy, implies being possessed of real tangible property.
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It arises from this, that the aggregate wealth of a people increases with rent and taxes; for, where there are neither, the desire of accumulation is the only thing that increases wealth. {189}
It is for this reason, that, by obliging a man to create more than he himself consumes, taxation increases the wealth of a nation; so that the flourishing state of England is a very natural effect of heavy taxation. The misery and poverty of those people who have little or nothing to pay, is equally natural, though it does not astonish one quite so much.
As there is nothing in the world without a bound, and a limit, it is clear, that, in laying it down as a principle, that rent and taxes occasion wealth instead of poverty, it is only to be understood, to a certain extent; that is to say, to the length to which the nature of things will admit of the exertion of man augmenting his industry, but not a step farther.
To ascertain this point would be to solve a most curious problem; observing, that the solution would, in every case, depend on a great variety of particular circumstances.
Something like a general investigation, however, is possible. It will not be accurate, nor is that wanted, but it may lay the foundation for understanding the matter better at a future period.
In London, rent and taxes are heavier than in any other part of the kingdom, and in Scotland they are less than in any other; yet, the working people, from all parts of the kingdom, come to London, and from the poorest places, in the greatest numbers. Ireland, Scotland, and Wales, are the poor countries,lightly taxed, and from them
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{189} Accumulation is sometimes not a passion, but arises from necessity; by accumulation, is meant the increasing the value of the stock you possess, whether it consists of land, cattle, money, or merchandize.
Thus, for example, the Americans are increasing in wealth, from necessity, because their country is becoming better, by being cultivated, in order to produce what is necessary. They cannot have what they want, in the way they wish, without increasing or bettering the property of which they have taken possession.
If they had no more rent and taxes than they have, and if this were not the case, they would remain a poor people. Thus, the inhabitants of Syria, of Egypt, of Arabia Felix, formerly the finest countries in the world, having a property that does not better in their possession, and having scarcely either rent or taxes to pay, remain, from generation to generation, creating little, and consuming what they create.
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people come, perpetually, to payheavy taxesin London. Yes, but it will be said, in answer, these are poor countries. They are, however, richer than England was in the days of Queen Elizabeth; and, if the nature of things could have admitted of peoplechanging centuries, as theychange countries, the people of the seventeenth century, with light taxes, would have emigrated to the nineteenth century, with all its heavy taxes, just as those Irish and Scotch come to London.
This proves that, even in London, the excess of taxes is not yet such as to create a retrograde effect, and it proves it in a very striking manner. Though there may, at first sight, appear something ludicrous in the idea of emigrating from the seventeenth to the nineteenth, from the reign of Queen Elizabeth to that of his present majesty, it is a perfectly fair comparison, and will hold good, examine it as much as one will. The common expression, (and a very significant one it is,) that one part of the country is a century behind another, or twenty years, or fifty years, is exactly the same idea, expressed in other words, for it is a comparison between the changes which a lapse of time makes in one case, and a removal of place in the other. The present times are then better to live in than those of Elizabeth, as London is better than any distant part of the country.
That the ability of the nation to sustain a given burthen, for a certain number of years, is no proof of a permanent ability to support it, must be admitted, even if the same annual resources were to continue; but, that permanent ability becomes much less certain, when we consider that the annual resources are perpetually varying, that, therefore, they have so many uncertain quantities, that it is impossible to resolve the problem.
As to the effect, with respect to the increasing the burthens of the people, that has been treated under the general head of taxation. Whether the money goes to pay for a ship of war, a regiment of soldiers, or the interest of loans, makes no difference to him who pays the tax; and, indeed, makes little to the general system of national economy, as, in every case, what is paid to the state is employed on unproductive labourers or idle people. That is to say, it is consumed, and never appears again.
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National debt, then, so far as it increases the taxes of a country, is like any other national expenditure; and, in maintaining unproductive and idle people, it is also the same; but it has, in another point of view, a different effect, and that effect is an advantageous one.
In every nation, the greatest part of the capital is employed, or, as it is called, sunk. Land, houses, machines, merchandize, &c. are the principal employments of capital. As those are transferred from one to another, or as the use or produce of them is paid for, by one to another, money is wanted occasionally; and, if there were no other employments, money must either be lying idle in some persons =sic= hands, till an employment could be found for it, or the possessor of it must begin some enterprise, and sink it himself.
But, when money is thus employed, it is no longer in the power of the proprietor; and, though money may be borrowed on such sort of security, it is slowly, and with difficulty. The expense, the inconveniency =sic=, and time necessary, prevent the lenders of money from lending any for occasional purposes on such sort of security; but when a nation borrows, and the stock is divisible and transferable at will, money can always be realized when it is wanted for any purpose that affords a greater advantage than the stock affords. {190}
Without this had been one of the effects of national debt, how could the facility of borrowing have increased, {191} as it has done? or how could merchants and individuals raise the sums they now do? {192}
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{190} In 1793, 5,000,000 L. was lent to merchants on exchequer-bills. The property, on which the money was secured, was really merchandize, but the lenders would have nothing to do with the goods; government stepped in, and took the goods as a security, creating a stock transferrable, that represented the same goods, and, as if by magic, the money was found in a moment. I know of no operation so fit for elucidating the advantage of national debt as this.
{191} Borrowing on life rents is bad, for this reason; where there is no employment of this sort, all money is constantly employed in some sort of trade or enterprise that will produce profit, but cannot be realised. Example, Paris, &c.
{192} When money was wanted, in Queen Anne's time, the Chancellor of the Exchequer, (Mr. Montague,) attended by the Lord Mayor and Sheriffs, went about, from shop to shop, to borrow it, much in the way that is occasionally practised by the beadles for a public charity!! Yet England's credit was good, it owed little, the war was popular, and the country rich.
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It must be allowed that one hundred millions, or at least a much smaller sum than our debts amount to now, would have produced this effect, and might answer every purpose of this sort, but there is still a consideration arising from the fluctuations in a stock, when it is small, and also from the number of persons possessed of it. People buy in and sell out with total indifference when the quantity is great, and the fluctuations small; but, the moment the funds are agitated, whether in rising or falling, money becomes scarce for those who want it for other purposes.
That the number of persons ready to buy and sell must be proportioned, in some degree, to the quantity of stock, is of itself so evident, that it would be useless to enlarge upon it; but it must be granted that the national debt has long ago passed the sum that was necessary to produce this advantage.
We find, then, that the evils attending the increase of debt are greatly counteracted by the debt itself, and that, to a certain amount, it is productive of a very considerable advantage to a trading nation. As those who calculated its ill effects, and foretold the ruin it would bring upon the state, did not take into account those circumstances, the result of their enquiries was necessarily wrong, in point of time, though the effect of which they spoke is perfectly certain to take place, if the debt continues to increase. Their reasoning may be compared to that of an astronomer, who observed the position of a planet, but, in his calculations, made no allowance for the refraction of the atmosphere, who would therefore err as to the place of the star, but not as to its existence.
Let us now consider the natural consequence, supposing that future increase is prevented by means of the sinking fund established for that purpose. As to the probability of this, it depends on so many circumstances that are concealed in the womb of time, that it would be madness to give any other than a hypothetical solution of the question.
If the war continues, and expenses increase nearly as they have hitherto done, great as is the operation of a sinking fund, it will not have time to counteract the evil. If the war stops soon, it will dim- [end of page #240] inish the debt with a most prodigious rapidity, {193} if it continues; the question, whether taxes can be found to pay the interest or not? can only be answered as a matter of opinion, which is, in a case of this sort, equivalent to no answer at all.
With respect to the supposed case of the debt augmenting, the observations that apply to that have been made already; they now only remain to be made with respect to the debt being paid off.
It has been observed already, in the chapter on Taxation, that the case of taxes being taken off to a great amount would be a new one of sudden and hurtful operation. Wages of labour would be diminished, as well as the burthens on those who live on settled income; it would therefore render people of fixed income more affluent, without giving ease to those who want it; in short, as the augmentation of taxes falls most on people with fixed incomes, so the advantages of this would principally be felt by them; and, as the baneful operation carries a sort of counteracting antidote with it, so, likewise, this beneficial operation would be attended with some drawback and inconveniency =sic=.
The diminution of taxes, though the ultimate is not, however, the immediate consequence of the operation of the sinking fund, the efficacy of which depends on the taxes being kept up to their full extent for a considerable time. =sic= The first effect of the fund is, that a large sum, annually expended, as revenue drawn from the subject, is reimbursed to the stockholders, and becomes capital.
This would immediately raise the funds, and thereby would counteract the sinking fund itself in a very material degree. Money would become abundant for all the purposes of trade, and it would be difficult
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{193} A sort of ridicule has been thrown on the operation of compound interest, because its effects are so amazing as not to be capable of being realized; but, on this subject, two things are to be said,-- first of all, it has never been to the operation during the first hundred years that either incredulity or ridicule have applied, and the sinking fund was never meant to continue to operate so long. Secondly, though there are many drawbacks on the employment of large sums laid out at interest, that diminish, and would at last destroy, the result of the calculation in accumulating; it is not so in paying off debt, where the effect calculated is produced with the greatest certainty.
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to find employment for it; and, if the progress continued, part of it would most undoubtedly be sent to other countries, and so be the means of impoverishing this.