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tially accomplished they must feel that an institutioneswhich is continually subject to the fluctuations of opinion in an ever-vary. ing court of merchants, and which lies in a certain degree at the mercy of any orator in the large and motleyclists of their Proprietors, is an anomaly in the annals of literature ; that it contains in its very constitution the seminal principlescof disorder, and that rebellions are its bitter fruit. The late debates at the India House must have shown them, that however, lenlarged may be their own views, they do not in the present state of things possess the power of realising their plans: mand it is pretty evident from the sort of language held out to theme by certain of their constituents in the public court, that they cannot even vindicate the establishment without danger to that popularity upon which their future election must depends We trust therefore that they will see how closely their own interests are
connected with those of the public; and that they will lend their honest assistance to the consummation of that statesman-like work, which they have so wisely begun, by transferring thepCollege without delay into the more efficient hands of government. It will then be independent of these cabals; after another rebellion or two the young men and their friends will be convinced that they cannot overturn it, and although we look for no Utopian perfection, we confidently predict thatgiin unionwith the College at Calcutta, it will be productive of solid and permanent advantages both to England and to India. sdt to moitkailaqe ads syd noitexsi to uomo ad ei mimib at 11a edt to 299iv,
na Tan000.000.08 03 88 mort gaiyisy fita x yaigaowe oa to zi cunoj babarlovov zudt ai doidw Iseruoo edT -I81509 9da didw' piloq ada diw sosiy ts dan oa bos estutse ÅRT. XII.4-An Essay on the Question of reducing the Interest of er the National Debt, in which the Justice and Expediency of that 21 Measure are fully established. ByłJ. R. M-Culloch, Esq.
18vo. 9b Underwood. London, 1816. vilidste bas dibers 9d froqu tado.-bant anulata od to forjslilinge sdt of visluoidisq svom AFTER a long and expensive war, in which the means of ithe country were put in action to an extent altogether, unprecedent ed, it cannot but be interesting to know in what condition we now stand; what changes have been brought about in our foreigh and domestic relations; and, above all, what line of policy may be most suitable to the circumstances
in which the peace has either found or placed us. It seems, then, to be admitted on all hands that the immense expenditure of public money during the last twenty years has produced two effects, both of great political importance, namely, a great fall in the real value of our currency including papera and species, and an enormousl addition to the national debt.ei There are two qgestions, therefore, ywhich
rally present themselves for our consideration, as being intimately connected with this crisis of public affairs; first, ought money to be allowed to recover its natural value and rise to the level at which it stood prior to 1797, or should means be used to perpetuate, in the time of peace, the high prices of commodities, in other words, the low value of the currency, to which they have been brought in the course of the war; and secondly, if the value of money shall be restored to its former level, either by the application of direct means, or by the natural course of things, which, in spite of all artificial arrangements, will produce this effect in a greater or less degree, what are the measures which should be adopted by the legislature in relation to the public burdens, which, it is very obvious, will increase in weight in proportion as money shall return to its wonted standard. Uitslag aus The opinion of our author on these important points is decidedand explicit.sRepeal," says he, “the corn laws, by which means wheat will fall, on an average of years, to fifty shillings the quarterly labour will fall in proportion; manufactured goods, and all other kinds of commodities, will sink in price in the same degree ; and we shall thus, in a very short time, be replaced in nearly the same situation, with regard to domestic trade and foreignocommerce, in which we stood before the French revolu tion.iw As to public burdens, he recommends the reduction of the interest of the national debt from five to four per cent, and the application of the whole sinking fund, to the ordinary services of the state; thus diminishing the amount of taxation by a sum varying from 18 to 20,000,000l. per annum.
The counsel which is thus vouchsafed to us is of so sweeping a nature, and so much at variance with the policy which the country has been acting upon these thirty or forty years past, that it cannot fail to awaken the strongest suspicion as to its expediency, and to demand the most minute attention to its probable effects upon the credit and stability of the government. We allude more particularly to the annihilation of the sinking fund,--that political engine hitherto regarded so omnipotent to save our publie credit, so essential an accompaniment of the funding system-constructed, we have been often told, on the soundest views of financial science and guarded in all its operations by the utmost vigilance of our greatest statesmen. bas atroidsins Stja9mob bus as If, indeed, we are unable to keep it in motion without borrowing money, Mr. M*Culloch, we will admit, is unquestionably in the right as to the propriety of its demolition, for nothing could be more illusory or positively ruinous, than to raise loans at six per cent. (including interest, bonus, and expence of management) merely to buy up stock bearing interest at five per cent. In fact, the very idea of a sinking fund, where there is no clear surVOL. IX. NO. XVII.
plus revenue, 'is ridiculous- in the extreme, as it implies the posk sibility of paying debt, without raising money, by a species tof arithmeçical legerdemain, and every person is now iconvinced that the only advantage which the country has derived from the celebrated financial engine in question, over and above what may be called its moral effect, or the confidence with which it inspired the money-lender, is confined to the sums raised during the war for the purpose of redeeming, in a given time, the annual loansa We allude to the measure suggested by Mr. Pittz in 1793, of extending the original principle of the fund by adding to itslevert year," one pound per centum on all the loans to be contracted forts subsequently to that period; which arrangement, as it proceeded on the practice of raising by taxes in the mean time, more money than would otherwise have been raised in that way; prevented to a certain extent the rapid accumulation of public debtsra The benefit thus resulting from the sinking fund ist admitted ibig Drs Hamilton himself; which, after all, implies nothing more recond dite in finance than that prompt payment precludes all future demands, and that if we had raised all our supplies within the year, we should now have had less interest to pay to the public creditors Tit is in peace, when we ought to have somez'surplus revenue, that a sinking fund would prove of real utility si fob nobody will deny that, whenever it can be maintained upon the balance of our income over our outlay--the only sinking fund any nation can possibly have it is an excellent instrument for realizing the liquidation of debt, so as both to meet the convey nience of the creditor, and to prevent sudden inequalities in the money market.' . .? Bjer Of Tomo cui qora od 2. But it is proposed by our author and other writers on finance, in this season of tranquillity, when the sword is sheathed all over Europe, to put an end to the operations of the sinking fund alto. gether, in order to relieve the country from the head of taxes necessary to maintain it. Admitting the necessity of this stepy which is, in other words, to admit the inability of the nation to pay interest on the whole debt, redeemed and unredeemed to persevere in the means of realizing a still farther redemption; and at the same time, to defray the expense of the whole peace establishment; and, yielding to thie arguments drawn from this view of our resources, suppose we adopt, in consequence the policy recommended by these writers, let us take a brief survey of the condition in which we shall thereby place ourselves, and of the effects likely to result from that condition.ir 21 21 2990|vora
In the first place, we must sit down under the dead weight of # capital debt of more than 600,000,000l. sterling, carrying with it a yearly charge of about 33,000,000. in the shape of interest and managements. The trade and industry of the country will thus be subjected to a degree of pressure, in all time coming, extremely unfavourable to their developement, and which cannot faib torbe a considerable bar to our success in that competition with the continental nations which the renewal of intercourse must, isooner or later, rinfallibly create. Our former experience too can ithirdw very little light on the probable consequences of such a condition, and more particularly when rendered permanentoi Before the American war, the funded debt of this coup-t try was 122,963,254li, bearing an annual charge of 4,254,67211; after that war, which added to the said debt about 91,000,000l. the interest of the unredeemed capital was 8,334,5719 but now, as has just been stated, the yearly charge connected with the natir onal debt, independent of the sinking fund, is about 33,000,000 The difference between which and even the largest of the for met sums is so immense, that no conclusion drawn from our experience, during any part of the period which elapsed from 1783 to the commencement of the late war, can possibly apply to the circumstances in which we are henceforth to be placed. Qur.independence, as a nation, will inevitably be put to hazard; and, at all events, our commanding influence among the several members of the European commonwealth must suffer a rspeedy diminution To be satisfied of thisy, let us turn our eyes foram moment to all the other nations of Europe which are known to have ácted on the funded system, without, at the same time, persevering in the proper means for paying off their debt. It completely ruined Holland; and, chiefly, too, by the necessity under which itplaced the government of imposing heavy taxes on the food of the people, in order to raise money to pay the dividends due to ther public creditorz (her manufactures decayed; her fisheries languished ;shor shipping decreased. And Dr. Smith has left it oni record that1ff the practice of funding hasgreatly enfeebled every state which has
has adopted it. The Italian republics seem to have begun it. Genoa and Venice have both been reduced by it. Spain i seems to have learned the practice from the Italian republies, and (its taxes being probably less judicious than theirs) it has, in proportion to its natural strength, been still more enfeebled. The debts of Spain are of old standing. It was devply in debt before the end of the sixteenth century about a hundred years before, England owed a shilling. France, potwithstanding call its natural resources, languishes under an op pressive, load of the same kind. The republic of the United Provinces is as much enfeebled by its debts as either Genoa or Venice. Is it likely that in Great Britain alone, a practice;which has broughtseiluant nnocent 1,88 diode lo guysdo yubor edi ti The sevils attending the funding isystem are not however, inseparable from it, and they are moreover counterbalanced by many solid avantages. The facility of borrowing on the credit of an anticipated revenue enables a government to make great exertions, without pressing, at the time a war breaks out, upon any species of industry, by withdrawing capital from its ordinary em ployment; but the misfortune is, that neither the government nor ine people can be persuaded to pay, on the return of peace, the surns which they may have borrowed in the time of war, Wheree fore do we borrow on pressing emergencies, and thereby mortgage the future revenue of ine country for several years to come, if it be not that we tacitly promise to repay the capital debt so cons tracted, and thus to relieve the mortgaged revenue when the emergency shall have gone by? When a war takes place we are often compelled to meet an increased expenditure in the midst of confusion and commercial embarrassment; and as we are unable in such circumstances to raise by taxes as much money as might appear necessary to carry it on with success, say, 70,000,000 in the year, we limit our exertions to the raising of 50,000,000, and then borrow the remaining 20,000,000. But when are we to pay these 20,000,000? Is it not when the war has been succeeded by peace, and when the capital of the country is again, safely employed in commerce and agriculture? The practice of this country, however, and of all the countries wherein the funding system has been extensively adopted, is at complete variance with the spirit of that wise maxim. We have borrowed largely in the time of war, and paid next to nothing in the time of peace. : To act with safety, and to avoid the peculiar danger attending the modern practice of mortgaging the revenue, the war-taxes ought, in every instance of hostilities, to be continued after the termination of the war, until all the debt contracted to meet the war expenditure sball have been liquidated, by which means we should at once avail ourselves of the proper advantages of the funding system, and shun the fatal effects of its abuse, so clearly pointed out by Smith and various other writers, So far, however, from acting upon these wise views, such has ever been the impatience of the country to get rid of their burdens, such their thoughtlessness or indifference with regard to futurity, that our government, like all those which have gone to ruin before us, have been compelled at the conclusion of every war to discontinue almost instantly the heaviest of the war taxes. The consequence of this monstrous folly is, that we of the present age have had to bear and defray, amidst our own unprecedented difficulties, the expense of nearly all the debt contracted in all the wars in which Great Britain has been engaged, since the days of William and Mary. Of the 128 years which have passed since the Revolution, we have been sixty-four in a state of war, and exactly as