passes through his hands. The revenue
of such a man can regularly pass through
his hands only once in a year. But the whole
amount of the capital and credit of a merchant,
who deals in a trade of which the returns
are very quick, may sometimes pass
through his hands two, three, or four times in
a year. A country abounding with merchants
and manufacturers, therefore, necessarily abounds
with a set of people, who have it at
all times in their power to advance, if they
chuse to do so, a very large sum of money to
government. Hence the ability in the subjects
of a commercial state to lend.
Commerce and manufactures can seldom
flourish long in any state which does not enjoy
a regular administration of justice; in
which the people do not feel themselves secure
in the possession of their property; in which
the faith of contracts is not supported by law;
and in which the authority of the state is not
supposed to be regularly employed in enforcing
the payment of debts from all those who
are able to pay. Commerce and manufactures,
in short, can seldom flourish in any
state, in which there is not a certain degree of
confidence in the justice of government. The
same confidence which disposes great merchants
and manufacturers upon ordinary occasions,
to trust their property to the protection
of a particular government, disposes them,
upon extraordinary occasions, to trust that government
with the use of their property. By
lending money to government, they do not
even for a moment diminish their ability to
carry on their trade and manufactures; on
the contrary, they commonly augment it. The
necessities of the state render government,
upon most occasions willing to borrow upon
terms extremely advantageous to the lender.
The security which it grants to the original
creditor, is made transferable to any other creditor;
and from the universal confidence in
the justice of the state, generally sells in the
market for more than was originally paid for
it. The merchant or monied man makes
money by lending money to government, and
instead of diminishing, increases his trading
capital. He generally considers it as a favour,
therefore, when the administration admits him
to a share in the first subscription for a new
loan. Hence the inclination or willingness
in the subjects of a commercial state to lend.
The government of such a state is very apt
to repose itself upon this ability and willingness
of its subjects to lend it their money on
extraordinary occasions. It foresees the facility
of borrowing, and therefore dispenses itself
from the duty of saving.
In a rude state of society, there are no great
mercantile or manufacturing capitals. The
individuals, who hoard whatever money they
can save, and who conceal their hoard, do so
from a distrust of the justice of government;
from a fear, that if it was known that they had
a hoard, and where that hoard was to be found,
they would quickly be plundered. In such a
state of things, few people would be able, and
nobody would be willing to lend their money
to government on extraordinary exigencies.
The sovereign feels that he must provide for
such exigencies by saving, because he foresees
the absolute impossibility of borrowing. This
foresight increases still further his natural disposition
to save.
The progress of the enormous debts which
at present oppress, and will in the long-run
probably ruin, all the great nations of Europe,
has been pretty uniform. Nations, like private
men, have generally begun to borrow
upon what may be called personal credit,
without assigning or mortgaging any particular
fund for the payment of the debt; and
when this resource has failed them, they have
gone on to borrow upon assignments or mortgages
of particular funds.
What is called the unfunded debt of Great
Britain, is contracted in the former of those
two ways. It consists partly in a debt which
bears, or is supposed to bear, no interest, and
which resembles the debts that a private man
contracts upon account; and partly in a debt
which bears interest, and which resembles
what a private man contracts upon his bill or
promissory-note. The debts which are due,
either for extraordinary services, or for services
either not provided for, or not paid at
the time when they are performed; part of
the extraordinaries of the army, navy, and ordnance,
the arrears of subsidies to foreign
princes, those of seamen's wages, &c. usually
constitute a debt of the first kind. Navy and
exchequer bills, which are issued sometimes
in payment of a part of such debts, and sometimes
for other purposes, constitutes a debt of
the second kind; exchequer bills bearing interest
from the day on which they are issued,
and navy bills six months after they are issued.
The bank of England, either by voluntarily
discounting those bills at their current
value, or by agreeing with government for
certain considerations to circulate exchequer
bills, that is, to receive them at par, paying
the interest which happens to be due upon
them, keeps up the value, and facilitates
their circulation, and thereby frequently enables
government to contract a very large debt
of this kind. In France, where there is no
bank, the state bills (billets d'etat[76]) have
sometimes sold at sixty and seventy per cent.
discount. During the great recoinage in
king William's time, when the bank of England
thought proper to put a stop to its usual
transactions, exchequer bills and tallies are
said to have sold from twenty-five to sixty per
cent. discount; owing partly, no doubt, to
the supposed instability of the new government