But if, by advancing their money,
they were to purchase, instead of perpetual annuities,
annuities for lives only, whether their
own or those of other people, they would not
always be so likely to sell them with a profit.
Annuities upon their own lives they would
always sell with loss; because no man will
give for an annuity upon the life of another,
whose age and state of health are nearly the
same with his own, the same price which he
would give for one upon his own. An annuity
upon the life of a third person, indeed,
is, no doubt, of equal value to the buyer and
the seller; but its real value begins to diminish
from the moment it is granted, and continues
to do so, more and more, as long as it
subsists. It can never, therefore, make so
convenient a transferable stock as a perpetual
annuity, of which the real value may be
supposed always the same, or very nearly the
same.
In France, the seat of government not being
in a great mercantile city, merchants do
not make so great a proportion of the people
who advance money to government. The
people concerned in the finances, the farmers-general,
the receivers of the taxes which are
not in farm, the court-bankers, &c. make the
greater part of those who advance their money
in all public exigencies. Such people are
commonly men of mean birth, but of great
wealth, and frequently of great pride. They
are too proud to marry their equals, and women
of quality disdain to marry them. They
frequently resolve, therefore, to live bachelors;
and having neither any families of their
own, nor much regard for those of their relations,
whom they are not always very fond of
acknowledging, they desire only to live in
splendour during their own time, and are not
unwilling that their fortune should end with
themselves. The number of rich people, besides,
who are either averse to marry, or whose
condition of life renders it either improper or
inconvenient for them to do so, is much greater
in France than in England. To such people,
who have little or no care for posterity,
nothing can be more convenient than to exchange
their capital for a revenue, which is to
last just as long, and no longer, than they
wish it to do.
The ordinary expense of the greater part
of modern governments, in time of peace, being
equal, or nearly equal, to their ordinary
revenue, when war comes, they are both unwilling
and unable to increase their revenue
in proportion to the increase of their expense.
They are unwilling, for fear of offending the
people, who, by so great and so sudden an
increase of taxes, would soon be disgusted
with the war; and they are unable, from not
well knowing what taxes would be sufficient
to produce the revenue wanted. The facility
of borrowing delivers them from the embarrassment
which this fear and inability would
otherwise occasion. By means of borrowing,
they are enabled, with a very moderate increase
of taxes, to raise, from year to year,
money sufficient for carrying on the war;
and by the practice of perpetual funding, they
are enabled, with the smallest possible increase
of taxes, to raise annually the largest possible
sum of money. In great empires, the people
who live in the capital, and in the provinces
remote from the scene of action, feel, many
of them, scarce any inconveniency from the
war, but enjoy, at their ease, the amusement
of reading in the newspapers the exploits of
their own fleets and armies. To them this
amusement compensates the small difference
between the taxes which they pay on account
of the war, and those which they had been
accustomed to pay in time of peace. They
are commonly dissatisfied with the return of
peace, which puts an end to their amusement,
and to a thousand visionary hopes of
conquest and national glory, from a longer
continuance of the war.
The return of peace, indeed, seldom relieves
them from the greater part of the taxes imposed
during the war. These are mortgaged
for the interest of the debt contracted, in order
to carry it on. If, over and above paying
the interest of this debt, and defraying the
ordinary expense of government, the old revenue,
together with the new taxes, produce
some surplus revenue, it may, perhaps, be
converted into a sinking fund for paying off
the debt. But, in the first place, this sinking
fund, even supposing it should be applied to
no other purpose, is generally altogether inadequate
for paying, in the course of any period
during which it can reasonably be expected
that peace should continue, the whole
debt contracted during the war; and, in the
second place, this fund is almost always applied
to other purposes.
The new taxes were imposed for the sole
purpose of paying the interest of the money
borrowed upon them. If they produce more,
it is generally something which was neither
intended nor expected, and is, therefore, seldom
very considerable. Sinking funds have
generally arisen, not so much from any surplus
of the taxes which was over and above
what was necessary for paying the interest or
annuity originally charged upon them, as
from a subsequent reduction of that interest;
that of Holland in 1655, and that of the ecclesiastical
state in 1685, were both formed in
this manner. Hence the usual insufficiency
of such funds.
During the most profound peace, various
events occur, which require an extraordinary
expense; and government finds it always more
convenient to defray this expense by misapplying
the sinking fund, than by imposing a
new tax. Every new tax is immediately felt
more or less by the people. It occasions always
some murmur, and meets with some