what they pay in those taxes, might, no doubt,
have been accumulated into capital, and consequently
employed in maintaining productive
labour; but the greater part would probably
have been spent, and consequently employed
in maintaining unproductive labour.
The public expense, however, when defrayed
in this manner, no doubt hinders, more or less,
the further accumulation of new capital; but
it does not necessarily occasion the destruction
of any actually-existing capital.
When the public expense is defrayed by
funding, it is defrayed by the annual destruction
of some capital which had before existed
in the country; by the perversion of some
portion of the annual produce which had before
been destined for the maintenance of productive
labour, towards that of unproductive
labour. As in this case, however, the taxes
are lighter than they would have been, had a
revenue sufficient for defraying the same expense
been raised within the year; the private
revenue of individuals is necessarily less burdened,
and consequently their ability to save
and accumulate some part of that revenue into
capital, is a good deal less impaired. If the
method of funding destroys more old capital,
it, at the same time, hinders less the accumulation
or acquisition of new capital, than that
of defraying the public expense by a revenue
raised within the year. Under the system of
funding, the frugality and industry of private
people can more easily repair the breaches
which the waste and extravagance of government
may occasionally make in the general
capital of the society.
It is only during the continuance of war,
however, that the system of funding has this
advantage over the other system. Were the
expense of war to be defrayed always by a revenue
raised within the year, the taxes from
which that extraordinary revenue was drawn
would last no longer than the war. The ability
of private people to accumulate, though
less during the war, would have been greater
during the peace, than under the system of
funding. War would not necessarily have
occasioned the destruction of any old capitals,
and peace would have occasioned the accumulation
of many more new. Wars would,
in general, be more speedily concluded, and
less wantonly undertaken. The people feeling,
during continuance of war, the complete
burden of it, would soon grow weary of it;
and government, in order to humour them,
would not be under the necessity of carrying
it on longer than it was necessary to do so.
The foresight of the heavy and unavoidable
burdens of war would hinder the people from
wantonly calling for it when there was no
real or solid interest to fight for. The seasons
during which the ability of private people
to accumulate was somewhat impaired,
would occur more rarely, and be of shorter
continuance. Those, on the contrary, during
which that ability was in the highest vigour,
would be of much longer duration than they
can well be under the system of funding.
When funding, besides, has made a certain
progress, the multiplication of taxes which it
brings along with it, sometimes impairs as
much the ability of private people to accumulate,
even in time of peace, as the other system
would in time of war. The peace revenue
of Great Britain amounts at present to
more than ten millions a year. If free and
unmortgaged, it might be sufficient, with proper
management, and without contracting a
shilling of new debt, to carry on the most vigorous
war. The private revenue of the inhabitants
of Great Britain is at present as
much incumbered in time of peace, their ability
to accumulate is as much impaired, as it
would have been in the time of the most expensive
war, had the pernicious system of
funding never been adopted.
In the payment of the interest of the public
debt, it has been said, it is the right hand
which pays the left. The money does not go
out of the country. It is only a part of the
revenue of one set of the inhabitants which is
transferred to another; and the nation is not
a farthing the poorer. This apology is founded
altogether in the sophistry of the mercantile
system; and, after the long examinatior,
which I have already bestowed upon that system,
it may, perhaps, be unnecessary to say
any thing further about it. It supposes, besides,
that the whole public debt is owing to
the inhabitants of the country, which happens
not to be true; the Dutch, as well as several
other foreign nations, having a very considerable
share in our public funds. But though
the whole debt were owing to the inhabitants
of the country, it would not, upon that account,
be less pernicious.
Land and capital stock are the two original
sources of all revenue, both private and public.
Capital stock pays the wages of productive
labour, whether employed in agriculture,
manufactures, or commerce. The management
of those two original sources of revenue
belongs to two different sets of people; the
proprietors of land, and the owners or employers
of capital stock.
The proprietor of land is interested, for the
sake of his own revenue, to keep his estate in
as good condition as he can, by building and
repairing his tenants houses, by making and
maintaining the necessary drains and inclosures,
and all those other expensive improvements
which it properly belongs to the landlord
to make and maintain. But, by different
land taxes, the revenue of the landlord may
be so much diminished, and, by different duties
upon the necessaries and conveniencies of
life, that diminished revenue maybe rendered
of so little real value, that he may find himself
altogether unable to make or maintain
those expensive improvements. When the