gains one man by each of those machines, who may be employed as a soldier or sailor, or a military manufacturer, without any diminution of reproduction, and whose wages in his new and unproductive occupation are provided by the economy of expence in threshing corn; for in this view of the question, each private saving of expence is a national saving. Apply the same reasoning to the numberless similar improvements of modern times in this country, and it will be easily seen why we have not only more men to spare, but more means to pay them without becoming poorer.

A further analysis of this most interesting question would lead us to remoter causes than the mere progress of mechanical inventions; to those causes on which the latter mainly depend for their introduction and improvement. They are, in fact, the creatures of high civilization in the true meaning of that word; of a state of society in which mental energies are excited, and industry is animated by a certainty that their movements will be unfettered by bad government, and in no danger of foreign or domestic spoliation.

Yet, although the means of supporting without impoverishment the immense public expences of modern times in this country may be very distinctly traced to increasing national prosperity, resulting from the intellectual, moral, and political improvements which denote high civilization, it may not be the less interesting to know by what mechanism of finance we have been able to raise our public debt to its present vast amount.

In every state of improved society it is much more profitable to the mass of the population that a part should be appointed to protect the whole, than that all should be called upon to quit, when wanted, the occupations where use and art have made their labour additionally productive, and contribute personally a part of their time to an object, whether civil or military, for which by education and habit they have not been adapted. Generally speaking, if these services are paid for by those whose time and capital is devoted to productive employments out of their revenue, a much larger proportion of it will remain for their own use than if their personal service were required. The time saved will produce far more than the cost of the commutation in

money.

If no moral and political circumstances interrupted the nearly equable progress of social life, all the cost of civil and military protection might be paid by regular and equable contemporary contributions from the revenue obtained by the profit of capital, and of labour productively employed. But since, from various causes, the expences of every government will be extremely

unequal according to political circumstances, the grand question seems to be, by what mechanism of finance may the natural inconveniences of this irregularity be so obviated as to produce the least possible mischief? By what means during periods of great national expence may a government avail itself of the national surplus of population and produce, without materially impeding the progress of private industry?

The more ancient way of attempting to do this was by hoarding in money the surplus of a revenue which exceeded the ordinary expences; or sometimes, by exacting contemporary contributions equal to the addition to them.

The system of hoarding in peace a treasure to be spent during war, promises well on a cursory view of it, but is of all that can be adopted the most injurious to national prosperity. It diminishes the circulating medium when most wanted to employ, during peace, a supernumerary population; at that time it increases the value of the remaining money, and consequently deadens industry by depressing prices, which are suddenly increased again by its dispersion during subsequent war.

saved when dear, and spent, when cheap. Hoarding money in a national treasury during peace, diminishes the stimulus to industry when labour is most plentiful, to increase it when labour for productive purposes is most scarce.

But the system of raising money during war by taxes equal to the additional expence, if adopted when that expence is great, is little less mischievous, though its bad consequences are totally different.

In the former case, money in circulation for productive uses is made more plentiful by war; the farmer, the manufacturer, all who have labour to sell, or its produce, obtain higher prices, and imagine themselves individually richer, if the treasure is not exported, and no evils of war are felt beyond the place of actual hostilities, and even there a lavish expence is often some compensation for its local injuries.

But a war altogether supported by taxes equal to its cost, will almost always become grievous and unpopular too soon to be carried on to a successful conclusion. The private revenues being materially diminished, the purchase of things not immediately necessary likewise diminishes, and this soon affects the general industry.

These defects of both the other systems would be, in some degree, removed, so far as it can be contrived that the expences of war shall be provided for partly out of hoarded treasure, and partly by temporary taxes; for could this be done in well adjusted proportions, their respective effects would, to some ex

tent, counteract each other, and less change would happen from the former state of civil economy.

But where money cannot be hoarded as a national treasure, no counterpoise can be made by its dispersion to the sudden effects of heavy and temporary taxation; which, therefore, will soon have all the consequences that indicate, though it may be erro-> neously, the decline of national prosperity, and lead to general distrust and despondence.

War can never, perhaps, altogether cease to be a political as well as moral evil, but its bad consequences, as resulting from its cost, are greatly diminished by the modern funding system as conducted in this country. By this system, so far as it is made to extend, no sudden change of any great importance is made in the sums taken from private incomes for the public use, the contemporary payment amounting on a medium to only about five per cent., that is, about the usual rate of interest for the money expended. Instead of calling on the people to pay at once the whole additional expence, the government obtains the money wanted by selling annuities, either temporary or perpetual, to those who will give most for them; and it contracts for the whole community a moral and political obligation to provide the means of regularly and punctually paying the aunuities which it has sold. The transaction more nearly resembles that of raising money by sale of annuities and rent charges in private life than the contracting of demandable debts; differing in nothing from the former as to temporary annuities, and with respect to the perpetual annuities, only differing from an absolute sale of rent charges, by retaining a right to repur chase them at a stipulated price, which price differs from that obtained by their sale, according to the conditions made at the time of the contract.

It is commonly objected to this system, that by raising money in this manner instead of providing it by adequate contemporary taxes, we exonerate ourselves to burden posterity.

In a national view, and as concerns the future resources of the government, many inconveniences may obviously arise from too great an extension of this system, but we apprehend that the popular objection to it which we have just now stated is altogether erroneous.

If any one, instead of being called upon to pay 1007. as his share of the extraordinary expenditure, is only called upon to pay about the usual interest of that sum, the difference as respecting his posterity amounts to this-that if his property is of such a sort that 1007. cannot give 51. a year of revenue, he and his posterity lose the annual difference; but this may almost always be avoided by a change of such property for other of a more pro

fitable kind. If his property is so employed as to give him more than five per cent. profit, he, and through him, his posterity gain the whole of the difference. In any case, if he retains 1007. capital, he has so much more to leave behind him. But if, according to the present system, he is also annually charged by increase of taxes with a sum to redeem his assumed proportion of the annuity created, the only difference is, that the term during which he pays interest instead of its principal money, becomes limited in proportion to the efficacy of the addition.

The next important question which arises respecting our funding system is, by what possible means do private persons provide the vast sums which they annually advance for the use of government; is there really a corresponding increase of national wealth, or does the artifice of the system only increase its pecuniary denomination? Many vague and strange opinions are confusedly held on this subject, which are not worth confuting or repeating: but there is one opinion of no small importance, and which has obtained general credit on the continent, where it has prompted the peculiar system of hostilities which of late years has been intended to ruin us by cutting off the supposed sources of almost all our wealth. The measures which, in consequence of this opinion, have been so steadily and actively adopted, have certainly caused inconvenience and loss to particular classes in this country, but they have not had, and indeed could not have, any great effect on the resources of government; and as a question of ultimate consequences, it is by no means improbable that, in the end, they will be found to have promoted the general good by contributing to restore a more convenient distribution of national industry.

In truth, the ability to advance such great sums for the use of the public and on the credit of the funding system, depends most materially on an actual concurrent increase of the real wealth of the country, and without such an increase would be difficult, if not impossible. But the rapid progress of Britain in that respect, though, without doubt, assisted by foreign trade, has arisen much more from the great increase of population and of domestic im→ provements, than from any causes over which foreign power can exercise a control.

Since the peace of Utrecht the funded debt of Britain, valued according to the present market prices, has increased about two hundred and eighty millions, while the national capital, estimated in the same manner, cannot have increased less than fifteen hundred millions, or considerably more than six times as much as the value in money of which the interest is paid by a corresponding increase of taxes.

If a large part of this debt has been contracted within a few

years, it is equally apparent that, at least, as large a proportion of productive capital has been created within the same period. The real means of paying the additional interest are the clear annual value of the produce of this capital; the ability to pay therefore has apparently kept pace with the demand, through the medium of taxes.

We have used the popular language of debt and interest, but the real nature of the funding system is, perhaps, more easily explained by considering the transactions as more correctly a sale of annuities by the nation, and purchase of them by individuals through the intervening agency of the government. So far as those individuals are inhabitants of this country, it only causes a transfer of revenue from one class of proprietors to another; but this tranfer being in some degree from the active to the inactive part of the nation, is supposed by some to be of importance in diminishing the means of employing it with due profit.

It might be so if the intrinsic capital, and not a portion of the profit obtained by that capital, were transferred to persons unable or unwilling to use it. If a soldier grown gray in camps, and worn out by hardships, were to have a grant for his future subsistence of a field cut off from a well managed farm, and hereafter to be made productive, if at all so, by his own exertions, the diminution of its crops would soon be apparent; but if he should be paid by a contribution out of the produce of that farm managed as before, the increase or decrease of that produce in consequence of that payment, would chiefly depend on the following circumstances: If, before his pension was charged on it, the occupier could make no annual saving or gain beyond his total expences, his means of obtaining produce must now diminish, and he must eventually be reduced to poverty. If he previously gained on an average just so much as he is now compelled to pay as a pension; it is true that he will not become poorer, but he cannot become richer, nor can he make his farm increase its own produce by employing on it savings which no longer exist. But if the pension thus charged on him is less than the annual gain or accumulation of real capital, all the difference remains to him, and may be employed in augmenting its future produce, and therefore his future gain.

Apply this to the national funding system. By that system there is no transfer of real capital, or capital in kind, but only of saleable annuities secured by its produce: no field is cut off from the farm, but instead of it is transferred a portion of the annual profits.

If the public necessities exact more revenue by taxes than the aggregate amount of the contemporary national gaiu, there must

VOL. V. NO. IX.

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