together depend on the general state of the country where they are levied.

The burden of all indirect taxes will fall either on the merchant and tradesman, or on the consumer, precisely according to the increasing or diminishing means of the latter to make his usual purchases. If his means diminish, he must buy less or give a lower price; and in either case the effect of taxes on his commodities will be to diminish the profits of the trader; and the value of money, as a medium of commerce, will be in creased in equal proportion.

We have no doubt that in an ultimate analysis it will be found that a national debt, and the taxes which must be levied to pay its interest, are rather instrumental than primary causes of changes in the value of money, and in the proportion of private incomes to the demands on them for national purposes.

If during many years past the private revenues of the British nation have increased in money value with a rapidity at least commensurate with the increase of the national debt, the primary cause of this has, without doubt, been an actual increase of national prosperity and of intrinsic wealth. Destroy or weaken that beautiful moral and political mechanism of society, which at present stimulates because it protects the general activity of the people, and the effect will be, that the national debt will become as actively instrumental in increasing the disastrous consequences of the change, as it may have been in contributing (as many imagine, and not altogether without reason) to provide for the payment of its own interest by increasing the nominal amount of the private revenue out of which it is paid.

But if it could be proved that an increase of national debt is a primary cause of an equivalent increase of the money value of private incomes, considered as one mass, yet this can only happen by a double depreciation of the intrinsic value of incomes incapable of such improvement, which at the same time become less in proportion to the total amount, and less competent to make the same purchases, and to enable their owners to maintain their former rank in society.

So far as

We are, indeed, persuaded that the great change in this respect, so far as that change was not caused by the temporary delusion of an erroneous hypothesis, has been much more owing to the obvious consequences of a rapid increase of intrinsic wealth than to the concurrent increase of the national debt. the depreciation of incomes limited in money value may have resulted from the former of these causes, it is with respect to those who cannot take a profitable share in national industry a misfortune without remedy; but so far as it affects those who may be

profitably active if they please, its effect on many must be as a powerful stimulus to exert powers which otherwise would have been dormant; and where they exist and are not made active there is no ground for commiseration. So far, however, as the diminution of the intrinsic value of unimprovable incomes may be caused by an increase of the national debt, it becomes a question of public justice, which can only be superseded by public necessity, to limit that increase by any means which can conveniently be adopted.

It is also important to observe, that although while the moral and political foundations of our national prosperity remain unshaken, the means of increasing the capital of the national debt, as afforded by the intrinsic increase of national wealth, may be ample; yet the means of paying the interest of such an addition to the debt are limited by different circumstances of various kinds, which practically limit the extent of taxation.

In every view, therefore, of the question, and however great the political and private convenience of a national debt guaranteed, as ours is, by national faith, may be, if limited within the extent in which it is really convenient, yet it is not less evident that great private misery and public danger may follow, if it should at any time be increased to a magnitude beyond the means of supporting its credit and paying its interest without having recourse to oppressive or unpopular measures.

One method of preventing or retarding that increase was adopted in the beginning of the present war, with a degree of courage and skill which has hardly been praised so much as it deserves. The taxes then imposed were, as we have already observed, provided for the single purpose of furnishing, as far as might be, the expence of the war, without having recourse to an increase of the national debt. The principle then first adopted was to preserve their full efficacy during the whole war by keeping them as much as possible distinct from the funding system. It was, therefore, an essential part of the plan that all expence incurred beyond the augmented revenue, when provided for by an increase of the funded debts, should be borrowed on the security and credit of additional revenue, either reverting to the nation as from expiring annuities, or created for the special purpose by adequate taxation; and that on no account the efficacy of a war-tax system should be diminished by perverting a part of its revenue to pay the interest of debt.

The system then adopted was rather calculated to provide a very great increase of temporary than of permanent revenue, and its quiet success depended very much on taking a judicious advantage of temporary circumstances. It was intended to impose

direct and indirect taxes in nearly equal proportions. A probable effect of direct taxes is to increase the value of money; a supposed, and perhaps while a nation is increasing in intrinsic wealth, a real effect of indirect taxes is to diminish the value of money. The compound effect of both united must, without doubt, be to cause a less violent change in the comparative proportions of private incomes than the same amount of revenue would do if imposed on one only of these bases. Direct taxes are, for obvious reasons, paid in much larger proportions by the higher, and taxes on consumption by the lower classes, and an equal combination of the two produced a more equable repartition than could possibly by any other means be effected. We hardly need remark that, for very evident reasons, magnitude of receipt and absence of complaint depend exceedingly on equability of repartition.

On the same principle a basis was adopted for the indirect taxes, which by including all persons from its universal use, should give to none a cause to complain of peculiar favour to those whom a less comprehensive system might have exempted, and would also be in proportion more productive than any tax affecting a part only of the nation.

The effect of the adoption of this system, and of its subsequent extension, has been to save borrowing more than 150 millions of money, which must probably have added more than 250 millions to the capital of the funded debt, and would have required that more than 10 millions of revenue should be raised by permanent taxes for interest and sinking fund on account of it.

But however much a contemporary provision of revenue to defray extraordinary expences may be preferable to an incautious extension of national debt, the amount of revenue which may be raised in this manner without mischief is limited in various respects.

War taxes affect the immediate comforts of those who have unimprovable incomes in a degree which makes it neither prudent nor just to impose them in an immoderate extent, especially on temporary revenue. Though the value of self-preservation and of present income ought to be more highly rated than reversionary property, yet if war taxes are imposed in too great a proportion to the whole expence incurred, the effect may be to charge too much of the burthen on those who derive from it no distant advantage. Comparing the charge of a war tax with that of our present funding system, as requiring a provision both for interest and redemption, the immediate diminution of private incomes by the latter is only about a seventeenth part of that

which is caused by the former; continuing, indeed, during about 40 years, whereas the other is only a single payment.

But when viewed as affecting commercial, manufacturing, and agricultural capital, it will be seen that war-taxes cannot, without incalculable mischief, be imposed to an extent which exceeds more than a part of the annual surplus produce of that capital beyond the usual expences of all kinds of its possessor. If they amount to more than the surplus profit they must probably be substracted from the capital, and consequently diminish the sources of future profit. Even if they take no more than the whole of the surplus profit, yet in that case they damp the ardour of enterprise, and contribute to national impoverishment. Without doubt nothing less than an unexampled increase of intrinsic national wealth could support such a war-tax system as we have adopted, and therefore this resource alone must not be relied on as likely to be adequate on future occasions to prevent any necessity of having recourse to a well-regulated funding system. But yet one great point has been gained, for a most important experiment in political economy has been fairly tried: the nation has without difficulty, and for many years, paid an immense amount of war-taxes; without reluctance, because the ne cessity has been apparent, and without impoverishment, because domestic industry has been protected. There cannot now re main a doubt but that when a similar exertion may be obviously necessary, a portion at least of extraordinary expence may in the same manner be provided for, although, as a question of expedience and of justice, a part of that expence may be better pro vided for by an established fund for borrowing and redeeming.

The sound and simple principle of such a fund is, that the regular and permanent public revenue should so much exceed any ordinary expences, that the accumulations of the surplus during peace should be, on an average of times, commensurate with the increase of expence during war. It is essential to such a system that the surplus and its profits should be well pro tected against misapplication by strict regulations; and any such system conducted on the plan of hoarding the surplus we have already shewn to be mischievous. It is indeed of the utmost importance that it never should be substracted in any manner from the active part of the national capital. Where there does not already exist a redeemable national debt, the profitable or productive employment of surplus national revenue may be difficult, hazardous, and expensive, though any thing is less mischievous than hoarding it. But where there does already exist a redeemable national debt, the employment of surplus revenue is cheap, safe, and with certainty productive,

The extent, however, to which the redemption of a public debt such as ours now is may be carried, and the rapidity with which it may safely be conducted, are both of them, but especially the latter, questions of primary importance. We believe it is now generally acknowledged that the progress of redemption, should be equable, and that a constant increase of it for the sake of arriving at last to an annus mirabilis, a sudden cessation of taxes to a prodigious amount, would be so far from being an unqualified advantage to the public, that it would be attended with most serious inconvenience. We believe also that the greater advantage of a successive redemption of debts, such as was the object of Mr. Pitt's plan in 1792, and such as existed, or was intended to exist in the original funding system, is well understood. The effect of such a system would be, that, instead of being under the necessity of providing, perhaps with extreme difficulty, new taxes for new debts, until an immense sum of former taxes shall suddenly be set free, successive portions of redeemed revenue, should become successively ready, as funds for such new loans as the public exigencies may require.

One important circumstance, however, as to the progress of the redemption of national debt, is, we believe, very little understood; which is, the mischief, the difficulty, perhaps the impossibility, of redeeming national debt beyond a limited annual extent.

It is not difficult to comprehend that the national debt can be redeemed by purchasing stock from its proprietors according to the present practice, so long only as, generally speaking, the means are open to them of making, or expecting to make, greater present or future profit by the price which they receive for it, When those means are no longer to be found, the redemption, if continued, can only be carried on by a compulsory repayment. Now that profit must greatly depend on the proportion of the sum so received to new means which may arise for employing it, If no new means arise, the competition to convert what has been metaphorically called dry and barren capital, if over abundant, into productive capital, will soon become excessive. That competition necessarily operates on the price of every thing saleable, which re-acts on the price of the stocks, and would make it im possible to employ a large sinking fund in purchasing much sooner than may be imagined, because a sufficient quantity will no longer be voluntarily sold, in which case, recourse must be had to forced repayments.

In the first case, therefore, the operation of a sinking fund is limited in profit and in extent by the means of employing the money which is paid for its purchases, with greater, or at least equal, present or future profit.