thence how long it is to last; the question is, how long can the funding system last? It is a thing but of modern invention, and has not yet continued beyond the life of a man; yet in that short space it has so far accumulated, that, together with the current expenses, it requires an amount of taxes at least equal to the whole landed rental of the nation in acres to defray the annual expenditure. That a government could not have always gone on by the same system which has been followed for the last seventy years, must be evident to every man; and for the same reason it cannot always go on.
The funding system is not money; neither is it, properly speaking, credit. It, in effect, creates upon paper the sum which it appears to borrow, and lays on a tax to keep the imaginary capital alive by the payment of interest and sends the annuity to market, to be sold for paper already in circulation. If any credit is given, it is to the disposition of the people to pay the tax, and not to the government, which lays it on. When this disposition expires, what is supposed to be the credit of Government expires with it. The instance of France under the former Government shows that it is impossible to compel the payment of taxes by force, when a whole nation is determined to take its stand upon that ground.
Mr. Burke, in his review of the finances of France, states the quantity of gold and silver in France, at about eighty-eight millions sterling. In doing this, he has, I presume, divided by the difference of exchange, instead of the standard of twenty-four livres to a pound sterling; for M. Neckar's statement, from which Mr. Burke's is taken, is two thousand two hundred millions of livres, which is upwards of ninety-one millions and a half sterling.
M. Neckar in France, and Mr. George Chalmers at the Office of Trade and Plantation in England, of which Lord Hawkesbury is president, published nearly about the same time (1786) an account of the quantity of money in each nation, from the returns of the Mint of each nation. Mr. Chalmers, from the returns of the English Mint at the Tower of London, states the quantity of money in England, including Scotland and Ireland, to be twenty millions sterling.12
M. Neckar13 says that the amount of money in France, recoined from the old coin which was called in, was two thousand five hundred millions of livres (upwards of one hundred and four millions sterling); and, after deducting for waste, and what may be in the West Indies and other possible circumstances, states the circulation quantity at home to be ninety-one millions and a half sterling; but, taking it as Mr. Burke has put it, it is sixty-eight millions more than the national quantity in England.
That the quantity of money in France cannot be under this sum, may at once be seen from the state of the French Revenue, without referring to the records of the French Mint for proofs. The revenue of France, prior to the Revolution, was nearly twenty-four millions sterling; and as paper had then no existence in France the whole revenue was collected upon gold and silver; and it would have been impossible to have collected such a quantity of revenue upon a less national quantity than M. Neckar has stated. Before the establishment of paper in England, the revenue was about a fourth part of the national amount of gold and silver, as may be known by referring to the revenue prior to King William, and the quantity of money stated to be in the nation at that time, which was nearly as much as it is now.
It can be of no real service to a nation, to impose upon itself, or to permit itself to be imposed upon; but the prejudices of some, and the imposition of others, have always represented France as a nation possessing but little money- whereas the quantity is not only more than four times what the quantity is in England, but is considerably greater on a proportion of numbers. To account for this deficiency on the part of England, some reference should be had to the English system of funding. It operates to multiply paper, and to substitute it in the room of money, in various shapes; and the more paper is multiplied, the more opportunities are offered to export the specie; and it admits of a possibility (by extending it to small notes) of increasing paper till there is no money left.
I know this is not a pleasant subject to English readers; but the matters I am going to mention, are so important in themselves, as to require the attention of men interested in money transactions of a public nature. There is a circumstance stated by M. Neckar, in his treatise on the administration of the finances, which has never been attended to in England, but which forms the only basis whereon to estimate the quantity of money (gold and silver) which ought to be in every nation in Europe, to preserve a relative proportion with other nations.
Lisbon and Cadiz are the two ports into which (money) gold and silver from South America are imported, and which afterwards divide and spread themselves over Europe by means of commerce, and increase the quantity of money in all parts of Europe. If, therefore, the amount of the annual importation into Europe can be known, and the relative proportion of the foreign commerce of the several nations by which it can be distributed can be ascertained, they give a rule sufficiently true, to ascertain the quantity of money which ought to be found in any nation, at any given time.
M. Neckar shows from the registers of Lisbon and Cadiz, that the importation of gold and silver into Europe, is five millions sterling annually. He has not taken it on a single year, but on an average of fifteen succeeding years, from 1763 to 1777, both inclusive; in which time, the amount was one thousand eight hundred million livres, which is seventy-five millions sterling.14
From the commencement of the Hanover succession in 1714 to the time Mr. Chalmers published, is seventy-two years; and the quantity imported into Europe, in that time, would be three hundred and sixty millions sterling.
If the foreign commerce of Great Britain be stated at a sixth part of what the whole foreign commerce of Europe amounts to (which is probably an inferior estimation to what the gentlemen at the Exchange would allow) the proportion which Britain should draw by commerce of this sum, to keep herself on a proportion with the rest of Europe, would be also a sixth part which is sixty millions sterling; and if the same allowance for waste and accident be made for England which M. Neckar makes for France, the quantity remaining after these deductions would be fifty-two millions; and this sum ought to have been in the nation (at the time Mr. Chalmers published), in addition to the sum which was in the nation at the commencement of the Hanover succession, and to have made in the whole at least sixty-six millions sterling; instead of which there were but twenty millions, which is forty-six millions below its proportionate quantity.
As the quantity of gold and silver imported into Lisbon and Cadiz is more exactly ascertained than that of any commodity imported into England, and as the quantity of money coined at the Tower of London is still more positively known, the leading facts do not admit of controversy. Either, therefore, the commerce of England is unproductive of profit, or the gold and silver which it brings in leak continually away by unseen means at the average rate of about three-quarters of a million a year, which, in the course of seventy-two years, accounts for the deficiency; and its absence is supplied by paper.15
The Revolution of France is attended with many novel circumstances, not only in the political sphere, but in the circle of money transactions. Among others, it shows that a government may be in a state of insolvency and a nation rich. So far as the fact is confined to the late Government of France, it was insolvent; because the nation would no longer support its extravagance, and therefore it could no longer support itself, but with respect to the nation all the means existed. A government may be said to be insolvent every time it applies to the nation to discharge its arrears. The insolvency of the late Government of France and the present of England differed in no other respect than as the dispositions of the people differ. The people of France refused their aid to the old Government; and the people of England submit to taxation without inquiry. What is called the Crown in England has been insolvent several times; the last of which, publicly known, was in May, 1777, when it applied to the nation to discharge upwards of £600,000 private debts, which otherwise it could not pay.
It
