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tity of the means of defence or annoyance, as its tion, and, more especially, of that part which force depends on the energy and skill with lives in towns, or is elsewhere employed otherwhich those means are employed; it follows wise than in reproducing the annual consumpa that, in proportion as the labor of production is tion of food, has been a very material cause of facilitated, the politically disposable numbers the progressive increase of its price, and, by a will be greater when compared with the whole chain of consequences, of the general cost of lapopulation. This solves the problem, how a bor, and of what is commonly called the depresmall nation without any diminution of its in- ciation of the value of money. We understand, trinsic wealth may be able to maintain equal hy the latter expression, the diminution of its armies with one far more numerous. If, for in- power as an instrument in estimating, exchangstance, in one pation two-thirds are usually want- ing, and transferring other things of real or imaed to reproduce food and other primary objects ginary worth, without any direct reference to the of consumption, and in another half only are commercial value of the material employed in its wanted for these purposes, then, all other circum- fabrication. stances being alike, this difference of one-sixth of We believe it will be found historically true the whole number may be added to the power of that, independent of the quantity of circulating its government. Also if, by means of improved metallic money, or of debts performing its funcmachinery in manufactures, two men can pro- tions, and also independeni of the immediate duce as much as three before, the third, if not effects of powerful causes, such as sudden employed to increase the former quantity, may be abundance or scarcity, there exists a fluctuation added to the power of the government.
of money prices, which is usually most visible An application of these observations to the with respect to things of most general and necesmodern state of the British empire will clearly sary consumption; and which very materially show, why it was for so long a time able to spare depends on the advance or decline of population such an immense proportion of its population and, more generally, on the state of national for military purposes, not only without being im- prosperity. If, as seems probable, the average poverished in point of intrinsic wealth by the supply of the necessaries and comforts of life, loss of their profitable labor, but with a still re- during any period of sufficient length to decide maining surplus of hands to employ very actively the question, will be very nearly in an exact in augmenting its present, and still more its pro- proportion to the consumpiion, where the popugressive, increase.
lation is stationary as to numbers, and the habits If also the private revenue of the nation has, of life are little varied by moral or political from these and other causes, increased in more changes: it is also a probable inference, that a than a duplicate proportion, it so far follows that constantly increasing population will anticipate the part of it which may be spared for the use of the increase of produce for its own use, and the the government will have equally increased in case will be inverted when, from any cause, its intrinsic value ; and, if the money value of that numbers are diminishing. We believe that the revenue is tripled, its nominal amount, as esti- supply much more usually adjusts itself to the demated in money, will be more than six times as mand than the demand to the supply. We do not great: that is, the population being now more mean to say that this is always the case, because than twice as great as in 1714, the intrinsic novelty will tempt purchasers, and unusual wealth and revenue being still more increased, abundance will, to a limited extent, increase conand the money price of that wealth being tripled sumption ; but, where the regular effect of in(if tripled ?), it conclusively follows, that, 'one creasing or diminishing numbers is not controllwith another, private incomes would not now be ed by other causes, we think it evident that the so much diminished in real value by paying course will be such as we have stated. Where £30,000,000 a year for the expenses of govern- there was previously an exported superabundment (exclusive of the interest of public debt) ance, the earlier effects of an increasing demand as by paying £5,000,000 a year only at the for- may, for some time, be hardly visible; or may mer time. It will hereafter be shown that money even be counteracted, as to any particular compaid by the subject for interest of public debt, modity, by any circumstance which may act as only falls within the case of actual national ex. a stimulus for producing it beyond the progrespense, so far as that debt belongs to foreigners sive consumption. This happened during the or others to whom its interest is transmitted. first half of the last century.
With respect to the degree in which the mo- For several years, till after the bankruptcy of ney prices have increased since 1714 the general the South Sea Company, there was an extreme opinion, that on a medium they are three times as activity of circulation, and decreasing interest of creat as formerly, is probably very near the truth. debts, indicating that sort of plenty of money, or, Various causes have been assigned for this in- more properly, facility of obtaining credit, which crease, of which the greater part have, undoube- is commonly deemed a chief cause of increasing edly, more or less contributed to it; and, as the prices; yet they regularly declined, and contieffects of any one of them have been more than nued to do so for nearly forty years. But, durof others laboriously traced by persons withing that period, the trade and manufactures of powers of observation naturally or artificially the country were by no means remarkably proscontracted, to that cause which they happen perous, a sure proof that they were not remarkamore clearly to apprehend they usually attribute bly profitable. The increase of population was the combined effect of many causes co-operating. not inconsiderable, though far less than it has We hope not to fall into the same error when we since been; but the profit of manufactures did slate that the progressive increase of the popula- not as yet entice it by high wages from agricul
tural employments. With the sudden and great duction which have, within a few years, bees change in that respect, which took place in con- greatly improved, and many of them almost it sequence of the political ascendency that we cently invented. acquired during the latter part of the seven years' In these a very large addition to the nation war, may be visibly connected a very rapid capital is now invested, of which, like all other change from superabundance of agricultural pro- capital, the revenue depends altogether on the duce to an actual deficiency. A public debt, productive use; and, on this account, the prowhich had increased fifty-fold between the revo- prietors of this species of capital must contoz lution and the peace of Utrecht, had no visible to employ their workmen, or cease to derive as effect on the value of money. A long peace, profit from it. So far as extends to internal conwith very remarkable alternations of private cre- sumption only, the demand for the produce di dit, between extrenje activity and a general stag- manufacturing industry can never be so eres nation of pecuniary transactions, had no remark- sive, but that, as long as room remains for in able effect on money prices of necessaries. The crease or improvement of cultivation, a suficiee succeeding war, from 1740 to 1748, disastrous to number of hands will remain to cultivate fi our commerce, impeding our manufactures, and adequate profit, and to an extent proportioned materially increasing our national debt, did not to the consumption. Nor could the diminutes visibly alter the value of money.
of the value of money, which results from a The causes of its diminished value, perhaps, inadequate domestic supply of those things to began to operate several years before their ef- which money is chiefly wanted, continue for a fects were distinctly visible, but it was not till long space, were it not for such a profitable some time after the successful termination of the portation of manufactures as entices too large! seven years' war that the change became remark- proportion of labor from its more useful emplo able. During the American war the money ment in reproducing food. prices of most things of extensive use considera- So long as only a surplus of labor beyon: bly diminished; during the late war they still what is wanted for domestic use is thus enmore remarkably increased. We by no means ployed, the very irregular demands of forens infer that these circumstances may not have im- markets, however inconvenient, will probabiy portant and regular effects on the value of mo- not materially affect the average value of modes ney, but only that other powerful causes may but the case is materially different when a coshave produced these seeming anomalies; and stant deficiency of the necessaries of life, creating
, also that the great decrease in the value of as before stated, of itself alone a constantly in money has been, to a considerable extent, occa- creasing money price for them, can only be susioned by the concurrent increase of real wealth, plied by a precarious exchange for things of rep and of the population employed in producing it. inferior use; of things subject to the caprice a Soon after the middle of the last century a great fashion, and the control of adverse policy
. change began in the proportion of agricultural Those who must buy cannot meet on equal produce and its home consumption.
terms in the market with those who are subjec
: In about twenty years, during which the po- to no such necessity; and hence arises an of pulation appears to
have increased about vious additional cause why the money prices of 1,000,000, a great surplus of corn, which had the food of a nation so situated must continue previously been exported, was changed to an to increase so long as it has luxuries only, or average deficiency, which soon became constant, things of which the purchase may be postponed and has since greatly increased. It is, therefore, to give to foreigners in exchange for it. We are evident that a great change was then beginning very far from intending to lessen the moral and between the comparative numbers of persons polítical value of commerce, and of indust? employed in producing corn, and of those by employed to furnish it with merchandise; but whom it was consumed. With that change be- we have wished to explain an important yan one very efficient cause of the general de- of the modern change of money prices, which preciation of money. A deficiency of supply, appears to us to have considerably resulted from which has never since overtaken the constantly an inconvenient disparity of profit between the increasing demand, has produced a progressive cultivation of necessaries and the manufacture increase of prices, requiring higher wages for of superfluities. We are not aware that this subsistence, giving greater profits to the farmer, cause of depreciation of money has been much leading him to give higher rents, and thus ad- considered, which must be our excuse if we apding to the money price of lands, and, like all pear to bestow on it a disproportionate degree other movements, acting with increasing effect of attention. We need not explain those causes in proportion to its unimpeded duration. The of it which are more generally, though we beadvance of money price, however great, cannot lieve imperfectly, known. restore the equilibrium, so long as it can be paid But if the population has doubled, if the real without difficulty by the great mass of con- wealth has increased in more than a sumers, which will continue while the profit of proportion, and if the money price of that real employing them in manufactures is great enough, wealth, on an average, is three times greater and the sale of those manufactures extensive than it was 100 years ago, it strictly follows
, that enough, to allow of paying adequately increas- £1,000,000 a year of public revenue at that time
, ing wages. And the period during which this bore as large a proportion to the means of patien excess of profit , or one of its consequences
, in- ing it as more than £6,000,000 now; proba ly duces the employer to give adequate wages, is £7,000,000. prolonged by the multiplied facilities of pro- About the middle of king William's reigt,
Gregory King valued the whole private revenue expenses never entirely ended, we have had very of England and Wales, including labor, at nearly the saine duration of war, and the in£43,500,000. Ilis authority is very great, crease of debt reduced to a five per cent. stock and we may rely on this calculation as a near at par, in order to make it more nearly correapproximation. The long wars which followed, spond with the debts of king William and queen and various other circumstances, had diminished Anne, which were even at a higher rate of inthe population about one-twenty-sixth, but there terest, and, including the unfunded bills, has was no remarkable change in money prices from been nearly as follows :the revolution to the peace of Utrechi.
The first war, including Imperial But, as ten to sixty-five, so is £43,500,000 to
The second war, including Irish From the returns made in 1811, it is clear
loan payable by Britain
117,927,890 that the population of England and Wales must now exceed 10,500,000; probably 10,700,000.
£313,527,890 The earnings of the laboring classes of this population at the present wages are very mode
Neither of the two latter sums is accurate, rately computed at £130,000,000 a year. but they are near enough to show that, when
The property income, as ascertained by the considered with due attention to the difference tax assessments for England and Wales, will be of national means, the debts incurred in the found this year to
amount to more than second period of warfare are by no means so £140,000,000.
heavy as in the first. With due allowance, therefore, for various We may apply these observations in comparprofits which escape assessment, the presenting the public debts contracted during the two annual revenue must certainly exceed 280,000,000, wars which preceded the peace of Utrecht, and and is probably little less than £300,000,000. which have been since the year 1792. The debt, And this remarkably agrees with the inference when that peace was made, is stated by professor from the increase of population and of money. Hamilton to have amounted to £55,282,978, of prices.
which all but about £1,054,925 had been conThe addition of Scotland must also be allowed tracted in about twenty-five years, that is, after for, which contributed very little during the for- the revolution. This statement, if correct, promer period; that is, in the reigns of king Wil- bably included the floating debt unprovided for, lian and queen Anne, until the peace of Utrecht. and afterwards paid out of the unappropriated The population of Scotland is about a sixth, revenue ; for it appears from an exchequer acthe extent about half, the cultivated extent about a count presented to parliament, and dated March sixth of the same in England and Wales; the wages 14th, 1716, that the principal money borrowed are lower ; but, all taken together, the revenue had been £47,268,883, of which £665,782 had of Scotland cannot be less than a tenth of that been paid, and £46,603,100 remained, at an of England, nor can both together be computed annual charge of £3,118,448. But this sum at less than between 310,000,000 and 330,000,000 being a charge on less than half the present po
pulation, and taken from less than half the pre
sent real private revenue, and computed in By another statement, which differs
of three times its present value, was, from that adopted by professor Hamilton, it therefore, in proportion to the means of paying appears that the debt contracted during the it, quite as much as a debt incurred during the reign of king William, by a war which lasted last twenty years would be, of more than almost nine years, was .. £15,730,439 £320,000,000" borrowed, with
than The debts contracted during the
£20,000,000 a year for its interest and cost of reign of queen Anne, by a war which lasted almost eleven years,
management. The annual charge, however, for
the increase of both funded and unfunded debt 37,750,661 from 1792 to August 1st, 1813, was only about
£16,500,000, being considerably less in propor
£53,481,100 tion to the real wealth of the country. Comparing these debts with the money and It cannot, however, he denied that our exermeans of the present times, by computing the tions have been much greater and more expenincrease of population as about twofold, the sive than in these proportions of interest for debt change of money prices about threefold, and the contracted. Our armies and navies have been addition of Scotland about a ninth, it will be much more than double, the equipments are infound that they were equivalent to the following trinsically more costly, and we cannot venture to sums in the present state of Great Britain :- say that the expenses have been managed with King William's debt multiplied by
greater economy. 6.45, and one-ninth added
The debt has not increased in equal propor
£112,385,247 Queen Anne's debt multiplied by
tion, because in two ways the exertions have
been 6:50, and one-ninth added 272,643,662
very great, by which its increase has been
retarded. By the war-taxes, and by the sinking The two united £385,028,909
fund. But, if the durable pressure has been
lessened by them, the question which naturally Since the beginning of 1793 to the 1st of follows is this: have the remporary burdens, and August in the present year, and deducting the the subtraction of such immense numbers from short interval of peace, during which the war productive employments, impoverished the na
tion, or altogether stopped its improvement? Had talare devoted to productive employments out of it been so, we should soon have seen the effect their revenue, a much larger proportion of it will in falling prices, in a suspension of public remain for their own use than if their personal works by subscription, and by many other un- service were required. The time saved will proequivocal proofs. The reasons why we are now duce far more than the cost of the commutation able to make such unexampled exertions have in money. If no moral and political circumnow, we think, been explained. In fact, nearly stances interrupted the nearly equable progress the whole resolves itself into increased facilities of social life, all the cost of civil and military of production, into a substitution of inanimate protection might be paid by regular and equafor animated power, and, in a less degree, the ble contemporary contributions from the revenue substitution of the labor of cattle and horses for obtained by the profit of capital, and of labor that of man.
productively employed. But since, from variNot to mention many well-known instances ous causes, the expenses of every government of inanimate movement, by fire or by water, of will be extremely unequal according to political complicated machinery, one example of a recent circuinstances, the grand question seems to be, improvement in rural economy may be produced by what mechanism of finance may the natural which will fully explain the effect of this system. inconveniences of this irregularity be so obviated On a tillage farm of 300 acres a threshing ma- as to produce the least possible mischief! By chine, if only moved by horses, on a very mode- what means, during periods of great national exrate estimate, saves as much human labor as that pense, may a government avail itself of the naof one man constantly employed, and far more tional surplus of population and produce, with. if moved by water. The produce is the same, out materially impeding the progress of private but the former saves so much expense in pro- industry? ducing, and the nation gains one man by each The more ancient way of attempting to do this of those machines, who niay be employed as a was by hoarding in money the surplus of a revenue soldier or sailor, or a military manufacturer, which exceeded the ordinary expenses; or somewithout any diminution of reproduction, and times by exacting contemporary contributions whose wages in his new and unproductive oc- equal to the addition of them. The former syscupation are provided by the economy of ex- tem promises well on a cursory view of it, but pense in threshing corn; for, in this view of the is, of all that can be adopted, the most injurious question, each private saving of expense is a to national prosperity. It diminishes the circunational saving. Apply the same reasoning to lating medium when most wanted to employ, the numberless similar improvements of modern during peace, a supernumerary population ; at times in this country, and it will be easily seen that time it increases the value of the remaining why we have not only more men to spare, but money, and consequently deadens industry by
means to pay them without becoming depressing prices, which are suddenly increased poorer. A further analysis of this most interest- again by its dispersion during subsequent war. ing question would lead us to remoter causes It is saved when dear, and spent when cheap. than the mere progress of mechanical inven- lloarding money in a national treasury during tions; to those causes on which the latter mainly peace diminishes the stimulus to industry when depend for their introduction and improvement. labor is most plentiful, to increase it when labor They are, in fact, the creatures of high civilisa- for productive purposes is most scarce. tion in the true meaning of that word; of a But the system of raising money during war state of society in which mental energies are ex- by taxes equal to the additional expense, if cited, and industry is animated by a certainty adopted when that expense is great, is little less that their movements will be unfeitered by bad mischievous, though its bad consequences are government, and in no danger of foreign or do- totally different. In the former case, money in mestic spoliation.
circulation for productive uses is made more Yet, although the means of supporting without plentiful by war; the farmer, the manufacturer, impoverishment the immense public expenses of all who have labor to sell, or its produce, obtain modern times in this country may be very dis- higher prices, and imagine themselves individutinctly traced to increasing national prosperity, ally richer, if the treasure is not exported, and resulting from the intellectual, moral, and polic no evils of war are felt beyond the place of tical improvements which denote high civilisa- actual hostilities, and even there a lavish expense tion, it may not be the less interesting to know is often some compensation for its local injuries. by what mechanism of finance we have been But a war altogether supported by taxes equal able to raise our public debt to its present vast to its cost will almost always become grievous
and unpopular too soon to be carried on to a In every state of improved society it is much successful couclusion. The private revenues more profitable to the mass of the population being materially diminished, the purchase of that a part should be appointed to protect the things not immediately necessary likewise dimiwhole, than that all should be called upon to nishes, and this soon affects the general industry, quit, when wanted, the occupations where use We have pursued this argument further in our and art have made their labor additionally pro- article Funds. ductive, and contribute personally a part of iheir Our own system has been a mixed one.time to an object, whether civil or military, for During the period in which our funded debt has which, by education and habit, they have not so largely increased it is apparent that, at least, been adapted. Generally speaking, if these ser- as large a proportion of productive capital has vices are paid for by those whose time and capi- been created within the same period. The real
means of paying the additional interest are the of capital would so far be in only an arithmeclear annual value of the produce of this capital; tical, and not a geometrical proportion. the ability to pay therefore has apparently kept If the demands of government are commenpace with the demand, through the medium of surate with the private gains, the nation becomes taxes. We have used the popular language of neither richer nor poorer, and is in a state of indebt and interest, but we must contend that the dolent indifference, neither animated by a prosreal nature of the funding system is, perhaps, pect of increasing riches, nor rendered despondmore easily explained by considering the trans- ing by a feeling of their diminution. actions as a sale of annuities by the nation, and The case before stated from private life will purchase of them by individuals through the in- also explain the reason why it is probable that tervening agency of the government.
the price paid to the government, by the purSo far as those individuals are inlabitants of chasers of the annuities which are sold by it, is this country, it only causes a transfer of revenue a part, and a part only, of the progressive infrom one class of proprietors to another; but crease of real capital
. If not so, it must either be this transfer, being in some degree from the ac- a part of unproductive accumulations of former tive to the inactive part of the nation, is sup- gains, or it must be a subtraction from the active posed by some to be of importance in diminish- capital which was employed in replacing couing the means of employing it with due profit. sumption or increasing the national wealth. Any It might be so if the intrinsic capital, and not a material subtraction of the latter would soon beportion of the profit obtained by that capital, come as visible in its effects as if the farmer were were transferred to persons unable or unwilling forced to sell a part of his working stock, or to use it. If a soldier, grown gray in camps, leave a field untilled for want of money to pay and worn out by hardships, were to have a grant his usual number of laborers. And it is equally for his future subsistence of a field cut off from clear that it cannot in any great extent have been a well managed farm, and hereafter to be made supplied by the unproductive accumulations of productive, if at all so, by his own exertions, former gains; no farther, certainly, than it may the diminution of its crops would soon be appa- appear that those accumulations on the whole rent; but, if he should be paid by a contribu- have really diminished. In one respect this has tion out of the produce of that farm managed happened, for a great proportion of metallic as before, the increase or decrease of that pro- money has been exported; but only so much of duce, in consequence of that payment, would this can be placed to the public account as has chiefly depend on the following circumstances : been exported for public purposes, and by any If, before his pension was charged on it, the oc- probable calculation far the greater part of the cupier could make no annual saving or gain be- money obtained by the funding system must yond his total expenses, bis means of obtaining have been furnished by recent increase of real produce must now diminish, and he must wealth, and by a part only of that increase; for, eventually be reduced to poverty. If he pre- if amounting to the whole of it, by what means viously gained, on an average, just so much as are buildings, canals, docks, enclosures, &c. &c., he is now compelled to pay as a pension, it is every where going on, and every where paid for? true that he will not become poorer, but he can- We must not entertain the absurd fancy that an not become richer, nor can he make his farm increase of money prices is an increase of real increase its own produce by employing on it capital, and thus furnishes the means of paying for savings which no longer exist. But, if the pen- all these additions to the stock of national wealth. sion thus charged on him is less than the annual The food of a laborer, if he is adequately paid, gain or accumulation of real capital, all the dif- is the same, whether the money price of wheat ference remains to him, and may be employed is on a medium four shillings or twelve shillings in augmenting its future produce, and therefore a bushel; the proportion of his pay to his subhis future gain.
sistence depends on various causes, and is more Apply this to the national funding system.- likely to increase than otherwise with the increase By that system there is no transfer of real capital, of money prices, and even beyond a due proor capital in kind, but only of saleable annuities portion to them. In any view of the question a secured by its produce: no field is cut off from change of the scale by which things are meathe farm, but instead of it is transferred a portion sured and transferred cannot be a change of the of the annual profits. If the public necessities things themselves, nor in any respect alter their exact more revenue by taxes than the aggregate quantity, the aggregate amount of which is the amount of the contemporary national gain, there real national capital. must be not only a cessation of improvement, Another important question which now arises but an actual diminution of private revenue, is, by what ineans such immense sums are which will obviously continue in a geometrical so easily collected, as are now advanced by indiproportion. If they exact less revenue than the viduals for the public use, by loans contracted total national gain, then so much of the remain- under the funding system. We think it very ing surplus as is employed in hiring more labor, doubtful if this could be done, were the whole or in any other facilities of production, will in- or even the greater part of the payments made in crease the total private revenue, and consequently metallic money, however plentiful it might be, the means of national accumulation. A portion, when compared with the present mixed cirhowever, of those gains may be employed in culation. The mechanism by which it is now obtaining things valuable but not productive, as done is much more convenient, though probably precious stones and metals, as works of art, contrived without any anticipation of its utility pictures, statues, &c.; in which case the increase in this respect, and perhaps now producing its