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vised, for discharging the expences of government, had been essayed in England, and the inconveniences of each had been fenfibly felt. Some monarchs, when provided with the means of supporting their government in ordinary times, had relied for supply in case of war, or other emergency, on an accumulated treasure; but besides the numerous objections which evidently present themselves against the subtraction of a large portion of money from circulation, a hoarding monarch is little calculated to be a favourite with a generous people. When the poffeßion of money becomes an object of intense desire, the character of the prince who is influenced by that passion is blended with every act of his government, and always in an unfavourable manner, since the obtaining of money from the subject must frequently, in such cases, be accomplished by craft or violence, and either character will be a just object of popular odium. The rapacious and tyrannical Conqueror, who plundered without disguise or pretext, was not more, or more justly, detested than the crafty and cold blooded Henry VII. who robbed the people under colour of law; and in order to gratify his darling avarice, leagued with informers, and became the patron of pettyfoggers. How different from these, the noble minded Elizabeth, whose patriotic and disinterested saying has already been recorded. Yet Elizabeth was not less lofty in her notions of prerogative than any of her predecessors; but she, dying without an accumulated treasure, left to her succeilor the talk of conciliating, or awing parliament, in order to obtain fupplies, while the treasures of William, seized by his sons according to their convenience, enabled them to usurp the throne, and violate the order of succeflion; and that of Henry VII. falling into the hands of his intemperate fucceflor, gave spurs to his ever violent passions, and energy to that tyrannical dirposition, which, for want of being checked by early necessity, produced many acts disgraceful to the British annals:
The railing of supplies within the year appears, at first light, to be the most eligible plan for a nation to pursue; but those who regard with attention the history of those periods, in which that system prevailed in England, will perceive with regret and shame, that the constant disputes between the sovereign and the commons must have rendered the nation contemptible in the eyes of foreign powers, and its government insecure and dependent. The glorious projects of Edward III. and Ilenry V. however popular, were delayed, and, but for events almost miraculous, must have been frustrated, through the parsimony of the commons. In fact, in such a system of government the welfare of the nation must depend cutirely on the estimation which happens to attend the fovereign, or his minister; and if the state is free, the necessity of securing popularity will much interfere with the magnanimous fpirit, which is neceffary to preserve its honour, and its external advantages. The monies expended by government are not devoted to the mere aggrandizement of the monarch, but the general good of the people; but it would be extremely difficult, to engage the people in an expensive contest, for support of the national honour and prosperity, if the sacrifice to be made mult produce great immediate inconvenience to individuals, and occafiongreater privations in one year of war or difficulty, than had been fustained in many of peace, however insecure or inglorious. In fact, when it was profetied, that the supplies should be raised within the year, it was ever found that the vote did not create the money, and therefore some anticipation, by means of creilit, was neceffary. The credit, when legal or conititutional, was limited to the amount of grants already provided; but need, combined with arbitrary power, occasioned the forced loans which have already been so often mentioned, and a complaisant or flavith parliament has been known to make a law, ccclaring the securities given by the king to the subjcas void, or in form giving and granting to the king the money which individuals had lent him under the most sacred guarantees. It was also a mean of keeping many sovereigns in a state of difficulty and distress, for those who afterward became shamefully indifferent about their own debts, were often superstitiously exact in paying those of their predeceffors; and thus incurred pecuniary difficulties from the very commencement of their reigns. . Another effect of these temporary loans was, that the lenders became extravagant in their demands of interest, and insolent in their requisitions of security. In proportion to the wants of the vercign, there demands rose, and while interest to the amount of 12 per cent, or more, was rendered for money, the extortionate lenders required the collateral security of the city of London, or of the houses of parliament; nay, fonetimes the crown, robes, jewels, and other regalia, were pledged for money.
ORIGIN OF FUNDING. Under such circumstances, when loans have been neceffary, it has not been unusual to mortgage the produce of taxes; but as the loans were only temporary, the expedient rather gave a hint, than furnished a precedent of a permanent fystem. During the reign of Charles II. a clause of credit was inserted in many acts, empowering the officers of the 'exchequer to borrow money from all persons, whcther natives or foreigners, on the security of the subsidy that was granted; and a law was passed, entitled, “ An act for affign"ing orders in the exchequer, without revocation,” which "enabled the king to borrow money on the credit of any branch
of the revenue, because in the words of the statute, “ it had « been found by experience, that the powers of assigning orders « in the exchequer by former acts, without revocation, had “ been of great use and advantage to the persons concerned in “ them, and to the trade of the kingdom.” The shutting of the exchequer, in the year 1672, laid the foundation of a permanent debt; for the king having thus secured the undue possession of 1,328,5261., issued letters patent, charging his hereditary revenue with the interest at fix per cent. amounting to nearly 80,000l. per annum. Even the payment of interest was afterward stayed, and the parties being driven to a legal process, after a very long delay, obtained a composition, by which interest at three per cent. on the original debt was charged on the hereditary excise, but the principal was to be redeemed on payment of 664,2631.
This sum was, in fact, the only part of the present national debt which was due at the revolution; but it must not be too haftily inferred, although the opinion is advanced by some enemies of that glorious event, that the incurring of a debt was not matter of necellity, but a mere contrivance to secure the authority of the new fovereign. The state of the realm at that time, if candidly considered, furnishes a sufficient answer to such an objection. The government was weak, and its affairs dishonestly administered, because faction prevailed in every department, and immense sums were misapplied, or embezzied. The house of commons were influenced by new and dangerous principles, in measures of supply. Those who confidered the government unstable hoarded their money, and out of 16,000,000l., at which the existing sum in the nation was computed, from five to fix millions are said to have been hoarded. The coin itself was in fo bad a state, that 2,415,1401. was the lofs luitained by the re-coinage. Every species of credit was at the lowest ebb; bank notes were at 20 per cent., and tallies at 40, 50, nay 60 per cent. discount. The expences of the revolution itself were not inconsiderable. To the Dutch alone were voted 600,000l. for the armament they had fitted out, in order to bring about that event. The reduction of Ireland was attended with great charges: nor were the partizans of the dethroned monarch driven from Scotland, without some bloodthed and expence. The money that was thus required to place William on the throne of the three kingdoms, would have fully defrayed the charges of at least one, if not of two campaigns. The honourable and necessary wars, in which the deliverer of England engaged, were also extremely expensive, owing not less to the great power of the common enemy, Lewis XIV. than the languid manner in which the common cause was sup
ported by some of the allies. Whoever considers, therefore, the state of our revenue, the magnitude of our expences, and the various circumftances, both forcign and domestic, above enumerated, must clearly perceive, that contracting a public debt was a matter, not of choice, but of neceflity. Whether the funding system has been beneficial or injurious to the nation, is among the problems which have occafioned, and ever must create, great differences of opinion, and would require more detailed arguments than can be introduced into this work; but certainly many, if not most, of the inconveniences complained of as resulting from the present national debt, arise from the inevitable inexperience of thote who, for many years after the system of the funds was adopted, conducted a scheme so new and difficult.
First Loans. The government of William III. adopted at firft the plan of Charles II. borrowing on the anticipated produce of grants voted by parliament, without establishing fund for
payment of interest. In 1692, an attempt was made to borrow a million upon annuities for ninety-nine years, for which to per cent, was to be given until the 24th June, 1700; and 7 per cent, afterwards, with the benefit of survivorship, for the lives of the nominees of those who contributed. So low, however, was the credit of government at that time, that even on these terms only 881,4931. 125. 2d. could be procured. In 1693, a million was raised on short annuities, and as every subscriber received 14 per cent. for fixteen years, with the additional benefits of a lottery, so advantageous an offer was eagerly grasped at. Some money was also borrowed during this reign on annuities for lives; and 14 per cent. was granted for one life, 12 per ceņt, for two lives, and 10 per cent. for three. Such terms were in the highest degree extravagant, particularly as no attention was paid to difference of ages. In this reign, the Bank of England and the Lait India Company were eitablished: they paid to government the sum of 3,200,000l. for which they received an interest of 8 per cent.; and as the taxes imposed to defray that interest were to remain until the prins cipal, and all the arrears of their respective annuities were discharged, and consequently were unlimited in their duration, this naturally paved the way for those perpetual annuities which afterwards took place.
FUNDING ESTABLISHED. The success with which the Bank of England was attended, had encouraged some individuals to form the project of a land bank, with a view, not only of raising a considerable fum for the use of government, but also of lending money on land securities, at low interest, a part of the Scheme being to give 500,000l. on mortgage, at 31. 1os. per
cent. to be paid quarterly, or 4 per cent. payable half yearly; but the project did not succeed. The temptation, however, of mortgages at so easy a rate, induced the landed gentlemen to agree to the establishment of perpetual taxes, to defray the interest of the money intended to be raised. The statutes in the year 1695-6 furnish the first example in our history of this climax of financial invention.
Such were the proceedings of government up to the period when the system of borrowing money on the permanent fecurity of the taxes, became thoroughly established. Volumes have been filled with difcufsions on the good or evil tendency of this plan, and every topic of encouragement and alarm has almost been exaulted in its eulogy or cenfure. On one hand it has been asserted as a kind of political axiom, that national debt is, in England, but another term for national greatness; while on the other, prophecies have been repeated till they are to many become objects of ridicule, that at some period the load of debt will be too great for the government to struggle. with, and that, at last, a general insolvency must close the account. Much of the ridicule attending these prophecies has been occasioned by the positive manner in which periods have been fixed for this completion of disaster, which have arrived and passed again, and again, still leaving the nation in a state of wealth and prosperity, of which no previous example had existed:
1: yet the too sanguine affertions made on the other side cannot be admitted without qualification, when it is recollected, that of late, necessity has enforced the raising of a part of supply within the year; and that extraordinary measures have been adopted for the purpose of taking up a portion of floating stock, in order to prevent its too great depreciation. . Among the advantages arising from the funds which have been least inlisted on, is the cheap and certain security which they afford to persons in subordinate situations in life, for the produce of small savings, and the receipt of a certain interest without any danger to the capital. In former times, the individual in humble life, as an inferior farmer, or tradesman, a clerk, or other person employed in trade, or a servant in a family, when he had by economy, or by a legacy, or other accident, become possessed of a small fum, was obliged to hoard it, without hope of its producing profit; or to lend it, with all the risque attending loans to individuals, and the expence to be incurred on one side or the other, of a legal security. In thefe times, fupposing the three per cents. to be at 60l., a person poffesling no more than twenty pounds, may at the expence of two thillings and fixa pence, secure an interest of twenty shillings a year, and add to his capital from time to time by any sums, however minute,