vifed, for discharging the expences of government, had been effayed in England, and the inconveniences of each had been fenfibly felt. Some monarchs, when provided with the means of fupporting their government in ordinary times, had relied for supply in cafe of war, or other emergency, on an accumulated treafure; but befides the numerous objections which evidently prefent themselves against the fubtraction of a large portion of money from circulation, a hoarding monarch is little calculated to be a favourite with a generous people. When the poffeflion of money becomes an object of intense defire, the character of the prince who is influenced by that paffion is blended with every act of his government, and always in an unfavourable manner, fince the obtaining of money from the fubject must frequently, in fuch cafes, 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 difguife or pretext, was not more, or more justly, detefted 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, whofe patriotic and difinterested saying has already been recorded. Yet Elizabeth was not lefs lofty in her notions of prerogative than any of her predeceffors; but fhe, dying without an accumulated treafure, left to her fucceffor the talk of conciliating, or awing parliament, in order to obtain fupplies, while the treasures of William, feized by his fons according to their convenience, enabled them to ufurp the throne, and violate the order of fucceffion; and that of Henry VII. falling into the hands of his intemperate fucceffor, gave fpurs to his ever violent paffions, and energy to that tyrannical difpofition, which, for want of being checked by early neceffity, produced many acts difgraceful to the British annals.

The railing of fupplies within the year appears, at first fight, to be the most eligible plan for a nation to pursue; but those who regard with attention the hiftory of thofe periods, in which that fyftem prevailed in England, will perceive with regret and fhame, that the conftant difputes between the fovereign and the commons must have rendered the nation contemptible in the eyes of foreign powers, and its government infecure and dependent. The glorious projects of Edward III. and IIenry V. however popular, were delayed, and, but for events almost miraculous, must have been fruftrated, through the parfimony of the commons. In fact, in fuch a fyftem of government, the welfare of the nation must depend entirely on the estimation which happens to attend the fovereign, or his minifter; and if

G 4

the

the ftate is free, the neceflity of fecuring popularity will much interfere with the magnanimous fpirit, which is neceffary to preferve 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 expenfive conteft, for fupport of the national honour and profperity, if the facrifice to be made must produce great immediate inconvenience to individuals, and occafion greater privations in one year of war or difficulty, than had been fuftained in many of peace, however infecure or inglorious. In fact, when it was profefled, that the fupplies fhould be raifed within the year, it was ever found that the vote did not create the money, and therefore fome anticipation, by means of credit, was neceflary. The credit, when legal or conftitutional, was limited to the amount of grants already provided; but need, combined with arbitrary power, occafioned the forced loans which have already been fo often mentioned, and a complaifant or flavish parliament has been known to make a law, declaring the fecurities given by the king to the subjects void, or in form giving and granting to the king the money which individuals had lent him under the moft facred guarantees. It was alfo a mean of keeping many fovereigns in a ftate of difficulty and diftrefs, for those who afterward became fhamefully indifferent about their own debts, were often fuperftitiously exact in paying thofe 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 intereft, and infolent in their requifitions of fecurity. In proportion to the wants of the vereign, thefe demands rofe, and while intercft to the amount of 12 per cent, or more, was rendered for money, the extortionate lenders required the collateral fecurity of the city of London, or of the houfes of parliament; nay, fometimes the crown, robes, jewels, and other regalia, were pledged for money.

ORIGIN OF FUNDING. Under fuch circumftances, when loans have been neceffary, it has not been unufual 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 fyftem. During the reign of Charles II. a claufe of credit was inferted in many acts, empowering the officers of the exchequer to borrow money from all perfons, whether natives or foreigners, on the fecurity of the fubfidy that was granted; and a law was paffed, entitled, " An act for affigning orders in the exchequer, without revocation," which enabled the king to borrow money on the credit of any branch

of

of the revenue, because in the words of the ftatute," it had "been found by experience, that the powers of affigning orders "in the exchequer by former acts, without revocation, had "been of great ufe and advantage to the perfons concerned in "them, and to the trade of the kingdom." The fhutting of the exchequer, in the year 1672, laid the foundation of a permanent debt; for the king having thus fecured the undue poffeffion of 1,328,5267., iffued letters patent, charging his hereditary revenue with the intereft 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 procefs, after a very long delay, obtained a composition, by which interest at three per cent. on the original debt was charged on the hereditary excife, but the principal was to be redeemed on payment of 664,2637.

This fum was, in fact, the only part of the prefent national debt which was due at the revolution; but it must not be too haftily inferred, although the opinion is advanced by fome enemies of that glorious event, that the incurring of a debt was not matter of neceflity, but a mere contrivance to fecure the authority of the new fovereign. The ftate of the realm at that time, if candidly confidered, furnishes a fufficient answer to fuch an objection. The government was weak, and its affairs difhoneftly adminiftered, because faction prevailed in every department, and immenfe fums were mifapplied, or embezzled. The house of commons were influenced by new and dangerous principles, in measures of fupply. Those who confidered the government unftable hoarded their money, and out of 16,000,000l., at which the existing fum in the nation was computed, from five to fix millions are faid to have been hoarded. The coin itfelf was in fo bad a ftate, that 2,415,140/. was the lofs fuftained by the re-coinage. Every fpecies 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 re

volution itself were not inconfiderable. 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 fome 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 neceffary wars, in which the deliverer of England engaged, were alfo extremely expenfive, owing not lefs to the great power of the common enemy, Lewis XIV. than the languid manner in which the common caufe was fup

ported

ported by fome of the allies. Whoever confiders, therefore, the ftate of our revenue, the magnitude of our expences, and the various circumftances, both foreign and domeftic, above enumerated, muft clearly perceive, that contracting a public debt was a matter, not of choice, but of neceflity. Whether the funding fyftem 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 moft, of the inconveniences complained of as refulting from the prefent national debt, arife from the inevitable inexperience of thofe who, for many years after the fyftem of the funds was adopted, conducted a scheme fo 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 a fund for payment of interest. In 1692, an attempt was made to borrow a million upon annuities for ninety-nine years, for which 10 per cent. was to be given until the 24th June, 1700; and 7 per cent. afterwards, with the benefit of furvivorship, 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 881,493/. 12s. 2d. could be procured. In 1693, a million was raised on fhort annuities, and as every fubfcriber received 14 per cent. for fixteen years, with the additional benefits of a lottery, fo advantageous an offer was eagerly grafped at. Some money was alfo borrowed during this reign on annuities for lives; and 14 per cent. was granted for one life, 12 per cent. 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 East India Company were eftablished: they paid to government the fum of 3,200,000l. for which they received an intereft of 8 per cent.; and as the taxes impofed to defray that intereft were to remain until the principal, and all the arrears of their respective annuities were difcharged, and confequently were unlimited in their duration, this naturally paved the way for those perpetual annuities which afterwards took place.

FUNDING ESTABLISHED. The fuccefs with which the Bank of England was attended, had encouraged fome individuals to form the project of a land bank, with a view, not only of raifing a confiderable fum for the ufe of government, but also of lending money on land fecurities, at low intereft, a part of the fcheme being to give 500,000l. on mortgage, at 3. 10s. per

cent,

cent. to be paid quarterly, or 4 per cent. payable half yearly; but the project did not fucceed. The temptation, however, of mortgages at fo eafy a rate, induced the landed gentlemen. to agree to the establishment of perpetual taxes, to defray the intereft of the money intended to be raifed. The ftatutes in the year 1695-6 furnish the first example in our history of this climax of financial invention.

Volumes

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 eftablished. have been filled with difcuffions on the good or evil tendency of this plan, and every topic of encouragement and alarm has almoft been exaufted in its eulogy or cenfure. On one hand it has been afferted 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 fome period the load of debt will be too great for the government to ftruggle. with, and that, at last, a general infolvency muft close the account. Much of the ridicule attending these prophecies has been occafioned by the pofitive manner in which periods have been fixed for this completion of difafter; which have arrived and paffed again, and again, ftill leaving the nation in a state of wealth and profperity, of which no previous example had exifted: yet the too fanguine aflertions made on the other fide cannot be admitted without qualification, when it is recollected, that of late, neceffity has enforced the railing of a part of fupply within the year; and that extraordinary measures have been adopted for the purpose of taking up a portion of floating ftock, in order to prevent its too great depreciation. Among the advantages aring from the funds which have been least infifted on, is the cheap and certain fecurity which they afford to perfons in fubordinate fituations in life, for the produce of small favings, and the receipt of a certain intereft without any danger to the capital. In former times, the individual in humble life, as an inferior farmer, or tradefman, a clerk, or other person employed in trade, or a fervant in a family, when he had by economy, or by a legacy, or other accident, become poffeffed of a small fum, was obliged to hoard it, without hope of its producing profit; or to lend it, with all the rifque attending loans to individuals, and the expence to be incurred on one fide or the other, of a legal fecurity. In thefe times, fuppofing the three per cents. to be at 60%., a perfon poffefling no more than twenty pounds, may at the expence of two fhillings and fixpence, fecure an interest of twenty fhillings a year, and add to his capital from time to time by any fums, however minute,