PART III.
SECT. I.
ABSTRACT of the EXPORTS from and IMPORTS to GREAT-BRITAIN from 1697 to 1773, with REMARKS.
IMPORTS. EXPORTS. EXCESS of EXPORTS. £. £. £. ANNUAL MEDIUM for FOUR YEARS ended at 1700 4.956,975 6.034,724 1.077,749 or 10/56 of the exports.
For FIVE YEARS ended at 1710 5.321,717 6.713,246 1.391,529 or 10/48 of the exports. at 1715 5.304,343 7.401,946 2.097,603 or 10/35 of the exports. at 1725 6.628,279 9.663,527 3.035,248 or 10/32 of the exports. at 1735 7.470,454 11.855,226 4.384,772 or 10/27 of the exports. at 1745 7.363,079 11.922,982 4.559,903 or 10/26 of the exports. at 1750 7.429,739 12.877,129 5.447,390 or 10/24 of the exports. at 1755 8.264,834 13.406,530 5.141,696 or 10/26 of the exports. at 1760 8.877,144 14.253,377 5.376,233 or 10/26 of the exports. For FOUR YEARS ended at 1764 10.110,870 15.793,158 5.682,228 or 10/28 of the exports.
For NINE YEARS ended at 1773 11.996,769 14.814,074 2.817,305 or 10/53 of the exports.
This ABSTRACT has been formed from the accounts delivered annually to the HOUSE OF COMMONS, and lately published by Sir CHARLES WHITWORTH.
In order to draw just inferences from it, the following particulars should be remembered.—First. The EXPORTS in the _Custom-House_ entries are, for reasons well-known, too high. This excess has, by some of the best judges, been reckoned at a million _per ann._—Secondly. The IMPORTS are too low, no smuggled commodities being included in them. This deficiency has been estimated at another million _per ann._ But, in order to be sure of keeping within bounds, I will take both at a _million and a half per ann._—Thirdly. The interest of the national debt paid to foreigners; the money spent in foreign countries by _English_ travellers; the bullion consumed in manufactures; and the wear of the current coin, cannot, perhaps, amount to much less than two millions _per ann._ I will, however, take them at no more than the annual sum which has been commonly supposed to be due to foreigners from our funds; or, a _million and a half_.—In order, therefore, to find the GRAND BALANCE OF PAYMENT between _Britain_ and the rest of the world _since_ the last war, all these sums (making up THREE MILLIONS) must be deducted from the excess of the exports.—But, in order to find the same balance _before_ the end of the last war, less must be deducted, in proportion as the national debt and the foreign trade were _then_ less than they are _now_.
If the foregoing Abstract is examined with a due regard to this rule, it will be found that, from[114] 1710 to 1764, the BALANCE OF PAYMENT must have been in favour of _Britain_; and that consequently, there must have been, during that period, an influx of money into the kingdom.—It was this, together with the increase of our paper, that produced the rapid fall of interest which began a few years before the _Accession_. And it was this also that enabled us to bear the great expence of the two last wars, and the loss of those enormous sums which were sent out of the kingdom to pay foreign subsidies, and to support armies on the continent.
Before 1710 it appears to be doubtful, whether the excess of the exports was such as brought any money into the kingdom; but it seems certain, that it could not have been such as in any degree compensated that drain of the public cash, which was occasioned by the continental wars of King _William_ and Queen _Ann_. In consequence of this, the quantity of _specie_ in the kingdom must have been greatly diminished; and Dr. _Davenant_ computes that in 1711 it was nine millions less than at the _Revolution_. Hence proceeded the high rate of interest; the unproductiveness of the taxes; and the difficulties which government met with in raising money during those two wars: And there is reason to believe, these difficulties would have been insurmountable, had not a substitute for _specie_ been provided by the establishment of the _Bank_.
In the interval of peace between the two last wars, or from 1748 to 1755, the balance in favour of _Britain_ was at the highest; and this contributed to raise the stocks[115] to such a price, as enabled government to reduce the interest of the public debts from 4 to 3 _per cent._
But the observation I here intended principally to make is, that the _balance_, since the year 1764, appears, from the preceding abstract, to have been _against_ BRITAIN; and that this accounts for the high price of bullion, the scarcity of specie, and the distress of the _Bank_ from that year to 1773.
It deserves farther to be observed that, while the exports were decreasing from 1764 to 1773, the IMPORTS appear to have increased faster than ever: And the fact is, that since 1760, a greater addition has been made to them, than had been made during the whole time from the _Accession_ to that year.—This is a striking proof that luxury has been for some years increasing with rapidity among us; and it is worth adding, that the productiveness of the taxes has kept pace, as might have been expected, with this increase of luxury, both the CUSTOMS and EXCISES having brought in lately, near 250,000l. _per ann._ each, more than they did twelve years ago.—It should be attended to, that this improvement of the revenue must be the effect solely of an increased consumption occasioned by luxury; the taxes, ever since the end of the last war, having been nearly the same.
The _exports_ from 1710 to 1764 went on increasing constantly. I have observed, that from 1764 to 1773 they have decreased. One reason of this has been, the decline of the PORTUGAL trade; the exports to that country having fallen, since 1760, from 1.200,000l. _per ann._ to 600,000l. _per ann._—Another reason has been the check which a wretched policy has been giving, ever since 1763, to our trade with the Colonies. This trade had for many years contributed more than any other trade towards raising our _exports_; and even in the period between 1763 and 1774, notwithstanding the checks it received, it went on increasing, and produced a balance in our favour of a million and a half _per ann._ But since 1774 it has been entirely lost. _Before_ this loss, the balance of payment between us and the rest of the world was, according to the account I have given, _against_ us. Undoubtedly then, it was a loss we could by no means have sustained, had it not been for the seasonable interposition of some very particular causes. Time will shew whether these causes are of a permanent nature, or temporary and accidental.
SECT. II.
_HISTORICAL DEDUCTION and ANALYSIS of the PUBLIC DEBTS._
_STATE and AMOUNT of the NATIONAL DEBT, at Midsummer, 1775, with the Charges of Management._
CAPITALS and ANNUITIES transferable at the BANK OF ENGLAND.
Principal. Interest. £. £.
CAPITAL of their original Fund—See Note (1) p. 125 3.200,000 96,000
EXCHEQUER bills, by 3d of _Geo._ I. c. 8th, bearing originally 5 _per cent._ interest, but reduced to 4 _per cent._ in 1727, and to 3 _per cent._ by 23d _George_ II. 1749. See Note (2) p. 126 500,000 15,000
Purchased of the SOUTH SEA COMPANY in 1722,—reduced from 6 to 5 _per cent._ interest in 1717; from 5 to 4. _per cent._ in 1727; and to 3 _per cent._ by 23d of _George_ II. 1749.—See Note (3) 4.000,000 120,000
Lent to government at 4 _per cent._ in 1728, charged on the surplus of the fund for the lottery in 1714, and reduced to 3 _per cent._ by 23d _George_ II. 1749 1.250,000 37,500
Lent at 4 _per cent._ in 1727; charged on the duties on coals; and reduced to 3 _per cent._ by 23d of _George_ II. 1749 1.750,000 52,500
Lent at 4 _per cent._ in 1746; charged on licences for retailing spirituous liquors; and reduced to 3 _per cent._ by 23d _Geo._ II. 1749 986,800 29,604
--------------------- Amount of Bank capital 11.686,800 350,604 See Note (4) p. 126.
Charge of management 5,898_l._ _per ann._
BANK ANNUITIES.
Consolidated 4 _per cent._ annuities due _April_ 5, and _October_ 10—See Note (5) 18.986,300 759,452
These annuities fall to 3 _per cent._ in _January_, 1781. Charge of management 10,680_l._ _per ann._
Annuities at 3½ _per cent._ 1758, due _Jan._ 5, and _July_ 5.—These annuities fall to 3 _per cent._ in 1782 4.500,000 157,500
See an account of them in p. 101.
Charge of management 2,805_l._ _per ann._ including management on half a million raised at the same time by a lottery, and made a part of the consolidated 3 _per cents_.
CONSOLIDATED 3 _per cent._ annuities due _Jan._ 5, and _July_ 5. See Note(6) 38.251,696 1.147,551
Management 21,087_l._ _per ann._
REDUCED 3 _per cent._ annuities, due _April_ 5, and _Oct._ 10. See Note (7) 18.353,774 550,613
Charge of management 10,324_l._ _per ann._
Three _per cent._ 1726, due _Jan._ 5, and _July_ 5, charged on the deduction of 6_d._ _per_ pound on all pensions from the civil list; and on all payments from the crown, except to the navy and army—See Note (8) p. 128 1.000,000 30,000
Management 360_l._ _per ann._
Long annuity due _Jan._ 5, and _July_ 5 6.702,750 248,250
The remaining term from _Jan._ 1776, is 84 years—See Note (9) p. 128.
Management 3,491_l._ _per ann._
CAPITALS and ANNUITIES transferable at the SOUTH SEA HOUSE.
SOUTH SEA STOCK 3.662,784 109,884
The dividend on this stock, at 3½ _per cent._ is 128,197_l._ 9_s._—Due _Jan._ 5, and _July_ 5.
SOUTH SEA 3 _per cent._ OLD Annuities due _April_ 5, and _Oct._ 10 11.907,470 357,224
Three _per cent._ NEW Annuities due _Jan._ 5, and _July_ 5 8.494,830 254,845
Three _per cent._ 1751, due _Jan._ 5, and _July_ 5 1.919,600 57,588
Charge of management on _South Sea_ Stock and Annuities 15,100_l._ _per ann._—See Note (10).
CAPITAL and ANNUITIES transferable at the INDIA HOUSE.
EAST INDIA STOCK 3.200,000 96,000
Interest 3 _per cent._
_Dividend_ 7 _per cent._ 224,000_l._ due _Jan._ 5, and _July_ 5.—See Note (11).
Charge of management 1.285_l._ 14_s._ 4_d._
EAST INDIA Annuity due _April_ 5, and _Oct._ 10, charged on the surplus of a tax on spirituous liquors. See Note (12) 1.000,000 30,000
Management 401_l._ 15_s._ 8_d._ _per ann._
ANNUITIES payable at the EXCHEQUER.
ANNUITIES for 96 and 99 years, from various dates, in the time of King _William_ and Queen _Anne_—See Note (13) 1.836,276 131,203
Salaries to Exchequer officers, and management—5,250_l._ _per ann._
Annuities for lives, with benefit of survivorship, granted by the 4th of _William_ and _Mary_, 1693.—These annuities are not yet extinct, and they are valued at three years purchase 22,781 7,567
Annuities for lives, with benefit of survivorship, by an Act of the 5th of _Geo._ III. 1765—See Note (14) 18,000 540
Annuities for two or three lives, granted in 1694.—Also, Annuities on single lives 1745, 1746, and 1757.—See Note (15)—Their original amount, taken all together, was very nearly 124,000_l._ but they are now reduced by deaths to near 80,000_l._ and their value is here taken at 10 years purchase 800,000 80,000
UNFUNDED DEBT, consisting of Exchequer bills, (1.250,000_l._) Navy debt, (1.850,000_l._) and Civil list debt, supposed 500,000_l._—The interest is reckoned at 2 _per cent._—See Note (16) 3.600,000 72,000
Salaries to Exchequer bill officers 650_l._ _per ann._ --------------------- Total of the principal and interest of the National Debt at _Midsummer_ 1775. £. 135.943,051 4.440,821
_NOTES containing an EXPLANATION and HISTORY of the different Articles in the foregoing Account._
NOTE (1)—BANK OLD CAPITAL. See Page 119.—The BANK was established in 1694. Their original capital was 1.200,000_l._ bearing 8 _per cent._ interest, charged on 5/7ths. of 9_d._ _per_ barrel excise, with 4000_l._ _per ann._ for management.—In 1709, they lent to government 400,000_l._ without interest, which increased their old capital to 1.600,000_l._ bearing 6 _per cent._ interest. In 1742, they again lent to government 1.600,000l. without interest; and thereby increased this capital to its present amount, or to 3.200,000_l._ bearing 3 _per cent._ with the same annual sum for management.—It is of particular importance to observe with respect to the sums of 400,000_l._ and of 1.600,000_l._ just mentioned, that they were properly a compensation from the _Bank_ to the public for continuing their exclusive privileges; and would have been advanced, or at least the greatest part of them, though government had not bound itself to return the purchase money, by making it a part of the principal due to the _Bank_, provided the same interest had been continued for some time on their former principal, and the same liberty granted to increase their _stock_.—The like is true of 1.200,000_l._ advanced by the _India_ Company without interest in 1708.—In these instances, therefore, a needless addition was made to the public debt of 3.200,000_l._ which, had it been avoided, the public would have had not only a principal so much less to pay; but it would have saved in interest at least 96000_l._ _per ann._ for the old capital of the _Bank_ and the capital of the _East India_ Company would have formed, in this case, between them, a debt of only 3.200,000_l._ (instead of 6.400,000_l._) the interest of which might long ago have been reduced at least one half; or from 8 _per cent._ the original interest, to 4 _per cent._
* * * * *
NOTE (2)—_Half a million_, part of the BANK CAPITAL. See Page 119.—This part of the Bank capital consisted originally of two millions in _Exchequer_ bills, cancelled for government by an act of the 3d of _Geo._ I. But half a million was discharged in 1729; and a million in 1738.
* * * * *
NOTE (3)—FOUR MILLIONS purchased of the SOUTH-SEA COMPANY; part of the BANK Capital. See Page 119.—In order to procure this money, the _Bank_ sold new stock at 18 _per cent._ premium. This produced a saving of 610,169_l._ the sale of 3.389,831_l._ _stock_ having produced four millions in _money_. And, consequently, though by this transaction the capital for which they received interest was increased four millions, yet the _stock_ on which they made their dividends was increased only 3.389,831_l._
* * * * *
NOTE (4)—BANK STOCK and DIVIDEND.—The _stock_ on which the _Bank_ divides is only 10,780,000_l._ This dividend varies as their profits vary; but for several years it has been 5½ _per cent._ payable half-yearly at _Lady-day_ and _Michaelmas_. Their whole annual dividend is, therefore, 592,900_l._ which subtracted from 350,604_l._ the interest paid by government, makes their clear annual profit 242,296_l._—Besides interest, they receive for management of their capital 4000_l._ _per ann._ on account of their old capital, and 1,898_l._ _per ann._ on account of four millions purchased of the South Sea Company; in all, 5,898_l._ _per ann._—The _Bank_ receives farther the sums specified in the foregoing account, towards bearing the expences of managing the annuities commonly called _Bank Annuities_. All these expences, including the sums granted for managing their capital, amount to 54,645_l._ _per ann._
* * * * *
NOTE (5)—CONSOLIDATED 4 _per cent._ BANK ANNUITIES. See Page 120.—The capital of these Annuities consists of two loans, one in 1760, and the other in 1762, consolidated into one stock, and charged on the additional duty of 3_d._ per bushel on malt, the surplus of the duties on spirituous liquors, and the additional duties on windows; all which duties were ordered by 2d Geo. III. to be carried to the Sinking Fund, and the interest with which they were charged to be paid out of that fund.—I have made some remarks on these loans in page 96, and page 99. They amounted to 20.240,000_l._ But 1.253,700_l._ of this capital was changed in 1770, from an interest of 4 to 3 _per cent._ and the capital reduced to the present sum.—A more full account of these annuities may be found in Mr. _Ashmore_’s Analysis of the several Bank Annuities, p. 17.
* * * * *
NOTE (6)—CONSOLIDATED 3 _per cent._ BANK ANNUITIES. See page 121.—The capital of these annuities is made a distinct stock from that of the annuities called _Reduced_, because it never bore a higher interest than 3 _per cent._—It consisted originally of the following loans—37,821_l._ remaining in 1727, of 3 _per cent._ annuities, granted in lieu of St. _Christopher_’s and _Nevis_ debentures—800,000_l._ borrowed in 1731—600,000_l._ borrowed in 1736—300,000_l_. in 1738—6.400,000_l_. in 1742, 1743, 1744 and 1745, and charged on additional duties on spirituous liquors, wines, vinegar, &c.—1.000,000_l._ borrowed in 1750—24.490,000_l._ borrowed in the course of the last war, and funded on the additional duties on beer, houses, stamps, &c.—4.900,000_l._ borrowed in 1766, 1767 and 1768—And 1.253,700_l._ of the 4 _per cent._ annuities, subscribed into the 3 _per cent._ annuities in 1770.
All these loans were by 25 Geo. II. 1751, and several subsequent Acts of Parliament, consolidated into one joint stock; and carried, with the duties for paying the interest, to the _Sinking Fund_. And in 1770, they formed a capital of 39.781,521_l._ which has been since reduced, by the payments mentioned in the _Postscript_ at the end of this tract, to the sum specified in the account to which this note refers.—See a more full account in Mr. Ashmore’s Analysis, &c. from page 5 to page 11.
* * * * *
NOTE (7)—REDUCED 3 _per cent._ BANK ANNUITIES. See page 121.—The capital of these annuities consisted, in 1749, of loans in 1746, 1747, and 1748, and navy, ordnance and transport debts funded in 1749, amounting to 18.402,472_l._ and all bearing 4 _per cent._ interest.—By the 23d of Geo. II. 1749, these loans were reduced to an interest of 3 _per cent._ and by the great consolidating Act in 1751, they were converted into one stock, and carried into the Sinking Fund with the duties on carriages, and the additional duties on glass, spirituous liquors, houses, windows, stamps, merchandize imported, &c. which had been granted for paying the interest.—In 1751, certain exchequer tallies and orders, amounting to 129,750_l._ were subscribed into this stock; and in 1765, navy bills to the amount of 1,482,000_l._ were subscribed into it, which made its whole original amount 20.014.222_l._—In 1751, there was paid off 830,898_l._ being stock which had not been subscribed agreeably to the Act in 1749 for reducing interest; and in 1772, 1774, and 1775, so much more of this stock was paid off as reduced it to its present amount.—See Mr. Ashmore’s Analysis, p. 12-16.
* * * * *
NOTE (8)—CIVIL LIST MILLION. See page 121.—The income settled upon King George I. for his civil list, was 700,000_l._—In 1720, there had been granted him besides, from the _Royal Exchange_ and _London_ Assurance companies, 300,000_l._ And in 1726, this million was farther granted towards paying off his debts.
* * * * *
NOTE (9)—BANK LONG ANNUITY. See page 122.—This annuity consists of 128,250_l._ _per ann._ for 99 years, given in 1761, as a _premium_ to the subscribers of 11.400,000_l._ at 3 _per cent_; and of 120,000_l._ _per ann._ for 98 years, given in 1762, as a premium to the lenders of twelve millions at 4 _per cent._ See page 95 and 100. It is charged, together with the loans to which it was annexed, on the _Sinking Fund_.—Its value in the Alley is about 25 years purchase; but the remaining term is really worth 27 years purchase, reckoning interest at 3½, (or the 3 _per cents._ being at 85¾.) But when interest is at 4 _per cent._ or the 3 _per cents._ are at 75, it is worth only 24 years purchase.—When this annuity is called a _premium_, it must not be imagined, that no compensation was given for it. Government received the value of it; but, at the same time, made itself a debtor for that value. And, what is very surprizing, this has been uniformly practised with respect to all the premiums or douceurs granted by government; and the consequence has been, that great and needless increase of the public debt explained in the 3d section of the 2d Part.
* * * * *
NOTE (10).—SOUTH-SEA STOCK AND ANNUITIES. See page 122.—These four capitals amounting to 25.984,684_l._ 13_s._ consist almost entirely of the remainder of debts contracted in the reigns of _King William_ and Queen _Anne_. The following account will probably give sufficient information concerning them.
In 1711, Lord Oxford being minister, the proprietors of certain navy, army, ordnance and transport debts, to the amount of 9.177,968_l._ including arrears of interest, and half a million for the current supplies, were incorporated into a company for trading to the _South-seas_. They were allowed 6 _per cent._ interest for this debt, with 8000_l._ _per ann._ for management; and the duties on wine, tobacco, _East-India_ goods, candles, &c. were made perpetual, and granted as a _Fund_ (ever since called the _South-sea Company’s Fund_) for paying the interest. This kept up public credit at the time, and has been called the _Earl of Oxford_’s master-piece.—By the 1st of Geo. I. 822,032_l._ consisting chiefly of interest payable on the Company’s capital, was added to the capital, in consequence of which it was increased to TEN MILLIONS, (ever since called their _original capital_) bearing 6 _per cent._ interest.—In 1717, they agreed to take 5 _per cent_; and this was the first great reduction of interest, which in conjunction with the same reduction of the other redeemable debts almost all carrying 6 _per cent._ laid the foundation of the SINKING FUND established in this year. But it is remarkable, that so fast did interest fall at this time, that the price of _South-sea stock_, notwithstanding this reduction, rose from 101 to 111.—In 1719, the _South-sea_ capital was increased to 11.746,844_l._ bearing 5 _per cent._ interest (with an addition of 1,397_l._ 9_s._ to their former allowance for management) by advancing to government 544,142_l._ and by the proprietors of 94,329_l._ 12_s._ lottery annuities for 32 years granted in 1710, accepting in lieu of them 1.202,702_l._ _South Sea stock_.—In 1720, the agreement was made by government with the South Sea Company, which produced the great SOUTH SEA BUBBLE.—There existed at that time _long_ annuities to the amount of 666,821_l._ 8_s._ and _short_ annuities, for 32 years from 1710, to the amount of 127,260_l._ 6_s._ The proprietors of these annuities were allowed to subscribe them into the _South Sea_ trading stock; and the Company, for every 100_l._ of the _long_ annuity which should be subscribed, were to receive from government an addition to their capital of 2000_l._ bearing 5 _per cent._ interest till 1727, and afterwards 4 _per cent._ till redeemed: and for every 100_l._ of the _short_ annuities, they were to receive an addition to their capital of 1400_l._ bearing the same interest.—They were besides to take in the redeemable debts to the amount of 16.546,482_l_. and to receive an addition to their capital of 100_l._ for every 100_l._ subscribed.—By the subscription of the _long_ and _short_ annuities which followed this agreement, a capital due from government to the Company was created, which was greater by 3.034,769_l._ than the original sum advanced for the annuities subscribed. And as much of these annuities and of the redeemable debts were subscribed, as increased the _South Sea_ trading capital to 37.802,203_l._—In 1722, four millions of this capital was purchased by the BANK, (See Note 3.) which reduced it to 33.802,203_l._—By 9 Geo. I. 1723, this remaining capital was divided into two equal parts, one of which alone (or 16.901,101_l._) was ordered to be the trading capital of the Company, and the other part was directed to be called _South Sea Annuities_.—In 1733, the _South Sea_ trading capital had been reduced by payments at different times to 14.651,137_l._ 12_s._ By an Act of Parliament in that year, this remaining stock received a farther division; and only a fourth part, or 3.662,784_l._ was allowed to be the Company’s stock; and the other three parts, or 10.988,353_l._ were directed to be called NEW South Sea Annuities, in order to distinguish them from the former annuities, which have ever since gone under the name of OLD South Sea annuities.—From 1733, to the present time, SOUTH SEA STOCK has continued the same; but the capital of the OLD South Sea annuities has been reduced, by redemptions, to 11,907,470_l._ and of the NEW South Sea annuities, to 8.494,830_l._ And of the whole _South Sea_ debt, which in 1722 was 33.802,203_l._ there has, since that year, been paid off in all 9.737,119_l._ This should have reduced it to 24.065,081_l._ but it is in reality 25.984,685_l._ The reason of this is, that the diminution just mentioned of the _South Sea_ debt was made in part with money borrowed in 1751, to pay off such proprietors of South Sea annuities as had refused to consent to the reduction of interest proposed to them in 1749. The sum borrowed for this purpose was 2.100,000_l._ bearing 3 _per cent._ with 1181_l._ 5_s._ for management. This debt is now reduced by redemptions to the sum specified in the preceding account; or to 1.919,600_l._
* * * * *
NOTE (11).—EAST-INDIA STOCK. See page 123.—In 1698, a company of merchants, in consideration of two millions lent to government at 8 _per cent._ were incorporated, and entitled to the sole privilege of trading to the _East-Indies_.—These two millions formed the first capital of the present _East-India_ Company.—In 1702, an old company of traders to the _East-Indies_ was united to this company; and in 1708, these united companies lent to government 1.200,000_l._ without additional interest, which made their capital 3.200,000_l._ bearing 5 _per cent._—In 1730, this interest was reduced to 4 _per cent._ and by the 23d Geo. II. 1749, to 3 _per cent._—The salt duties, and some additional stamp duties, were at first charged with the annuity due on this capital; but at present the duties constituting the aggregate fund are charged with it.
* * * * *
NOTE (12).—EAST-INDIA ANNUITY. See page 123.—The capital of this annuity was advanced to government in 1744, at 3 _per cent._ and, in consideration of this loan, the exclusive charter of the Company was continued to Lady-day 1783, at which time it is to cease, provided three years notice has been given, and the debt due from government discharged.
An observation here forces itself upon me, which I have often had occasion to make.—Part of this loan was a compensation from the _East-India_ Company for prolonging the term of its charter; and, therefore, ought not to have been included in the loan. The Company would have lent 750,000_l._ on the interest common at the time, or 4 _per cent._ and the remainder would have been advanced as a gratuity.—It is a pity those who managed these contracts for the public, did not attend to the absurdity and extravagance of making a _debt_ of purchase money, and _borrowing_ in the very act of _selling_.
* * * * *
NOTE (13).—EXCHEQUER LONG ANNUITIES. See page 123.—These are the _long_ annuities which, in 1720, remained unsubscribed to the South Sea Company. See Note 10.—They consist first of annuities to the amount of 54,900_l._ 14_s._ 6_d._ purchased by the 4th, 5th, and 6th of _William_ and _Mary_, for 96 years, from January 1695, with the addition of 1350_l._ _per ann._ for salaries to exchequer officers. These annuities were originally 14 _per cent._ life-annuities. By the 6th and 7th of _William_ and _Mary_, in order to raise more money, these annuitants, or any other persons for them, were offered a reversionary interest in the annuities after the failure of the lives, till the end of 96 years from January 1695, on paying 4½ years purchase, (that is 63_l._) for every annuity of 14_l._—The predecessors of the present company of the MILLION BANK (so called from the MILLION lottery 1694, in which they were some of the principal adventurers) purchased 30,669_l._ 4_s._ of these reversionary annuities. The life annuitants being now reduced to a very small number, almost the whole of this annuity is lapsed to the _company_; and though they have divided for several years 5 _per cent._ on a capital of half a million, yet their growing savings, from the falling in of lives, have been such, that, when their annuity ceases in 1791, they will, I am informed, have accumulated a fund considerably larger, than the capital on which they have made their dividends. But to return.
* * * * *
These EXCHEQUER Annuities consist farther of
£. _s._ _d._ 30,400 6 8 purchased for 99 years from _Christmas_ 1705, by 2d and 3d of _Anne_, with 1450_l._ for management. 23,234 16 6 purchased for 99 years from _Lady-day_, 1706, by 4 _Anne_, with 1470_l._ _per ann._ for management. 7,776 10 0 purchased for 99 years from _Lady-day_, 1707, by 5 _Anne_, with 375_l._ 12_s._ _per ann._ for management. 4,710 0 0 purchased for 99 years from _Lady-day_, 1708, by 6th of _Anne_, with 208_l._ 2_s._ _per ann._ for management. 10,181 0 0 purchased for 99 years from _Lady-day_, 1707, by a 2d Act of 5th of _Anne_, with 416_l._ _per ann._ for management. Add 54,900 14 6 ----------------- 131,203 7 8 Total.
The original sum contributed for these annuities was 1.836,276_l._ They are even now worth more than this sum. The public has already paid above TEN MILLIONS; and by the time they are all extinct, it will have paid above THIRTEEN MILLIONS, on their account. This is great extravagance; but it is nothing to the extravagance constantly practised of borrowing on perpetual annuities, without putting them into a fixed course of redemption.
* * * * *
NOTE (14).—TONTINE by an act of 6 Geo. III. See page 124.—The intention of this Act was to raise 300,000_l._ towards paying off navy bills, by offering to subscribers for every 100_l._ advanced, an annuity of 3_l._ for their lives, with benefit of survivorship. But the scheme did not succeed, and only 18000_l._ was subscribed.
* * * * *
NOTE (15).—LIFE ANNUITIES. See page 124.—The annuities on _two_ lives in 1694, were sold at 12_l._ _per ann._ during _two_ lives, of any ages, and the annuities on _three_ lives, at 10_l._ _per ann._ during three lives, for every 100_l._ advanced.—This was very extravagant; for, supposing the annuitants in general, about the age of 20 or 30, it was the same, in the case of _two_ lives, with giving above 10 _per cent._ for money, and in the case of _three_ lives, 9 _per cent._—It is, likewise, extremely absurd in these cases to pay no regard to difference of ages. A _single_ life at the age of 60, supposing money improved at 4 _per cent._ is intitled to 11 _per cent._ but at the age of 10, scarcely to 6 _per cent._ _Two_ lives at 60, are entitled, on the same supposition, to 8½ _per cent._ but at 10, not to 5 _per cent._—The original amount of these annuities was 22,700_l._ nearly. In 1762, that is, in 68 years, they were reduced by deaths no lower than 9,215_l._
The other life-annuities mentioned in the preceding account were _douceurs_ granted for loans in 1745, 1746, and 1757. An account of the annuities granted in the last of these years may be seen in page 101.
The life-annuities in 1745, amounted to 22,500_l._ and were granted, together with the profits of a lottery, for a loan of two millions at 4 _per cent._
The life-annuities in 1746, amounted to 45,000_l._ and were granted, with the profits of another lottery, for a loan of three millions, at the same interest.—The remarks made in the 3d section of the last part, and particularly in the note, p. 101, are applicable to these two loans. The value of the life-annuities, and the profits of the lotteries, were made a part of the public debt. And, supposing the life-annuities worth, one with another, only 14 years purchase, and the profits of the two lotteries worth 300,000_l._ it will follow, that the capital created by these loans, instead of being 5.000,000_l._ should have been only 3.755,000_l._
But there is another remark, which it is proper to mention here. The life-annuities granted in 1757, amounting to 33,750_l._ were, in January 1775, that is in 18 years, reduced by deaths to 28,732_l._ or but a little more than a seventh part. But, supposing the annuitants all in the firmest stage of life, or between the age of 10 and 30, they ought, according to some of the best tables of observations, to have been reduced a _quarter_. These life-annuities have, therefore, fallen in much more slowly than could have been expected; and I have found the same to be true of all the other life-annuities.—The reason, undoubtedly, is, that the tables exhibit the rate of mortality among all sorts and orders of men taken together; whereas, the lives on which annuities are bought, are a selection of the better sort of lives from the general mass, and therefore must be of greater value.—Indeed I am not acquainted with any table of observations which gives the probabilities of the duration of life high enough to be a guide in this case; except that which was formed by Mr. _De Parcieux_, from the French _Tontines_.—A calculation, therefore, of the values of lives, agreeably to this table, would be of considerable use.
* * * * *
NOTE (16).—UNFUNDED DEBT. See page 124.—I have given the navy debt, as it was in January, 1775.—The civil list debt in 1775, was probably more than the sum at which I have reckoned it. Lord STAIR, in his account of the national debt, income, and expenditure, reckons it at 800,000_l._
Much the greatest part of the foregoing debts, with the taxes for paying the interest, including the duties composing the _Aggregate_, _South-Sea_, and _General_ Funds, have, by the 25th of _George_ the Second, 1751, and several subsequent acts of Parliament, been thrown into one general account; and the _surplus_ of the whole, after deducting the interest, 800,000l. _per ann._ to the civil list, and a few other payments, forms the SINKING FUND.—The debts not brought to this account are about seven millions and a half in the _South-Sea_ House; 11.186,800l. of the _Bank_ capital; the Civil List million; four millions and a half borrowed at 3½ _per cent._ in 1758; the capital of the East-India annuity; and the Exchequer long and life annuities, except those granted in 1758. But the _surplusses_ of the duties which pay the interest of these debts are either carried _immediately_ into the _Sinking Fund_ account; or brought _first_ to the _Aggregate_ Fund, and from thence carried into that account.—On the contrary. Deficiencies in these duties when they happen, are made good out of the Sinking Fund; and afterwards replaced from the supplies.
For example. Three old nine-penny excises on beer, with an additional three-pence per barrel, producing above half a million annually; also, 3,700l. _per_ week out of the hereditary excise on beer, together with some duties on paper, coals, &c. and ⅓ additional subsidy of tonnage and poundage, are appropriated to the payment of the Banker’s Annuity; the Life Annuities granted in 1693 and 1694; the Exchequer Long Annuities; and annuities on various sums subscribed to the South-Sea Company in 1720. The surplusses make a part of the _Aggregate Fund_; and after contributing to satisfy the charge on that fund, are carried into the _Sinking Fund_.—Again. Certain additional duties on soap, parchment, coals, &c. are appropriated to pay the interest of 1.250,000l. and of 1.750,000l. parts of the Bank capital.—The surplusses are carried _directly_ to the _Sinking Fund_.—In like manner. The duties on houses and windows imposed by an act of the 20th of _George_ the Second, 1747,[116] after deducting from them 91,485l. _per ann._ to satisfy certain charges on old house-duties in the _Aggregate Fund_; and, also, other duties on houses and windows imposed by the 2d and 6th of _George_ the Third, amounting in all to about 205,000l. _per ann._ are carried into the Sinking Fund, together with the capitals, the interest of which has been charged upon them. But the addition to these duties (with a tax on pensions) granted in 1758, and charged with the interest (at 3½ _per cent._) of the loan in that year, having not been carried into the _Sinking Fund_, and proving deficient; the deficiency is constantly made good out of this fund, and afterwards replaced from the supplies.
_State and Amount of the NATIONAL DEBT at Christmas 1753; with the Charges of Management._
BANK OF ENGLAND.
Principal. Interest. £. £.
BANK capital 11.686,800 393,038
Of this capital 3.200,000l. bore at this time 3 _per cent._ interest; and the remainder bore 3½ _per cent._ till 1757, by 23d Geo. II. 1749.—See note (1) p. 125.
Management 5,898l. _per ann._
Three _per cent._ BANK Annuities consolidated by 25 Geo. II. 1751.—See note (6) p. 127. 9.137,821 274,135
Management 4,450l. _per ann._
BANK Annuities consolidated by 25 Geo. II. 2.713,618l. carrying 3½ _per cent._ interest till 1755; and 14.857,956l. carrying the same interest till 1757. See note (7) p. 128. 17.740,132 619,546
Management 9,884l. _per ann._
Civil List million, 1726 1.000,000 30,000
Management 360l. _per ann._
Whole charge of Management at the Bank in 1753—20,592l. _per ann._
SOUTH-SEA COMPANY.
SOUTH-SEA STOCK carrying 4 _per cent._ till 1757 3.662,784 146,511
Old and New SOUTH-SEA Annuities carrying 3½ _per cent._ till 1757 21.362,525 747,688
Three _per cent._ 1751—See note (10) p. 131. 2.100,000 63,000
Whole charge of management at the _South-Sea-House_ on stock and annuities, 15,748l. _per ann._
EAST-INDIA HOUSE.
EAST-INDIA STOCK, reduced to 3½ till 1757 3.200,000 112,000
EAST-INDIA annuity 1744 1.000,000 30,000
Management 1,687l. 10s. _per ann._ --------------------- Total[117] £. 70,851,254 2.415,918
EXCHEQUER.
ANNUITIES for 96 and 99 years from various dates in King _William_’s and Queen _Anne_’s times being the original sum contributed. See note (13) page 132. 1.836,276 131,203
Management 5,230l. _per ann._ inclusive of management for the two next articles.
ANNUITIES for lives with benefit of survivorship, being the original sum contributed 108,100 7,567
ANNUITIES for two and three lives, being the remainder after deducting the annuities fallen in by deaths, and reckoned worth 10 years purchase 106,650 10,665
ANNUITIES for single lives 1745, being the remainder after deducting the annuities fallen in by deaths; and reckoned worth 14 years purchase 296,142 21,153
ANNUITIES for single lives 1746, being the remainder after the lives fallen in 582,274 41,591
Navy debt in 1754—Interest reckoned at 2 _per cent._ 1.296,568 25,931 --------------------- Total of the principal and interest of the public debts in 1753 £. 75.077,264 2.654,028
_STATE and AMOUNT of the NATIONAL DEBT in 1739._
BANK OF ENGLAND.
Principal. Interest. £. £.
BANK CAPITAL, consisting of 1.600,000l. old capital carrying 6 _per cent_; and 7.500,000l. carrying 4 _per cent._ See note 1, p. 123. 9.100,000 396,000
BANK ANNUITIES at 3 _per cent._ for the lottery in 1731. 800,000 24,000
SOUTH-SEA COMPANY.
Stock and annuities bearing 4 _per cent._ 27.302,203 1.092,088
EAST-INDIA COMPANY.
EAST-INDIA stock carrying 4 _per cent._ 3.200,000 128,000
EXCHEQUER ANNUITIES.
Annuities at 3½ by 4 Geo. II. paid off in 1752 400,000 14,000
ANNUITIES at 4 _per cent._ charged on the duty on wrought plate by 6 Geo. I. 1720 312,000 12,480
182,250l. of this capital was paid off in 1750. The remainder is now included in the capital of the reduced 3 _per cent._ annuities.
ANNUITIES at 3 _per cent._ charged on the Sinking Fund by 9 and 10 Geo. II. Now included in the consolidated 3 _per cent._ annuities 900,000 27,000
ANNUITIES on _Nevis_ and St. _Christopher_ Debentures at 3 _per cent._ Now included in the consolidated 3 _per cents._ 37,821 1,135
EXCHEQUER BILLS charged on a duty upon victuallers by 12 Geo. I. 1726—Carrying 3 _per cent._ 480,000 14,400
EXCHEQUER BILLS charged on a duty on sweets by 10 of Geo. II. 1737—Carrying 3 _per cent._ and paid off in 1754—See the note p. 140. 499,600 14,988
ANNUITIES for long terms from various dates 1.836,276 131,203
ANNUITIES for lives with _benefit_ of _Survivorship_ granted in 1693 108,100 7,567
ANNUITIES for two and three lives, 1694 106,650 15,000
_Navy_ debt[118] 1.300,000 26,000 --------------------- Total of the _Principal_ and _Interest_ of the National Debt in 1739[119] £. 46.382,650 1.903,861
From the account in the POSTSCRIPT, at the end of this tract, it will appear, that 10.639,793l. of the public debt was discharged between the years 1763 and 1775; and also that the _funded_ debt was, in 1775, 1.400,000l. greater than it was at the end of the last war. From hence, and from the amount of the public debt in 1775, as stated in page 124, it follows, that the funded debt at the end of the war was 130.943,051l. and the whole debt 146.582,844l. and, consequently, that the war left upon the nation an _unfunded debt_ amounting to[120] 15.639,793l. This unfunded debt consisted of the following particulars—Of 3.500,000l. borrowed after the peace in 1763, and applied towards bearing such expences of the war as could not immediately cease with its operations.—Of near _eight millions_ in navy, victualling, ordnance, and transport debts.—Of 1.800,000l. _Exchequer bills_; and the remainder, of subsidies to foreign princes, extraordinaries of the army, and German demands.
In the interval of peace between 1748 and 1755 the following debts were paid off.
£.
_Bank Annuities_ bearing 4 _per cent._ 1.013,148
SOUTH-SEA Annuities bearing 4 _per cent._ 176,893
_Annuities_ bearing 3½ _per cent._ charged by 4 Geo. II. on additional Stamp-duties 400,000
EXCHEQUER Bills bearing 3 _per cent._ charged by 10 Geo. II. 1737 on the duties on sweets 499,600
Borrowed in 1745 at 3½ _per cent._ on the credit of the Salt duties 1.000,000
See note, page 140. ----------- [121]Total £. 3.089,641
From the whole, the following account of the progress of the National Debt, from 1739 to 1775, may be deduced.
Principal. Interest. £. £.
_Amount_ of the _principal_ and _interest_ of the national debt before the war which begun in 1740 46.382,650 1.903,861
Amount in 1749 immediately after the war 78.166,906 2.765,608
Increased by the war 31.784,256 861,747
Diminished by the Peace from 1748 to 1755 3.089,641 111,590
Amount at the commencement of the last war 75.077,264 2.654,018
Amount at the end of the war in 1763 146.582,844 4.840,821
Increased by the last war 71.505,580 2.186,803
Diminished by the Peace, in twelve years from 1763 to 1775 10.639,793 [122]400,000
Amount at _Midsummer_, 1775 135.943,051 4.440,821
We are now involved in another war, and the public debts are increasing again fast. _Exchequer_ Bills have been increased from 1.250,000l. to 1.500,000l. A new capital of 2.150,000l. has been added to the 3 _per cent._ Consolidated Annuities. And a vote of credit was given in the last session of Parliament for a million. The last year, therefore, has added 3.400,000l. to our debts, besides a vast sum not yet provided for, consisting of navy, ordnance, victualling, transport and army debts.—The present year (1777) must make another great addition to them; and what they will be at the end of these troubles, no one can tell.—The union of a _foreign_ war to the present _civil_ war might perhaps raise them to TWO HUNDRED MILLIONS; but, more probably, it would sink them to—NOTHING.
SECT. III.
_Of the DEBTS and RESOURCES of France._
Ministers have of late sought to remove the public apprehensions by general accounts of the weakness of powers, which, from the circumstances of former wars as well as national prejudices, have been felt by the people as jealous rivals or formidable enemies.—I wish it was possible for me to confirm these accounts; and by contrasting the preceding state of our own debts with a similar one of those of FRANCE, to shew, that from this power in particular we have nothing to fear. The following particulars, on the correctness of which I can rely, may give some assistance in judging of this subject.
* * * * *
The whole expence of the last war to FRANCE was 1.118.307,047 livres; that is, 49.702,000l. sterling: of which 23.152,000l. (520.926,000 livres) consisted of money procured by the sale of taxes, by free-gifts, and extra-impositions during the war, which left behind them no debts: And 26.550,000l. (597.380,100 livres) consisted of LOANS, or money raised on perpetual annuities, life-annuities, and lotteries.—At the beginning of 1769 the whole amount of the debts of _France_, including all arrears and capitals advanced on annuities and lotteries, was 128.622,000l. sterling, or 2.894.053,616 livres. The annual charge derived from this debt was 6.707,500l. sterling (150.919,284 livres)—All the appropriations amounted to 8.218,500l. sterling (184.919,284 livres).—The expences of the army, navy, king’s houshold, prince’s houshold, foreign affairs, &c. amounted to 8.947,000l. or 201.307,312 livres. So that the whole annual expence was 17.165,000l. (386.226,596 livres).—The whole revenue had amounted, before 1769, to 13.484,500l. sterling (303.401,696 livres).—The public expence, therefore, had exceeded the revenue 3.681,000l. (82.800,000 livres.) _per ann._
From the year 1769 to the present King’s Accession, by forced reductions of interest, and by new taxes, the public revenue was carried to 16.289,000l. sterling (366.508,000 livres) and the public expence was reduced so as not to exceed the revenue above 766,800l. _per annum_ (17.253,000 livres).—The anticipations also of the revenue, which before 1769 had extended to _seventeen_ months, were reduced to _five_ months.—Such was the progress of reformation; namely, an increase of revenue amounting to little less than THREE MILLIONS sterling _per ann._ in a few years, under an unpopular minister, in the latter days of a reign never characterized by an attention to oeconomy, or a regard to the public interest; and at this time particularly stamped by unprecedented profusion and a general relaxation.
A new reign produced a new minister of finance whose name will be respected by posterity for a set of measures as new to the _political_ world, as any late discoveries in the system of nature have been to the _philosophical_ world.—Doubtful in their operation, as all unproved measures must be, but distinguished by their tendency to lay a solid foundation for endless peace, industry, and a general enjoyment of the gifts of nature, arts, and commerce.—The edicts issued during his administration exhibit indeed a phænomenon of the most extraordinary kind. An absolute king rendering a voluntary account to his subjects, and inciting his people to _think_; a right which it has been the business of all absolute princes and their ministers to extinguish in the minds of men.—In these edicts the king declared in the most distinct terms against a bankruptcy, an augmentation of taxes, and new loans; while the minister applied himself to increase every public resource by principles more liberal than _France_, or any part of _Europe_, ever had in serious contemplation.—It is much to be regretted, that the opposition he met with, and the intrigues of a court, should have deprived the world of those lights which must have resulted from the example of such an administration.
After a short interval, a nomination, in some respects still more extraordinary, has taken place in the court of FRANCE. A court which a few years since was distinguished by its bigotry and intolerance, has raised a _Protestant_, the subject of a small but virtuous republic, to a decisive lead in the regulation of its finances. It is to be presumed, that so singular a preference will produce an equally singular exertion of integrity and talents. Though differing from Monsieur TURGOT in several principles, which regard the larger lines of government, he appears by his first steps, and, particularly, the preamble to a late edict for raising 24 millions of livres by a lottery, to put his foot on the same great basis of general justice, and a strict conservation of the faith o£ the king; and points more particularly at the surest of all resources in any modern states, a simplification of taxes and a reformation in the collection of them. This administration, making improvements in the Revenue its immediate object, is more capable of present exertion; and, as such, is more formidable.
From these facts and observations it is impossible not to conclude, that if we trust our safety to the difficulties of FRANCE, we may find ourselves fatally deceived. I will add, that though (like the 3s. land-tax and lotteries among ourselves) some of the extraordinary impositions of the last war have been continued in _France_, there are some which ceased with the war, and which they can renew. It is, particularly, an advantage of unspeakable importance to them, that they can carry on a war, as they did the last, at _half_ our expence; and that, having no dependence on the flattering delusion of paper, they can, as they did in 1759, bear even a bankruptcy in the middle of a war, and yet carry it on vigorously.—Their debts time itself is sinking fast. Of 3.111,000l. (seventy millions of livres) in annuities on the _Hotel de Ville_ at _Paris_, 1.777,000l. (forty millions of livres) consisted in 1774 of Life Annuities, which were falling by deaths at the rate of 71,000l. (1.600,000 livres) every year.—Even their loss of credit, whatever present embarrassment attends it, favours them upon the whole. To this they owe the advantages just mentioned. The facility with which our high credit has enabled us to run in debt ensnares us; and, if a change of measures does not take place,[123] must _ruin_ us. Experience has given them a just horror at borrowing on permanent funds; and were they inclined to do it, they are not able to do it to any great amount; and, consequently, they cannot go on mortgaging one resource after another till none is left.—While we lose sight of the capital in the interest, they carry their views chiefly to the reimbursement of the capital; and after receiving high interest, for some years, can be satisfied with receiving back a part of their capital.—Their debts, being confined in a great measure to the _Farmers General_ and others at PARIS, are not circulated and diffused among the body of the people in the manner ours are: And it is well known, that they can make use of methods to discharge them which our government must never think of. The acts of arbitrary power and unjust expedients to which, on many occasions, they have had recourse for this purpose without producing any tumults, are such as appear to us almost incredible; and should the time ever come, when it will be necessary in this country to make use of any violence of the same kind, all government will probably be at an end.
In point of territory and number of inhabitants, the two countries will bear no comparison[124]. We have hitherto opposed _France_ by our free spirit, and our colonies; and to them chiefly we owe our prosperity and victories. Our colonies once separated from us, the islands will soon follow. But should they remain ours, our comparative advantages will best appear from the following authentic account of the imports into _France_ from their islands.
In 1774.
Weight in Pounds.
Sugar imported into _France_ 147.986,959 Indigo 1.734,206 Rocou 210,187 Coffee 58.247,133 ----------- 208.178,485
In 1775.
Weight in Pounds.
Sugar imported into _France_ 171.932,972 Indigo 2.134,247 Rocou 169,831 Coffee 58.545,000 ----------- [125]232.782,050
Value of the above commodities re-exported from _France_, taken upon the average price.
_Livres._ _Sterling._
In 1774 75.901,373 3.373,000 In 1775 74.961,318 3.331,000
The whole importation from the _West Indies_ into _Britain_ is about three millions _per ann._
But I have gone much beyond the views with which I begun this section. The facts which have been stated, and the reflections which they have occasioned, are intended principally to shew that we ought not to suffer ourselves to be drawn into security by any assurances of the weakness of _France_.—May she, however, find herself the weakest of kingdoms whenever, from motives of interest or ambition, she shall attempt to injure any of her neighbours.—May _Britain_, hitherto the most favoured spot under heaven, always preserve her distinguished happiness, and escape the danger which now threatens her. And may the time soon come, when all mankind, sensible of the value of the blessings of peace and equal liberty, shall suffer one another to enjoy them, and learn war no more.
SECT. IV.
_Containing an Account of the National Income and Expenditure; the Surplus of the Revenue; and the Money drawn from the Public by the Taxes; with Remarks on Lord STAIR’S Account._
_APPROPRIATED REVENUE at Midsummer, 1775._
£.
Interest of the national debt 4.440,821
Civil list revenue. See the note in page 163 800,000
Expences of management attending the national debt; of which 71,432 l. is the expence of management at the Bank, South-Sea House, and _India_ House; and 5.900 l. salaries to _Exchequer Officers_. See Page 119, &c. 77,332
Annuities payable out of the Aggregate Fund to the DUKE OF GLOUCESTER, 8000 l.—DUKE OF CUMBERLAND, 8000 l.—the Representatives of ARTHUR ONSLOW, Esq; 3000 l.—And the Sheriffs of ENGLAND and WALES, 4000 l.—In all 23,000
Clerk of the Hanaper in Chancery—Coinage[126] expence—Tenths and first-fruits of the Clergy appropriated to the augmentation of small livings—Extra revenues of the crown, consisting of _American_ quit-rents; duty of 4½ _per cent._ in the Leeward Islands; revenues of Gibraltar and dutchy of _Cornwall_, &c.—Fees for warrants and orders, for auditing and engrossing accounts of dividend warrants, and other charges at the EXCHEQUER and TREASURY[127] 100,000 --------- Total of the Appropriated Revenue £. 5.441,153
_State of the SURPLUS of the REVENUE for 11 years ended at 1775._
UNAPPROPRIATED REVENUE.
NEAT PRODUCE of the Sinking Fund, for five years, including casual surplusses, reckoning to _Christmas_ in every year; being the annual medium, after deducting from it about 45,000l. always carried to it from the supplies, in order to replace so much taken from it every year to make good a deficiency in a Fund established in 1758. £. 2.610,759
Neat annual produce of Land Tax at 3s. militia deducted; and of the Malt Tax[128] 1.800,000
(N. B. These two taxes in 1773, brought in only 1.665,475l.)
There are some casual Receipts, not included in the Sinking Fund, such as Savings in Pay-Office, duties on Gum Senega, American Revenue, &c. But they are so uncertain and inconsiderable, that it is scarcely proper to give them as a part of the permanent Revenue. Add however on this account 50,000 --------- Total of unappropriated Revenue £. 4.460,759
_Produce of the SINKING FUND, reckoned to Christmas in every Year._
1770 £. 2.486,836 1771 2.553,505 1772 2.683,831 1773 2.823,150 1774 2.731,476
The average of these five years is 2.655,759l. or, deducting 45,000l. (as directed in the last page), 2.610,759l.
In 1775, the Sinking Fund was taken for 2.900,000l. including an extraordinary charge of 100,000l. on the _Aggregate_ Fund; but it produced 2.917,869l. The average of six years, including 1775, was 2.654,443l. The average of five years before 1770, was 2.234,780l.
ANNUAL EXPENDITURE.
£.
Peace Establishment, for the Navy and Army, including all miscellaneous and incidental expences 3.700,000
Annual increase of the Navy and Civil List debts 350,000
Interest at 2 _per cent._ of 3.600,000l. unfunded debt, which must be paid out of the unappropriated Revenue 72,000
--------- Total 4.122,000 ANNUAL SURPLUS of the Revenue 338,759 --------- Annual income £. 4.460,759
The estimate for the peace establishment, including miscellaneous expences, amounted, in 1775, to 3.703,476l.—But the extraordinary expences, occasioned by the war with America, made it fall very short.—In 1774 it amounted to 3.784,452l. exclusive of 250,000l. raised by Exchequer Bills, towards defraying the expence of calling in the gold coin. And the medium for eleven years, from 1765, has been nearly 3.700,000l.—According to the accounts which I have collected, the expence of the peace establishment (including miscellaneous expences) was in 1765, 1766, and 1767, 3.540,000l. _per ann._—In 1768, 1769, and 1770, it was 3.354,000l. _per ann._—In 1771, 1772, 1773, 1774, and 1775, the average has been nearly four millions _per ann._ exclusive of the expence of calling in the coin.
* * * * *
The parliament votes for the sea service 4l. _per_ month _per_ man, including wages, wear and tear, victuals and ordnance. This allowance is insufficient, and falls short every year more or less, in proportion to the number of men voted. From hence, in a great measure, arises that annual increase of the navy debt, mentioned in the second article of the _National Expenditure_. This increase in 1772 and 1773 was 669,996l. or 335,000l. _per ann._ The number of men voted in those two years, was 20,000. I have supposed them reduced to 16,000, and the annual increase of the Navy Debt to be only 250,000l.—Add 100,000l. for the annual increase of the Civil List Debt, and the total will be 350,000l.
* * * * *
Soon after the publication of the preceding account in _February_ last year, the EARL OF STAIR obliged the public with another account of the same kind, which brings out a conclusion much more unfavourable. According to this account, were lotteries abolished, and the land-tax at 3s. in the pound only, there would be a _deficiency_ in the revenue, instead of such a _surplus_ as I have stated. The following remarks will shew the reason of this difference.
The EARL OF STAIR has taken the annual produce of the _Sinking_ Fund at 2.506,400l. being the average produce of EIGHT years ended at _Lady day_ 1775.—I have taken it at 2.610,759l. being the average of FIVE years ended at _Christmas_ 1775.—The neat produce of the land and malt taxes has been also taken near 50,000l. higher in my account; and I have besides admitted 50,000l. _per ann._ for casual supplies, which his Lordship has not charged.
The annual increase of the Navy Debt, LORD STAIR states at 300,000l. and of the Civil List at 200,000l. I have stated the former at 250,000l. and the latter at 100,000l.—In order also to avoid, as much as possible, all exaggeration, I have thrown out the expence of the new coinage. Lord Stair has admitted it, and given an yearly expence derived from hence of 100,000l.—He has also taken the Peace Establishment for 1774, as a fair medium for common years of peace, because it was lower in that year than in the three years preceding 1775. I have taken the average of _eleven_ years of peace, which is 75,000l. less.
In consequence of these differences, the national PEACE expenditure in _Lord Stair_’s account comes out 325,000l. _per ann. higher_ than in mine; and the national income comes out 204,359l. _lower_; from whence it follows, that without lotteries, and the land being at 3s. in the pound, the kingdom must, according to his Lordship’s calculation, run out at the rate of about 200,000l. every year.
In some of the particulars I have mentioned, this account is probably nearest to the truth; but, I hope, it will be considered, that I have studied to give moderate accounts, and aimed at erring always rather on the favourable than the unfavourable side.
_Second Method of deducing the SURPLUS of the REVENUE._
From the year 1763 to the year 1775, or during a period of 12 years, 10.639,793l. of the public[129] debt was paid off.—The money employed for this purpose must have been derived from the surplus of the _ordinary_ revenue, added to the _extraordinary_ receipts. These receipts have consisted of the following articles.—1st. The land-tax at 4s. in the pound in 1764, 1765, 1766, and 1771; or 1s. in the pound extraordinary for four years, making 1.750,000l.—2. The profits of ten lotteries[130] making (at 150,000l. each lottery) 1.500,000l.—3. A contribution of 400,000l. _per ann._ for five years from the EAST INDIA Company, making 2.000,000l.—4. Savings by debts discharged at a discount,[131] making at least 400,000l.—5. Paid by the Bank in 1764 for the renewal of their charter, 110,000l.—6. Savings on high grants during the war; produce of _French_ prizes taken before the declaration of war; sale of lands in the ceded islands; and composition for maintaining _French_ prisoners,[132] making 2.520,000l.—All these sums amount to 8.280,000l. There remains to make up 10.639,793l. (the whole debt discharged) 2.359,793l. and this, therefore, is the amount of the whole surplus of the _ordinary_ revenue for twelve years; or 196,000l. _per ann._[133]
The Earl of STAIR has also, in this method, calculated the _surplus_ of the Revenue; and makes the total, for eleven years, to be no more than 2.557,378l. even with the assistance of lotteries, and the land-tax at 4s. in the pound for five years; from whence it follows, that _without_ these assistances, there would have been a deficiency of near 60,000l. _per ann._—The reason is, that his Lordship has taken the whole debt paid since 1763, at no more than 7.053,855l. or three millions and a half less than I have made it; and he has taken it so much less, chiefly in consequence of including in the amount of the public debt in 1775, the excess of the expences of that year above the common peace expences. This excess is to be charged to the present war; and, in determining the ordinary peace _surplus_, which is my object, it was proper to exclude it, and to terminate the account at the commencement of the war.—I will only add, that Lord STAIR has also included more in the extraordinary receipts than I have; and, particularly, 700,000l. which he supposes the public gained by the TEA INDEMNITY.—But this was only a compensation made by the _East-India_ Company for the loss which the public sustained by taking off, in 1766, a part (or 1s. _per_ pound) of the duty on tea. In 1772 it was restored; and the excise upon tea has since, if I am rightly informed, produced as much as ever. _Before_ 1766, it produced annually 474,091l. Immediately[134] after 1766, it produced 341,284l.—But in 1775, it produced near half a million.
_Sketch of an Account of the Money drawn from the Public by the Taxes, before the Year 1776._
£.
CUSTOMS in ENGLAND, being the medium of the payments into the Exchequer, for 3 years ending in 1773[135] 2.528,275
Amount of the EXCISES in ENGLAND, including the malt tax, being the medium of 3 years ending in 1773 4.649,892
Land Tax at 3s. 1.300,000
Land Tax at 1s. in the pound 450,000
SALT DUTIES, being the medium of the years 1765 and 1766 218,739
Duties on Stamps, Cards, Dice, Advertisements, Bonds, Leases, Indentures, News-papers, Almanacks, &c. 280,788
Duties on houses and windows, being the medium of 3 years ending in 1771 385,369
Post Office, Seizures, Wine Licences, Hackney Coaches, Tenths of the Clergy, &c. 250,000
EXCISES in SCOTLAND, being the medium of 3 years ending in 1773 95,229
CUSTOMS in SCOTLAND, being the medium of 3 years ending in 1773 68,369
Annual profit from Lotteries 150,000
Inland taxes in SCOTLAND, coinage duties, casual revenues, such as the duties on Gum-Senega, American revenue, &c. 150,000
EXPENCE of collecting the EXCISES in ENGLAND, being the average of the years 1767 and 1768, when their produce was 4.531,075l. _per ann._—6 _per cent._ of the gross produce 297,887
EXPENCE of collecting the Excises in SCOTLAND, being the medium of the years 1772 and 1773, and the difference between the gross and nett produce—31 _per cent._ of the gross produce 43,254
EXPENCE of collecting the CUSTOMS in ENGLAND, being the average of 1771 and 1772, bounties included, and 15 _per cent._ of the gross produce, exclusive of drawbacks and over-entries 468,703
N. B. The bounties for 1771 were 202,840l.—for 1772, 172,468l.
The charges of management for 1771, were 276,434l.
For 1772, 285,764l. or 10 _per cent._ nearly.
Interest of loans on the land tax at 4s. expences of collection, militia, &c. 250,000
PERQUISITES, &c. to Custom-house officers, &c. supposed 250,000
EXPENCE of collecting the Salt-duties in ENGLAND, 10½ _per cent._ 27,000
Bounties on fish exported 18,000
EXPENCE of collecting the duties on Stamps, Cards, Advertisements, &c. 5¼ _per cent._ 18,000 ---------- Total £. 11.900,505 ----------
It must be seen, that this account is imperfect and defective. It is, however, sufficient to prove, that the whole money raised DIRECTLY by the taxes, (exclusive of tithes, county rates, and the taxes which support the poor,) cannot be much less than TWELVE MILLIONS. The _Earl of Stair_ has in his papers made it to be above 400,000l. more, by including in his estimate several articles which I have omitted; particularly, the interest and management on the equivalent to _Scotland_, the Scotch crown Revenues, Dutchy of _Cornwall_ and _Lancaster_ Fines, &c. He has also given an estimate of the fees and perquisites of office of every kind, and reckoned them at half a million; whereas, I have only reckoned the perquisites of office at the _Custom-house_.
I should be inexcusable were I to quit this subject, without taking notice of the particular gratitude due from the public to _Lord Stair_, for publishing his papers; and for stepping forth at this time to draw attention, by the weight of his name and character, to calculations, which, as he justly says, “it becomes every man of property among us to understand; to awaken the nation from the lethargy into which the mockery of paper wealth has plunged it; and to bear his testimony against the present unnatural war.”
POSTSCRIPT.
The following POSTSCRIPT has been published only in a few of the last Editions of the _Observations on Civil Liberty._ It has been often referred to in the preceding work; and, therefore, it is necessary to give it a place here.
_ACCOUNT of Public Debts discharged, Money borrowed, and Annual Interest saved from 1763 to 1775._
Debts paid off since 1763. Annuity decreased. £. £. _s._ 1765 870,888 funded, bearing interest at 4 _per cent._ 34,835 10 1.500,000 unfunded, 4 _per cent._ 60,000 00 1766 0.870,888 funded, 4 _per cent._ 34,835 10 1.200,000 unfunded, 4 — 48,000 00 1767 2.616,777 funded, 4 — 104,671 0 1768 2.625,000 funded, 4 — 105,000 0 1771 1.500,000 funded, 3 _per cent._ 45,000 0 1772 1.500,000 funded, 3 _per cent._ 45,000 0 1773 800,000 unfunded, 3 — 24,000 0 1774 1.000,000 funded, 3 — 30,000 0 1775 1.000,000 funded, 3 — 30,000 0 ---------- ---------- Total 15.483,553 Total 561,342 0
In 1764, there was paid off 650,000_l._ navy-debt; but this I have not charged, because scarcely equal to that annual increase of the navy-debt for 1764, 1765, and 1766, which forms a part of the ordinary peace establishment. The same is true of 300,000_l._ navy-debt, paid in 1767; of 400,000_l._ paid in 1769; of 100,200_l._ paid in 1770; 200,000_l._ in 1771; 215,883_l._ in 1772; and 200,000_l._ in 1774.
_Account of money borrowed and debts contracted since 1763._
Annual interest £ increased. Borrowed and funded, at 3 _per cent._ in 1765 1.500,000 45,000 in 1766 1.500,000 45,000 in 1767 1.500,000 45,000 in 1768 1.900,000 57,000 Unfunded in 1774 250,000 7,500 Civil list debt in 1775 500,000[136] --------- ------- Total 7.150,000 199,500
From 15.483,553_l._ the total of debts discharged, subtract 7.150,000_l._ the total of debts contracted; and the remainder, or 8.333,553_l._ will be the diminution of the public debts since 1763. Also, from 561,342_l._ the total of the decrease of the annual interest, subtract 199,500_l._ (the total of its increase), and the remainder, or 361,842_l._ will be the interest or annuity saved since 1763.—To this must be added 12,537_l._ _per ann._ saved by changing a capital of 1.253,700_l._ (part of 20.240,000_l._) from an interest of 4 to 3 _per cent._ pursuant to an act of the 10th of George III.; also the life-annuities that have fallen in; and 7,500_l._ _per ann._ gained by the falling (in 1771) of 1.500,000_l._ from an interest of 3½ to 3 _per cent._; which will make a saving in the whole of near 400,000_l._ _per annum_: And it is to this saving, together with the increase of luxury, that the increase of the _Sinking-Fund_ for the last ten years has been owing.
To the debts discharged the following additions must be made.
In 1764 there was paid towards discharging the extraordinary expences of the army, 987,434_l._: In 1765, these expences amounted to 404,496_l._: In 1766, to 479,088_l._—Total 1.871,018_l._—This sum is at least a million higher than the extraordinary expences of the army for three years in a time of peace. This excess, being derived from the preceding war, must be reckoned a debt left by the war. And the same is true of 1.106,000_l._ applied, in 1764, 1765, and 1766, towards satisfying _German_ demands.—There are likewise some smaller sums of the same kind; such as subsidies to _Hesse-Cassel_, _Brunswick_, &c. And they may be taken at 200,000_l._—The total of all these sums is 2.306,240_l._; which, added to 8.333,553_l._ makes the whole diminution of the public debt since 1763, to be 10.639,793_l._
Soon after the peace in 1763, an unfunded debt, amounting to 6.983,553_l._ was funded on the _Sinking Fund_, and on new duties on wine and cyder, at 4 _per cent._ There has been since borrowed and funded on coals exported, window-lights, &c. 6.400,000_l._ The funded debt, therefore, has increased since the war 13.383,553_l._ It has decreased (as appears from page 171) 11.983,553_l._; and, consequently, there has been on the whole an addition to it of 1.400,000_l._—During seven years, from 1767 to 1774, 1.415,883_l._ navy-debt was paid off. See page 172. But, as this is a debt arising from constant deficiencies in the peace estimates for the navy, it is a part of the current peace expences.—In 1768 this debt was[137] 1.226,915_l._—In 1774 it was 1.850,000_l._; and consequently, though 1.415,883_l._ was paid off, an addition was made to it, in seven years, of 623,085_l._ It increased, therefore, at the rate of 291,000_l._ _per ann._
The paper from which I have taken the following account, came into my hands after almost the whole of this work had been printed off. It contains a fact of so much importance, that I cannot satisfy myself without laying it before the public.—In a Committee of CONGRESS in _June_ 1775, a declaration was drawn up containing an offer to GREAT BRITAIN, “that the Colonies would not only continue to grant extraordinary aids in time of war, but also, if allowed a free commerce, pay into the SINKING FUND such a sum annually for ONE HUNDRED YEARS, as should be _more_ than sufficient in that time, if faithfully applied, to extinguish all the present debts of BRITAIN. Or, provided this was not accepted, that, to remove the groundless jealousy of _Britain_ that the Colonies aimed at Independence and an abolition of the Navigation Act, which, in truth, they had never intended; and also, to avoid all future disputes about the right of making that and other Acts for regulating their commerce for the general benefit, they would enter into a covenant with _Britain_, that she should fully possess and exercise that right for _one hundred years_ to come.”
At the end of the _Observations on Civil Liberty_, I had the honor of laying before the public the Earl of _Shelburne’s_ plan of Pacification with the Colonies. In that plan, it is particularly proposed, that the Colonies should grant an annual supply to be carried to the Sinking Fund, and unalienably appropriated to the discharge of the public debt.—It must give this excellent Peer great pleasure to learn, from this resolution, that even this part of his plan, as well as all the other parts, would, most probably, have been accepted by the Colonies. For though the resolution only offers the alternative of either a _free_ trade, with extraordinary aids and an annual supply, or an _exclusive_ trade confirmed and extended; yet there can be little reason to doubt, but that to avoid the calamities of the present contest, both would have been consented to; particularly, if, on our part, such a revisal of the laws of trade had been offered as was proposed in Lord Shelburne’s plan.
The preceding resolution was, I have said, drawn up in a Committee of the Congress. But it was not entered in their minutes; a severe Act of Parliament happening to arrive at that time, which determined them not to give the sum proposed in it.
FINIS.
POSTSCRIPT.
The following POSTSCRIPT was published only in a few of the last Editions of the _Observations on Civil Liberty_. It has been often referred to in the preceding work; and therefore, it is necessary to give it a place here.
_ACCOUNT of Public Debts discharged, Money borrowed, and Annual Interest saved from 1763 to 1775._
Debts paid off since 1763. Annuity decreased. £. £. _s._ 1765 876,888 funded, bearing interest at 4 _per cent._ 34,835 10 1.500,000 unfunded, 4 _per cent._ 60,000 00 1766 0.870,888 funded, 4 _per cent._ 34,835 10 1.200,000 unfunded, 4 — 48,000 00 1767 2.616,777 funded, 4 — 104,671 0 1768 2.625,000 funded, 4 — 105,000 0 1771 1.500,000 funded, 3½ _per cent._ 52,500 0 1772 1.500,000 funded, 3 _per cent._ 45,000 0 1773 800,000 unfunded, 3 — 24,000 0 1774 1.000,000 funded, 3 — 30,000 0 1775 1.000,000 funded, 3 — 30,000 0 ---------- ----------- Total 15.483,553 Total 568,842 0
In 1764, there was paid off 650,000l. navy-debt; but this I have not charged, because scarcely equal to that annual increase of the navy-debt for 1764, 1765, and 1766, which forms a part of the ordinary peace establishment. The same is true of 300,000l. navy-debt, paid in 1767; of 400,000l. paid in 1769; of 100,200l. paid in 1770; 200,000l. in 1771; 215,883l. in 1772; and 200,000l. in 1774.
_Account of money borrowed and debts contracted since 1763._
Annual interest £ increased. Borrowed and funded, at 3 _per cent._ in 1765 1.500,000 45,000 in 1766 1.500,000 45,000 in 1767 1.500,000 45,000 in 1768 1.900,000 57,000 Unfunded in 1774 250,000 7,500 Civil list debt in 1775 500,000[138] --------- ------- Total 7.150,000 199,500
From 15.483,553l. the total of debts discharged, subtract 7.150,000l. the total of debts contracted; and the remainder, or 8.333,553l. will be the diminution of the public debts since 1763. Also, from 568,842l. the total of the decrease of the annual interest, subtract 199,500l. (the total of its increase), and the remainder, or 369,342l. will be the interest or annuity saved since 1763.—To this must be added 12,537l _per ann._ saved by changing a capital of 1.253,700l. (part of 20.240,000l.) from an interest of 4 to 3 _per cent._ pursuant to an act of the 10th of George III.; also the life-annuities that have fallen in; which will make a saving in the whole of near 400,000l. _per annum_: And it is to this saving, together with the increase of luxury, that the increase of the _Sinking Fund_ for the last ten years has been owing.
To the debts discharged the following additions must be made.
In 1764 there was paid towards discharging the extraordinary expences of the army, 987,434l. In 1765, these expences amounted to 404,496l. In 1766, to 479,088l.—Total 1.871,018l.—This sum is 1.100,000l. higher than the extraordinary expences of the army for three years in a time of peace. This excess, being derived from the preceding war, must be reckoned a debt left by the war. And the same is true of 1.106,000l. applied, in 1764, 1765, and 1766, towards satisfying _German_ demands.—There are likewise some smaller sums of the same kind; such as subsidies to _Hesse-Cassel_, _Brunswick_, &c. And they may be taken at 200,000l.—The total of all these sums is 2.406,240l. which, added to 8.333,553l. makes the whole diminution of the public debts, or the whole saving of the kingdom, since 1763, to be 10.739,793l.
Soon after the peace in 1763, an unfunded debt, amounting to 6.983,553l. was funded on the _Sinking Fund_, and on new duties on wine and cyder, at 4 _per cent._ There has been since borrowed and funded on coals exported, window-lights, &c. 6.400,000l. The funded debt, therefore, has increased since the war 13.383,553l. It has decreased (as may appear from page 177) 11.983,553l. and, consequently, there has been on the whole an addition to it of 1.400,000l.—During seven years, from 1768 to 1774, 1.115,883l. navy-debt was paid off. See page 178. But, as this is a debt arising from constant deficiencies in the peace estimates for the navy, it is a part of the current peace expences.—On the 31st of December, 1767, this debt was 1.213,072l.—On the 31st of December, 1774, it was 1.850,000l. and consequently, though 1.115,883l. was paid off, an addition was made to it, in seven years, of 673,028l. It increased, therefore, at the rate of 255,558l. _per ann._
SUPPLEMENT TO SECTION III PART II.
_Containing additional Observations on Schemes for raising Money by Public Loans._
It is impossible, that any attentive person can reflect without concern, on that monstrous accumulation of artificial debt for which no value has been received, which has been pointed out in different parts of the preceding Tract; and, particularly in the third Section of the second Part. This being a subject which, in the present state of our finances, is highly interesting; I have been induced to return to it in this place; and to offer some further observations and proposals which have occurred to me in reconsidering it, and which I think necessary to explain and confirm those which have been already offered.
* * * * *
There are two methods in which money is capable of being borrowed for public services. The first is, by offering such _high_ interest as may of itself be sufficient to induce lenders to advance the sums that are wanted: And the second is, by offering a _low_ interest, with a _gratuity_ or _douceur_ to produce the acceptance of it.—The last has been the method in which our government has most commonly borrowed money; and the gratuity offered has been either a right to a greater capital than the sum advanced, or a _long_ or _short_ or _life_ annuity, or the profits of a lottery, or some advantages of trade.—The first without doubt, is the most rational method of borrowing; and the latter is so absurd and extravagant as to be incapable of being adopted in the common transactions of life.—In order to give a just and full idea of this, I shall instance in the last loan; specifying the manner in which it _would_ have been made if the usual method of borrowing had been followed; and comparing this with the manner in which it _was_ made; and the manner in which, I think, it _might_ have been made to the greatest advantage.
FIVE MILLIONS, it is well known, were borrowed last year; and, had the old plan of borrowing been adopted, this sum would have been borrowed by some such scheme as one of the _two_ following.
First. Interest in the public funds being then near 4 _per cent. per ann._ an interest of only 3 _per cent._ would have been offered; or, in other words, for every 100l. in _money_, 100l. _stock_ carrying 3 _per cent._ (worth then 78l.) would have been given; but at the same time, as a _premium_ or _compensation_ for accepting such low interest, a life-annuity, or a short annuity would have been offered worth somewhat more than the difference between 100l. and 78l. or about 24l. The whole premium, therefore, in raising _five millions_, would have been equal in value to about 1.200,000l. and, supposing it to have been either a life-annuity, or a short annuity for 17 years of 2l. worth 12 years purchase, annexed to every 100l. stock, the whole annual charge incurred by the loan would have been 250,000l. for a term of years, and 150,000l. for ever till the capital is redeemed.
It is manifest that the capital including in it according to this account almost the whole _premium_, the public makes itself, by this mode of borrowing, a _debtor_ for the very thing it _gives_; and, besides paying the annuity, obliges itself to advance at redemption the whole value of it.—It is proper to add, that this is done _unnecessarily_, because 1.200,000 might have been procured by selling the annuity, and the remaining 3.800,000l. necessary to make up five millions, might have been procured, as will be shewn presently, without any _douceur_ by giving higher interest.
But there is another method of borrowing which has been practised by government on former occasions, and which might have been adopted in the last loan.
For every 100l. advanced a new capital in the 3 _per cent._ funds worth that sum would have been sold, including a funded 10l. lottery ticket. This new capital would have been nearly 127l. three _per cent. stock_ for every 100l. in _money_, or 6.343,954l. stock for FIVE MILLIONS in money; of which stock 5.718,954l. would have been sold, to encourage subscriptions, at 2 _per cent._ below the market price, that is, at 76l. ½; and the remaining stock, having a lottery annexed, would have been sold at _par_. A fictitious or artificial capital, therefore, would have been created, or a debt incurred more than the value received, of 1.343,954l. besides relinquishing about 150,000l. which might have been obtained by the profits of the lottery.
I have been seldom more surprized than at the preference of this scheme, which, at the time of settling the last loan, was expressed by some very respectable members of the House of Commons; nor can this preference be easily accounted for on any other supposition than that they consider the public debts as incumbrances, never to be removed, and, therefore, think it of no consequence with what difficulties the redemption of them is loaded by an increase of capitals bearing low interest. It must be acknowledged indeed that this method of borrowing would have been attended with a small present advantage; for the interest of 6.343,954l. at 3 _per cent._ is 190,318l. and this, together with the interest of 150,000l. or 6000l. _per ann._ lost by giving up the profits of a lottery, would have been the whole present annual charge it would have brought on the public. But if this be a sufficient reason for preferring such a scheme, it would perhaps be best to create capitals bearing 2 _per cent._ or even 1 _per cent._ interest; for probably such capitals would bear a better price, in proportion to the rates of interest, than any 3 _per cent._ capitals, and consequently, a greater present saving might be made by selling them. No other objection can be made to this than that by lowering interest, and laying the public under an obligation to return _double_ or _triple_ every sum it receives; the redemption of the public debts might be rendered so expensive and difficult as to be entirely impracticable. But this would be of no consequence if indeed their redemption is already become impracticable; and if, therefore, every new charge they bring on the public is to be considered as laid on for eternity.
* * * * *
With these schemes let us now compare the scheme actually adopted for the last loan.
Instead of a 3 _per cent._ capital, a new capital bearing 4 _per cent._ interest, irredeemable for ten years, was offered at 95l. for every 100l. _stock_, with two _douceurs_ to raise the value of the stock above 100l. in money; namely, a short annuity of a HALF _per cent._ for ten years, (reckoned worth 4l. 2s.) and the profit (reckoned at 3l.) of one ticket in a money lottery consisting of 50,000 tickets.
The chief difference between this scheme and the first I have described is, that the new stock created is a FOUR _per cent._ instead of a THREE _per cent._ stock. But this is a difference of particular importance, and brings it near to such plans of borrowing as appear to me the best.—In the _first_ scheme, the artificial capital is 1.200,000l. In the _second_, 1.343,954l. In this _third_ scheme it is only 250,000l. This scheme, therefore, has evidently great merit; and perhaps, in the present state of the public debts, it does not admit of any great improvement. There is, however, an easy alteration which, I think, would have been an improvement, and which I shall take the liberty to mention.
According to a preceding observation, the two _douceurs_ being included in the capital, are granted, and must be paid twice over. This is so absurd and extravagant that it ought to be avoided as far as possible; and it might have been avoided, in a great measure, by offering for every 100l. advanced 95l. stock, carrying 4 _and a quarter_ interest irredeemable for ten years, with the same short annuity and a lottery ticket annexed.[139] In this case, the new capital would have been 4.750,000_l_. carrying (at 4¼ _per cent._) 201,875_l_. _per ann._ interest. There would, therefore, have been a saving of 250,000l. in the capital; and the annual charge would have been nearly the same.
It must be observed that this scheme supposes that a stock bearing 4¼ _per cent._ interest would have been valued nearly at _par_; and, according to the principles on which the scheme was calculated, it could not have been valued at much less; or, supposing it valued at 1 or 2 _per cent._ less, the difference might have been made up by only adding two or three years to the duration of the short annuity and the term of irredeemableness.—Had a _stock_ been offered bearing 4¼ _per cent._ interest irredeemable for ten years, one _half_ at least of the short annuity might have been saved. The annual charge for ten years would have been somewhat less;[140] and the excess afterwards would have been much more than compensated by the advantages at redemption attending a higher interest and a smaller capital.
But, perhaps, such a scheme as the following would have been preferable to any of those now proposed.
For every 100l. in _money_ 75l. stock irredeemable for 10 years and carrying 4¼ _per cent._ interest, might have been offered, together with an annuity for 27 years of 1½ _per cent._ (valued cheap at 16 years purchase, or 24l.) and the advantage of a lottery ticket. This scheme would have been as likely to be attended with a profit as that which was adopted. The new capital would have been only 3.750,000l. bearing 159,375l. interest. The short annuity would have been 75,000l. and the whole annual charge (supposing no redemptions of the capital to take place after ten years) 234,375l. for 27 years, and afterwards 159,375l. It appears, therefore, that 1.250,000l. or a _quarter_ of the capital that was actually created, would have been saved; and also a rent charge on the public after 27 years of 40,750l. _per ann._ for ever.—The additional expence to balance these advantages would have been 9.650l. _per ann._ for ten years, and 34,375l. _per ann._ for 17 years. In other words; the public would have absolutely secured the redemption of a _quarter_ of the loan, (or of 1.250,000l.) besides an easier redemption of the remainder, at the expence of 680,875l. in the whole,[141] to be paid annually in small sums during the course of 27 years.
* * * * *
All that has been now said has gone on the supposition that, agreeably to the calculations on which the last loan was formed, 100l. _stock_ irredeemable for ten years and bearing 4 _per cent._ interest, would sell at 17l. more than 100l. stock bearing 3 _per cent._ interest; (or at 95l. when the latter stock is at 78l.) and also, that a short annuity for ten years would sell at 8⅟₁₀ years purchase.—But events have shewn that these valuations were too high. The new subscription (including 100l. four _per cent._ stock, a half _per cent._ short annuity, and the profit of a lottery ticket) should have sold, according to these valuations, at about 102½. But it never bore so high a price; and in a little time it fell to _par_, and at last to 3 _per cent._ discount.—Various reasons have been assigned for this; but the true reasons were the following.
First. A general fall of near 2 _per cent._ which took place in the stocks soon after the loan was settled.
Secondly. A lower valuation of the new 4 _per cent._ stock and the short annuity which took place in the ALLEY.—This was the principal reason; and it will be proper particularly to explain it. In doing this, it will be necessary to look back a little to the history of the public funds.
* * * * *
In 1717 the public debts were reduced from an interest of 6 _per cent._ to 5 _per cent._ and in 1727, from 5 _per cent._ to 4 _per cent._ In 1737 a bill was brought into the HOUSE OF COMMONS by Sir _John Barnard_, for a farther reduction from 4 to 3 _per cent._ At this time the 3 _per cents._ were above _par_; and even, during the three first years of the war which began in 1740, they continued so high that government was able to raise the necessary supplies by borrowing at 3 _per cent._—In such circumstances, it was impossible the public creditors should avoid expecting a _third_ reduction; and this expectation would necessarily link the value of the FOUR PER CENTS. by leading the public to consider them as no more than a THREE _per cent._ stock having a short annuity of ONE _per cent._ annexed. Accordingly; _before_ the war the difference of price between the THREE and the FOUR _per cent._ stocks was about 10 or 11 _per cent._ After the commencement of the war, a reduction becoming more doubtful and more distant, this difference became greater, and generally kept between 14 and 17 _per cent._ At the approach of the PEACE in 1748, it sunk to 11 _per cent._ and soon _after_ the PEACE, the 3 _per cents._ having risen considerably above _par_,[142] and an universal expectation of a speedy reduction taking place, it sunk to 6 _per cent._—It is evident, therefore, that the price of the FOUR _per cents._ has been governed by the expectation of their reduction,[143] and that, had there been no such expectation, their price, compared with the 3 _per cents._ would have been much higher. It will appear presently to be most probable, that had it not been for this expectation, the prices of these stocks would not have differed much from the proportion of the rates of interest.
In taking this account, I have only compared the THREE _per cents._ with the SOUTH-SEA FOUR _per cent._ capitals before their reduction in 1749, at which time they amounted to above 27 millions, and were (as the consolidated three _per cent._ annuities are now) the grand staple stock of the kingdom. In 1746 and 1747, two new FOUR _per cent._ capitals were created redeemable at any time, and transferable at the BANK. The price of these new capitals kept for some time after their creation, considerably below the price of the old SOUTH-SEA four _per cents._ the reasons of which were, I suppose, the general reasons which make new funds bear a lower price than old ones; and, particularly, their having less traffic in them, and being small and detached parcels likely to be first selected for the operations of finance.
* * * * *
Were the cause now assigned, or the expectation of a reduction of interest, the only cause that governed the comparative prices of 3 _per cent._ and 4 _per cent._ capitals, the excess of one above the other would never be more than the supposed value of a short annuity of 1l. till _reduction_.—But there is another cause which may operate in this instance, and which ought not to be overlooked; I mean, the expectation of a greater payment at _redemption_. The effect of the former is to _diminish_, and of the latter to _increase_ the value of FOUR _per cent._ capitals.—In order to understand this it must be remembered, that when the 3 _per cents._ are at any considerable discount, it becomes practicable to redeem them under _par_, while debts bearing 4 _per cent._ interest must be redeemed at _par_. This will make a difference in favour of the latter, which will be greater or less in proportion to the greater or less discount at which the _three per cents._ are sold, the greater or less quantity of stock bearing 4 _per cent._ interest, and the greater or less probability that the whole or a considerable part of it will be soon redeemed[144]—Let us suppose, for instance, that all the public debts bearing 4 _per cent._ interest, consist of a single capital of FIVE MILLIONS redeemable at any time; and that all the rest of the public debts are THREE _per cent._ capitals sold at a discount of 12 _per cent._ or at 88l. for every 100l. stock. In these circumstances, there would be a certainty that the small stock bearing 4 _per cent._ interest would be selected for redemption as soon as possible; and, as a stock carrying such high interest could not be expected, when the 3 _per cents._ are at 88, to be redeemed under _par_, its real value would on this account exceed that of the THREE _per cents._ more or less in proportion as its redemption was more or less distant. And its _whole_ excess of value in these circumstances is to be computed in the following manner.—It would consist of a 3 _per cent._ capital, for every 100l. of which 100l. in money is to be received; and of an additional annuity of 1 _per cent._ till redemption. Its excess of value, therefore, if the whole capital was to be redeemed immediately, would be the same with the discount of the 3 _per cents._ or 12 _per cent._ If the capital was not to be redeemed till the end of 7 years, its excess of value would consist of 12 _per cent._ payable seven years hence, and the present worth of an annuity of 1 _per cent._ for the intermediate term of seven years. 12l. payable at the end of 7 years is worth in present money (allowing compound interest at 4 _per cent._) 9l. 2s. 6d. An annuity of 1l. for seven years is worth (reckoning the same interest) 6l. The whole excess of value, therefore, will be 15l. 2s. 6d. for every 100l. stock. If the redemption of the capital is to be delayed 15 years, the excess of value computed in the same manner will be 17l. 15s. 6d.—if 20 years, 19l. 1s.—if 30 years, 21l.
If the 3 _per cents._ had been supposed at a greater discount, it is evident that these several values would have been likewise greater; and had the quantity of 4 _per cent._ stock been supposed _double_ or _triple_, the effect would have been the same with a delay of redemption; and had it been supposed thirty or forty millions, the effect (in consequence of our slow progress in redeeming our debts) would not have fallen very short of an eternal delay of redemption.
Before 1749, the amount of the public debts carrying 4 _per cent._ interest was near 58 millions. The expectation, therefore, of the advantage now explained could not _then_ have any effect; and the only cause which could have influenced, in any considerable degree, the comparative prices of these stocks must have been the first I have assigned, or the expectation of their _reduction_; that is, in other words, the expectation of a _sudden redemption_ of them, as soon as the 3 _per cents._ got above _par_, by borrowing money at that interest. Had not this been foreseen, or had there been an act of parliament rendering it impracticable, there is no reason to doubt but the price of the FOUR _per cents._ compared with the THREE _per cents._ would have approached nearly to the proportion of the rates of interest, agreeably to what is said in (page 191).
The state of the public funds has been much changed since the two last wars; but it is an alteration that has increased the comparative value of 4 _per cent._ capitals.
I have already observed, that during the last war there was reason to expect, that, as soon as peace came, the THREE _per cents._ would rise above _par_. No one can now entertain any such expectation. On the contrary; it is most probable, that they will never again rise to that which has been their average price during the last peace from 1763 to 1775, and which, I think, may be stated at 87 or 88.—My reason for this assertion is,
First, that after the present war, should we be so happy as to escape the ruin with which it threatens us, our taxes and expences will be so much increased, and at the same time our resources so much diminished, as necessarily to leave the credit and value of our public securities lower than ever.
Secondly. Though our credit and resources should continue undiminished, yet the great addition which the present war will make to the public debt, is alone likely to sink their value, because every increase of a saleable commodity has always a tendency to lower its price.—It follows from hence, that the purchasers of FOUR _per cent._ capitals have now a prospect of an advantage of 12 or 14 _per cent._ at redemption, which they could not have had before the last peace.
In connexion with this it must be considered, that it is now highly probable, that it will never be again practicable to reduce the interest of any 4 _per cent._ capitals. In order to such a reduction, government must be able to offer to the proprietors of these capitals their _principal_, should they not chuse to take lower interest, and consequently to borrow at an interest of 3½ or 3¾ _per cent._ But no sums will be lent on such lower interest, unless it can be depended Upon that capitals bearing that interest, when brought to market, will bear a premium of 1 or 2 _per cent._; and this, when the _three per cents._ are not higher than 87 or 88, would require the excess of value of such capitals to be estimated at 14 or 15 _per cent._ whereas it has been lately found, that even FOUR _per cent._ capitals irredeemable for ten years, will not bear such an excess of value.—A _reduction_, therefore, of the interest of FOUR _per cent._ capitals, or a _redemption_ of them by borrowed money, cannot now be reckoned upon; and the only cause that can REASONABLY sink their value compared with the THREE _per cents._ below the ratio of the rates of interest, is the probability of a redemption of them by the surplus of the national revenue. I need not say how little is to be expected from hence. Supposing, however, that much may be expected, I have shewn what effect it ought to have; and from the observations I have made, and particularly the computation in (page 194), &c. it appears, I think, that the price of the capital of five millions four _per cent._ annuities lately created ought to have been near 18 _per cent._ more than the price of the THREE _per cents._ This appears to be true on the supposition that this capital will be redeemed in fifteen years; (that is, in five years after the expiration of the term for which it is made irredeemable) that the 3 _per cents._ will rise to as high a price as they bore during the last peace; and that purchasers are allowed to make FOUR _per cent._ compound interest of their money.—Were we to suppose this capital discharged even in two years after it becomes redeemable, the value, made out in the same way, would be nearly 17l.
He who will consider all this, and also recollect the general price of the 4 _per cents._ before their reduction in 1749, (see page 190) must be convinced that the TREASURY, at the time the last loan was settled, had good reason for taking the price of the new _four per cent._ capitals 17 _per cent._ higher than the price of the three _per cents._—It has, however, been found that this was too high a valuation. Instead of being sold at 17l. more for every 100l. stock than the 3 _per cents._ they have been sold at only 13l. or 14l. more; and this has been the chief reason of the discount to which the last subscription fell.—It is hard to say, by what principles the money’d men who traffic in the funds have governed themselves in this instance; but certain it is, that they have not been guided by any of the rules of just calculation: And the same must be said of the value at which they have reckoned the short annuity of a half _per cent._ for ten years annexed to the new 4 _per cents._ In forming the scheme for the last loan this annuity was, I have said, estimated at 8⅟₁₀ years purchase, agreeably to its real value, supposing the payments yearly, the first payment to be made at the distance of a year, and money improved at 4 _per cent._ compound interest. But it has in general been sold at about 7½ years purchase; which is _less_ than its value, supposing money improved at 5½ _per cent._ compound interest.[145]
From this account it appears, that could the caprice of the public have been foreseen, the price of the new four _per cents._ should not have been reckoned at more than 91l.; (the 3 _per cents._ being at 78l.) and that, consequently, to make up a value which would have produced 102l. for every 100l. advanced, either the term of irredeemableness and of the short annuity should have been lengthened; or, supposing this term the same, the short annuity should have been more than doubled. An artificial capital, indeed, of near half a million would in this case have been created. But this disadvantage might have been avoided, without bringing any additional expence on the public, by such alterations as I have before proposed; and by increasing in the corrected schemes, (page 186), &c. either the term of irredeemableness, or the short annuity, or the rate of interest, or all of them together.
* * * * *
The preceding account will, I fancy, help to shew what is practicable, _taking things as they are_, in borrowing money for public uses. It proves, that the nation loses greatly by the low price of all capitals bearing a higher interest than 3 _per cent._ and that could their value be raised, it would be greatly benefited.—For example. Could the new FOUR _per cents._ have been taken at 99l. for every 100l. stock, instead of 95l. the whole expence of the short annuity in the scheme of the last loan, and of a _quarter per cent._ perpetual interest, in the corrected schemes, (page 186), &c. might have been saved. But had the value of the 4 _per cents._ been raised in proportion to the rate of interest, or _nearly_ in that proportion, a farther saving might have been made, in all the schemes, of the profits of the lottery, and, consequently, of 6000l. _per annum_ in the annual charge.—My next enquiry, therefore, shall be, in what manner and by what regulations this may be done. I have written in the section on loans, on the supposition that such regulations are practicable; and I have proposed one of them; but I will here be more explicit.
* * * * *
It has been shewn, that before 1749 the cause which depressed the value of the 4 _per cents._ was the expectation of their being reduced; and that _now_ this cause is the expectation of their being soon _redeemed_. Remove, therefore, these causes in any degree, and their value must rise in the same degree.—With respect to the first, it is in my opinion certain that it would be doing great service to the public to exclude it entirely. Our reductions of interest have proceeded from a policy too narrow; and the nation is likely to suffer by them much more than it has gained.[146] The savings they produce, being expended on current services, tempt to extravagance; give a fallacious appearance of opulence; and, by making our debts sit lighter, render us less anxious about redeeming them, and less apprehensive of danger from the increase of them. At the same time they render their redemption a work of more difficulty, and oblige government, when under a necessity of contracting new debts, either to give extravagant interest, or to offer extravagant premiums. That accumulation of artificial debts which I have pointed out has been owing principally to this cause; and had it not been, in particular, for the reduction in 1749, the public debts would now have been near 14 millions less; and a debt of above a hundred millions, instead of consisting of capitals bearing interest at 3 _per cent._ would have consisted of capitals bearing some of them 3½, some 4, and some 4½ and 5 _per cent._ interest, which (supposing them all at a medium to bear 4 _per cent._) a million _per ann._ would have redeemed in six years less time, and at twenty-one millions less expence.—In short; reducing of interest is one of those unhappy TEMPORARY EXPEDIENTS to which statesmen are apt to betake themselves; and by which _present_ relief is gained at the expence of _future_ safety, and distress postponed by rendering it in the end more unavoidable and dreadful.—There cannot, therefore, be any sufficient reason against making the interest of the new capitals which may be created by any future loans, IRREDUCIBLE.[147] Should this raise the price of capitals bearing high interest in proportion to the increase of interest, government would be enabled to borrow to equal advantage whatever interest it offered; the new loans would not bring any greater annual charge on the nation than would have been necessary had the same sums been obtained by selling 3 _per cent._ capitals; and, at the same time, all the immense expence of _douceurs_ and _fictitious capitals_ would be saved, and all the advantages in redeeming the public debts obtained, arising from smaller capitals bearing higher interest.
Such a regulation as that now proposed would be alone sufficient for these purposes, when the amount of the debts bearing high interest and declared irreducible, is considerable, as appears from what is said in (page 195). But when a debt happens to bear a higher interest than any other, and is at the same time small, the probability of a _quick redemption_ will operate in the same manner on its price with the expectation of a _reduction_; and in this case, therefore, it will become necessary, in order to avoid the inconveniences I have described, to POSTPONE REDEMPTION; and one of the best methods of doing this will be, by ordering, that such a debt shall be redeemed _after_ some other given part of the funded public debts.—So slow has been our progress in redeeming debts, that this (supposing the part to be first redeemed considerable) would be reckoned, in the present circumstances of the funds, the same with making the debt to be last redeemed, irredeemable for ever. And should such an apprehension prove right, the public would lose nothing, because the debt whose redemption was postponed, would bring no greater annual charge on the public, than if the same sum had been obtained by selling a capital bearing any lower interest. But should it prove false, or should our debts be ever put into a fixed course of redemption, the public would gain greatly by being able, after discharging one part of its debts, to discharge the remainder more expeditiously and easily.
I shall beg leave to illustrate what has been now said by having recourse again to the last loan of FIVE MILLIONS.—During the last 60 years, or from the first establishment of the sinking fund to the year 1777, no more than about FIFTEEN MILLIONS of the public funded debts have been paid. An order, therefore, that the capital of five millions bearing 4 _per cent._ created by the last loan, should not be discharged unless a capital of twenty-five or thirty millions in the three _per cents._ shall have been _first_ discharged, would have carried its redemption to so distant a period, as might probably have raised it to the same comparative value with any 3 _per cent._ capitals.
Let it, however, be supposed to advance its price only to 102l. when the 3 _per cents._ are at 78; that is, when the ratio of the rates of interest required the price to be at 104. In these circumstances, 4.850,000l. of the five millions would have been advanced for an equal capital carrying 194,000l. interest at 4 _per cent._; and the remaining 150,000l. would have been advanced for the lottery: And thus the whole expence of the short annuity, and 150,000l. capital, would have been saved.—And had the same sum been obtained by selling a 3 _per cent._ capital, the amount of interest, though the least possible, would not have been much less;[148] but, at redemption, there would have been a necessity of paying above a MILLION AND A QUARTER for which no value had been received.—When such advantages, uncompensated by any loss, can be obtained by so easy and simple a regulation as only changing the ORDER of paying the public debts,[149] what possible reason can there be against adopting it?
There is another method by which the value of any stocks bearing high interest might be raised, which would probably be no less effectual; I mean, by ordering that no part of such stocks shall be redeemed, without at the same time redeeming an _equal_, or any _larger_ sum, in other capitals. This is the regulation proposed in the section on public loans, (page 98); and it will not be amiss here to give an illustration of it, by supposing, that EIGHT MILLIONS will be wanted for the necessary supplies of this year; and that this sum will be procured by selling, as was done in the last loan, a capital equal to the sum advanced, bearing 4 _per cent._ interest. Were the interest in this case made irreducible, and the capital incapable of being redeemed without at the same time redeeming four times as much of the 3 _per ct._ or some other stocks, an increase of value would be communicated to it which would render all DOUCEURS unnecessary. For it would be a capital, the redemption of which could not be completed without discharging in all FORTY[150] MILLIONS of the public debts.—I cannot doubt but that, in these circumstances (supposing the price of the 3 _per cents._ to continue near 78) a 100l. in money would be given for 100l. in such a stock, and the whole extravagant expence of short annuities, lotteries, and artificial capitals would be saved.
In short. With the aid of such regulations as those now proposed, EIGHT MILLIONS might this year be borrowed (supposing the 3 _per cents._ not lower than 78 or 77) _probably_ at an interest of 4 _per cent._, but _certainly_ at an interest an EIGHTH or a QUARTER higher, without offering any _premiums_. Whereas, if no such regulations are established, either an artificial debt of near[151] _two millions and a half_ must be created; or 5 _per cent._ for 15 or 20 years certain, together with the profits of a lottery, must be given; and a new tax laid which will produce 400,000l. _per ann._
It may deserve to be added, that an unprosperous state of public affairs, and apprehensions of public danger, would have a tendency, by placing the redemption of our debts at a greater distance, to promote, rather than obstruct the success of schemes attended with such regulations.
* * * * *
There remains one proposal more on this subject which I wish may be attended to.
I have observed, that our reductions of interest have been the effect of too narrow a policy. It seems to me, that one of the best measures that could now be adopted, would be to undo what we have done in this instance, by restoring the 3 _per cent._ capitals to a higher interest, and making this restoration, one of the means of raising the necessary supplies. That this is practicable, and that it would be advantageous, will appear from the following scheme, and observations.
For 20l. in money, let 110l. stock bearing 3½ _per cent._ interest, be offered, in exchange for every 100l. of the 3 _per cent._ stocks; and let the new 3½ _per cent._ flock be capable of being redeemed at any time, but never under _par_, unless when the price of the 3 _per cents._ happens to be below 85l.—By this scheme the public would procure 20l. from the conversion of every 100l. 3 _per cent._ stock into 110l. stock carrying 3½ _per cent._; or FIVE MILLIONS from the conversion of TWENTY-FIVE MILLIONS. The new _additional_ capital would be only TWO MILLIONS AND A HALF, (or 10 _per cent._ of the old capital); and the _additional_ interest would be 17s. (that is, a half _per cent._ added to 7s. the interest of 10l. at 3½ _per cent._) for every 20l. advanced; or 4¼ _per cent._ for the whole loan.
That such a scheme would afford ample encouragement to subscriptions, supposing the 3 _per cents._ at or near 78, will appear from considering, that the interest offered is above a _quarter per cent._ more than could be made by purchasing any perpetual annuities, and at the same time, in consequence of forming a part of the interest of a THREE AND A HALF _per cent._ capital, is incapable of reduction, and therefore nearly on an equal footing with the interest of any 3 _per cent._ capital.—But to be a little more explicit.
The new capital of 110l. bearing 3½ _per cent._ interest would be better than the 100l. THREE _per cent._ capitals for which it would be substituted, in the following respects.—1st. It would carry 17s. _per ann._ more interest; and such an interest, when the price of an annuity of 3l. is 78l., ought to be worth 22l. 2s. The additional interest, therefore, would be disposed of at 2l. 2s. for every sum of 22l. 2s. (or at 9½ _per cent._) less than its true value, compared with the price of the 3 _per cent._ annuities.
Secondly. The 3 _per cents._ when _peace_ comes, will probably be capable of being redeemed at 88l.[152] But this stock, in the same circumstances, must be redeemed at _par_. It will, therefore, produce 12l. more in every 100l. at redemption. Add the 10l. additional stock; and the whole additional sum to be received at redemption will be 22l.—There will, therefore, be a profit at redemption of 10l. _per cent._ of the money advanced; and this profit deserves the more notice, because the stock to which it is annexed, being redeemable at any time, and bearing a higher interest than the 3 _per cents._ will be selected for redemption before them; and therefore its price will be so much the more likely always to keep near _par_.—Setting aside, however, this advantage, and supposing only the 20l. advanced likely to be received at redemption, it may be found by calculating in the manner explained in (p. 194), &c. that the substitution of 110l. flock carrying THREE AND A HALF _per cent._ for 100l. carrying THREE _per cent._, or, in other words, that 20l. to be received some time hereafter, besides an annuity of 17s. for the intermediate time, is worth in present money more than 20l., reckoning compound interest at 4 _per cent._
Such a scheme, therefore, in whatever way its value was rightly calculated, would appear to offer an advantageous bargain. Should there, however, be reason to fear that the public might judge otherwise; or should the 3 _per cents._ be at 74 or 75, the value might be easily increased near nine _per cent._ by making the substituted stock 112l. instead of 110l. in which case, the interest for the 20l. advanced would become 18s. 5d. _per ann._, or a little more than four and a half _per cent._ instead of _four and a quarter_.
The advantages to the public which would arise from such a scheme are—1st. That it would be one of the best preparations for measures that must some time or other be entered into for putting the public debts into a _fixed_ course of redemption.[153]—In consequence of being raised to a higher interest, a considerable part of them would be made capable of being redeemed with more ease and expedition; and for this reason, it is certain that, if there remains a possibility of our escaping a public bankruptcy, the time must come when we shall wish all our debts bore a high interest.[154]
Secondly. A capital of TWO MILLIONS AND A HALF would be saved in raising FIVE MILLIONS. That is; the nation in procuring _five millions_ would incur a debt of only _half_ that sum; and instead of having a QUARTER or a THIRD _more_ to pay at redemption than had been received, it would have ONE HALF _less_ to pay.
Thirdly. Such a scheme would keep up public credit; and, by its necessary operation, contribute to carry _itself_ into execution. For the advantages attending it being grounded entirely upon the old 3 _per cent._ stocks, few at such a time would chuse to sell them, but many would be induced to buy, and, consequently, their price would be advanced, contrary to the common effect of public loans.—These seem to me advantages so unspeakably important, that I cannot but think it would be right to go to some extraordinary expence, in making at least one experiment of this kind. If, in consequence of offering high terms in _one_ trial for a small sum, such an experiment should succeed, it might be renewed on lower terms; and the way might be discovered of managing, in the best manner, larger loans on the same plan.—I cannot help thinking indeed, that it would be found that in this way great sums might be raised without creating _any_ new capitals, or making any addition to the public debts. I fancy, for instance, that few, when the 3 _per cents._ are about 78, would scruple to pay 25l. for the conversion of 100l. THREE _per cent._ stock into a 100l. FOUR _per cent._ stock, provided this last stock was not to become redeemable till THIRTY or FORTY MILLIONS of our present debts have been discharged: And supposing this true, money for public services would be raised at 4 _per cent._ or at an interest nearly as low as possible; and, at the same time, a sum equal to the whole money advanced would be saved. But were it necessary to take for such a substitution 24l. or even 23l. (that is, to pay about 4¼ _per cent._ for money) the gain, if our debts are ever to be redeemed, would abundantly overbalance the increased expence of interest.
FOOTNOTES
[48] See Observations on Civil Liberty, page 74.
[49] Of all the writers against this war, the learned Dr. TUCKER is the severest. For if, as he maintains, contrary to repeated declarations from the throne, a separation from the Colonies would be an advantage to us, the attempt to keep them, by invasion and bloodshed, deserves a harsher censure than words can convey.
[50] See Observations on Civil Liberty, Part I. sect. 1.
[51] See Observations, Part I. sect. 2.
[52] The greatest part of Mr. _Goodricke_’s remarks are founded on this misunderstanding. He is so candid that I know he did not mean to misrepresent me; and yet I cannot help thinking it hard, after repeated declarations of my preference of such a constitution as our own, to be considered as an advocate for a pure Democracy. See _Observations on Dr. Price’s Theory and Principles of Civil Liberty and Government_, by Mr. GOODRICKE.
[53] One of the best plans of this kind has been with much ability, described by Mr. DE LOLME, in his account of the Constitution of England.
[54] “As in a free state, every man who is supposed a free agent, ought to be his own governor; so the legislative power should reside in the whole body of the people.” _Spirit of Laws_, Book XI. chap. vi. See likewise Justice Blackstone’s Commentaries on the Laws of England, page 158. 1st Vol. oct. edition.—_Demosthenes_ speaking in his first Philippic, sect. 3d. of certain free states, calls them _their own legislators_, αυτονομουμηνα καὶ ελευθερα.
[55] See _Remarks_, printed for Mr. Cadell, _on a pamphlet published by Dr. Price. In a letter from a gentleman in the country to a member of parliament_, page 10.
[56] Rom. vii.
[57] Dr. PRIESTLY, in his Essay on the _first principles of Government_, makes a distinction between _civil_ Liberty and _political_ Liberty; the former of which he defines to be “the power which the members of a state ought to enjoy over their actions;” and the latter, “their power of arriving at public offices, or, at least, of having votes in the nomination of those who fill them.”—This distinction forms a very proper subdivision of _the liberty of the citizen_ here mentioned; and it may be accommodated to all I have said on this subject, by only giving some less general name to that which Dr. Priestly calls _civil_ Liberty.
[58] See on this Subject an excellent Sermon entitled, _The Principles of the REVOLUTION vindicated_. By Dr. Watson, Regius Professor of Divinity, at Cambridge.
[59] Some who maintain this doctrine concerning government, overthrow their own system by acknowledging the right of resistance in certain cases. For, if there is such a right, the people must be judges _when_ it ought to be exercised; a right to resist only when civil governors _think_ there is reason, being a gross absurdity and nullity.—The right of resistance, therefore, cannot mean less than a right in the people, whenever they think it necessary, to change their governors, and to limit their power. And from the moment this is done, government becomes the work of the people, and governors become their trustees or agents.
[60] It has been commonly reckoned, that it is the end of civil government and civil laws to protect the _property_ and _rights_ of men; but, according to this writer, civil government and civil laws create _property_ and _rights_. It follows therefore, that, antecedently to civil laws, men could have no _property_ or _rights_; and that civil governors, being the makers of civil laws, it is a contradiction to suppose, that mankind can have any property or rights which are valid against the claims of their governors. See Three Letters to Dr. _Price_, p. 21, &c. And Remarks on the principal Acts of the 13th Parliament of Great-Britain, p. 58, &c. and p. 191.
[61] This has been done in a lower instance. Parents have been furnished with a particular affection for their children, in order to prevent any abuse of their power over them.
[62] “In ages of darkness, and too often also in those of greater knowledge, by the perfidious arts of designing princes, and by the base servility of too many ecclesiastics, who managed the superstition of the populace, by the violent restraints put upon divulging any juster sentiments about the rights of mankind, the natural notions of polity were erased out of the minds of men; and they were filled with some confused imaginations of something adorable in monarchs, some representation of the Divinity; and that even in the worst of them; and of some certain Divine claims in certain families.—No wonder this! that millions thus look upon themselves as a piece of property to one of their fellows as silly and worthless as the meanest of them; when the like arts of superstition have made millions, nay the very artificers themselves, fall down before the block or stone they had set up; or adore monkies, cats, and crocodiles, as the sovereign disposers of their fortunes.” See Dr. HUTCHESON’S System of Moral Philosophy. Vol. ii. p. 280.
[63] “Let not, therefore, these _pretended masters_ of the people be allowed even to do good against the general consent.—Let it be considered, that the condition of rulers is exactly the same as that of the Cacique, who being asked whether he had any slaves, answered; _Slaves? I know but one slave in all my district, and that is myself._” See the Philosophical and Political History of the Settlements and Trade of the _Europeans_ in the EAST AND WEST INDIES. Translated from the French of the Abbe _Raynal_, by Mr. _Justamond_. Vol. v. page 414.
[64] See Obs. p. 25. “The rights of mankind are so sacred that no prescription of tyranny or arbitrary power can have authority enough to abolish them.” Mr. _Hume_’s Essays, vol. iii. Essay on the Coalition of Parties.
[65] “Mankind have been generally a great deal too tractable; and hence so many wretched forms of power have always enslaved nine tenths of the nations of the world, where they have the fullest right to make all efforts for a change.” Dr. _Hutcheson_’s Moral Philosophy. Vol. ii. p. 280.
[66] See Remarks on the Acts of the Thirteenth Parliament of _Great Britain_. P. 34, &c.—“Is not the same reasoning applicable to taxes paid for the support of civil government? Are not these too the property of the civil magistrate?” Ibid. p. 56.—If I understand this writer, his meaning is, not only that the taxes which the civil magistrate _has_ imposed are his property; but also, _any_ which he shall please to impose.
[67] Matth. xxiii. 8-12.—John xiii. 14.
[68] Luke xxii. 25, &c.
[69] 1 Pet. v. 3.—2 Cor. i. 24.
[70] He who wants to be convinced of the _practicability_, even in this country, of a complete representation, should read a pamphlet lately published, the title of which is, TAKE YOUR CHOICE.
[71] “A _free_ subject of a free state” is a contradiction in terms. See the Proclamation for a Fast.
[72] Mr. Hume’s Essays. Vol. i. Essay iv. p. 31.
[73] Spirit of Laws. Book xix. ch. 27.
[74] Introduction to the Commentaries on the Laws of England, p. 48. See also Book i. ch. 8.
[75] In 1692 King William rejected a bill for triennial Parliaments, after it had passed both Houses. But in a following year he thought proper to give his assent to it.
[76] Spirit of Laws. Book xix. ch. 27.
[77] History of Civil Society. Part vi. sect. 5.
[78] _Political_ Discourses. Essay xii. p. 301.
[79] History of Civil Society. Part iv. sect. 5.
[80] See Mr. Hume’s Essays. Vol. i. p. 91.
[81] See the conclusion of the Third Part.
[82] This was confirmed by the account of the noble Lord at opening the last Budget.
[83] I have mentioned this sum at random. It is not of great consequence whether it is half a million too little or half a million too much.
[84] The quantity of coin within all equal degrees of deficiency would be equal, were equal quantities issued every year, and were there also no cause which diminished or destroyed it, except the _uniform_ operation of time in wearing it. Any cause, therefore, which destroys it more, or diminishes it faster at first than at last, must render the quantity less in the first degrees of deficiency. And the same must be the consequence of a greater proportion issued formerly, in any given time, than of late.—The causes of diminution never probably operated so much on the gold coin as they did for about twelve years before 1773; and this will balance the greater proportion coined during that time. The very reason of the increase of coinage in those years was, a necessity created by the loss of the new coin, and never before felt in an equal degree. The coinage, however, in those years, was not so much more than usual as some may imagine. In ten years before 1770, eight millions and a half were coined; and in twelve years after the _Accession_, the same quantity was coined; and in twenty-seven years after the _Accession_, more was coined than in twenty-seven years before 1770. See _Considerations on Money, Bullion_, &c. p. 2.—The whole quantity of gold coined from the Accession to 1770, was near 29 millions; more than one half of which must have been melted and exported; and, the greatest part of the remainder must have been precipitated in its progress towards deficiency by being clipped and sweated.
[85] When the silver _specie_ was recoined in King William’s time, it appeared, that a great treasure had been hoarded before the _Revolution_, in consequence of the danger of public liberty at that time. See Davenant’s Works, Vol. I. p. 439, &c.
In _Russia_ it is reckoned, that as much money lies buried under ground, as exists above ground.
[86] In these sums is included all the coin which the late Proclamations have brought in from HOLLAND and other foreign countries; and which, I think, ought not to be deemed a part of the resting stock of the kingdom.
[87] Or deducting a million for the _Irish_ coin, seventeen or eighteen millions.
[88] This is said on the supposition, that the last call would bring in no more than was expected, or about three millions. Its having brought in above double this sum makes little difference. For it proves, that the whole quantity of gold coin must have been (according to Lord NORTH’s method of computing) 21 or 22 millions; and the quantity deficient more than a grain about 15 millions; and, consequently, six or seven millions (that is, near a _third_) will still remain to be the quantity deficient less than a grain.
[89] It has been thought very strange, that a piece of metal should bear a higher price, merely because it wants the stamp of the mint. But the reason is, that bullion alone being exportable in any considerable quantity, the price of it must vary as the demand for it varies; or, in other words, as the _balance of payment_ between us and the rest of the world is favourable or unfavourable.—This will be explained at the beginning of the Third Part, where it will appear that, in consequence of the increase of luxury and the national debt, this balance has been generally against us ever since the end of the last war.
[90] The coin brought in last Summer, added to near 14 millions coined from the beginning of 1772 to the time of the last call, amounts to about 20 millions and a half; but only 16 millions and a half have been brought in, including the coin from _Ireland_ and foreign countries.
[91] Or EIGHTEEN MILLIONS AND A HALF. See Dr. DAVENANT’s Works, Vol. i. p. 363, &c. 443, &c. A great part of this specie was carried out of the nation in King WILLIAM’s wars; and the consequence was, that the taxes became unproductive; and that Government fell under great difficulties, from which it was afterwards relieved by the establishment of the _Bank_ and the increase of trade. See the beginning of the Third Part.
[92] The paper currency of the Colonies is one of the greatest disadvantages under which they labour; but it is of a more safe and permanent nature than ours. Were it not so, it could not have been of the least use to them for the last year and a half. He who doubts this, need only consider what our paper would be worth were we now invaded as they are.
This difference depends chiefly, on the following circumstances.—Their paper is not payable on demand.—It is a legal tender.—It represents fixed property which is mortgaged for it.—It does not support such a monstrous debt as ours.—And when public emergencies require any extraordinary emissions, they are generally sunk by taxes in four or five years.—It is the first of these circumstances that gives our paper its currency; and it is also this circumstance that creates the danger attending it, by rendering it incapable of sustaining any great shock or panic.—The possession of securities equal in nominal value to the amount of the paper emitted, or the debts contracted, is of little consequence when the value of these securities depends on the paper, and is created by it; that is, in other words, when the debts themselves are the very cash which must pay the debts.—Nothing can be more unnatural than such a state of things; and it may hereafter be a curious object of enquiry, how it could be ever possible that it should subsist any long time.
In page 78 of the _Observations on Civil Liberty_, I have said, “that the kingdom of FRANCE has no such dependence as we have on paper-credit; and that its specie amounts to 67 millions sterling.” In mentioning this sum I took the lowest of different accounts which I had then received from different authorities. I have since received accounts which make it 87 millions and a half; or 2000 millions of _livres_. This, in particular, is the account of an author whom all know to be likely to be well informed on this subject; I mean the author of the Treatise on the _Legislation_ and _Commerce of Corn_, Part I. chap. v.—In the same treatise it is said, (Part I. chap. viii,) that it appears, from the returns made by the intendants of the different Provinces, that the number of _annual_ deaths in the whole kingdom of France, for three years ended in 1772, was 780,040. I have been informed by the ingenious author, that this account may be depended on; and if so, _France_ must contain 26 millions of inhabitants; for the best observations prove, that no more than a thirty-third part of a whole kingdom dies annually. See Observations on Reversionary Payments, page 200.—In _Sweden_, though a nineteenth part die in the capital every year, only a thirty-fifth part die in the whole kingdom. See Philosophical Transactions, Vol. lxv. for 1775, p. 426. The particulars now mentioned, added to the nature of the debts of FRANCE as mentioned in page 78 of the _Observations on Civil Liberty_, form a striking contrast between the state of that kingdom and ours. Nothing gives us our superiority but the advantages we derive from our RELIGION and our LIBERTY. Even in these respects, however, they seem to be improving, while we are declining. _Montesquieu_, _Abbe Raynal_, and others of their most admired writers, inculcate principles of government, and breathe a spirit of Liberty, which, to the shame of this country, are become offensive in it.
[93] See the proposals and observations in a pamphlet lately published by Lord Viscount MAHON on this subject.
[94] “There is something (says a great writer) so unnatural in supposing a large society, sufficient for all the good purposes of an independent political union, remaining subject to the direction and government of a distant body of men who know not sufficiently the circumstances and exigencies of this society; or in supposing this society obliged to be governed solely for the benefit of a distant country; that it is not easy to imagine there can be any foundation for it in justice or equity. The insisting on _old claims_ and _tacit conventions_, to extend civil power over distant nations, and form grand unwieldy empires, without regard to the obvious maxims of humanity, has been one great source of human misery.” _System of Moral Philosophy_, by Dr. HUTCHESON, vol. ii. p. 309. In the section from whence this quotation is taken, Dr. HUTCHESON discusses the question, “When colonies have a right to be released from the dominion of the parent state?” And his general sentiment seems to be, that they acquire such a right, “Whenever they are so increased in numbers and strength, as to be sufficient by themselves for all the good ends of a political union.”—Such a decision given by a wise man, long before we had any disputes with the colonies, deserves, I think, particular notice.
[95] See COMMON SENSE, and PLAIN TRUTH, p. 44. Published for Mr. _Almon_.
[96] The Colonies, I am assured, were not perfectly unanimous till they saw this answer.
[97] I am sorry to differ from those respectable persons who have proposed placing _America_ on the same ground with _Ireland_. If the same ground of LAW is meant, it is already done; for our laws give us the same power over _Ireland_, that we claim over _America_. If the same ground of PRACTICE is meant; it has been most unfortunate for _Ireland_, and would be equally so for _America_.
[98] See the Abbe RAYNAL’s Reflections on this subject at the end of the 18th book of his History of the _European Settlements_ in the East and West-Indies.—“Is it not likely, says this writer, that the distrust and hatred which have of late taken place of that regard and attachment which the _English_ Colonies felt for the parent country, may hasten their separation from one another? Every thing conspires to produce this great disruption; the æra of which it is impossible to know.—Every thing tends to this point: The progress of good in the new hemisphere, and the progress of evil in the old.—In proportion as our people are weakened, and resign themselves to each other’s dominion, population and agriculture will flourish in _America_; and the arts make a rapid progress: And that country rising out nothing, will be fired with the ambition of appearing with glory in its turn on the face of the globe—O posterity! ye, peradventure, will be more happy than your unfortunate and contemptible ancestors.”—Mr. _Justamond_’s Translation.
[99] Had this interest been insufficient, it might have been increased a 16th or even an 8th _per cent._ without any material difference; or, (which would have been better) 3½ _per cent._ might have been offered for _four fifths_ of the sum borrowed, and 4 _per cent._ for the remainder; in which case, the annuity payable by the public would have been 65,790l.
[100] It should be remembered here, that tho’ Government, when its debts are at a discount, may be able, with the consent of the creditors, to redeem a given capital by paying a less sum than that capital; yet it can never be obliged to pay _more_.—In other words; a 100l. capital in the 3 _per cents_; 3½ _per cents_; or 4, or 5 _per cents_, Government is always at liberty to redeem by paying 100l. whatever the market price of it may be, and whether the creditors will consent or not.
[101] There is another very great advantage which would attend these annuities.—One and the same _surplus_ would discharge a given capital in less time. For example. A surplus of a million _per ann._ invariably applied, and the first payment to be made immediately, would discharge a capital of a _hundred millions_ bearing 3 _per cent._ interest in 46 years. But if the same capital bore 3½ _per cent._ interest, it would be discharged in 43½ years; if 4 _per cent._ in 40 years; if 5 _per cent._ in 37¼ years.—A capital _less_ than a 100 millions, in the same proportion that the interest is _more_ than 3 _per cent._ and for which, therefore, the same annuity is paid, (as in the present case) the same surplus would discharge in 39 years, if the interest is 3½; in 34¼ years, if the interest is 4 _per cent._ in 27¼ years if the interest is 5 _per cent._—Supposing, therefore, 75 millions borrowed in the manner of our Government, by creating a capital of a 100 millions bearing 3 _per cent._ (that is, by selling 3 _per cent._ stock for 75l. in money) which might have been borrowed by creating a capital of only 75 millions bearing 4 _per cent._ (that is by selling 4 _per cent._ stock at 100) there will not only be a loss of 25 millions by a needless increase of the capital; but also a loss of 14 millions, by an increase of the time in which one and the same saving will discharge the two capitals.—This may be proved in the following manner.—A million, _per ann._ will, in 34 years and a quarter, very nearly discharge a debt of 75 millions bearing interest at 4 _per cent._; but the same saving will, in the same time, discharge only a capital of 61 millions, if it bears interest at 3 _per cent._ When, therefore, such a saving has compleated the redemption of the _one_ capital, there will remain unpaid of the other, 39 millions.—What has been now applied to a large sum holds true in proportion of any smaller sums.
It appears from hence to be a very wrong observation which some have made; “that provided the annual charge is the same, it signifies little what the _principal_ of the public debt is.”—As there is no way of removing the annual charge but by paying the _principal_, it is of just as much consequence what it is, as whether it is practicable or impracticable, to remove a burden which weakens and cripples, and must in time sink the public. An annuity of SIX MILLIONS, if the principal is HUNDRED MILLIONS borrowed at 6 _per cent._ might be redeemed in 33 years with a million _per ann._ surplus. But if the principal is TWO HUNDRED MILLIONS bearing 3 _per cent._ the same surplus would, in the same time, pay off only 56 millions; and but little more than a _quarter_ of the annuity would be redeemed. If, therefore, the same sum might as well have been obtained by creating a principal of a hundred millions bearing 6 _per cent._ as by creating a capital of two hundred millions bearing 3 _per cent._ there will be a needless expence, in discharging the debt, of 144 millions.
[102] The price of the 3 _per cents_ at the time of this loan (in the beginning of Feb. 1759) was 88½ and 89.
[103] The 3 _per cents_ just before this loan were at 69l. and, consequently, 5 _per cent._ interest, (or 3l. _per ann._ for 60l.) would have afforded subscribers a profit of 9l. for every 60l. advanced. The long annuity was worth, as the stocks then stood, 21 years purchase, and the short annuity, 13 years purchase. Upon the whole loan, therefore, the profit would have been 3 _per cent._
[104] That is, the difference between 12 millions, and the sum bearing interest at 3 _per cent._ which a million _per ann._ would pay off, in five years and a quarter.
[105] The 3 _per cents_ being at this time at 80l. an annuity of 3l. purchased for 75l. would have produced a profit of 5l. Therefore these schemes are of exactly the same value. But they are too narrow; and the subscription this year fell immediately to one _per cent._ discount. But in the scheme I have proposed this might have been prevented by only offering 4 _per cent._ for 77l. or 78l. (instead of 75l.) of every 100l.
[106] It is plain, that this capital, as well as the former, might have been a quarter (or 60,000_l._) less, which would have made the whole saving of capital 2.060,000_l._
[107] At the time of this loan, the 3 _per cents._ were above 75; and, therefore, a perpetual annuity of 3_l._ could not be purchased for 75_l._ and an annuity of 1_l._ 2_s._ 6_d._ for 99 years, was worth at least 27_l._ This, therefore, would have been a scheme very profitable to subscribers.
[108] The life-annuity granted in this case could not have been worth so little as 16_l._ or 14 years purchase; and, therefore, a capital of 100_l._ in the 3 _per cents_ was sold for 84_l_; or a capital of three millions, for 2.520,000_l._—A premium, therefore, was granted of 480,000_l_; and this was done without the least reason. For the 3 _per cents_ being at that time at 87 and 88, 2.520,000_l._ would undoubtedly have been lent at 3½ _per cent._ interest; and the remaining 480,000_l._ necessary to make up three millions, would have been given for the life annuities; in which case, the annual charge occasioned by the new capital would have been somewhat less; and 480,000_l._ would have been saved, together with the additional expence occasioned by the longer time which a given surplus would require to discharge a debt bearing 3 _per cent._ interest, as explained in the note, p. 94.
[109] It is a general and certain maxim “that whenever money is borrowed by a lottery which gives a right to _stock_ equal to the sum advanced, there is a loss equal to the sum which might have been received for the profits of the lottery.”—When the 3 _per cents._ are at 76 or 77, half a million might be borrowed by a lottery, consisting of 50,000 tickets, each of the same value with 10l. three _per cent._ stock: and hitherto such a method of borrowing has been reckoned advantageous. But it only gives a fallacious appearance of borrowing at 3 _per cent._ It is the same with selling the profits of a lottery, and at the same time absurdly converting the purchase-money into a debt due to the purchaser.—Since the last war we have had seven of these lotteries, including two in 1763; and above a million has been lost by them.
In Queen _Anne_’s time, there were several lotteries, consisting of all _prizes_ and no _blanks_. This is so curious, and most persons may be so much at a loss to conceive of the possibility of it, that I cannot help explaining it.
A capital, equal to the whole money advanced, was distributed _equally_ among all the tickets in the lottery; and, in order to make them prizes of different values, there was farther distributed among them different shares of an additional capital, to which a right was given, though no money had been paid for it.—For example—In 1711, two millions were raised by a lottery of this kind, called a class lottery. The whole sum advanced was divided into 20,000 tickets, each 100_l._ stock bearing 6 _per cent._ interest. This capital was increased by a gratuitous capital of 602,200_l._ bearing the same interest, and divided into shares which were added to the tickets, in order to form prizes.—This was the same with giving near 8 _per cent._ for money, besides a _premium_ of 30 _per cent._—As the interest of money was at this time 6 _per cent._ the sum borrowed would most certainly have been advanced at 8 _per cent._ without any _premium_; but it was, I suppose, reckoned necessary that government should not _seem_ to give such high interest.—In the same year, 1.500,000_l._ was borrowed by another such lottery, and creating a capital of 1.928,570_l._ And in 1712, 3.600,000_l._ was borrowed by two more such lotteries, and creating a capital of 4.683,080_l._—The greatest part of the debts contracted by these lotteries (amounting to 9.213,850_l._ though only 7.100,000_l._ was advanced) remains at this hour an incumbrance on the public; and the duties constituting the _general fund_ are charged with the interest of it.
In 1714, the national interest was reduced to 5 _per cent._ But in that very year 1.400,000_l._ was borrowed by a lottery, which gave a right to a capital of 1.876,000_l._ bearing 4 _per cent._ that is, by giving near 5½ _per cent._ interest, besides a _premium_ of 34 _per cent._—Thus have our debts been increased. But even worse has been done. The taxes charged with the interest of the public debts proving often deficient, the shortest way of discharging the arrears has been often taken, by adding them to the principal, and paying _compound_ interest for money.—Is it a wonder, that a nation which has been so careless in contracting debts, should have done so little towards discharging them?
[110] That is, in other words; there is no one who would not be glad to lend to government on any higher interest than that which he can make in the funds. There is no one, for instance, who would not be glad to lend 75_l._ at 4 _per cent._ when the 3 _per cents._ are at 76, and when, therefore, he cannot make 4 _per cent._ by purchasing them.
[111] The expectation of receiving back some time or other the purchase-money would probably, in private loans, influence a purchaser. But in the cases to which I allude, this certainly was not considered, and did not at all influence. And if it had influenced, the observations I have made as I have gone along, demonstrate that the same loans would have been made without any such expectation.
[112] See the Postscript.
[113] SIXTEEN MILLIONS have been specified. It will come in my way to mention above FOUR MILLIONS more in the second section of the next part. Notes 1, 12, 14.—No notice has been here taken of the loans of the war before the last; but losses of the same kind to a great amount were incurred by them.
[114] In the exports, as delivered to the _House of Commons_, is included bullion exported. If this, as well as the other sums I have mentioned, is deducted, there will be still a balance left in favour of _Britain_ during this period. Since 1764, it does not appear, from the accounts laid before the _House of Commons_, as published by Sir _Charles Whitworth_, that any bullion has been entered for exportation.
[115] The 3 _per cent._ annuities were then at 105; and, during the first five years of the war which began in 1755, they were higher than they have generally been _since_ the war.
[116] These duties were appropriated to the payment of the interest at 4 _per cent._ of a capital of 4.400,000l. created in 1747, for which four millions only had been advanced. It is now a part of the capital of the reduced 3 _per cent._ annuities.
[117] The whole of this sum, (except 16.437,821l. consisting of the old Bank capital, the consolidated 3 _per cents_, the South-Sea 3 _per cent._ annuities 1751, the Civil List million, and the East-India annuity) that is, 54.413,433l. was reduced by 23 Geo. II. 1749. from an interest of 4 _per cent._ to 3½ till 1757, and afterwards to 3 _per cent._—The proprietors of a capital of 3.290,042l. refused to consent to this reduction, which, therefore, was paid off; 1.190,042l. with _Exchequer_ Bills (afterwards cancelled); and 2.100,000l. with money borrowed at 3 _per cent._ and added to the capital of the _South-Sea_ annuities. The whole sum, therefore, reduced and paid off, was 57.703,475l. which produced a saving to the public, and an addition to the Sinking Fund after 1757, of 612,735l. _per ann._
The SALT DUTIES in 1753 had been for some time mortgaged to pay the principal and interest of a million borrowed in 1745. In 1757, after clearing the mortgage, they became free, and were carried into the Sinking Fund, of which they have ever since formed a part. This produced a farther addition to the _Sinking Fund_, after 1757, of about 220,000l. _per ann._
I have not included the million now mentioned in the account given above of the public debts in 1753, because it was in a fixed course of redemption; nor have I included 499,600l. in Exchequer Bills charged on the duty on sweets, because these Exchequer Bills were paid off in 1754.
[118] Having met with no account of the Navy Debt at this time, I have chosen, rather than omit it, to suppose it nearly the same that it was at the commencement of the last war; which, probably, is reckoning it too high.
[119] In this account I have omitted a million borrowed in 1734, because the redemption of it was near being completed by the Salt Duties. I have also omitted _Short Annuities_ amounting to 24,334l. being the remainder of 9 _per cent._ annuities for 32 years created in 1710, because the term for which they were created was near expiring.
[120] The author of the _Considerations on the Trade and Finances of this Kingdom_ makes this debt 1.318,000l. more than the sum at which I have here stated it. See page 22; and _State of the Nation_ by the same author, page 15, quarto editions.—The reason of this difference is, that this writer has included in the unfunded debt left by the war the deficiencies of grants and funds in 1763 and 1764, and the _whole_ army debt not provided for in those years; whereas I have excluded the former entirely; and admitted only as much of the latter as exceeded the army debts common in subsequent years. See the Postscript.
[121] In 1751 there was applied to the payment of Navy debts 200,000l. and in 1752, the sum of 900,000l. But I have not reckoned these sums, because they did little more than make up the constant deficiency in the _Peace Establishment_ for the Navy.
[122] See the Postscript.
[123] “Either the nation (Mr. Hume says) must destroy public credit, or public credit will destroy the nation.” Political Essays, page 135.
[124] The number of inhabitants in _France_ is 26 millions. In _Britain_ it cannot exceed six or seven millions. See p. 66. And _Observations on Reversionary Payments_, page 185, third edition.
[125] Near one half of all this importation is made into _Bourdeaux_ only; and the rest into _Rochelle_, _Marseilles_, _Nantz_, _Havre_, and _Honfleur_.
[126] In order to defray the expence of coinage, a duty of 10s. _per_ ton has been laid on wines imported; and, as far as this duty happens to fall short of 15,000 l. the deficiency is made good out of the supplies.
[127] I am not able to give the exact amount of this part of the appropriated revenue. I have, therefore, reckoned it at such a round sum, as, I think, cannot much exceed or fall short of it.
[128] The Land-tax at 3s. is given by Parliament for 1.500,000l.; and the Malt-tax for 750,000l. but they are always greatly deficient.—Both these taxes (and also sometimes the income of the Sinking Fund) are borrowed of the _Bank_, and spent long before they come into the Exchequer; and therefore, are debts constantly due to the Bank, for which interest is paid.
[129] The account given by Lord North at opening the Budget in 1775, was, that the public debt had been diminished since 1763, near nine millions and a half. The grounds on which I have stated this diminution at 10.639,793l. may be seen in the POSTSCRIPT, (p. 171).
[130] Four of these lotteries have been annexed to annuities; but it would be a great mistake to think that they have not been equally profitable with the other lotteries. For instance; in 1767, a million and a half was borrowed on an annuity of 45,000l. with a lottery of 60,000 tickets annexed. In the same year, 2.616,777l. was paid off; but, had it not been for the lottery, only 1.350,000l. could have been raised on the annuity; and 150,000l. less must have been paid off.
[131] The discounts on a million and a half paid off in 1772, and two millions paid off in 1774 and 1775, amounted nearly to this sum.
[132] The particular sums may be found in a pamphlet, entitled, _The Present State of the Nation_, p. 28, quarto edition. But I have not included all the sums there enumerated; nor have I admitted the Army savings in 1772, and some other smaller sums.
[133] This surplus, being the medium for the whole 12 years of peace, is less than that in p. 160, which is the medium at the end of this period, when the Sinking-Fund produced above a quarter more than it did at the beginning of it.
[134] I have here taken the average of two years before and after 1766.
[135] The annual medium of the payments into the Exchequer from the CUSTOMS in ENGLAND, for the last five years, has been 2.521,769l.—In 1774 the payment into the Exchequer was 2.547,717l.—In 1775, it was 2.476,302l.—The produce of the CUSTOMS, therefore, has been given rather too high.
The produce of the EXCISES in England has been higher, in 1772 and 1775, than in any two years before 1776; but the average of any three successive years, or of all the five years since 1770, will not differ much from the sum I have given.—In 1754, or the year before the last war, the CUSTOMS produced only 1.558,254l.—The Excises, exclusive of the Malt-tax, produced 2.819,702l,—And the whole revenue, exclusive of the Malt-tax and Land-tax at 2s. was 5.097,617l.—In 1753 the whole revenue was 5.189,745l. And the appropriation or annual charge upon it, (consisting of the Civil List, 834,443l. interest of the national debt, exclusive of navy debt, 2.628,087l. expences of management, 43,691l. 4½ _per cent._ from the Leeward Islands 27,378l. annuity to the late Duke of Cumberland 25,000l. first-fruits and tenths of the Clergy 13,597l. &c. &c.) was 3.733,713l. The Sinking-Fund, therefore, produced 1.456,000l.; which, added to 1.500,000l. (the neat produce, at that time, of Land at 2s. and Malt-tax) made the unappropriated revenue 2.956,032l.—The expence of the peace establishment, consisting of 10,000 seamen, and 18,857 landmen, was, in 1753 and 1754, (including an allowance for the increase of the Navy-debt) 2.400,000l. nearly; which left an annual surplus in the national income of 556,000l. _without_ lotteries, and land at 2s. This surplus (with land at 3s.) has of late scarcely exceeded 300,000l.; and, therefore, has not been a THIRD of what it was in the last peace, and before the reduction of interest to 3 _per cent._ was compleated.
[136] This article was omitted in the former editions of this _Postscript_; and its insertion here makes the diminution of the public debts, since 1763, half a million less than the sum at which it is taken in p. 104 and 108.—It might have been proper also to add, the excess of Navy debts _contracted_ above the Navy debts _discharged_, from 1763 to 1775; and had this been done, the surplus in p. 165, would have been reduced to 150,000l.
[137] See _The Present State of the Nation_, page 26.
[138] This article was omitted in the first editions of this _Postscript_.—It might have been proper to add, the excess of Navy debts _contracted_ above the Navy debts _discharged_, from 1763 to 1775; and had this been done, the surplus in p. 166, would have been reduced to 150,000l. _per ann._
[139] Or, for every 105l. contributed, 100l. STOCK irredeemable for 10 years might have been given, carrying 4¼ _per cent._ interest, with the same short annuity and a lottery ticket annexed; and then the new capital would have been 4.762,000l. carrying (at 4¼ _per cent._) 202,385l. _per ann._ interest. The amount of the short annuity would have been 23,810l. and the number of lottery tickets 47,620.
[140] 211,375l. the interest at 4½ of 4.750,000l. and 12,500l. a short annuity of a QUARTER _per cent._ annexed to every 100l. contributed, make 223,875l. This last sum, therefore, would have been the annual charge for 10 years; and the first sum the annual charge after ten years till redemption.
[141] Ten payments of 9,650l. and seventeen payments of 34,375l. make 680,875l.
[142] It may be worth observing, that during this whole war they never fell below 82, except for a few months during the rebellion in 1745; that after the PEACE in 1748 they rose to 105, and in the succeeding war never fell so low as they are now, except in the two last years; that after the PEACE in 1763 it was expected they would again rise above _par_; but that, instead of this, they have in general during the whole peace kept 12 or 13 _per cent._ below _par_, and 15 or 16 _per cent._ below the price they bore before the two last wars.—One of the reasons of the great alteration which has taken place since the last war is, I think, pointed out in the 3d Section of the 3d Part of this Tract.
[143] Since the reduction in 1749 there has been no FOUR _per cent._ capital created except that of the last year.
[144] What is here said has been verified, in the particular instance of a _million and a half_ borrowed in 1756, which was to carry 3½ _per cent._ interest till 1771, and then to become redeemable.—During the last war, and for about three years after the commencement of peace, there was a general expectation that the THREE _per cents._ would rise above _par_ as they had done in the former peace; and while this expectation continued, this stock reckoned no better than a THREE _per cent._ stock with a short annuity of a _half per cent._ annexed; and for this reason it bore, during that period, a lower price than another stock of 4 millions and a half which was to bear the same interest till 1782, and then to become redeemable, and to sink to an interest of 3 _per cent._—In the latter end of 1767 and beginning of 1768 the price of the former stock rose above that of the latter, and continued not far from _par_ from that time to the time of its redemption in 1771. The reason must have been, that being a small stock bearing a higher interest than the other stocks, it was expected, that it would be paid off at _par_, and therefore with a considerable profit, as soon as it became redeemable; which accordingly happened. See Postscript, (page 177).
[145] Nothing has been more undervalued in the ALLEY than _Annuities on lives_. They have been always granted, very unreasonably, without any limitation of age; and their value has been taken at no more than 12 or 13 years purchase; tho’ really worth one with another 16 or 17 years purchase. This is a strong reason for preferring short annuities to them in all schemes for raising money. Short annuities for 21 years will be taken for as much as life-annuities; and yet experience has proved that in this time not a _quarter_ of the life-annuities will drop; and the whole expence brought by them on the public will not be removed in less than 70 or 80 years. See Note 15, (Page 134).
[146] I would except here the first reduction in 1717. This was then necessary to gain a fund for sinking the public debts; and had the fund thus gained been applied, as the laws required, invariably to this purpose, and all farther reductions been avoided, we should now have been burthened with no debts.
[147] That is; never capable of being redeemed by substituting one debt for another; or of being saved from redemption by accepting lower interest.
[148] Supposing the 3 _per cents._ sold at 76½, the capital necessary to produce 4.850,000l. in money would be 6.339,869l. the interest of which at 3 _per cent._ is 190,195l.
[149] When the amount of interest, payable for a sum obtained by selling a 4 _per cent._ capital, is the same with the amount of interest, payable for an equal sum obtained by selling a 3 _per cent._ capital, which is nearly the present case, postponing, in the manner I have proposed, the redemption of the former, becomes as indifferent as it would be to postpone in the same manner the redemption of any 3 _per cents._
[150] In this case only a FIFTH of the _surplus_ to be at any time employed in redeeming debts could be applied to the redemption of this _particular_ loan. The rest after nine years might be employed in redeeming the 4 _per cent._ stock created last year; or jointly with it, such parts of future loans bearing high interest, as, in borrowing on the same plan, might be left redeemable. And thus no obligation would arise from this mode of borrowing to prefer the redemption of 3 _per cents._ to the redemption of capitals bearing higher interest. In particular; had this been the plan of borrowing through the last war, all surplus monies might have been ever since employed intirely in paying off 4, 4½ and 5 _per cent._ capitals preferably to any others; and at the same time, no _douceurs_ would have been granted in order to procure the loans, no artificial debt contracted, or extraordinary charge incurred.
[151] Should this be disregarded, and a long annuity offered, as a _douceur_, of 1½ _per cent._ for 90 or 100 years, _eight millions_ might perhaps be borrowed at an interest, including the long annuity, of 4½ _per cent._ even though the 3 _per cents._ should fall as low as 73.—And this, probably, would be the very scheme a minister would prefer, who, minding chiefly present ease, did not care how much he burdened the nation hereafter.
[152] In 1774, a million of the 3 _per cents._ was redeemed at this price; and in 1772, a million and a half at 90.
[153] I mean such a course of redemption as should not be liable to interruption by a WAR; or, as would be the effect of the establishment of such an unalienable _sinking_ fund as has been described in the _Appeal to the Public on the Subject of the National Debt_, and the _Observations on reversionary Payments_.—Nothing can save us from bankruptcy but such a fund; and were it established, the 3 _per cents._, when they came to be redeemed, would soon rise to _par_; and, consequently, the obligation implied in this scheme to pay a part of them at _par_ would occasion no additional expence. It is, however, so little to be expected, that such a fund will be ever established, that it would have been folly to have made the calculation given above, on any supposition less favourable, than that the 3 _per cents._ will bear the same price after the present war, that they bore after the last; and that we shall go on as we have hitherto done, paying off a _million_, or a _million and a half_, now and then in a time of peace.
[154] The conversion of a 3 _per cent._ stock into a 3½ _per cent._ stock gives the same advantage in redeeming it, that the power of redeeming it at 85¾ for every 100l. would give.—A million _per ann._ surplus would redeem 114 millions and a quarter of the latter stock in the same time, and therefore at the same expence, that it would redeem 100 millions of the former. I suppose here the 3 _per cents._ paid at _par_; and this I have before observed will be found to be necessary should a time (scarcely the object of hope) ever come when government will set itself in earnest and with any effect to pay the public debts.
CORRECTIONS and ADDITIONS.
Transcriber’s Note: Whilst minor typesetting errors have been corrected in the course of producing this e-text, the author’s list of corrections and additions below has not been addressed.
In THE SECOND TRACT, (page 120), after the words _Lent at 4 per cent. in 1746, charged on licences for retailing spirituous liquors, and reduced to 3 per cent. by 23d of George II. 1749_, add, _and consisting of old Exchequer Bills then cancelled and converted into a debt from Government to the Bank, for which the Bank was allowed to add to its capital an equal sum by 19th George II. Ch. 6_.
In (page 128), instead of the words, _In 1751, certain Exchequer tallies and orders, amounting to 129,750l._ read, _In 1751, the remainder of certain Exchequer tallies and orders charged on the duties on wrought plate, and amounting to 129,750l._
(Page 136), line 17, instead of 1758 read 1757.
(Page 137), line 2d from the bottom, for 205,000l. read 215,000l.
(Page 139), for 17.7401,32l. read 17.701,324l.
(Page 144), after _Exchequer Bills charged on a duty upon victuallers by 12th Geo. I. 1726_, add, _and afterwards by 16th Geo. II. 1743, charged on the duties on licences for retailing spirituous liquors. Now included in the Bank Capital by 19th Geo. II. Ch. 6_.
(Page 144), Note (b) after the words, _In this account I have omitted a million borrowed in 1734_, add, _and half a million borrowed in 1736; because these debts had for some time been in a fixed course of redemption by the salt-duties_.
In (page 145), line 2d, for 10.639,793l. read 10.739,793l.—Ibid, line 10th, for 146.582,844l. read 146.682,844l.—Ib. line 12th, for 15.639,793l. read 15.739,793l—Ibid. note, line 2d, for 1.118,000l. read 1.218,000l.
(P. 147). For 146.582,844l. read 146.682,844l.—For 71.505,580l. read 71.605,580l.—And for 10.639,793l. read 10.739,793.
FINIS.
A SUMMARY VIEW and COMPARISON of the different Schemes of Public Loans described in the SUPPLEMENT.
_N.B._ The Sum borrowed is always supposed FIVE MILLIONS; and the Price of the 3 _per cents._ 78l. But all the Schemes may be accommodated to any other Price of the 3 _per cents._ and to Schemes for borrowing any greater or smaller Sums.
+---------------------------------+-------------+ | | | | OLD SCHEMES. | | | | | | I. II. |Scheme of the| +----------------+----------------+loan in 1777.| |Scheme described|Scheme described| Page 185. | | Page 182. | Page 183. | | | | | | | | | III. | | | | | | £. | £. | £. | SUM ADVANCED | 5.000,000 | 5.000,000 | 5.000,000 | ------------------------+----------------+----------------+-------------+ NEW CAPITAL, or sum | | | | payable at redemption | 5.000,000 | 6.343,954 | 5.000,000, | ------------------------+----------------+----------------+-------------+ Interest offered | 3 _per cent._ | 3 _per cent._ |4 _per cent._| ------------------------+----------------+----------------+-------------+ ARTIFICIAL CAPITAL, | | | | or sum payable at | 1.200,000 | 1.343,954 | 250,000 | redemption more than | | | | the value received | | | | ------------------------+----------------+----------------+-------------+ DOUCEURS consisting of | | | | additional capitals | --0-- | 1.343,954 | --0-- | Short Annuity worth | 1.200,000 | --0-- | 200,000 | Lottery worth | --0-- | 150,000 | 150,000 | ------------------------+----------------+----------------+-------------+ ANNUAL CHARGE. | | | | Perpetual | 150,000 | 100,318 | 200,000 | Temporary | 100,000 | --0-- | 25,000 | | For lives or | |for 10 years.| | 17 yrs. | | | ------------------------+----------------+----------------+-------------+ Total of Annual Charge | 250,000 | 190,318 | 225,000 | ------------------------+----------------+----------------+-------------+
+-------------------------------+---------------+ | Scheme of 1777, altered |Scheme of 1777;| | to avoid douceurs and |supposing 100l.| | an artificial capital. |four _per ct._ | +---------------+---------------+ stock worth | | See Page 186. | See Page 188. | 91l. when the | | | | 3 _per cts._ | | | | are at 78l. | | | | Page 200. | | IV. | V. | VI. | | | | | | £. | £. | £. | SUM ADVANCED | 5.000,000 | 5.000,000 | 5.000,000 | ------------------------+---------------+---------------+---------------+ NEW CAPITAL, or sum | | | | payable at redemption | 4.750,000 | 3.750,000 | 5.000,000 | ------------------------+---------------+---------------+---------------+ Interest offered | 4¼ _per cent._| 4¼ _per cent._| 4 _per cent._| ------------------------+---------------+---------------+---------------+ ARTIFICIAL CAPITAL, | | | | or sum payable at | --0-- | --0-- |[155]450,000 | redemption more than | | | | the value received | | | | ------------------------+---------------+---------------+---------------+ DOUCEURS consisting of | | | | additional capitals | --0-- | --0-- | --0-- | Short Annuity worth | --0-- | --0-- | 450,000 | Lottery worth | 150,000 | 150,000 | 150,000 | ------------------------+---------------+---------------+---------------+ ANNUAL CHARGE. | | | | Perpetual | 201,875 | 159,375 | 200,000 | Temporary | 25,000 | 75,000 | 56,250 | | For 10 years. | for 27 years. | for 10 years.| ------------------------+---------------+---------------+---------------+ Total of Annual Charge | 226,875 | 234,375 | 256,250 | ------------------------+---------------+---------------+---------------+
+---------------+-------------------------------+ | | Schemes of loans by changing | | Scheme | the 3 _per cent._ stocks to | | founded | stocks bearing higher | | on the | interest. | | regulations +--------------+----------------+ | proposed | See Page 209.| See Page 214. | | Page 205, &c. | | | | | | | | VII. | VIII. | IX. | | | | | | £. | £. | £. | SUM ADVANCED | 5.000,000 | 5.000,000 | 5.000,000 | ------------------------+---------------+--------------+----------------+ NEW CAPITAL, or sum | | | | payable at redemption | 4.850,000 | 2.500,000 | --0-- | ------------------------+---------------+--------------+----------------+ Interest offered | _4 per cent._ |4¼ _per cent._| 4 _per cent._ | ------------------------+---------------+--------------+----------------+ ARTIFICIAL CAPITAL, | | | | or sum payable at | --0-- | --0-- | --0-- | redemption more than | | | | the value received | | | | ------------------------+---------------+--------------+----------------+ DOUCEURS consisting of | | | | additional capitals | --0-- | --0-- | --0-- | Short Annuity worth | --0-- | --0-- | --0-- | Lottery worth | --0-- | --0-- | --0-- | ------------------------+---------------+--------------+----------------+ ANNUAL CHARGE. | | | | Perpetual | 194,000 | 212,500 | 200,000 | Temporary | --0-- | --0-- | --0-- | | | | | ------------------------+---------------+--------------+----------------+ Total of Annual Charge | 194,000 | 212,500 | 200,000 | ------------------------+---------------+--------------+----------------+
[To be placed last of all, facing Page 216.]
[155] This Scheme may be altered to avoid the artificial Capital and 450,000l. Douceur (preserving nearly the same annual Charge) in the Manner directed in the 4th or 5th Scheme.