"On the verge, nay even in the gulph of bankruptcy."
1 This pamphlet, as Paine predicts at its close (no doubt on
good grounds), was translated into all languages of Europe,
and probably hastened the gold suspension of the Bank of
England (1797), which it predicted. The British Government
entrusted its reply to Ralph Broome and George Chalmers, who
wrote pamphlets. There is in the French Archives an order
for 1000 copies, April 27, 1796, nineteen days after Paine's
pamphlet appeared. "Mr. Cobbett has made this little
pamphlet a text-book for most of his elaborate treatises on
our finances.... On the authority of a late Register of Mr.
Cobbett's I learn that the profits arising from the sale of
this pamphlet were devoted [by Paine] to the relief of the
prisoners confined in Newgate for debt."--"Life of Paine,"
by Richard Carlile, 1819.--_Editor._.
Debates in Parliament.
Nothing, they say, is more certain than death, and nothing more
uncertain than the time of dying; yet we can always fix a period beyond
which man cannot live, and within some moment of which he will die. We
are enabled to do this, not by any spirit of prophecy, or foresight into
the event, but by observation of what has happened in all cases of human
or animal existence. If then any other subject, such, for instance, as
a system of finance, exhibits in its progress a series of symptoms
indicating decay, its final dissolution is certain, and the period of it
can be calculated from the symptoms it exhibits.
Those who have hitherto written on the English system of finance, (the
funding system,) have been uniformly impressed with the idea that its
downfall would happen _some time or other_. They took, however, no data
for their opinion, but expressed it predictively,--or merely as opinion,
from a conviction that the perpetual duration of such a system was a
natural impossibility. It is in this manner that Dr. Price has spoken of
it; and Smith, in his Wealth of Nations, has spoken in the same manner;
that is, merely as opinion without data. "The progress," says Smith,
"of the enormous debts, which at present oppress, and will in the long
run _most probably ruin_, all the great nations of Europe [he should
have said _governments_] has been pretty uniform." But this general
manner of speaking, though it might make some impression, carried with
it no conviction.
It is not my intention to predict any thing; but I will show from data
already known, from symptoms and facts which the English funding system
has already exhibited publicly, that it will not continue to the end of
Mr. Pitt's life, supposing him to live the usual age of a man. How much
sooner it may fall, I leave to others to predict.
Let financiers diversify systems of credit as they will, it _is_
nevertheless true, that every system of credit is a system of paper
money. Two experiments have already been had upon paper money; the one
in America, the other in France. In both those cases the whole capital
was emitted, and that whole capital, which in America was called
continental money, and in France assignats, appeared in circulation; the
consequence of which was, that the quantity became so enormous, and so
disproportioned to the quantity of population, and to the quantity' of
objects upon which it could be employed, that the market, if I may so
express it, was glutted with it, and the value of it fell. Between five
and six years determined the fate of those experiments. The same fate
would have happened to gold and silver, could gold and silver have been
issued in the same abundant manner that paper had been, and confined
within the country as paper money always is, by having no circulation
out of it; or, to speak on a larger scale, the same thing would happen
in the world, could the world be glutted with gold and silver, as
America and France have been with paper.
The English system differs from that of America and France in this one
particular, that its capital is kept out of sight; that is, it does
not appear in circulation. Were the whole capital of the national debt,
which at the time I write this is almost one hundred million pounds
sterling, to be emitted in assignats or bills, and that whole quantity
put into circulation, as was done in America and in France, those
English assignats, or bills, would soon sink in value as those of
America and France have done; and that in a greater degree, because
the quantity of them would be more disproportioned to the quantity
of population in England, than was the case in either of the other two
countries. A nominal pound sterling in such bills would not be worth one
penny.
But though the English system, by thus keeping the capital out of sight,
is preserved from hasty destruction, as in the case of America and
France, it nevertheless approaches the same fate, and will arrive at it
with the same certainty, though by a slower progress. The difference
is altogether in the degree of speed by which the two systems approach
their fate, which, to speak in round numbers, is as twenty is to one;
that is, the English system, that of funding the capital instead of
issuing it, contained within itself a capacity of enduring twenty times
longer than the systems adopted by America and France; and at the end of
that time it would arrive at the same common grave, the Potter's Field
of paper money.
The datum, I take for this proportion of twenty to one, is the
difference between a capital and the interest at five per cent. Twenty
times the interest is equal to the capital. The accumulation of paper
money in England is in proportion to the accumulation of the interest
upon every new loan; and therefore the progress to the dissolution is
twenty times slower than if the capital were to be emitted and put into
circulation immediately. Every twenty years in the English system is
equal to one year in the French and American systems.
Having thus stated the duration of the two systems, that of funding upon
interest, and that of emitting the whole capital without funding, to be
as twenty to one, I come to examine the symptoms of decay, approaching
to dissolution, that the English system has already exhibited, and to
compare them with similar systems in the French and American systems.
The English funding system began one hundred years ago; in which time
there have been six wars, including the war that ended in 1697.