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.