ÆäÀÌÁö À̹ÌÁö
PDF
ePub
[blocks in formation]

THE funding system, as it is called, is a modern governmental policy of about 150 years standing, and having attained its maturity, is apparently now fast falling into decay. The dividend interest is rapidly getting into a position hostile to the industrial interests; and a conflict is in preparation that must be terrible in its effects and speedy in its results. The whole system of public credit is wrong in principle, founded in fraud, raised in injustice, and sustained by deception. It is the mere instrument by which profligate and irresponsible governments exact from the people the means of carrying out their own schemes to the ultimate injury of the state. All great writers on natural civil law agree with Puffendorf, as follows:

"Natural law is only the determination, by reason, of that which must be done to preserve the social state of mankind. It follows that the first law of nature is this; that the social state is to be guarded and preserved to the uttermost, by and for every man. This comprehends the duty of a good citizen towards the state, that nothing shall be preferred by him before the safety and integrity of the state; and that he shall freely and at all times, offer his life, his means and his fortune, to preserve that state's safety and integrity."

[ocr errors]

Following these maxims, it results that each individual in a state is liable, in case of emergency, to sustain it with his whole means, or, in the words of Grotius-De Jure Belli et Pacis. "In cases of great urgency, the law revives, to use all things as if they were common property.' These rules are undoubtedly sound, on the supposition that the state is composed of individuals equal in rights and of a common general interest, and that the "urgency" is common to, or sanctioned by all; that is to say, that the object for which the expenses are to be incurred, is one, the necessity of which is recognised for the common good. To arrive at common assent, universal suffrage and general representation are indispensable. When, under such circumstances, it is ascertained that a war or other great expense is unavoidable, then "the law revives, to use all things as if they were common

1st. A Financial, Monetary and Statistical History of England, from the Revolution of 1688 to the present time, derived principally from Official Documents. Addressed to the Young Men o Great Britain. By Thomas Doubleday, Esq., author of the "True Law of Population." Lon don: E. Wilson, Royal Exchange.

2d. Direct Taxation. Blackwood, for March.

property." The state and the people have then a right to spend all the property they have earned or possessed, or all they may earn during their lives; and may contract a debt to be paid within that term. If, however, all the property in a state is liable to its wants, of whom is money to be borrowed? Who are the favored persons whose money is not only exempt from a demand which holds all others, but who require full interest for its use, as applied to objects in which their interest is as great as those who borrow of them? It is very clear that if all citizens owe equal duties to the state, there can be no lenders to the state except in foreign countries. Nor can a state borrow of foreign countries for a longer term than the probable life of the borrowing generation. They have no more right to draw upon the next generation than upon another country. This was clearly set forth in the letter of Thomas Jefferson to J. W. Eppes, in June, 1813. If a debt is contracted in the manner of the European governments, in perpetuity, the interest always to be paid by the people to the lenders, the labor of posterity is indefinitely mortgaged to a few persons. As all money, or all property received by state creditors as interest, is the result of the labor of the existing generation, a continued contraction of debt must ultimately cause its interest to reach an amount which will require the whole industry of a people to discharge it, leaving the mass of laborers nothing for their own enjoyment. This is nearly the case now in England; and that it is not entirely so, is owing only to the fact, that the system is of modern date. As thus, suppose the ancient Britons had contracted debts to repel the Romans; the latter incurred it to support the pro-consuls and their forces; the Saxons to repel the Danes, and subsequently the Normans; the latter to establish their power; the Crusaders to prosecute the holy wars, and so on down to the present time, how great would have been the debt? Its interest would soon have outrun the industrial powers of the Anglo-Saxon race, and "repudiation" long since have cleared the score. It was not, however, until the time of Charles II. that the government recognised in the monied portion of its citizens a class not only exempt from supporting the state, but entitled to make money at the expense of the remainder, by lending to the government. The existing debt had a most fitting commencement, viz., an agreement to repay a theft of Charles II. At that time there was a kind of paper money issued by goldsmiths as a "receipt for coin," lodged with them on deposit. Charles, always in a strait for money, and surrounded by prostitutes and a most profligate set of men, was unable to borrow; his credit was gone. He therefore, with his worthy coadjutors, contrived to create a panic, during which he induced the goldsmiths and merchants to lodge their money, £664,263, in the exchequer for security. As soon as this was done, he abstracted the money and spent it in his revels. This sum, bearing six per cent. interest, commenced that English debt which is now £800,000,000. The people of England have paid interest on the money Charles stole, and gave to his women, £40,000 per annum, for 181 years, making £7,240,000, or $32,000,000, and the debt is no nearer extinguishment than before. Gradually increased during the eighteenth century, the debt rose to £263,463,043 in 1793. In the following 22 years, which is the estimate for the life of a generation, it was increased £540,000,000! Suppose every generation should borrow a like sum, who would pay? Surely Mr. Pitt and his generation had no exclusive right to borrow. Of thirty generations which passed away from the Norman conquest down to the French war, each one had as much right to borrow as that of Mr. Pitt, and nearly every one had as much necessity. Suppose they had done so, where would have been his ability to borrow? The generations that have passed away since the contraction of the debt have quietly submitted to pay its interest, but

the one now in being has begun strongly to question both his right to borrow at all, the justice of the debts he did contract, and the equity of continuing to pay. When this matter comes once to be seriously discussed, the death knell of the funding system may be considered as being struck.

The doctrine of repudiation is by no means new in England; it was advised and confidently predicted by Thomas Paine, in his able writings, while the mischief was going on. After him came the late celebrated William Cobbett, who, Sept. 12, 1815, three months after the battle of Waterloo, wrote as follows:

"It is now hoped by some persons, that the restoration of the Pope, the Inquisition, the Jesuits and the Bourbons, will so far brutalize the people of the continent of Europe, that we shall have no rivals in the arts of peace; and that thus we shall be left to enjoy a monopoly of navigation, commerce and manufactures, and be. thereby, enabled to pay the interest on our debt, and meet the enormous annual expenses of our government. Without stopping to comment on the morality and humanity of this hope, entertained in a country abounding with bible societies, I venture to give it as my decided opinion, that the hope is fallacious. Russia, Denmark, Sweden, Holland, Austria, Spain, the Italian States, and even the Bourbons, will all push forward for their share of the benefits of the arts of peace."

This view, taken thirty years ago, has been confirmed by subsequent events. The extension of commerce, the "rivalship in the arts of peace," have continually pressed upon England's industry, reducing the money value. of labor, and, as a consequence, increasing the value of dividends and annuities. The debt which was contracted in a cheap depreciated paper currency, is now being paid in a dear metallic currency of increasing value. These circumstances have in effect doubled the debt since the war. A stock of £100, for which £50 was given in 1814, was worth in 1846, £100, or double its cost, and this is not nominally but really so, because the £30 interest per annum, received by its holders, will buy for him double the products of industry that the same sum would have produced for him in 1810 and 1815. Hence it is, that the burden of this debt has increased with the population. That is to say, if £30,000,000, the amount of the interest per annum, represented the products of 10,000,000 persons in the cheap money of 1816, it represents the industry of 20,000,000 persons in the dear money of 1847. The financial history of England since 1815, has been that of a constant struggle against the oppression of the debt in the manner set forth in the extracts from Cobbett. Each succeeding minister has felt the approach of the crisis, and, no doubt, has watched with anxiety the growth of the repudiating party, the strength and boldness of which is indicated in the book mentioned at the head of this article. It is a London edition, published a few weeks since, clumsily written and badly printed. The writer is thoroughly inspired with the view of Mr. Paine, particularly with his paper on the "Decline and Fall of the English system of Finance;" and follows his views very strictly as far as they went. He has, however, but a very crude notion of the financial affairs of the United States, as the following, in relation to the currency, will indicate:

"He (General Jackson) refused, during the first four years of his Presidency, to sign a renewal of the charter of the bank; and on being re-elected, his cabinet, under his auspices, carried a series of measures, one of which was a return to those cash payments which had been suspended from and after the war of 1814, to the great injury both of the inorals, credit and prosperity of the Union."

This piece of stupidity is characteristic of English writers on American matters. It is, however, not the less important on that account. Its object is to set forth the inevitable and speedy approach of the repudiation of the English debt, as an unjust burden upon an industrious people, "who have

already paid too much." A royal octavo volume, of 400 pages, arrives at the following conclusion:

"Thus, then, it seems evident, almost to a demonstration, that one measure alone can avert the violent destruction of the system; and that is, the sweeping away of the debt, and the reduction of the taxes to about one fifth of the present amount."

This is repudiation in its broadest,-its Mississippi sense, and is the doctrine of a large, influential and growing party. The debt has hitherto been maintained by taxes levied upon consumable goods, a mode by which the whole has been thrown upon the working classes, and, as a consequence, the landed and funded interests, and the church, were united in its support. When Sir Robert Peel came into power, in 1844, he found a deficit of £10,000,000 in the revenues. Unless this could be repaired, it was evidently fatal to public credit. He declared that indirect taxation had reached its limit, and levied taxes upon property; that is to say, he declared war be tween the landed and funded interests. He placed the former in collusion with the people in hostility to the stockholders. As long as industry paid all the taxes, the landed interests favored the stockholders; the moment that property was taxed for debts, the rights of the latter came in question. The February number of Blackwood, the high tory organ, has an article on "direct taxation," with this ominous commencement:

"Free trade,' say the Americans, is another word for direct taxation, and direct taxation is another word for repudiation of state debts.' The Americans are right; it is so."

The article, then, in admitting the necessity for direct taxes, advises their extension to embrace all classes, as well as Ireland, and tells us that the "public credit and the existence of the nation depends on the question." Such a position of the finances vetoes forever England's wars. Austria may annex Cracow, or Russia, Constantinople. England cannot help it; although Chatham did say, that "not a gun should hereafter be fired in Europe without England knew the reason why ?" The importance of this separation of interests becomes more manifest, when we consider that out of 27,000,000 people that inhabit Great Britain, but 830,000 are electors, while in the United States there are 2,600,000 out of 17,000,000 people. The 830,000 electors of Great Britain embrace the interests of the church, of property and stocks. These have supported "public credit," "tithes," the whole expensive hierarchy, and the exemption of property from taxation. The great mass of the people are opposed to the public debt and in favor of direct taxation. Alison, in his History of Europe, page 436, vol. 4, states:

"If Great Britain wants to shake off its national debt, it has only to extend the suffrage in any considerable degree, and the burden will not stand three months.” These are the words of the mouth-piece of aristocracy, and are meant to excite horror of democracy. They, however, are true, and strongly illustrate the taxation without representation which exists in England. The minister has relieved the people of taxes to a considerable extent, and imposed a portion of the interest upon property; that is to say, of £30,000,000 which the debt costs, £5,300,000 are drawn from the income tax. Events have abolished the corn laws which are a protection to lands, and raised the poor The people have therefore a powerful ally in that interest; and the moment the debt is too irksome to property holders, an extension of the right of suffrage will send both that and tithes to the "tomb of the Capulets." It will be remarked, that precisely at the moment when, on the accession

rates.

of the new minister in 1842, the necessity arose for making property pay a portion of the interest due the public creditors, the repudiation of the debts of several of the United States was announced. Under such circumstances it is not surprising that that event created immense excitement, or that the fund-mongers evinced such alarm and indignation at an example, which went far to encourage the repudiating party in England. The discussion of the subject there would be fatal; hence, unmeasured abuse of "democratic repudiation" filled all prints and pointed all speeches. Hence the renewed and violent outcry against slavery; the patronising and feasting of drunken negroes by the nobility of England; the employment of emissaries, and the expenditure of money to foment dissensions on this side, in order to divert public attention from the finances there.

The crisis in Ireland and the state of the harvests in the last year, has brought the matter to a focus. On the next harvest depends the salvation of British credit, if it can be sustained till then, The funding-system of England has two separate branches, viz., the direct loans of the government, on which it pays interest annually, and the paper-money in circulation, which is the medium in which taxes are collected and interest paid. It is obvious that the magnitude to which the debt may be raised depends somewhat upon the quantity of money in circulation. Hence the direct debt never could be very large, unless there were some means of increasing the circulating medium, to admit of the collection of necessary taxes. That is to say, if England had no debt, the collections and disbursements of the government would be annually £60,000,000 less than they are, and the demand for circulating money to that extent diminished. Hence it is, that the Bank of England and the country banks keep out about £30,000,000, which are constantly passing from the people to the tax collectors, thence to the bank, where they accumulate and are paid out to the national creditors, who pay them away to the people, from whose hands they return through the tax-gatherers to the treasury. For this reason the operations of the Bank of England, originating with the debt, kept pace with its progress. The amount of paper in circulation increased year by year, with the public expenditures, until 1815, when that expenditure reached its maximum; since that time its circulation has been stationary, at about twothirds of the interest on the public debt. We stated that the theft of Charles II. was the origin of the present debt; that is to say, it was the amount owed by the government at the date of the Revolution. When James II. abdicated the throne, the revenue of Great Britain was £2,000,000 per annum; taxes were consequently light, property well-distributed, and the nation prosperous. The precious metals had, during the previous century, flowed freely in from America, and favorably influenced business. The expenses of the Revolution were followed by the extravagance of the new king, transplanted from Holland, and the persecution of Ireland required large sums of money, as well as the wars fought to carry out the Dutch policy of the new king. These wars ruined the finances of the country. It became impossible to raise sufficient supplies, and the exchequer bills were taken only at a ruinous discount. At this juncture, Bishop Burnet, of Salisbury, and William Patterson, of Scotland, projected a bank after the Dutch plan. The king caught eagerly at the scheme, and in July, 1794, the present bank received a charter, with the following curious title: "For securing certain recompenses and advantages to such persons as shall voluntarily raise £1,500,000 for carrying on the war with France." The subscribers to the sum to be a corporation, with the title of "The Governor and Company of the Bank of England." The subscribed capital to be lent to the government at 8 per cent. per annum. From time to

« ÀÌÀü°è¼Ó »