THE
DECLINE AND FALL

OF THE
ENGLISH SYSTEM OF FINANCE.

BY THOMAS PAINE,
AUTHOR OF COMMON SENSE, RIGHTS OF MAN,
AGE OF REASON, &c.

PHILADELPHIA,

PRINTED BY JOHN PAGE, N. 67 MULBERRY STREET,
FOR BENJ. FRANKLIN BACHE, N. 112 HIGH STREET,
1796.

"On the verge, nay even in the gulph of bankruptcy."
*Debates in Parliament.*

NOTHING, they say, is more certain than death,
and nothing more uncertain than the time of dying:
yet we can always fix a period beyond which man
cannot live, and within some moment of which he
will die. We are enabled to do this, not by any
spirit of prophecy, or forefight into the event, but by
observation of what has happened in all cafes of hu-
man or animal existence. If then any other subject,
fuch for instance as a system of finance, exhibits in
A

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its progrès a férie of symptoms indicating decay, its final diffolition is certain, and the period of it can be calculated from the symptoms it exhibits.

Thofe who have hitherto written on the English fyſtem of finance (the funding ſystem) have been uniformly impreſſed with the idea of its downfall happening some time or other. They took, however, no data for that opinion, but expreſſed it predictively, or merely as opinion, from a conviction that the perpetual duration of such a ſystem was a natural impofibility. It is in this manner that Doctor Price has ſpoken of it; and Smith in his Wealth of Na-tions has ſpoken in the fame manner; that is, merely as opinion without data. “The progrès, says Smith, of the enormous debts, which at preſent oppreſs, and will in the long run moſt probably ruin, all the great nations of Europe, (he ſhould have faid governments) has been pretty uniform.” But this general manner of ſpeaking, though it might make some impreſſion, carried with it no conviction.

It is not my intention to predict any thing; but I will show from data already known, from ſymptoms and facts, which the English funding ſystem has already exhibited publicly, that it will not continue to the end of Mr. Pitt's life, ſuppoſing him to live the ufual age of a man. How much sooner it may fall, I leave to others to predict.

Let financiers diversify ſystems of credit as they will, it is nevertheless true, that every ſystem of credit is a ſystem of paper money. Two experiments have already been had upon paper money; the one in America the other in France. In both thofe cafes the whole capital was emitted, and that whole capital, which in America was called continental money, and in France affixnats, appeared in circulation; the consequence of which was, that the quantity became ſo

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enormous, and so disproportioned to the quantity of
population, and to the quantity of objects upon which
it could be employed, that the market, if I may so
exprès it, was glutted with it, and the value of it
fell. Between five and fix years determined the fate
of those experiments. The fame fate would have
happened to gold and silver, could gold and silver
have been diffused in the fame abundant manner as
paper had been, and confined within the coun-
try as paper money always is, by having no circu-
lation out of it; or, to speak on a larger scale, the
fame thing would happen in the world, could the
world be glutted with gold and silver, as America
and France has been with paper.

The English system differs from that of America
and France in this one particular, that its capital is
kept out of fight; that is, it does not appear in cir-
culation. Were the whole capital of the national
debt, which at the time I write this is almost four
hundred million pounds sterling, to be emitted in af-
signats or bills, and that whole quantity put into
circulation, as was done in America and in France,
those English assignats, or bills, would sink in value
as those of America and France have done; and that
in a greater degree, because the quantity of them
would be more disproportioned to the quantity of po-
pulation in England, than was the case in either of
the other two countries. A nominal pound sterling
in such bills would not be worth one penny.

But though the English system, by thus keeping
the capital out of fight, is preferred from haughty de-
struction, as in the case of America and France, it
nevertheless approaches the fame fate; and will ar-
rive at it with the fame certainty, though by a flower
progress. The difference is altogether in the degree
of speed by which the two systems approach their

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fate, which, to speak in round numbers, is as twenty is to one; that is, the English system, that of funding the capital instead of infusing it, contained within itself a capacity of enduring twenty times longer than the systems adopted by America and France; and at the end of that time it would arrive at the same common grave, the Potter's field, of paper money.

The datum I take for this proportion of twenty to one, is the difference between a capital and the interest at five per cent. Twenty times the interest is equal to the capital. The accumulation of paper money in England is in proportion to the accumulation of the interest upon every new loan; and therefore the proceeds to diffusion is twenty times fewer than if the capital were to be emitted and put into circulation immediately. Every twenty years in the English system is equal to one year in the French and American systems.

Having thus stated the duration of the two systems, that of funding upon interest, and that of emitting the whole capital without funding, to be as twenty to one, I come to examine the symptoms of decay approaching to dissolution, that the English system has already exhibited, and to compare them with similar symptoms in the French and American systems.

The English funding system began one hundred years ago; in which time there has been six wars including the war that ended in 1697.

1. The war that ended, as I have just said, in 1697.

2. The war that began in 1702.

3. The war that began in 1739.

4. The war that began in 1756.

5. The American war that began in 1775.

6. The present war that began in 1793.

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The national debt, at the conclusion of the war,
which ended in 1697, was twenty one millions and
an half. (See Smith's *Wealth of Nations*, chapter
'on Public Debts.) We now see it approaching faft
to four hundred millions. If between those two
extremes of twenty one millions and four hundred
millions, embracing the several expences of all the
including wars, there exifts some common ratio that
will afcertain arithmetically the amount of the debt
at the end of each war, as certainly as the fact is
now known to be, that ratio will in like manner de-
termine what the amount of the debt will be in all
future wars, and will afcertain the period within
which the funding fyftem will expire in a bankrupt-
cy of the government; for the ratio I allude to is
the ratio which the nature of the thing has eſtabliſh-
ed for itself.

Hitherto no idea has been entertained that any
such ratio exifted, or could exift, that could deter-
mine a problem of this kind, that is, that could af-
certain, without having any knowledge of the fact,
what the expence of any former war had been, or
what the expence of any future war would be; but
it is nevertheless true that such a ratio does exift, as
I shall shew, and also the mode of applying it.

The ratio I allude to is not in arithmetical pro-
gression, like the numbers

2, 3, 4, 5, 6, 7, 8, 9,

nor yet in geometrical progression, like the numbers

2, 4, 8, 16, 32, 64, 128, 256;

but is in the series of one half upon each preceding
number; like the numbers

8, 12, 18, 27, 40, 60, 90, 135.

Any person can perceive that the second nu-

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12, is produced by the preceding number 8, and
half 8: and that the third number 18 is in like man-
ner produced by the preceding number 12 and half
12, and so on for the rest. They can also see how
rapidly the fums increafe as the ratio proceeds. The
difference between the two first numbers is but 4, but
the difference between the two last is 45; and from
thence they may see with what immense rapidity the
national debt has encreafed, and will continue to
encreafe, till it exceeds the ordinary powers of cal-
culation, and loles itself in cyphers.

I come now to apply the ratio as a rule to deter-
mine all the cafes.

I begin with the war that ended in 1697, which
was the war in which the funding fyftem began.
The expence of that war was twenty-one millions
and an half. In order to ascertain the expence of
the next war, I add to twenty-one millions and an
half, the half thereof (ten millions and three quar-
ters) which makes thirty one millions and three
quarters for the expence of that war. This thirty-
one millions and three quarters, added to the former
debt of twenty-one millions and an half, carries the
national debt to 52 millions and three quarters.
Smith, in his chapter on Public Debts, fays, the
national debt was at this time 53 millions.

I proceed to ascertain the expence of the next
war, that of 1739, by adding, as in the former
cafe, one half to the expence of the preceding war.
The expence of the preceding war was thirty-one
millions and three quarters; for the fake of even
numbers, fay 32 millions, the half of which (16),
makes forty eight millions for the expence of that
war.

I proceed to ascertain the expence of the war of
1756, by adding, according to the ratio, one half to

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the expence of the preceding war. The expence of the preceding war was taken at 48 millions, the half of which (24) makes 72 millions for the expence of that war. Smith (chapter on Public Debts) fays, the expence of the war of 1756 was 72 millions and a quarter.

I proceed to ascertain the expence of the American war of 1775, by adding, as in the former cases, one half to the expence of the preceding war. The expence of the preceding war was 72 millions, the half of which (36) makes 108 millions for the expence of that war. In the last edition of Smith, (chapter on Public Debts) he fays, the expence of the American war was more than an hundred millions.

I come now to ascertain the expence of the present war, fupposing it to continue as long as former wars have done, and the funding system not to break up before that period. The expence of the preceding war was 108 millions, the half of which (54) makes one hundred and sixty-two millions for the expence of the present war. It gives symptoms of going beyond this sum, fupposing the funding system not to break up; for the loans of the last year and of the present year, are twenty-two millions each; which exceeds the ratio compared with the loans of the preceding war. It will not be from the inability of procuring loans that the system will break up. On the contrary, it is the facility with which loans can be procured, that hastsens that event. The loans are altogether paper transactions, and it is the excess of them that brings on, with accelerating speed, that progressive depreciation of funded paper money that will dissolve the funding system.

I proceed to ascertain the expence of future wars, and I do this merely to show the impossibility

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of the continuance of the funding system, and the certainty of its dissolution.

The expence of the next war, after the present war, according to the ratio that has ascertained the preceding cafes, will be - - 243 millions
Expence of the second war - - 364 millions
of the third war - - 546 millions
of the fourth war - - 819 millions
of the fifth war - - 1228 millions

3200 millions;

which, at only 4 per cent, will require taxes to the nominal amount of one hundred twenty-eight millions to pay the annual interest, besides the interest of the present debt, and the expence of government, which are not included in this account. Is there a man so mad, so stupid, as to suppose this system can continue?

When I first conceived the idea of seeking for some common ratio that should apply as a rule of measurement to all the cafes of the funding system, so far as to ascertain the several stages of its approach to dissolution, I had no expectation that any ratio could be found that would apply with so much exactness as this does. I was led to the idea merely by observing that the funding system was a thing in continual progression, and that whatever was in a state of progression, might be supposed to admit of, at least, some general ratio of measurement that would apply without any very great variation. But who could have supposed that falling systems, or falling opinions, admitted of a ratio, apparently as true as the descent of falling bodies? I have not made the ratio, any more than Newton made the ratio of gravitation. I have only discovered it, and explained the mode of applying it.

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Those who are acquainted with the power with which even a small ratio, acting in progression, multiplies in a long series, will see nothing to wonder at in this table. Those who are not acquainted with that subject, and not knowing what else to say, may be inclined to deny it. But it is not their opinion one way, nor mine the other, that can influence the event. The table exhibits the natural march of the funding fyftem to its irredeemable diffolution.—Supposing the present government of England to continue and to go on, as it has gone on since the funding fyftem began, I would not give twenty shillings for one hundred pounds in the funds to be paid twenty years hence. I do not speak this predictively; I produce the data upon which that belief is founded; and which data it is every body's interest to know, who have any thing to do with the funds, or who are going to bequeath property to their defendants to be paid at a future day.

Perhaps it may be asked, that as governments or minifters proceeded by no ratio in making loans or incurring debts, and as nobody intended any ratio, or thought of any, how does it happen that there is one? I answer that the ratio is founded in necessity, and I now go to explain what that necessity is.

It will always happen that the price of labour or of the produce of labour, be that produce what it may, will be in proportion to the quantity of money in a country, admitting things to take their natural course. Before the invention of the funding fyftem, there was no other money than gold and silver; and as nature gives out those metals with a sparing hand and in regular annual quantities from the mines, the several prices of things were proportioned to the quantity of money at that time, and

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so nearly stationary as to vary but little in any fifty or sixty years of that period.

When the funding system began, a substitute for gold and silver began also. That substitute was paper; and the quantity of it increased as the quantity of interest increased upon accumulated loans. This appearance of a new and additional species of money in the nation soon began to break the relative value, which money and the things it will purchase, bore to each other before. Every thing rose in price, but the rise at first was little and slow, like the difference in units between the two first numbers 8 and 12, compared with the two last numbers 90 and 135 in the table. It was however sufficient to make itself considerably felt in a large transaction. When therefore government, by engaging in a new war, required a new loan, it was obliged to make a higher loan than the former loan to balance the increased price to which things had risen; and as that new loan increased the quantity of paper in proportion to the new quantity of interest, it carried the price of things still higher than before. The next loan was again higher to balance that further increased price; and all this in the same manner, though not in the same degree, that every new emission of continental money in America, or of assignats in France, were greater than the preceding emission to make head against the advance of prices, till the combat could be maintained no longer. Herein is founded the necessity, of which I have just spoken. That necessity proceeds with accelerating velocity, and the ratio I have laid down is the measure of that acceleration; or, to speak the technical language of the subject, it is the measure of the increasing depreciation of funded paper money, which it is impossible to prevent, while the quantity of that money and of bank

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notes continues to multiply. What else but this can
account for the difference between one war costing
21 millions and another war costing 160 millions?

The difference cannot be accounted for on the
score of extraordinary efforts or extraordinary at-
chievements. The war that cost 21 millions was
the war of the confederates, historically called the
grand alliance, confighting of England, Austria and
Holland, in the time of William the third, against
Louis, the fourteenth, and in which the confede-
rates were victorious. The present is a war of a
much greater confederacy; a confederacy of Eng-
land, Austria, Prussia, the German Empire, Spain,
Holland, Naples and Sardinia, eight powers against
the French Republic singly, and the Republic has
beaten the whole confederacy.—But to return to
my subject.

It is said in England that the value of paper keeps
equal with the value of gold and silver. But the
cafe is not rightly stated; for the fact is, that the
paper has *pulled down* the value of gold and fil-
ver to a level with itself. Gold and silver will not
purchase so much of any purchaseable article at this
day as if no paper had appeared, nor so much as it
will in any country in Europe where there is no
paper. How long this hanging together of money
and paper will continue, makes a new cafe; because
it daily exposes the system to sudden death, indepen-
dent of the natural death it would otherwise suffer.

I consider the funding system as being now ad-
vanced into the last twenty years of its existence.
The single circumstance, were there no other, that
a war should now cost *nominally* one hundred
and sixty millions, which when the system began
cost but twenty-one millions, or that the loan for
one year only (including the loan to the Emperor)

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should now be *nominally* greater than the whole ex-
pence of that war, shows the state of depreciation
to which the funding system has arrived. Its de-
preciation is in the proportion of eight for one, com-
pared with the value of its money when the system
began; which is the state the French alignats stood
in a year ago (March 1795) compared with gold
and silver. It is therefore that I say, that the Eng-
lish funding system has entered into the last twenty
years of its existence, comparing each twenty years
of the English system, with every single year of the
American and French systems, as before stated.

Again, supposing the present war to close as
former wars have done, and without producing
either revolution or reform in England, another
war, at least, must be looked for in the space of the
twenty years I allude to; for it has never yet hap-
pened that twenty years have passed off without a
war, and that more especially since the English go-
vernment has dabbled in German politics, and shown
a dispoſition to infult the world, and the world of
commerce, with her navy. That next war will
carry the national debt to very nearly seven hundred
millions, the interest of which at four per cent. will
be twenty-eight millions, besides the taxes for the
(then) expences of government, which will encroach
in the fame proportion, and which will carry the
taxes to at least forty millions; and if another war
only begin, it will quickly carry them to above fifty;
for it is in the last twenty years of the funding system,
as in the last year of the American and French fyf-
tems without funding, that all the great shocks
begin to operate.

I have just mentioned that paper, in England,
has *pulled down* the value of gold and silver to a
level with itself; and that this *pulling down* of gold

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and silver money has created the appearance of pa-
per money keeping up. The fame thing and the
fame miftake took place in America and in France,
and continued for a confiderable time after the com-
mencement of their fyftem of paper; and the
actual depreciation of money was hidden under that
miftake.

It was faid in America, at that time, that every
thing was becoming dear; but gold and silver could
then buy thofe dear articles no cheaper than paper
could; and therefore it was not called depreciation.
The idea of dearneſs eſtabliſhed it self for the idea of
depreciation. The fame was the cafe in France.
Though every thing rose in price ſoon after aſſig-
nats appeared, yet thofe dear articles could be pur-
chafed no cheaper with gold and silver than with
paper, and it was only faid that things were dear.
The fame is ſtill the language in England. They
call it dearneſs. But they will ſoon find that it is
an actual depreciation, and that this depreciation is
the effect of the funding ſystem; which by crowd-
ing ſuch a continually encreaſing mafs of paper into
circulation, carries down the value of gold and silver
with it. But gold and silver will, in the long run,
revolt againſt depreciation, and ſeparate from the
value of paper; for the progrefs of all ſuch ſystems
appears to be, that the paper will take the com-
mand in the beginning, and gold and silver in the
end.

But this ſucceſſon in the command of gold and
silver over paper, makes a crifis far more eventful
to the funding ſystem than to any other ſystem up-
on which paper can be iſſued; for, ſtrictly ſpeaking,
it is not a crifis of danger, but a ſymptom of death.
It is a death ſtroke to the funding ſystem. It is a
revolution in the whole of its affairs.

( 015 )

If paper be diffused without being funded upon
interest, emitions of it can be continued after the
value of it separates from gold and silver, as we
have seen in the two cafes of America and France.
But the funding system refts altogether upon the
value of paper being equal to gold and silver; which
will be as long as the paper can continue carrying down
the value of gold and silver to the same level to
which itself defcends, and no longer. But even in
this state, that of defcending equally together, the
minifter, whoever he may be, will find himself
befet with accumulating difficulties; because the
loans and taxes voted for the service of each enfu-
ing year will wither in his hands before the year ex-
pires, or before they can be applied. This will
force him to have recourse to emitions of what is
called exchequer and navy bills, which by still en-
creasing the mafs of paper in circulation, will drive
on the depreciation still more rapidly.

It ought to be known that taxes in England are
not paid in gold and silver, but in paper (bank notes).
Every person who pays any considerable quantity
of taxes, such as malsters, brewers, distillers (I ap-
peal for the truth of it to any of the collectors of ex-
cise in England, or to Mr. Whitbread) knows this
to be the case. There is not gold and silver enough
in the nation to pay the taxes in coin, as I shall show;
and consequently there is not money enough in the
bank to pay the notes. The interest of the national
funded debt is paid at the bank in the same kind
of paper in which the taxes are collected. When
people find, as they will find, a reservedness among
each other in giving gold and silver for bank notes
or the least perference for the former over the lat-
ter, they will go for payment to the bank where
they have a right to go. They will do this as a mea-

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fure of prudence, each one for himself, and the truth
of delusion of the funding fyften will then be proved.

I have faid in the foregoing paragraph, that there
is not gold and silver enough in the nation to pay the
taxes in coin, and confequently that there cannot be
enough in the bank to pay the notes. As I do not
chufe to reft any thing upon aftertion, I appeal for
the truth of this to the publications of Mr. Eden
(now called Lord Auckland), and George Chalmers,
secretary to the board of trade and plantation, of
which Jenkinſon (now called Lord Hawſbury) is
president. (These forſt of folks change their names
ſo often, that it is as difficult to know them as it is to
know a thieſe.) Chalmers gives the quantity of gold
and silver coin from the returns of coinage at the
mint; and after deducting for the light gold re-
coined, ſays, that the amount of gold and silver coin
is about twenty millions. He had better not have
proved this, especially if he had reflected that public
credit is ſiſpicion aſleep. The quantity is much too
little.

Of this twenty millions (which is not a fourth
part of the quantity of gold and silver there is in
France, as is ſhewn in Mr. Necker's treatife on the
admiſtration of the finances) three millions at leaſt
muſt be ſuppoſed to be in Ireland, ſome in Scotland,
and in the West-Indies, Newfoundland, &c. The
quantity therefore in England cannot be more than
ſixteen millions, which is four millions leſs than the
amount of the taxes. But admitting there to be fix-
teen millions, not more than a fourth part thereof
(four millions) can be in London, when it is confi-
dered that every city, town, village, and farm-houſe
in the nation muſt have a part of it, and that all the
great manufactories, which moſt require caſh, are
out of London. Of this four millions in London,

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every banker, merchant, tradefman, in short every
individual must have some. He must be a poor
shop-keeper indeed, who has not a few guineas in
his till. The quantity of cash therefore in the bank
can never, on the evidence of circumftances, be so
much as two millions; most probably not more than
one million; and on this flender twig, always liable
to be broken, hangs the whole funding fyftem of
four hundred millions, besides many millions in
bank notes. The sum in the bank is not suffici-
ent to pay one fourth of only one year's intereſt of
the national debt, were the creditors to demand
payment in cash, or to demand cash for the bank
notes in which the intereſt is paid. A circum-
ftance always liable to happen.

One of the amusements that has kept up the
farce of the funding fyftem is, that the intereſt is
regularly paid. But as the intereſt is always paid
in bank notes, and as bank notes can always be
coined for the purpose, this mode of payment proves
nothing. The point of proof is, can the bank give
cash for the bank notes in which the intereſt is
paid ? If it cannot, and it is evident it cannot, some
millions of bank notes must go without payment,
and those holders of bank notes who apply laft will
be worst off. When the prefent quantity of cash in
the bank be paid away, it is next to impoffible to
fee how any new quantity is to arrive. None will
arrive from taxes, for the taxes will all be paid in
bank notes; and ſhould the government refufe bank
notes in payment of taxes, the credit of bank notes
will be gone at once. No cash will arrive from the
bufineſs of discounting merchants' bills, for every
merchant will pay off those bills in bank notes and
not in cash. There is therefore no means left for
the bank to obtain a new supply of cash after the

C

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present quantity be paid away. But, besides the impossibility of paying the interest of the funded debt in cash, there are many thousand persons in London and in the country, who are holders of bank notes that came into their hands in the fair way of trade, and who are not stockholders in the funds; and as such persons have had no hand in increasing the demand upon the bank, as those have had, who for their own private interest, like Boyd and others, are contracting, or pretending to contract, for new loans, they will conceive they have a just right their bank notes should be paid first. Boyd has been very fly in France, in changing his paper into cash. He will be just as fly in doing the same thing in London, for he has learned to calculate; and then it is probable he will get off for America.

A stoppage of payment at the bank is not a new thing. Smith, in his Wealth of Nations, book 2, chap. 2, says, That in the year 1696, exchequer bills fell forty, fifty and sixty per cent. bank notes twenty per cent. and the bank stop payment. That which happened in 1696 may happen again in 1796. The period in which it happened was the last year of the war of king William. It necessarily put a stop to the further emission of exchequer and navy bills, and to the raising of new loans; and the peace which took place the next year was probably hurried on by this circumstance, and saved the bank from bankruptcy. Smith, in speaking of the circumstances of the bank, upon another occasion, says (book 2, chap. 2.) "This great company has been reduced to the necessity of paying in fix-pences." When a bank adopts the expedient of paying in fix-pences it is a confection of insolvency.

It is worthy of observation, that every case of a failure in finances, since the system of paper began,

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has produced a revolution in governments, either
total or partial. A failure in the finances of France
produced the French revolution. A failure in the
finance of the affiliates broke up the revolutionary
government, and produced the present French Con-
stitution. A failure in the finances of the old Con-
gress of America, and the embarrasments it brought
upon commerce, broke up the system of the old
confederation, and produced the present Federal
Constitution. If then we admit of reasoning by
comparison of causes and events, a failure in the
English finances will produce some change in the
government of that country.

As to Mr. Pitt's project of paying off the national
debt by applying a million a year for that purpose,
while he continues adding more than twenty milli-
ons a year to it, it is like fetting a man with a wood-
en leg to run after a hare. The longer he runs the
farther he is off.

When I said that the funding system had entered
the last twenty years of its existence, I certainly
did not mean that it would continue twenty years,
and then expire as a lease would do. I meant to de-
scribe that age of decrepitude in which death is
every day to be expected, and life cannot continue
long. But the death of credit, or that state that is call-
ed bankruptcy, is not always marked by those pro-
gressive stages of visible decline, that mark the de-
cline of natural life. In the progression of natural
life, age cannot counteract youth, nor conceal the
departure of juvenile abilities. But it is otherwise
with respect to the death of credit; for though all
the approaches to bankruptcy may actually exist in
circumstances, they admit of being concealed by
appearances. Nothing is more common than to see
the bankrupt of to-day a man in credit but the day

( 20 )

before; yet no sooner is the real state of his affairs
known, than every body can see he had been insol-
vent long before. In London, the greatest theatre
of bankruptcy in Europe, this part of the subject
will be well and feelingly understood.

Mr. Pitt continually talks of credit and of the na-
tional resources. These are two of the feigned ap-
pearances by which the approaches to bankruptcy
are concealed. That which he calls credit may ex-
ist, as I have just shewn, in a state of insolvency,
and is always, what I have before described it to
be, suspicion asleep.

As to national resources, Mr. Pitt, like all the
English financiers that preceded him since the fund-
ing system began, has uniformly mistaken the na-
ture of a resource; that is, they have mistaken it
confidently with the delusion of the funding system;
but time is explaining the delusion. That which
he calls, and which they called, a resource, is not
a resource, but is the anticipation of a resource.
They have anticipated what would have been a
resource in another generation, had not the use of
it been so anticipated. The funding system is a system
of anticipations. Those who established it an hun-
dred years ago, anticipated the resources of those
who were to live an hundred years after; for the
people of the present day have to pay the interest of
the debts contracted at that time, and of all debts
contracted since. But it is the last feather that breaks
the horse's back. Had the system began an hun-
dred years before, the amount of taxes at this time,
to pay the annual interest at four per cent. (could we
suppose such a system of insanity could have conti-
nued), would be two hundred and twenty millions
annually; for the capital of the debt would be 5486
millions, according to the ratio that ascertains the ex-

( 21 )

pence of the wars for the hundred years that are past.
But long before it could have reached this period,
the value of bank notes, from the immense quanti-
ty of them (for it is in paper only that such a no-
minal revenue could be collected) would have been
as low or lower than continental paper-money has
been in America, or affignats in France; and as to
the idea of exchanging them for gold and silver, it
is too absurd to be contradicted.

Do we not see that nature, in all her operations,
disowns the visionary basis upon which the funding
fytem is built. She acts always by renewed suc-
ceffions, and never by accumulating additions perpe-
tually progressing. Animals and vegetables, men and
trees, have exifted ever since the world began; but
that existence has been carried on by succedions of
generations, and not by continuing the fame men
and the fame trees in existence that exifted firft;
and to make room for the new, she removes the old.
Every natural ideot can see this. It is the stock-
jobbing ideot only that mistakes. He has conceived
that art can do what nature cannot. He is teaching
her a new fyftem—That there is no occasion for
man to die.—That the scheme of creation can be
carried on upon the plan of the funding fyftem.—
That it can proceed by continual additions of new
beings, like new loans, and all live together in
eternal youth. Go, count the graves, thou ideot,
and learn the folly of thy arithmetic.

But besides these things, there is something viſ-
bly farcical in the whole operation of loaning. It is
farcely more than four years ago that such a rot of
bankruptcy spread itself over London, that the
whole commercial fabric tottered; trade and credit
were at a stand; and such was the state of things,
that to prevent, or suspend, a general bankruptcy,

( 42 )

the government lent the merchants fix millions in
government paper, and now the merchants lend the
government twenty-two millions in their paper; and
two parties, Boyd and Morgan, men but little known,
contend who shall be the lenders. What a farce is
this! It reduces the operation of loaning to accom-
dation paper, in which the competitors contend,
not who shall lend, but who shall sign, because there
is something to be got for signing.

Every English stock-jobber and minister boasts of
the credit of England. Its credit, fay they, is grea-
ter than that of any country in Europe. There is a
good reason for this; for there is not another country
in Europe that could be made the dupe of such a
delusion. The English funding system will remain
a monument of wonder, not so much on account of
the extent to which it has been carried, as of the
folly of believing in it.

Thofe who had formerly predicted that the fun-
ding system would break up when the debt should
amount to one hundred or one hundred and fifty
millions, erred only, in not distinguishing between
insolvency and actual bankruptcy; for the insolvency
commenced as soon as the government became un-
able to pay the interest in cash, or to give cash for
the bank notes in which the interest was paid, whe-
ther that inability was known or not, or whether it
was suspected or not. Insolvency always takes place
before bankruptcy, for bankruptcy is nothing more
than the publication of that insolvency. In the af-
fairs of an individual, it often happens that infol-
vency exists several years before bankruptcy, and
that the insolvency is concealed and carried on till
the individual is not able to pay one shilling in the
pound. A government can ward off bankruptcy
longer than an individual; but insolvency will in-

( 23 )

evitably produce bankruptcy, whether in an individual or in a government. If then the quantity of bank notes payable on demand, which the bank has issued, are greater than the bank can pay off, the bank is insolvent; and when that insolvency is declared, it is bankruptcy. *

* Among the delusions that have been impeded upon the nation by ministers, to give a false colouring to its affairs, and by none more than by Mr. Pitt, is a motley amphibious charactering thing called the *balance of trade*. This balance of trade, as it is called, is taken from the custom-house books, in which entries are made of all cargoes exported, and also of all cargoes imported in each year; and when the value of the exports, according to the price set upon them by the exporter or by the custom-house, is greater than the value of the imports estimated in the same manner, they fall, the balance of trade is so much in their favour.

The custom-house books prove regularly enough that so many cargoes have been exported, and so many imported; but this is all that they prove or were intended to prove. They have nothing to do with the balance of profit or lofts; and it is ignorance to appeal to them upon that account; for the cafe is, that the greater the lofts is in any one year, the higher will this thing called the balance of trade appear to be according to the custom-house books. For example, nearly the whole of the Mediterranean convoy has been taken by the French this year: consequently those cargoes will not appear as imports on the custom-house books, and therefore the balance of trade, by which they mean the profits of it will appear to be so much the greater as this lofts amounts to; and on the other hand, had the lofts not happened the profits would have appeared to have been so much the lofts. All the lofts happening at sea to returning cargoes, by accidents, by the elements, or by capture, make the balance appear the higher on the side of the exports; and were they all loft at sea, it would appear to be all profit on the custom-house books. Also every cargo of exports that is loft, that occasions another to be sent, adds in like manner to the side of the exports, and appears as profit. This year the balance of trade will appear high, because the lofts have been great by capture and by storms. The ignorance of the British parliament, in lifting to this hackneyed imposition of ministers about the balance of trade, is astonishing. It shows how little they know of national affairs, and Mr. Grey may as well talk Greek to them, as make motions about the state of the nation. They under-gand fox-hunting and the game-laws.

( 24 )

I come now to show the several ways by which bank notes get into circulation. I shall afterwards offer an estimate on the total quantity or amount of bank notes existing at this moment.

The bank acts in three capacities. As a bank of discount; as a bank of deposit; and as banker for the government.

First, as a bank of discount. The bank discounts merchants' bills of exchange for two months. When a merchant has a bill that will become due at the end of two months, and wants payment before that time, the bank advances that payment to him, deducting therefrom at the rate of five per cent. per ann. The bill of exchange remains at the bank as a pledge or pawn, and at the end of two months it must be redeemed. This transaction is done altogether in paper; for the profits of the bank, as a bank of discount, arise entirely from its making use of paper as money. The bank gives bank notes to the merchant, in discounting the bill of exchange, and the redeemer of the bill pays bank notes to the bank in redeeming it. It very seldom happens that any real money paffles between them.

If the profits of a bank be, for example, two hundred thousand pounds a year (a great sum to be made merely by exchanging one fort of paper for another, and which shows also that the merchants of that place are preferred for money for payments, instead of having money to spare to lend to government) it proves that the bank discounts to the amount of four millions annually, or £666,666 every two months, and as there never remain in the bank more than two months, pledges, of the value of £666,666 at any one time, the amount of bank notes in circulation at any one time should not be more than to that amount. This is sufficient

( 25 )

to, knew that the prefent immenſe quantity of bank
notes, which are diſtributed through every city,
town, village, and farm-houſe in England, cannot
be accounted for on the ſcore of diſcounting.

Secondly, as a bank of depoſit. To depoſit money
at the bank means to lodge it there for the ſake of
convenience, and to be drawn out at any moment
the depoſiter pleafes, or to be paid away to his order.
When the buſineſs of diſcounting is great, that of de-
poſiting is neceſſarily ſmall. No man depoſits and
applies for diſcounts at the fame time; for it would
be like paying intereſt for lending money inſtead of
for borrowing it. The depoſits that are now made
at the bank are almoſt entirely in bank notes, and
conſequently they add nothing to the ability of the
bank to pay off the bank notes that may be prefented
for payment; and befides this, the depoſits are no
more the property of the bank, than the caſh or
bank notes in a merchant's counting houſe are the
property of his book-keeper. No great increaſe
therefore of bank notes, beyond what the diſcount-
ing buſineſs admits, can be accounted for on the
ſcore of depoſits.

Thirdly. The bank acts as banker for the govern-
ment. This is the connection that threatens ruin to
every public bank. It is through this connection that
the credit of a bank is forced far beyond what it
ought to be, and ſtill further beyond its ability to
pay. It is through this connection that ſuch an im-
menſe redundant quantity of bank notes have gotten
into circulation; and which, inſtead of being iſſued
becauſe there was property in the bank, have been
iſſued becauſe there was none.

When the treasury is empty, which happens in
almoſt every year of every war, its coffers at the
bank are empty alſo. It is in this condition of empty-

D

( 26 )

nefs that the minifter has recourse to emifions of
what are called exchequer and navy bills, which
continually generates a new increafe of bank notes,
and which are ſported upon the public, without there
being property in the bank to pay them. Theſe
exchequer and navy bills (being as I have faid emit-
ted becauſe the treafury and its coſſers at the bank
are empty and cannot pay the demands that come in)
are no other than an acknowledgment that the bear-
er is entitled to receive ſo much money. They may
be compared to the ſettlement of an account, in
which the debtor acknowledges the balance he owes,
and for which he gives a note of hand ; or to a note
of hand given to raife money upon it.

Sometimes the bank diſcounts thoſe bills as it
would diſcount merchants' bills of Exchange; ſome-
times it purchases them of the holders at the current
price; and ſometimes it agrees with the minifter to
pay an intereſt upon them to the holders and keep
them in circulation. In every one of thoſe cafes an
additional quantity of bank notes get into circulation,
and are ſported, as I have faid, upon the public,
without there being property in the bank, as banker
for the government, to pay them: and beſides this
the bank has now no money of its own; for the
money that was originally ſubſcribed to begin the
credit of the bank with, at its first eſtablishment, has
been lent to government and waſted long ago.

" The bank (fays Smith, book 2, chap. 2) acts not " only as an ordinary bank, but as a great engine of " ſtate : it receives and pays the greater part of the " annuities which are due to the creditors of the " public." (It is worth obſerving that the public, or the nation, is always put for the government in ſpeaking of debts.) " It circulates, fays Smith, ex- " chequer bills, and it advances to government the

( 27 )

" annual amount of the land and malt taxes, which
" are frequently not paid till several years after-
" wards." (This advancement is alfo done in bank
notes for which there is not property in the bank.)
" In thoſe different operations (lays Smith) its duty
" to the public may ſometimes have obliged it, without
" any fault of its directors, to overſtock the circulation
" with paper-money," bank notes. How its duty to
the public can induce it to overſtock that public with pro-
miflory bank notes which it cannot pay, and thereby
expoſe the individuals of that public to ruin, is too
paradoxical to be explained; for it is on the credit
which individuals give to the bank by receiving and
circulating its notes, and not upon its own credit or
its own property, for it has none, that the bank
ſports. If however it be the duty of the bank to ex-
pofe the public to this hazard, it is at leaſt equally
the duty of the individuals of that public to get
their money and take care of themſelves; and leave
it to placemen, pensioners, government contractors,
Reeve's aff聯ation, and to the members of both
houſes of parliament, who have voted away the
money of the public at the nod of the minifter, to
ſupport the credit of the bank, and of the unpaid
bank notes, if they can, and for which their eſtates
ought to anſwer as far as they will go.

There has always exifted, and still exiſts, a my-
ſterious ſuſpicious connection between the minifter
and the directors of the bank, and which explains
itſelf no otherways than by a continual encreafe of
bank notes. Without, therefore, entering into any
further details of the various contrivances by which
bank notes are iſſued and thrown upon the public;
I proceed, as I before mentioned, to offer an eſti-
mate on the total quantity of bank notes in circula-
tion.

( 28 )

However dispoſed governments may be to wring
money by taxes from the people, there is a limit to
the practice eſtablished in the nature of things.
That limit is the proportion between the quantity of
money in a nation, be that quantity what it may,
and the greatest quantity of taxes that can be raifed
upon it. People have other uſes for money besides
paying taxes; and it is only a proportional part of
that money they can ſpare for taxes, as it is only a
proportional part they can ſpare for houſe-rent, for
cloathing, or for any other particulat uſe. These
proportions find out and eſtablish themselves; and
that with ſuch exactneſs that if any one part exceeds
its proportion, all the other parts feel it.

Before the invention of paper money (bank notes)
there was no other money in the nation than gold
and silver, and the greatest quantity of money that
ever was raifed in taxes, during that period, never
exceeded a fourth part of the quantity of money in
the nation. It was high taxing when it came to
this point. The taxes in the time of William the
third, never reached to four millions before the in-
vention of paper; and the quantity of money in the
nation at that time was estimated to be about fix-
teen millions. The fame proportions eſtablished
themselves in France. There was no paper-money
in France before the preſent revolution, and the
taxes were collected in gold and silver money. The
highest quantity of taxes never exceeded twenty-two
millions ſterling; and the quantity of gold and fil-
ver money in the nation, at the fame time, as ſtated
by Mr. Neekar from returns of coinage at the mints,
in his treatife on the adminiftration of the finances,
was about ninety millions ſterling. To go beyond
this limit, of a fourth part, in England, they were
obliged to introduce paper-money; and the attempt

( 29 )

to go beyond it in France where paper could not be
introduced, broke up the government. This propor-
tion therefore of a fourth part is the limit which the
nature of the thing eſtablishes for itſelf, be the
quantity of money in a nation more or leſs.

The amount of taxes in England at this time is
full twenty millions, and therefore the quantity of
gold and filver and of bank notes taken together,
amounts to eighty millions. The quantity of gold and
filver as ſtated by Lord Hawkeſbury's secretary (George
Chalmers) as I have before ſhewn, is twenty mil-
lions; and therefore the total amount of bank notes
in circulation, all made payable on demand, is ſixty
millions. This enormous ſum will aſtoniſh the moſt
ſtupid ſtock-jobber, and overpower the credulity of
the moſt thoughtleſs Englilſhman; but were it only
a third part of that ſum the bank cannot pay half a
crown in the pound.

There is ſomething curious in the movements of
this modern complicated machine, the funding fy-
ſtem; and it is only now that it is beginning to un-
fold the full extent of its movements. In the firſt
part of its movements it gives great powers into the
hands of government, and in the laſt part it takes
them completely away.

The funding ſystem ſet out with raſing revenues
under the name of loans, by means of which go-
vernment became both prodigal and powerful. The
loaners affumed the name of creditors, and though it
was ſoon diſcovered that loaning was government-
jobbing, thoſe pretended loaners, or the perſons
who purchafed into the funds afterwards, con-
ceived themſelves not only to be creditors, but to be
the only creditors.

But ſuch has been the operation of this compli-
cated machine, the funding ſystem, that it has pro-

( 30 )

duced, unperceived, a second generation of creditors, more numerous and far more formidable, and withal more real than the first generation; for every holder of a bank note is a creditor, and a real creditor, and the debt due to him is made payable on demand. The debt therefore which the government owes to individuals is composed of two parts; the one about four hundred millions bearing interest, the other about sixty millions payable on demand. The one is called the funded debt, the other is the debt due in bank notes.

This second debt (that contained in the bank notes) has, in a great measure, been incurred to pay the interest of the first debt; so that in fact little or no real interest has been paid by government. The whole has been delusion and fraud. Government first contracted a debt in the form of loans with one class of people, and then run clandestinely into debt with another class, by means of bank notes, to pay the interest. Government acted of itself in contracting the first debt, and made a machine of the bank to contract the second.

It is this second debt that changes the feat of power and the order of things; for it puts it in the power of even a small part of the holders of bank notes (had they no other motive than difguft at Pitt and Grenville's fedition bills) to controul any measure of government they found to be injurious to their interest; and that not by popular meetings, or popular societies, but by the simple and easy operation of with-holding their credit from that government; that is, by individually demanding payment at the bank for every bank note that comes into their hands. Why should Pitt and Grenville expect that the very men whom they infult and injure should at the same time continue to fupport the measures of

( 31 )

Pitt and Grenville by giving credit to their pro-
miffory notes of payment. No new emiffions of bank
notes could go on while payment was demanding on
the old, and the caſh in the bank waſting daily
away; nor any new advances be made to govern-
ment or to the Emperor to carry on the war, nor
any new emiffion be made of exchequer bills.

" The bank, says Smith, (book 2. chap. 2) is a great engine of ſlate." And in the fame paragraph he says, " The ſtability of the bank is equal to that of the Britiſh government;" which is the fame as to ſay that the ſtability of the government is equal to that of the bank, and no more. If then the bank cannot pay, the arch-treasurer of the holy Roman empire (S. R. I. A.*) is a bankrupt. When Folly invented Titles, ſhe did not attend to their application; for ever ſince the government of England has been in the hands of arch-treafurers, it has been running into bankruptcy; and as to the arch-treasurer apparent, he has been a bankrupt long ago. What a miferable profit has England before its eyes!

Before the war of 1755 there were no bank notes
lower than twenty pounds. During that war bank
notes of fifteen pounds and of ten pounds were
coined; and now, since the commencement of the
present war they are coined as low as five pounds.
Theſe five pound notes will circulate chiefly among
little ſhop keepers, butchers, bakers, market people,
renters of ſmall houſes, lodgers, &c. All the high
departments of commerce, and the affluent ſtations
of life were already overſtocked, as Smith expreſſes it,
with bank notes. No place remained open wherein
to crowd an additional quantity of bank notes but
among the clafs of people I have juſt mentioned, and
the means of doing this could be best effected by

* Part of the inſcription on an English guinea.

( 32 )

coining five pound notes. This conduct has the appearance of that of an unprincipled insolvent, who, when on the verge of bankruptcy to the amount of many thousands, will borrow as low as five pounds of the servants in his house, and break the next day.

But whatever momentary relief or aid the minister and his bank might expect from this low contrivance of five pound notes, it will encreafe the inability of the bank to pay the higher notes, and haften the destruction of all; for even the small taxes that used to be paid in money will now be paid in those notes, and the bank will soon find itself with fearcely any other money than what the hair powder guinea tax brings in.

The bank notes make the most serious part of the busines of finance; what is called the national funded debt is but a trifle when put in comparison with it; yet the cafe of the bank notes has never been touched upon. But it certainly ought to be known upon what authority, whether that of the minister or of the directors, and upon what foundation, such immense quantities areiffued. I have stated the amount of them at sixty millions sterling; I have produced data for that estimation; and befides this, the apparent quantity of them, far beyond that of gold and silver in the nation, corroborates therewith. But were there but a third part of sixty millions, the bank cannot pay half a crown in the pound; for no new supply of money, as before said, can arrive at the bank, as all the taxes will be paid in paper.

When the funding system began, it was not doubted that the loans that had been borrowed would be repaid. Government not only propagated that belief, but it began paying them off. In time this profession came to be abandoned; and it is not

( 33 )

difficult to see that bank notes will march the same
way; for the amount of them is only another debt
under another name; and the probability is, that Mr.
Pitt will at last propose funding them. In that case
bank notes will not be so valuable as French affig-
nats. The affignats have a solid property in reserve
in the national domains; bank notes have none; and
besides this, the English revenue must then sink
down to what the amount of it was before the
funding system began, between three and four mil-
lions: One of which the arch-treasurer would re-
quire for himself, and the arch-treasurer apparent
would require three quarters of a million more to
pay his debts. "In France, says Sterne, they order
these things better."

I have now exposed the English system of finance
to the eyes of all nations; for this work will be pub-
lished in all languages. In doing this, I have done
an act of justice to those numerous citizens of neu-
tral nations who have been imposed upon by that
fraudulent system, and who have property at stake
upon the event.

As an individual citizen of America, and as far as
an individual can go, I have revenged (if I may use
the expression without any immoral meaning), the
piratical depredations committed on the American
commerce by the English government.—I have retra-
liated for France on the subject of finance; and I
conclude with retorting on Mr. Pitt the expression
he used against France, and say, that the English
system of finance "IS ON THE VERGE, NAY EVEN
IN THE GULPH OF BANKRUPTCY."

THOMAS PAINE.

Paris, 19th Germinal,
4th year of the Republic,
April 8, 1796.

SPEECH

OF

THOMAS PAINE,

As delivered in the Convention, July 7, 1795.
Wherein he alludes to the preceding Work.

ON the motion of Lanthenas. “ That permission
be granted to Thomas Paine, to deliver his sen-
timents on the Declaration of Rights and the Confti-
tution, Thomas Paine ascended the Tribune; and no
opposition being made to the motion, one of the Se-
cretaries, who ftood by Mr. Paine, read his fpeech, of
which the following is a literal tranflation :

CITIZENS,

The effects of a malignant fever, with which I was
afflicted during a rigorous confinement in the Luxem-
bourg, have thus long prevented me from attending at
my poſt in the boſom of the Convention, and the mag-
nitude of the ſubject under diſcuffion, and no other
confideration on earth, could induce me now to repair
to my ſtation.

A recurrence to the vicifitudes I have experienced, and
the critical situations in which I have been placed in con-
sequence of the French Revolution, will throw upon
what I now propofe to submit to the Convention, the
moſt unequivocal proofs of my integrity, and the reſti-
tude of thofe principles which have uniformly influenced
my conduct.

In England I was proſcribed for having vindicated
the French Revolution, and I have suffered a rigorous
imprifonment in France for having purfued a ſimilar

C


mode

( 34 )

mode of conduct. During the reign of terrorism, I was a close prisoner for eight long months, and remained so above three months after the era of the 10th Thermidor. I ought, however, to state, that I was not perfecuted by the people either of England or France. The proceedings in both countries were the effects of the despotism existing in their respective governments. But, even if my perfecution had originated in the people at large, my principles and conduct would still have remained the fame. Principles which are influenced and subject to the controul of tyranny have not their foundation in the heart.

A few days ago I transmitted to you, by the ordinary mode of distribution, a short Treatise, entitled "Differentiation on the First Principles of Government." This little work I did intend to have dedicated to the people of Holland, who, about the time I began to write it, were determined to accomplish a Revolution in their Government, —rather than to the people of France, who had long before effected that glorious object. But there are, in the Constitution which is about to be ratified by the Convention, certain articles, and in the report which preceded it, certain points, so repugnant to reason, and incompatible with the true principles of liberty, as to render this Treatise, drawn up for another purpose, applicable to the present occasion, and under this impression I presumed to submit it to your confidence.

If there be faults in the Constitution, it were better to expunge them now, than to abide the event of their mischievous tendency; for certain it is, that the plan of the Constitution which has been presented to you is not confident with the grand object of the Revolution, nor congenial to the sentiments of the individuals who accomplished it.

To deprive half the people in a nation of their rights as citizens, is an easy matter in theory or on paper: but it is a most dangerous experiment, and rarely practicable in the execution.

I shall

( 35 )

I shall now proceed to the observations I have to offer on this important subject; and I pledge myself that they shall be neither numerous nor diffusive.

In my apprehension, a constitution embraces two distinct parts or objects, the *Principle* and the *Practice*; and it is not only an essential, but an indispensable provision, that the practice should emanate from, and accord with the principle. Now I maintain, that the converse of this proposition is the case in the plan of the Constitution under discussion. The first article, for instance, of the POLITICAL STATE of Citizens, (V. TITLE II. OF THE CONSTITUTION) says,

> " Every man born and resident in France, who, being twenty-one years of age, has inscribed his name on the Civic Register of his Canton, and who has lived afterwards one year on the territory of the Republic, and who pays any direct contribution whatsoever, real or personal, is a French citizen."

I might here ask, if those only who come under the above description are to be considered as citizens, what designation do you mean to give the rest of the people? I allude to that portion of the people on whom the principal part of the labour falls, and on whom the weight of indirect taxation will in the event chiefly prefs. In the structure of the social fabric, this class of people are infinitely superior to that privileged order, whose only qualification is their wealth or territorial possessions. For what is trade without merchants? What is land without cultivation? And what is the produce of the land without manufacturers? But to return to the subject.

In the first place, this article is incompatible with the three first articles of the Declaration of Rights, which precede the Constitutional Act.

The first article of the Declaration of Rights says:—

> " The end of society is the public good; and the institution of government is to secure to every individual the enjoyment of his rights."

But

( 36 )

But the article of the Constitution to which I have
just adverted proposes as the object of society, not
the public good, or in other words, the good of all,
but a partial good, or the good only of a few; and
the Constitution provides solely for the rights of this
few, to the exclusion of the many.

The second article of the Declaration of Rights
says:—

"The Rights of Man in society are Liberty, Equa-
lity, Security of his person and property."

But the article alluded to in the Constitution has a
direct tendency to establish the converse of this pofi-
tion, inasmuch as the persons excluded by this inequa-
lity can neither be faid to possess liberty, nor security
against oppression. They are confided totally to the
caprice and tyranny of the reft.

The third article of the Declaration of Rights says :—

"Liberty confifts in such acts of volition, as are not
injurious to others."

But the article of the Constitution, on which I have
observed, breaks down this barrier. It enables the
liberty of one part of society to destroy the freedom of
the other.

Having thus pointed out the inconsistency of this
article to the Declaration of Rights, I shall proceed to
comment on that part of the fame article which makes
a direct contribution a necessary qualification to the
right of citizenship.

A modern refinement on the object of public revenue
has divided the taxes or contributions into two classes,
the *direct* and the *indirect*, without being able to define
precisely the distinction, or difference between them,
because the effect of both is the same.

Those are designated indirect taxes which fall upon
the consumers of certain articles, on which the tax is
imposed, because the tax being included in the price,
the consumer pays it without taking notice of it.

The fame observation is applicable to the territorial
tax. The land proprietors, in order to reimburse them-
felves,

( 37 )

felves, will rack-rent their tenants: the farmer, of
courfe, will transfer the obligation to the miller, by
enhancing the price of grain; the miller to the baker,
by increafing the price of flour; and the baker to the
confumer, by raifing the price of bread. The territo-
rial tax, therefore, though called direct, is in its con-
sequences indirecct.

To this tax the land proprietor contributes only in
proportion to the quantity of bread and other provi-
fions that are confumed in his own family. The deficit
is furnished by the great mafs of the community, which
comprehends every individual of the nation.

From the logical diffinction between the direct and
indirect taxation, ſome emolument may refult, I allow,
to auditors of public accounts, &c. but to the people at
large I deny that ſuch a diffinction (which by the by is
without a difference) can be productive of any practical
benefit. It ought not, therefore, to be admitted as a
principle in the conſtitution.

Besides this objection, the provifion in queſtion does
not affect to define, ſecure, or eſtabliſh the right of citi-
zenſhip. It configns to the caprice or diſcretion of the
legiſture the power of pronouncing who ſhall, or ſhall
not, exercife the functions of a citizen; and this may
be done effectually, either by the impofition of a direcſ
or indirecſ tax, according to the ſelſih views of the le-
giſlators, or by the mode of collecting the taxes ſo im-
poſed.

Neither a tenant who occupies an extenſive farm, nor
a merchant or manuſaſturer, who may have embarked
a large capital in their reſpective purſuits, can ever,
according to this ſyſtem, attain the pre-emption of a
citizen. On the other hand, any upſtart, who has by
ſucceſſion or management, got poſſeſſion of a few acres
of land, or a miſerable tenement, may exultingly exer-
cife the functions of a citizen, although perhaps he
neither poſſeſſes a hundredth part of the worth or pro-
perty of a ſimple mechanic, nor contributes in any pro-
portion to the exigencies of the ſtate.

The

( 38 )

The contempt in which the old government held
mercantile puruits, and the obliquy that attached on
merchants and manufacturers, contributed not a little
to its embarraffments, and its eventual subversion; and,
strange to tell, though the mischiefs aris-ing from this
mode of conduct are so obvious, yet an article is pro-
posed for your adoption, which has a manifeft ten-
dency to reſtore a defect inherent in the monarchy.

I ſhall now proceed to the ſecond article of the fame
title, with which I ſhall conclude my remarks.

The ſecond article ſays, " Every French ſoldier, who
ſhall have ſerved one or more campaigns in the cauſe of
liberty, is deemed a citizen of the Republic, without
any reſpect or reference to other qualifications."

It ſhould ſeem, that in this Article, the Committee
were defirous of extricating themſelves from a dilemma
into which they had been plunged by the preceding
article. When men depart from an eſtablished princi-
ple, they are compelled to reſort to trick and ſubter-
fuge, always shifting their means to preſerve the uni-
ty of their objects; and as it rarely happens that the
firſt expedient makes amends for the profitution of
principle, they muſt call in aid a ſecond of a more fla-
grant nature to ſupply the deficiency of the former.
In this manner legiilators go on accumulating error upon
error, and artiſice upon artiſice, until the mafs becomes
ſo bulky and incongruous, and their embarraſſment ſo
desperate, that they are compelled, as their laſt expe-
dient, to reſort to the very principle they had vio-
lated.—The Committee were precifely in this predi-
cament, when they framed this article; and to me, I
confefſs, their conduct appears ſpecious rather than effi-
cacious.

It was not for himſelf alone, but for his family, that
the French citizen, at the dawn of the revolution (for
then indeed every man was confiſered a citizen) marched
ſoldier-like to the frontiers, and repelled a foreign in-
vafion. He had it not in his contemplation, that he
ſhould enjoy liberty for the refidue of his earthly ca-
reer

( 39 )

reer, and by his own act preclude his offspring from
that inestimable bleffing. No! He wifhed to leave it
as an inheritance to his children, and that they might
hand it down to their lateft pofterity. If a Frenchman,
who united in his perſon the character of a Soldier and
a Citizen, was now to return from the army to his
peaceful habitation, he muſt addreſs his ſmall family
in this manner:

"Sorry I am, that I cannot leave to you a ſmall por-
tion of what I have acquired by expofing my perſon to
the ferocity of our enemies, and defeating their machi-
nations. I have eſtablished the republic, and, painful
the reflection, all the laurels I have won in the field
are blaſted, and all the privileges to which my exertions
have entitled me, extend not beyond the period of my
own exſistence!" Thus the meaſure that has been adopted
by way of ſubterfuge, falls ſhort of what the framers
of it ſpeculated upon; for in conciliating the affections
of the ſoldier, they have ſubjeſted the Father to the
moſt pungent ſenſations, by obliging him to adopt a
generation of Slaves.

Citizens, a great deal has been urged reſpeſting
inſurrections. I am confident no man has a greater ab-
horrence of them than myſelf, and I am forſory that any
inſinuations ſhould have been thrown out upon me as a
promoter of violence of any kind. The whole tenor of
my life and converſation gives the lie to thofe calumnies,
and proves me to be a friend to order, truth and
juſtice.

I hope you will attribute this effuſion of my ſenti-
ments to my anxiety for the honor and ſucceſs of the
revolution. I have no intereſt diſtinſt from that which
has a tendency to meliorate the ſituation of mankind.
The revolution, as far as it reſpectſs myſelf, has been
productive of more loſs and perſecution than it is poſ-
fible for me to deſcribe, or for you to indemnify. But
with reſpect to the ſubjeſt under consideration, I could
not refrain from declaring my ſentiments.

In my opinion, if you ſubvert the bafs of the revo-
lution,