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A nominal pound sterling in such bills would not be worth one
penny.

But though the English system, by thus keeping the capital out of sight,
is preserved from hasty destruction, as in the case of America and
France, it nevertheless approaches the same fate, and will arrive at it
with the same certainty, though by a slower progress. The difference
is altogether in the degree of speed by which the two systems approach
their fate, which, to speak in round numbers, is as twenty is to one;
that is, the English system, that of funding the capital instead of
issuing it, contained within itself a capacity of enduring twenty times
longer than the systems adopted by America and France; and at the end of
that time it would arrive at the same common grave, the Potter's Field
of paper money.

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

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

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

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.


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 fast to four hundred
millions. If between these two extremes of twenty-one millions and four
hundred millions, embracing the several expenses of all the including
wars, there exist some common ratio that will ascertain arithmetically
the amount of the debts at the end of each war, as certainly as the fact
is known to be, that ratio will in like manner determine what the amount
of the debt will be in all future wars, and will ascertain the period
within which the funding system will expire in a bankruptcy of the
government; for the ratio I allude to, is the ratio which the nature of
the thing has established for itself.

Hitherto no idea has been entertained that any such ratio existed, or
could exist, that would determine a problem of this kind; that is, that
would ascertain, without having any knowledge of the fact, what the
expense of any former war had been, or what the expense of any future
war would be; but it is nevertheless true that such a ratio does exist,
as I shall show, and also the mode of applying it.

The ratio I allude to is not in arithmetical progression 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 it 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 number, 12, is produced by the
preceding number, 8, and half 8; and that the third number, 18, is in
like manner produced by the preceding number, 12, and half 12; and so
on for the rest. They can also see how rapidly the sums increase as
the ratio proceeds. The difference between the two first numbers is but
four; but the difference between the two last is forty-five; and from
thence they may see with what immense rapidity the national debt has
increased, and will continue to increase, till it exceeds the ordinary
powers of calculation, and loses itself in ciphers.

I come now to apply the ratio as a rule to determine in all cases.

I began with the war that ended in 1697, which was the war in which the
funding system began. The expense of that war was twenty-one millions
and an half. In order to ascertain the expense of the next war, I add
to twenty-one millions and an half, the half thereof (ten millions and
three quarters) which makes thirty-two millions and a quarter for the
expense of that war. This thirty-two millions and a quarter, added to
the former debt of twenty-one millions and an half, carries the national
debt to fifty-three millions and three quarters. Smith, in his
chapter on Public Debts, says, that the national debt was at this time
fifty-three millions.

I proceed to ascertain the expense of the next war, that of 1739, by
adding, as in the former case, one half to the expense of the preceding
war. The expense of the preceding war was thirty-two millions and a
quarter; for the sake of even numbers, say, thirty-two millions; the
half of which (16) makes forty-eight millions for the expense of that
war.

I proceed to ascertain the expense of the war of 1756, by adding,
according to the ratio, one half to the expense of the preceding war.
The expense of the preceding was taken at 48 millions, the half of which
(24) makes 72 millions for the expense of that war. Smith, (chapter on
Public Debts,) says, the expense of the war of 1756, was 72 millions and
a quarter.

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

I come now to ascertain the expense of the present war, supposing it to
continue as long as former wars have done, and the funding system not
to break up before that period. The expense of the preceding war was 108
millions, the half of which (54) makes 162 millions for the expense of
the present war. It gives symptoms of going beyond this sum, supposing
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
hastens 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 expense of future wars, and I do this merely
to show the impossibility of the continuance of the funding system, and
the certainty of its dissolution.

The expense of the next war after the present war, according to the
ratio that has ascertained the preceding cases, will be 243 millions.

Expense of the second war 364

---------------- third war 546

---------------- fourth war 819

-------- fifth war 1228

3200 millions;

which, at only four per cent. will require taxes to the nominal amount
of one hundred and twenty-eight millions to pay the annual interest,
besides the interest of the present debt, and the expenses of
government, which are not included in this account. Is there a man so
mad, so stupid, as to sup-pose 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 cases 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.

To shew at one view the rapid progression of the funding system to
destruction, and to expose the folly of those who blindly believe in
its continuance, and who artfully endeavour to impose that belief upon
others, I exhibit in the annexed table, the expense of each of the six
wars since the funding system began, as ascertained by ratio, and the
expense of the six wars yet to come, ascertained by the same ratio.

[Illustration: Table318]

* The actual expense of the war of 1739 did not come up to
the sum ascertained by the ratio. But as that which is the
natural disposition of a thing, as it is the natural
disposition of a stream of water to descend, will, if
impeded in its course, overcome by a new effort what it had
lost by that impediment, so it was with respect to this war
and the next (1756) taken collectively; for the expense of
the war of 1756 restored the equilibrium of the ratio, as
fully as if it had not been impeded. A circumstance that
serves to prove the truth of the ratio more folly than if
the interruption had not taken place. The war of 1739 ***
languid; the efforts were below the value of money et that
time; for the ratio is the measure of the depreciation of
money in consequence of the funding system; or what comes
to the same end, it is the measure of the increase of paper.
Every additional quantity of it, whether in bank notes or
otherwise, diminishes the real, though not the nominal value
of the former quantity.--_Author_


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.



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