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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. 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 system to its
irredeemable dissolution. Supposing the present government of England to
continue, and to go on as it has gone on since the funding system 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 descendants to be paid at a
future day.

Perhaps it may be asked, that as governments or ministers proceeded by
no ratio in making loans or incurring debts, and 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 system, 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 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 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 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, was 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 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 achievements. The war that cost twenty-one
millions was the war of the con-federates, historically called the grand
alliance, consisting of England, Austria, and Holland in the time of
William III. against Louis XIV. and in which the confederates were
victorious. The present is a war of a much greater confederacy--a
confederacy of England, 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 case is not rightly stated; for the
fact is, that the paper has _pulled down_ the value of gold and silver
to a level with itself. Gold and silver will not purchase so much of any
purchasable 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
case; because it daily exposes the system to sudden death, independent
of the natural death it would otherwise suffer.

I consider the funding system as being now advanced 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) should now be
nominally greater than the whole expense of that war, shows the state of
depreciation to which the funding system has arrived. Its depreciation
is in the proportion of eight for one, compared with the value of its
money when the system began; which is the state the French assignats
stood a year ago (March 1795) compared with gold and silver. It is
therefore that I say, that the English funding system has entered on 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 happened that twenty years have passed off without
a war, and that more especially since the English government has dabbled
in German politics, and shown a disposition to insult the world, and the
world of commerce, with her navy. The 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) expenses of government, which will increase in the same
proportion, and which will carry the taxes to at least forty millions;
and if another war only begins, 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 systems 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 dawn_
of gold and silver money has created the appearance of paper money
keeping up. The same thing, and the same mistake, took place in
America and in France, and continued for a considerable time after the
commencement of their system of paper; and the actual depreciation of
money was hidden under that mistake.

It was said in America, at that time, that everything was becoming
_dear_; but gold and silver could then buy those dear articles no
cheaper than paper could; and therefore it was not called depreciation.
The idea of _dearness_ established itself for the idea of depreciation.
The same was the case in France. Though every thing rose in price soon
after assignats appeared, yet those dear articles could be purchased no
cheaper with gold and silver, than with paper, and it was only said that
things were _dear_. The same is still the language in England. They
call it _deariness_. But they will soon find that it is an actual
depreciation, and that this depreciation is the effect of the funding
system; which, by crowding such a continually increasing mass 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 progress of all such systems
appears to be, that the paper will take the command in the beginning,
and gold and silver in the end.

But this succession in the command of gold and silver over paper, makes
a crisis far more eventful to the funding system than to any other
system upon which paper can be issued; for, strictly speaking, it is not
a crisis 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.

If paper be issued without being funded upon interest, emissions of it
can be continued after the value of it separates from gold and silver,
as we have seen in the two cases of America and France. But the funding
system rests 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 descends,
and no longer. But even in this state, that of descending equally
together, the minister, whoever he may be, will find himself beset with
accumulating difficulties; because the loans and taxes voted for the
service of each ensuing year will wither in his hands before the year
expires, or before they can be applied.



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