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This will force him to have
recourse to emissions of what are called exchequer and navy bills,
which, by still increasing the mass 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 maltsters, brewers, distillers,
(I appeal for the truth of it, to any of the collectors of excise in
England, or to Mr. White-bread,)(1) 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 preference for the
former over the latter, they will go for payment to the bank, where they
have a right to go. They will do this as a measure of prudence, each one
for himself, and the truth or delusion of the funding system will then
be proved.

1 An eminent Member of Parliament.--_Editor._.

I have said in the foregoing paragraph that there is not gold and silver
enough in the nation to pay the taxes in coin, and consequently that
there cannot be enough in the bank to pay the notes. As I do not choose
to rest anything upon assertion, 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
Lord Hawkesbury) is president.(1) (These sort of folks change their
names so often that it is as difficult to know them as it is to know
a thief.) Chalmers gives the quantity of gold and silver coin from the
returns of coinage at the Mint; and after deducting for the light gold
recoined, says that the amount of gold and silver coined is about twenty
millions. He had better not have proved this, especially if he had
reflected that _public credit is suspicion asleep_. The quantity is much
too little.

1 Concerning Chalmers and Hawkesbury see vol. ii., p. 533.
Also, preface to my "Life of Paine", xvi., and other
passages.---_Editor._.

Of this twenty millions (which is not a fourth part of the quantity of
gold and silver there is in France, as is shown in Mr. Neckar's Treatise
on the Administration 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 that there are sixteen millions, not more than
a fourth part thereof (four millions) can be in London, when it is
considered 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, every
banker, merchant, tradesman, in short every individual, must have some.
He must be a poor shopkeeper indeed, who has not a few guineas in his
till. The quantity of cash therefore in the bank can never, on the
evidence of circumstances, be so much as two millions; most probably
not more than one million; and on this slender twig, always liable to be
broken, hangs the whole funding system of four hundred millions, besides
many millions in bank notes. The sum in the bank is not sufficient to
pay one-fourth of only one year's interest of the national debt, were
the creditors to demand payment in cash, or demand cash for the bank
notes in which the interest is paid, a circumstance always liable to
happen.

One of the amusements that has kept up the farce of the funding system
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 with 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 last
will be worst off. When the present quantity of cash in the bank is paid
away, it is next to impossible to see 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 refuse bank notes in payment of taxes,
the credit of bank notes will be gone at once. No cash will arise from
the business 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
present quantity is 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 that
their bank notes should be paid first. Boyd has been very sly in France,
in changing his paper into cash. He will be just as sly in doing the
same thing in London, for he has learned to calculate; and then it is
probable he will set off for America.

A stoppage of payment at the bank is not a new thing. Smith in his
Wealth of Nations, book ii. 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 stopped 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
emissions 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
from the circumstances of the bank, upon another occasion, says (book
ii. chap. 2.) "This great company had been reduced to the necessity
of paying in sixpences." When a bank adopts the expedient of paying in
sixpences, it is a confession of insolvency.

It is worthy of observation, that every case of failure in finances,
since the system of paper began, 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 assignats broke up the revolutionary government, and produced
the present French Constitution. A failure in the finances of the Old
Congress of America, and the embarrassments it brought upon commerce,
broke up the system of the old confederation, and produced the federal
Constitution. If, then, we admit of reasoning by comparison of causes
and events, the failure of 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 millions a-year to it, it is like setting a man with a wooden 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 describe 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
called bankruptcy, is not always marked by those progressive stages
of visible decline that marked the decline of natural life. In the
progression of natural life age cannot counterfeit 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 before; yet no sooner is the real state of
his affairs known, than every body can see he had been insolvent 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 the national resources. These
are two of the feigned appearances by which the approaches to bankruptcy
are concealed. That which he calls credit may exist, as I have just
shown, 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 English financiers that
preceded him since the funding system began, has uniformly mistaken the
nature of a resource; that is, they have mistaken it consistently with
the delusion of the funding system; but time is explaining the delusion.
That which he calls, and which they call, 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 anticipation.
Those who established it an hundred 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 all debts contracted since. But it is the last feather that
breaks the horse's back. Had the system begun an hundred 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 continued)
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 expense of the wars for the hundred years that are past.



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