By all I have yet read of the history of our own country, it appears to me, that the national debts, secured upon parliamentary funds of interest, were things unknown in England before the last Revolution under the Prince of Orange. It is true, that in the grand rebellion the king's enemies borrowed money of particular persons, upon what they called the public faith; but this was only for short periods, and the sums no more than what they could pay at once, as they constantly did. Some of our kings have been very profuse in peace and war, and are blamed in history for their oppressions of the people by severe taxes, and for borrowing money which they never paid:[6] but national debts was a style, which, I doubt, would hardly then be understood. When the Prince of Orange was raised to the throne, and a general war began in these parts of Europe, the King and his counsellors thought it would be ill policy to commence his reign with heavy taxes upon the people, who had lived long in ease and plenty, and might be apt to think their deliverance too dearly bought: wherefore one of the first actions of the new government was to take off the tax upon chimneys, as a burthen very ungrateful to the commonalty. But money being wanted to support the war (which even the convention-parliament, that put the crown upon his head, were very unwilling he should engage in), the present Bishop of Salisbury[7] is said to have found out that expedient (which he had learned in Holland) of raising money upon the security of taxes, that were only sufficient to pay a large interest. The motives which prevailed on people to fall in with this project were many, and plausible; for supposing, as the ministers industriously gave out, that the war could not last above one or two campaigns at most, it might be carried on with very moderate taxes; and the debts accruing would, in process of time, be easily cleared after a peace. Then the bait of large interest would draw in a great number of those whose money, by the dangers and difficulties of trade, lay dead upon their hands; and whoever were lenders to the government, would, by surest principle, be obliged to support it. Besides, the men of estates could not be persuaded, without time and difficulty, to have those taxes laid on their lands, which custom hath since made so familiar; and it was the business of such as were then in power to cultivate a moneyed interest; because the gentry of the kingdom did not very much relish those new notions in government, to which the King, who had imbibed his politics in his own country, was thought to give too much way. Neither perhaps did that Prince think national incumbrances to be any evil at all, since the flourishing republic, where he was born, is thought to owe more than ever it will be able or willing to pay. And I remember, when I mentioned to Mons. Buys the many millions we owed, he would advance it as a maxim, that it was for the interest of the public to be in debt: which perhaps may be true in a commonwealth so crazily instituted, where the governors cannot have too many pledges of their subjects' fidelity, and where a great majority must inevitably be undone by any revolution, however brought about: but to prescribe the same rules to a monarchy, whose wealth ariseth from the rents and improvements of lands, as well as trade and manufactures, is the mark of a confined and cramped understanding.
[Footnote 5: Adam Cardonnell, Esq., secretary to the Duke of Marlborough, shared in his disgrace. See "The Examiner," No. 28. [W.S.J.]
[Footnote 6: P. Fitzgerald says "which they have not been able or willing to pay." [W.S.J.]
[Footnote 7: Dr. Gilbert Burnet. [ORIGINAL NOTE.]
I was moved to speak thus, because I am very well satisfied, that the pernicious counsels of borrowing money upon public funds of interest, as well as some other state lessons, were taken indigested from the like practices among the Dutch, without allowing in the least for any difference in government, religion, law, custom, extent of country, or manners and dispositions of the people.
But when this expedient of anticipations and mortgages was first put in practice, artful men, in office and credit, began to consider what uses it might be applied to; and soon found it was likely to prove the most fruitful seminary, not only to establish a faction they intended to set up for their own support, but likewise to raise vast wealth for themselves in particular, who were to be the managers and directors in it. It was manifest, that nothing could promote these two designs so much, as burthening the nation with debts, and giving encouragement to lenders: for, as to the first, it was not to be doubted, that moneyed men would be always firm to the party of those who advised the borrowing upon such good security, and with such exorbitant premiums and interest; and every new sum that was lent, took away as much power from the landed men, as it added to theirs: so that the deeper the kingdom was engaged, it was still the better for them. Thus a new estate and property sprung up in the hands of mortgagees, to whom every house and foot of land in England paid a rent-charge, free of all taxes and defalcations, and purchased at less than half value. So that the gentlemen of estates were, in effect, but tenants to these new landlords; many of whom were able, in time, to force the election of boroughs out of the hands of those who had been the old proprietors and inhabitants. This was arrived at such a height, that a very few years more of war and funds would have clearly cast the balance on the moneyed side.
As to the second, this project of borrowing upon funds, was of mighty advantage to those who were in the management of it, as well as to their friends and dependants; for, funds proving often deficient, the government was obliged to strike tallies for making up the rest, which tallies were sometimes (to speak in the merchants' phrase) at above forty per cent, discount. At this price those who were in the secret bought them up, and then took care to have that deficiency supplied in the next session of Parliament, by which they doubled their principal in a few months; and, for the encouragement of lenders, every new project of lotteries or annuities proposed some farther advantage, either as to interest or premium.
In the year one thousand six hundred and ninety-seven, a general mortgage was made of certain revenues and taxes already settled, which amounted to near a million a year. This mortgage was to continue till one thousand seven hundred and six, to be a fund for the payment of about five millions one hundred thousand pounds. In the first Parliament of the Queen, the said mortgage was continued till one thousand seven hundred and ten, to supply a deficiency of two millions three hundred thousand pounds, and interest of above a million; and in the intermediate years a great part of that fund was branched out into annuities for ninety-nine years; so that the late ministry raised all their money to one thousand seven hundred and ten, only by continuing funds which were already granted to their hands. This deceived the people in general, who were satisfied to continue the payments they had been accustomed to, and made the administration seem easy, since the war went on without any new taxes raised, except the very last year they were in power; not considering what a mighty fund was exhausted, and must be perpetuated, although extremely injurious to trade, and to the true interest of the nation.
This great fund of the general mortgage was not only loaded, year after year, by mighty sums borrowed upon it, but with the interests due upon those sums; for which the treasury was forced to strike tallies, payable out of that fund, after all the money already borrowed upon it, there being no other provision of interest for three or four years: till at last the fund was so overloaded, that it could neither pay principal nor interest, and tallies were struck for both, which occasioned their great discount.
But to avoid mistakes upon a subject, where I am not very well versed either in the style or matter, I will transcribe an account sent me by a person[8] who is thoroughly instructed in these affairs.