Thoughts on the mechanism of societies

by marquis de Charles Casaux

As for the two capitalists in land and industry, it is clear that each of them will have exactly the faculty of preparing, buying, selling, consuming, and saving, under the denomination of 30, 40, 60, &c. all that they could prepare, buy, sell, consume, and save, under that of 15, 20, 30, &c.

Before we attend to the lender, let us advert to the State; and let it be observed, that in the case where 20 millions of cash and paper currency would have sufficed for the circulation and national transactions of all kinds, at a time when both revenues amounted to 64 millions, it is enough to find out 20 millions more, whenever, by the effect of taxation, those said revenues are raised from 64 to 128 millions; and from the instant that those 20 millions in cash and paper currency are obtained, you may flatter yourselves to have established, funded most firmly and for ever, the interest of a national debt of 420 millions, the interest of which, would at 5 per cent. amount to 21 millions.

It is not yet time to examine what influence so considerable a rise, in the price of every thing, might have upon the foreign trade; but let us turn our thoughts to the interest of the stockholder, who has so generously lent his money. It will be said, that he is evidently injured: the interest due to him on account of his loan, was equal to two-thirds of the landed revenue: the land is mortgaged to the creditors of the state: two-thirds of the neat revenue belong therefore in fact to the lender. A few years more, employed in erecting useful buildings, bridges, causeways, &c. the whole landed revenue must have been absorbed, and the lender have entered into possession.

Such is nearly the result of Mr. Hume’s reasoning on this pretended mania of supplying the wants of the State, by mortgaging its revenue. Let me be permitted to urge a few words in answer, on behalf of the landed proprietor.

Whatever use the sums borrowed are put to by government, in this respect the nation and the lender stand nearly in the same predicament as two individuals who should have set up an undertaking at a joint expence: when it is completed, each of them first takes back his capital, before they share the profits. In point of national enterprises, is war the object? The profit is existence and glory, if the war has proved successful. Are public establishments in prospect? Then the lender shares in their utility and comfort. Has the employing of the capital been productive neither of glory, nor public establishments? In a word, is the State reduced to its primary and bare existence? The capital lent will not, at least, be lost to the lender, if administration think fit to observe how little it costs to be just; and the lender, on his part, will reflect, that he should not have been a greater gainer, had he buried his treasure during the time of national distress and that, had he lent it to individuals, he might have lost it entirely.

What I have just said, will, I think, suffice to refute the extravagant pretensions which Mr. Hume is pleased to suppose in the lender. What I shall add, will also be sufficient, I hope, to quiet the scrupulous minds of those who might entertain some doubts on the injustice of despoiling the landed proprietor; I mean, the injustice of any kind of spoliation, but that which may be the consequence of his own extravagance.

That man who gives up his land for the annual quit-rent of a quarter of wheat, and two shillings when the wheat was at four shillings only, supposed he had entitled himself and his heirs to an income of a quarter and a half of wheat; yet his representatives enjoy, at this day, only one quarter, and the 18th or 20th part of another.—Will these insist, that the meaning of the landlord having been to secure, and that of the tenant to grant, such a portion of the landed revenue, as might be at all times equal to a quarter and a half of wheat, it is unjust to act in direct opposition to the intention of the contracting parties? This objection would appear very forcible, and yet would go no further than to prove, that, when a proprietor gives up his land for an annual consideration, he ought to stipulate that it should be paid in kind, if he means to keep up to the same income; if not, the landlord must be referred to the terms of his contract.

The state-creditor stands in a far more disagreeable predicament; he cannot even suppose, on his part, an intention hostile to the general good. Whoever lends to the State, knows that the latter cannot pay the interest it submits to, but by taxes, which, in the long-run, affect every thing alike; and that one must cease to be a consumer, if he would forbear coming in for his share. Now, whilst the exigency of the State requires fresh loans, and course additional taxes, whoever advances of the stock, the interest of which is paid by means of those very taxes, cannot entertain any hopes of avoiding their effect, unless it be for a short period, which depends entirely on the adopted scheme of finance. Some of these schemes extend, others shorten the round such taxes must go through, before the burden falls equally on every shoulder, and becomes null by its universality. I say null, all injustice set aside, which is inseparable from some sorts of taxes, of which I shall speak hereafter; but, I add, strictly null, even in regard to the lender, although the price of every article be raised, whilst his revenue alone continues on the same standard. And I ground my opinion on the following reason, which appears to me unanswerable: The difference between the interest of money, and that of landed property, is always a sufficient indemnity to the monied man for the rise, occasioned by the taxes, on the prices of the produce of land and industry; but nothing can compensate the landed proprietor for that pretended increase of wealth called Money, or that supposed poverty known by the name of Taxes, but a proportionable increase in the price of his goods[3]. A word more on the lender. One may take the part of that important individual, who accumulates those savings by which the State is to profit. It is allowed, I say, to support such a man even against the State, when the State attempts to reduce him by an useless reimbursement, by an unnatural operation; but he should be assigned his real rank in the State, that he may not complain of the natural reductions. In this case, I think, we should be more just, more humane, and more equitable, than Mr. Hume, when, in the continuation of the scheme of national loans, he offers to the posterity of the present owners of landed estates, no other prospect than that of serving, as coachmen, the descendents of their footmen, and no other means of averting the prophecy—but a bankruptcy. (Vide Hume’s Public Credit, Essay IX.)

Reflections on the two foregoing Articles.

If it were very true, though upon the first blush rather strange, that after an operation so simple as that of increasing the price of the whole mass of commodities, or rather suffering it naturally to increase, in proportion as the taxes and the effects produced by them enhance the price of all the products of industry, which are to bear those taxes—were it true, I say, that after so plain, so simple an operation, it would suffice, in order to secure for ever, in the most efficacious manner, the payment of the interest on any given national debt whatever, to find, once for all, in cash and paper, a sum which would exactly be, to the mass of the specie and paper already in circulation, as the interest of the debt, and the reactions of which I shall speak in the sequel, are to the mass of the two revenues—were it equally true, that those who are to be paid that interest, should, after these two previous data, have nothing in the world to dread but the reimbursement of a principal, the interest of which should appear so oddly secured, it would then be impossible not to confess, that England has hitherto been a prey to great uneasiness, with very little foundation.