Among the causes that may produce a failure of paper-credit, there are two which the present quarrel with America calls upon us particularly to consider.—The first is, “An unfavourable balance of trade.” This, in proportion to the degree in which it takes place, must turn the course of foreign exchange against us; raise the price of bullion; and carry off our specie. The danger to which this would expose us is obvious; and it has been much increased by the new coinage of the gold specie which begun in 1773. Before this coinage, the greatest part of our gold coin being light, but the same in currency as if it had been heavy, always remained in the kingdom. But, being now nearly of full weight, whenever a wrong balance of foreign trade alters the course of exchange, and gold in coin becomes of less value than in bullion, there is reason to fear, that it will be melted down in such great quantities, and exported so fast, as in a little time to leave none behind;[36] the consequence which must prove, that the whole superstructure of paper-credit, now supported by it, will break down.—The only remedy, in such circumstances, is an increase of coinage at the mint. But this will operate too slowly; and, by raising the price of bullion, will only increase the evil.—It is the Bank that at such a time must be the immediate sufferer: For it is from thence that those who want coin for any purpose will always draw it.
For many years before 1773, the price of gold in bullion had been, from 2 to 3 or 4 per cent. higher than in coin. This was a temptation to melt down and export the coin, which could not be resisted. Hence arose a demand for it on the Bank; and, consequently, the necessity of purchasing bullion at a loss for a new coinage. But the more coin the Bank procured in this way, the lower its price became in comparison with that of bullion, and the faster it vanished; and, consequently, the more necessary it became to coin again, and the greater loss fell upon the Bank.—Had things continued much longer in this train, the consequences might have proved very serious. I am by no means sufficiently informed to be able to assign the causes which have produced the change that happened in 1772. But, without doubt, the state of things which took place before that year must be expected to return. The fluctuations of trade, in its best state, render this unavoidable. But the contest with our Colonies has a tendency to bring it on soon; and to increase unspeakably the distress attending it. All know that the balance of trade with them is greatly in our favour;[37] and that this balance is paid partly by direct remittances of bullion; and partly by circuitous remittances through Spain, Portugal, Italy, &c. which diminish the balance against us with these countries.—During the last year they have been employed in paying their debts, without adding to them; and their exportations and remittances for that purpose have contributed to render the general balance of trade more favourable to us, and, also, (in conjunction with the late operations of the Bank) to keep up our funds. These remittances are now ceased; and a few years will determine, if this contest goes on, how far we can sustain such a loss without suffering the consequences I have described.
The second event, ruinous to our paper circulation, which may arise from our rupture with America, is a deficiency in the revenue. As a failure of our paper would destroy the revenue, so a failure of the revenue, or any considerable diminution of it, would destroy our paper. The Bank is the support of our paper; and the support of the Bank is the credit of government. Its principal securities, are a capital of eleven millions lent to government; and money continually advanced to a vast amount on the Land-tax and Malt-tax, Sinking Fund, Exchequer Bills, Navy Bills, &c. Should, therefore, deficiencies in the revenue bring government under any difficulties, all these securities would lose their value, and the Bank and Government, and all private and public credit, would fall together.—Let any one here imagine, what would probably follow, were it but suspected by the public in general, that the taxes were so fallen, as not to produce enough to pay the interest of the public debts, besides bearing the ordinary expences of the nation; and that, in order to supply the deficiency and to hide the calamity, it had been necessary in any one year to anticipate the taxes, and to borrow of the Bank.—In such circumstances I can scarcely doubt, but an alarm would spread of the most dangerous tendency.—The next foreign war, should it prove half as expensive as the last, will probably occasion such a deficiency; and bring our affairs to that crisis towards which they have been long tending.—But the war with America has a greater tendency to do this; and the reason is, that it affects our resources more; and is attended more with the danger of internal disturbances.
Some have made the proportion of our trade depending on North America to be near ONE HALF. A moderate computation makes it a THIRD.[38] Let it, however, be supposed to be only a FOURTH. I will venture to say, this is a proportion of our foreign trade, the loss of which, when it comes to be felt, will be found insupportable.—In the article of Tobacco alone it will cause a deduction from the Customs of at least 300,000l. per ann.[39] including the duties paid on foreign commodities purchased by the exportation of tobacco. Let the whole deduction from the revenue be supposed to be only half a million. This alone is more than the kingdom can at present bear, without having recourse to lotteries, and the land-tax at 4s. in order to defray the common and necessary expences of peace. But to this must be added a deduction from the produce of the Excises, in consequence of the increase of the poor, of the difficulties of our merchants and manufacturers, of less national wealth, and a retrenchment of luxury. There is no possibility of knowing to what these deductions may amount. When the evils producing them begin, they will proceed rapidly; and they may end in a general wreck before we are aware of any danger.
In order to give a clearer view of this subject, I will in an Appendix[40], state particularly the national expenditure and income for eleven years, from 1764 to 1774. From that account it will appear, that the money drawn every year from the public by the taxes, does not fall greatly short of a sum equal to the whole specie of the kingdom; and that, notwithstanding the late increase in the productiveness of the taxes, the whole surplus of the national income has not exceeded 338,759l. per ann. See the Second Tract, [p. 160]. This is a surplus so inconsiderable as to be scarcely sufficient to guard against the deficiencies arising from the common fluctuations of foreign trade, and of home consumption. It is NOTHING when considered as the only fund we have for paying off a debt of near 140 millions.—Had we continued in a state of profound peace, it could not have admitted of any diminution. What then must follow, when one of the most profitable branches of our trade is destroyed; when a THIRD of the Empire is lost; when an addition of many millions is made to the public debt; and when, at the same time, perhaps some millions are taken away from the revenue?—I shudder at this prospect.—A kingdom on an edge so perilous, should think of nothing but a retreat.
SECT. IV.
Of the Honour of the Nation as affected by the War with America.
One of the pleas for continuing the contest with America is, “That our honour is engaged; and that we cannot now recede without the most humiliating concessions.”
With respect to this, it is proper to observe, that a distinction should be made between the nation, and its rulers. It is melancholy that there should be ever any reason for making such a distinction. A government is, or ought to be, nothing but an institution for collecting and for carrying into execution the will of the people. But so far is this from being in general the fact, that the measures of government, and the sense of the people, are sometimes in direct opposition to one another; nor does it often happen that any certain conclusion can be drawn from the one to the other.—I will not pretend to determine, whether, in the present instance, the dishonour attending a retreat would belong to the nation at large, or only to the persons in power who guide its affairs. Be this as it will, no good argument can be drawn from it against receding. The disgrace which may be implied in making concessions, is nothing to that of being the aggressors in an unrighteous quarrel; and dignity, in such circumstances, consists in retracting freely and speedily.—For, (to adopt on this occasion, words which I have heard applied to this very purpose, in a great assembly, by a peer to whom this kingdom has often looked as its deliverer, and whose ill state of health at this awful moment of public danger every friend to Britain must deplore) to adopt, I say, the words of this great man—“Rectitude is dignity. Oppression only is meanness; and justice, honour.”
I will add, that Prudence, no less than true Honour, requires us to retract. For the time may come when, if it is not done voluntarily, we may be obliged to do it; and find ourselves under a necessity of granting that to our distresses, which we now deny to equity and humanity, and the prayers of America. The possibility of this appears plainly from the preceding pages; and should it happen, it will bring upon us disgrace indeed, disgrace greater than the worst rancour can wish to see accumulated on a kingdom already too much dishonoured.—Let the reader think here what we are doing.—A nation, once the protector of Liberty in distant countries, and the scourge of tyranny, changed into an enemy to Liberty, and engaged in endeavouring to reduce to servitude its own brethren.—A great and enlightened nation, not content with a controuling power over millions of people which gave it every reasonable advantage, insisting upon such a supremacy over them as would leave them nothing they could call their own, and carrying desolation and death among them for disputing it.—What can be more ignominious?—How have we felt for the brave Corsicans, in their struggle with the Genoese, and afterwards with the French government? Did Genoa or France want more than an absolute command over their property and legislations; or the power of binding them in all cases whatsoever?—The Genoese, finding it difficult to keep them in subjection, CEDED them to the French.—All such cessions of one people by another are disgraceful to human nature. But if our claims are just, may not we also, if we please, CEDE the Colonies to France?—There is, in truth, no other difference between these two cases than that the Corsicans were not descended from the people who governed them, but that the Americans are.
There are some who seem to be sensible, that the authority of one country over another, cannot be distinguished from the servitude of one country to another; and that unless different communities, as well as different parts of the same community, are united by an equal representation, all such authority is inconsistent with the principles of Civil Liberty.—But they except the case of the Colonies and Great Britain; because the Colonies are communities which have branched forth from, and which, therefore, as they think, belong to Britain. Had the colonies been communities of foreigners, over whom we wanted to acquire dominion, or even to extend a dominion before acquired, they are ready to admit that their resistance would have been just.—In my opinion, this is the same with saying, that the Colonies ought to be worse off than the rest of mankind, because they are our own Brethren.