[end of page #233]
CHAP. IV.
Of the National Debt and Sinking Fund.-- Advantages and Disadvantages of both.-- Errors committed in calculating their Effects.--Causes of Error. -- Mode proposed for preventing future Increase.
IN no circumstance does the British empire differ so widely from all nations recorded in history, or from any now in existence, as with regard to the national debt.
Not only the invention of contracting debt to carry on war is but of recent origin, but no nation has ever carried it to near the extent that it has arrived at in England. The Italian states, in which this mode was first practised, never had the means of carrying it very far. In Spain, France, and Holland, national debt met with obstacles that arrested its progress long before it arrived at the pitch to which it has now come in this country.
The interest of the debt is above thrice the free revenue of the country, in time of peace, as that revenue was, previous to hostilities in 1793.
Whenever any operation is begun, the result of which is not known, owing to its being new, but which is in itself of great importance; the anxiety it occasions must be great, and, generally, the alarm is more than proportioned to the danger. If ever this truth was exemplified in any thing, it has been with regard to the national debt of England, which has been a continual object of terror since its first creation; not a public terror, merely amongst the ignorant, but the most profound and enlightened statesmen. Calculators, and writers on political economy, have served to augment the uneasiness by their predictions of a fatal termination.
While the debt has been augmenting with great rapidity, the wealth and resources of the nation have, at least, augmented equally fast, and the matter of fact has given the lie to all the forebodings of those who [end of page #234] occasioned the alarm. This very extraordinary circumstance merits an investigation.
It unfortunately happens, that, where people are deeply interested in a subject, they form their opinion before they begin to examine and investigate, and consequently the mind commences with a bias, and acts under its influence, the consequence of which is, that the conclusion is not so accurate as it otherwise would be. Not that, in calculating with figures, the disposition of the mind can make an unit of difference, the question being once fairly stated; but the previous impression on the mind tends to prevent the fair statement of the question.
That an uninterrupted practice of borrowing must end in an inability to pay is a self-evident axiom. It is not a matter that admits of dispute; but to fix the point where the inability will commence is a problem to resolve of a very difficult nature; it is indeed a problem, the re-solution =sic= of which depends upon some circumstances that cannot be ascertained. There are, it is true, certain fixed principles; but there are some points also that depend on events entirely unconnected with the debt, and, in themselves, uncertain. Two great considerations, that operate powerfully, have been omitted by most writers on this subject. The first, is the increased energy of human exertion, under an increased operation of necessity; the second, is the effect that the depreciation of money has, on lessening the apparent burthen occasioned by the interest of the debt. That these two causes, which have not been taken into account, have rendered the calculations erroneous, there is not a doubt; and how far they may still continue to operate is, at this time, as uncertain as ever; but they ought not to be considered as of operation beyond a certain unknown point, else the practice of contracting debt would be capable of infinite extension, which is impossible.