Chapter III: Of Public Debts (2)

The proprietor of land is interested, for the sake of his own revenue, to
keep his estate in as good condition as he can, by building and repairing
his tenants houses, by making and maintaining the necessary drains and
inclosures, and all those other expensive improvements which it properly
belongs to the landlord to make and maintain. But, by different land
taxes, the revenue of the landlord may be so much diminished, and, by
different duties upon the necessaries and conveniencies of life, that
diminished revenue may be rendered of so little real value, that he may
find himself altogether unable to make or maintain those expensive
improvements. When the landlord, however, ceases to do his part, it is
altogether impossible that the tenant should continue to do his. As the
distress of the landlord increases, the agriculture of the country must
necessarily decline.

When, by different taxes upon the necessaries and conveniencies of life,
the owners and employers of capital stock find, that whatever revenue they
derive from it, will not, in a particular country, purchase the same
quantity of those necessaries and conveniencies which an equal revenue
would in almost any other, they will be disposed to remove to some other.
And when, in order to raise those taxes, all or the greater part of
merchants and manufacturers, that is, all or the greater part of the
employers of great capitals, come to be continually exposed to the
mortifying and vexatious visits of the tax-gatherers, this disposition to
remove will soon be changed into an actual removing. The industry of the
country will necessarily fall with the removal of the capital which
supported it, and the ruin of trade and manufactures will follow the
declension of agriculture.

To transfer from the owners of those two great sources of revenue, land,
and capital stock, from the persons immediately interested in the good
condition of every particular portion of land, and in the good management
of every particular portion of capital stock, to another set of persons
(the creditors of the public, who have no such particular interest), the
greater part of the revenue arising from either, must, in the long-run,
occasion both the neglect of land, and the waste or removal of capital
stock. A creditor of the public has, no doubt, a general interest in the
prosperity of the agriculture, manufactures, and commerce of the country;
and consequently in the good condition of its land, and in the good
management of its capital stock. Should there be any general failure or
declension in any of these things, the produce of the different taxes
might no longer be sufficient to pay him the annuity or interest which is
due to him. But a creditor of the public, considered merely as such, has
no interest in the good condition of any particular portion of land, or in
the good management of any particular portion of capital stock. As a
creditor of the public, he has no knowledge of any such particular
portion. He has no inspection of it. He can have no care about it. Its
ruin may in some cases be unknown to him, and cannot directly affect him.

The practice of funding has gradually enfeebled every state which has
adopted it. The Italian republics seem to have begun it. Genoa and Venice,
the only two remaining which can pretend to an independent existence, have
both been enfeebled by it. Spain seems to have learned the practice from
the Italian republics, and (its taxes being probably less judicious than
theirs) it has, in proportion to its natural strength, been-still more
enfeebled. The debts of Spain are of very old standing. It was deeply in
debt before the end of the sixteenth century, about a hundred years before
England owed a shilling. France, notwithstanding all its natural
resources, languishes under an oppressive load of the same kind. The
republic of the United Provinces is as much enfeebled by its debts as
either Genoa or Venice. Is it likely that, in Great Britain alone, a
practice, which has brought either weakness or dissolution into every
other country, should prove altogether innocent?

The system of taxation established in those different countries, it may be
said, is inferior to that of England. I believe it is so. But it ought to
be remembered, that when the wisest government has exhausted all the
proper subjects of taxation, it must, in cases of urgent necessity, have
recourse to improper ones. The wise republic of Holland has, upon some
occasions, been obliged to have recourse to taxes as inconvenient as the
greater part of those of Spain. Another war, begun before any considerable
liberation of the public revenue had been brought about, and growing in
its progress as expensive as the last war, may, from irresistible
necessity, render the British system of taxation as oppressive as that of
Holland, or even as that of Spain. To the honour of our present system of
taxation, indeed, it has hitherto given so little embarrassment to
industry, that, during the course even of the most expensive wars, the
frugality and good conduct of individuals seem to have been able, by
saving and accumulation, to repair all the breaches which the waste and
extravagance of government had made in the general capital of the society.
At the conclusion of the late war, the most expensive that Great Britain
ever waged, her agriculture was as flourishing, her manufacturers as
numerous and as fully employed, and her commerce as extensive, as they had
ever been before. The capital, therefore, which supported all those
different branches of industry, must have been equal to what it had ever
been before. Since the peace, agriculture has been still further improved;
the rents of houses have risen in every town and village of the country, a
proof of the increasing wealth and revenue of the people; and the annual
amount of the greater part of the old taxes, of the principal branches of
the excise and customs, in particular, has been continually increasing, an
equally clear proof of an increasing consumption, and consequently of an
increasing produce, which could alone support that consumption. Great
Britain seems to support with ease, a burden which, half a century ago,
nobody believed her capable of supporting, Let us not, however, upon this
account, rashly conclude that she is capable of supporting any burden; nor
even be too confident that she could support, without great distress, a
burden a little greater than what has already been laid upon her.

When national debts have once been accumulated to a certain degree, there
is scarce, I believe, a single instance of their having been fairly and
completely paid. The liberation of the public revenue, if it has ever been
brought about at all, has always been brought about by a bankruptcy;
sometimes by an avowed one, though frequently by a pretended payment.

The raising of the denomination of the coin has been the most usual
expedient by which a real public bankruptcy has been disguised under the
appearance of a pretended payment. If a sixpence, for example, should,
either by act of parliament or royal proclamation, be raised to the
denomination of a shilling, and twenty sixpences to that of a pound
sterling; the person who, under the old denomination, had borrowed twenty
shillings, or near four ounces of silver, would, under the new, pay with
twenty sixpences, or with something less than two ounces. A national debt
of about a hundred and twenty-eight millions, near the capital of the
funded and unfunded debt of Great Britain, might, in this manner, be paid
with about sixty-four millions of our present money. It would, indeed, be
a pretended payment only, and the creditors of the public would really be
defrauded of ten shillings in the pound of what was due to them. The
calamity, too, would extend much further than to the creditors of the
public, and those of every private person would suffer a proportionable
loss; and this without any advantage, but in most cases with a great
additional loss, to the creditors of the public. If the creditors of the
public, indeed, were generally much in debt to other people, they might in
some measure compensate their loss by paying their creditors in the same
coin in which the public had paid them. But in most countries, the
creditors of the public are, the greater part of them, wealthy people, who
stand more in the relation of creditors than in that of debtors, towards
the rest of their fellow citizens. A pretended payment of this kind,
therefore, instead of alleviating, aggravates, in most cases, the loss of
the creditors of the public; and, without any advantage to the public,
extends the calamity to a great number of other innocent people. It
occasions a general and most pernicious subversion of the fortunes of
private people; enriching, in most cases, the idle and profuse debtor, at
the expense of the industrious and frugal creditor; and transporting a
great part of the national capital from the hands which were likely to
increase and improve it, to those who are likely to dissipate and destroy
it. When it becomes necessary for a state to declare itself bankrupt, in
the same manner as when it becomes necessary for an individual to do so, a
fair, open, and avowed bankruptcy, is always the measure which is both
least dishonourable to the debtor, and least hurtful to the creditor. The
honour of a state is surely very poorly provided for, when, in order to
cover the disgrace of a real bankruptcy, it has recourse to a juggling
trick of this kind, so easily seen through, and at the same time so
extremely pernicious.

Almost all states, however, ancient as well as modern, when reduced to
this necessity, have, upon some occasions, played this very juggling
trick. The Romans, at the end of the first Punic war, reduced the As, the
coin or denomination by which they computed the value of all their other
coins, from containing twelve ounces of copper, to contain only two
ounces; that is, they raised two ounces of copper to a denomination which
had always before expressed the value of twelve ounces. The republic was,
in this manner, enabled to pay the great debts which it had contracted
with the sixth part of what it really owed. So sudden and so great a
bankruptcy, we should in the present times be apt to imagine, must have
occasioned a very violent popular clamour. It does not appear to have
occasioned any. The law which enacted it was, like all other laws relating
to the coin, introduced and carried through the assembly of the people by
a tribune, and was probably a very popular law. In Rome, as in all other
ancient republics, the poor people were constantly in debt to the rich and
the great, who, in order to secure their votes at the annual elections,
used to lend them money at exorbitant interest, which, being never paid,
soon accumulated into a sum too great either for the debtor to pay, or for
any body else to pay for him. The debtor, for fear of a very severe
execution, was obliged, without any further gratuity, to vote for the
candidate whom the creditor recommended. In spite of all the laws against
bribery and corruption, the bounty of the candidates, together with the
occasional distributions of coin which were ordered by the senate, were
the principal funds from which, during the latter times of the Roman
republic, the poorer citizens derived their subsistence. To deliver
themselves from this subjection to their creditors, the poorer citizens
were continually calling out, either for an entire abolition of debts, or
for what they called new tables; that is, for a law which should entitle
them to a complete acquittance, upon paying only a certain proportion of
their accumulated debts. The law which reduced the coin of all
denominations to a sixth part of its former value, as it enabled them to
pay their debts with a sixth part of what they really owed, was equivalent
to the most advantageous new tables. In order to satisfy the people, the
rich and the great were, upon several different occasions, obliged to
consent to laws, both for abolishing debts, and for introducing new
tables; and they probably were induced to consent to this law, partly for
the same reason, and partly that, by liberating the public revenue, they
might restore vigour to that government, of which they themselves had the
principal direction. An operation of this kind would at once reduce a debt
of £128,000,000 to £21,333,333:6:8. In the course of the second Punic war,
the As was still further reduced, first, from two ounces of copper to one
ounce, and afterwards from one ounce to half an ounce; that is, to the
twenty-fourth part of its original value. By combining the three Roman
operations into one, a debt of a hundred and twenty-eight millions of our
present money, might in this manner be reduced all at once to a debt of
£5,333,333:6:8. Even the enormous debt of Great Britain might in this
manner soon be paid.

By means of such expedients, the coin of, I believe, all nations, has been
gradually reduced more and more below its original value, and the same
nominal sum has been gradually brought to contain a smaller and a smaller
quantity of silver.

Nations have sometimes, for the same purpose, adulterated the standard of
their coin; that is, have mixed a greater quantity of alloy in it. If in
the pound weight of our silver coin, for example, instead of eighteen
penny-weight, according to the present standard, there were mixed eight
ounces of alloy; a pound sterling, or twenty shillings of such coin, would
be worth little more than six shillings and eightpence of our present
money. The quantity of silver contained in six shillings and eightpence of
our present money, would thus be raised very nearly to the denomination of
a pound sterling. The adulteration of the standard has exactly the same
effect with what the French call an augmentation, or a direct raising of
the denomination of the coin.

An augmentation, or a direct raising of the denomination of the coin,
always is, and from its nature must be, an open and avowed operation. By
means of it, pieces of a smaller weight and bulk are called by the same
name, which had before been given to pieces of a greater weight and bulk.
The adulteration of the standard, on the contrary, has generally been a
concealed operation. By means of it, pieces are issued from the mint, of
the same denomination, and, as nearly as could be contrived, of the same
weight, bulk, and appearance, with pieces which had been current before of
much greater value. When king John of France, {See Du Cange Glossary, voce
Moneta; the Benedictine Edition.} in order to pay his debts, adulterated
his coin, all the officers of his mint were sworn to secrecy. Both
operations are unjust. But a simple augmentation is an injustice of open
violence; whereas an adulteration is an injustice of treacherous fraud.
This latter operation, therefore, as soon as it has been discovered, and
it could never be concealed very long, has always excited much greater
indignation than the former. The coin, after any considerable
augmentation, has very seldom been brought back to its former weight; but
after the greatest adulterations, it has almost always been brought back
to its former fineness. It has scarce ever happened, that the fury and
indignation of the people could otherwise be appeased.

In the end of the reign of Henry VIII., and in the beginning of that of
Edward VI., the English coin was not only raised in its denomination, but
adulterated in its standard. The like frauds were practised in Scotland
during the minority of James VI. They have occasionally been practised in
most other countries.

That the public revenue of Great Britain can never be completely
liberated, or even that any considerable progress can ever be made towards
that liberation, while the surplus of that revenue, or what is over and
above defraying the annual expense of the peace establishment, is so very
small, it seems altogether in vain to expect. That liberation, it is
evident, can never be brought about, without either some very considerable
augmentation of the public revenue, or some equally considerable reduction
of the public expense.

A more equal land tax, a more equal tax upon the rent of houses, and such
alterations in the present system of customs and excise as those which
have been mentioned in the foregoing chapter, might, perhaps, without
increasing the burden of the greater part of the people, but only
distributing the weight of it more equally upon the whole, produce a
considerable augmentation of revenue. The most sanguine projector,
however, could scarce flatter himself, that any augmentation of this kind
would be such as could give any reasonable hopes, either of liberating the
public revenue altogether, or even of making such progress towards that
liberation in time of peace, as either to prevent or to compensate the
further accumulation of the public debt in the next war.

By extending the British system of taxation to all the different provinces
of the empire, inhabited by people either of British or European
extraction, a much greater augmentation of revenue might be expected.
This, however, could scarce, perhaps, be done, consistently with the
principles of the British constitution, without admitting into the British
parliament, or, if you will, into the states-general of the British
empire, a fair and equal representation of all those different provinces;
that of each province bearing the same proportion to the produce of its
taxes, as the representation of Great Britain might bear to the produce of
the taxes levied upon Great Britain. The private interest of many powerful
individuals, the confirmed prejudices of great bodies of people, seem,
indeed, at present, to oppose to so great a change, such obstacles as it
may be very difficult, perhaps altogether impossible, to surmount.
Without, however, pretending to determine whether such a union be
practicable or impracticable, it may not, perhaps, be improper, in a
speculative work of this kind, to consider how far the British system of
taxation might be applicable to all the different provinces of the empire;
what revenue might be expected from it, if so applied; and in what manner
a general union of this kind might be likely to affect the happiness and
prosperity of the different provinces comprehended within it. Such a
speculation, can, at worst, be regarded but as a new Utopia, less amusing,
certainly, but no more useless and chimerical than the old one.

The land-tax, the stamp duties, and the different duties of customs and
excise, constitute the four principal branches of the British taxes.

Ireland is certainly as able, and our American and West India plantations
more able, to pay a land tax, than Great Britain. Where the landlord is
subject neither to tythe nor poor’s rate, he must certainly be more able
to pay such a tax, than where he is subject to both those other burdens.
The tythe, where there is no modus, and where it is levied in kind,
diminishes more what would otherwise be the rent of the landlord, than a
land tax which really amounted to five shillings in the pound. Such a
tythe will be found, in most cases, to amount to more than a fourth part
of the real rent of the land, or of what remains after replacing
completely the capital of the farmer, together with his reasonable profit.
If all moduses and all impropriations were taken away, the complete church
tythe of Great Britain and Ireland could not well be estimated at less
than six or seven millions. If there was no tythe either in Great Britain
or Ireland, the landlords could afford to pay six or seven millions
additional land tax, without being more burdened than a very great part of
them are at present. America pays no tythe, and could, therefore, very
well afford to pay a land tax. The lands in America and the West Indies,
indeed, are, in general, not tenanted nor leased out to farmers. They
could not, therefore, be assessed according to any rent roll. But neither
were the lands of Great Britain, in the 4th of William and Mary, assessed
according to any rent roll, but according to a very loose and inaccurate
estimation. The lands in America might be assessed either in the same
manner, or according to an equitable valuation, in consequence of an
accurate survey, like that which was lately made in the Milanese, and in
the dominions of Austria, Prussia, and Sardinia.

Stamp duties, it is evident, might be levied without any variation, in all
countries where the forms of law process, and the deeds by which property,
both real and personal, is transferred, are the same, or nearly the same.

The extension of the custom-house laws of Great Britain to Ireland and the
plantations, provided it was accompanied, as in justice it ought to be,
with an extension of the freedom of trade, would be in the highest degree
advantageous to both. All the invidious restraints which at present
oppress the trade of Ireland, the distinction between the enumerated and
non-enumerated commodities of America, would be entirely at an end. The
countries north of Cape Finisterre would be as open to every part of the
produce of America, as those south of that cape are to some parts of that
produce at present. The trade between all the different parts of the
British empire would, in consequence of this uniformity in the
custom-house laws, be as free as the coasting trade of Great Britain is at
present. The British empire would thus afford, within itself, an immense
internal market for every part of the produce of all its different
provinces. So great an extension of market would soon compensate, both to
Ireland and the plantations, all that they could suffer from the increase
of the duties of customs.

The excise is the only part of the British system of taxation, which would
require to be varied in any respect, according as it was applied to the
different provinces of the empire. It might be applied to Ireland without
any variation; the produce and consumption of that kingdom being exactly
of the same nature with those of Great Britain. In its application to
America and the West Indies, of which the produce and consumption are so
very different from those of Great Britain, some modification might be
necessary, in the same manner as in its application to the cyder and beer
counties of England.

A fermented liquor, for example, which is called beer, but which, as it is
made of molasses, bears very little resemblance to our beer, makes a
considerable part of the common drink of the people in America. This
liquor, as it can be kept only for a few days, cannot, like our beer, be
prepared and stored up for sale in great breweries; but every private
family must brew it for their own use, in the same manner as they cook
their victuals. But to subject every private family to the odious visits
and examination of the tax-gatherers, in the same manner as we subject the
keepers of ale-houses and the brewers for public sale, would be altogether
inconsistent with liberty. If, for the sake of equality, it was thought
necessary to lay a tax upon this liquor, it might be taxed by taxing the
material of which it is made, either at the place of manufacture, or, if
the circumstances of the trade rendered such an excise improper, by laying
a duty upon its importation into the colony in which it was to be
consumed. Besides the duty of one penny a-gallon imposed by the British
parliament upon the importation of molasses into America, there is a
provincial tax of this kind upon their importation into Massachusetts Bay,
in ships belonging to any other colony, of eight-pence the hogshead; and
another upon their importation from the northern colonies into South
Carolina, of five-pence the gallon. Or, if neither of these methods was
found convenient, each family might compound for its consumption of this
liquor, either according to the number of persons of which it consisted,
in the same manner as private families compound for the malt tax in
England; or according to the different ages and sexes of those persons, in
the same manner as several different taxes are levied in Holland; or,
nearly as Sir Matthew Decker proposes, that all taxes upon consumable
commodities should be levied in England. This mode of taxation, it has
already been observed, when applied to objects of a speedy consumption, is
not a very convenient one. It might be adopted, however, in cases where no
better could be done.

Sugar, rum, and tobacco, are commodities which are nowhere necessaries of
life, which are become objects of almost universal consumption, and which
are, therefore, extremely proper subjects of taxation. If a union with the
colonies were to take place, those commodities might be taxed, either
before they go out of the hands of the manufacturer or grower; or, if this
mode of taxation did not suit the circumstances of those persons, they
might be deposited in public warehouses, both at the place of manufacture,
and at all the different ports of the empire, to which they might
afterwards be transported, to remain there, under the joint custody of the
owner and the revenue officer, till such time as they should be delivered
out, either to the consumer, to the merchant-retailer for home
consumption, or to the merchant-exporter; the tax not to be advanced till
such delivery. When delivered out for exportation, to go duty-free, upon
proper security being given, that they should really be exported out of
the empire. These are, perhaps, the principal commodities, with regard to
which the union with the colonies might require some considerable change
in the present system of British taxation.

What might be the amount of the revenue which this system of taxation,
extended to all the different provinces of the empire, might produce, it
must, no doubt, be altogether impossible to ascertain with tolerable
exactness. By means of this system, there is annually levied in Great
Britain, upon less than eight millions of people, more than ten millions
of revenue. Ireland contains more than two millions of people, and,
according to the accounts laid before the congress, the twelve associated
provinces of America contain more than three. Those accounts, however, may
have been exaggerated, in order, perhaps, either to encourage their own
people, or to intimidate those of this country; and we shall suppose,
therefore, that our North American and West Indian colonies, taken
together, contain no more than three millions; or that the whole British
empire, in Europe and America, contains no more than thirteen millions of
inhabitants. If, upon less than eight millions of inhabitants, this system
of taxation raises a revenue of more than ten millions sterling; it ought,
upon thirteen millions of inhabitants, to raise a revenue of more than
sixteen millions two hundred and fifty thousand pounds sterling. From this
revenue, supposing that this system could produce it, must be deducted the
revenue usually raised in Ireland and the plantations, for defraying the
expense of the respective civil governments. The expense of the civil and
military establishment of Ireland, together with the interest of the
public debt, amounts, at a medium of the two years which ended March 1775,
to something less than seven hundred and fifty thousand pounds a year. By
a very exact account of the revenue of the principal colonies of America
and the West Indies, it amounted, before the commencement of the present
disturbances, to a hundred and forty-one thousand eight hundred pounds. In
this account, however, the revenue of Maryland, of North Carolina, and of
all our late acquisitions, both upon the continent, and in the islands, is
omitted; which may, perhaps, make a difference of thirty or forty thousand
pounds. For the sake of even numbers, therefore, let us suppose that the
revenue necessary for supporting the civil government of Ireland and the
plantations may amount to a million. There would remain, consequently, a
revenue of fifteen millions two hundred and fifty thousand pounds, to be
applied towards defraying the general expense of the empire, and towards
paying the public debt. But if, from the present revenue of Great Britain,
a million could, in peaceable times, be spared towards the payment of that
debt, six millions two hundred and fifty thousand pounds could very well
be spared from this improved revenue. This great sinking fund, too, might
be augmented every year by the interest of the debt which had been
discharged the year before; and might, in this manner, increase so very
rapidly, as to be sufficient in a few years to discharge the whole debt,
and thus to restore completely the at-present debilitated and languishing
vigour of the empire. In the meantime, the people might be relieved from
some of the most burdensome taxes; from those which are imposed either
upon the necessaries of life, or upon the materials of manufacture. The
labouring poor would thus be enabled to live better, to work cheaper, and
to send their goods cheaper to market. The cheapness of their goods would
increase the demand for them, and consequently for the labour of those who
produced them. This increase in the demand for labour would both increase
the numbers, and improve the circumstances of the labouring poor. Their
consumption would increase, and, together with it, the revenue arising
from all those articles of their consumption upon which the taxes might be
allowed to remain.

The revenue arising from this system of taxation, however, might not
immediately increase in proportion to the number of people who were
subjected to it. Great indulgence would for some time be due to those
provinces of the empire which were thus subjected to burdens to which they
had not before been accustomed; and even when the same taxes came to be
levied everywhere as exactly as possible, they would not everywhere
produce a revenue proportioned to the numbers of the people. In a poor
country, the consumption of the principal commodities subject to the
duties of customs and excise, is very small; and in a thinly inhabited
country, the opportunities of smuggling are very great. The consumption of
malt liquors among the inferior ranks of people in Scotland is very small;
and the excise upon malt, beer, and ale, produces less there than in
England, in proportion to the numbers of the people and the rate of the
duties, which upon malt is different, on account of a supposed difference
of quality. In these particular branches of the excise, there is not, I
apprehend, much more smuggling in the one country than in the other. The
duties upon the distillery, and the greater part of the duties of customs,
in proportion to the numbers of people in the respective countries,
produce less in Scotland than in England, not only on account of the
smaller consumption of the taxed commodities, but of the much greater
facility of smuggling. In Ireland, the inferior ranks of people are still
poorer than in Scotland, and many parts of the country are almost as
thinly inhabited. In Ireland, therefore, the consumption of the taxed
commodities might, in proportion to the number of the people, be still
less than in Scotland, and the facility of smuggling nearly the same. In
America and the West Indies, the white people, even of the lowest rank,
are in much better circumstances than those of the same rank in England;
and their consumption of all the luxuries in which they usually indulge
themselves, is probably much greater. The blacks, indeed, who make the
greater part of the inhabitants, both of the southern colonies upon the
continent and of the West India islands, as they are in a state of
slavery, are, no doubt, in a worse condition than the poorest people
either in Scotland or Ireland. We must not, however, upon that account,
imagine that they are worse fed, or that their consumption of articles
which might be subjected to moderate duties, is less than that even of the
lower ranks of people in England. In order that they may work well, it is
the interest of their master that they should be fed well, and kept in
good heart, in the same manner as it is his interest that his working
cattle should be so. The blacks, accordingly, have almost everywhere their
allowance of rum, and of molasses or spruce-beer, in the same manner as
the white servants; and this allowance would not probably be withdrawn,
though those articles should be subjected to moderate duties. The
consumption of the taxed commodities, therefore, in proportion to the
number of inhabitants, would probably be as great in America and the West
Indies as in any part of the British empire. The opportunities of
smuggling, indeed, would be much greater; America, in proportion to the
extent of the country, being much more thinly inhabited than either
Scotland or Ireland. If the revenue, however, which is at present raised
by the different duties upon malt and malt liquors, were to be levied by a
single duty upon malt, the opportunity of smuggling in the most important
branch of the excise would be almost entirely taken away; and if the
duties of customs, instead of being imposed upon almost all the different
articles of importation, were confined to a few of the most general use
and consumption, and if the levying of those duties were subjected to the
excise laws, the opportunity of smuggling, though not so entirely taken
away, would be very much diminished. In consequence of those two
apparently very simple and easy alterations, the duties of customs and
excise might probably produce a revenue as great, in proportion to the
consumption of the most thinly inhabited province, as they do at present,
in proportion to that of the most populous.

The Americans, it has been said, indeed, have no gold or silver money, the
interior commerce of the country being carried on by a paper currency; and
the gold and silver, which occasionally come among them, being all sent to
Great Britain, in return for the commodities which they receive from us.
But without gold and silver, it is added, there is no possibility of
paying taxes. We already get all the gold and silver which they have. How
is it possible to draw from them what they have not?

The present scarcity of gold and silver money in America, is not the
effect of the poverty of that country, or of the inability of the people
there to purchase those metals. In a country where the wages of labour are
so much higher, and the price of provisions so much lower than in England,
the greater part of the people must surely have wherewithal to purchase a
greater quantity, if it were either necessary or convenient for them to do
so. The scarcity of those metals, therefore, must be the effect of choice,
and not of necessity.

It is for transacting either domestic or foreign business, that gold or
silver money is either necessary or convenient.

The domestic business of every country, it has been shewn in the second
book of this Inquiry, may, at least in peaceable times, be transacted by
means of a paper currency, with nearly the same degree of conveniency as
by gold and silver money. It is convenient for the Americans, who could
always employ with profit, in the improvement of their lands, a greater
stock than they can easily get, to save as much as possible the expense of
so costly an instrument of commerce as gold and silver; and rather to
employ that part of their surplus produce which would be necessary for
purchasing those metals, in purchasing the instruments of trade, the
materials of clothing, several parts of household furniture, and the iron
work necessary for building and extending their settlements and
plantations; in purchasing not dead stock, but active and productive
stock. The colony governments find it for their interest to supply the
people with such a quantity of paper money as is fully sufficient, and
generally more than sufficient, for transacting their domestic business.
Some of those governments, that of Pennsylvania, particularly, derive a
revenue from lending this paper money to their subjects, at an interest of
so much per cent. Others, like that of Massachusetts Bay, advance, upon
extraordinary emergencies, a paper money of this kind for defraying the
public expense; and afterwards, when it suits the conveniency of the
colony, redeem it at the depreciated value to which it gradually falls. In
1747, {See Hutchinson’s History of Massachusetts Bay vol. ii. page 436 et
seq.} that colony paid in this manner the greater part of its public
debts, with the tenth part of the money for which its bills had been
granted. It suits the conveniency of the planters, to save the expense of
employing gold and silver money in their domestic transactions; and it
suits the conveniency of the colony governments, to supply them with a
medium, which, though attended with some very considerable disadvantages,
enables them to save that expense. The redundancy of paper money
necessarily banishes gold and silver from the domestic transactions of the
colonies, for the same reason that it has banished those metals from the
greater part of the domestic transactions in Scotland; and in both
countries, it is not the poverty, but the enterprizing and projecting
spirit of the people, their desire of employing all the stock which they
can get, as active and productive stock, which has occasioned this
redundancy of paper money.

In the exterior commerce which the different colonies carry on with Great
Britain, gold and silver are more or less employed, exactly in proportion
as they are more or less necessary. Where those metals are not necessary,
they seldom appear. Where they are necessary, they are generally found.

In the commerce between Great Britain and the tobacco colonies, the
British goods are generally advanced to the colonists at a pretty long
credit, and are afterwards paid for in tobacco, rated at a certain price.
It is more convenient for the colonists to pay in tobacco than in gold and
silver. It would be more convenient for any merchant to pay for the goods
which his correspondents had sold to him, in some other sort of goods
which he might happen to deal in, than in money. Such a merchant would
have no occasion to keep any part of his stock by him unemployed, and in
ready money, for answering occasional demands. He could have, at all
times, a larger quantity of goods in his shop or warehouse, and he could
deal to a greater extent. But it seldom happens to be convenient for all
the correspondents of a merchant to receive payment for the goods which
they sell to him, in goods of some other kind which he happens to deal in.
The British merchants who trade to Virginia and Maryland, happen to be a
particular set of correspondents, to whom it is more convenient to receive
payment for the goods which they sell to those colonies in tobacco, than
in gold and silver. They expect to make a profit by the sale of the
tobacco; they could make none by that of the gold and silver. Gold and
silver, therefore, very seldom appear in the commerce between Great
Britain and the tobacco colonies. Maryland and Virginia have as little
occasion for those metals in their foreign, as in their domestic commerce.
They are said, accordingly, to have less gold and silver money than any
other colonies in America. They are reckoned, however, as thriving, and
consequently as rich, as any of their neighbours.

In the northern colonies, Pennsylvania, New York, New Jersey, the four
governments of New England, etc. the value of their own produce which they
export to Great Britain is not equal to that of the manufactures which
they import for their own use, and for that of some of the other colonies,
to which they are the carriers. A balance, therefore, must be paid to the
mother-country in gold and silver and this balance they generally find.

In the sugar colonies, the value of the produce annually exported to Great
Britain is much greater than that of all the goods imported from thence.
If the sugar and rum annually sent to the mother-country were paid for in
those colonies, Great Britain would be obliged to send out, every year, a
very large balance in money; and the trade to the West Indies would, by a
certain species of politicians, be considered as extremely
disadvantageous. But it so happens, that many of the principal proprietors
of the sugar plantations reside in Great Britain. Their rents are remitted
to them in sugar and rum, the produce of their estates. The sugar and rum
which the West India merchants purchase in those colonies upon their own
account, are not equal in value to the goods which they annually sell
there. A balance, therefore, must necessarily be paid to them in gold and
silver, and this balance, too, is generally found.

The difficulty and irregularity of payment from the different colonies to
Great Britain, have not been at all in proportion to the greatness or
smallness of the balances which were respectively due from them. Payments
have, in general, been more regular from the northern than from the
tobacco colonies, though the former have generally paid a pretty large
balance in money, while the latter have either paid no balance, or a much
smaller one. The difficulty of getting payment from our different sugar
colonies has been greater or less in proportion, not so much to the extent
of the balances respectively due from them, as to the quantity of
uncultivated land which they contained; that is, to the greater or smaller
temptation which the planters have been under of over-trading, or of
undertaking the settlement and plantation of greater quantities of waste
land than suited the extent of their capitals. The returns from the great
island of Jamaica, where there is still much uncultivated land, have, upon
this account, been, in general, more irregular and uncertain than those
from the smaller islands of Barbadoes, Antigua, and St. Christopher’s,
which have, for these many years, been completely cultivated, and have,
upon that account, afforded less field for the speculations of the
planter. The new acquisitions of Grenada, Tobago, St. Vincent’s, and
Dominica, have opened a new field for speculations of this kind; and the
returns from those islands have of late been as irregular and uncertain
as those from the great island of Jamaica.

It is not, therefore, the poverty of the colonies which occasions, in the
greater part of them, the present scarcity of gold and silver money. Their
great demand for active and productive stock makes it convenient for them
to have as little dead stock as possible, and disposes them, upon that
account, to content themselves with a cheaper, though less commodious
instrument of commerce, than gold and silver. They are thereby enabled to
convert the value of that gold and silver into the instruments of trade,
into the materials of clothing, into household furniture, and into the
iron work necessary for building and extending their settlements and
plantations. In those branches of business which cannot be transacted
without gold and silver money, it appears, that they can always find the
necessary quantity of those metals; and if they frequently do not find it,
their failure is generally the effect, not of their necessary poverty, but
of their unnecessary and excessive enterprise. It is not because they are
poor that their payments are irregular and uncertain, but because they are
too eager to become excessively rich. Though all that part of the produce
of the colony taxes, which was over and above what was necessary for
defraying the expense of their own civil and military establishments, were
to be remitted to Great Britain in gold and silver, the colonies have
abundantly wherewithal to purchase the requisite quantity of those metals.
They would in this case be obliged, indeed, to exchange a part of their
surplus produce, with which they now purchase active and productive stock,
for dead stock. In transacting their domestic business, they would be
obliged to employ a costly, instead of a cheap instrument of commerce; and
the expense of purchasing this costly instrument might damp somewhat the
vivacity and ardour of their excessive enterprise in the improvement of
land. It might not, however, be necessary to remit any part of the
American revenue in gold and silver. It might be remitted in bills drawn
upon, and accepted by, particular merchants or companies in Great Britain,
to whom a part of the surplus produce of America had been consigned, who
would pay into the treasury the American revenue in money, after having
themselves received the value of it in goods; and the whole business might
frequently be transacted without exporting a single ounce of gold or
silver from America.

It is not contrary to justice, that both Ireland and America should
contribute towards the discharge of the public debt of Great Britain. That
debt has been contracted in support of the government established by the
Revolution; a government to which the protestants of Ireland owe, not only
the whole authority which they at present enjoy in their own country, but
every security which they possess for their liberty, their property, and
their religion; a government to which several of the colonies of America
owe their present charters, and consequently their present constitution;
and to which all the colonies of America owe the liberty, security, and
property, which they have ever since enjoyed. That public debt has been
contracted in the defence, not of Great Britain alone, but of all the
different provinces of the empire. The immense debt contracted in the late
war in particular, and a great part of that contracted in the war before,
were both properly contracted in defence of America.

By a union with Great Britain, Ireland would gain, besides the freedom of
trade, other advantages much more important, and which would much more
than compensate any increase of taxes that might accompany that union. By
the union with England, the middling and inferior ranks of people in
Scotland gained a complete deliverance from the power of an aristocracy,
which had always before oppressed them. By a union with Great Britain, the
greater part of people of all ranks in Ireland would gain an equally
complete deliverance from a much more oppressive aristocracy; an
aristocracy not founded, like that of Scotland, in the natural and
respectable distinctions of birth and fortune, but in the most odious of
all distinctions, those of religious and political prejudices;
distinctions which, more than any other, animate both the insolence of the
oppressors, and the hatred and indignation of the oppressed, and which
commonly render the inhabitants of the same country more hostile to one
another than those of different countries ever are. Without a union with
Great Britain, the inhabitants of Ireland are not likely, for many ages,
to consider themselves as one people.

No oppressive aristocracy has ever prevailed in the colonies. Even they,
however, would, in point of happiness and tranquillity, gain considerably
by a union with Great Britain. It would, at least, deliver them from those
rancourous and virulent factions which are inseparable from small
democracies, and which have so frequently divided the affections of their
people, and disturbed the tranquillity of their governments, in their form
so nearly democratical. In the case of a total separation from Great
Britain, which, unless prevented by a union of this kind, seems very
likely to take place, those factions would be ten times more virulent than
ever. Before the commencement of the present disturbances, the coercive
power of the mother-country had always been able to restrain those
factions from breaking out into any thing worse than gross brutality and
insult. If that coercive power were entirely taken away, they would
probably soon break out into open violence and bloodshed. In all great
countries which are united under one uniform government, the spirit of
party commonly prevails less in the remote provinces than in the centre of
the empire. The distance of those provinces from the capital, from the
principal seat of the great scramble of faction and ambition, makes them
enter less into the views of any of the contending parties, and renders
them more indifferent and impartial spectators of the conduct of all. The
spirit of party prevails less in Scotland than in England. In the case of
a union, it would probably prevail less in Ireland than in Scotland; and
the colonies would probably soon enjoy a degree of concord and unanimity,
at present unknown in any part of the British empire. Both Ireland and the
colonies, indeed, would be subjected to heavier taxes than any which they
at present pay. In consequence, however, of a diligent and faithful
application of the public revenue towards the discharge of the national
debt, the greater part of those taxes might not be of long continuance,
and the public revenue of Great Britain might soon be reduced to what was
necessary for maintaining a moderate peace-establishment.

The territorial acquisitions of the East India Company, the undoubted
right of the Crown, that is, of the state and people of Great Britain,
might be rendered another source of revenue, more abundant, perhaps, than
all those already mentioned. Those countries are represented as more
fertile, more extensive, and, in proportion to their extent, much richer
and more populous than Great Britain. In order to draw a great revenue
from them, it would not probably be necessary to introduce any new system
of taxation into countries which are already sufficiently, and more than
sufficiently, taxed. It might, perhaps, be more proper to lighten than to
aggravate the burden of those unfortunate countries, and to endeavour to
draw a revenue from them, not by imposing new taxes, but by preventing the
embezzlement and misapplication of the greater part of those which they
already pay.