Chapter XXIII: Part IV: Of Public Credit (3)

During the last war, as in that preceeding it, taxes were increased in proportion to the interest of the money borrowed; and new impositions were now laid on the articles of great consumption, which produced abundantly. The new malt-duty of 3_d._ _per_ bushel, and the new beer-duty of 3_s._ _per_ barrel, bring in net into the exchequer near 820 000_l._ _per annum_, and discharge the interest of above 27 millions sterling, at 3 _per cent._ Such a sum raised at the end of a war so very expensive, and at the very time when the credit of France was totally fallen, must have operated in the strongest manner, and did in fact operate more, perhaps, than any other consideration to put an end to that war, the most glorious that Europe has beheld since the beginning of this century, or perhaps in any age whatever: advantageous to Great Britain, notwithstanding all the expence, providing that the consequences happen to correspond to what may be reasonably expected.

I shall now set before my reader a short state of the taxes, debts, and public funds of Great Britain, at this bright period of her history.

From the best authority I have been able to procure, the revenue of the state, considered under the three general branches of customs, excise, and other inland duties, which comprehend the whole permanent income of this kingdom, was then as follows:

Customs net into the exchequer, about £2 000 000 Excise in all its permanent branches net, about 4 600 000 Other inland duties net 1 000 000 Land tax at 4_s._ in the pound 2 000 000 Annual malt tax net 613 000 —————————— In all 10 213 000

Let us next state the annual charges and appropriations settled upon this fund.

First then the civil list, to the amount
of £800 000
2_do_, The interest of about 131
millions of funded debts at different
rates of interest, about 4 500 000
3_tio_, The interest of nine millions
not then provided for, supposed to be
at 4 _per cent._ 360 000
——————————
In all of regular and permanent annual charge 5 660 000
——————————
So there remains free, about 4 553 000

From which if we deduct the annual grants of land and
malt-taxes, which extend together, as above, to 2 613 000
——————————
There will remain as the produce of the sinking
fund[29] 1 940 000

Footnote 29:

I find that the sinking fund is now estimated at 2 100 000_l._ by the
author of the Considerations on Trade, &c. above cited. I am also
informed that the net produce of the customs exceeds 2 000 000_l._
considerably: but 4 600 000_l._ is rather the gross than the net
produce of the _permanent_ duties of excise; that is, of all the
excise duties, excepting the annual malt-duty. It must also be
observed, that the annuities payable to the national creditors,
amounted, the 5th January 1764, to more than 4 720 000_l._ But on the
other hand, the interest of the unfunded 9 millions is rated too high,
as appears from the author above quoted. I cannot pretend to give
exact details. The general sketch here stated is sufficient for my
purpose.

In that state, nearly, stood the affairs of Great Britain after the conclusion of the peace in 1763.

It now only remains to offer some conjectures why, after this period, money was not found to regorge, as after the peace of Aix-la-Chapelle, so as to furnish an opportunity of reducing the rate of interest upon all redeemable debts, and by that of raising the amount of the sinking fund, and more firmly establishing the national credit.

After the fall of the credit of France towards the end of 1759, Great Britain had the command of all the money to be lent in Europe; and accordingly amazing sums were borrowed in 1760, 1761, and 1762. Of the sums borrowed, a great part, no doubt, was the property of strangers; but they, not being so well acquainted with the affairs of this nation as the English themselves, instead of subscribing to the loans, lent the money to our own country people, who, in hopes of a great rise upon the return of peace, filled the subscriptions with borrowed money.

The consequence was, that no sooner did the funds begin to rise after the peace, than every creditor demanded his money of those who had invested it in the public funds. This obliged the latter to bring their stock to market, and this again had naturally the effect of keeping the funds very low. Some, more prudent than the rest, had borrowed upon a long term of repayment; which had the effect of putting off still longer the settlement of the funds in the hands of the real proprietors, and of taking them out of those who only held them nominally.

Besides this accidental cause of the low price of the funds, other circumstances, no doubt, greatly contributed to produce the same effect.

However great the balance of trade, that is, of exportations above importations, may have been of late in favour of England, still the mighty sums drawn out by strangers have certainly, upon the whole, prevented much money from coming home on the general or grand balance of payments. While that remains the case, it is impossible money should regorge at home in the hands of the natives, and until this happens, there is no hope of seeing the 3 _per cents._ above par. But then the rise, small as it is, since the peace, may encourage us to hope that that time is not far off: for had the profits of our trade been quite unable to balance the loss upon our foreign debts, the funds would undoubtedly still continue to fall, which is demonstrably not the case from the circumstances of the loan in April 1766, obtained by government, with the assistance of a lottery indeed, at 3 _per cent._[30]

Footnote 30:

The loan of 1766, was 1 500 000_l._ at 3 _per cent._ Every subscriber
for 100_l._ had an annuity of 3 _per cent._ on 60_l._ and 4 lottery
tickets, valued to them by government at 10_l._ each, in all 100_l._
The prizes and blanks in the lottery amount to 600 000_l._ and bear 3
_per cent._ paid by government. The annuities amount to 900 000_l._
and bear also 3 _per cent._ The number of tickets are 60 000. Hence,
at 10_l._ each, they amount to 600 000_l._

The advantage government reaps by this way of borrowing, is, that the
desire of gaming, raises the lottery tickets above their value, when
thrown into the hands of the public; and this advanced value being a
profit to those who receive them in part of their subscription, that
profit they share with government. Example. In April 1766, when
government borrowed 1 500 000_l._ at 3 _per cent._ the 3 _per cents._
were only at 89: consequently, the difference between 89 and 100,
which is 11_l._ must have been supposed to be the sum which the
subscribers, from the propensity of people to game, had a reasonable,
or rather a certain expectation of gaining upon the sale of 4 lottery
tickets, that is, 2_l._ 15_s._ upon every one.

To know therefore the real par of a lottery ticket, you must proceed
thus: it costs the subscribers 10_l._ for which they receive from
government 3 _per cent._ This 10_l._ as 3 _per cents._ stood at 89, is
worth at that rate no more than 8_l._ 18_s._ add to this sum what the
public must pay for the liberty to play, which we have stated above at
2_l._ 15_s._ and you have the exact par of a lottery ticket at 11_l._
13_s._

Whatever they sell at above 11_l._ 13_s._ is profit to the
subscribers, whatever they sell below 11_l._ 13_s._ is a loss to them.

This profit, though small in appearance, is greatly increased from
another circumstance, viz. That the subscribers may sell their
subscriptions at a time when they have really advanced but a small
part of it. The first payment is commonly of 15 _per cent._ on their
subscription: when they sell, they make this profit upon the whole
capital. Suppose then 15 _per cent._ paid in: if the profit upon
selling be no more than 1 _per cent._ upon the capital, that 1 _per
cent._ turns out no less than 6⅔ _per cent._ upon the money they have
advanced. Thus a person who is possessed of 1500_l._ only, may
subscribe for 10 000_l._ in this loan: he pays in his 1500_l._ and
receives his subscription; when he sells he sells 10 000_l._
subscription, upon which he gains 1 _per cent._: 1 _per cent._ of 10
000_l._ is 100_l._ so (in one month suppose) he gains by this means
100_l._ for the use of 1500_l._ But as a counterbalance for this
profit, he runs the risk of the falling of the subscription, which
involves him in a proportional loss if he sells out; or in the
inconvenience of advancing more money than he had to employ in that
way, in case he should prefer keeping his subscription for a longer
time, in hopes of a rise in the public funds. By this mode of
borrowing, government profits by the disposition of the people to
game. But this propensity has its bounds, and at present it is found
by experience not to exceed 60 000 lottery tickets, or 600 000_l._
Were, therefore, a subscription of 3 millions taken in upon the same
plan with the present of 1 500 000_l._ the regorging number of tickets
would so glut the market, that the whole would fall below the par of
their supposed value.

Here then was an outlet provided for more money than all that could regorge at home, viz. the payment of those foreign creditors, to whom the stock-holders were indebted. Besides this, the sale by government, of such tracts of land in the new acquired islands in the West Indies, provided another; money was even placed in the funds of France soon after the peace, until the adventurers were checked by the operations of the King’s council, in reducing both capitals and interest upon them, contrary to the original stipulations with the creditors. A lucky circumstance for Great Britain, as it forces, in a manner, all the money of the continent into the English funds, which equally remain a debt upon the nation, whether high or low in the market.

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CHAP. VI.
_State of the public Credit in France, their Debts, Funds, and
Appropriations, at the Peace 1763._

Were it as easy to get information of the political state of France as of Britain, one might attempt to give such a sketch of their affairs as we have now done of the other; but when we consider the lame accounts given by French authors who have made researches of that kind their particular study, it would be inconsiderate in a stranger ever to undertake a task so difficult.

In France, the finances are considered as a political arcanum, of great consequence to the state to conceal from vulgar eyes. It is not long ago, since the farmers of the greatest part of the revenue used regularly to burn their books at the end of the year, to prevent the King’s servants from knowing the state of the most essential part of his affairs. Cardinal de Fleuri abolished this custom, and obliged them to lay every thing open to his eyes.

I shall now endeavour to communicate, in as short and distinct a manner as I can, an idea of the present state of the French revenue; of the taxes from which it proceeds; of the manner they are administred; of the purposes to which they are appropriated; and of the state of the King’s debts at the end of the last war.

From this view we shall form a general notion of their public expences; of their public debts; and of what is most material, of the resources of that kingdom in time to come.

For this purpose, I shall divide the whole revenue of France, that is, all that is raised on the people, to whatever purpose it may be applied, into five branches; and after having first explained the nature of each, I shall give a general detail of them in their order.

The first branch is what is called the King’s ordinary revenue. This is composed of about twelve articles of permanent taxes, supposed to be sufficient for defraying the whole expence of government, civil and military, in time of peace.

The second is composed of all the extraordinary impositions which were laid upon the people, in consequence of debts contracted in the former war, ended in 1748.

The third, what was imposed during the last war, for the service of the state, and for paying off the debts then contracted.

The debts of France, contracted in periods anterior to those two wars, are charged on the ordinary revenue, as we shall presently see.

The fourth branch consists of two articles. The first comprehends certain perpetual taxes appropriated for certain state expences, not charged upon the ordinary revenue. The second, what is computed to be the expence of levying all the taxes, and also the profit of the farmers: or in other words, what the people pay more than the public receives from the hands of the tax-gatherers.

The fifth and last branch, comprehends the taxes paid to the court of Rome, to the clergy, and to the poor; with other duties belonging to private persons. Under one or other of these five branches, may be very properly arranged all the taxes paid by the French nation.

First general branch.

The King’s ordinary revenue, with the charges upon it for the year 1761.

Articles of revenue. Fr. money. Sterling ditto.
livres. l. s. d.
1. Domain (the King’s landed
estate) 6 000 000 266 666 13 4
2. Taille (the land-tax) 56 600 000 2 515 555 11 1¼
3. Double capitation (the
poll-tax) 53 200 000 2 364 444 8 10½
4. Ditto upon such as have
civil employments,
pensions, &c. 6 700 000 297 777 15 6½
5. 2s. in the pound on all
civil employments. 6 800 000 302 222 4 5¼
6. The mint, or coinage 2 400 000 106 666 13 4
7. Decimes and capitation of
the clergy 12 400 000 551 111 2 2½
8. Free gifts from the
states of Burgundy,
Provence, Languedoc, and
Brittany 10 000 000 444 444 8 10½
9. Paulette, or annual tax
upon hereditary offices 2 600 000 115 555 11 1¼
10. Tax on the Lutheran
clergy of Alsace 200 000 8 888 17 9¼
11. Regale, or the
sovereign’s right on
ecclesiastical benefices 1 400 000 62 222 4 5¼
12. General farms 112 500 000 5 000 000 — —
——————————— ————————————————————
Total of the ordinary
revenue 270 800 000 12 035 555 11 [31]1¼

Of this total the livres. l. s. d.
general farms
amount to 112 500 000 5 000 000 — —
And the other 158 300 000 7 035 555 11 1¼
branches to

The farms were increased
_anno_ 1762 by 11 500 000 511 111 2 2½
——————————— ————————————————————
Total ordinary revenue at the }
end of the war } 282 300 000 12 546 666 13 4
——————————— ————————————————————
Articles of Expence.
Houshold of the King and royal
family 9 400 000 417 777 15 6½
Ditto, their personal expence 4 600 000 204 444 8 10½
King’s stables and stud 2 500 000 111 111 2 2½
Hunting equipages 1 600 000 71 111 2 2½
Alms 600 000 26 666 13 4
Pay of the palace guards,
(_gardes de la porte_) &c. 3 300 000 146 666 13 4
King’s buildings 6 600 000 293 333 6 8
——————————— ————————————————————
Total expence of the court 28 600 000 1 271 111 2 2
——————————— ————————————————————
Pay of all the houshold troops 8 000 000 355 555 11 1¼
Pay of all the other troops of
France 48 000 000 2 133 333 6 8
Fortifications 6 000 000 266 666 13 4
Artillery for land service 6 600 000 293 333 6 8
Military gratifications, over
and above the pay 10 000 000 444 444 8 10½
Pay of general officers
commanding in provinces and
fortresses 2 000 000 88 888 17 9¼
Pay, &c. of the marechaussée 2 200 000 97 777 15 6½
Expence of prisoners of state 1 200 000 53 333 6 8
Ordinary expence of the navy 25 000 000 1 111 111 2 2½
——————————— ————————————————————
Total regular military expence
by land and sea 109 000 000 4 844 444 8 10
——————————— ————————————————————
Royal pensions 9 000 000 400 000 — —
The appointments of the King’s
ministers 310 000 13 777 15 6½
Ditto of the first presidents
of all the parliaments in
France, expence of criminal
prosecutions, and many other
articles of that sort 22 000 000 977 777 15 6½
Appointments of the venal
employments, of the robe,
treasurers, receivers,
comptrollers, &c. 10 000 000 444 444 8 10½
Bridges, highways, dykes, &c. 4 000 000 177 777 15 6½
For the royal academies 1 400 000 62 222 4 5¼
To the King’s library and
archives of France 1 800 000 80 000 — —
Extraordinary and casual
expence upon the two last
articles 400 000 17 777 15 6½
For lighting and cleaning the
city of Paris 840 000 37 333 6 8
Appointments of the secretary
of the cabinet council, for
couriers, and other expence 1 400 000 62 222 4 5¼
Ditto of ministers at foreign
courts 1 800 000 80 000 — —
——————————— ————————————————————
Total sum of this branch 52 950 000 2 353 333 6 8
——————————— ————————————————————
Interest at 2½ _per cent._
upon 990 000 000 livres, or
44 000 000_l._ sterl. of the
late King’s debts,
constituted after the
bankruptcy 1720 24 750 000 1 100 000 — —
Interest at 2½, upon 94
millions due to the company
of the Indies, upon their
old accompts 1720 2 350 000 104 444 8 10½
Farther allowed to the
company, for paying their
dividends 2 400 000 106 666 13 4
Annuities on lives constituted
during the last war 16 000 000 711 111 2 2½
——————————— ————————————————————
Total interest of debts 45 500 000 2 022 222 4 5
——————————— ————————————————————

Footnote 31:

These reductions of French money to sterling, are computed at the rate
of 22½ livres to the pound sterling. Hence 270 800 000 livres make 12
035 555_l._ 11_s._ and 1½_d._ sterling, or nearly 1¼_d._ as stated,
though the amount of the partial sums differs by 1_d._

This article of 16 millions of annuities on lives is the only charge cast upon the King’s ordinary revenue, in consequence of the last war.

Articles of revenue. Fr. money. Sterling ditto. livres. l. s. d. Recapitulation of the expences. Expence of the court 28 600 000 1 271 111 2 2½ Fixed military ditto, by sea and land 109 000 000 4 844 444 8 10½ Justice, pensions, &c. 52 950 000 2 353 333 6 8 Interest of debts 45 500 000 2 022 222 4 5¼ ——————————— ———————————————————— Total expence 236 050 000 10 491 111 2 2½ Total ordinary revenue at the end of the war 282 300 000 12 546 666 13 4 ——————————— ———————————————————— The first deducted from the } latter, Remains free } 46 250 000 2 055 555 11 1½ ——————————— ————————————————————

Besides the articles of expence here stated, there are many others, to which no limit can be set. The _comptant_, or the King’s private orders for secret service, and many different expences, form a great article. Subsidies also to foreign courts: in short, much more, in all human probability, is spent, than all the produce of this permanent revenue can answer. So that from this no relief from debts can be expected, except so far as it may be augmented by the falling in of the annuities on lives. But public debts are to be paid only by funds appropriated for that purpose: and were this revenue to be relieved of the whole 45 millions of interest charged upon it, I have little doubt but the King’s expence would augment in proportion.

I shall delay making any observation upon the nature of the impositions which produce this revenue, until we come to the subject of taxes, to which it naturally belongs.

Besides this ordinary revenue of the Kings of France, which (if we except 26 600 000 livres, or 1 182 222 _l._ 4 _s._ 5¼ _d._ upon the capitation, added on account of the war only for a time) may be considered as their civil list; there are other branches of revenue, which are to be looked on as extraordinary supplies, imposed for raising money in time of war, and for paying off the debts contracted, upon the return of peace. Of this nature are _dixiemes_ and _vingtiemes_; taxes very contrary to the spirit of the French nation, and to which they never have submitted without the greatest reluctance, and only on very urgent occasions.

The credit of France fell very low towards the end of the former war, which began in 1744, and ended in 1748. The parliament registred with great unwillingness every edict imposing new burthens. The _dixieme_ was a great augmentation of revenue, for the time it lasted; but being an imposition which the Kings of France never have been able to make perpetual, it could not be pledged for such large sums as are required in time of war, and which no nation, however wealthy, can furnish annually, as they are demanded.

To supply, therefore, the want of a fund to be mortgaged, and consequently the want of public credit, the King’s banker M. de Monmartel, with other men in business, joined their credit, and supplied the King’s extraordinary occasions. They opened a sort of bank _anno_ 1745, where they received money at ½ _per cent._ _per_ month, the principal payable on demand. This fund gained credit; payments being regularly made as soon as demanded.

Upon settling accounts after the peace, _anno_ 1748, the King was found indebted to this bank for a vast sum of money. In order to pay it, lotteries were set on foot. The tickets were given to the bankers, and they by the sale of them withdrew their own paper, which was circulating with very good credit on the exchange of Paris. In order to furnish a fund for this lottery, the King had interest with the parliament to get a twentieth penny established, or one shilling in the pound, upon all the revenues of private people in France, except the clergy, and some hospitals. The same was charged upon the industry of all corporations of trades and merchants; and to these was added a capitation upon the Jews.

This was thrown into what they call the _caisse d’amortissement_, or sinking fund; and appropriated for paying off the lotteries, and some of the antient debts which were to be drawn, for this purpose, by lot; and for other extraordinary expences incurred in consequence of the war. This tax was to subsist, I believe, till 1767. It was this _caisse d’amortissement_ which was shut up in 1759, by which step a mortal blow was given to French credit.

Besides this first twentieth penny, there were five other taxes imposed, and appropriated during a determinate number of years, not exceeding 15 in some, 12 in others, for paying off the debts contracted in the war ended 1748, and for some extraordinary expences of government.

These shall be specified in the following general view of this branch of the French revenue.

Second general branch.

Extraordinary taxes established after the peace of Aix-la-Chapelle, with their appropriations.

Articles of revenue. Fr. money. Sterling ditto.
livres. l. s. d.
The first twentieth penny on
all income 23 800 000 1 057 777 15 6½
Ditto upon tradesmen and
merchants incorporated 6 500 000 288 888 17 9¼
Ditto upon the Jews 1 400 000 62 222 4 5¼
—————————— —————————
Total of the twentieth penny,
which formed a sinking fund,
shut up in 1759 31 700 000 1 408 888 17 9¼
The farm of the posts and
_relais_ of France 6 000 000 266 666 13 4
Two shillings in the pound of
the capitation added to it 5 520 000 245 333 6 8
The farm of stamp-duties on
leather, and duties on
tanners bark 2 960 000 131 555 11 1¼
The farm of duties upon
gunpowder and saltpetre 2 988 000 132 800 — —
Two shillings in the pound of
the twentieth penny added 3 170 000 140 888 17 9¼
Total of this second branch
of }
French taxes } 52 338 000 2 326 133 6 8
—————————— —————————
Appropriations of this fund, as follows:
1. For paying, during 10
years, a part of the 990
millions, of livres, of old
Annuities, charged above on
the King’s ordinary revenue,
and bearing an interest of
2½ _per cent._ the yearly
sum of 5 000 000 222 222 4 5¼
2. To the India Company, in
discharge of a debt due to
them: for 12 years 2 000 000 88 888 17 9¼
3. For paying the prizes of
the bankers lotteries every
year as they are drawn: for
12 years 3 800 000 168 888 17 9¼
4. Towards making good
deficiencies upon the funds
appropriated for the war,
yearly, till paid 18 700 000 831 111 2 2½
5. Ditto upon the funds
appropriated to the new
_Ecole militaire_ 1 200 000 53 333 6 8
6. For payment of perpetual
annuities created during
last war 14 500 000 644 444 8 10½
7. For making good
deficiencies upon the
artillery and magazines,
during the war 1744: for 12
years, the annual sum of 1 800 000 80 000 — —
8. Ditto upon the article of
foreign affairs 8 690 000 386 222 4 5¼
Total appropriation 55 690 000 2 475 111 2 2½
—————————— ————————————————

This branch of revenue appears, by this state, to be totally appropriated to certain purposes.

Were appropriations adhered to in France, and could one be certain that debts are actually discharged, at the period appointed, in consequence of the appropriation for that purpose, we might form a better judgment of the _actual_ amount of the debts of France, than in fact any man can do who is not in the administration.

Of this second branch of taxes I consider the twentieth penny, the two shillings in the pound augmentation upon it, and a like augmentation upon the double capitation; amounting in all to above 40 millions a year, as a resource which France may have at all times, in cases of necessity; although I do not suppose it will be possible to establish them as a fixed revenue. They will probably, however, as matters stand, be continued, either in whole or in part, until the great load of debts, recently contracted, shall be considerably diminished.

As for the remaining sum, arising from the posts, leather, and saltpetre, these I consider as perpetual; because by their nature they are not burdensome to the people.

We are not to understand that the annual sum of five millions of livres, appropriated for paying off the capital of 990 millions of the old annuities, bearing 2½ _per cent._ stated in art. 1st, was intended to be applied to these capitals, at the rate they stand. In France it is supposed that he who gets 20 years purchase of the interest of his debt, is always fairly paid off; and people there are so fond of reimbursements, even at this rate of making them, that when, about the year 1755, a like scheme of paying off those old annuities was suggested, it was upon condition that every one having, for instance, an annuity of 100 livres, should, in order to be intitled to this reimbursement, pay to the King 20 years purchase of it, or 2000 livres ready money; and that being complied with, his contract was to be put into the lottery wheel, with all the rest subscribed for, and if it happened to be drawn, he was to receive 4000 livres; to wit, the 2000 he had paid down, and the other 2000 as the value of a capital of 4000 livres, at 2½ _per cent._

This every body must allow procures a wonderful facility in paying off debts. If the English creditors could be engaged to enter into the spirit of such reimbursements, government, I am persuaded, would not apply so closely as they do, to reduce the interest upon them; whereby a great distress comes upon poor widows and orphans, who have their all vested in the funds. This inconvenience is avoided in France: the poor are cherished by the comfort of high interest; the state is set free; and the creditors rejoice in getting back their money, in any shape whatever.

The war of 1756 breaking out, obliged the King to think of every expedient to increase his income. Had he set out by borrowing upon annuities for lives, at 10 _per cent._ and by mortgaging his ordinary revenue for the payment of them, his credit would have been more solid, and the plan of running in debt more systematical: but in the end, it would have involved him in the terrible dilemma of either making a bankruptcy, in order to re-instate himself in the possession of his ordinary revenue, or of making him depend more than he inclined upon his parliament; whose authority is absolutely necessary for laying a perpetual and regular imposition, which alone can form a solid basis of national credit.

He was therefore resolved, in one way or other, to increase the impositions on the people in the time of war, in order to avoid the consequences he foresaw from the loss of his fixed revenue.

The King’s ministers at this time could not convince the parliament of Paris, that in order to borrow money upon the best terms, it was necessary to have a sure fund for paying the interest of it.

It had been usual to borrow money, on pressing occasions, from the farmers of the revenue, bankers, and financiers, as they are called, at 7 and even 10 _per cent._ They understanding the chain of the affairs of France, used to obtain credit both abroad and at home, from people who would not lend directly to the King; although they knew at the time of the loan that the money was borrowed for his use. The reason was, that the King was under an absolute necessity to keep faith with this set of men, upon whom the credit of France has depended for many ages: and as the profits they used to make were very great, ministers knew, by a sort of instinct, when they had gained enough; and in clearing their accounts in the usual way, a sufficiency was left to them, to repay what they had borrowed from others.

Perhaps the parliament thought, and perhaps with reason, that in the main it was cheaper to borrow in this way, at 10 _per cent._ than in the English way, at 3 _per cent._ because of the great facility in paying off the debts which attended it; but this is only a conjecture. That there was however a contrast of sentiments between the parliament, and the minister of the finances at that time, who had contracted English ideas of credit, is most undoubted; and it was this contrast which brought on the bankruptcy in 1759, when the sinking fund was shut up against the creditors by an act of power. To judge of the sentiments of both parties with candour, let us then examine the plan of borrowing proposed by the one, and by the other.

The minister, M. de Silhouëtte, proposed to the King, to levy, as a solid fund of credit to borrow upon, a general subvention, as it was called, over all France; or in other words, to make the repartition of a large annual payment, over all the cities, towns, villages, and suburbs in France.

This was to be divided according to the supposed wealth and quantity of circulation every where. Every district was ordered to report to the King’s council their opinion concerning the particular mode of raising their proportional part of it, in the best way relative to their situation. This report the council was to examine, and to approve or amend the proposal given in, according to information.

This was perhaps the best plan of taxation, if properly executed, that ever has been thought of, for a nation already under a regular administration of government, and accustomed to pay considerable impositions.

It removes the inconvenience attending all general taxes, which never fail to affect unequally different places and districts. It admits of a prudent mixture of excises, with taxes upon possessions, according to the internal circumstances of every place. It confines them to towns, where alone all excises at least can be levied with propriety. It lightens the oppression of tax-gatherers; because the corporation may employ whom they will for that purpose. In a word, it is a tax administred with all the advantages of a farm.

This tax, the general subvention, after it had been imposed by edict, registred in a Bed of justice September 1759, fell to the ground, from the nature of the French constitution; because it could not be levied without a systematic administration, supported by the authority of the courts of law, to which the parliament would not give their concurrence, for a very plain reason.

The general subvention being very extensive, and calculated for a fund of credit to borrow upon, was, by its nature, of a species proper to become a perpetual tax, as all excises are. The parliament of Paris seemed to think it agreeable to the constitution, which they are sworn to maintain, to preserve at all times in their hands a certain power over the King’s purse, in order to prevent an extravagant minister from impoverishing the King and the kingdom at once, or running them into the inextricable confusion of an infallible bankruptcy.

This circumspection of the parliament was represented in another light at court; and odious parallels were drawn between what had happened in England about the middle of the last century, and what soon might be expected in France.

Upon such topics every one judges as he is affected. The minister was railed at by the parliament-party, in the most virulent manner. Who was in the right, and who was in the wrong, upon the general question, of the propriety of raising so large an imposition, to serve as a fund of credit, under a government like that of France, I shall not here examine. But that a solid fund should be provided, in one way or other, proportional to the actual deficiency of the annual supplies, and to what could not be raised within the year, for the uses of the war, was, I think, entirely agreeable to principles.

This the minister had proposed in the subvention, though perhaps the plan was too great; and the parliament, when they rejected the proposal, sensible that the exigencies of the state demanded a supply of money, proposed in their turn, as an equivalent for the general subvention, to coin for 600 millions of notes, which were to have the sanction of parliament for their fund of payment; but no provision was made for the ready circulation of them in the interim.

Here then is an example where the sentiments of the French nation were divided upon the principles of public credit. And this affords a good opportunity of reconciling them, and of confirming the doctrine we have been endeavouring to establish.

The minister felt the disadvantage of the King’s borrowing upon a lame security; he therefore proposed a solid and permanent fund of credit for performing the obligations to be contracted with the creditors.

The parliament, on the other hand, examined the situation of the people, who, they thought, were no longer in a capacity to pay the taxes already imposed; and therefore concluded, that it was unnecessary to establish any new one. They therefore proposed to augment circulation, by providing a means whereby alienations might be carried on, and by that they expected to render the taxes already imposed more productive.

Both parties were in the right, as commonly is the case in such disputes; but they did not perceive how their opinions could be reconciled.

Had circulation been facilitated by the establishment of a bank upon true principles, perhaps the taxes already imposed, might have produced a sufficient fund for carrying on the war, without the expedient of the general subvention.

But the manner proposed by the parliament to increase circulation, by paying with paper money, and not providing a fund for realizing it when it came to stagnate, was an expedient entirely delusive. The paper would soon have fallen to a great discount: the remembrance of the Missisippi would probably have been revived, which would have occasioned the locking up of the coin; and the kingdom might have been involved in the greatest distress and bankruptcy.

The minister should therefore have concurred with the parliament in a scheme for establishing a bank: the King might safely have entrusted the administration of it to parliament, and even have supplied coin from the royal treasury for circulating the paper. But the minister, I suppose, took it for granted, that taxes _would_ be paid, providing they were imposed; and the parliament, that the paper _would_ circulate, providing it was issued.

The reasonings I have ascribed to each party in this dispute, are not founded upon information: they are only natural conjectures which I form from the opposition of sentiments between men who were all, I suppose, well acquainted with the situation of France, and who respectively took part according to the combinations which occurred to them.

The remonstrances of the parliament at that time were filled with an enumeration of distresses, all of which are the necessary effects of a scanty circulation. In the King’s edicts there is strong reasoning upon the principles of public credit. The candour I feel in my breast, while I examine the merits of this important dispute, will I hope serve as an apology for all mistakes in point of exact information.

The result upon the whole was what might have been expected. The subvention was dropt, and the proposal of the paper was rejected by the King.

The middle term adopted by the parties, shewed however, I think, that in the main the minister had been in the right; because the taxes were increased and paid: had the paper been issued, the success, I am persuaded, would not have been favourable in proportion.

But instead of a permanent subvention, a tax of the most odious nature was established, which, from this very circumstance, there was little danger of seeing long continued.

In the preceeding year, a second twentieth penny upon possessions had been imposed, to which had been added 2 shillings in the pound of the tax itself; a new poll-tax upon certain classes of the people in proportion to the number of their servants; an additional duty upon the stamps upon silver and gold plate; higher duties on foreign manufactures imported; and 20 _per cent._ on all former duties on consumption. The second twentieth was to continue until two years after the peace; the other duties for eight years longer.

Notwithstanding this heavy load already laid upon property, the parliament, rather than consent to the subvention, agreed to impose a third twentieth penny upon possessions; and to render this tax more productive, additional poll-taxes upon place-men, &c. were comprehended in that edict. Thus ended the dispute: the minister was dismissed, and the edict for the general subvention was withdrawn.

Besides the second and third twentieth penny, several augmentations of revenue were obtained during the last war, which I shall presently mention, two of which, for their peculiarity, I shall briefly explain.

The clergy of France, strongly pressed by the King, supported by his parliaments, to give in a declaration of their income, in order to be taxed at so many shillings in the pound, like other subjects, after many evasions, at last succeeded in disappointing the scheme. They offered an extraordinary free gift equivalent to the two twentieths, to be paid annually until 1765, and this was accepted.

The ordinary free gift of the clergy is at the rate of a million and a half of livres a year; this they doubled and paid at the rate of three millions a year, which we may consider as two shillings in the pound of all the clergy possess in France, which makes their revenue to be about thirty millions a year, and I believe it does not far exceed it.

The other branch of revenue is something analogous to a circumstance in the history of English taxes: it was called an extraordinary free gift to be paid by every corporation in France. Charles I. had a very exact valuation put upon all England, when he proposed to levy ship-money. This was found so correct that it served for a basis to regulate the distribution of the sum of 100 000_l._ a year paid to Charles II. for his courts of wards and liveries[32].

Footnote 32:

Davenant’s Ways and Means, Article of Monthly Assessments.

In like manner the King of France had a very accurate estimate made of all France, when he formed his edict for a general subvention, which had pretty much the fate of the ship-money. And though the parliament refused their consent to the great subvention, they agreed to establish the epitome of it in August 1759: which see in the note[33].

Footnote 33:

This free gift was imposed upon all cities, towns, buroughs, villages,
and suburbs, in France. And those lying within the jurisdiction of
every Intendant were joined in one sum, leaving the repartition of
them to those magistrates, as the custom is.

For the generality of Amiens 153 300 For the generality of Orleans 356 000 For the generality of Paris 1 578 000 For the generality of Chalons 200 900 For the generality of Poitiers 265 200 For the generality of Soissons 60 700 For the generality of Tours 34 434 For the generality of Rochelle 131 800 For the generality of Bourges 105 600 For the generality of Moulin 91 770 For the generality of Riom 165 628 For the generality of Lyons 397 454 For the generality of Artois 150 000 ——————— Sterling. Sum total 3 690 786 £164 034 18 8

The duties imposed by this arret are to be levied upon all classes of
the people, nobility, commons, clergy, even nuns and monks; no
exception is made except in favour of hospitals for their own
consumption only.

This tax, small as it is, may be of infinite consequence in times to come. The great difficulty of raising taxes is in the beginning; and if the levying of this trifle in every city, town, village, and suburb, in France, be carefully conducted, with a view to subsequent augmentations, and if it be properly distributed upon every branch of consumption and revenue, nothing will be so easy to the King as, by his own private authority, to enforce a gradual augmentation of it, and perhaps in time to absorb in it, the whole, or at least the greatest part of the revenue of his kingdom.

Besides the two twentieths, and the free gift of the cities, several other taxes of less moment were either imposed, renewed, or continued for a longer term, and then sold for raising money for the service of the year, viz.

1_mo_, Five years of the free gift of the clergy of France, amounting to 15 millions, were paid down at once by that body.

2_do_, That of the clergy of Alsace, paid in the same way, for the same term, produced 3 millions.

3_tio_, A duty on firewood, &c. in the city of Paris, valued at 3 400 000 a year, sold for 7 years, for 10 millions.

4_to_, Another duty upon the consumption of eggs, butter, &c. valued at 2 400 000, sold for 15 years for above 30 millions.

5_to_, A like sum got from the farmers general, for allowing them to raise the price of their tobacco 10 _per cent._ for 10 years. The annual amount of this I do not know.

6_to_, And in the last place, the third twentieth penny, which produced 36 270 000 a year, was sold for the two years for which it was imposed, for 60 millions.

Thus, of all the impositions raised during the last war, the second twentieth, and an epitome of the subvention raised in all cities, towns, villages, and suburbs, in France, remain unalienated.

In order to throw all the light I possibly can upon the present state of that nation, I shall next briefly recapitulate the extent of the annual supplies raised for the service of the different years of the war, from 1756 to 1762 inclusive; in which I shall point out, as well as I can, how this third branch of revenue was appropriated.

It is in this manner only I can communicate to the reader what I can guess concerning the present state of that nation. Could we know, as with us, the amount of taxes, and outstanding debts at every period, that detail would be unnecessary.

The extraordinary grants of 1756, amounted to 121 millions, 5 377 777_l._ sterling.

In October 1755, the farms of almost all the taxes were renewed. Upon such occasions, it is usual for the farmers to advance sums in proportion to the extent of their farms, for security of the lease; for which advances the King, at that time, allowed them an interest out of their yearly farm-rent of 5 _per cent._ and the sums advanced were appropriated for the service of the year 1756. Here follow the sums advanced upon the several farms.

Fr. money. Sterling ditto.
livres. l. s. d.
1. Upon the general farms,
after repaying what had been
advanced upon the former
lease, nett into the royal
treasure 40 000 000 1 777 777 15 6½
2. Upon the farm of the posts
of France 3 000 000 133 333 6 8
3. Upon the farm of the stamps
upon leather 1 000 000 44 444 8 10½
4. Upon the farm of the
_paulette_ 1 000 000 44 444 8 10½
5. Upon the farm of duties on
gun-powder and salt-petre 1 000 000 44 444 8 10½
6. The farm of the market of
Poissi was sold for seven
years, for 15 000 000 666 666 13 4

This sum was the price of the
total alienation of the
duties collected in that
market for the whole time;
which duties should be
marked as a branch of
revenue; but as the annual
amount of them cannot be
ascertained, it is here
thrown in as an
extraordinary means of
supply arising from the sale
of a tax.
7. Besides those casual supplies
from the new farms, there was
levied this year, for the sale
of five years revenue of the
free gift of the clergy of
France, to 1761 exclusive 15 000 000 666 666 13 4
8. And for that of Alsace 3 000 000 133 333 6 8
9. Raised by a lottery, for which
the annual sum of 3 800 000 was
set apart for 11 years 32 000 000 1 422 222 4 5¼
10. And for the sale of the
duties upon firewood, &c. in
Paris, for 7 years 10 000 000 444 444 8 10½
———————————— ———————————————————
Total extraordinary supplies }
for 1756 121 000 000 5 377 777 15 5¾

The supplies for 1757, amounted
to 136 millions, £6 044 444
sterl.
1. Two lotteries, for which
were appropriated, for the
first, 3 800 000 during 12
years; and for the second, 4
000 000 during 11 years.
These sums were annually to
be drawn, and paid every
year; for which was paid to
the King, for the first, 36
millions; for the second, 40
millions; together 76 000 000 3 377 777 15 6½
2. The ordinary revenue was
charged with 6 millions of
life annuities, at 10 _per
cent._ sold for 60 000 000 2 666 666 13 4
———————————— ———————————————————
136 000 000 6 044 444 8 10½

The supplies for 1758, amounted
to 135 millions, £6 000 000
sterl.
1. The first was a loan of 40
millions, upon a perpetual
annuity of 5 _per cent._
proposed to be paid off by way
of lottery, at the rate of 3
200 000 yearly — — 40 000 000 1 777 777 15 6½
2. The King obliged those who
have hereditary offices
proportionally to purchase
additional salaries, to the
extent of 1 million a year,
at the rate of 20 years
purchase, or forfeit what
they had 20 000 000 888 888 17 9¼
3. The additional 10 _per
cent._ upon the price of
tobacco, was sold this year
to the farmers, for 30 000 000 1 333 333 6 8
4. The ordinary revenue was
charged with 3 600 000
livres, life-annuities, upon
two lives, at 8 _per cent._;
sold for the sum of 45 000 000 2 000 000 — —
———————————— ———————————————————
135 000 000 5 999 999 19 11¾

The supplies for 1759, amounted
to upwards of 194 millions, £8
652 923 sterl.
1. The first supply for this
year was the epitome of the
general subvention, called
an extraordinary free gift
from all the cities, towns,
burgs, villages, and suburbs
in France 3 690 786 164 034 18 8
2. 3 600 000 livres of
perpetual annuities,
borrowed upon the general
farms, at 5 _per cent._
until reimbursement, sold
for 72 000 000 3 200 000 — —
These are called the contracts
upon the farms; each one
thousand livres capital.
3. The free gift of the
clergy, for five years from
1761 inclusive, sold at once
for 16 000 000 711 111 2 2½
4. The second twentieth penny
produced for this year 35 000 000 1 555 555 11 1¼
5. Sold to the magistrates and
heads of colleges in some
towns in Flanders, some
branches of their own taxes,
for 8 000 000 355 555 11 1¼
6. The ordinary revenue was
charged with 3 millions of
annuities, called
_tontines_, sold for 60 000 000 2 666 666 13 4
———————————— ———————————————————
194 690 786 8 652 923 16 5

The supplies for 1760,
amounted to above 251
millions, £ 11 186 430
sterling.
1. The Paris-duties above
mentioned sold for 15 years 30 283 900 1 345 951 2 2½
2. The 3d shilling in the
pound sold for two years,
for 72 340 000 3 215 111 2 2½
3. The 2d shilling produced
this year 35 000 000 1 555 555 11 1¼
4. Raised by perpetual
annuities, at 3 _per cent._
secured on the King’s
ordinary revenue[34] 60 000 000 2 666 666 13 4
5. The free gift of the
cities, &c. 3 690 787 164 034 19 6½
6. By a lottery at 5 _per cent._
where the discredited paper
(the payment of which was
stopt, when the sinking fund
was shut up in 1759) was taken
in payment for one half, was
raised 50 000 000 2 222 222 4 5¼
7. Borrowed from the officers of the town-house of Paris, at 5 _per
cent._
secured on the ordinary revenue 380 000 16 888 17 9¼
———————————— ———————————————————
251 694 687 11 186 430 10 7¼

The supplies for 1761, exceeded
120 millions, £5 364 034 sterl.
1. Charged upon the ordinary
revenue, 200 000 livres a
year upon lives and other
annuities, at 10 _per cent._
in favour of the order of
the Holy Ghost, sold for 2 000 000 88 888 17 9¼
2. Borrowed on the duties upon
leather, at 3 _per cent._ 30 000 000 1 333 333 6 8

These were the annuities which
were ordered to be reimbursed
after the peace of 1763, at 20
years purchase; and which, I
suppose, had been subscribed
for, partly, in discredited
paper.
3. Charged on the ordinary
revenue, 4 millions a year,
for annuities at 8 _per
cent._ upon two lives, sold
for 50 000 000 2 222 222 4 5¼
—————————— ———————————————————
82 000 000 3 644 444 8 10½
4. Besides these sums, there
was the amount of the 2d
twentieth, and the small
subvention, or free gift,
which continued to be
applied to the current
service, as they had not
been sold off; _inde_ 38 690 787 1 719 590 10 8
———————————— ———————————————————
Total 120 690 787 5 364 034 19 6½