Another fallacy has been often broached of late years by a small party in the country, namely, that the general pros perity of the state would be advanced by the abolition (unsatisfied) of the public debt ; and as in all matters of public policy the prosperity of a great majority should be considered before that of a part, a sound policy requires that faith should no longer be kept with the public creditor. The proposition is here put in plainer terms perhaps than its advocates would use, but this is the substance of their argument.
It has been shown that the money in respect of which the claims of the public creditors have arisen is spent, and that most of those creditors being part of our selves, living and expending their in comes among us, the evil effects of the debt are limited to the loss of the capital which otherwise would have formed part of the national wealth, and would have been productively employed. But the capital thus lost has all been advanced in times of necessity, in full faith that the conditions promised would be performed by the borrowers ; and it would indeed be a day of disgrace that should sanction the securing of any advantage, however great, through the dishonest breach of those conditions. But would any such advantage as has been supposed follow from so dishonest a step? Those who contend that the great majority of the nation would be benefited by the unsatis fied extinction of the national debt, and would urge its extinction on this ground, as being precisely the same ground on which many enactments are made, ought to show that the loss occasioned by such extinction will be confined to the imme diate losers, to the comparatively small number of public creditors. But it is easy to show that the loss would not be confined to the immediate losers ; and this being the case, it is impossible to prove that such extinction will really benefit a great majority. It might happen that it would in its results benefit only a small minority of the actual generation, or even nobody at s$1; and the allegation of this possible result is a sufficient an swer to the assumption made by the advocates of unsatisfied extinction, that the loss incurred would be confined to the immediate losers, and that there would be a real gain to the great majority of the nation. Such an unsatisfied ex tinction would in effect be a dissolution of innumerable contracts, on the faithful performance of which depends the happi ness of many persons who are not public creditors. It is hardly necessary to remark
that the nation would not afterwards find it easy to borrow money from individuals on any reasonable terms for any purpose, however generally useful, or any public necessity, however urgent.
The contracting of the National Debt cannot be said to have been began before the Revolution of 1688. Even for some few years after the accession of William and Mary the borrowings of the govern ment were for short periods only. The first transaction of this kind of a per manent character arose out of the char tering of the Bank of England in 1693, when its capital of 1,200,0001. was lent to the public at 8 per cent. interest. A power of repayment was reserved on this occasion by the crown, but there was no corresponding right of demanding pay ment on the part of the bank, So cautious was the parliament in those days of burthening future generations for the exigencies of the present moment, that when the annual income was inade quate to meet the charges of the foreign wars in which the country was engaged, and it became necessary to borrow the deficiency, annuities were granted, not in perpetuity, but for lives and terms of years, the produce of certain duties being mortgaged for their discharge.
This cautious proceeding could not be long continued. The expensiveness of the wars in which the nation was engaged ut the end of the seventeenth century made it necessary to incur debts beyond the means of their prompt redemption, and at the peace of Ryswick, in 1697, the debt amounted to 214 millions. During the next ten years, although the country was again involved in a continental war, its amount was reduced to little more than 16 millions, and the greatest efforts were made to raise money without im posing any lasting burthen on the people. These efforts indeed soon found their limit, and at the accession of George 1. in 1714, the debt had accumulated to the amount of 54 millions, an amount which excited great uneasiness and caused the House of Commons to declare itself under the necessity of making efforts for its reduction. In 1717 the debt amounted to 48} millions, and the annual charge in respect of the same to 3,117,296/. A great part of this debt consisted of an nuities granted for 99 years, the money obtained for which had varied from 15 to 16 years' purchase.