undertaken for the interest of the science and the benefit of truth.

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"If fifteen millions sterling a year extraordinary," says the noble Earl, were levied by the government "from the revenue of its subjects, to defray the charge of warfare, or any other extraordinary expenditure; as this money would be expended in articles of consumption, as fast as assumed, the 66 expence of the government would effectually coun"teract the effects of the parsimony it renders

necessary and creates in the subject. The only "mischief therefore that could ensue, would arise from "the extensive demand it must suddenly occasion "for one class of commodities, and from the conse

quent abstraction of so large a portion of the revenue "of the subjects from the acquisition of those articles "in which it is usually expended;—a mischief in "itself no-wise trifling, as recent experience has taught.

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Very different, however, must have been the effect of "raising fifteen millions for the purpose of accumula

tion, or of forcibly converting fifteen millions of "revenue into capital. In this, as in the former case, "there would have ensued all the mischief occasioned

by abstracting a portion of demand represented by "fifteen millions a year from the commodities which the subjects were accustomed to acquire with this part of their revenue: but in this case there would "unfortunately have existed no extraordinary expen"diture to counteract the full effects of this forced parsimony; for it would have been difficult to per"suade the proprietors of stock, from whom such

"extensive purchases would have been made by the "commissioners of the sinking fund, all at once to

spend, as revenue, that which habit had taught "them to regard as capital; or, in other words, all " at once to ruin themselves in order to counteract the "bad effects of this miserly policy in government.

"Unless, however, the stock-holder could have "been persuaded thus to expend his capital, fifteen "millions a year less must have been expended in "the different articles the country produced or "manufactured; that is, a portion of demand would "at once have been withdrawn from commodities of "British growth or manufacture.

.

"But if it is true, (which all writers on political

economy, however much they may differ on other "subjects, concur in asserting,) that the whole quan

tity of industry employed to bring any commodity "to the market, naturally saits itself to the effectual "demand, and constantly aims at bringing the pre"cise quantity thither that is sufficient to supply the "demand; it follows, that this diminution of demand "must occasion a similar diminution of the produc❝tions of the country.

"Though the opinions of great and eminent men "are here referred to for establishing the position, that

a diminution of demand must occasion a diminu"tion of produce, that is, of wealth; it is not on autho"rity alone that this inference rests; reason also "shews that it must be so. It follows, therefore, that "three hundred millions (calculating the value of "the fifteen millions of produce which must have " been annihilated, at twenty years purchase) of real

"wealth would have heen extinguished before this accumulating fund, with all its boasted activity, "could have, in all probability, converted one hun"dred millions of the revenue into capital.

"Dismal as the consequences of this experiment "must have been in diminishing the re-production “and revenue, there appear, on the other hand, no "good effects likely to have resulted from it in rela"tion to the capital of the country, to counteract its " evil effects on the revenue.

"The stockholders, who would have been tempted "to sell by the offer of the commissioners of this sinking fund, would, it is evident, have had in their possession fifteen millions of capital, upon the employment of which, in such a manner as to "return a profit, their income, that is, their subsistence, must have depended. To acquire a profit, we know that capital must be applied to supplant

st

or perform a portion of labour in producing or

giving form to commodities; and it is hardly pos"sible to suppose, that there could have existed any

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new channels of so employing a capital, at a moment when there was forcibly created a dimi"nution of demand for commodities to the extent of "fifteen millions.

"So far from its being reasonable to suppose there “could have existed, under such circumstances, any "opportunity of employing an additional quantity "of capital, it is certain, that so great a diminution of demand must have thrown out of employ some of that capital which was useful in supplanting labour, "in the progress of bringing to market those commo

"dities for which there could no longer have sub"sisted a demand.

"The only means, therefore, those stock-holders "could have had of forcing the capital in their hands "into employment, must have been by offering to

supplant labour at a cheaper rate than that at which "it was antecedently performed. A competition "would thus have arisen; the profit of capital must "have been diminished; the interest paid for stock

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or money must have fallen; and, of course, the "value of fixed annuities, or government securities, "must have risen; and this must have continued

progressively till capital became so abundant and its profits so diminished, that the proprietors would "have been induced to remove it to other countries, "where higher profits might be made: and France would inevitably have been amply supplied with

t

capital, the want of which is the great drawback "on her industry.

"Neither is it theory alone which points out these "evils as the necessary result of such a measure; for, as far as practice gives us an opportunity of judging, the accuracy of the inference is uniformly con"firmed by experience.

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"When Pope Innocent XI. reduced the interest "of his debt from four to three per cent, and "employed the sum sved to accumulate, but a "short time elapsed till the new three per cent fund "sold at 112. In like manner, when the interest "of the national debt of England was reduced, in 1717, from six to five per cent, and the saving "devoted to accumulaton; the consequence was,

"that, in 1727, from the rise of public securities, "there was an opportunity of again reducing the "interest from four to three per cent, and of apply

ing an additional sum to accumulate. This of "course produced another rise, and to such a degree, "that the sinking fund was now grown to a great "maturity, and produced annually about 1,200,000l. "and was become almost a terror to all the individual "proprietors of the public debt. The high state of "credit, the low rate of interest of money, and the "advanced price of all public stocks and funds above par, made the great monied companies apprehend "nothing more than being obliged to receive their "principal too fast; and it became almost the uni"versal consent of mankind, that one million a year

r

was as much as the creditors of the public could "bear to receive in discharge of part of their principal."*

Such are the arguments on which Lord Lauderdale rests his opposition to the system of paying off public debts by means of a sinking fund.

The first reflection to which the noble Earl's arguments give rise is, that they triumphantly refute the principal objection of Adam Smith against public loans. He considered the re-payment of national debts by savings from the ordinary revenue, as fanciful and impossible; while Lord Lauderdale proves not only that these savings may discharge the whole

* The Earl of Lauderdale's Inquiry into the Nature and Origin of Public Wealth, Chap. iv, page 244, and following,