demand for and consequently the quantity of productive industry in all its branches, which would also lessen the annual accumulation of national capital, from whose income alone the public revenue can be effectually and permanently drawn. For instance, say a whole nation consumes less food, less clothing, less of the conveniences and comforts of life than it has hitherto done; the inevitable effect must be that less land would be cultivated, as less would be sufficient to supply the diminished demand for food; thus would agriculture be discouraged;-less manufacturing industry would also be put in motion, because less would be wanted to furnish the diminished demand for clothing; thus would manufactures languish and decay;-less commercial enterprise would also be afloat, since less would be needed to supply the contracted demands of a narrower market for its commodities; thus would trade be curtailed in its operations. But when a nation once becomes retrograde in its three great branches of productive industry, agriculture, manufactures, and commerce, it hastens forward to destruction; the sources of public revenue are dried up; the population diminishes; the government loses its energy; the spirit of the people evaporates into indolence and weakness; and the whole community silently and without resistance sinks into the arms of a foreign foe or of domestic despotism. The late and present condition of Holland is a striking illustration of these melancholy truths.

The only question then is between the comparative merits of the other two systems of finance, namely, a taxation which shall raise the supplies within the year, or a contract which shall procure the extraordinary sums by loan, which of these is the safest, the easiest, and the most consonant to the natural order of developing the circumstances and the strength of a nation?

The expenses of every individual are proportioned to the ordinary state of society in which he lives. He squares his enjoyments by his common rate of gain, and by the common amount of the contributions which he must pay to the public service. The bulk of the community, the middle orders, on whom the chief weight of all taxes must ultimately fall, are peculiarly unable to increase their contributions on any sudden emergency. He who could hardly pay £50 last year would have nothing to live upon if the government were to take from him £150 or 200 this year. He must either leave the country, hide his property, encroach on his capital, or run in debt. If he encroach on his capital, he is less able to pay taxes next year even to the ordinary amount; and no prudent government would encourage a scheme which would make all the individuals in the community run in debt on their own separate accounts, admitting that they could all give such security as would induce money-holders to trust them. Besides, what becomes of the large class of annuitants in every country; laborers of every sort who have little or no stock or capital on which to encroach, and can give little or no security to the lenders; and traders on commission whose gains are so little proportioned to their capitals, but whose contributions ought to bear some proportion to their gains ?

The proper fund of all taxation is not the general capital of the community, and consequently not that part of the revenue which is necessary for the support of the proprietor and his capital, and which if touched must ultimately throw the burden on the capital. The only fund from which taxes can be safely drawn is the revenue reserved for consumption; and the question is,-How shall this be effected so as to increase at will the public revenue without injury to the wealth of the nation, or injustice to individuals?

The immediate effect of every war, civil or external, and in a less degree of all other emergencies which happen to a nation, is to obstruct the ordinary employment of capital; to throw a quantity of stock which was formerly profitably invested out of its place; and to prevent the new accumulations of stock from finding new channels of employment. A great mass of capital is thus collected in the hands both of the mercantile and manufacturing part of the community, shifting and floating about, ready for any speculation or profitable use. This part of the national stock naturally seeks the service of the public; it can be employed in no other way, and should be used by the state. The owners are always willing to give the use of it to government for a certain premium, and when the crisis which occasions the extraordinary expenditure is past, they have the opportunity of re-investing their capital in trade; partly as it may be gradually paid back to them by the state, and partly as they may transfer their securities to a class of proprietors always increasing in every wealthy country, namely, the monied interest, who are constantly drawing together floating capital by profitable speculations and have no means of employing it except in loans. The government is the best creditor for all these persons, at least in ordinary cases its security is the most tempting and the most transferable; so that upon any sudden call for the stock, they can transfer the security, and use their capital. Hence the public funds afford a sort of entrepot for capital; a deposit where it is naturally collected in an useful employment, (inasmuch as wars are necessary evils) ready at the same time for other services, and capable of being transferred in a moment to fill those blanks which accident may occasion. The natural order of things prescribes this arrangement : it is the mode of raising large sums least noxious to the state, and it throws the expenses of the emergency

entirely upon the surplus revenue of the community; first, by the yearly interest paid for the use of the money borrowed; and secondly, by the provisions for gradual payment, which a wise nation will always make part of its funding system.

The wants of the state, whatever be their extent, must be fully supplied; and as this can only be done by contributions levied on the internal resources of the country, the skill of the financier must be displayed, not in really lightening a load which must be borne, but in rendering it more tolerable by a more equal distribution of its pressure. This must be done either by borrowing money or by paying debt; that is to say, either relieving the existing generation by drawing on the more ample resources of a future age; or relieving posterity at the expense of the existing generation. If the expenditure of a state be at any time increased much beyond its usual rate, from the frequent occurrence of war, or from any other unforeseen emergency, it would be unjust to load one generation beyond its strength, and entirely to relieve posterity from burdens imposed as much for their benefit and security as for the welfare of their fore-fathers. It would also be inexpedient; because the weight which, if laid all at once, would crush the prosperity of a country, may be so divided and lightened by being gradually increased, as to allow its growing resources freely to expand; and the fund from which future exertions must be made to be proportionally enlarged, so as to sustain with ease the pressure of even heavier demands.

It is the great and distinguishing excellence of the funding system, that it enables the statesman to levy contributions on future ages; and thus furnishes him with resources for the execution of great designs. And by instituting at the period when the debt is first contracted a process for its final redemption, although he freely anticipates the resources of poste

rity, he provides at the same time the certain means of their future relief. The object of the funding system, is to lighten the burden of a heavy expenditure by extending it over several generations; while the system of sinking funds fixes a period for the discharge of these incumbrances; and thus prevents any one generation from being overwhelmed by the consolidated debt of ages. By invariably combining the expedient of borrowing with the practice of establishing a sinking fund for the redemption of the debt, the extremes of two opposite systems are tempered and balanced; we are enabled to avoid the inconveniences peculiar to each, and to avail ourselves of all their advantages without incurring any of their evils.

That the funding system does not weaken the government which resorts to it, may be easily shewn. The very pressure of necessity, and the burden of taxation incident to the funding system, stimulates the industry of a people to a greater and a more constant degree of exertion than where no such pressure exists. A far greater quantity of labor is produced by a given number of people in Britain under the stimulus of taxation, than is produced by the same number of people similarly employed in any other country under the cope of heaven. It is admitted by Mr. Hume, in his " Essay on Taxation," that where taxes are laid on judiciously, the poor increase their industry, perform more work, and live better than before; become more laborious and more opulent than others who enjoy the greatest physical advantages of soil and climate. Mr. Burke says emphatically that "the moment a man is exempted from the maintenance of the community, he is in a sort separated from it, he loses the place of a citizen." See M. Garnier's "View of the doctrine of Smith compared with that of the French Economists," for ample proofs of the mode in which indirect taxation quickens and increases the industry of a people.