two evils; one is both remediless and hopeless; the other is at least a certain resource, and affords means to abridge its own duration.

It may however be supposed, that the capitals absorbed by public loans are only abstracted from labours the least productive, the least profitable, and the loss of which is most easily borne. In the case of equal profits, capitals are preferably employed in the most productive labours, because their benefit is the safest and most lasting. Hence it necessarily follows, that public loans affect only the least valuable and least productive capitals.

Moreover, the loss resulting from the disappearance of these capitals may in some degree be repaired by a · greater consumption of the produce of other branches of labour, by a greater activity, energy, and diligence, on the part of the labourers, and a greater economy in their consumption. The necessity of paying the tax imposed upon them to provide for the interest and the extinction of the public debt, must induce them to redouble their efforts for the purpose of raising the produce of their labour to the level of their new burthens.

Thus every thing induces the belief that public loans have a contrary effect to extraordinary contributions; the latter necessarily tend to diminish the produce of labour, because they deprive labour of its means; the former tend to increase it, by invigorating its energy consequently, the loss which results from public loans is the least considerable and the soonest repaired.

Adam Smith has attentively weighed most of these

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considerations; and yet they have not obtained his assent; but it may easily be perceived, that the motives of his hostility are but indirect attacks upon public loans, and do not prove that there exists a better mode of providing for the extraordinary expences of the state.

He asserts, that if extraordinary expences were "always defrayed by a revenue raised within the year, wars would in general be more speedily con“cluded and less wantonly undertaken. The people, feeling during the continuance of war the complete "burden of it, would soon grow weary of it."*

But this assertion is not supported by experience; war was never and no where subordinate to the means of carrying it on; the passions which cause it to be pursued, regard neither its cost, nor the calamities it inflicts. When the ordinary and extraordinary resources are exhausted, war is carried on by devastating other countries, and its calamities, far from hastening its termination, prolong its duration. It is only since public loans have provided for their expences, that wars have lost something of theirintensity and asperity, that they have been shorter, and, if I may be allowed to say so, less fatal to nations. Each additional year of • warfare renders every new loan more expensive, more difficult, and more ruinous. The belligerents are thus every year warned of the exhausted state of their finances; and this periodical warning forces them, though reluctantly, to think of peace, and to put an end to awar the expences of which are ruinous, and which almost Adam Smith's Wealth of Nations, London, 1805. Vol. iii, book

v. p. 446.

always disappoints the hopes of those by whom it is carried on.

Adam Smith objects also, that "it is absolutely "chimerical to suppose that national debts could "ever be fairly and completely paid by any savings " of the ordinary revenue.

This objection might have had some weight in the mind of Adam Smith, because sinking funds had made little progress in his time; their nature had not been thoroughly investigated, nor their effects appreciated ; and it was difficult to foresee the wonders they have since accomplished. It may fairly be supposed, that Adam Smith would have altered his opinion, had he known that, if after providing for the interest of a public loan, one per cent of the capital is placed at compound interest, the debt is extinguished in thirty-seven years.

This measure, the advantages of which I have set forth in another work,* had just then been represented by the Earl of Lauderdale as pregnant with the most fatal and most disastrous effects. Unacquainted with the noble Lord's publication, I could neither weigh the arguments on which his opinion is built, nor develope the motives which induced me to adopt a contrary opinion. I must therefore now perform the task which I could not attempt at that time; and, if I am not mistaken, the system of sinking funds will derive new lights from a controversy

Essai Politique sur le Revenue Public des Peuples de l' Antiquité, du Moyen Age, et des Siècles Modernes ; par Charles Ganilh : in two volumes. Paris, 1806.

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 ex"penditure; as this money would be expended in ar"ticles of consumption, as fast as assumed, the expence of the government would effectually coun"teract the effects of the parsimony it renders necessary and creates in the subject. The only mis"chief therefore that could ensue, would arise from "the extensive demand it must suddenly occasion "for one class of commodities, and from the consequent 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 mis"chief 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 accumu"lation, 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

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"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 ma"nufactured; that is, a portion of demand would at 66 once have been withdrawn from commodities of "British growth or manufacture.

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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 quantity of industry employed to bring any commodity to the market, naturally suits 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.

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"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 au"thority 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