amount of the interest of their capital. As for the sixth million, which forms a part of their capital, they probably seek a new employment for it, which restores the interest of which the sinking fund deprived them. Such new employment is easily found, since the hundred millions, consumed by the loan, have diminished the circulating capital by that sum, and left a void in circulation. The gradual return of the extinguished debt into circulation covers part of the loss or privations suffered through the abstraction of the borrowed hundred millions, and insensibly restores the natural course of circulation.

Thus it is evident that the sinking fund, both in its principle and in its results, produces none of the fatal effects which are ascribed to it by the Earl of Lauderdale.

1. It does not abstract a part of the general revenue from consumption; neither does it diminish re-production in the same degree.

The economy which it occasions, is in proportion to the extraordinary consumption effected by the loan. as one to an hundred, or at the utmost as one to fifty : it, therefore, can neither impede nor diminish production, since it feels already a void of ninety-nine, or at least, of forty-nine millions. When the necessity to produce is as one hundred, the sinking fund, which diminishes it one hundredth part, is neither felt nor perceived.

Lord Lauderdale, and many other estimable writers, have been misled by the supposition that production in England is on a level with consumption, that the fixed capital in England is as considerable as

it ought to be, and the circulating capital proportioned to the wants of consumtion and labour; and that the sums repaid by means of the sinking fund are a surplus which cannot find any employment in the country without deranging its general economy.

But I think they may be easily undeceived. Although the sinking fund is considerable in England, it is but a fifty-second, or thereabouts, of the national debt, and, consequently, returns to the circulating capital but a fifty-second part of the funds which had been abstracted from it. To render this return of a fifty-second part of the national debt to the circula ting capital burthensome to the nation, the loss of the five hundred eighty millions sterling borrowed by the English government, and consequently abstracted `from the circulating capital, must be supposed to have been recovered by more labour and economy; the national debt of England at this present day must be supposed to be a clear gain to the capitalists to whom it belongs, and the revenue which serves to pay its interest and to accumulate for the extinction of the debt, must be supposed to become absolutely free or unnecessary when the national debt is paid. Such an increase of wealth in the short space of less than a century, would be an inconceivable phenomenon and beyond all belief. In vain it is urged that, in spite of the loans and the enormous capitals which they have abstracted from the circulation of the country, the circulating capital is adequate to all the branches of labour and to all the wants of circulation; which would not be the case, if the capitals consumed by the loans had not been reproduced by labour and

-

economy. This fact, which appears conclusive and decisive, is however but specious and delusive.

When England opened her first loans, she gave to those who lent her their money a credit in the great book, which guaranteed their claims as creditors. This credit in the book certainly did not re-pay the money that had been lent; England always continued debtor to its amount. She never began to pay

her creditors but when she created a sinking fund, and she has liberated herself only as far as she has been allowed to do so by this fund.

Had things continued in this state, it would be obvious to any one, that haying by her loans consunied five hundred eighty millions sterling of the circulating capital, and re-imbursed only as much as the sinking fund has allowed her to re-pay, there must be in the circulating capital a deficiency paramount to the national debt: excepting however the ameliorations which that capital has gained from labour and economy.

How then can it be supposed, that there is no void in the circulating capital, that the consumption of the five hundred eighty millions sterling which constituted part of it has been repaired, and that an augmentation of this circulating capital would be burthensome to the country? This is one of the greatest mysteries of political economy and of the science of circulation.

The written acknowledgment given by the state to every one of its creditors has replaced the circulating capital absorbed by the loans. Every bearer of such an acknowledgment offered it in case of need, as he would have offered that part of the circulating capital

with which he had parted, to lend it to the state; and this acknowledgment every-where obtained the same value. Thus an acknowledgment, containing the very proof of part of the circulating capital having been consumed, was every-where received, like any other actual part of the circulating capital, or as if it had represented a still existing circulating capital. appears inconceivable, and yet it is so.

This

To increase the delusion, the Bank provided the money for these acknowledgments, and, by throwing them in small shares or into general circulation, it has altered their nature even to the most clear-sighted eye. The present circulating capital of England is thus composed in part of her national debt, that is to say, of the acknowledgments which attest the actual consumption of part of the circulating capital. This is so true, that if it were possible for the English government to re-imburse the whole of the national debt, and receive from the hands of its creditors the acknowledgments which it has given them; if the public creditors in their turn paid their creditors and withdrew their notes; if, in short, a general and complete liquidation took place of the public and private debts in England, the circulating capital would only be altered in its nature, without being increased by one farthing. Instead of the public and private paper of which that circulating capital consists, it would contain its real value, and nothing more. There would be no alteration in its quantity, and consequently circulation would continue in its habitual state.

Hence it follows, that as the sinking fund effects anly in fifty-two years what I have just supposed to

"

be effected in an instant, nothing can result from it but a gradual and successive diminution of the acknowledgments of the public debt, a return to the circulating capital of the funds that had been abstracted from it, and the re-establishment of circulation in real and effective values.

Το say that the sinking fund increases the circulating capital at the expence of consumption and re-production, is tantamount to supposing that the circulating capital consists only of real values, and that the acknowledgments of the national debt do not form any part of it; which supposition is altogether inadmissible; or it is like maintaining that a private individual, who is re-paid what had been borrowed of him, is twice as rich as he was before this re-payment; it betrays, in short, the most complete ignorance concerning the nature of loans, of a sinking fund, and of circulation.

2. The assertion, that extinction of the public debt by a sinking fund depreciates capitals and forces them abroad, is equally incorrect.

The circulating capital continues the same before and after the extinction of the debt: the difference is only in the objects of which the circulating capital consists. Before the extinction it consisted of paper, which after the extinction is replaced by the same sum in metallic currency. The circulating capital receives no increase; and hence it is difficult to understand how it can be depreciated, and have more or less value than it had before the paper was converted into a metallic currency.

But might it not be objected, that since the acknow, ledgments of the debt are sufficient for circulation,