a collective term, used for a considerable number of people inhabiting a certain extent of land, confined within fixed limits, and under the same government.

NATIONAL DEBT: the money owing by government.

Our limits permit us to give but a very general sketch of this subject: However, as it is of considerable importance to every inhabitant of these kingdoms, we shall endeavour to give as clear and comprehensive a view of it as the bounds necessarily prescribed us will admit. In order to this, it may not be improper to refer back to the times that have gone before us, that we may the better discover the nature of public revenues, the manner of their expenditure, and the causes of public debt.

In that rude state of society which precedes the extension of commerce and the improvements of manufactures, when those expensive luxuries which commerce and manufactures can alone introduce, are altogether unknown; the person who possesses a large revenue can spend or enjoy that revenue in no other way than by maintaining nearly as many people as it can maintain. Among our feudal ancestors, the long time during which estates used to continue in the same family, sufficiently demonstrates the general disposition of people to live within their income. Though the rustic hospitality constantly exercised by the great landholders may not to us in the present times seem consistent with that order which we are apt to consider as inseparably connected with good economy, yet we must certainly allow them to have been at least so far frugal as not commonly to have spent their whole income. Some part of this money, perhaps, they spent in purchasing the few objects of vanity and luxury with which the circumstances of the times could furnish them: but some part of it they seem commonly to have hoarded. They could not well indeed do any thing else but hoard whatever money they saved. To trade was disgraceful to a gentleman; and to lend money at interest, which at that time was considered as usury and prohibited by law, would have been still more fo. The same disposition to save and to hoard prevailed in the sovereign as well as in the subjects. Among nations to whom commerce and manufactures are little known, the sovereign is in a situation which naturally disposes him to the parsimony requisite for accumulation. In that situation the expense even of a sovereign cannot be directed by that vanity which delights in the gaudy finery of a court. The ignorance of the times affords but few of the trinkets in which that finery consists. Standing armies are not then necessary; so that the expense even of a sovereign, like that of any other great lord, can be employed in scarce anything but bounty to his tenants and hospitality to his retainers. But bounty and hospitality very seldom lead to extravagance: though vanity almost always does.

All the ancient sovereigns of Europe accordingly had treasuries. Every Tartar chief in the present times is said to have one.

In a commercial country abounding with every sort of expensive luxury, the sovereign, in the same manner as almost all the great proprietors in his dominions, naturally spends a great part of his revenue in purchasing those luxuries. His own and the neighbouring countries supply him abundantly with all the costly trinkets which compose the splendid but insignificant pageantry of a court. His ordinary expense becomes equal to his ordinary revenue, and it is well if it does not frequently exceed it. The amassing of treasure can no longer be expected: and when extraordinary exigencies require extraordinary expenses, he must necessarily call upon his subjects for an extraordinary aid. The late king of Prussia and his father are the only great princes of Europe who, since the death of Henry IV. of France in 1610, are supposed to have amassed any considerable treasure. The parsimony which leads to accumulation has become almost as rare in republican as in monarchical governments. The Italian republics, the United Provinces of the Netherlands, are all in debt. The canton of Berne is the single republic in Europe which has amassed any considerable treasure. The other Swiss republics have not. The taste for some sort of pageantry, for splendid buildings at least and other public ornaments, frequently prevails as much in the apparently sober senate house of a little republic as in the dissipated court of the greatest king.

The want of parsimony in time of peace imposes the necessity of contracting debt in time of war. When war comes, there is no money in the treasury but what is necessary for carrying on the ordinary expense of the peace establishment. In war an establishment of three or four times that expense becomes necessary for the defence of the state, and consequently a revenue three or four times greater than the peace revenue. Supposing that the sovereign should have what he fears ever has, the immediate means of augmenting his revenue in proportion to the augmentation of his expense; yet still the produce of the taxes, from which this increase of revenue must be drawn, will not begin to come into the treasury till perhaps ten or twelve months after they are imposed. But the moment in which war begins, or rather the moment in which it appears likely to begin, the army must be augmented, the fleets must be fitted out, the garrisoned towns must be put into a posture of defence: that army, that fleet, those garrisoned towns, must be furnished with arms, ammunition, and provisions. An immediate and great expense must be incurred in that moment of immediate danger, which will not wait for the gradual and slow returns of the new taxes. In this exigency government can have no other resources but in borrowing.

The same commercial state of society which, by the operation of moral causes, brings government in this manner into the necessity of borrowing, produces in the subjects both an ability and an inclination to lend. If it commonly brings along with it the necessity of borrowing, it likewise brings along with it the facility of doing so.

A country abounding with merchants and manufacturers, necessarily abounds with a set of people through whose hands not only their own capitals, but the capitals of all those who either lend them money or trust them with goods, pass as frequently or more frequently than the revenue of a private man, who without trade or business lives upon his income, passes through his hands. The revenue of such a man can regularly pass through his hands only once in a year. But the whole amount of the capital and credit of a merchant who deals in a trade of which the returns are very quick may sometimes pass through his hands two, three, or four times in a year. A country abounding with merchants and manufacturers, therefore, necessarily abounds with a set of people, who have it at all times in their power to advance, if they choose to do so, a very large sum of money to government. Hence the ability in the subjects of a commercial state to lend.

The progress of the enormous debts which at present oppress, and will in the long-run probably ruin, all the great nations of Europe, has been pretty uniform. In England, after the Revolution, when new connexions with Europe introduced a new system of foreign politics, the expenses of the nation not only in settling the new establishment, but in maintaining long wars, as principals, on the continent, for the security of the Dutch barrier, reducing the French monarchy, settling the Spanish succession, supporting the house of Austria, maintaining the liberties of the Germanic body, and other purposes, increased to an unusual degree: insomuch that it was not thought advisable to raise all the expenses of any one year by taxes to be levied within that year, lest the unaccustomed weight of them should create murmurs among the people. It was therefore the policy of the times to anticipate the revenues of their posterity, by borrowing immense sums for the current service of the state, and to lay no more taxes upon the subject than would suffice to pay the annual interest of the sums so borrowed; by this means converting the principal debt into a new species of property, transferable from one man to another at any time and in any quantity. This system indeed seems to have had its origin in the state of Florence, A.D. 1344; which government then owed about 60,000l. sterling; and being unable to pay it, formed the principal into an aggregate sum, called metaphorically a mount or bank, the shares whereof were transferable like our stocks, with interest at 5 per cent. the prices varying according to the exigencies of the state. National state. This laid the foundation of what is called the national debt; for a few long annuities created in the reign of Charles II, will hardly deserve that name.

Nations, like private men, have generally begun to borrow upon what may be called personal credit, without affixing or mortgaging any particular fund for the payment of the debt; and when this resource has failed them, they have gone on to borrow upon assignments or mortgages of particular funds.

What is called the unfunded debt of Great Britain, is contracted in the former of those two ways. It consists partly in a debt which bears, or is supposed to bear, no interest; and which resembles the debts that a private man contracts upon account; and partly in a debt which bears interest, and which resembles what a private man contracts upon his bill or promissory note. The debts which are due either for extraordinary services, or for services neither paid for nor paid at the time when they are performed; part of the extraordinary expenses of the army, navy, and ordnance, the arrears of subsidies to foreign princes, those of seamen's wages, &c., usually constitute a debt of the first kind. Navy and exchequer bills, which are issued sometimes in payment of a part of such debts and sometimes for other purposes, constitute a debt of the second kind; exchequer bills bearing interest from the day on which they are issued, and navy bills six months after they are issued. The bank of England, either by voluntarily discounting those bills at their current value, or by agreeing with government for certain considerations to circulate exchequer bills, that is, to receive them at par, paying the interest which happens to be due upon them, keeps up their value, and facilitates their circulation, and thereby frequently enables government to contract a very large debt of this kind. During the great recoinage in King William's time, when the bank of England thought proper to put a stop to its usual transactions, exchequer bills and tallies are said to have sold from 25 to 60 per cent, discount owing partly, no doubt, to the supposed infallibility of the new government established by the Revolution, but partly too to the want of the support of the bank of England.

When this resource is exhausted, and it becomes necessary, in order to raise money, to assign or mortgage some particular branch of the public revenue for the payment of the debt, government has upon different occasions done this in two different ways. Sometimes it has made this assignment or mortgage for a short period of time only, a year or a few years, for example; and sometimes for perpetuity. In the one case, the fund was supposed sufficient to pay within the limited time both principal and interest of the money borrowed: In the other, it was supposed sufficient to pay the interest only, or a perpetual annuity equivalent to the interest; government being at liberty to redeem at any time this annuity upon paying back the principal sum borrowed. When money was raised in the one way, it was said to be raised by anticipation; when in the other, by perpetual funding, or, more shortly, by funding.

In the reign of King William, when the debt began to be amassed, and during a great part of that of Queen Anne, before we had become so familiar as we are now with the practice of perpetual funding, the greater part of the new taxes were imposed but for a short period of time (for four, five, six, or seven years only), and a great part of the grants of every year consisted in loans upon anticipation of the produce of those taxes. The produce being frequently insufficient for paying within the limited term the principal and interest of the money borrowed, deficiencies arose; to make good which it became necessary to prolong the term.

On the 31st of December 1697, the funded and unfunded debts amounted to £21,515,742l. 13s. 8½d.; at the same time, in 1714, they were £33,681,076l. 5s. 6½d. In 1755, before the breaking out of the war, they amounted to £72,289,673l.; and on the 5th of January 1763, at the conclusion of the peace, they had accumulated to £122,603,336l. 8s. 2½d. of funded debt, and of unfunded £13,027,589l. 2s. 2½d. more. In 1775, they were very nearly 130 millions; and the last American war added upwards of 120 millions more to that enormous sum: to pay the interest of which, and the charges of management, amounting annually to nearly eight millions and a half, the extraordinary revenues elsewhere enumerated * (excepting only the land-tax and annual malt tax) are in the first place mortgaged and made perpetual by parliament. Perpetual we say; but still redeemable by the same authority that imposed them; which, if it at any time can pay off the capital, will abolish those taxes which are raised to discharge the interest.

By this means, then, the quantity of property in the kingdom is greatly increased in idea compared with former times; yet, if we coolly consider it, not at all increased in reality. We may boast of large fortunes, and quantities of money in the funds. But where does this money exist? It exists only in name, in paper, in public faith, in parliamentary security: and that is undoubtedly sufficient for the creditors of the public to rely on. But then what is the pledge which the public faith has pawned for the security of these debts? The land, the trade, and the personal industry of the subject; from which the money must arise that supplies the several taxes. In these, therefore, and these only, the property of the public creditors does really and intrinsically exist; and of course the land, the trade, and the personal industry of individuals, are diminished in their true value just so much as they are pledged to answer. If A's income amounts to 100l. per annum; and he is so far indebted to B, that he pays him 50l. per annum for his interest; one half of the value of A's property is transferred to B the creditor. The creditor's property exists in the demand which he has upon the debtor, and nowhere else; and the debtor is only a trustee to his creditor for one half of the value of his income. In short, the property of a creditor of the public consists in a certain portion of the national taxes; by how much therefore he is the richer, by so much the nation, which pays these taxes, is the poorer.

The only advantage that can result to a nation from public debts, is the increase of circulation, by multiplying the call of the kingdom, and creating a new species of currency, assignable at any time and in any quantity; always therefore ready to be employed in any beneficial undertaking, by means of this its transferable quality; and yet producing some profit even when when it lies idle and unemployed. A certain proportion of debt seems to be highly useful to a trading people; but what that proportion is, it is not for us to determine. This much is indubitably certain, that the present magnitude of our national encumbrances very far exceeds all calculations of commercial benefit, and is productive of the greatest inconveniences. For, first, The enormous taxes that are raised upon the necessaries of life for the payment of the interest of this debt, are a hurt both to trade and manufactures, by raising the price as well of the artificer's subsistence as of the raw material, and of course, in a much greater proportion, the price of the commodity itself. Nay, the very increase of paper circulation itself, when extended beyond what is requisite for commerce or foreign exchange, has a natural tendency to increase the price of provisions as well as of all other merchandise. For as its effect is to multiply the cash of the kingdom, and this to such an extent that much must remain unemployed, that cash (which is the universal measure of the respective values of all other commodities) must necessarily sink in its own value, and every thing grow comparatively dearer. Secondly, If part of this debt be owing to foreigners, either they draw out of the kingdom annually a considerable quantity of specie for the interest; or else it is made an argument to grant them unreasonable privileges in order to induce them to reside here. Thirdly, If the whole be owing to subjects only, it is then charging the active and industrious subject, who pays his share of the taxes to maintain the indolent and idle creditor who receives them. Lastly, and principally, It weakens the internal strength of a state, by anticipating those resources which should be reserved to defend it in case of necessity. The interest we now pay for our debts would undoubtedly be sufficient to maintain the most vigorous war that any national motives could possibly require. If indeed our ancestors in King William's time had annually paid, so long as their exigencies lasted, a far less sum than we now annually raise upon their accounts, they would not in time of war have borne so great burdens as they have bequeathed to and fettered upon their posterity in time of peace; and might have been eased the instant the exigence was over.

On the whole, then, the national debt is undoubtedly a subject of vast importance, and as such it has been always considered; for much has been said and written upon it, and many schemes have been proposed at various times and by various persons for gradually removing it, it being considered by the most judicious as a most pernicious encumbrance to a commercial country. Some, we are aware, think it of vast utility; but this opinion is too eccentric, and in our estimation too feebly supported, to be convincing. The public debt is indubitably a great grievance; and every lover of his country must surely wish to see it removed: the period, however, when this blessing shall take place, if indeed it ever arrive, must at least be very distant.

We refer such as wish for farther information on this interesting topic to those who have treated of it at full length, as Smith in his Wealth of Nations, and Sir John Sinclair in his History of the Revenue. The writings of Dr Price likewise deserve considerable attention, especially as one of his plans for the reduction of the debt has in fact been adopted, and in consequence established, by the legislature: His three plans may be found in a pamphlet by William Morgan, entitled, A Review of Dr Price's Writings on the Subject of the Finances of this Kingdom.