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their forefathers. It would be also very inexpedient; because the weight which, if laid on 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 meet with ease the pressure even of 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 ample resources for the execution of great designs; and though in its excess it may degenerate into an intolerable grievance, and may even strike at the root of national prosperity, yet, in its milder operation, it does not in any great degree retard the advancement of a thriving country. It lops off only the redundant. branches, while the massy trunk, untouched and unimpaired, is left to renew, for a future age, its fresh and more abundant foliage.

It must be confessed, however, that by furnishing an easy method of raising present supplies, the funding system may tempt the indolence or the rashness of statesmen to carry it to too great a length. It is evident, that if the debt of a nation be regularly and rapidly increasing, so that in each successive year it becomes necessary to mortgage a greater proportion of its annual revenue, the period must arrive sooner or later, when it will be impossible to make any further addition to its burdens. In these circumstances, however strongly any measure may be recommended by considerations of public utility, yet, if it increases the expenses of the state, it cannot be adopted without the certainty, or at least the imminent hazard, of national bankruptcy. The most effectual, and indeed the only method of guarding against this calamity, is to establish, at the period when the debt is first contracted, a fund for its final redemption; and thus, while the resources of posterity are freely anticipated, at the same time to provide the certain means of their future relief. The design of the funding system is to lighten the burden of an uncommonly heavy expenditure, by extending it over a succession of 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 debt, the extremes of two opposite systems are in a manner tempered and balanced; we are enabled to avoid the inconveniences peculiar to each, and to avail ourselves of all their advantages, without any of their evils.

In almost every state where the funding system has been adopted,

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it has been abused. Statesmen have considered it as an easy way of raising present supplies; and they have troubled themselves very little about the consequences to which they must have perceived it would lead. In Britain, after a few feeble and fruitless attempts to check the undue increase of the national debt, our provident ancestors seem to have consigned the interests of posterity to utter oblivion. They appear to have imagined that the national debt was a sort of sacred inheritance, which, along with our rights and liberties, it was their duty to transmit unimpaired to their children. is true, indeed, that in the system of finance pursued immediately after the revolution, various expedients were devised for preventing an indefinite increase of this debt. The partial system of redemption adopted at that time, was however naturally relinquished for the more comprehensive scheme of a general fund established in 1716 by Sir Robert Walpole, and rendered applicable to the discharge of the whole debt. The history of this fund is well known; it was encroached upon, on every real or fancied emergence, till it was at last wholly alienated from its original purpose. No attempt was afterwards made to limit the amount of the national debt till the year 1786, when the annual sum of one million was set apart for that purpose. In 1792, 200,000l. was voted to be annually added to it; and another sinking fund was established of 1 per cent. on all future loans. Both those sinking funds amounted, on the 5th February 1807, to about 8,339,7091.

In order ftill further to affift the effect of these falutary meafures, Mr Pitt adopted the refolution of raifing part of the fupplies within the year; this refolution he carried into effect by means of an increase in the affeffed taxes. By this plan, aided by voluntary contributions, a fum of 6,000,000l. was raised within the year 797. In 1798 the income-tax was substituted in its ftead, which it was fuppofed would more effectually accomplish the object of the former measure. Since the year 1797, when the principle of raising the supplies within the year was first adopted, it has been carried to a much greater extent. In addition to the income or property-tax, other taxes have been impofed, by which the war-taxes have been brought up to the immenfe fum of 21,000,000l. It is poffible, however, that this fystem, affifted as it is by the conftantly increafing action of the finking fund, may be pushed too far, and may ultimately prefs too heavily on the growing refources of the country. The plan of finance brought forward by Lord Henry Petty feems to be framed with a view to guard against this evil. It is calculated to relieve the prefent generation, and to throw proportionally a greater burden on pofterity. This is alfo the object of the funding fyftem; but the prefent

plan

plan is an extenfion of that fyftem; it carries it a step further. By the funding system, the principal is borrowed, and taxes are laid on to pay the intereft; by Lord Henry Petty's plan, both principal and intereft are borrowed, and taxes are only impofed to pay the intereft of a fum equal to the interest of the principal, i e. the intereft of the intereft. It is evident that this fyftem can only afford a temporary respite from taxation. By borrowing the intereft at prefent, we can only hope to delay its payment till a more convenient feafon. The circumftances of a country may, however, render it expedient to have recourfe to meafures of this

nature.

When we confider the prefent fituation of Britain, we cannot hefitate as to the expediency, if not the neceffity, of preventing, as far as poffible, any further addition to her burdens. We do not think that in this country taxation can be carried much further without degenerating into a fyftem of the most vexatious and grinding oppreffion. The taxes on luxurious confumption, which are in every refpect the most eligible, and the leaft oppreffive, feem to have reached their natural limit. Almost all commodities pay about double or triple their original value in taxes; every transfer of property, all the general transactions of commerce, and even particular profeflions, are taxed. No new tax of any confequence can be propofed by the minifter on confumable commodities without the certainty of its encountering a moft formidable oppofition. In fome cafes taxes are either greatly modified, or relinquished without any attempt to carry them into effect; and even when they are perfisted in, the experience of their impropriety, or inefficiency, often renders their repeal neceflary. With all these facts before us, it seems very doubtful whether the taxes which we have already imposed on confumption admit of any confiderable augmentation. It is only when taxation preffes lightly on a country, when it rather follows than precedes its increafing wealth, that an increase in the exifting duties can be expected to produce any thing like a proportional increase of revenue to the state. When confumable commodities are already very heavily taxed, any confiderable addition to the duties which they pay, instead of yielding an increase, would most probably fo far diminish consumption as to occasion a defalcation of revenue.

The difficulty of drawing any additional revenue from taxes on confumption, plainly appears from the change which of late years has been introduced into our fyftem of taxation. Great part of the supplies which are required for the prefent exigencies of the ftate, are raised by direct and compulfory taxes, to which we are perfuaded no minifter would willingly refort if any other refource zemained. Befides a variety of other taxes, which have more or

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lefs of a compulfory character, the property-tax levies a contribution of one-tenth on all income above 100l. a-year. Having nearly exhausted the taxes on consumption, we have had recourse to direct taxation; but, if direct taxation fails, we have no other refource. If, however, we are of opinion, that taxes on confumption will not admit of any confiderable augmentation, we are still more decidedly convinced, when we confider the extreme feverity with which the property-tax already preffes on the middling claffes of fociety, that direct taxation cannot be carried further without materially encroaching on the refources of future wealth.

Although it would therefore be, in our opinion, very inexpedient, with the prospect before us of a tedious and expenfive war, to add very confiderably to our permanent taxes, and thus rafhly to push taxation to its utmost limit, yet it would furely not be very confolatory to reflect, that while we were relieving ourfelves from prefent burdens by throwing proportionally a greater load on futurity, we were at the fame time providing no fure refource for meeting the accumulated demands which, in that cafe, would too furely await us. If it were certain, indeed, that peace would be procured in a few years, or at any time before the loans for intereft, or the fupplementary loans, rofe to a very great amount, in that cafe it would be only neceffary to continue fuch a portion of the war-taxes as would be required either for paying the intereft of the debt contracted, or for its final discharge. The nature of the arrangements adopted for this purpose would of course be determined by the ftate of the finances at the close of the war. We are aware that the continuance of war-taxes, after the peace, would be made a handle to excite popular clamour and discontent; but the burden of these taxes, for a limited period, is comparatively a very light evil, when it is confidered, that by improvidently adding to the load of permanent taxes, we might derange our finances, and ultimately be compelled to adopt that as a measure of neceffity, which we now adopt as a measure of prudence. We are, befides, at a lofs to discover, what peculiar objections can be urged against the continuance of the war-taxes: if, at the conclufion of the war, it be neceffary either to continue the old taxes, or to impose new ones, it would furely be better to allow thofe taxes to remain, of which the effects are known, and to which the habits of the people are accommodated, than to resort to what is wholly new and untried.

As it is impoffible, however, to fix any certain limit to the duration of the war, it is neceffary to provide against the most unfavourable contingence which can happen. The plan of finance now before us, confifts, as we have already had occafion to obferve, in an extenfion of the funding fyftem, by borrowing both principal and intereft, and in funding only the interest. But if the

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the war were to continue for ten or twelve years, the loans for intereft would nearly equal the fum required for the fervices of the current year. In order, therefore, to attain the great object of the measure, namely, to limit the amount of the permanent taxes, it becomes neceffary to provide for the payment of the intereft due on thofe loans, without impofing new duties. For this purpose the finking fund, which, in the course of ten years, will have increased from 8,555,000l. to 22,720,000l., will afford ample refources.

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When this fund was first established, the evils of its exceffive increase were forefeen and provided againft. By a fubfequent arrangement, however, the finking funds of 1786 and 1792 were confolidated, and no limit was fixed for their accumulation. mischief, it was thought, could be guarded against when it was near; and the great acceffion of debt, occafioned by the enormous expenditure of the last war, had unfortunately removed to a diftant period the dangers which were to be apprehended from the future increase of the sinking fund. When we consider, however, not only its prefent amount, but how rapidly it must accumulate, independent of the ftrong claims of the prefent generation for relief from their almoft intolerable burdens, it appears to us that the period may well be looked to, when it will be expedient to limit its operation, and thus, by rendering the reduction of the debt more gradual, to guard against the effects of too fudden a change. The collecting of that immenfe revenue, which is at prefent required for the payment of the public creditors, and for the fervice of the ftate, together with the whole body of laws, regulations, and complicated establishments neceffary for this purpofe, has effected a great, though gradual, change in the structure of fociety in Britain. To this artificial state of fociety, however, mens' views, habits, fchemes, and commercial arrangements, are accommodated; and any great, or fudden alteration, even although it might remove one evil, would undoubtedly produce extensive mifchief. The abftraction of a certain portion of the revenue of a country, though a great evil, is not the only evil of taxation. The increase in the value of the commodity taxed, the consequent diminution of its consumption, and perhaps the stagnation of the manufacture, produce fully as much confusion and inconvenience as the mere privation of revenue occasioned by the tax. But when the change is fairly accomplished, the business of society adapts itself to it, and goes on with the same regularity as before. In these circumstances, if things were suddenly reinstated in their original condition, the evil of taxation would no doubt be removed; but this benefit would be accompanied by all those incidental evils which the sudden reformation even of acknow

ledged

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