The object of this war has been often enough declared to be 'maintaining the supremacy of this country over the colonies'. I have already enquired how far reason and justice, the principles of liberty, and the rights of humanity, entitle us to this supremacy. Setting aside, therefore, now all considerations of this kind, I would observe that this supremacy is to be maintained either merely for its own sake or for the sake of some public interest connected with it and dependent upon it. If for its own sake, the only object of the war is the extension of dominion, and its only motive is the lust of power. All government, even within a state, becomes tyrannical as far as it is a needless and wanton exercise of power, or is carried farther than is absolutely necessary to preserve the peace and to secure the safety of the state. This is what an excellent writer [Jonathan Shipley] calls 'governing too much' and its effect must always be, weakening government by rendering it contemptible and odious. Nothing can be of more importance in governing distant provinces and adjusting the clashing interests of different societies than attention to this remark. In these circumstances it is particularly necessary to make a sparing use of power in order to preserve power. Happy would it have been for Great Britain, had this been remembered by those who have lately conducted its affairs. But our policy has been of another kind. At the period when our authority should have been most concealed, it has been brought most in view and by a progression of violent measures, every one of which has increased distress, we have given the world reason to conclude that we are acquainted with no other method of governing than by force. What a shocking mistake! If our object is power we should have known better how to use it, and our rulers should have considered that freemen will always revolt at the sight of a naked sword, and that the complicated affairs of a great kingdom, holding in subordination to it a multitude of distant communities, all jealous of their rights and warmed with spirits as high as our own, require not only the most skilful but the most cautious and tender management. The consequences of a different management we are now feeling. We see ourselves driven among rocks and in danger of being lost.
The following reasons make it too probable that the present contest with America is a contest for power only, abstracted from all the advantages connected with it.
First, there is a love of power inherent in human nature, and it cannot be uncharitable to suppose that the nation in general, and the cabinet in particular, are too likely to be influenced by it. What can be more flattering than to look across the Atlantic, and to see in the boundless continent of America increasing millions whom we have a right to order as we please, who hold their property at our disposal, and who have no other law than our will? With what complacency have we been used to talk of them as our subjects? Is it not the interruption they now give to this pleasure, is it not the opposition they make to our pride, and not any injury they have done us, that is the secret spring of our present animosity against them? I wish all in this kingdom would examine themselves carefully on this point. Perhaps they might find that they have not known what spirit they are of. Perhaps they would become sensible that it was a spirit of domination more than a regard to the true interest of this country that lately led so many of them, with such savage folly, to address the throne for the slaughter of their brethren in America if they will not submit to them and to make offers of their lives and fortunes for that purpose. Indeed, I am persuaded that, were pride and the lust of dominion exterminated from every heart among us and the humility of Christians infused in their room, this quarrel would be soon ended.
Secondly, another reason for believing that this is a contest for power only is that our ministers have frequently declared that their object is not to draw a revenue from America, and that many of those who are warmest for continuing it represent the American trade as of no great consequence.
But what deserves particular consideration here is that this is a contest from which no advantages can possibly be derived. Not a revenue, for the provinces of America, when desolated, will afford no revenue, or, if they should, the expence of subduing them and keeping them in subjection will much exceed that revenue. Not any of the advantages of trade, for it is a folly, next to insanity, to think trade can be promoted by impoverishing our customers and fixing in their minds an everlasting abhorrence of us. It remains, therefore, that this war can have no other object than the extension of power. Miserable reflection! To sheath our swords in the bowels of our brethren and spread misery and ruin among a happy people for no other end than to oblige them to acknowledge our supremacy. How horrid! This is the cursed ambition that led a Caesar and an Alexander, and many other mad conquerors, to attack peaceful communities and to lay waste the earth.
But a worse principle than even this influences some among us. Pride and the love of dominion are principles hateful enough, but blind resentment and the desire of revenge are infernal principles. And these, I am afraid, have no small share at present in guiding our public conduct. One cannot help indeed being astonished at the virulence with which some speak on the present occasion against the Colonies. For what have they done? Have they crossed the ocean and invaded us? Have they attempted to take from us the fruits of our labour and to overturn that form of government which we hold so sacred? This cannot be pretended. On the contrary, this is what we have done to them. We have transported ourselves to their peaceful retreats and employed our fleets and armies to stop up their ports, to destroy their commerce, to seize their effects, and to bum their towns. Would we but let them alone and suffer them to enjoy in security their property and governments, instead of disturbing us they would thank and bless us. And yet it is we who imagine ourselves ill-used. The truth is, we expected to find them a cowardly rabble who would lie quietly at our feet and they have disappointed us. They have risen in their own defence and repelled force by force. They deny the plenitude of our power over them and insist upon being treated as free communities. It is this that has provoked us and kindled our governors into rage.
I hope I shall not here be understood to intimate that all who promote this war are actuated by these principles. Some, I doubt not, are influenced by no other principle than a regard to what they think the just authority of this country over its colonies and to the unity and indivisibility of the British Empire. I wish such could be engaged to enter thoroughly into the enquiry which has been the subject of the first pan of this pamphlet and to consider particularly how different a thing maintaining the authority of government within a state is from maintaining the authority of one people over another already happy in the enjoyment of a government of their own. I wish farther they would consider that the desire of maintaining authority is warrantable only as far as it is the means of promoting some end and doing some good, and that, before we resolve to spread famine and fire through a country in order to make it acknowledge our authority, we ought to be assured that great advantages will arise not only to ourselves, but to the country we wish to conquer. That from the present contest no advantage to ourselves can arise has been already shewn, and will presently be shewn more at large. That no advantage to the Colonies can arise from it need not, I hope, be shewn. It has however been asserted that even their good is intended by this war. Many of us are persuaded that they will be much happier under our government than under any government of their own, and that their liberties will be safer when held for them by us than when trusted in their own hands. How kind is it thus to take upon us the trouble of judging for them what is most. for their happiness? Nothing can be kinder except the resolution we have formed to exterminate them if they will not submit to our judgment. What strange language have I sometimes heard? By an armed force we are now endeavouring to destroy the laws and governments of America, and yet I have heard it said that we are endeavouring to support law and government there. We are insisting upon our right to levy contributions upon them and to maintain this right we are bringing upon them all the miseries a people can endure, and yet it is asserted that we mean nothing but their security and happiness.
But I have wandered a little from the point I intended principally to insist upon in this section, which is, 'the folly, in respect of policy, of the measures which have brought on this contest, and its pernicious and fatal tendency'.
The following observations will, I believe, abundantly prove this.
First, there are points which are likely always to suffer by discussion. Of this kind are most points of authority and prerogative and the best policy is to avoid, as much as possible, giving any occasion for calling them in question.
The Colonies were at the beginning of this reign in the habit of acknowledging our authority and of allowing us as much power over them as our interest required and more, in some instances, than we could reasonably claim. This habit they would have retained, and had we, instead of imposing new burdens upon them and increasing their restraints, studied to promote their commerce and to grant them new indulgences, they would have been always growing more attached to us. Luxury and, together with it, their dependence upon us, and our influence in their assemblies, would have increased till in time perhaps they would have become as corrupt as ourselves; and we might have succeeded to our wishes in establishing our authority over them. But, happily for them, we have chosen a different course. By exertions of authority which have alarmed them they have been put upon examining into the grounds of all our claims and forced to give up their luxuries and to seek all their resources within themselves. And the issue is likely to prove the loss of all our authority over them and of all the advantages connected with it. So little do men in power sometimes know how to preserve power and so remarkably does the desire of extending dominion sometimes destroy it. Mankind are naturally disposed to continue in subjection to that mode of government, be it what it will, under which they have been born and educated. Nothing rouses them into resistance but gross abuse or some particular oppressions out of the road to which they have been used. And he who will examine the history of the world will find there has generally been more reason for complaining that they have been too patient than that they have been turbulent and rebellious.
Our governors, ever since I can remember, have been jealous that the Colonies, some time or other, would throw off their dependence. This jealousy was not founded on any of their acts or declarations. They have always, while at peace with us, disclaimed any such design, and they have continued to disclaim it since they have been at war with us. I have reason, indeed, to believe that independency is, even at this moment, generally dreaded among them as a calamity to which they are in danger of being driven in order to avoid a greater. The jealousy, I have mentioned, was, however, natural and betrayed a secret opinion that the subjection in which they were held was more than we could expect them always to endure. In such circumstances, all possible care should have been taken to give them no reason for discontent and to preserve them in subjection by keeping in that line of conduct to which custom had reconciled them, or, at least, never deviating from it except with great caution, and, particularly, by avoiding all direct attacks on their property and legislations. Had we done this, the different interests of so many states scattered over a vast continent, joined to our own prudence and moderation, would have enabled us to maintain them in dependence for ages to come. But instead of this, how have we acted? It is in truth too evident that our whole conduct, instead of being directed by that sound policy and foresight which in such circumstances were absolutely necessary, has been nothing (to say the best of it) but a series of the blindest rigour followed by retraction, of violence followed by concession, of mistake, weakness and inconsistency. A recital of a few facts within every body's recollection, will fully prove this.
In the 6th of George the Second, an act was passed for imposing certain duties on all foreign spirits, molasses and sugars imported into the plantations. In this act the duties imposed are said to be given and granted by the Parliament to the King, and this is the first American act in which these words have been used. But notwithstanding this, as the act had the appearance of being only a regulation of trade, the Colonies submitted to it and a small direct revenue was drawn by it from them. In the 4th of the present reign, many alterations were made in this act, with the declared purpose of making provision for raising a revenue in America. This alarmed the Colonies and produced discontents and remonstrances which might have convinced our rulers this was tender ground on which it became them to tread very gently. There is, however, no reason to doubt but in time they would have sunk into a quiet submission to this revenue act as being at worst only the exercise of a power which then they seem not to have thought much of contesting, I mean, the power of taxing them externally. But before they had time to cool, a worse provocation was given them and the Stamp Act was passed. This being an attempt to tax them internally, and a direct attack on their property by a power which would not suffer itself to be questioned, which eased itself by loading them, and to which it was impossible to fix any bounds, they were thrown at once, from one end of the continent to the other, into resistance and rage. Government, dreading the consequences, gave way and the Parliament (upon a change of ministry) repealed the Stamp Act without requiring from them any recognition of its authority, or doing any more to preserve its dignity than asserting, by the declaratory law, that it was possessed of full power and authority to make laws to bind them in all cases whatever. Upon this, peace was restored, and, had no farther attempts of the same kind been made, they would undoubtedly have suffered us (as the people of Ireland have done) to enjoy quietly our declaratory law. They would have recovered their former habits of subjection, and our connexion with them might have continued an increasing source of our wealth and glory. But the spirit of despotism and avarice, always blind and restless, soon broke forth again. The scheme for drawing a revenue from America, by parliamentary taxation, was resumed and in a little more than a year after the repeal of the Stamp Act, when all was peace, a third act was passed, imposing duties payable in America on tea, paper, glass, painters' colours, etc. This, as might have been expected, revived all the former heats and the Empire was a second time threatened with the most dangerous commotions. Government receded again and the Parliament (under another change of ministry) repealed all the obnoxious duties except that upon tea. This exception was made in order to maintain a shew of dignity. But it was, in reality, sacrificing safety to pride and leaving a splinter in the wound to produce a gangrene. For some time, however, this relaxation answered its intended purposes. Our commercial intercourse with the Colonies was again recovered and they avoided nothing but that tea which we had excepted in our repeal. In this state would things have remained, and even tea would perhaps in time have been gradually admitted, had not the evil genius of Britain stepped forth once more to embroil the Empire.
The East India Company having fallen under difficulties, partly in consequence of the loss of the American market for tea, a scheme was formed for assisting them by an attempt to recover that market. With this view an act was passed to enable them to export their tea to America free of all duties here, and subject only to 3d per pound duty payable in America. It was to be offered at a low price and it was expected the consequence would prove that the Colonies would be tempted to buy it, a precedent gained for taxing them, and at the same time the company relieved. Ships were, therefore, fitted out and large cargoes sent. The snare was too gross to escape the notice of the Colonies. They saw it and spurned at it. They refused to admit the tea and at Boston some persons in disguise threw it into the sea. Had our governors in this case satisfied themselves with requiring a compensation from the province for the damage done, there is no doubt but it would have been granted. Or had they proceeded no farther in the infliction of punishment than stopping up the port and destroying the trade of Boston till compensation was made, the province might possibly have submitted and a sufficient saving would have been gained for the honour of the nation. But having hitherto proceeded without wisdom they observed now no bounds in their resentment. To the Boston Port Bill was added a bill which destroyed the chartered government of the province, a bill which withdrew from the jurisdiction of the province persons who in particular cases should commit murder, and the Quebec Bill. At the same time a strong body of troops was stationed at Boston to enforce obedience to their bills.
All who knew any thing of the temper of the Colonies saw that the effect of this sudden accumulation of vengeance would probably be not intimidating but exasperating them and driving them into a general revolt. But our ministers had different apprehensions. They believed that the malecontents in the Colony of Massachusett's were a small party, headed by a few factious men, that the majority of the people would take the side of government as soon as they saw a force among them capable of supporting them, that, at worst, the Colonies in general would never make a common cause with this province, and that the issue would prove, in a few months, order, tranquility and submission. Every one of these apprehensions was falsified by the events that followed.
When the bills I have mentioned came to be carried into execution, the whole province was thrown into confusion. Their courts of justice were shut up, and all government was dissolved. The commander in chief found it necessary to fortify himself in Boston, and the other Colonies immediately resolved to make a common cause with this Colony.
Disappointed by these consequences, our ministers took fright. Once more they made an effort to retreat, but indeed the most ungracious one that can well be imagined. A proposal was sent to the Colonies called Conciliatory, and the substance of which was, that if any of them would raise such sums as should be demanded of them by taxing themselves, the Parliament would forbear to tax them. It will be scarcely believed, hereafter, that such a proposal would be thought conciliatory. It was only telling them, 'If you will tax yourselves by our order, we will save ourselves the trouble of taxing you.' They received the proposal as an insult, and rejected it with disdain.
At the time this concession was transmitted to America, open hostilities were not begun. In the sword our ministers thought they had still a resource which would immediately settle all disputes. They considered the people of New-England as nothing but a mob, who would be soon routed and forced into obedience. It was even believed that a few thousands of our army might march through all America, and make all quiet wherever they went. Under this conviction our ministers did not dread urging the Province of Massachusett's Bay into rebellion, by ordering the army to seize their stores and to take up some of their leading men. The attempt was made. The people fled immediately to arms and repelled the attack. A considerable part of the flower of the British army has been destroyed. Some of our best generals and the bravest of our troops are now disgracefully and miserably imprisoned at Boston. A horrid civil war is commenced and the Empire is distracted and convulsed.
Can it be possible to think with patience of the policy that has brought us into these circumstances? Did ever Heaven punish the vices of a people more severely by darkening their counsels? How great would be our happiness could we now recall former times and return to the policy of the last reign? But those times are gone. I will, however, beg leave for a few moments to look back to them and to compare the ground we have left with that on which we find ourselves. This must be done with deep regret, but it forms a necessary part of my present design.
In those times our Colonies, foregoing every advantage which they might derive from trading with foreign nations, consented to send only to us whatever it was for our interest to receive from them and to receive only from us whatever it was for our interest to send to them. They gave up the power of making sumptuary laws and exposed themselves to all the evils of an increasing and wasteful luxury, because we were benefited by vending among them the materials of it. The iron with which providence had blessed their country, they were required by laws, in which they acquiesced, to transport hither that our people might be maintained by working it for them into nails, ploughs, axes, etc. And, in several instances, even one Colony was not allowed to supply any neighbouring Colonies with commodities which could be conveyed to them from hence. But they yielded much farther. They consented that we should have the appointment of one branch of their legislature. By recognizing as their King, a King resident among us and under our influence, they gave us a negative on all their laws. By allowing an appeal to us in their civil disputes, they gave us likewise the ultimate determination of all civil causes among them. In short, they allowed us every power we could desire, except that of taxing them, and interfering in their internal legislations. And they had admitted precedents which, even in these instances, gave us no inconsiderable authority over them. By purchasing our goods they paid our taxes, and by allowing us to regulate their trade in any manner we thought most for our advantage they enriched our merchants and helped us to bear our growing burdens. They fought our battles with us. They gloried in their relation to us. All their gains centered among us and they always spoke of this country and looked to it as their home.
Such was the state of things. What is it now?
Not contented with a degree of power sufficient to satisfy any reasonable ambition, we have attempted to extend it. Not contented with drawing from them a large revenue indirectly, we have endeavoured to procure one directly by an authoritative seizure, and in order to gain a pepper-corn in this way have chosen to hazard millions, acquired by the peaceable intercourse of trade. Vile policy! What a scourge is government so conducted? Had we never deserted our old ground, had we nourished and favoured America with a view to commerce instead of considering it as a country to be governed, had we, like a liberal and wise people, rejoiced to see a multitude of free states branched forth from ourselves, all enjoying independent legislatures similar to our own, had we aimed at binding them to us only by the tyes of affection and interest, and contented ourselves with a moderate power rendered durable by being lenient and friendly, an umpire in their differences, an aid to them in improving their own free governments, and their common bulwark against the assaults of foreign enemies, had this, I say, been our policy and temper, there is nothing so great or happy that we might not have expected. With their increase our strength would have increased. A growing surplus in the revenue might have been gained which, invariably applied to the gradual discharge of the national debt, would have delivered us from the ruin with which it threatens us. The liberty of America might have preserved our liberty, and, under the direction of a patriot king or wise minister, proved the means of restoring to us our almost lost constitution. Perhaps, in time, we might also have been brought to see the necessity of carefully watching and restricting our paper-credit. And thus we might have regained safety and, in union with our Colonies, have been more than a match for every enemy and risen to a situation of honour and dignity never before known amongst mankind. But I am forgetting myself. Our Colonies are likely to be lost for ever. Their love is turned into hatred and their respect for our government into resentment and abhorrence. We shall see more distinctly what a calamity this is, and the observations I have now made will be confirmed by attending to the following facts.
Our American Colonies, particularly the northern ones, have been for some time in the happiest state of society or in that middle state of civilization, between its first rude and its last refined and corrupt state. Old countries consist, generally, of three classes of people, a gentry; a yeomanry; and a peasantry. The Colonies consist only of a body of yeomanry supported by agriculture, and all independent and nearly upon a level; in consequence of which, joined to a boundless extent of country, the means of subsistence are procured without difficulty and the temptations to wickedness are so inconsiderable that executions are seldom known among them. From hence arises an encouragement to population so great that in some of the colonies they double their own number in fifteen years, in others in eighteen years, and in all, taken one with another, in twenty-five years. Such an increase was, I believe, never before known. It demonstrates that they must live at their ease and be free from those cares, oppressions, and diseases which depopulate and ravage luxurious states.
With the population of the Colonies has increased their trade; but much faster, on account of the gradual introduction of luxury among them. In 1723 the exports to Pensylvania were £16,000. In 1742 they were £75,295. In 1757 they were increased to £268,426, and in 1773 to half a million.
The exports to all the Colonies in 1744 were £640,114. In 1758 they were increased to £1,832,948 and in 1773 to three millions. And the probability is that, had it not been for the discontents among the Colonies since the year 1764, our trade with them would have been this year double to what it was in 1773, and that in a few years more, it would not have been possible for the whole kingdom, though consisting only of manufacturers, to supply the American demand.
This trade, it should be considered, was not only thus an increasing trade, but it was a trade in which we had no rivals, a trade certain, constant, and uninterrupted, and which, by the shipping employed in it, and the naval stores supplied by it, contributed greatly to the support of that navy which is our chief national strength. Viewed in these lights it was an object unspeakably important. But it will appear still more so if we view it in its connexions and dependencies. It is well known that our trade with Africa and the West-Indies cannot easily subsist without it. And, upon the whole, it is undeniable that it has been one of the main springs of our opulence and splendour and that we have, in a great measure, been indebted to it for our ability to bear a debt so much heavier than that which, fifty years ago, the wisest men thought would necessarily sink us.
This inestimable prize and all the advantages connected with America, we are now throwing away. Experience alone can shew what calamities must follow. It will indeed be astonishing if this kingdom can bear such a loss without dreadful consequences. These consequences have been amply represented by others and it is needless to enter into any account of them. At the time we shall be feeling them: the Empire dismembered, the blood of thousands shed in an unrighteous quarrel, our strength exhausted, our merchants breaking, our manufacturers starving, our debts increasing, the revenues sinking, the funds tottering, and all the miseries of a public bankruptcy impending. At such a crisis should our natural enemies, eager for our ruin, seize the opportunity. The apprehension is too distressing. Let us view this subject in another light.
On this occasion, particular attention should be given to the present singular situation of this kingdom. This is a circumstance of the utmost importance and, as I am afraid it is not much considered, I will beg leave to give a distinct account of it.
At the Revolution, the specie of the kingdom amounted, according to Davenant's account, to eighteen millions and a half. From the accession to the year 1772 there were coined at the mint near 29 millions of gold; and in ten years only of this time or from January 1759 to January 1769 there were coined eight millions and a half. But it has appeared lately that the gold specie now left in the kingdom is no more than about twelve millions and a half. Not so much as half a million of silver specie has been coined these sixty years, and it cannot be supposed that the quantity of it now in circulation exceeds two or three millions. The whole specie of the kingdom, therefore, is probably at this time about fifteen millions. Of this some millions must be hoarded at the Bank. Our circulating specie, therefore, appears to be decreased. But our wealth, or the quantity of money in the kingdom, is greatly increased. This is paper to a vast amount, issued in almost every comer of the kingdom, and, particularly, by the Bank of England. While this paper maintains its credit it answers all the purposes of specie, and is in all respects the same with money.
Specie represents some real value in goods or commodities. On the contrary, paper represents immediately nothing but specie. It is a promise or obligation which the emitter brings himself under to pay a given sum in coin, and it owes its currency to the credit of the emitter, or to an opinion that he is able to make good his engagement, and that the sum specified may be received upon being demanded. Paper, therefore, represents coin, and coin represents real value. That is, the one is a sign of wealth. The other is the sign of that sign. But farther, coin is an universal sign of wealth, and will procure it every where. It will bear any alarm, and stand any shock. On the contrary, paper, owing its currency to opinion, has only a local and imaginary value. It can stand no shock. It is destroyed by the approach of danger or even the suspicion of danger.
In short, coin is the basis of our paper credit, and were it either all destroyed, or were only the quantity of it reduced beyond a certain limit, the paper circulation of the kingdom would sink at once. But, were our paper destroyed, the coin would not only remain but rise in value in proportion to the quantity of paper destroyed.
From this account it follows that as far as, in any circumstances, specie is not to be procured in exchange for paper, it represents nothing, and is worth nothing. The specie of this kingdom is inconsiderable compared with the amount of the paper circulating in it. This is generally believed and, therefore, it is natural to enquire how its currency is supported. The answer is easy. It is supported in the same manner with all other bubbles. Were all to demand specie in exchange for their notes payment could not be made, but at the same time that this is known every one trusts that no alarm producing such a demand will happen, while he holds the paper he is possessed of, and that if it should happen, he will stand a chance for being first paid, and this makes him easy. But let any events happen which threaten danger and every one will become diffident. A run will take place and a bankruptcy follow.
This is an account of what has often happened in private credit. And it is also an account of what will (if no change of measures takes place) happen some time or other in public credit. The description I have given of our paper-circulation implies that nothing can be more delicate or hazardous. It is an immense fabrick with its head in the clouds that is continually trembling with every adverse blast and every fluctuation of trade and which, like the baseless fabrick of a vision, may in a moment vanish, and leave no wreck behind. The destruction of a few books at the Bank, an improvement in the art of forgery, the landing of a body of French troops on our coasts, insurrections threatening a revolution in government, or any events that should produce a general panic, however groundless, would at once annihilate it and leave us without any other medium of traffic than a quantity of specie not much more than the money now drawn from the public by the taxes. It would, therefore, become impossible to pay the taxes. The revenue would fail. Near a hundred and forty millions of property would be destroyed. The whole frame of government would fall to pieces, and a state of nature would take place. What a dreadful situation? It has never had a parallel among mankind, except at one time in France after the establishment of the Royal Mississippi Bank. In 1720 this bank broke and, after involving for some time the whole kingdom in a golden dream, spread through it in one day desolation and ruin. The distress attending such an event in this free country would be greater than it was in France. Happily for that kingdom they have shot this gulph. Paper-credit has never since recovered itself there and their circulating cash consists now all of solid coin amounting, according to the lowest account, to no less a sum than 1500 millions of livres, or near 67 millions of pounds sterling. This gives them unspeakable advantages and, joined to that quick reduction of their debts which is inseparable from their nature, places them on a ground of safety which we have reason to admire and envy.
These are subjects on which I should have chosen to be silent, did I not think it necessary that this country should be apprized and warned of the danger which threatens it. This danger is created chiefly by the national debt. High taxes are necessary to support a great public debt and a large supply of cash is necessary to support high taxes. This cash we owe to our paper and, in proportion to our paper, must be the productiveness of our taxes. King William's wars drained the kingdom of its specie. This sunk the revenue and distressed government. In 1694 the Bank was established and the kingdom was provided with a substitute for specie. The taxes became again productive. The revenue rose and government was relieved. Ever since that period our paper and taxes have been increasing together and supporting one another; and one reason, undoubtedly, of the late increase in the productiveness of our taxes has been the increase of our paper.
Was there no public debt, there would be no occasion for half the present taxes. Our paper circulation might be reduced. The balance of trade would turn in our favour. Specie would flow in upon us. The quantity of property destroyed by a failure of paper-credit (should it in such circumstances happen) would be 140 millions less, and, therefore, the shock attending it would be tolerable. But in the present state of things whenever any calamity or panic shall produce such a failure, the shock attending it will be intolerable. May heaven soon raise up for us some great statesman who shall see these things and enter into effectual measures, if not now too late, for extricating and preserving us.
Public banks are, undoubtedly, attended with great conveniencies. But they also do great harm, and, if their emissions are not restrained and conducted with great wisdom, they may prove the most pernicious of all institutions, not only by substituting fictitious for real wealth, by increasing luxury, by raising the prices of provisions, by concealing an unfavourable balance of trade, and by rendering a kingdom incapable of bearing any internal tumults or external attacks without the danger of a dreadful convulsion, but, particularly, by becoming instruments in the hands of ministers of state to increase their influence, to lessen their dependence on the people, and to keep up a delusive shew of public prosperity, when perhaps ruin may be near. There is, in truth, nothing that a government may not do with such a mine at its command as a public bank while it can maintain its credit, nor, therefore, is there any thing more likely to be improperly and dangerously used. But to return to what may be more applicable to our own state at present.
Among the causes that may produce a failure of paper-credit there are two which the present quarrel with America calls upon us particularly to consider. The first is 'an unfavourable balance of trade'. This, in proportion to the degree in which it takes place, must turn the course of foreign exchange against us, raise the price of bullion, and carry off our specie. The danger to which this would expose us is obvious, and it has been much increased by the new coinage of the gold specie which begun in 1773. Before this coinage, the greatest part of our gold coin being light, but the same in currency as if it had been heavy, always remained in the kingdom. But, being now nearly of full weight, whenever a wrong balance of foreign trade alters the course of exchange, and gold in coin becomes of less value than in bullion, there is reason to fear that it will be melted down in such great quantities and exported so fast as in a little time to leave none behind. The consequence of which must prove that the whole superstructure of paper-credit, now supported by it, will break down. The only remedy, in such circumstances, is an increase of coinage at the mint. But this will operate too slowly, and, by raising the price of bullion, will only increase the evil. It is the Bank that at such a time must be the immediate sufferer, for it is from thence that those who want coin for any purpose will always draw it.
For many years before 1773 the price of gold in bullion had been from 2 or 3 or 4 per cent higher than in coin. This was a temptation to melt down and export the coin which could not be resisted. Hence arose a demand for it on the Bank, and, consequently, the necessity of purchasing bullion at a loss for a new coinage. But the more coin the Bank procured in this way, the lower its price became in comparison with that of bullion, and the faster it vanished, and, consequently, the more necessary it became to coin again, and the greater loss fell upon the Bank. Had things continued much longer in this train, the consequences might have proved very serious. I am by no means sufficiently informed to be able to assign the causes which have produced the change that happened in 1772. But, without doubt, the state of things that took place before that year must be expected to return. The fluctuations of trade, in its best state, render this unavoidable. But the contest with our Colonies has a tendency to bring it on soon and to increase unspeakably the distress attending it. All know that the balance of trade with them is greatly in our favour, and that this balance is paid partly by direct remittances of bullion and partly by circuitous remittances through Spain, Portugal, Italy, etc. which diminish the balance against us with these countries. During the last year they have been employed in paying their debts without adding to them, and their exportations and remittances for that purpose have contributed to render the general balance of trade more favourable to us, and also (in conjunction with the late operations of the Bank) to keep up our funds. These remittances are now ceased and a few years will determine, if this contest goes on, how far we can sustain such a loss without suffering the consequences I have described.
The second event, ruinous to our paper circulation, which may arise from our rupture with America, is a deficiency in the revenue. As a failure of our paper would destroy the revenue, so a failure of the revenue, or any considerable diminution of it, would destroy our paper. The Bank is the support of our paper and the support of the Bank is the credit of government. Its principal securities are a capital of eleven millions lent to government and money continually advanced to a vast amount on the land-tax and malt-tax, sinking fund, exchequer bills, navy bills, etc. Should, therefore, deficiencies in the revenue bring government under any difficulties, all these securities would lose their value, and the Bank and Government, and all private and public credit, would fail together. Let any one here imagine what would probably follow were it but suspected by the public in general that the taxes were so fallen as not to produce enough to pay the interest of the public debts, besides bearing the ordinary expences of the nation, and that, in order to supply the deficiency and to hide the calamity, it had been necessary in any one year to anticipate the taxes and to borrow of the Bank. In such circumstances I can scarcely doubt but an alarm would spread of the most dangerous tendency. The next foreign war, should it prove half as expensive as the last, will probably occasion such a deficiency and bring our affairs to that crisis towards which they have been long tending. But the war with America has a greater tendency to do this, and the reason is that it affects our resources more and is attended more with the danger of internal disturbances.
Some have made the proportion of our trade depending on North America to be near one half. A moderate computation makes it a third. Let it, however, be supposed to be only a fourth. I will venture to say this is a proportion of our foreign trade the loss of which, when it comes to be felt, will be found insupportable. In the article of tobacco alone it will cause a deduction from the customs of at least £300,000 per ann., including the duties paid on foreign commodities purchased by the exportation of tobacco. Let the whole deduction from the revenue be supposed to be only half a million. This alone is more than the kingdom can at present bear, without having recourse to lotteries and the land-tax at 4 shillings in order to defray the common and necessary expences of peace. But to this must be added a deduction from the produce of the excises in consequence of the increase of the poor, of the difficulties of our merchants and manufacturers, of less national wealth, and a retrenchment of luxury. There is no possibility of knowing to what these deductions may amount. When the evils producing them begin, they will proceed rapidly and they may end in a general wreck before we are aware of any danger.
In order to give a clearer view of the subject, I will in an Appendix, state particularly the national expenditure and income for eleven years, from 1764 to 1774. From that account it will appear that the money drawn every year from the public by the taxes does not fall greatly short of a sum equal to the whole specie of the kingdom, and that, notwithstanding the late increase in the productiveness of the taxes, the whole surplus of the national income has not exceeded £338,759 per ann. This is a surplus so inconsiderable as to be scarcely sufficient to guard against the deficiencies arising from the common fluctuations of foreign trade and of home consumption. It is nothing when considered as the only fund we have for paying off a debt near 140 millions. Had we continued in a state of profound peace, it could not have admitted of any diminution. What then must follow, when one of the most profitable branches of our trade is destroyed, when a third of the Empire is lost, when an addition of many millions is made to the public debt, and when, at the same time perhaps some millions are taken away from the revenue? I shudder at this prospect. A kingdom on an edge so perilous should think of nothing but a retreat.
. Except the negroes in the southern Colonies, who probably will now either soon become extinct, or have their condition changed into that of freemen. It is not the fault of the Colonies that they have among them so many of these unhappy people. They have made laws to prohibit the importation of them, but these laws have always had a negative put upon them here because of their tendency to hurt our Negro trade.
Writings of Richard Price