Essays, Thomas Paine [digital book reader .txt] 📗

be, will find himself beset with accumulating difficulties; because the loans and taxes voted for the service of each ensuing year will wither in his hands before the year expires, or before they can be applied. This will force him to have recourse to emissions of what are called exchequer and navy bills, which, by still increasing the mass of paper in circulation, will drive on the depreciation still more rapidly.

It ought to be known that taxes in England are not paid in gold and silver, but in paper (bank notes). Every person who pays any considerable quantity of taxes, such as maltsters, brewers, distillers, (I appeal for the truth of it, to any of the collectors of excise in England, or to Mr. Whitbread,)21 knows this to be the case. There is not gold and silver enough in the nation to pay the taxes in coin, as I shall show; and consequently there is not money enough in the bank to pay the notes. The interest of the national funded debt is paid at the bank in the same kind of paper in which the taxes are collected. When people find, as they will find, a reservedness among each other in giving gold and silver for bank notes, or the least preference for the former over the latter, they will go for payment to the bank, where they have a right to go. They will do this as a measure of prudence, each one for himself, and the truth or delusion of the funding system will then be proved.

I have said in the foregoing paragraph that there is not gold and silver enough in the nation to pay the taxes in coin, and consequently that there cannot be enough in the bank to pay the notes. As I do not choose to rest anything upon assertion, I appeal for the truth of this to the publications of Mr. Eden (now called Lord Auckland) and George Chalmers, Secretary to the Board of Trade and Plantation, of which Jenkinson (now Lord Hawkesbury) is president.22 (These sort of folks change their names so often that it is as difficult to know them as it is to know a thief.) Chalmers gives the quantity of gold and silver coin from the returns of coinage at the Mint; and after deducting for the light gold recoined, says that the amount of gold and silver coined is about twenty millions. He had better not have proved this, especially if he had reflected that public credit is suspicion asleep. The quantity is much too little.

Of this twenty millions (which is not a fourth part of the quantity of gold and silver there is in France, as is shown in Mr. Neckar’s Treatise on the Administration of the Finances) three millions at least must be supposed to be in Ireland, some in Scotland, and in the West Indies, Newfoundland, etc. The quantity therefore in England cannot be more than sixteen millions, which is four millions less than the amount of the taxes. But admitting that there are sixteen millions, not more than a fourth part thereof (four millions) can be in London, when it is considered that every city, town, village, and farmhouse in the nation must have a part of it, and that all the great manufactories, which most require cash, are out of London. Of this four millions in London, every banker, merchant, tradesman, in short every individual, must have some. He must be a poor shopkeeper indeed, who has not a few guineas in his till. The quantity of cash therefore in the bank can never, on the evidence of circumstances, be so much as two millions; most probably not more than one million; and on this slender twig, always liable to be broken, hangs the whole funding system of four hundred millions, besides many millions in bank notes. The sum in the bank is not sufficient to pay one-fourth of only one year’s interest of the national debt, were the creditors to demand payment in cash, or demand cash for the bank notes in which the interest is paid, a circumstance always liable to happen.

One of the amusements that has kept up the farce of the funding system is, that the interest is regularly paid. But as the interest is always paid in bank notes, and as bank notes can always be coined for the purpose, this mode of payment proves nothing. The point of proof is, can the bank give cash for the bank notes with which the interest is paid? If it cannot, and it is evident it cannot, some millions of bank notes must go without payment, and those holders of bank notes who apply last will be worst off. When the present quantity of cash in the bank is paid away, it is next to impossible to see how any new quantity is to arrive. None will arrive from taxes, for the taxes will all be paid in bank notes; and should the government refuse bank notes in payment of taxes, the credit of bank notes will be gone at once. No cash will arise from the business of discounting merchants’ bills; for every merchant will pay off those bills in bank notes, and not in cash. There is therefore no means left for the bank to obtain a new supply of cash, after the present quantity is paid away. But besides the impossibility of paying the interest of the funded debt in cash, there are many thousand persons, in London and in the country, who are holders of bank notes that came into their hands in the fair way of trade, and who are not stockholders in the funds; and as such persons have had no hand in increasing the demand upon the bank, as those have had who for their own private interest, like Boyd and others, are contracting or pretending to contract for new loans, they will conceive they have a