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

were collected in gold and silver money. The highest quantity of taxes never exceeded twenty-two millions sterling; and the quantity of gold and silver money in the nation at the same time, as stated by M. Neckar, from returns of coinage at the Mint, in his Treatise on the Administration of the Finances, was about ninety millions sterling. To go beyond this limit of a fourth part, in England, they were obliged to introduce paper money; and the attempt to go beyond it in France, where paper could not be introduced, broke up the government. This proportion, therefore, of a fourth part, is the limit which the thing establishes for itself, be the quantity of money in a nation more or less.

The amount of taxes in England at this time is full twenty millions; and therefore the quantity of gold and silver, and of bank notes, taken together, amounts to eighty millions. The quantity of gold and silver, as stated by Lord Hawkesbury’s Secretary, George Chalmers, as I have before shown, is twenty millions; and, therefore, the total amount of bank notes in circulation, all made payable on demand, is sixty millions. This enormous sum will astonish the most stupid stockjobber, and overpower the credulity of the most thoughtless Englishman: but were it only a third part of that sum, the bank cannot pay half a crown in the pound.

There is something curious in the movements of this modern complicated machine, the funding system; and it is only now that it is beginning to unfold the full extent of its movements. In the first part of its movements it gives great powers into the hands of government, and in the last part it takes them completely away.

The funding system set out with raising revenues under the name of loans, by means of which government became both prodigal and powerful. The loaners assumed the name of creditors, and though it was soon discovered that loaning was government-jobbing, those pretended loaners, or the persons who purchased into the funds afterwards, conceived themselves not only to be creditors, but to be the only creditors.

But such has been the operation of this complicated machine, the funding system, that it has produced, unperceived, a second generation of creditors, more numerous and far more formidable and withal more real than the first generation; for every holder of a bank note is a creditor, and a real creditor, and the debt due to him is made payable on demand. The debt therefore which the government owes to individuals is composed of two parts; the one about four hundred millions bearing interest, the other about sixty millions payable on demand. The one is called the funded debt, the other is the debt due in bank notes.

The second debt (that contained in the bank notes) has, in a great measure, been incurred to pay the interest of the first debt; so that in fact little or no real interest has been paid by government. The whole has been delusion and fraud. Government first contracted a debt, in the form of loans, with one class of people, and then run clandestinely into debt with another class, by means of bank notes, to pay the interest. Government acted of itself in contracting the first debt, and made a machine of the bank to contract the second. It is this second debt that changes the seat of power and the order of things; for it puts it in the power of even a small part of the holders of bank notes (had they no other motives than disgust at Pitt and Grenville’s sedition bills,) to control any measure of government they found to be injurious to their interest; and that not by popular meetings, or popular societies, but by the simple and easy operation of withholding their credit from that government; that is, by individually demanding payment at the bank for every bank note that comes into their hands. Why should Pitt and Grenville expect that the very men whom they insult and injure, should, at the same time, continue to support the measures of Pitt and Grenville, by giving credit to their promissory notes of payment? No new emissions of bank notes could go on while payment was demanding on the old, and the cash in the bank wasting daily away; nor any new advances be made to government, or to the emperor, to carry on the war; nor any new emission be made on exchequer bills.

“The bank” says Smith, (book ii chap. 2) “is a great engine of state.” And in the same paragraph he says, “The stability of the bank is equal to that of the British government;” which is the same as to say that the stability of the government is equal to that of the bank, and no more. If then the bank cannot pay, the arch-treasurer of the holy Roman empire (S.R.I.A.)24 is a bankrupt. When Folly invented titles, she did not attend to their application; forever since the government of England has been in the hands of arch-treasurers, it has been running into bankruptcy; and as to the arch-treasurer apparent, he has been a bankrupt long ago. What a miserable prospect has England before its eyes!

Before the war of 1755 there were no bank notes lower than twenty pounds. During that war, bank notes of fifteen pounds and of ten pounds were coined; and now, since the commencement of the present war, they are coined as low as five pounds. These five-pound notes will circulate chiefly among little shopkeepers, butchers, bakers, market-people, renters of small houses, lodgers, etc. All the high departments of commerce and the affluent stations of life were already overstocked, as Smith expresses it, with the bank notes. No place remained open wherein to crowd an additional quantity of bank notes but among the class of people I have just mentioned, and the means of doing this could be best effected by coining