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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 of 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 scarce 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 fleet 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 resource 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 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。
Commerce and manufactures can seldom flourish long in any
state which does not enjoy a regular administration of justice；
in which the people do not feel themselves secure in the
possession of their property； in which the faith of contracts is
not supported by law； and in which the authority of the state is
not supposed to be regularly employed in enforcing the payment of
debts from all those who are able to pay。 Commerce and
manufactures； in short； can seldom flourish in any state in which
there is not a certain degree of confidence in the justice of
government。 The same confidence which disposes great merchants
and manufacturers； upon ordinary occasions； to trust their
property to the protection of a particular government； disposes
them； upon extraordinary occasions； to trust that government with
the use of their property。 By lending money to government； they
do not even for a moment diminish their ability to carry on their
trade and manufactures。 On the contrary； they commonly augment
it。 The necessities of the state render government upon most
occasions willing to borrow upon terms extremely advantageous to
the lender。 The security which it grants to the original creditor
is made transferable to any other creditor； and； from the
universal confidence in the justice of the state； generally sells
in the market for more than was originally paid for it。 The
merchant or monied man makes money by lending money to
government； and instead of diminishing； increases his trading
capital。 He generally considers it as a favour； therefore； when
the administration admits him to a share in the first
subscription for a new loan。 Hence the inclination or willingness
in the subjects of a commercial state to lend。
The government of such a state is very apt to repose itself
upon this ability and willingness of its subjects to lend it
their money on extraordinary occasions。 It foresees the facility
of borrowing； and therefore dispenses itself from the duty of
saving。
In a rude state of society there are no great mercantile or
manufacturing capitals。 The individuals who hoard whatever money
they can save； and who conceal their hoard； do so from a distrust
of the justice of government； from a fear that if it was known
that they had a hoard； and where that hoard was to be found； they
would quickly be plundered。 In such a state of things few people
would be able； and nobody would be willing； to lend their money
to government on extraordinary exigencies。 The sovereign feels
that he must provide for such exigencies by saving because he
foresees the absolute impossibility of borrowing。 This foresight
increases still further his natural disposition to save。
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。 Nations； like private men； have
generally begun to borrow upon what may be called personal
credit； without assigning 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 either not provided for； or not paid at
the time when they are performed； part of the extrordinaries of
the army； navy； and ordnance； the arrears of subsidies to foreign
princes； those of seamen's wages； etc。； usually constitute a debt
of the first kind； sometimes in payment of a part of such 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 th