for its discharge-and when an artificial | for the sake of which its incalculable system has contributed to the formation ultimate benefits were relinquished. of a burden, it is well that it should not be entirely removed till that burden is reduced to a reasonable amount.

35. Lord Castlereagh made a most manly endeavour, in 1816, to induce the people to submit for a few years to that elevated rate of taxation by which alone permanent relief from the national embarrassments could be expected; but he committed a signal error in the tax which he selected for the struggle, and deviated as much from Mr Pitt's principles in the effort to maintain that heavy impost, as subsequent administrations did in their abandonment of others of a lighter character. The income-tax, being a direct war impost of the most oppressive and invidious description, was always intended by that great statesman to come to a close with the termination of hostilities; and its weight was so excessive, that it was impossible and unreasonable to expect the people to submit any longer to its continuance. Nothing could be more impolitic, therefore, than to commit government to a contest with the nation on so untenable a ground. It was the subsequent repeal of indirect taxes to the amount of above thirty millions a-year, when they were not complained of, and when the fall in the price of the taxed articles, from the change in the value of money, had rendered their weight impercep

34. Every one, when this vast reduction of indirect taxes was going on, to the entire destruction of the sinking-fund and Mr Pitt's provident system of financial policy, looked only, even with reference to present advantage, to one side of the account. They forgot that if the demands of government on the industry of the nation were rapidly reduced, its demands on government must instantly undergo a similar diminution; that if the exchequer ceased to collect seventy millions a-year, it must cease also to expend it. Every reduction of taxation, even in those branches where it was not complained of, was held forth as an alleviation of the burdens of the nation, and a reasonable ground for popularity to its rulers; whereas, in truth, the relief even at the moment was more nominal than real. Though a diminution of those burdens was effected, it took place frequently in quarters where they were imperceptible, and drew after it an instantaneous and most sensible reduction in the demand for labour and the employment of the industrious classes, at a time when such demand could ill be spared, from the same effect having si-tible, which was the fatal deviation multaneously ensued from other causes. Great part of the distress which has been felt by all classes since the peace was the result of the general diminution of expenditure, which the too rapid reduction of so many indirect taxes and consequent abandonment of the sinking-fund necessarily occasioned, and which the maintenance of its machinery, till it had fulfilled its destined purpose, would to a very great degree have alleviated. It augments our regret, therefore, at the abandonment of Mr Pitt's financial system, that the change had not even the excuse of present necessity or obvious expedience for its recommendation, but was the result of undue subservience to particular interests, or desire for popularity on the part of our rulers, unattended even by the temporary advantages

from Mr Pitt's principles.

36. The administrations by whom this prodigious repeal was effected are not exclusively responsible for the result. It is not unlikely that, from the growing preponderance of the popular branch of the constitution, it had become impossible to carry on the government without the annual exhibition of some such fallacious benefit, to gain the applause of the multitude; and it is more than probable that, from the excessive influence which in later years it acquired, the maintenance of any fixed provident system of finance had become impossible. But they are to blame, and history cannot acquit them of the fault, for not having constantly and strenuously combated this natural, though ruinous, popular weakness; and if they could not prevail on the House

upon those who, for the sake of their children as well as themselves, have engaged in the struggle, the whole charges of a contest of which the more lasting benefits are probably to accrue to those who are to succeed them. In such cases, necessity in nations, not less than individuals, calls for the equalisation of the burden over all those who are to obtain the benefit; and the obvious mode of effecting this is by the funding system, which, pro

of Commons to adhere to Mr Pitt's financial system, they should at least have laid on them the responsibility of all the consequences of its abandonment. And as the repeal of indirect taxes during peace was the fatal error, so the return to an income-tax during the burdens of the Chinese, and the disasters of the Affghanistaun wars, in 1842, was a wise and manly measure, as much in accordance with the spirit of Mr Pitt's financial policy as the previous calamitous reductions of in-viding at once by loan the supplies direct taxes had been against it.

necessary for carrying on the contest, lays its interest as a lasting charge on those for whose behoof the debt had been contracted. Nor is it possible to deny, amidst all the evils which the

It was impossible to explain Mr Pitt's system for the reduction of the debt, without anticipating the course of events, and unfolding the ruinous results which have followed the depar-abuse of this system has occasioned, its ture from its principles. The paramount importance of the subject must plead the author's apology for the anachronism; and it remains now to advert, with a different measure of encomium, to the funding system on which that statesman so largely acted, and the general principles on which his taxation was founded.

37. It is evident that, in some cases, the funding system, or the plan of providing for extraordinary public expenses by loans, the interest of which is alone laid as a burden on future years, is not only just, but attended with very great public advantage. When a war is destined apparently to be of short endurance, and a great lasting advantage may be expected from its results, it is often impossible, and if possible would be unjust, to lay its expenses exclusively upon the years of its continuance. In ordinary contests, indeed, it is frequently practicable, and when so it is always advisable, to make the expenses of the year fall entirely upon its income; so that, at the conclusion of hostilities, no lasting burden may descend upon posterity. But in other cases this cannot be done. When, in consequence of the fierce attack of a desperate and reckless enemy, it has become necessary to make extraordinary efforts, it is often altogether out of the question to raise supplies in the year adequate to its expenditure; nor is it reasonable, in such cases, to lay

astonishing effect in suddenly augmenting the resources of a nation; or to resist the conclusion deducible from the fact, that it was to its vigorous and happy application, at the close of the war, that the extraordinary successes by which it was distinguished are in a great degree to be ascribed.*

38. But this system, like everything good in human affairs, has its limits; and if extraordinary benefits may sometimes arise from its adoption, extraordinary evils may still more frequently originate in its abuse. Many individuals have been elevated, by means of loans contributed at a fortunate moment, to wealth and greatness; but many more have been involved, by the fatal command of money which it confers for a short period, in irretrievable embarrassments. Unless suggested by necessity and conducted with prudence

unless administered with frugality and followed by parsimony, borrowing * Loans contracted by the British government in the latter years of the war :

is to nations, not less than individuals, | national faith was pledged, till the the general road to ruin. It is the whole debt thus contracted, principal ease of contracting compared with the and interest, was discharged. It is no difficulty of discharging; the natural impeachment of the wisdom of this disposition to get a present command system, so far as finance goes, that the of money, and leaving the task of pay- expectations of a speedy termination of ing it off to posterity, which is the the contest were constantly disappointtemptation that, to communities noted, and that debt to the amount of a less than single men, so often proves irresistible. Opulent nations, whose credit is high, become involved in debt from the same cause which has overwhelmed almost all the great estates in Europe with mortgages. The existence of the means of relieving present difficulties by merely contracting debt, is more than the firmness either of the heads of families or the rulers of empires can resist. And there is this extraordinary and peculiar danger in the lavish contraction of debt by government, that, by the great present expenditure with which it is attended, a very great impulse is communicated at the time to every branch of industry, and thus immediate prosperity is generated out of the source of ultimate ruin.

hundred and sixteen million pounds was contracted before the Continental peace of Campo Formio in 1797, without any other result than a constant addition to the power of France. The question is not, whether the resources obtained from these loans were beneficially expended, but whether the debts were contracted yearly under a belief, founded on rational grounds, that by a vigorous prosecution of the contest it might speedily be brought to a successful issue? That this view, so far as mere finance considerations are concerned, was well founded, is obvious from the narrow escapes which the French Republic repeatedly made during that period, and the many occasions on which the jealousies of the Allies, or the niggardly exertion of its military resources by Great Britain, let slip the means of triumph when within their grasp.

39. Mr Pitt was fully aware both of the immediate advantages and of the ultimate dangers of the funding system. His measures, accordingly, varied with the aspect which the war assumed, and 40. The financial measures of the the chances of bringing it to an imme- British minister, therefore, during this diate issue which present appearances period, were justifiable and prudent: seemed to afford. During its earlier the real error consisted in the misapyears, when the Continental campaigns plication or undue husbanding of the were going on, and a rapid termination land forces of the country, for which of the strife was constantly expected, it is not so easy to find an apology. as was the case with the Spanish revo- But after the peace of Campo Formio, lution in 1823, or the Polish in 1831, in 1797, this system of lavish annual large loans were annually contracted, borrowing, in expectation of an immeand the greater part of the war sup-diate and decisive result, necessarily plies of the year were raised by that means; provision being made for the permanent raising of the interest, and of the sinking-fund for the extinction of these loans, in the indirect taxes which were simultaneously laid on, and to the maintenance of which the

*

required a modification. Great Britain was then left alone in the struggle. Her Continental allies had all disappeared from the field of battle; and the utmost that she could now expect was, to continue a defensive warfare till time or a different series of events had again brought their vast armies to her side. To have continued the system of borrowing for the war expenses of the year, in such a state of the contest, would have been to go on with measures which were likely to lead to perdition. The war having

now assumed a defensive and lasting | is evidently impracticable, some mecomplexion, the moment had arrived dium, however, may be found to draw when it became necessary to bring the as much advantage from the funding taxes within the year nearer to a level system as it is fit, consistently with a with the expenditure. This change, due regard to posterity, to afford, and and the reasons for it, are thus detail- at the same time to obviate the evils ed in Mr Pitt's speech on the budget with which its excess would be attendfor the year 1798 :ed. We may still devise some expedient by which we may contribute to the defence of our own cause, and to the supply of our own exigencies; by which we may reduce within equitable limits the accommodation of the funding system, and lay the foundation of that quick redemption which will prevent the dangerous consequences of an overgrown accumulation of our public debt.