Volume II Part 11 (2/2)
says he, ”was tangible and real till paper currency was introduced.” Now, was there ever, since men emerged from a state of utter barbarism, an age in which there were no debts? Is not a debt, while the solvency of the debtor is undoubted, always reckoned as part of the wealth of the creditor? Yet is it tangible and real wealth? Does it cease to be wealth, because there is the security of a written acknowledgment for it? And what else is paper currency? Did Mr. Southey ever read a banknote? If he did, he would see that it is a written acknowledgment of a debt, and a promise to pay that debt. The promise may be violated, the debt may remain unpaid: those to whom it was due may suffer: but this is a risk not confined to cases of paper currency: it is a risk inseparable from the relation of debtor and creditor. Every man who sells goods for anything but ready money runs the risk of finding that what he considered as part of his wealth one day is nothing at all the next day. Mr. Southey refers to the picture-galleries of Holland.
The pictures were undoubtedly real and tangible possessions. But surely it might happen that a burgomaster might owe a picture- dealer a thousand guilders for a Teniers. What in this case corresponds to our paper money is not the picture, which is tangible, but the claim of the picture-dealer on his customer for the price of the picture; and this claim is not tangible. Now, would not the picture-dealer consider this claim as part of his wealth? Would not a tradesman who knew of the claim give credit to the picture-dealer the more readily on account of the claim?
The burgomaster might be ruined. If so, would not those consequences follow which, as Mr. Southey tells us, were never heard of till paper money came into use? Yesterday this claim was worth a thousand guilders. To-day what is it? The shadow of a shade.
It is true that, the more readily claims of this sort are transferred from hand to hand, the more extensive will be the injury produced by a single failure. The laws of all nations sanction, in certain cases, the transfer of rights not yet reduced into possession. Mr. Southey would scarcely wish, we should think, that all indors.e.m.e.nts of bills and notes should be declared invalid. Yet even if this were done, the transfer of claims would imperceptibly take place, to a very great extent.
When the baker trusts the butcher, for example, he is in fact, though not in form, trusting the butcher's customers. A man who owes large bills to tradesmen, and fails to pay them, almost always produces distress through a very wide circle of people with whom he never dealt.
In short, what Mr. Southey takes for a difference in kind is only a difference of form and degree. In every society men have claims on the property of others. In every society there is a possibility that some debtors may not be able to fulfil their obligations. In every society, therefore, there is wealth which is not tangible, and which may become the shadow of a shade.
Mr. Southey then proceeds to a dissertation on the national debt, which he considers in a new and most consolatory light, as a clear addition to the income of the country.
”You can understand,” says Sir Thomas, ”that it const.i.tutes a great part of the national wealth.”
”So large a part,” answers Montesinos, ”that the interest amounted, during the prosperous times of agriculture, to as much as the rental of all the land in Great Britain; and at present to the rental of all lands, all houses, and all other fixed property put together.”
The Ghost and Laureate agree that it is very desirable that there should be so secure and advantageous a deposit for wealth as the funds afford. Sir Thomas then proceeds:
”Another and far more momentous benefit must not be overlooked; the expenditure of an annual interest, equalling, as you have stated, the present rental of all fixed property.”
”That expenditure,” quoth Montesinos, ”gives employment to half the industry in the kingdom, and feeds half the mouths. Take, indeed, the weight of the national debt from this great and complicated social machine, and the wheels must stop.”
From this pa.s.sage we should have been inclined to think that Mr.
Southey supposes the dividends to be a free gift periodically sent down from heaven to the fundholders, as quails and manna were sent to the Israelites; were it not that he has vouchsafed, in the following question and answer, to give the public some information which, we believe, was very little needed.
”Whence comes the interest?” says Sir Thomas.
”It is raised,” answers Montesinos, ”by taxation.”
Now, has Mr. Southey ever considered what would be done with this sum if it were not paid as interest to the national creditor? If he would think over this matter for a short time, we suspect that the ”momentous benefit” of which he talks would appear to him to shrink strangely in amount. A fundholder, we will suppose, spends dividends amounting to five hundred pounds a year; and his ten nearest neighbours pay fifty pounds each to the tax-gatherer, for the purpose of discharging the interest of the national debt. If the debt were wiped out, a measure, be it understood, which we by no means recommend, the fundholder would cease to spend his five hundred pounds a year. He would no longer give employment to industry, or put food into the mouths of labourers. This Mr.
Southey thinks a fearful evil. But is there no mitigating circ.u.mstance? Each of the ten neighbours of our fundholder has fifty pounds a year more than formerly. Each of them will, as it seems to our feeble understandings, employ more industry and feed more mouths than formerly. The sum is exactly the same. It is in different hands. But on what grounds does Mr. Southey call upon us to believe that it is in the hands of men who will spend it less liberally or less judiciously? He seems to think that n.o.body but a fundholder can employ the poor; that, if a tax is remitted, those who formerly used to pay it proceed immediately to dig holes in the earth, and to bury the sum which the Government had been accustomed to take; that no money can set industry in motion till such money has been taken by the tax-gatherer out of one man's pocket and put into another man's pocket. We really wish that Mr. Southey would try to prove this principle, which is indeed the foundation of his whole theory of finance: for we think it right to hint to him that our hard-hearted and unimaginative generation will expect some more satisfactory reason than the only one with which he has yet favoured it, namely, a similitude touching evaporation and dew.
Both the theory and the ill.u.s.tration, indeed, are old friends of ours. In every season of distress which we can remember, Mr.
Southey has been proclaiming that it is not from economy, but from increased taxation, that the country must expect relief; and he still, we find, places the undoubting faith of a political Diafoirus, in his
”Resaignare, repurgare, et reclysterizare.”
”A people,” he tells us, ”may be too rich, but a government cannot be so.”
”A state,” says he, ”cannot have more wealth at its command than may be employed for the general good, a liberal expenditure in national works being one of the surest means of promoting national prosperity; and the benefit being still more obvious, of an expenditure directed to the purposes of national improvement.
But a people may be too rich.”
We fully admit that a state cannot have at its command more wealth than may be employed for the general good. But neither can individuals, or bodies of individuals, have at their command more wealth than may be employed for the general good. If there be no limit to the sum which may be usefully laid out in public works and national improvement, then wealth, whether in the hands of private men or of the Government, may always, if the possessors choose to spend it usefully, be usefully spent. The only ground, therefore, on which Mr. Southey can possibly maintain that a government cannot be too rich, but that a people may be too rich, must be this, that governments are more likely to spend their money on good objects than private individuals.
But what is useful expenditure? ”A liberal expenditure in national works,” says Mr. Southey, ”is one of the surest means for promoting national prosperity.” What does he mean by national prosperity? Does he mean the wealth of the State? If so, his reasoning runs thus: The more wealth a state has the better; for the more wealth a state has the more wealth it will have. This is surely something like that fallacy, which is ungallantly termed a lady's reason. If by national prosperity he means the wealth of the people, of how gross a contradiction is Mr. Southey guilty. A people, he tells us, may be too rich: a government cannot: for a government can employ its riches in making the people richer. The wealth of the people is to be taken from them, because they have too much, and laid out in works, which will yield them more.
We are really at a loss to determine whether Mr. Southey's reason for recommending large taxation is that it will make the people rich, or that it will make them poor. But we are sure that, if his object is to make them rich, he takes the wrong course. There are two or three principles respecting public works, which, as an experience of vast extent proves, may be trusted in almost every case.
It scarcely ever happens that any private man or body of men will invest property in a ca.n.a.l, a tunnel, or a bridge, but from an expectation that the outlay will be profitable to them. No work of this sort can be profitable to private speculators, unless the public be willing to pay for the use of it. The public will not pay of their own accord for what yields no profit or convenience to them. There is thus a direct and obvious connection between the motive which induces individuals to undertake such a work, and the utility of the work.
Can we find any such connection in the case of a public work executed by a government? If it is useful, are the individuals who rule the country richer? If it is useless, are they poorer? A public man may be solicitous for his credit. But is not he likely to gain more credit by an useless display of ostentatious architecture in a great town than by the best road or the best ca.n.a.l in some remote province? The fame of public works is a much less certain test of their utility than the amount of toll collected at them. In a corrupt age, there will be direct embezzlement. In the purest age, there will be abundance of jobbing. Never were the statesmen of any country more sensitive to public opinion, and more spotless in pecuniary transactions, than those who have of late governed England. Yet we have only to look at the buildings recently erected in London for a proof of our rule. In a bad age, the fate of the public is to be robbed outright. In a good age, it is merely to have the dearest and the worst of everything.
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