tity of the means of defence or annoyance, as its force depends on the energy and skill with which those means are employed; it follows that, in proportion as the labor of production is facilitated, the politically disposable numbers will be greater when compared with the whole population. This solves the problem, how a small nation without any diminution of its intrinsic wealth may be able to maintain equal armies with one far more numerous. If, for instance, in one nation two-thirds are usually wanted to reproduce food and other primary objects of consumption, and in another half only are wanted for these purposes, then, all other circumstances being alike, this difference of one-sixth of the whole number may be added to the power of its government. Also if, by means of improved : machinery in manufactures, two men can produce as much as three before, the third, if not employed to increase the former quantity, may be added to the power of the government.

An application of these observations to the modern state of the British empire will clearly show, why it was for so long a time able to spare such an immense proportion of its population for military purposes, not only without being impoverished in point of intrinsic wealth by the loss of their profitable labor, but with a still remaining surplus of hands to employ very actively in augmenting its present, and still more its progressive, increase.

If also the private revenue of the nation has, from these and other causes, increased in more than a duplicate proportion, it so far follows that the part of it which may be spared for the use of the government will have equally increased in intrinsic value; and, if the money value of that revenue is tripled, its nominal amount, as estimated in money, will be more than six times as great: that is, the population being now more than twice as great as in 1714, the intrinsic wealth and revenue being still more increased, and the money price of that wealth being tripled (if tripled?), it conclusively follows, that, one with another, private incomes would not now be so much diminished in real value by paying £30,000,000 a year for the expenses of government (exclusive of the interest of public debt) as by paying £5,000,000 a year only at the former time. It will hereafter be shown that money paid by the subject for interest of public debt, only falls within the case of actual national expense, so far as that debt belongs to foreigners or others to whom its interest is transmitted.

With respect to the degree in which the money prices have increased since 1714 the general opinion, that on a medium they are three times as great as formerly, is probably very near the truth. Various causes have been assigned for this increase, of which the greater part have, undoubt edly, more or less contributed to it; and, as the effects of any one of them have been more than of others laboriously traced by persons with powers of observation naturally or artificially contracted, to that cause which they happen more clearly to apprehend they usually attribute the combined effect of many causes co-operating. We hope not to fall into the same error when we state that the progressive increase of the popula

tion, and, more especially, of that part which lives in towns, or is elsewhere employed otherwise than in reproducing the annual consump tion of food, has been a very material cause of the progressive increase of its price, and, by a chain of consequences, of the general cost of labor, and of what is commonly called the depreciation of the value of money. We understand, by the latter expression, the diminution of its power as an instrument in estimating, exchanging, and transferring other things of real or imaginary worth, without any direct reference to the commercial value of the material employed in its fabrication.

We believe it will be found historically true that, independent of the quantity of circulating metallic money, or of debts performing its functions, and also independent of the immediate effects of powerful causes, such as sudden abundance or scarcity, there exists a fluctuation of money prices, which is usually most visible with respect to things of most general and necessary consumption; and which very materially depends on the advance or decline of population and, more generally, on the state of national prosperity. If, as seems probable, the average supply of the necessaries and comforts of life, during any period of sufficient length to decide the question, will be very nearly in an exact proportion to the consumption, where the population is stationary as to numbers, and the habits of life are little varied by moral or political changes: it is also a probable inference, that a constantly increasing population will anticipate the increase of produce for its own use, and the case will be inverted when, from any cause, its numbers are diminishing. We believe that the supply much more usually adjusts itself to the demand than the demand to the supply. We do not mean to say that this is always the case, because novelty will tempt purchasers, and unusual abundance will, to a limited extent, increase consumption; but, where the regular effect of increasing or diminishing numbers is not controlled by other causes, we think it evident that the course will be such as we have stated. Where there was previously an exported superabundance, the earlier effects of an increasing demand may, for some time, be hardly visible; or may even be counteracted, as to any particular commodity, by any circumstance which may act as a stimulus for producing it beyond the progressive consumption. This happened during the first half of the last century.

For several years, till after the bankruptcy of the South Sea Company, there was an extreme activity of circulation, and decreasing interest of debts, indicating that sort of plenty of money, or, more properly, facility of obtaining credit, which is commonly deemed a chief cause of increasing prices; yet they regularly declined, and continued to do so for nearly forty years. But, during that period, the trade and manufactures of the country were by no means remarkably prosperous, a sure proof that they were not remarkably profitable. The increase of population was not inconsiderable, though far less than it has since been; but the profit of manufactures did not as yet entice it by high wages from agricul

tural employments. With the sudden and great change in that respect, which took place in consequence of the political ascendency that we acquired during the latter part of the seven years' war, may be visibly connected a very rapid change from superabundance of agricultural produce to an actual deficiency. A public debt, which had increased fifty-fold between the revolution and the peace of Utrecht, had no visible effect on the value of money. A long peace, with very remarkable alternations of private credit, between extreme activity and a general stagnation of pecuniary transactions, had no remarkable effect on money prices of necessaries. The succeeding war, from 1740 to 1748, disastrous to our commerce, impeding our manufactures, and materially increasing our national debt, did not visibly alter the value of money.

The causes of its diminished value, perhaps, began to operate several years before their effects were distinctly visible, but it was not till some time after the successful termination of the seven years' war that the change became remarkable. During the American war the money prices of most things of extensive use considerably diminished; during the late war they still more remarkably increased. We by no means infer that these circumstances may not have important and regular effects on the value of money, but only that other powerful causes may have produced these seeming anomalies; and also that the great decrease in the value of money has been, to a considerable extent, occasioned by the concurrent increase of real wealth, and of the population employed in producing it. Soon after the middle of the last century a great change began in the proportion of agricultural produce and its home consumption.

In about twenty years, during which the population appears to have increased about 1,000,000, a great surplus of corn, which had previously been exported, was changed to an average deficiency, which soon became constant, and has since greatly increased. It is, therefore, evident that a great change was then beginning between the comparative numbers of persons employed in producing corn, and of those by whom it was consumed. With that change began one very efficient cause of the general depreciation of money. A deficiency of supply, which has never since overtaken the constantly increasing demand, has produced a progressive increase of prices, requiring higher wages for subsistence, giving greater profits to the farmer, leading him to give higher rents, and thus adding to the money price of lands, and, like all other movements, acting with increasing effect in proportion to its unimpeded duration. The advance of money price, however great, cannot restore the equilibrium, so long as it can be paid without difficulty by the great mass of consumers, which will continue while the profit of employing them in manufactures is great enough, and the sale of those manufactures extensive enough, to allow of paying adequately increasing wages. And the period during which this excess of profit, or one of its consequences, induces the employer to give adequate wages, is prolonged by the multiplied facilities of pro

duction which have, within a few years, been greatly improved, and many of them almost recently invented.

In these a very large addition to the national capital is now invested, of which, like all other capital, the revenue depends altogether on the productive use; and, on this account, the proprietors of this species of capital must continue to employ their workmen, or cease to derive any profit from it. So far as extends to internal consumption only, the demand for the produce of manufacturing industry can never be so excessive, but that, as long as room remains for increase or improvement of cultivation, a sufficient number of hands will remain to cultivate with adequate profit, and to an extent proportioned to the consumption. Nor could the diminution of the value of money, which results from an inadequate domestic supply of those things for which money is chiefly wanted, continue for any long space, were it not for such a profitable exportation of manufactures as entices too large a proportion of labor from its more useful employinent in reproducing food.

So long as only a surplus of labor beyond what is wanted for domestic use is thus employed, the very irregular demands of foreign markets, however inconvenient, will probably not materially affect the average value of money; but the case is materially different when a constant deficiency of the necessaries of life, creating, as before stated, of itself alone a constantly increasing money price for them, can only be supplied by a precarious exchange for things of very inferior use; of things subject to the caprice of fashion, and the control of adverse policy. Those who must buy cannot meet on equal terms in the market with those who are subject to no such necessity; and hence arises an obvious additional cause why the money prices of the food of a nation so situated must continue to increase so long as it has luxuries only, or things of which the purchase may be postponed, to give to foreigners in exchange for it. very far from intending to lessen the moral and political value of commerce, and of industry employed to furnish it with merchandise; but we have wished to explain an important cause of the modern change of money prices, which appears to us to have considerably resulted from an inconvenient disparity of profit between the cultivation of necessaries and the manufacture of superfluities. We are not aware that this cause of depreciation of money has been much considered, which must be our excuse if we appear to bestow on it a disproportionate degree of attention. We need not explain those causes of it which are more generally, though we believe imperfectly, known.

We are

But if the population has doubled, if the real wealth has increased in more than a duplicate proportion, and if the money price of that real wealth, on an average, is three times greater than it was 100 years ago, it strictly follows, that £1,000,000 a year of public revenue at that time, bore as large a proportion to the means of paying it as more than £6,000,000 now; proba ly £7,000,000.

About the middle of king William's reign,

Gregory King valued the whole private revenue of England and Wales, including labor, at £43,500,000. Ilis authority is very great, and we may rely on this calculation as a near approximation. The long wars which followed, and various other circumstances, had diminished the population about one-twenty-sixth, but there was no remarkable change in money prices from the revolution to the peace of Utrecht.

But, as ten to sixty-five, so is £43,500,000 to £282,750,000.

From the returns made in 1811, it is clear that the population of England and Wales must now exceed 10,500,000; probably 10,700,000.

The earnings of the laboring classes of this population at the present wages are very moderately computed at £130,000,000 a year.

The property income, as ascertained by the tax assessments for England and Wales, will be found this year to amount to more than £140,000,000.

With due allowance, therefore, for various profits which escape assessment, the present annual revenue must certainly exceed 280,000,000, and is probably little less than £300,000,000. And this remarkably agrees with the inference from the increase of population and of moneyprices.

The addition of Scotland must also be allowed for, which contributed very little during the former period; that is, in the reigns of king William and queen Anne, until the peace of Utrecht. The population of Scotland is about a sixth, the extent about half, the cultivated extent about a sixth of the same in England and Wales; the wages are lower; but, all taken together, the revenue of Scotland cannot be less than a tenth of that of England, nor can both together be computed at less than between 310,000,000 and 330,000,000

Neither of the two latter sums is accurate, but they are near enough to show that, when considered with due attention to the difference of national means, the debts incurred in the second period of warfare are by no means so heavy as in the first.

We may apply these observations in comparing the public debts contracted during the two wars which preceded the peace of Utrecht, and which have been since the year 1792. The debt, when that peace was made, is stated by professor Hamilton to have amounted to £55,282,978, of which all but about £1,054,925 had been contracted in about twenty-five years, that is, after the revolution. This statement, if correct, probably included the floating debt unprovided for, and afterwards paid out of the unappropriated revenue; for it appears from an exchequer account presented to parliament, and dated March 14th, 1716, that the principal money borrowed had been £47,268,883, of which £665,782 had been paid, and £46,603,100 remained, at an annual charge of £3,118,448. But this sum being a charge on less than half the present population, and taken from less than half the present real private revenue, and computed in money of three times its present value, was, therefore, in proportion to the means of paying it, quite as much as a debt incurred during the last twenty years would be, of more than £320,000,000 borrowed, with more than £20,000,000 a year for its interest and cost of management. The annual charge, however, for the increase of both funded and unfunded debt from 1792 to August 1st, 1813, was only about £16,500,000, being considerably less in proportion to the real wealth of the country.

It cannot, however, be denied that our exertions have been much greater and more expensive than in these proportions of interest for debt contracted. Our armies and navies have been much more than double, the equipments are intrinsically more costly, and we cannot venture to say that the expenses have been managed with greater economy.

tion, because in two ways the exertions have The debt has not increased in equal proporbeen very great, by which its increase has been retarded. By the war-taxes, and by the sinking fund. But, if the durable pressure has been lessened by them, the question which naturally follows is this: have the temporary burdens, and the subtraction of such immense numbers from productive employments, impoverished the na

tion, or altogether stopped its improvement? Had it been so, we should soon have seen the effect in falling prices, in a suspension of public works by subscription, and by many other unequivocal proofs. The reasons why we are now able to make such unexampled exertions have now, we think, been explained. In fact, nearly the whole resolves itself into increased facilities of production, into a substitution of inanimate for animated power, and, in a less degree, the substitution of the labor of cattle and horses for that of man.

Not to mention many well-known instances of inanimate movement, by fire or by water, of complicated machinery, one example of a recent improvement in rural economy may be produced which will fully explain the effect of this system. On a tillage farm of 300 acres a threshing machine, if only moved by horses, on a very moderate estimate, saves as much human labor as that of one man constantly employed, and far more if moved by water. The produce is the same, but the former saves so much expense in producing, and the nation gains one man by each of those machines, who may be employed as a soldier or sailor, or a military manufacturer, without any diminution of reproduction, and whose wages in his new and unproductive occupation are provided by the economy of expense in threshing corn; for, in this view of the question, each private saving of expense is a national saving. Apply the same reasoning to the numberless similar improvements of modern times in this country, and it will be easily seen why we have not only more men to spare, but more means to pay them without becoming poorer. A further analysis of this most interesting question would lead us to remoter causes than the mere progress of mechanical inventions; to those causes on which the latter mainly depend for their introduction and improvement. They are, in fact, the creatures of high civilisation in the true meaning of that word; of a state of society in which mental energies are excited, and industry is animated by a certainty that their movements will be unfettered by bad government, and in no danger of foreign or domestic spoliation.

Yet, although the means of supporting without impoverishment the immense public expenses of modern times in this country may be very distinctly traced to increasing national prosperity, resulting from the intellectual, moral, and political improvements which denote high civilisation, it may not be the less interesting to know by what mechanism of finance we have been able to raise our public debt to its present vast

amount.

In every state of improved society it is much more profitable to the mass of the population that a part should be appointed to protect the whole, than that all should be called upon to quit, when wanted, the occupations where use and art have made their labor additionally productive, and contribute personally a part of their time to an object, whether civil or military, for which, by education and habit, they have not been adapted. Generally speaking, if these services are paid for by those whose time and capi

tal are devoted to productive employments out of their revenue, a much larger proportion of it will remain for their own use than if their personal service were required. The time saved will produce far more than the cost of the commutation in money. If no moral and political circumstances interrupted the nearly equable progress of social life, all the cost of civil and military protection might be paid by regular and equable contemporary contributions from the revenue obtained by the profit of capital, and of labor productively employed. But since, from various causes, the expenses of every government will be extremely unequal according to political circumstances, the grand question seems to be, by what mechanism of finance may the natural inconveniences of this irregularity be so obviated as to produce the least possible mischief? By what means, during periods of great national expense, may a government avail itself of the national surplus of population and produce, without materially impeding the progress of private industry?

The more ancient way of attempting to do this was by hoarding in money the surplus of a revenue which exceeded the ordinary expenses; or sometimes by exacting contemporary contributions equal to the addition of them. The former system promises well on a cursory view of it, but is, of all that can be adopted, the most injurious to national prosperity. It diminishes the circulating medium when most wanted to employ. during peace, a supernumerary population; at that time it increases the value of the remaining money, and consequently deadens industry by depressing prices, which are suddenly increased again by its dispersion during subsequent war. It is saved when dear, and spent when cheap. Hoarding money in a national treasury during peace diminishes the stimulus to industry when labor is most plentiful, to increase it when labor for productive purposes is most scarce.

But the system of raising money during war by taxes equal to the additional expense, if adopted when that expense is great, is little less mischievous, though its bad consequences are totally different. In the former case, money in circulation for productive uses is made more plentiful by war; the farmer, the manufacturer, all who have labor to sell, or its produce, obtain higher prices, and imagine themselves individually richer, if the treasure is not exported, and no evils of war are felt beyond the place of actual hostilities, and even there a lavish expense is often some compensation for its local injuries. But a war altogether supported by taxes equal to its cost will almost always become grievous and unpopular too soon to be carried on to a successful conclusion. The private revenues being materially diminished, the purchase of things not immediately necessary likewise diminishes, and this soon affects the general industry. We have pursued this argument further in our article FUNDS.

Our own system has been a mixed one.During the period in which our funded debt has so largely increased it is apparent that, at least, as large a proportion of productive capital has been created within the same period. The real