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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 their current value； or by agreeing
with government for certain considerations to circulate exchequer
bills； that is； to receive them at par； paying the interest which
happens to be due upon them； keeps up their value and facilitates
their circulation； and thereby frequently enables government to
contract a very large debt of this kind。 In France； where there
is no bank； the state bills （billets d'etat） have sometimes sold
at sixty and seventy per cent discount。 During the great
recoinage in King William's time； when the Bank of England
thought proper to put a stop to its usual transactions； exchequer
bills and tallies are said to have sold from twenty…five to sixty
per cent discount； owing partly； no doubt； to the supposed
instability of the new government established by the Revolution；
but partly； too； to the want of the support of the Bank of
England。
When this resource is exhausted； and it becomes necessary；
in order to raise money； to assign or mortgage some particular
branch of the public revenue for the payment of the debt；
government has upon different occasions done this in two
different ways。 Sometimes it has made this assignment or mortgage
for a short period of time only； a year； or a few years； for
example； and sometimes for perpetuity。 In the one case the fund
was supposed sufficient to pay； within the limited time； both
principal and interest of the money borrowed。 In the other it was
supposed sufficient to pay the interest only； or a perpetual
annuity equivalent to the interest； government being at liberty
to redeem at any time this annuity upon paying back the principal
sum borrowed。 When money was raised in the one way； it was said
to be raised by anticipation； when in the other； by perpetual
funding； or； more shortly； by funding。
In Great Britain the land and malt taxes are regularly
anticipated every year； by virtue of a borrowing clause
constantly inserted into the acts which impose them。 The Bank of
England generally advances at an interest； which since the
Revolution has varied from eight to three per cent； the sums for
which those taxes are granted； and receives payment as their
produce gradually comes in。 If there is a deficiency； which there
always is； it is provided for in the supplies of the ensuing
year。 The only considerable branch of the public revenue which
yet remains unmortgaged is thus regularly spent before it comes
in。 Like an improvident spendthrift； whose pressing occasions
will not allow him to wait for the regular payment of his
revenue； the state is in the constant practice of borrowing of
its own factors and agents； and of paying interest for the use of
its own money。
In the reign of King William； and during a great part of
that of Queen Anne； before we had become so familiar as we are
now with the practice of perpetual funding； the greater part of
the new taxes were imposed but for a short period of time （for
four； five； six； or seven years only）； and a great part of the
grants of every year consisted in loans upon anticipations of the
produce of those taxes。 The produce being frequently insufficient
for paying within the limited term the principal and interest of
the money borrowed； deficiencies arose； to make good which it
became necessary to prolong the term。
In 1697； by the 8th of William III； c。 20； the deficiencies
of several taxes were charged upon what was then called the first
general mortgage or fund； consisting of a prolongation to the
first of August 1706 of several different taxes which would have
expired within a shorter term； and of which the produce was
accumulated into one general fund。 The deficiencies charged upon
this prolonged term amounted to L5；160；459 14s。 9 1/4d。
In 1701； those duties； with some others； were still further
prolonged for the like purposes till the first of August 1710；
and were called the second general mortgage or fund。 The
deficiencies charged upon it amounted to L2；055；999 7s。 11 1/2d。
In 1707； those duties were still further prolonged； as a
fund for new loans； to the first of August 1712； and were called
the third general mortgage or fund。 The sum borrowed upon it was
L983；254 11s。 9 1/4d。
In 1708； those duties were all （except the Old Subsidy of
Tonnage and Poundage； of which one moiety only was made a part of
this fund； and a duty upon the importation of Scotch linen； which
had been taken off by the Articles of Union） still further
continued； as a fund for new loans； to the first of August 1714；
and were called the fourth general mortgage or fund。 The sum
borrowed upon it was L925；176 9s。 2 1/4d。
In 1709； those cities were all （except the Old Subsidy of
Tonnage and Poundage； which was now left out of this fund
altogether） still further continued for the same purpose to the
first of August 1716； and were called the fifth general mortgage
or fund。 The sum borrowed upon it was L922；029 6s。
In 1710； those duties were again prolonged to the first of
August 1720； and were called the sixth general mortgage or fund。
The sum borrowed upon it was L1；296；552 9s。 11 3/4d。
In 1711； the same duties （which at this time were thus
subject to four different anticipations） together with several
others were continued for ever； and made a fund for paying the
interest of the capital of the South Sea Company； which had that
year advanced to government； for paying debts and making good
deficiencies； the sum of L9；177；967 15s。 4d。； the greatest loan
which at that time had ever been made。
Before this period； the principal； so far as I have been
able to observe； the only taxes which in order to pay the
interest of a debt had been imposed for perpetuity； were those
for paying the interest of the money which had been advanced to
government by the Bank and the East India Company； and of what it
was expected would be advanced； but which was never advanced； by
a projected land bank。 The bank fund at this time amounted to
L3；375；027 17s。 10 1/2d。； for which was paid an annuity or
interest of L206；501 13s。 5d。 The East India fund amounted to
L3；200；000； for which was paid an annuity or interest of
L160；000… the bank fund being at six per cent； the East India
fund at five per cent interest。
In 1715； by the 1st of George I； c。 12； the different taxes
which had been mortgaged for paying the bank annuity； together
with several others which by this act were likewise rendered
perpetual； were accumulated into one common fund called The
Aggregate Fund； which was charged not only with the payments of
the bank annuity； but with several other annuities and burdens of
different kinds。 This fund was afterwards augmented by the 3rd of
George I； c。 8； and by the 5th of George I； c。 3； and the
different duties which were then added to it were likewise
rendered perpetual。
In