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 Front Page arrow Titles (by Subject) arrow Of the Means of promoting human Improvement and Happiness in the United States.—And first, of Public Debts. - Observations on the Importance of the American Revolution, and the Means of Making it a Benefit to the World

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Subject Area: Economics
Subject Area: Political Theory
Subject Area: War and Peace
Topic: The American Revolution and Constitution

Of the Means of promoting human Improvement and Happiness in the United States.—And first, of Public Debts. - Richard Price, Observations on the Importance of the American Revolution, and the Means of Making it a Benefit to the World [1784]

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Observations on the Importance of the American Revolution, and the Means of Making it a Benefit to the World. To which is added, a Letter from M. Turgot, late Comptroller-General of the Finances of France: with an Appendix, containing a Translation of the Will of M. Fortuné Ricard, lately published in France (London: T. Cadell, 1785).

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Of the Means of promoting human Improvement and Happiness in the United States.—And first, ofPublic Debts.

IT seems evident, that what first requires the attention of the United States is the redemption of their debts, and making compensation to that army which has carried them through the war. They have an infant credit to cherish and rear, which, if this is not done, must perish, and with it their character and honour for ever. Nor is it conceivable they should meet with any great difficulties in doing this. They have a vast resource peculiar to themselves, in a continent of unlocated lands possessing every advantage of soil and climate. The settlement of these lands will be rapid, the consequence of which must be a rapid increase of their value. By disposing of them to the army and to emigrants, the greatest part of the debts of the United States may probably be sunk immediately. But had they no such resource, they are very capable of bearing taxes sufficient for the purpose of a gradual redemption. Supposing their debts to amount to nine millions sterling, carrying interest at 5½ per cent. taxes producing a revenue of a million per ann. would pay the interest, and at the same time leave a surplus of half a million per ann. for a sinking fund, which would discharge the principal in thirteen years. A surplus of a quarter of a million would do the same in 20½ years. After discharging the principal, the appropriated revenue being no longer wanted, might be abolished, and the States eased of the burthen of it. But it would be imprudent to abolish it entirely. 100,000 l. per ann. reserved, and faithfully laid out in clearing unlocated lands and other improvements, would in a short time increase to a treasure (or continental patrimony) which would defray the whole expenditure of the union, and keep the States free from debts and taxes for ever* . Such a reserve would (supposing it improved so as to produce a profit of 5 per cent.) increase to a capital of three millions in 19 years, 30 millions in 57 years, 100 millions in 81 years, and 261 millions in 100 years. But supposing it capable of being improved so as to produce a profit of 10 per cent. it would increase to five millions in 19 years, 100 millions in 49 years, and 10,000 millions in 97 years.

It is wonderful that no state has yet thought of taking this method to make itself great and rich. The smallest appropriation in a sinking fund, never diverted, operates in cancelling debts, just as money increases at compound interest; and is, therefore, omnipotent* . But, if diverted, it loses all its power. Britain affords a striking proof of this. Its sinking fund (once the hope of the kingdom) has, by the practice of alienating it, been rendered impotent and useless. Had it been inviolably applied to the purpose for which it was intended, there would, in the year 1775, have been a surplus in the revenue of more than five millions per ann. But instead of this, we were then encumbered with a debt of 137 millions, carrying an interest of near 4½ millions, and leaving no surplus of any consequence. This debt has been since increased to* 280 millions, carrying an interest (including expences of management) of nine millions and a half.—A monstrous bubble;—and if no very strong measures are soon taken to reduce it within the limits of safety, it must produce a dreadful convulsion. Let the United States take warning—Their debts at present are moderate. A Sinking fund, guarded† against misapplication, may soon extinguish them, and prove a resource in all events of the greatest importance.

I must not, however, forget that there is one of their debts on which no sinking fund can have any effect; and which it is impossible for them to discharge:—A debt, greater, perhaps, than has been ever due from any country; and which will be deeply felt by their latest posterity.—But it is a debt of gratitude only—Of gratitude to that General, who has been raised up by Providence to make them free and independent, and whose name must shine among the first in the future annals of the benefactors of mankind.

The measure now proposed may preserve America for ever from too great an accumulation of debts; and, consequently, of taxes—an evil which is likely to be the ruin not only of Britain, but of other European States.—But there are measures of yet greater consequence, which I wish ardently to recommend and inculcate.

For the sake of mankind, I wish to see every measure adopted that can have a tendency to preserve peace in America; and to make it an open and fair stage for discussion, and the seat of perfect liberty.

[* ]The lands, forests, imposts, &c. &c. which once formed the patrimony of the crown in England, bore most of the expences of government. It is well for this kingdom that the extravagance of the crown has been the means of alienating this patrimony, for the consequence has been making the crown dependent on the people. But in America such a patrimony would be continental property, capable of being applied only to public purposes, in the way which the public (or its delegates) would approve.

[* ]One penny put out at our Saviour’s birth to 5 per cent. compound interest would, before this time, have increased to a greater sum than would be contained in two hundred millions of earths all solid gold. But, if put out to simple interest, it would have amounted to no more than seven shillings and six-pence. All governments which alienate funds destined for reimbursements, chuse to improve money in the last rather than the first of these ways.

[* ]See the Postscript to a pamphlet, entitled, The State of the Finances of the Kingdom, at signing the Preliminary Articles of Peace in January 1783, printed for Mr. Cadell.

[† ]When not thus guarded, public funds become the worst evils, by giving to the rulers of states a command of revenue for the purposes of corruption.