The Online Library of Liberty

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• Errata—vol. III.
• Defence of Usury; Showing the Impolicy of the Present Legal Restraints On the Terms of Pecuniary Bargains; In Letters to a Friend.
• Letter I.: Introduction.
• Letter II.: Reasons For Restraint—prevention of Usury.
• Letter III.: Reasons For Restraint—prevention of Prodigality.
• Letter IV.: Reasons For Restraint—protection of Indigence.
• Letter V.: Reasons For Restraint—protection of Simplicity.
• Letter VI.: Mischiefs of the Anti-usurious Laws.
• Letter VII.: Efficacy of Anti-usurious Laws.
• Letter VIII.: Virtual Usury Allowed.
• Letter IX.: Blackstone Considered.
• Letter X.: Grounds of the Prejudices Against Usury.
• Letter XI.: Compound Interest.
• Letter XII.: Maintenance and Champerty.
• Letter XIII.: To Dr. Smith, On Projects In Arts, &c.
• A Manual of Political Economy: Now First Edited From the Mss. of Jeremy Bentham.
• Chapter I.: Introduction. *
• Chapter II.: Analytical Survey of the Field of Political Economy.
• Chapter III.: Of Wealth.
• Chapter IV.: Of Population.
• Chapter V.: Of Finance.
• Chapter VI.: Operation of a Sinking Fund On the Production of Wealth.
• Chapter VII.: Noscenda.
• Observations On the Restrictive and Prohibitory Commercial System; Especially With a Reference to the Decree of the Spanish Cortes of July 1820.
• Preface.: Observations, &c.
• Section I.: Nature of the Prohibitory System.
• Section II.: Mischiefs of the Prohibitory System.
• Section III.: Causes of the Prohibitory System.
• A Plan For Saving All Trouble and Expense In the Transfer of Stock, and For Enabling the Proprietors to Receive Their Dividends Without Powers of Attorney, Or Attendance At the Bank of England, By the Conversion of Stock Into Note Annuities.
• Introduction.
• Chapter I.: Plan For the Creation, Emission, Payment, and Eventual Extension, of a Proposed New Species of Government Paper, Under the Name of Annuity Notes.
• Chapter II.: Form of an Annuity Note. (see Table II.)
• Chapter III.: Comparison of the Proposed, With the Existing Government Securities, &c.
• Chapter IV.: Grounds of Expectation, In Regard to the Proposed Measure.
• Chapter V.: Financial Advantages.
• Chapter VI.: Advantage By Addition to National Capital.
• Chapter VII.: Advantage By Addition to Commercial Security.
• Chapter VIII.: Particular Interests Concerned.
• Chapter IX.: Rise of Prices—how to Obviate.
• Chapter X.: Reduction of Interest—proposed Mode Compared With Mr. Pelham’s.
• Chapter XI.: Moral Advantages.
• Chapter XII.: Constitutional Advantages.
• Chapter XIII.: Recapitulation and Conclusion.
• Appendix A.: Government Ought to Have the Monopoly of Paper Money, As Well As of Metallic Money.
• Appendix B.: Paper Money—causes Why Not Circulated By Government Without Interest, As Well As By Individuals.
• General View of a Complete Code of Laws.
• Chapter I.: General Division.
• Chapter II.: Relations Between the Laws Concerning Offences, Rights, Obligations, and Services.
• Chapter III.: Relation Between the Penal and Civil Code.
• Chapter IV.: Of Method.
• Chapter V.: Plan of the Penal Code.
• Chapter VI.: Of the Division of Offences.
• Chapter VIII. Titles of the Penal Code.
• Chapter IX.: First General Title of the Civil Code, * of Things.
• Chapter X.: Second General Title of the Civil Code. of Places.
• Chapter XI.: Third General Title of the Civil Code. of Times.
• Chapter XII.: Fourth General Title of the Civil Code. of Services.
• Chapter XIII.: Fifth General Title of the Civil Code. of Obligations.
• Chapter XIV.: Sixth General Title of the Civil Code. of Rights.
• Chapter XV.: Seventh General Title of the Civil Code. of Collative and Ablative Events.
• Chapter XVI.: Eighth General Title of the Civil Code. of Contracts.
• Chapter XVII.: Ninth General Title of the Civil Code. of the Domestic and Civil States.
• Chapter XVIII.: Tenth General Title of the Civil Code. of Persons Capable of Acquiring and of Contracting.
• Chapter XIX.: Of the Particular Titles of the Civil Code.
• Chapter XX.: Of Elementary Political Powers.
• Chapter XXI.: Of Elementary Political Powers— Subject Continued.
• Chapter XXII.: Plan of the Political Code.
• Chapter XXIII.: Plan of the International Code.
• Chapter XXIV.: Plan of the Maritime Code.
• Chapter XXV.: Plan of the Military Code.
• Chapter XXVI.: Plan of the Ecclesiastical Code.
• Chapter XXVII.: Plan of Remuneratory Laws.
• Chapter XXVIII.: Of Political Economy.
• Chapter XXIX.: Plan of the Financial Code.
• Chapter XXX.: Plan of Procedure Code.
• Chapter XXXI.: Of the Integrality of the Code of Laws.
• Chapter XXXII.: Of Purity In the Composition of a Code of Laws.
• Chapter XXXIII.: Of the Style of the Laws.
• Chapter XXXIV.: Of the Interpretation, Conservation, and Improvement of a Code.
• Pannomial Fragments.
• Chapter I.: General Observations.
• Chapter II.: Consideranda.
• Chapter III.: Expositions.
• Chapter IV.: Axioms.
• Nomography; Or the Art of Inditing Laws: Now First Published From the Mss. of Jeremy Bentham.
• Chapter I.: The Subject Stated.
• Chapter II.: Relations.
• Chapter III.: Proper End In View.
• Chapter IV.: Imperfections Primary.
• Chapter V.: Explanations Relative to the Imperfections of the Second Order.
• Chapter VI.: Of Remedies. *
• Chapter VII.: Of Language.
• Chapter VIII.: Of the Perfections of Which the Legislative Style Is Susceptible.
• Chapter IX.: Of Forms of Enactment.
• Appendix. Logical Arrangements, Or Instruments of Invention and Discovery
• Equity Dispatch Court Proposal; Containing a Plan For the Speedy and Unexpensive Termination of the Suits Now Depending In Equity Courts. With the Form of a Petition, and Some Account of a Proposed Bill For That Purpose
• Section I.: Purpose Explained. Jeremy Bentham to the Honest and Afflicted Among Equity Suitors.
• Section II.: Equity Suitors’ Petition For Dispatch Court. to the King’s Most Excellent Majesty, —
• Section III.: Dispatch Court Bill—some Account of It.
• Section IV.: Information Requisite From Petitioning Suitors.
• Equity Dispatch Court Bill: Being a Bill For the Institution of an Experimental Judicatory Under the Name of the Court of Dispatch, For Exemplifying In Practice the Manner In Which the Proposed Summary May Be Substituted to the So Called Regular Sy
• Editor’s Note.
• Preface.
• Preamble.
• Part I.—: Judiciary.
• Section I.: Judge Located, How.
• Section II.: Remuneration.
• Section III.: Registrar, &c.
• Section IV.: Eleemosynary Advocate.
• Section V.: Judges’, &c. Deputes.
• Section VI.: Judge’s Powers—exemptions—checks.
• Section VII.: Prehensors and Messengers.
• Section VIII.: Consignees; * Or Say, In-trust-holders.
• Section IX.: Grounds of Decision For the Dispatch Court Judge.
• Section X. ‡: Suits’ Comparative Suitableness; and Order of Cognizance.
• Section XI.: Auxiliary Judges and Accountants.
• Section XII.: Sittings, Times Of.
• Part II.—: Procedure.
• Section XIII.: Definitions. *
• Section XIV.: Examination of Solicitors.
• Section XV.: Initiatory Examination of Parties, &c.
• Section XVI.: Appropriate Intercourse, Constant and Universal, Secured.
• Section XVII.: Mutual Security For Forthcomingness of Persons and Things. ‡
• Section XVIII.: Evidence-procuring Money, How Provided.
• Section XIX.: Subsequential Evidence, How Elicited.
• Section XX.: Execution, How Performed.
• Section XXI.: Equity Court Costs, How Disposed Of.
• Section XXII.: Dispatch Court Costs, How Disposed Of.
• Section XXIII.: Eventual Retrotransference of a Suit to the Equity Court.
• Section XXIV.: Expense of the Court, How Provided For.
• Supplemental Sections:—
• Section I. Or XXV.: Bankruptcy and Insolvency.
• Section II. Or XXVI.: Henceforward Dispatch Court.
• Schedules to the Bill.
• Plan of Parliamentary Reform, In the Form of a Catechism, With Reasons For Each Article: With an Introduction, Showing the Necessity of Radical, and the Inadequacy of Moderate, Reform.
• Introduction.
• Section I.: History of the Ensuing Tract—alarming State of the Country and the Constitution.
• Section II.: Most Prominent Present Grievance, Gareisoning France.
• Section III.: Causes of the Above and All Other Mischiefs:—particular Interests Monarchical and Aristocratical, Adverse to the Universal—their Ascendency.
• Section IV.: Sole Remedy In Principle—democratic Ascendency.
• Section V.: Remedy In Detail: Radical Parliamentary Reform: Elementary Arrangements In This Edition of It—their Necessity.
• Section VI.: Differences Between This and the Original Editions of Radical Reform.
• Section VII.: Virtual Universality of Suffrage Further Considered.
• Section VIII.: Virtual Universality of Suffrage—its Undangerousness.
• Section IX.: Freedom of Suffrage Further Explained—seductive Influence—its Forms, Instruments, &c.
• Section X.: Bribery and Terrorism Compared.
• Section XI.: Purchase of Seats—in What Cases Mischievous—in What Beneficial.
• Section XII.: Secresy of Suffrage—its Importance Further Developed.
• Section XIII.: Exclusion of Placemen, &c. From the Right of Voting—mischievousness and Profligacy of the Opposite Arrangement.
• Section XIV.: Universal Constancy of Attendance—its Importance.
• Section XV.: Representatives—impermanence of Their Situation—its Importance:—objections—their Groundlessness.
• Section XVI.: Moderate Reform—its Arrangements—their Inadequacy.
• Section XVII.: Trienniality Inadequate;—annuality Necessary.
• Section XVIII.: Interests Adverse to Adequate Reform—support Given By Them to Moderate, to the Exclusion of Radical: Tories—whigs—people’s Men.
• Catechism of Parliamentary Reform; Or, Outline of a Plan of Parliamentary Reform; In the Form of Question and Answer; With Reasons to Each Article.
• Section I.: Ends to Be Aimed At On the Occasion of Parliamentary Reform.
• Section II.: Means, Conducive Towards These Ends.
• Section III.: Means—their Uses, With Reference to Their Respective Ends.
• Section IV.: Means Conducive to Aptitude In Members: I. Placemen Not to Vote, Nor to Be Seated By Election.
• Section V.: Means, &c. Continued.—ii. Placemen Seated By the King, With Speech and Motion, Without Vote.
• Section VI.: Means, &c. Continued.—iii. Elections Frequent—annual.
• Section VII.: Means, &c. Continued.—iv. Speeches Authentically and Promptly Published.
• Section VIII.: Means, &c. Continued.—v. Attendance, Punctual and General, Secured.
• Section IX.: Inconveniences Incident to Elections, and Election Judicature.
• Section X.: Election Inconveniences—means For Their Removal.
• Section XI.: Collateral Advantages, Referable to the Situations of Electors, Placemen, Lords, &c.
• A Sketch of the Various Proposals For a Constitutional Reform In the Representation of the People, Introduced Into the Parliament of Great Britain, From 1770 to 1812.
• Radical Reform Bill, With Extracts From the Reasons.
• Preliminary Explanations.
• Title of the Proposed Act.
• Preamble.
• Section 1.—: Seats and Districts.
• Section 2.—: Electors, Who.
• Section 3.—: Eligible, Who.
• Section 4.—: Election Offices.
• Section 5.: Election Apparatus.
• Section 6.—: Promulgation of Recommendations In Favour of Proposed Members.
• Section 7.—: Voters’ Titles Pre-established.
• Section 8.—: Election, How.
• Section 9.: Election Districts and Polling Districts, How Marked Out.
• Section 10.—: Vote-making Habitations, How Defined.
• Section 11.—: Members’ Continuance.
• Section 12.—: Vacancies Supplied.
• Section 13.—: Security For the House Against Disturbance By Members. †
• Section 14.—: Indisposition of Speakers Obviated.
• Appendix, Including General Explanations.
• Radicalism Not Dangerous. Extracted From the Mss. of Jeremy Bentham. *
• Part I.—: Introduction.
• Section I.: Radical Reform Bill Recapitulated.
• Section II.: Persuasion of the Dangerousness of Radicalism—cause of It, and of the Vituperative Expression Given to It.
• Section III.: Terms of the Accusation,—speeches From the Throne, 16 Th July and 21 St November 1819.
• Section IV.: The Accusation In General Terms—counter-averment.
• Section V.: Plan of This Defence.
• Part II.—: Deference From the General Nature of the Case.
• Section I.: Conditions Necessary to a Man’s Embarking In Such a Design.
• Section VII.: Concurrence In Any Other Extensive Plan of Spoliation Impossible.
• Section VIII.: Concurrence of Any Constituted Authorities Impossible.
• Section IX.: Accomplishment Impossible—design Impossible.
• Section X.: The Talked-of Spunge No Proof of the Design.
• Part III.—: Defence From Experience In the Case of the United States.
• Part IV.: Defence From Particular Experience In the Case of Ireland: Years 1777 Or 1778, to 1783.
• Section I.: Analogy Between This and the Previous Case.
• Section II.: Democratic Ascendency, How Produced.
• Section III.: Fruit of Democratic Ascendency a Golden Age.
• Section IV.: Coincidence of Its Characters With Those of Radicalism.
• Section VI.: Extinction of Democratic Ascendency and Reform—restoration of Monarchico-aristocratical Ascendency, and Its Consequences.
• Conclusion.

CHAPTER X.

REDUCTION OF INTEREST—PROPOSED MODE COMPARED WITH MR. PELHAM’S.

Reduction of Interest is a declared object with Parliament:—the only question is as to the mode.

To exhibit the comparative eligibility as between the two plans—(the one here proposed for the future, and the one pursued in time past by Mr. Pelham)—I shall consider them together under the several heads of expense—celerity of operation—previous assurance of success—and gentleness of operation:—not forgetting, with respect to Mr. Pelham’s, the possibility of applying it at the present time to the immensely increased mass of debt.

I. As to Expense—viz. as compared with profit.—In Mr. Pelham’s time, the profit consisted in reducing to 3 per cents. the whole amount of the then existing quantity of 4 per cents.; that is, reducing the quantum of interest paid on the nominal capital of £57,703,475, from about £2,308,136 to about £1,731,102.

When the operation was first mentioned by him in parliament, it was a sign that then at least the state of the money market was ripe for it; otherwise he could not have obtained the requisite assurance of the money for paying off in case of refractoriness:—how much longer it might have already been ripe, it would be in vain to attempt to calculate. This being assumed, whatever respite he allowed—whether as to the whole or as to a part of the interest proposed to be struck off—is to be considered as a price, or bonus, which under the plan proposed it was looked upon as advisable in point of prudence to allow to the stockholders, in order to purchase their acquiescence, and insure the plan against the hazard of failure. I say, to prudence; for as to sympathy for the sufferings of the individuals damnified, the professedly vindictive measures pursued afterwards against the repugnants are a sufficient proof that no such motive was consulted in the arrangements of the terms.

1. A year’s interest was allowed in the first plan without reduction:—i. e. the amount of the one per cent. that was to be afterwards struck off by the reduction, £577,034, was allowed for the first year.*

2. Half of the one per cent. ultimately struck off was allowed for seven years more. This for one year was £288,517;—for the seven years £2,019,619. Adding the one per cent. for the first year, makes the total price paid for consent, £2,596,653;—deducting £426,980 discount for the several years to come, leaves the amount of the money paid for the £577,034 a-year thus saved, £2,169,673.

This £2,169,673 (thus paid for consent to the reduction) amounts to a little more than 1-27th of the amount of the capital of £57,703,475, upon which the reduction of the 4 per cent. to 3 per cent. was thus effected: a little less than £2,308,136, which would be the exact amount of four year’s purchase of the perpetual annuity thus struck off. Such, then, was the price that on Mr. Pelham’s plan was given for a consent, which upon the proposed plan would be obtained gratis.

On the proposed plan, the quantum of interest that would be struck off by the first reduction (meaning the reduction effected in the course of the two first periods, by conversion of 4 and 5 and 3 per cents. into capitals bearing £2 : 19s. per cent.) by means of the paper of the first issue, would be £1,212,608.

That, upon any proposed reduction to be effected at this time of day, the same terms precisely should be offered as were offered at that time of day, would, under the vast difference of circumstances, be a supposition altogether untenable; but as it would be a fruitless attempt to determine what would be the terms now offered, the only terms on which any argument can be grounded are the above.†

On that supposition, the price to be paid for a consent to the striking off a mass of permanent annuities to the above amount of £1,212,608 a-year, would be a little less than four times that sum: it would be £4,559,458: exactly four times would be £4,850,432.‡

3. A sacrifice which may be added to the expense attending the reduction of interest, as above, is—that of going on with the redemption of the principal of the debt. By Mr. Pelham’s plan, this latter mode of liberation was given up: even in point of right, for eight years—and in intention, perhaps for ever. Since the establishment of the existing sinking funds, it could not now be given up upon any terms; and supposing it possible, and deemed eligible, to adopt the principle of Mr. Pelham’s reduction plan to a certain extent, it could not be adopted without such modifications as would be necessary to render it compatible with the institution of those redemption funds.

On the proposed plan, reduction of interest and redemption of principal afford assistance to each other: reduction to redemption, by the supplies it pours into the fund;—redemption to reduction, by the sums which, by expelling them out of the old annuities, it drives into the new.

4. Another sacrifice that would be to be made upon Mr. Pelham’s plan was—of the eventual advantage of ulterior reductions:—the very right given up for eight years as before—and for any subsequent period, no foundation laid, nor prospect opened, for anything that appears.

On the proposed plan, issue follows issue—reduction, reduction—as wave follows wave,—execution treading without respite upon the heels of possibility. What space of time each reduction would occupy, is scarcely open to conjecture:—thus much is certain, that there is not a moment’s interval between the completion of one reduction and the commencement of the next.

II. Celerity of Operation constitutes a head of comparison different in name, but in effect carried to account already, under the head of Expense. A given sum is worth the less, as the time for receiving it is more distant. Acceleration is profit—retardation, loss.

III. Previous Assurance of Success.

That Mr. Pelham’s plan was practicable, was proved by the event. But for a long time it was likely to have failed: and had it failed, it would have failed in toto; since, if the reduction had not been submitted to in respect of nearly the whole mass, it could not have taken place as to any part. Had not the quantity of uninscribed stock (about 3¼ millions) been small enough to admit of its being paid off, the submission, testified in respect of the subscribed stock, could hardly have been accepted: nor could the plan have taken place in any degree, without a joint and simultaneous operation on the part of one or other of two numerous sets of parties—viz. the stock holders, who were called upon to submit to the reduction—or the monied men, from whom, as far as the expected submission failed of taking place, the money was to come for paying off the repugnants.

But though practicable then, in respect of the 57 or 58 millions in question then, it does not follow that it would be practicable now, in regard to the amount of debt now in question, not even although stocks should arrive at par.

In regard to reduction on the proposed plan, success is, as we have seen, independent of contingencies. In each year—month—day, the process will go on to the utmost extent consistent with the state of the money market at that time. By the proposed subscription plan—by the consequent competition for respite from further deductions—the first reduction might be rendered in a manner instantaneous; and a very short space of time would be sufficient for the accomplishment of it, even without any such aid. The 5 or 6 millions (which would by that time be the amount of a year’s produce of the sinking fund,) call it 5 millions—this vibrating without ceasing between the stock market and the annuity-note market, would be sufficient to dispatch the reduction, and with prodigious rapidity, although the subscription plan were untried, or tried without effect. In the machinery thus put in motion, no part is liable to stop of itself for want of the assistance of any other—and as it is at the beginning, so is it at the end.

During the first issue, every note then issued pays off by the money it produces, and thus, converts into note annuities, a corresponding portion of stock annuities. During the second issue, every note then issued converts in the same way, into paper bearing the reduced rate of interest of that second issue, a correspondent portion of the paper of the first issue:—and a single note thus taken out in the way of issue, would bring about the reduction upon that portion of capital, and in a determinable time even upon the whole capital, although not another note were ever to be issued on the same terms.

Once put in motion, the machine keeps going of itself, without any fresh winding up, so long as there remains a particle of the debt for it to act upon and cut down:—nothing is left to depend on circumstances of the moment—nothing on the humours of individuals;—no interval between reduction and reduction—no pausing, deliberating, negotiating, debating, fumbling:—nor yet is the process exposed to the charge of precipitation or excess,—government having it in its power to stop or retard the operation at any time, by stopping or retarding the influx of the primum mobile from the sinking fund.*

IV. Lastly, as to Gentleness of Operation. Of Mr. Pelham’s plan, it is upon record that it experienced much opposition, and created much dissatisfaction. It was in the nature of it so to do. It brought forward the minister in an obnoxious attitude, calling upon men to submit to a loss to the amount of a perpetual tax of 25 per cent. upon income, subject only to an abatement to the amount of about four years’ purchase, on the condition of their lending their hands to a sacrifice of which they were the sole victims.

Accordingly, though on the ground of justice nothing could be more unimpeachable, ill-humour on one side appears to have begot ill-humour on the other—on the part of the authors of the suffering, as well as on the part of the sufferers themselves. On those who stood out at first, harder terms were afterwards imposed; and, to judge from the debates, the professed motive was not merely economy but vengeance.*

By the proposed plan, no such invidious task is put into the hands of any one. Before anything of hardship shows itself (at least to the great class of individuals here in question—the stockholders,) the measure will have been known—known for years as a measure of universal accommodation. Every man’s money will have been breeding money in his pocket—every man who has sold out, will have sold to an advantage. When hardship comes at last, it will be at the end of a long chain of causes and effects, the first link of which has been removed by time, almost out of the reach of observation. The immediate cause, being everybody’s act, is nobody’s. No new act—none at least that carries anything of compulsion on the face of it, is required at this (or indeed at any time) on the part of government.

On Mr. Pelham’s plan, everything turning upon subscription, a man knew not but that he was subscribing to his own loss. On the proposed plan, the loss takes place at any rate, and the effect of a subscription is all gain to him. The quantity of this gain depends upon his own exertions; and the bustle of competition serves to call off his mind from the suffering which is to come.

[* ]This, it may be thought, should not be considered as constituting part of the bonus, inasmuch as in some of the acts, and probably in all the acts prior to that date, it will be found that a year’s notice previous to redemption was among the stipulated terms. On the other hand, if instead of waiting for meditations and negotiations, and observations to be taken of the times, a plan had been adopted in the first instance, such as (like the proposed plan) would have given the public the benefit of the reduction from the instant that the rise in the rate of interest in general, and of money in the funds in particular, had rendered the commencement of it practicable, the probability seems to be, that the extra interest, not only of the year in question, but of one or more preceding years, might have been saved.

[† ]Written 1800.

[‡ ]As £577,034 is to £2,169,673, so is £1,212,608 to £4,559,458.

[* ]This being so perfectly opposition-proof, is a feature by which the proposed mode of reduction stands distinguished in a very striking point of view from every other. Though this consequence of the proposed conversion were ever so clearly foreseen, by those who, either from factious motives, or on the honest ground of personal motives, were disposed to thwart it, though it were even expressly announced by government (as indeed virtually it could not but be,) it would not be in the power even of conspiracy so much as to impede it. By refusing the paper, each conspirator would make a complete and certain sacrifice of his own personal advantage, without the smallest chance of affording any sensible help to the common object of the conspiracy. Limitation only, not prevention—limitation to a degree altogether without effect—would be the utmost possible result of the most unanimous and most persevering opposition on this ground.

[* ]In the case of the second set of subscribers, two years were struck off from the half per cent. for seven years that had been allowed to the first set. First act, 23 Geo. II. c. 1. Second act, 23 Geo. II. c. 22.