Part II: Chapter V, 8

Speaking as someone with no stake in it, the present scheme for paying off the national debt seems to me a badly devised, perhaps even a deceptive, undertaking. The burden of the debt lies not in its total of so many millions or hundreds of millions, but in the taxes collected each year to pay its interest. If those taxes remain the same, the burden of the national debt remains the same in every practical sense, whether the principal rises or falls. The public can know that the debt has been reduced only through a reduction in the taxes that pay its interest. All the millions paid so far have therefore not reduced the public's burden by a farthing; and it would now cost more to buy up the principal than it would have when the scheme began.

Digressing for a moment, though I shall return to this subject, I look back to Mr. Pitt's appointment as minister.

I was then in America. The war was over; and though resentment had subsided, its memory remained vivid.

When news of the coalition arrived, though it did not concern me personally, I felt its affront as a man. There was something shocking in this public sport with decency, if not with principle. Lord North showed impudence; Mr. Fox, a lack of firmness.

At that time Mr. Pitt was what might be called an untried character in politics. Far from being worn down by it, he seemed uninitiated even in the first mysteries of court intrigue. Everything favored him. Resentment against the coalition became support for him, and his unfamiliarity with vice was taken for virtue. Peace would have brought a revival of commerce and prosperity of its own accord, yet even that increase was credited to him.

When he took the helm, the storm had passed and nothing obstructed his course. It took ingenuity even to go wrong, and he succeeded. Before long he proved to be the same kind of man as his predecessors. Instead of learning from the errors that had built up a burden of taxes unequaled in the world, he sought out—I might almost say advertised for—enemies, and provoked occasions for raising taxes. Pursuing something he could not name, he scoured Europe and India for adventures. Abandoning the honest promise with which he began, he became the knight-errant of modern times.

It is painful to watch a man throw away his character; more painful still to discover one has been deceived. Mr. Pitt had earned nothing, but promised much. He showed signs of a mind above the pettiness and corruption of courts. His apparent candor raised expectations; public confidence, dazed, wearied, and bewildered by the chaos of parties, revived and attached itself to him. But he mistook the nation's disgust with the coalition for a tribute to his own merit and rushed into measures a less-supported man would not have dared to undertake.

All this suggests that a change of ministers accomplishes nothing. One leaves and another enters, while the same measures, vices, and extravagances persist. Who holds the ministry makes no difference. The fault lies in the system. Both the foundations and the structure of the government are bad. Shore it up as you please, it continually sinks back into rule by the court, and always will.

I return, as promised, to the national debt, that child of the Dutch-Anglo revolution and its attendant, the Hanover succession.

It is too late now to inquire how the debt began. Its creditors advanced the money; whether it was well spent, badly spent, or pocketed was not their fault. But one can readily see that as the nation reflects on the nature and principles of government, comes to understand taxation, and compares the taxes of America, France, and England, it will become nearly impossible to keep it in its former stupor. Some reform must soon begin, of necessity. The issue is not how strongly these principles press upon us at this moment. They have been made known. They circulate through the world, and no force can stop them. Like a disclosed secret, they cannot be recalled; only a blind person could fail to see that change has already begun.

Nine millions in taxes paid on an old debt are no small matter, especially when the debt was incurred for bad government and, in large part, for foreign rule. Once the power to make war was put in the hands of foreigners who came for what they could get, little else could have been expected than what followed.

Earlier in this work I have given reasons why, whatever tax reforms are made, they should fall on the government's current expenses, not on the part devoted to interest on the national debt. Removing the taxes borne by the poor will give them complete relief and dispel discontent. Removing the other taxes already mentioned will repay the nation more than the entire cost of the mad American war.

Only the national debt would then remain a source of discontent. To remove—or rather prevent—that discontent, the holders of government securities would be wise to recognize their holdings as property that, like all other property, should bear some share of taxation. This would win both public favor and security for their holdings. Much of the debt's present inconvenience is offset by the capital it keeps in circulation; such a measure would strengthen that offset enough to silence objections.

This could be accomplished gradually, with the greatest ease and convenience.

Instead of taxing the principal, it would be best to tax the interest at a progressively increasing rate and reduce public taxes in the same proportion as the interest paid diminished.

Suppose interest were taxed one halfpenny in the pound in the first year, a penny more in the second, and thereafter according to a fixed scale yet to be determined, always lower than any other tax on property. The tax could be deducted when the interest was paid, without any cost of collection.

One halfpenny in the pound would reduce the interest, and therefore the taxes needed to pay it, by twenty thousand pounds. The tax on wagons brings in that amount and could be abolished in the first year. In the second, the tax on female servants, or another yielding a similar sum, could also be abolished. Proceeding in this way, and always applying the tax raised from debt holdings to extinguishing the debt rather than to current government expenses, the debt would free itself.

Even with this tax, the holders of government securities would pay less in taxes than they do now. Their savings from abolishing the poor-rates, the tax on houses and windows, and the commutation tax would considerably exceed this new tax, slow but certain in its effect.

It seems prudent to me to seek measures suited to whatever circumstances may be approaching. European affairs are now at a crisis that calls for such prudence. Preparation today is wisdom. Once taxation is let loose, it will be difficult to restore order; nor would the relief be as effective as relief brought about by a definite, gradual reduction.

The fraud, hypocrisy, and deception of governments are becoming too well understood for their careers to last much longer. The farce of monarchy and aristocracy throughout the world is following chivalry into oblivion, and Mr. Burke is dressing for the funeral. Let it go quietly to the tomb of all other follies, and let the mourners take comfort.

The day is not far off when England will laugh at itself for sending to Holland, Hanover, Zell, or Brunswick for men who cost a million a year and understood neither its laws, its language, nor its interests, and whose abilities would barely have qualified them to serve as parish constables. If government can be trusted to such hands, it must indeed be something easy and simple; people equipped for all its purposes can be found in every English town and village.

When a country anywhere in the world can say, "My poor are happy; neither ignorance nor distress is found among them; my jails hold no prisoners, my streets no beggars; the aged do not want, taxes do not oppress; the world of reason is my friend because I am the friend of its happiness"—when it can say these things, then it may boast of its constitution and government.

In the space of a few years we have witnessed two revolutions, in America and France. In the former the struggle was long and the fighting severe. In the latter the nation acted with such united force that, with no foreign enemy to oppose it, its revolution was complete in power from the moment it appeared. Both examples show that the greatest forces that can enter the field of revolution are reason and common interest. Where they have room to act, opposition dies of fear or crumbles under conviction. They have now won a great position everywhere; we may hope that revolutions, or changes of government, will in future be brought about as peacefully as any measure settled by reason and discussion.

Once a nation changes its opinions and ways of thinking, it can no longer be governed as it was before. It would be both wrong and unwise to try to accomplish by force what should be accomplished by reason. Rebellion means forcibly resisting a nation's general will, whether that resistance comes from a faction or a government. Every nation should therefore have a way to ascertain, from time to time, public opinion on government. In this respect the old French government was superior to England's present one: on extraordinary occasions it could summon what was then called the States General. England has no such occasional assembly, and many of those now called Representatives are mere instruments of the court, men holding office and depending on its favor.

Although all the people of England pay taxes, I believe not even one in a hundred can vote, while the members of one house of parliament represent no one but themselves. No authority, then, except the freely expressed will of the people has the right to act on general reform; and if two people have the right to discuss such a matter, a thousand have the same right. The purpose of all such preliminary proceedings is to discover the nation's general judgment and abide by it. If a nation prefers a bad or defective government to reform, or chooses to pay ten times more taxes than necessary, it has the right to do so. As long as the majority does not impose on the minority conditions different from those it imposes on itself, there may be grave error but no injustice. Nor will the error endure. Reason and discussion will soon put matters right, however badly they begin. Such a process need provoke no unrest. The poor in every country are naturally peaceful and grateful when reforms include their interests and happiness. Only neglect and rejection drive them to unrest.

What now demands public attention is the French Revolution and the prospect of a general revolution in governments. No European nation has a greater stake in the French Revolution than England. Enemies for centuries, at vast expense and without any national purpose, the two now have the chance to end that history amicably and join in reforming the rest of Europe. They would thereby prevent further bloodshed and higher taxes, and be able to cast off a considerable share of their present burdens, as I have already shown. Long experience, however, teaches that old governments do not wish to advance such reforms. These matters therefore fall to nations, not to such governments.

Earlier in this work I spoke of an alliance between England, France, and America for purposes I would later set out. Though I have no direct authority to speak for America, I have good reason to believe she would consider such a measure, provided her prospective allies acted as national governments, not as courts shrouded in intrigue and secrecy. That France, as a nation and a national government, would prefer an alliance with England is certain. Nations, like individuals, who have long been enemies without knowing one another or knowing why, become better friends when they discover the errors and deceptions that governed their conduct.

Speaking as someone with no personal stake, I think the current plan to pay off the national debt is poorly designed, if not outright deceptive. The burden of the debt does not come from the number of millions or hundreds of millions owed. It comes from the taxes collected every year to pay the interest. If those taxes stay the same, the burden on the public stays the same, whether the principal rises or falls. The public can tell that the debt has been reduced only if the taxes that pay its interest are reduced. So all the millions paid off have not reduced the debt's burden on the public by a single farthing. In fact, buying up the remaining principal would cost more now than it did when the plan began.

I will return to this point shortly. First, let me look back at Mr. Pitt's appointment as minister.

I was in America then. The war was over. People were no longer angry, but they still remembered what had happened.

When I heard about the coalition, I felt shocked as a person, though it did not concern me directly. It openly made a joke of decency, if not principle. Lord North showed shamelessness, and Mr. Fox showed a lack of resolve.

At that time, Mr. Pitt was new to politics. Far from being a hardened politician, he did not even seem to know the first secrets of court intrigue. Everything favored him. Anger at the coalition made people support him, and they mistook his inexperience with wrongdoing for virtue. With peace restored, trade and prosperity would have grown on their own. Yet even that growth was credited to him.

By the time he took charge, the storm was over and nothing blocked his way. Getting things wrong would have taken ingenuity, but he managed it. Before long, he proved to be just like the ministers before him. He could have learned from the mistakes that had produced an unmatched burden of taxes. Instead, he went looking for enemies—I could almost say he advertised for them—and provoked situations that would raise taxes. Pursuing some aim he could not even identify, he searched Europe and India for adventures. He abandoned his promising start and became a modern wandering knight.

It is painful to watch a person waste his reputation. It is even more painful to find that you were deceived. Mr. Pitt had achieved nothing, but he seemed to promise a great deal. He showed signs of being above the pettiness and corruption of courts. His apparent openness raised hopes. The public had been stunned, exhausted, and confused by the chaos of political parties. It began to trust him again. But he mistook the country's disgust with the coalition for proof of his own worth. That led him to pursue measures that someone with less support would never have dared to attempt.

All this suggests that changing ministers makes no difference. One leaves and another arrives, but the same policies, vices, and reckless spending continue. It does not matter who the minister is. The fault is in the system. The government is unsound from its foundations to its highest levels. Support it however you like, and it keeps sinking back into rule by the court. It always will.

I return, as promised, to the national debt, born from the Dutch-Anglo revolution, with the Hanoverian succession as its attendant.

It is too late to investigate how the debt began. The people owed the money lent it. Whether it was spent well, wasted, or stolen is not their fault. Still, the country is increasingly examining the nature and principles of government. People are learning about taxes and comparing those of America, France, and England. It will be almost impossible to keep them as unresponsive as they have been. Some reform must soon begin out of necessity. It does not matter whether these principles have much or little force at this moment. They have been made public and have spread through the world. Nothing can stop them. Like a secret once told, they cannot be taken back. Anyone who cannot see that change has already begun must be blind.

Nine million pounds a year in taxes spent on old debts is a serious burden. Much of this debt came from bad government, and especially from government conducted for foreigners. When the power to make war was given to foreigners who came to take what they could get, little else could have been expected.

I have already given reasons why any tax reductions should come from the government's current expenses, not from the money used to pay interest on the national debt. Removing taxes on the poor will relieve them completely and end their discontent. Removing the other taxes I have named will more than repay the country for the entire cost of the foolish American war.

Then only the national debt will remain as a cause of complaint. To remove—or, rather, prevent—that complaint, the holders of government debt would be wise to treat it as property that must bear a share of taxes, like all other property. This would make it more popular and more secure. Much of its present drawback is offset by the capital it keeps available. Such a measure would improve that balance and silence objections.

This can be done gradually, with the greatest possible ease and convenience.

The best approach is not to tax the principal. Tax the interest at a progressively increasing rate instead, and lower public taxes by the same amount as the interest payments fall.

Suppose interest were taxed at one halfpenny in the pound in the first year, a penny more in the second, and then at a set rate of increase to be decided. The rate should always remain lower than any other property tax. This tax could be deducted when interest is paid, without any collection cost.

A halfpenny in the pound would reduce interest payments, and therefore the taxes needed to fund them, by twenty thousand pounds. The tax on wagons raises that amount, so it could be removed in the first year. In the second year, the tax on female servants or another tax raising about the same amount could also be removed. Keep going this way. Always use the tax on debt holdings to pay off the debt itself, not to fund current services. In time, the debt would free the public from its burden.

Even with this tax, the holders of government debt would pay less in taxes than they do now. They would save much more from abolishing poor rates, the tax on houses and windows, and the commutation tax than this slow but steady tax on their interest would cost them.

I think it is wise to prepare measures that will work in whatever circumstances arise. Europe is facing a crisis right now, and preparation is wise. If tax collection is simply abandoned all at once, it will be difficult to restore it. Relief would also be less effective than a definite, gradual reduction.

People are starting to understand the fraud, hypocrisy, and deceit of governments too well for them to continue much longer. Monarchy and aristocracy in every country are becoming a farce, just as chivalry did. Mr. Burke is getting dressed for the funeral. Let them quietly go to the grave with all the other follies, and let those who mourn be comforted.

Before long, England will laugh at itself for sending to Holland, Hanover, Zell, or Brunswick to get men to govern it at a cost of a million pounds a year. These men understood neither its laws, its language, nor its interests. They were barely qualified to be parish constables. If government could be entrusted to them, it must be a simple job indeed. Every English town and village must have people capable of doing it.

A country may boast about its constitution and government when it can say: "My poor people are happy. None of them lives in ignorance or distress. My jails hold no prisoners and my streets have no beggars. Older people have what they need. Taxes are not oppressive. Thinking people around the world are my friends because I care about their happiness." Only when a country can say all that has it earned the right to boast.

In just a few years, we have seen two revolutions, in America and France. America's struggle was long and fierce. In France, the whole country acted together. With no foreign enemy to fight, its revolution took full power as soon as it began. Both examples show that reason and shared interests are the greatest forces available in a revolution. When they have a chance to act, opposition either dies from fear or falls away when people are persuaded. They have now won a strong position everywhere. We may hope that future revolutions, or changes of government, can happen as peacefully as any measure decided through reason and discussion.

When a nation changes its views and habits of thought, it can no longer be governed in the old way. Trying to force what reason should accomplish is both wrong and unwise. Rebellion is the use of force to oppose a nation's general will, whether the force comes from a faction or from the government. Every nation therefore needs a way to find out from time to time what people think of their government. In this respect, the old government of France was better than England's present government. On exceptional occasions, France could call together what was then called the States General. England has no such occasional assembly. And many of its present so-called Representatives are little more than instruments of the court: government appointees and dependents.

I believe that, although everyone in England pays taxes, fewer than one person in a hundred can vote. The members of one house of Parliament represent no one but themselves. So no body has a right to decide a general reform except the people acting voluntarily. If two people have the right to discuss reform, so do a thousand. The purpose of these first steps is to learn what the nation as a whole thinks, and then follow it. If people prefer a bad or flawed government to reform, or choose to pay ten times more tax than they need to, they have that right. Provided the majority imposes no conditions on the minority that it does not also accept for itself, the choice may be mistaken but is not unjust. The mistake will not last long. Reason and discussion will soon put things right, however badly they start. This process need not cause unrest. Poor people in every country are naturally peaceful and grateful when reforms include their interests and happiness. They become restless only when they are ignored and rejected.

The issues now demanding public attention are the French Revolution and the prospect of widespread changes in governments. No European nation has a greater stake in the French Revolution than England. England and France have been enemies for centuries, at enormous expense and with no national purpose. They now have a chance to end that history on friendly terms and work together to reform the rest of Europe. They could prevent more bloodshed and higher taxes. They could also lift a large part of their present burdens, as I have already explained. Long experience shows, however, that old governments do not want reforms like these. These proposals are therefore for the peoples of those countries, not for their governments.

Earlier in this work, I mentioned an alliance among England, France, and America for purposes I would explain later. I cannot speak officially for America. But I have good reason to believe it would consider such an alliance if the governments involved truly represented their nations, rather than acting as courts wrapped in intrigue and secrecy. France as a nation, with a national government, would certainly prefer an alliance with England. Nations are like people. After being enemies for years without knowing each other, or even knowing why they fought, they can become better friends once they recognize the mistakes and deceptions behind their behavior.