passes through his hands. The revenue 
of such a man can regularly pass through 
his hands only once in a year. But the whole 
amount of the capital and credit of a merchant
who deals in a trade of which the returns 
are very quick, may sometimes pass 
through his hands two, three, or four times in 
a year. A country abounding with merchants 
and manufacturers, therefore, necessarily abounds 
with a set of people, who have it at 
all times in their power to advance, if they 
chuse to do so, a very large sum of money to 
government. Hence the ability in the subjects 
of a commercial state to lend
Commerce and manufactures can seldom 
flourish long in any state which does not enjoy 
a regular administration of justice; in 
which the people do not feel themselves secure 
in the possession of their property; in which 
the faith of contracts is not supported by law
and in which the authority of the state is not 
supposed to be regularly employed in enforcing 
the payment of debts from all those who 
are able to pay. Commerce and manufactures, 
in short, can seldom flourish in any 
state, in which there is not a certain degree of 
confidence in the justice of government. The 
same confidence which disposes great merchants 
and manufacturers upon ordinary occasions
to trust their property to the protection 
of a particular government, disposes them, 
upon extraordinary occasions, to trust that government 
with the use of their property. By 
lending money to government, they do not 
even for a moment diminish their ability to 
carry on their trade and manufactures; on 
the contrary, they commonly augment it. The 
necessities of the state render government
upon most occasions willing to borrow upon 
terms extremely advantageous to the lender
The security which it grants to the original 
creditor, is made transferable to any other creditor
and from the universal confidence in 
the justice of the state, generally sells in the 
market for more than was originally paid for 
it. The merchant or monied man makes 
money by lending money to government, and 
instead of diminishing, increases his trading 
capital. He generally considers it as a favour
therefore, when the administration admits him 
to a share in the first subscription for a new 
loan. Hence the inclination or willingness 
in the subjects of a commercial state to lend
The government of such a state is very apt 
to repose itself upon this ability and willingness 
of its subjects to lend it their money on 
extraordinary occasions. It foresees the facility 
of borrowing, and therefore dispenses itself 
from the duty of saving
In a rude state of society, there are no great 
mercantile or manufacturing capitals. The 
individuals, who hoard whatever money they 
can save, and who conceal their hoard, do so 
from a distrust 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 extraordinaries of the army, navy, and ordnance
the arrears of subsidies to foreign 
princes, those of seamen's wages, &c. usually 
constitute a debt of the first kind. Navy and 
exchequer bills, which are issued sometimes 
in payment of a part of such debts, and sometimes 
for other purposes, constitutes 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 the 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[76]) 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