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modern complicated machine, the funding system; and it is only now that it is beginning to unfold the full extent of its movements. In the first part of its movements it gives great powers into the hands of Government, and in the last part it takes them completely away.

The funding system set out with raising revenues under the name of loans, by means of which, Government became both prodigal and powerful. The loaners assumed the name of creditors, and though it was soon discovered that loaning was Government jobbing, those pretended loaners, or the persons who purchased into the funds afterwards, conceived themselves not only to be creditors, but to be the only creditors.

But such has been the operation of the complicated machine, the funding system, that it has produced, unperceived, a second generation of creditors, more numerousand far more formidable, and withal, more real than the first generation; for every holder of a Bank note is a creditor, and a real creditor, and the debt due to him is made payable on demand. The debt, therefore, which the Government owes to individuals, is composed of two parts; the one about four hundred millions bearing interest, the other about sixty millions payable on demand. The one is called the funded debt, the other is the debt due in Bank notes.

This second debt (that contained in the Bank notes) has in a great measure been incurred to pay the interest of the first debt; so that, in fact, little or no real interest has been paid by Government. The whole has been delusion and fraud. Government at first contracted a debt in the form of loans with one class of people, and then run clandestinely into debt with another class, by means of Bank notes, to pay the interest. Government acted of itself in contracting the first debt, and made a machine of the Bank to contract the second.

It is this second debt that changes the seat of power, and the order of things: for it puts it in the power of even a small part of the holders of Bank notes, (had they no other motive than disgust at Pitt and Grenville's sedition bills) to control any measure of Government they found to be injurious to their interest; and that not by popular meetings, or popular societies, but by the simple and easy operation of withholding their credit from that Government; that is, by individually demanding payment at the Bank for every Bank note that comes into their hands. Why should Pitt and Grenville expect that the very men whom they insult and injure, should at the same time continue to Support the measures of Pitt and Grenville, by giving credit to their promissory notes of payment? No new emission of Bank notes could go on while payment was demanding on the old, and the cash in the Bank wasting daily away ; nor any new advances be made to Government or to the Emperor, to carry on the war; nor any new emission be made of exchequer bills.

rt TN Bank," says Smith (book ii. chap. 2.) "is a great engine of State." And, in the same paragraph, he says, "The stability of the Bank, is equal to that of the British Government;" which is the same as to say, that the stability of the Government is equal to that of the Bank, and no more. If then the Bank cannot pay, the Jrch-Treasurer of the Holy Roman Empire (S. R. I. A.*) is a bankrupt. When Folly invented titles, she did not attend to their application; for ever since the Government of England has been in the hands of atch-treasurers, it has been running into bankruptcy; and as to the arch-treasurer apparent he has been a bankrupt long ago. What a miserable prospect has England before its eyes!

Before the war of 1775 there were no Bank notes lower than twenty pounds. During that war Bank notes of fifteen pounds and ten pounds were coined; and now, since the commencement of the present war, they are coined as low as five pounds. These five pound notes will circulate chiefly among little shop-keepers, butchers, bakers, market people, renters of small houses, lodgers, &c. All the high departments of commerce, and the affluent stations of life were already overstocked, as Smith expresses it, with the Bank notes. No place remained open wherein to crowd an additional quantity of Bank notes but among the class of people I have just mentioned, and the means of doing this could be best effected by coining five pound notes. This conduct has the appearance of that of an unprincipled insolvent, who, when on the verge of bankruptcy to the amount of many thousands, will borrow as low as five pounds of the strtants in his house, and break the next day.

Part of the inscription on an English Guinea.

But whatever momentary relief or aid the Minister and his bank might expect from this low contrivance of five pound notes, it will increase the inability of the Bank to pay the higher notes, and hasten the destruction of all; for even the small taxes that used to be paid in money, will now be paid in these notes, and the Bank will soon find itself with scarcely any other money than what the hair powder guinea tax brings in.

The Bank notes make the most serious part of the business of finance; what is called the national funded debt is but a trifle when put in comparison with it; yet the case of the Bank notes has never been touched upon. But it certainly ought to be known upon what authority, whether that of the Ministers or of the Directors, and upon what foundation, luch immense quantities are issued. I have stated the amount of them at sixty millions sterling; I have produced data for that estimation; and besides this, the apparent quantity of them, far beyond that of gold and silver in the nation, corroborates therewith. But were there but a third part of sixty millions, the Bank cannot pay half-a-crown in the pound; for no new supply of money, as before said, can arrive at the Bank, as all the taxes will be paid in paper.

When the funding system began, it was not doubted that the loans that had been borrowed would be repaid. Government not only propagated that belief, but it began paying them off. In time this profession came to be abandoned ; and it is not difficult to see that Bank notes will march the same way; for the amount of them is only another debt under another name; and the probability is, that Mr. Pitt will at last propose funding them. In that case Bank notes will not be so valuable as French assignats. The assignats have a solid property in reserve in the national domains; Bank notes have none ; and besides this, the English revenue must then sink down to what the amount of it was before the funding system began; between three and four millions. One of which the arch-treasurer would require for himself, and the arch-treasurer apparent would require three quarters of a million more to pay his debts. "In France," says Sterne, " they order these things better."

I have now exposed the English system of Finance to the eyes of all nations; for this work will be published in all languages. In doing this, I have done an act of justice to those numerous citizens of neutral nations who have been imposed upon by that fraudulent system, and who have property at stake upon the event.

As an individual citizen of America, and as far as an individual can go, I have revenged (if I may use the expression without any immoral meaning) the piratical depredations committed on the American commerce by the English Government.—I have retaliated for France on the subject of Finance; and I conclude with retorting on Mr. Pitt the exression he used against France, and say, that the English ystem of Finance " is On The Verge,—NayEven In THE GOLPH OF BANKRUPTCY."

THOMAS PAINE.

Paris, 19th Germinal, 4th year of the RepublicApril 8, 1796.

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LETTER

TO

GEORGE WASHINGTON,

ON THE SUBJECT OF
CONCLUDED BETWEEN

GREAT BRITAIN if THE UNITED STATES
OF AMERICA,

INCLUDING OTHER MATTERS.

BY THOMAS PAINE.

itontron:

FEINTED AND PUBLISHED BY R, CARLILE, 55, FLEET STREET.

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