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countries; and whenever its transference begins to take place, to any considerable extent, it forms an almost insuperable obstacle to the farther increase of wealth or of taxation. It is not because a man cannot pay more, but because he will not pay more, that taxes frequently cease to be productive. It is very difficult, indeed, to set limits to the power of a great nation, where the security of property and the freedom of industry are maintained, to bear taxes; but, as Mr Ricardo has truly stated, there are limits, and those not so remote as is commonly imagined, to the price which individuals will submit to pay for the privilege of living, or of employing their capital, in their native country.* The rate of profit is always tending to the same common level. That principle of competition which reduces the profits derived from the capital invested in different businesses carried on in the same country to the same average rate, extends its influence over all those countries that have

any intercourse together. The same motives that prevent a capitalist from employing capital in any branch of industry carried on in Liverpool or Manchester, for example, unless it yields as large a profit as might be derived from employing it in London, would, provided the moral or immaterial advantages attending the investment of capital were the same, lead him to employ it in France rather than in England, if by so doing he could realize a larger return. It is, no doubt, true, that there are a variety of circumstances, such as the difference of language, the ignorance of foreign manners and customs, and sometimes the greater want of security, that in many cases, oppose the most formidable obstacles to the transfer of capital to foreign countries. But experience has shown, that a comparatively low rate of profit has invariably proved more than sufficient to overbalance these disadvantages. The low rate of profit in Holland, during the last century, prevented her capitalists from laying out any portion of their accumulations at home, and thus paved the way for the slow but gradual, and, ultimately, complete destruction of her fisheries, manufactures, and commerce. It will be singular infatuation, if we do not endeavour to profit · by this awful warning. Our situation bears, in many respects, a very close resemblance to that of Holland in the early part of last century. The low rate of profit that has obtained amongst us since the peace, has already been productive of consequences that ought to excite the most anxious attention to the means by which their future recurrence may be averted. It

Principles of Political Economy and Taxation, 1st edit. p. 340.

has served to counterbalance the most extreme risk that can be supposed to attend foreign investments, and has tempted our capitalists to adventure in the most ruinous enterprises. Every foreign state, no matter what sort of security she had to offer, has been able to negotiate loans in England; and notwithstanding the immense losses that bave been already sustained, there is not, with the single exception perhaps of Ferdinand of Spain, a sovereign in Europe, or a cacique in South America, whom the capitalists of London would not willingly undertake to supply with the largest sums of money on the most reasonable terms.

In our view of the matter, therefore, we are inclined to consider the heavy taxation to which we are subjected, as likely to be infinitely more injurious in time to come than it has been bitherto, or is likely to be for some considerable period. During the war, capital could not be easily transferred to other countries; and the waste occasioned by the expenses to which we were subjected, was in a great measure defrayed by the increased spirit

of frugality and industry that the increase of taxation infused into all classes. But a period of peace not only enables other nations to avail themselves of those superior facilities of production, which have hitherto enabled us to support our comparatively heavy burdens; but it also affords unusual facilities for the transference of capital to them. It is true, indeed, that the disastrous effects which a comparatively heavy taxation may thus be expected to produce, are not of a description that can speedily develope themselves; they undermine by slow degrees; and any considerable discovery in the arts might serve partially to counteract them; and, by increasing our powers of production, would, in so far, lessen the pressure of our burdens. But though such discoveries may be expected to occur, it would be wrong to calculate too confidently upon them; and though they should occur, still, as they cannot be monopolized, it is clear that a relatively heavy taxation must act as a constant premium on and incentive to the transference of capital from every country subject to its operation; and can hardly, therefore, fail of being, in the end, productive of the most disastrous consequences.

Under these circumstances, none can doubt that it is the bounden duty of Ministers to make every possible retrenchment, and to confine the public expense within the narrowest limit within which it can be compressed, consistently with the maintenance of the tranquillity and independence of the country. Nothing, therefore, could be more satisfactory or gratifying, than the statement made by Mr Canning, corroborated as it was by the pledge in the speech from the Throne at the prorogation, that Ministers had resolved to submit the consideration of all matters connected

with the public income and expenditure to à committec, and that they were determined to cut down every unnecessary expense. 'We believe that Lord Goderich and his colleagues have ihe public interest too much at heart, to hesitate about giving the fullest effect to every practicable scheme of retrenchment. And they may be assured, that a determination to act in the spirit of Mr Canning's declaration, notwithstanding the opposition that may be expected from interested and powerful individuals, will entitle them to the lasting gratitude of the nation, and will be productive of the most advantageous consequences.

At the same time, however, we must say, that those who expect that any retrenchments, which it is in the power of the best intentioned and most powerful Ministers to adopt, will of themselves afford any material relief from the pressure of taxation, are a great deal more sanguine than we are. A diminution of the public burdens is neither, indeed, the sole nor even the principal recommendation in favour of an unsparing system of retrenchment. The corrupt influence engendered by the multiplication of unnecessary functionaries, and by an excess in the emoluments received by them, is productive of the most pernicious results. It is not in any respect necessary to a government possessed of the public confidence; though it is of the last importance to one that is deprived of that legitimate support, and may even enable it to maintain itself in power, and to prosecute a course of measures hostile alike to the wishes and interests of the public. A patriotic and really enlightened administration cannot be otherwise than anxious to take away a source of influence, which, while it can do no good, may be thus easily perverted to the very worst purposes, at the same time that it is productive of a heavy expense. But the advantages of a political description that would result from the suppression of this illegitimate source of unnecessary and much abused power, though not the only, are, in our apprehension, certainly by far the most impoi tant, that can be expected from retrenchment. If we would really lessen the heavy pressure on the national resources, and by rendering industry more productive raise the rate of profit, we must go much deeper than this. It is not by amputating a few sinecures, by paying off some dozens of supernumerary clerks, nor even by disbanding a few superfluous regiments, that the real evils which afflict the country can be materially mitigated, much less removed.

According to the official accounts, printed by order of the House of Commons, the total public expenditure of the United Kingdom, for 1826, was as follows:

Public Expenditure of the United Kingdom, for the year ending 5th Janu.

ary 1827, after deducting Repayments, Allowances, Discounts, Drawbacks, &c. exclusive of the Sums applicable to the Reduction of the National Debt during the same period. (Finance Accounts for 1826, p. 19.)


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PAYMENTS OUT OF THE INCOME, in its progress to the Exchequer :


d. £ CHARGES of Collection

4,030,337 7 28 Other Payments .

1,357,047 7111 Total Payments out of the Income, prior to the Payments into the Exchequer

5,387,348 15 23 PAYMENTS OUT OF THE EXCHE.

Dividends, Interest and Management of the

Public Funded Debt, four Quarters to 10th
October 1826, exclusive of L.5,591,231, 168.
2d. issued to the Commissioners for the Re-
duction of the National Debt

27,245,750 14 Interest on Exchequer Bills .

831,207 6 3

28,076,958 3 Issued to the Trustees of Naval and Military

Pensions, per Act 3 Geo. IV. c. 51. . 2,214,260
Ditto to the Bank of England, per Act 4 Geo.
IV. c. 22.


2,800,000 Civil list

1,057,000 Pensions charged by Act of Parliament on Con solidated Fund, four Quarters to 10th October 1826

364,268 6 31| Salaries and allowance


69,115 13 5 Courts of Justice


150,590 15 114 Mint


14,750 Bointies


2,956 13 8 Miscellaneous


204,064 7 9

301,427 10 6

2,164,173 7 71 Advance on account of the Wet Docks at Leitb 240,000 For the purchase of the Duke of Atholl's Inte.

rests in the Public Revenues of the Isle of Man

150,000 London Bridge, Towards rebuilding

Act 7 Geo. IV. c. 40.


510,000 Army

8,297,360 15 89 Navy

6,540,634 9 Ordnance

1,869,606 6 81 Miscellaneous

2,566,783 11 51

19,274,385 6Lottery Prizes

69,802 5 10 By the Commissioners for issuing Exchequei Bills, per Act 3 Geo. IV. c. 86, for the Em. ployment of the Poor

443,300 Advances out of the Consolidated Fund in Ire. land, for Public Works

546,922 2 68

1,060,024 8 41


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59,272,925 17 5$ Surplus of Income paid into Exchequer, over

Expenditure is. sued thereout

£ 1,009,448 8

£60,282,374 5 51

Now, it is obvious from this Account, that the field for retrenching from the direct public expenditure of the country, is much more limited than is generally supposed. About A HALF of the whole expenditure goes to the payment of the interest on the public debt, and is not, therefore, susceptible of the least diminution. With respect to the payments on account of the Civil List and Pensions, amounting together to about L.1,400,000, there can be no doubt that savings, important in a political point of view, may be effected in them; but it is visionary to imagine that they can have any perceptible effect on the financial condition of the country. If any considerable savings are to be made, they must be effected either in the collection of the revenue, or in the Army, Navy, Ordnance, and Miscellaneous departments. In these, certainly, there is much room for retrenchment; though even there it will, we apprehend, be found, that that room is not nearly so extensive as is commonly believed. It is extremely doubtful whether anything can be saved from the expense of collection, otherwise than by a reduction of some oppressive duties, and an improvement in the mode of imposing others. The salaries of the officers of Customs and Excise are anything but excessive. In some departments, perhaps, as in the Scotch Custom-house, a few thousand pounds might be saved by the dismissal of a number of superior officers who are wholly unnecessary; but that is all. The great bulk of the expenditure is incurred on account of the inferior officers; and if any change is to be made in their salaries, they must be augmented, not reduced.

A considerable diminution might certainly be effected in the cost of the army, amounting at present to upwards of eight millions a-year. But, we incline to think that this diminution ought rather to be effected by gradually withdrawing the troops from the colonies, some of which ought to be abandoned, than by disbanding any portion of those that now form the peace establisliment of Great Britain and Ireland. It is held by many, to whose opinion on such subjects the greatest deference is due, to be very doubtful whether there are at present any considerable number of supernumerary soldiers in this country. And it is clear that, in the peculiar circumstances under which Great Britain is placed, with an immense manufacturing population congregated into large masses, liable to be suddenly thrown out of employment, and exposed to every sort of privation, a powerful military force is indispensable for preserving the peace of the country, and giving confidence to the owners of property. Had it not been for the activity with which troops were poured into Lancashire, on the breaking out of the riots there in the spring of VOL, XLVI. NO. 92,

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