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deficiency was made good by borrowing upon annuities for lives at

fourteen per cent�察�or at little more than seven years' purchase。

In 1695�察�the persons who had purchased those annuities were

allowed to exchange them for others of ninety´six years upon

paying into the Exchequer sixty´three pounds in the hundred�察�that

is�察�the difference between fourteen per cent for life�察�and

fourteen per cent for ninety´six years�察�was sold for sixty´three

pounds�察�or for four and a half years' purchase。 Such was the

supposed instability of government that even these terms procured

few purchasers。 In the reign of Queen Anne money was upon

different occasions borrowed both upon annuities for lives�察�and

upon annuities for terms of thirty´two�察�of eighty´nine�察�of

ninety´eight�察�and of ninety´nine years。 In 1719�察�the proprietors

of the annuities for thirty´two years were induced to accept in

lieu of them South Sea stock to the amount of eleven and a half

years' purchase of the annuities�察�together with an additional

quantity of stock equal to the arrears which happened then to be

due upon them。 In 1720�察�the greater part of the other annuities

for terms of years both long and short were subscribed into the

same fund。 The long annuities at that time amounted to L666��821

8s。 3 1/2d。 a year。 On the 5th of January 1775�察�the remainder of

them�察�or what was not subscribed at that time�察�amounted only to

L136��453 12s。 8d。

     During the two wars which began in 1739 and in 1755�察�little

money was borrowed either upon annuities for terms of years�察�or

upon those for lives。 An annuity for ninety´eight or ninety´nine

years�察�however�察�is worth nearly as much money as a perpetuity��

and should�察�therefore�察�one might think�察�be a fund for borrowing

nearly as much。 But those who�察�in order to make family

settlements�察�and to provide for remote futurity�察�buy into the

public stocks�察�would not care to purchase into one of which the

value was continually diminishing�察�and such people make a very

considerable proportion both of the proprietors and purchasers of

stock。 An annuity for a long term of years�察�therefore�察�though its

intrinsic value may be very nearly the same with that of a

perpetual annuity�察�will not find nearly the same number of

purchasers。 The subscribers to a new loan�察�who mean generally to

sell their subscriptions as soon as possible�察�prefer greatly a

perpetual annuity redeemable by Parliament to an irredeemable

annuity for a long term of years of only equal amount。 The value

of the former may be supposed always the same�察�or very nearly the

same�察�and it makes�察�therefore�察�a more convenient transferable

stock than the latter。

     During the two last´mentioned wars�察�annuities�察�either for

terms of years or for lives�察�were seldom granted but as premiums

to the subscribers to a new loan over and above the redeemable

annuity or interest upon the credit of which the loan was

supposed to be made。 They were granted�察�not as the proper fund

upon which the money was borrowed�察�but as an additional

encouragement to the lender。

     Annuities for lives have occasionally been granted in two

different ways�察�either upon separate lives�察�or upon lots of

lives�察�which in French are called Tontines�察�from the name of

their inventor。 When annuities are granted upon separate lives��

the death of every individual annuitant disburthens the public

revenue so far as it was affected by his annuity。 When annuities

are granted upon tontines�察�the liberation of the public revenue

does not commence till the death of all annuitants comprehended

in one lot�察�which may sometimes consist of twenty or thirty

persons�察�of whom the survivors succeed to the annuities of all

those who die before them�察�the last survivor succeeding to the

annuities of the whole lot。 Upon the same revenue more money can

always be raised by tontines than by annuities for separate

lives。 An annuity�察�with a right of survivorship�察�is really worth

more than an equal annuity for a separate life�察�and from the

confidence which every man naturally has in his own good fortune��

the principle upon which is founded the success of all lotteries��

such an annuity generally sells for something more than it is

worth。 In countries where it is usual for government to raise

money by granting annuities�察�tontines are upon this account

generally preferred to annuities for separate lives。 The

expedient which will raise most money is almost always preferred

to that which is likely to bring about in the speediest manner

the liberation of the public revenue。

     In France a much greater proportion of the public debts

consists in annuities for lives than in England。 According to a

memoir presented by the Parliament of Bordeaux to the king in

1764�察�the whole public debt of France is estimated at twenty´four

hundred millions of livres�察�of which the capital for which

annuities for lives had been granted is supposed to amount to

three hundred millions�察�the eighth part of the whole public debt。

The annuities themselves are computed to amount to thirty

millions a year�察�the fourth part of one hundred and twenty

millions�察�the supposed interest of that whole debt。 These

estimations�察�I know very well�察�are not exact�察�but having been

presented by so very respectable a body as approximations to the

truth�察�they may�察�I apprehend�察�be considered as such。 It is not

the different degrees of anxiety in the two governments of France

and England for the liberation of the public revenue which

occasions this difference in their respective modes of borrowing。

It arises altogether from the different views and interests of

the lenders。

     In England�察�the seat of government being in the greatest

mercantile city in the world�察�the merchants are generally the

people who advance money to government。 By advancing it they do

not mean to diminish�察�but�察�on the contrary�察�to increase their

mercantile capitals�察�and unless they expected to sell with some

profit their share in the subscription for a new loan�察�they never

would subscribe。 But if by advancing their money they were to

purchase�察�instead of perpetual annuities�察�annuities for lives

only�察�whether their own or those of other people�察�they would not

always be so likely to sell them with a profit。 Annuities upon

their own lives they would always sell with loss�察�because no man

will give for an annuity upon the life of another�察�whose age and

state of health are nearly the same with his own�察�the same price

which he would give for one upon his own。 An annuity upon the

life of a third person�察�indeed�察�is�察�no doubt�察�of equal value to

the buyer and the seller�察�but its real value begins to diminish

from the moment it is granted�察�and continues to do so more and

more as long as it subsists。 It can never�察�therefore�察�make so

convenient a transferable stock as a perpetual annuity�察�of which

the real value may be supposed always the same�察�or very nearly

the same。

     In France�察�the seat of government not being in a great

mercantile city�察�merchants do not make so great a proportion of

the people who advance money to government。 The people concerned

in the finances�察�the farmers general�察�the receivers of the taxes

which are not in farm�察�the court bankers�察�etc。�察�make the greater

part of those who advance their money in all public exigencies。

Such people are commonly men of mean birth�察�but of great wealth��

and frequently of great pride。 They are too proud to marry their

equals�察�and women of quality disdain to marry them。 They

frequently resolve�察�therefore�察�to live bachelors�察�and having

neither any families of their own�察�nor much regard for those of

their relations�察�whom they are not always very fond of

acknowledging�察�they desire only to live in splendour during their

own time�察�and are not unwilling that their fortune should end

with themselves。 The number of rich people�察�besides�察�who are

either averse to marry�察�or whose condition of life renders it

either improper or inconvenient for them to do so�察�is much

greater in France than in England。 To such people�察�who have

little or no care for posterity�察�nothing can be more convenient

than to exchange their capital for a revenue which is to last

just as long�察�and no longer�察�than they wish it to do。

     The ordinary expense of the greater part of modern

governments in time of peace being equal or nearly equal to their

ordinary revenue�察�when war comes they are both unwilling and

unable to increase their revenue in proportion to the increase of

their expense。 They are unwilling for fear of offending the

people�察�who�察�by so great and so sudden an increase of taxes��

would soon be disgusted with the war�察�and they are unable from

not well knowing what taxes would be sufficient to produce the

revenue wanted。 The facility of borrowing delivers them from the

embarrassment which this fear and inability would otherwise

occasion。 By means of borrowing they are enabled�察�with a very

moderate increase of taxes�察�to raise�察�from year to year�察�money

sufficient for carrying on the war�察�and by the practice of

perpetually funding they are enabled�察�with the smallest possible

increase of taxes�察�to raise annually the largest possible sum of

money。 In great empires the people who live in the capital�察�and

in the provinces remote from the scene of action�察�feel�察�many of

them�察�scarce any inconveniency from the war�察�but enjoy�察�at their

ease�察�the amusement of reading in the newspapers the exploits of

their own fleets and armies。 To them this amusement compensates

the small difference between the taxes which they pay on account

of the war�察�and those which they had been accustomed to pay in

time of peace。 They are commonly dissatisfied with the return of

peace�察�which puts an end to their amusement�察�and to a thousand

visionary hopes of conquest and national glory from a longer

continuance of the war。

     The return of peace�察�indeed�察�seldom relieves them from the

greater part of the taxes imposed during the war。 These are

mortgaged for the interest of the debt contracted in order to

carry it on。 If�察�over and above paying the interest of this debt��

and defraying the ordinary expense of government�察�the old

revenue�察�together with the new taxes�察�produce some surplus

revenue�察�it may perhaps be converted into a sinking fund for

paying off the debt。 But�察�in the first place�察�this sinking fund��

even supposing it should be applied to no other purpose�察�is

generally altogether inadequate for paying�察�in the course of any

period during which it can reasonably be expected that peace

should continue�察�the whole debt contracted during the war�察�and��

in the second place�察�this fund is almost always applied to other

purposes。

     The new taxes were imposed for the sole purpose of paying

the interest of the money borrowed upon them。 If they produce

more�察�it is generally something which was neither intended nor

expected�察�and is therefore seldom very considerable。 Sinking

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