22.17. 17. Of Public Debts.
Some have imagined that it was for the
advantage of a state to be indebted to itself: they thought that this
multiplied riches by increasing the circulation.
Those who are of this opinion have, I believe, confounded a
circulating paper which represents money, or a circulating paper which
is the sign of the profits that a company has or will make by commerce,
with a paper which represents a debt. The first two are extremely
advantageous to the state: the last can never be so; and all that we can
expect from it is that individuals have a good security from the
government for their money. But let us see the inconveniences which
result from it.
1. If foreigners possess much paper which represents a debt, they
annually draw out of the nation a considerable sum for interest.
2. In a nation that is thus perpetually in debt, the exchange must
be very low.
3. The taxes raised for the payment of the interest of the debt are
an injury to the manufactures, by raising the price of the artificer's
labour.
4. It takes the true revenue of the state from those who have
activity and industry, to convey it to the indolent; that is, it gives
facilities for labour to those who do not work, and clogs with
difficulties those who do work.
These are its inconveniences: I know of no advantages. Ten persons
have each a yearly income of a thousand crowns, either in land or trade;
this raises to the nation, at five per cent, a capital of two hundred
thousand crowns. If these ten persons employed one-half of their income,
that is, five thousand crowns, in paying the interest of a hundred
thousand crowns, which they had borrowed of others, that still would be
only to the state as two hundred thousand crowns; that is, in the
language of the algebraists, 200,000 crowns -100,000 crowns + 100,000
crowns = 200,000.
People are thrown perhaps into this error by reflecting that the
paper which represents the debt of a nation is the sign of riches; for
none but a rich state can support such paper without falling into decay.
And if it does not fall, it is a proof that the state has other riches
besides. They say that it is not an evil, because there are resources
against it; and that it is an advantage, since these resources surpass
the evil.
