Say^s Catechism of 



amount of the taxes as part of llie in- 

 come of a nation? 



Never, for they are values not created, 

 but transferred. They have formed a 

 part of the incomes of individuals which 

 they have not consumecl. 



Have not the government other sources 

 of revenue ? 



Sometimes the government retains the 

 exclusive exercise of a certain industry, 

 and causes it to be paid for beyond its va- 

 lue, as the carriage of letters. In this case 

 the tax does not amount to the whole of 

 the charge for postage, but only to that 

 |)art which exceeds what it would cost if 

 this service was left open to free com- 

 petition. 



The profits which government some- 

 times makes on lotteries is of the same 

 kind, but is much less justifiable, on many 

 accounts. 



ON PUBLIC LOANS. 



With what view do governments bor- 

 row money? 



To provide for extraordinary expences 

 which the ordinary revenues are not suffi- 

 cient to discharge. How do they pay 

 tlie interest of the loans they borrow? 



They pay it either by laying on a new 

 tax, or by economising, from the ordinary 

 expences, a sum sufficient to pay the an- 

 nual interest. 



Loans, then, are a means of consuming 

 q principal of which the interest is paid 

 by a portion of the taxes? 



Yes, 



Who are the lenders i 



Individuals who have capitals at their 

 disposal. 



Since government represents the so- 

 ciety, and society is composed of indi- 

 viduals, it is then the society which lends 

 to itself. 



Yes: it is a part of the individuals who 

 lend to the whole of the individuals ; that 

 is to say, to the society or to its go- 

 yernmcnt. 



Wljat effect is produced by public 

 loans on the public riches ? Do they aug- 

 ment or dnnmish them? 



The loan in itself neither increases nor 

 diminishes them : it isa value which passes 

 from the hands of individuals to the 

 hands of the government, a simple trans- 

 fer. But, as the principal of the loan, or, 

 if you will, the capital lent, is generally 

 consuioedin consequence of this transfer, 

 public loans produce an improductive 

 COiisumptiun, adestruction of capital. 



Would not a capital thus lent have 

 been erpinlly cooiuiiied if it had reiDaiiied 

 ia ih« hands of individuaUf 



Political Economy. 



6l5 



No: the individuals who lent the 

 capital, wished to lay it out, not to con- 

 sume it. If it had not been lent to go- 

 vernment it wouM have been lent to 

 those who would have made use of it, 

 or they would have employed it them- 

 selves; thus the capital would have been 

 consumed reproduciively instead of im- 

 productively. 



Is the total income of a nation in> 

 creased or diminished by public loans? 



It is diminished, because all the capital 

 which is consumed carries with it the in- 

 come which it would otherwise have 

 gained. 



But, in this case, the individual who 

 lends does not lose any income, since the 

 government pays him interest for hit 

 capital; and, if he does not lose, who 

 does? 



Those who lose are the contributor* 

 who pay the increased taxes, with which 

 the public creditor is paid his interest. -,• 



But, if the creditor receives on the on« 

 hand an income which the contributor 

 pays on the other, it appears to me that 

 there is no portion of income lost, aixl 

 that the gtate has profited by the priu- 

 cijjal of the loan which it has consumed. 



You are in an error; and to convince 

 you ofit we will exaojine liow tliis opera, 

 tion is effected. An individual lends to 

 the state a thousand pounds. Conse- 

 quently he draws this vnliie trom an em- 

 ployment in which it was already, or in 

 which it would have been, engaged. 

 Supposing that this employment would 

 have afforded five per cent, there is tm 

 income of fifty pounds taken from the sow 

 ciety. It is nevertheleis paid to the 

 creditor ; but how is it paid ? At the ex- 

 pence of a coiitrihiitor; of a landed pro- 

 prietor, who would have used , for his 

 own purposes these fifty pounds wlnph 

 the government takes froni him to pay 

 the creditor. Instead of two incomes 

 which there was in society, that of the 

 tinufand pounds lent to governintnt 

 (which either had been, or might have 

 been placed elsewhere) and the income 

 of the funds, which had product ri to the 

 laridholder the fifty pounds of contribu- 

 tion, which he has been compelled to 

 pay to satis'y the creditor. In lieu tif 

 these two incomes, theie remains but 

 one, natnely, the last, which is trani- 

 ferred from the contributor to the creditor. 

 — Why is there only one income of fifty 

 (lotiiuis where there had been formerly 

 two? Because there had been, beside 

 the funds of the contributor, another 

 fund of one thuusaud pounds^ producing 



fifty 



