Kingdom has ever possessed. Accordingly, it has been, coeval with its funding system, the prevailing opinion of the men of business and of the generality of the most sagacious theorists of that country that the operation of the public funds, as capital, has contributed to the effect in question. Among ourselves appearances, thus far, favor the same conclusion. Industry, in general, seems to have been reanimated. There are symptoms indicating an extension of our commerce. Our navigation has certainly of late had a considerable spring; and there appears to be, in many parts of the Union, a command of capital which, till lately, since the Revolution, at least, was unknown. But it is at the same time to be acknowledged that other circumstances have occurred (and in a great degree) in producing the present state of things, and that the appearances are not yet sufficiently decisive to be entirely relied upon.
In the question under discussion it is important to distinguish between an absolute increase of capital or an accession of real wealth and an artificial increase of capital as an engine of business or as an instrument of industry and commerce. In the first sense a funded debt has no pretensions to being deemed an increase of capital; in the last, it has pretentions which are not easy to be controverted. Of a similar nature is bank credit, and, in an inferior degree, every species of private credit.
But though a funded debt is not, in the first instance, an absolute increase of capital or an augmentation of real wealth, yet by serving as a new power in the operations of industry it has, within certain bounds, a tendency to increase the real wealth of a community, in like manner as money borrowed by a thrifty farmer, to be laid out in the improvement of his farm, may in the end add to his stock of real riches.
There are respectable individuals who from a just aversion to an accumulation of public debt are unwilling to concede to it any kind of utility; who can discern no good to alleviate the ill with which they suppose it pregnant; who can not be persuaded that it ought in any sense to be viewed as an increase of capital, lest it should be inferred that the more the debt, the more capital; the greater the burdens, the greater the blessings of the community.
But it interests the public councils to estimate every object as it truly is; to appreciate how far the good in any measure is compensated by the ill, or the ill by the good; either of them is seldom unmixed.
Neither will it follow that an accumulation of debt is desirable, because a certain degree of it operates as capital. There may be a plethora in the political as in the natural body; there may be a state of things in which any such artificial capital is unnecessary. The debt, too, may be swelled to such a size as that the greatest part of it may cease to be useful as capital, serving only to pamper the dissipation of idle and dissolute individuals; as that the sum required to pay the interest upon it may become oppressive and beyond the means which a government can employ consistently with its tranquility to raise them; as that the resources of taxation to face the debt may have been strained too far to admit of extensions adequate to exigencies which regard the public safety.
