Abstract

In lieu of an abstract, here is a brief excerpt of the content:Hume Studies Volume XX, Number 1, April 1994, pp. 143-149 David Hume and Public Debt: Crying Wolf? JOHN CHRISTIAN LAURSEN and GREG COOLIDGE David Hume's views on public credit have not only received prominent attention in the literature on his political thought, but have even been the subject of attention in The Wall Street Journal.1 Most of the attention has centered on Hume's essay "Of Public Credit" of 1752, and treats it only as an expression of ideas, without relating it to the historical facts. This note lays out Hume's views on this matter throughout his lifetime, and juxtaposes them with figures for the actual public debt, carrying the story down to the twentieth century. Public debt as we know it only goes back about 300 years. The British government in the 1690s was the first modern government to establish enough genuine credit that private citizens would loan it money without having to be compelled.2 At the turn of the century, in the year 1700, the British public debt amounted to 14.2 million pounds sterling.3 As early as 1741, Hume was already worrying about the public debt in the essay "Of Liberty and Despotism" (later changed to "Of Civil Liberty"). In the last paragraph of that essay, he wrote of the "degeneracy" brought about by public debt, suggested that debt-service "taxes may, in time, become altogether intolerable, and all the property of the state be brought into the hands of" the government. If it is not curbed, we may come to "curse our very liberty," he wrote.4 That year, the national debt totaled 48.8 million pounds (45.2 million in 1701 pounds5). John Christian Laursen and Greg Coolidge are at the Department of Political Science, University of California, Riverside, Riverside, CA 92521 USA. Laursen e-mail: [email protected]. 144 John Christian Laursen and Greg Coolidge Hume's essay of 1752, "Of Public Credit, " was devoted entirely to criticism of the public debt (Essays, 349-365). His thoughts on public credit at this time can be summed up in this ominous warning: It must, indeed, be one of these two events; either the nation must destroy public credit, or public credit will destroy the nation. (Essays, 360-361) Hume acknowledged that the use of public credit could benefit the economy in some ways: more men with large stocks and incomes, may naturally be supposed to continue in trade, where there are public debts; and this, it must be owned, is of some advantage to commerce, by diminishing its profits, promoting circulation, and encouraging industry. (Essays, 354) But the many disadvantages would outweigh such advantages (Essays, 354355 ): 1) "It is certain, that national debts cause a mighty confluence of people and riches to the capital," making the head too large for the body. 2) Public stocks "banish gold and silver from the most considerable commerce of the state." 3) The taxes levied to pay the interest oppress the poorer people. 4) "As foreigners possess a great share of our national funds, they render the public, in a manner, tributary to them, and may in time occasion the transport of our people and our industry." 5) Public credit encourages an idle and useless rentier class. All of this pales, however, in comparison to the political consequences. From the point of view of the body politic, public credit was a threat to the security of the state. It would die a natural or a violent death. In wartime, or some national emergency, the funds necessary for the functioning of the economy would be diverted to other purposes. The economy, now dependent on credit, would crumble. The whole fabric, already tottering, falls to the ground, and buries thousands in its ruins. And this, I think, may be called the natural death of public credit. (Essays, 363) Hume Studies David Hume and Public Debt: Crying Wolf? 145 Another scenario would occur if the government became too indebted to intervene in maintaining the balance of power in Europe. Our children, weary of the struggle, and fettered with encumbrances, may sit down secure, and see their neighbors oppressed and conquered ; till, at last, they themselves...