Loans may be of two kinds, either domestic or foreign. The relative advantages and disadvantages of each, as well as those which are common to both, will deserve attention. Reasonings of this kind, as they depend on rules of arithmetic, are best understood by numerical positions. For the purposes of elucidation, therefore, it may be supposed that the annual tax of any particular husbandman were fifteen pounds, so that (the whole being regularly consumed in payment of taxes) he would be no richer at the end of the war, than he was at the beginning. It is at the same time notorious, that the profits made by husbandmen, on funds which they borrowed were very considerable. In many instances their plantations, as well as the cattle and family utensils, have been purchased on credit, and the bonds given for both have shortly been paid by sales of produce. It is, therefore, no exaggeration to state the profits at twelve per cent. The enormous usury, which people in trade have been induced to pay, and which will presently be noticed, demonstrates that the profits made by the other professions, are equal to those of the husbandman.
The instance, therefore, taken from that which is the most numerous class of citizens, will form no improper standard for the whole. Let it then be farther supposed in the case already stated, that the party should annually borrow the sum of ten pounds at six per cent, to pay part of the tax of fifteen pounds. On this sum then he would make a profit of twentyfour shillings, and have to pay an interest of twelve shillings. The enclosed calculation will show, that in ten years he would be indebted one hundred pounds, but his additional improvements would be worth near one hundred and fifty, and his net revenue be increased near twelve, after deducting the interest of his debt. Whereas if he had not borrowed, his revenue, as has been already observed, would have continued the same. This mode of reasoning might be pursued farther, but what has been said is sufficient to show, that he would have made a considerable advantage from the yearly loan. If it be supposed, that every person in the community made such a loan, a similar advantage would arise to the community. And lastly, if it be supposed, that the government were to make a loan and ask so much less in taxes, the same advantage would be derived. Hence, also, may be deduced this position, that in a society where the average profits of stock are double the interest at which money can be obtained, every public loan for necessary expenditures, provides a fund in the aggregate of national wealth equal to the discharge of its own interest.