During the two wars which began in 1739 and in 1755, little money was borrowed either upon annuities for terms of years, or upon those for lives.An annuity for ninety-eight or ninety-nine years, however, is worth nearly as much money as a perpetuity, and should, therefore, one might think, be a fund for borrowing nearly as much.But those who, in order to make family settlements, and to provide for remote futurity, buy into the public stocks, would not care to purchase into one of which the value was continually diminishing; and such people make a very considerable proportion both of the proprietors and purchasers of stock.An annuity for a long term of years, therefore, though its intrinsic value may be very nearly the same with that of a perpetual annuity, will not find nearly the same number of purchasers.The subscribers to a new loan, who mean generally to sell their subscriptions as soon as possible, prefer greatly a perpetual annuity redeemable by Parliament to an irredeemable annuity for a long term of years of only equal amount.The value of the former may be supposed always the same, or very nearly the same, and it makes, therefore, a more convenient transferable stock than the latter.
During the two last-mentioned wars, annuities, either for terms of years or for lives, were seldom granted but as premiums to the subscribers to a new loan over and above the redeemable annuity or interest upon the credit of which the loan was supposed to be made.They were granted, not as the proper fund upon which the money was borrowed, but as an additional encouragement to the lender.
Annuities for lives have occasionally been granted in two different ways; either upon separate lives, or upon lots of lives, which in French are called Tontines, from the name of their inventor.When annuities are granted upon separate lives, the death of every individual annuitant disburthens the public revenue so far as it was affected by his annuity.When annuities are granted upon tontines, the liberation of the public revenue does not commence till the death of all annuitants comprehended in one lot, which may sometimes consist of twenty or thirty persons, of whom the survivors succeed to the annuities of all those who die before them, the last survivor succeeding to the annuities of the whole lot.Upon the same revenue more money can always be raised by tontines than by annuities for separate lives.An annuity, with a right of survivorship, is really worth more than an equal annuity for a separate life, and from the confidence which every man naturally has in his own good fortune, the principle upon which is founded the success of all lotteries, such an annuity generally sells for something more than it is worth.In countries where it is usual for government to raise money by granting annuities, tontines are upon this account generally preferred to annuities for separate lives.The expedient which will raise most money is almost always preferred to that which is likely to bring about in the speediest manner the liberation of the public revenue.
In France a much greater proportion of the public debts consists in annuities for lives than in England.According to a memoir presented by the Parliament of Bordeaux to the king in 1764, the whole public debt of France is estimated at twenty-four hundred millions of livres, of which the capital for which annuities for lives had been granted is supposed to amount to three hundred millions, the eighth part of the whole public debt.
The annuities themselves are computed to amount to thirty millions a year, the fourth part of one hundred and twenty millions, the supposed interest of that whole debt.These estimations, I know very well, are not exact, but having been presented by so very respectable a body as approximations to the truth, they may, I apprehend, be considered as such.It is not the different degrees of anxiety in the two governments of France and England for the liberation of the public revenue which occasions this difference in their respective modes of borrowing.
It arises altogether from the different views and interests of the lenders.
In England, the seat of government being in the greatest mercantile city in the world, the merchants are generally the people who advance money to government.By advancing it they do not mean to diminish, but, on the contrary, to increase their mercantile capitals, and unless they expected to sell with some profit their share in the subscription for a new loan, they never would subscribe.But if by advancing their money they were to purchase, instead of perpetual annuities, annuities for lives only, whether their own or those of other people, they would not always be so likely to sell them with a profit.Annuities upon their own lives they would always sell with loss, because no man will give for an annuity upon the life of another, whose age and state of health are nearly the same with his own, the same price which he would give for one upon his own.An annuity upon the life of a third person, indeed, is, no doubt, of equal value to the buyer and the seller; but its real value begins to diminish from the moment it is granted, and continues to do so more and more as long as it subsists.It can never, therefore, make so convenient a transferable stock as a perpetual annuity, of which the real value may be supposed always the same, or very nearly the same.
In France, the seat of government not being in a great mercantile city, merchants do not make so great a proportion of the people who advance money to government.The people concerned in the finances, the farmers general, the receivers of the taxes which are not in farm, the court bankers, etc., make the greater part of those who advance their money in all public exigencies.
