Note 109 — PART II. CONTAINING Remarks on some Particulars in a Speech at opening the Budget in April 1776.

It is a general and certain maxim “that whenever money is borrowed by a lottery which gives a right to stock equal to the sum advanced, there is a loss equal to the sum which might have been received for the profits of the lottery.”—When the 3 per cents. are at 76 or 77, half a million might be borrowed by a lottery, consisting of 50,000 tickets, each of the same value with 10l. three per cent. stock: and hitherto such a method of borrowing has been reckoned advantageous. But it only gives a fallacious appearance of borrowing at 3 per cent. It is the same with selling the profits of a lottery, and at the same time absurdly converting the purchase-money into a debt due to the purchaser.—Since the last war we have had seven of these lotteries, including two in 1763; and above a million has been lost by them.

In Queen Anne’s time, there were several lotteries, consisting of all prizes and no blanks. This is so curious, and most persons may be so much at a loss to conceive of the possibility of it, that I cannot help explaining it.

A capital, equal to the whole money advanced, was distributed equally among all the tickets in the lottery; and, in order to make them prizes of different values, there was farther distributed among them different shares of an additional capital, to which a right was given, though no money had been paid for it.—For example—In 1711, two millions were raised by a lottery of this kind, called a class lottery. The whole sum advanced was divided into 20,000 tickets, each 100l. stock bearing 6 per cent. interest. This capital was increased by a gratuitous capital of 602,200l. bearing the same interest, and divided into shares which were added to the tickets, in order to form prizes.—This was the same with giving near 8 per cent. for money, besides a premium of 30 per cent.—As the interest of money was at this time 6 per cent. the sum borrowed would most certainly have been advanced at 8 per cent. without any premium; but it was, I suppose, reckoned necessary that government should not seem to give such high interest.—In the same year, 1.500,000l. was borrowed by another such lottery, and creating a capital of 1.928,570l. And in 1712, 3.600,000l. was borrowed by two more such lotteries, and creating a capital of 4.683,080l.—The greatest part of the debts contracted by these lotteries (amounting to 9.213,850l. though only 7.100,000l. was advanced) remains at this hour an incumbrance on the public; and the duties constituting the general fund are charged with the interest of it.

In 1714, the national interest was reduced to 5 per cent. But in that very year 1.400,000l. was borrowed by a lottery, which gave a right to a capital of 1.876,000l. bearing 4 per cent. that is, by giving near 5½ per cent. interest, besides a premium of 34 per cent.—Thus have our debts been increased. But even worse has been done. The taxes charged with the interest of the public debts proving often deficient, the shortest way of discharging the arrears has been often taken, by adding them to the principal, and paying compound interest for money.—Is it a wonder, that a nation which has been so careless in contracting debts, should have done so little towards discharging them?