It has been famously argued that Tom Paine was not much of an economic thinker. Indeed, in his published work, we see relatively scarce systematic commentary on the subject. But, as befitting his origins in a mercantile family, Paine as a young man had prepared for a career as an excise officer. He later fully participated in a broader Enlightenment conversation about the new world of credit, trade, commercial and monetary policies, among other fiscal issues of early globalization. In particular, Paine formulated a systematic critique of public debt as a compelling way to discuss political sovereignty, the social contract, and the true wealth of nations – among other issues. In 1796, in France, Paine published a critique of wartime funding of the British economy with the publication of The Decline and Fall of the English System of Finance inspired by the title of Gibbon’s The Decline and Fall of the Roman Empire (1776). Paine’s denunciation of the economic self-mutilation caused by British wartime expansionism focused on a reform by the Prime Minister, William Pitt the Younger, who partially privatized the public debt of Britain. The British pound sterling was henceforth sustained by mysterious private loans whose very terms were obscured from public opinion. This article argues that the pamphlet had many parallels to David Hume’s 1752 essay Of Public Debt which Hume revised after the Seven Years War with a radical critique of public debt. The Humean origins of many of Paine’s arguments are manifest in the corrupting nature of public debt tied to military expenditure. To Hume and Paine, gimmicky forms of state borrowing in times of war lead to the bankruptcy of expansionist absolutism and to the eventual “decline and fall” of belligerent empires.
SonenscherBefore22–34; Allan Potofsky “The Political Economy of the French-American Debt Debate: The Ideological Uses of Atlantic Commerce 1787 to 1800” The William and Mary Quarterly 63 (July 2006): 489–516.
Allan Potofsky“G-J-A Ducher and the Collapse of ‘Doux Commerce’ in the Atlantic During the Era of Revolutions,” in “L’Amérique: des Colonies aux Républiques”Cahiers Charles V38 (2006): 163–186. Idem "The Political Economy" op. cit.
Istvan Hont“The Rhapsody of Public Debt: David Hume and Voluntary State Bankruptcy,”Jealousy of Trade: International Competition and the Nation-State in Historical Perspective(Cambridge ma: Harvard University Press 2005) 325–353.
Hume’s prediction in1776predicting a European cataclysm provoked by national debt resonates as a final word: “It will be found in the present year 1776 that all the revenues of this island north of Trent and west of Reading are mortgaged or anticipated forever. Could the small remainder be in a worse condition were those provinces seized by Austria and Prussia? There is only this difference that some event might happen in Europe which would oblige these great monarchs to disgorge their acquisitions. But no imagination can figure a situation which will induce our creditors to relinquish their claims or the public to seize their revenues. So egregious indeed has been our folly that we have even lost all title to compassion in the numberless calamities that are waiting us.” David Hume The History of England from the Invasion of Julius Caesar to the Revolution in 1688. (Indianapolis Liberty Fund 1983) vol. 4 appendix iii 373.