The Idéologue and classical liberal Destutt de Tracy (1754-1836) criticised the practice of increasing government debt by “borrowing money on perpetual annuities” as harmful to productive economic activity and which perpetuated the power of “a crowd of useless annuitants” who live off future taxes:
It is then as erroneous to believe that the loans of government are not hurtful to national industry, as it is to suppose that the funds which they produce, are not taken from any individual involuntarily. In truth these are not the real reasons which cause so much importance to be attached to the possibility of borrowing. The great advantage of loans, in the eyes of their partisans, is that they furnish in a moment enormous sums, which could only have been very slowly procured by means of taxes, even the most overwhelming. Now I do not hesitate to declare that I regard this pretended advantage as the greatest of all evils.
But at this day, in Europe, we are so habituated to the existence of a public debt, that when we have found the means of borrowing money on perpetual annuities, and of securing payment of the interest, we think ourselves liberated and no longer owing any thing; and we do not or will not see that this interest absorbing a part of the public revenue (which was already insufficient) since we have been obliged to borrow, is the cause that this same revenue still less suffices for subsequent expenses; that soon we must borrow again to provide for this new deficit, and load ourselves with new interest; and that, thus in but a short time it is found that a considerable portion of all the riches annually produced is employed, not for the service of the state, but to support a crowd of useless annuitants. And to fill the measure of our evils, who are these lenders? Men not only idle, as are all annuitants; but also completely indifferent to the success or failure of the industrious class to which they have lent nothing: having absolutely no interest but the permanence of the borrowing government, whatsoever it be or whatsoever it does; and at the same time having no desire but to see it embarrassed, to the end that it may be forced to keep fair with them and pay them better. Consequently natural enemies to the true interests of society, or at least being absolutely strangers to them. I do not pretend to say that all the annuitants of the state are bad citizens; but I say that their situation is calculated to render them such. I add further, that life annuities tend moreover to break family ties; and that the great abundance of public effects cannot fail of producing a crowd of licentious gamblers in the funds. The truth of what I advance is manifested in a very odious and fatal manner in all great cities without commerce; and especially in all the capitals in which this class of men is very numerous and very powerful; and has many means of giving weight to their passions, and of perverting the public opinion.
It is then as erroneous to believe that the loans of government are not hurtful to national industry, as it is to suppose that the funds which they produce, are not taken from any individual involuntarily. In truth these are not the real reasons which cause so much importance to be attached to the possibility of borrowing. The great advantage of loans, in the eyes of their partisans, is that they furnish in a moment enormous sums, which could only have been very slowly procured by means of taxes, even the most overwhelming. Now I do not hesitate to declare that I regard this pretended advantage as the greatest of all evils. It is nothing else than a mean of urging men to excessive efforts, which exhaust them and destroy the sources of their life. Montesquieu perceived it well. After having painted very energetically the state of distress and anxiety to which the exaggeration of the public expenses had already, in his time, reduced the people of Europe, who ought by their industry to have been the most flourishing, he adds, “And, “what prevents all remedy in future, they no longer “count on the revenues; but make war with “their capital. It is not unheard of for states “to mortgage their funds even during peace, and “employ to ruin themselves means which they “call extraordinary; and which are so much so “that an heir of a family the most deranged could “with difficulty imagine them.”
It will not fail to be said that this is to abuse its credit, and not to use it; and that the abuse which may be made of it does not prevent its being good to have it. I answer, first, that the abuse is inseparable from the use, and experience proves it. It is scarcely two hundred years since the progress of civilization, of industry, of commerce, that of the social order, and perhaps also the increase of specie, have given to governments the facility of making loans; and in this short space of time these dangerous expedients have led them all either to total or partial bankruptcies, sometimes repeated, or to the equally shameful and more grevious resource of paper money, or to remain overburdened under the weight of a load which daily becomes more insupportable.
But I go farther. I maintain that the evil is not in the abuse; but in the use itself of loans, that is to say that the abuse and the use are one and the same thing; and that every time a government borrows it takes a step towards its ruin. The reason of this is simple: A loan may be a good operation for an industrious man, whose consumption reproduces with profit. By means of the sums which he borrows, he augments this productive consumption; and with it his profits. But a government which is a consumer of the class of those whose consumption is sterile and destructive, dissipates what it borrows, it is so much lost for ever; and it remains burdened with a debt, which is so much taken from its future means. This cannot be otherwise. In several countries they have commenced, by being long without feeling the bad effects of these operations; because the progress of industry and the arts being very great at this epoch, their advance has been found more rapid than that of the debt; and the means of the government have not failed to augment also. Many have even concluded that a public debt was a source of prosperity, while it only proved that individuals did more good than the government did evil; but this evil was not the less real; and nobody now undertakes to deny it.