loans or incurring debts, and nobody intended any
ratio, or thought of any, how does it happen that there is one? I
answer, that the ratio is founded in necessity; and I now go to explain
what that necessity is.

It will always happen, that the price of labour, or of the produce
of labour, be that produce what it may, will be in proportion to the
quantity of money in a country, admitting things to take their natural
course. Before the invention of the funding system, there was no other
money than gold and silver; and as nature gives out those metals with
a sparing hand, and in regular annual quantities from the mines, the
several prices of things were proportioned to the quantity of money at
that time, and so nearly stationary as to vary but little in any fifty
or sixty years of that period.

When the funding system began, a substitute for gold and silver began
also. That substitute was paper; and the quantity increased as the
quantity of interest increased upon accumulated loans. This appearance
of a new and additional species of money in the nation soon began to
break the relative value which money and the things it will purchase
bore to each other before. Every thing rose in price; but the rise at
first was little and slow, like the difference in units between two
first numbers, 8 and 12, compared with the two last numbers 90 and 135,
in the table. It was however sufficient to make itself considerably felt
in a large transaction. When therefore government, by engaging in a new
war, required a new loan, it was obliged to make a higher loan than the
former loan, to balance the increased price to which things had risen;
and as that new loan increased the quantity of paper in proportion
to the new quantity of interest, it carried the price of things still
higher than before. The next loan was again higher, to balance that
further increased price; and all this in the same manner, though not
in the same degree, that every new emission of continental money in
America, or of assignats in France, was greater than the preceding
emission, to make head against the advance of prices, till the combat
could be maintained no longer. Herein is founded the necessity of which
I have just spoken. That necessity proceeds with accelerating velocity,
and the ratio I have laid down is the measure of that acceleration; or,
to speak the technical language of the subject, it is the measure of the
increasing depreciation of funded paper money,