The application of millions in this manner by our statesmen, was in a great measure owing to the enthusiastic speculations of Dr Richard Price, a benevolent, ingenious, and laborious man, who, unfortunately for the public, possessed the power of giving his wild speculations a tangible and practical appearance.  He was, to use a common expression, ‘carried off his feet’ by arithmetical calculations.  He believed compound interest to be omnipotent.  He made a calculation of what a penny could have come to if laid out at compound interest from the birth of Christ to the nineteenth century, and found it would make—­we forget precisely how many globes of gold the size of this earth.  He did not say, however, where the proper investments were to be made; how the money was to be procured; and, most serious of all, he overlooked that where one party received such an accumulating amount of money, some other party must pay it, and to pay it must make it.  In fact, the doctor looked on the increase of money by compound interest as a mere arithmetical process.  The world, however, finds it to be a process of working, and the making of money by toil, parsimony, and anxiety.

When any one seizes on such a theme he is sure to be carried to extremities with it.  It was one of Price’s favourite theories, that the time when interest was highest was the best time for borrowing money, because the borrowed sinking-fund would then bring the highest interest.  One is astonished in times like these, when people think taxes and national debt so serious, at the easy carelessness with which the doctor treats the disease, and his sure remedy.  He says in his celebrated work on Annuities (i. 277):  ’It is an observation that deserves particular attention here, that in this plan it will be of less importance to a state what interest it is obliged to give for money; for the higher the interest, the sooner will such a sum pay off the principal.  Thus, L.100,000,000 borrowed at 8 per cent., and bearing an annual interest of L.8,000,000, would be paid off by a fund producing annually L.100,000 in fifty-six years; that is, in thirty-eight years less time than if the same money had been borrowed at 4 per cent.  Hence it follows that reductions of interest would in this plan be no great advantage to a state.  They would indeed lighten its present burdens; but this advantage would be in some measure balanced by the addition which would be made to its future burdens, in consequence of the longer time during which it would be necessary to bear them.’

‘Certain it is, therefore,’ says the doctor, in a general survey of his arithmetical salvation of the country, ’that if our affairs are to be relieved, it must be by a fund increasing itself in the manner I have explained.  The smallest fund of this kind is indeed omnipotent, if it is allowed time to operate.’  And again:  ’It might be easily shewn that the faithful application from the beginning of the year 1700, of only L.200,000