Dialogue in Hell between Machiavelli and Montesquieu

Twentieth Dialogue

Machiavelli: You have said that the budget is a framework. Yes, but it is an elastic framework that can stretch as far as one wants. I would always be within, never outside it.

Montesquieu: What do you mean?

Machiavelli: Is it me who must inform you about how things work, even in the States in which the budgetary organization is pushed to its highest point of perfection? Perfection consists precisely in knowing how to use ingenious artifices to escape from a system of limitation that in reality is purely fictional.

What is your annually approved budget? Nothing other than a provisional regulation, an outline of the principal financial developments. The situation is only definite after the completion of the expenditures that necessity has required over the course of the year. In your budgets, one recognizes many kinds of appropriations that respond to all possible contingencies: appropriations that are complementary, supplementary, extraordinary, exceptional and so forth. And each one of these appropriations forms, on its own, as many distinct budgets. Therefore, this is how things work: the general budget, which is voted on at the beginning of the year, totals (I suppose) an appropriation of 800 million. When one has reached the mid-year point, the financial facts already no longer correspond to the first provisions; then one presents to the Chambers what one calls a corrected budget, and it adds 100 or 150 million to the original figure. Then comes the supplementary budget: it adds on another 50 or 60 million; finally, there is the liquidation [the funds needed to amortize the debt], which adds 15, 20 or 30 million more. In brief, in the general balance of accounts, the total difference is a third of the foreseen expenditures. It is in this last figure that, in the form of a validation, the legislative vote of the Chambers survives. In this manner, at the end of 10 years, the budget could double or even triple.

Montesquieu: I do not doubt that this accumulation of expenditures can be the result of your financial improvements, but nothing similar would happen in the States in which one would avoid your methods.[1] In addition, you are not at an end: it would be quite necessary, in sum, that the expenditures are balanced by the tax collections. How would you do this?

Machiavelli: Here everything would consist in what might be called the art of grouping the figures and in certain distinctions among expenditures, with the aid of which one could obtain the necessary latitude. Thus, for example, the distinction between the ordinary and extraordinary budgets would be a great help. Under the cover of the word "extraordinary," one could quite easily get passed certain contestable expenditures and certain more or less problematic collections. For example, I might have 20 million in expenditures, and it is necessary to come up with 20 million in collections. I bear a war indemnity of 20 million, still not collected, but which will be collected later, or I bear as a receipt an increase of 20 million in taxes, which will be realized the next year. So much for the collections; I need not multiply examples. As for the expenditures, one could appeal to the opposite procedure: in place of adding, one would subtract. Thus, one would detach the costs of the collection [perception] of taxes from the budget of expenditures.

Montesquieu: And, I beseech you to explain, under what pretext?

Machiavelli: One could say, and with reason (according to me), that this is not a State expenditure. Thanks to the same reason, one could even have the costs of provincial and communal services not figure in the budget of expenditures.

Montesquieu: I dispute none of this, as you can see; but what would you do with the appropriations that are deficits and the expenditures that you would eliminate?

Machiavelli: In this matter, the key idea is the distinction between the ordinary and extraordinary budgets. It is to the extraordinary budget that the expenditures that preoccupy you would refer.

Montesquieu: But, finally, these two budgets are totaled together and the definitive figure of the expenditures appears.

Machiavelli: One must not total them: on the contrary, the ordinary budget would appear alone; the extraordinary budget would be an annex to which one attends by other means.

Montesquieu: And what would they be?

Machiavelli: Do not make me anticipate. Thus you see that, above all, there would be particular manners of presenting the budget, of dissimulating the growing increase, if need be. It would not be the government that has the necessity of acting in this fashion; there are inexhaustible resources in the industrious countries, but -- as you have remarked -- these are avaricious, suspicious countries: they dispute the most necessary expenditures. No more than the other forms, financial politics cannot put its cards on the table: one would be stopped at each step; but, in short, and (I agree) thanks to the perfecting of the budgetary system, everything is regained, everything is classified and, if the budget has its mysteries, it also has its clarities.

Montesquieu: But no doubt only for the initiates. I see that you would make of financial legislation a formalism as impenetrable as the judicial procedures of the Romans during the era of the Twelve Tables.[2] But let us proceed. Since your expenditures would increase, it would be quite necessary that your resources increase in the same proportion. Like Julius Caesar, would you find a value of two billion Francs in the State's coffers or would you discover the sources of the Potosi?[3]

Machiavelli: Your barbs are quite ingenuous. I would do what all governments do: I would borrow.

Montesquieu: It is here that I wanted to lead you. It is certain that few governments do not have the necessity of resorting to loans; but it is also certain that they are obligated to use them with discretion; they do not know how -- without involving immorality and danger -- to burden the generations to come with loads that are exorbitant and disproportionate to probable resources. How are loans made? By the issuance of securities that contain obligations on the part of the government to pay sums proportionate to the capital that is deposited with it. If the loan is at 5 percent, for example, the State -- at the end of 20 years -- must pay a sum equal to the loaned capital; at the end of 40 years, a double sum; at the end of 60 years, a triple sum, and yet it still remains a debtor for the totality of that capital. One can add that, if the State indefinitely increases its debts, without doing anything to diminish them, it will be brought to the impossibility of borrowing [any more] or bankruptcy. Such results are easy to grasp: there is no country in which every person would not understand them. The modern States have also wanted to set necessary limitations on the growth of taxes. To this purpose, they have imagined what one has called the system of amortization, which is an arrangement truly admirable for the simplicity and the practical method of its execution. One creates a special fund, of which the capitalized resources are intended for the permanent redemption of the public debt through successive fractions, with the result that, every time the State borrows, it must endow the amortization fund with a certain [amount of] capital intended to wipe out the new debts in a given period of time. You will see that this method of limitation is indirect and that this it its power. By means of the amortization, the nation says to its government: "You will borrow if you are forced to, but you must still preoccupy yourself with meeting the new obligations that you incur in my name. When one is ceaselessly obligated to amortize, one will look twice before borrowing. If you regularly amortize, I will allow your loans to pass."

Machiavelli: Any why would you want me to amortize, I ask you? In which States is amortization a regular practice? Even in England it is suspended; your example falls flat, I imagine: what is done nowhere cannot be done.

Montesquieu: Thus you would suppress amortization?

Machiavelli: I did not say so, not at all. I would let this mechanism function and my government would use the funds that it produces; this arrangement presents a great advantage. During the presentation of the budget, one could from time to time make the products of amortization figure as revenues for the following year.

Montesquieu: And in the following year, they would figure an as expenditures.

Machiavelli: I do not know, it would depend on the circumstances, because I would regret it if this financial institution did not proceed more regularly. My ministers would explain the matter in an extremely sad manner. My God, I would not claim that -- from the financial standpoint -- my administration might not have some criticizable aspects, but, when the facts have been presented, one would pass over many things. Do not forget that the administration of finances would also be an administration of the press.

Montesquieu: How is that?

Machiavelli: Did you not tell me that the very essence of the budget would be publicity?[4]

Montesquieu: Yes.

Montesquieu: So: would not the budgets be accompanied by reviews, reports and official documents of all kinds? What resources of public communications would not available to the sovereign if he is surrounded by skillful men? I would want my minister of finances to speak the language of figures with an admirable clarity and that his literary style would also be of an irreproachable purity.

It would be good to ceaselessly repeat what is true: "The management of public funds is now placed in the light of day."

This incontestable proposition would have to be presented in a thousand forms. I would like that one writes lines like these: "Our accounting system, the fruit of long experience, is distinguished by the clarity and certitude of its procedures. It puts obstacles in the way of abuse and gives to no one -- from the least functionary to the Chief of State himself -- the means of diverting the least sum from its destination or of making irregular usages of it."

One would keep to your language. How could one do better? And one would say: "The excellence of the financial system rests upon two bases: accounting and publicity. Accounting prevents a single coin from leaving the hands of the taxpayers and entering the public coffers, from passing from one coffer to another, or from going into the hands of a creditor of the State without the legitimacy of its collection [perception], the regularity of its movements or the legitimacy of its use being controlled by responsible agents, verified by unremovable magistrates and definitively sanctioned in the legislative accounts of the Chamber."

Montesquieu: O, Machiavelli! You still joke around, but your banter has something infernal about it.

Machiavelli: You forget where we are.[5]

Montesquieu: You defy the heavens.

Machiavelli: God fathoms [all] hearts.

Montesquieu: Continue.

Machiavelli: At the beginning of the budgetary year, the administrator of finances would announce: "Until now, nothing has altered the provisions of the current budget. Without creating illusions, one has the most serious reasons to hope that, for the first time in years, the budget -- despite the recourse to loans -- will present a real balance in the final accounting. This result, which is so desirable, obtained in exceptionally difficult times [such as these], is the best proof that the ascending movement of the public treasury has never slowed down." Is this well said?

Montesquieu: Continue.

Machiavelli: One would speak of amortization, which preoccupied you a little while ago, and one would say: "Amortization will soon function. If the project that one has conceived in this regard is completed, if the State's revenues continue to grow, it will not be impossible that -- in the budget that will be presented in 5 years -- the public accounts will be balanced by an surplus of tax revenues."

Montesquieu: Your hopes are long term. But, with respect to amortization: if, after having promised to make it work, one has not done so, what would you say?

Machiavelli: One would say that the moment was not well chosen, that it will be necessary to wait longer. One could go even further: recommendable economists would contest the real efficacy of amortization. You know these theories: I could recall them to you.

Montesquieu: That would be useless.

Machiavelli: One would publish these theories in the unofficial newspapers; one could insinuate them oneself; finally, one could avow them more openly.

Montesquieu: How? After you recognized the efficacy of amortization and exalted its benefits?

Machiavelli: Does not the data available to the science change? Is there an enlightened government that, little by little, does not follow the economic progress of its century?

Montesquieu: Nothing more [that is] peremptory. Let us leave amortization. When you have not kept any of your promises; when you find yourself overwhelmed by expenses; after having to foreseen a surplus of tax revenues: what would you say?

Machiavelli: If need be, one would brazenly agree. If it emanated from a strong power, such frankness would honor the government and touch the people. On the other hand, my minister of finances would devote himself to removing all significance from the elevation of expenditures. He would say what is true: "Financial practice demonstrates that deficits are never entirely confirmed; a certain quantity of new resources ordinarily survives over the course of the year, notably due to the accumulation of tax revenues; moreover, a considerable portion of approved appropriations -- not having been put to use -- were annulled."

Montesquieu: Would this happen?

Machiavelli: As you know, sometimes in financial matters there are readymade words, stereotypical phrases, that have great effect on the public, calming it, reassuring it.

Thus, by artfully presenting this or that debt, one would say: "This figure is not at all exorbitant; it is normal, it is in conformity with previous budgets; the amount of the floating debt is nothing but reassuring." There are a host of similar locutions of which I will not speak to you because there are other, more important artifices to which I must draw your attention.

First of all, in all official documents, it would be necessary to insist upon the development of prosperity, commercial activity and the always growing progress of consumption.[6]

Taxpayers riot less due to the disproportion of the budgets -- [even] when one repeats such things to them, and one can repeat them to the point of satiety without ever challenging them -- than authentic accounts produce a magical effect on the minds of bourgeois fools. When the balance of the budget is broken and when one wants to prepare the public for some kind of disappointment [mecompte] in the following year, one should say in advance in some kind of report: next year the deficit will only be such and such.

If the deficit is lower than expected, this would be a real triumph; if it is greater, one would say: "The deficit was greater than what we expected, but it was greater the preceding year. In the final accounting, the situation is better, because we spent less and yet we have been through exceptionally difficult circumstances: war, shortages, epidemics, unforeseen crises of subsistences, etc. But next year, the increase of collections will in all probability permit the attainment of a long-desired balance: the debt will be reduced, the budget properly balanced. This progress will continue, one hopes, and, except for extraordinary events, equilibrium will become the custom of our finances, as well as the law."

Montesquieu: This is high comedy: "the custom will become the law." It will never happen, because I imagine that, under your reign, there will always be some extraordinary circumstances, some war, some crisis of subsistence.

Machiavelli: I do not know if there will be crises of subsistence. What is certain is that I will hold the flag of national dignity very high.

Montesquieu: This would be the least that you can do. If you receive glory, one should not be grateful to you for it, because in your hands it would only be a means of governing: it will not amortize the debts of your States.

[1] The French word used here, errements, can also mean "bad habits."

[2] Circa 449 BCE.

[3] Mountains in Nevada, USA.

[4] That is to say, transparent to the eyes of the public.

[5] Or the possibility that Machiavelli is actually the Devil in disguise.

[6] That is, the progress in the consumption of products. (In John S. Waggoner's translation, this phrase is rendered as "a constantly rising standard of living.") Note that such an insistence is almost a century ahead of its time. Emphasis in original.

(Translated from the French by NOT BORED! December 2007. Footnotes by the translator.)

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