is from pages 514-515 of the 1982 Liberty Fund version of the 1978 Oxford University Press edition of Adam Smith’s Lectures on Jurisprudence:
Say they, tho’ we owe at present above 100 millions, we owe it to ourselves, or at least very little of it to forreigners. It is just the right hand owing the left, and on the whole can be little or no disadvantage. But it is to be considered that the interest of this 100 millions is paid by industrious people, and given to support idle people who are employed in gathering it. Thus industry is taxed to support idleness. If the debt had not been contracted, by prudence and oeconomy the nation would have been much richer than at present. Their industry would not be hurt by the oppression of these idle people who live upon it. Instead of the brewer paying taxes which are often improper, the stock might have been lent out to such industrious people as would have made 6 or 7 per cent. by it, and have given better interest than the government does. This stock would then have been employed for the country’s wellfare. When there are such heavy taxes to pay, every merchant must carry on less trade than he would otherwise do; he has his taxes to pay before he sell any of his commodities. This narrows as it were his stock, and hinders his trade from being so extensive as it otherwise would be. To stop this clamour Sir Robert Walpole endeavoured to shew that the public debt was no inconvenience, tho’ it is to be supposed that a man of his abilities saw the contrary himself.