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P. 5.

Some remarks follow on the importance of the subject, and the blunted feelings of the public respectiag it. He then adds, that

Tales “ Various schemes have been proposed by means of sinking funds for dininishing, and in course of time discharging, our national in, cumbrances, and some of these laaye been carried into execution to a certain extent.sk that “their principles and probable result ought to be scrutinized in the strictest manner," and that

“ The most perspicuous mode of conducting this enquiry seems to be,

“ First-To lay down some general principles, which if esta. blished would lead to general conclusions concerning our financial system, and in a great measure supersede the necessity of examining particular plans which have been proposed or adopted.

Secondly-To give a narration of the manner in which we have proceeded in conducting and accumulating our public debt, and a statement of its present amount and annual charge, and an account of the plans which have been proposed or adopted for its discharge, and their operation. The necessary tables in illustration of these particulars will be subjoined in an appendix.

“ Thirdly-By means of these general principles to scrutinize the efficacy of the schemes to which we trust for the relief of our national burthens; and examine the propriety of the methods we have adopted in conducting our financial operations," P.6.

In conformity with this plan he begins the first part of the subsequent Inquiry by stating a series of “ general principles of finance."—Without meaning to be hypercritical, we would rather have called them propositions, as indeed the author himself does afterwards ; for instance, the unqualified statement in the latter part of the second of them, that*“ we are already, far advanced to the utmost limit of taxation,” is surely, neither a general principle of finance nor an inference from any principle, but an assertion of a fact which requires distinct proof, and of which no proof is given; connected as it is with the preceding part of the sentence, it means the utmost limit of the amount of revenue obtainable by taxation, which, from his observations on the same subject a few pages after, we are sure the author cannot have intended, which allows nothing for the present rapid progress of population and intrinsic national wealth, and makes no distinction between the difficulty of multiplying taxes, or of increasing their rate; nor between indirect and direct taxation We are quite convinced that the assertion, is unfounded in that sense in which it is likely to be generally interpreted ; and if unfounded, without any doubt inexpedient. But, passing by this inadvertence, we in the strongest manner wish to recommend to

general attention the important, and we believe, incontrovertible summary of the author's opinion, which he has stated in the fol. lowing manner :

6 The excess of revenue aboye expenditure is the only real sinking fund by which public debt can be discharged. The increase of the revenue and the diminution of expence are the only means by which this sinking fund can be enlarged, and its operation rendered more effectual: and every scheme for discharging the public debt by sinking funds operating by compound interest, or in any other manner, unless so far as they are founded upon this principle; are illusory.” P. 10.

He gives as a reason for examining minutely the principles which he has stated, that although they are "incontrovertible, or inferred by a very obvious train of reasoning; yet measures inconsistent with them have not only been advanced by men of acknowledged abilities, and expert in calculations, but have been acted on hy successive administrations, and annually supported in parliament, and ostentatiously held forth in every ministerial publication." P.11.

We readily allow that measures have been recommended upon principles, and by arguments inconsistent with the truths which Professor Hamilton has so ably established; but we must think the latter part of these' assertions a great deal too unqualified; and we expect to prove that Mr. Pitt and others who have succeeded to him have not adopted measures inconsistent with his principles, but have clearly comprehended them, and regulated in conformity with them the more important parts of their arrangements for the redemption of our public debt,

In his remarks (pages 44-57) on the principle of redeeming debt by appropriated sinking funds increasing by compound interest, Professor Hamilton has given a series of perspicuous arithmetical statements which demonstrate the futility of some opinions on the subject, that we would rather call vulgar, thau popular; because, as far as our observation has extended, few, if any, intelligent persons have ever been so much deceived by the magic of numbers, as to believe that the national debt can ever be diminished but by an average surplus of revenue beyond the average expenditure. The error has long since been refuted in various publications, and particularly by Sir F. D'Ivernois.

The Professor (page 57) states, that the point at issue is, wliether, taxation and expenditure being the samie, a sinking fund produces any beneficial effect?". Certainly not, if this is the only point at issue. If we are to limit our views solely by ariilmetical calculations of direct profit and loss, we cannot discover that a sinking fund has any peculiar advantages in diminishing debt or retarding its increase; and it may be that the same money may be employed with equal efficacy by less expensive mechanism. But we have before stated, that the mechanisin of our sinking fund appears to us to have been originally framed and since improved with far more extensive views of political economy. '

The second part of this work contains a useful “history of the present public debt of Great Britain, from its commence ment to the 1st of February, 1912," which is continued in a postscript to the 1st of November in the same year. The first section of this part describes concisely the methods of borrowing the funded debt, which have successively been“ adopted, and subjoins 'a clear, arith netical statement of its progress.". The second section is employed in describing " the plans which have been adopted for the reduction of the funded debt, and their operation *." and the third section is employed in stating the nature and amount of the unfunded part of the public debt.

The third part of the work contains an examination of plans for the redemption of the national debt, and other financial operations," in four sections; of which, the first examines Dr. Price's views of finance; the second reviews Mr. Pitt's sinking funds; the third comments on the plan introduced by Lord Henry Petty; and the fourth contains an "examination of the system of funding by increase of capital.”

This part of the work is written with considerable ability, and for that reason we regret that it is not a little more comprehensive. We wish it had included the Professor's opinions of some earlier plans for reducing the national debt; and especially the propositions of Mr. Archibald Hutcheson, which influenced the first attempts to reduce it, and have evidently been the basis of some important measures adopted with the same intention by Mr. Piit.

The object of the examination of Dr. Price's plans is to dist prove the arithmetical principle on which he founded their eftir cacy. To us it has always appeared that the Doctor perplexed

* One of these plans, namely, the redemption of the land-tax, and a provision by excise in lieu of it, was adopted froin Mr. Hutcheson's Propositions for paying off the National Debt in the year 1713... Professor Hamilron's view of this mean sure is very singular. He considers it as having only travsferred a still existing debt from one description of creditor to another. To us it appears to be as truly an extinction of so much public debt, as when a private person sells a part of his estate to pay off a mortgage on the whole of it. Neither the one nor the other may gain much revenue by the transaction, but that is a perfectly different question. In this instance the primary object seems to have been a reduction of the nominal capital of the debt; the great magnitude of it being considered pressing its market price. As a question of more or less revenue it'was almost immaterial, but its collateral advantages have undoubtedly been considerable in its connexion with other questions of political economy, and especially as clearing away obstructions to a more efficient use of the most important and equitable source of public revenue.

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can be made efficiently instrumental in creating an increase of revenue, which might not otherwise have been obtained that increase, in whatever mayner, applied to extinguish debt, whether contingently or by a strictly regulated appropriation, is substanttially a sinking fund; but in neither case is one step advanced towards extinction of debt, by borrowing with one hand to redeem with the other, unless at a lower rate of interest; and then the difference saved, if so applied, is, as truly a sinking fund as an equal increase of surplus income would be by an augmentation of the amount of it.

If, however, the adoption of a permanent sinking fund may give to a nation means of augmenting its income, which cannot be adopted at all in private life, or can only be adopted in very limited extent, in that case a difference arises which so far only may justify, Dr. Price's distinction. Where not instrumental in increasing the revenue so far as is necessary to pay the interest of the sums borrowed, the measure in public or private affairs will be absurd; but if it may be made thus instrumental in the one case and not in the other, the distinction is so fạr defensible.

11.4.1 103 72629931 As to the latter part of Dr. Price's assertion," that it is borrowing money at simple interest in order to improve it at compound interest,” his meaning no doubt was, that if " additional funds are provided to pay the interest of the sums borrowed," the new debt will not increase by compound interest, while the old debt will be diminished in that proportion; and with this proviso the truth of his assertion is indisputable, although announced in a manner more adapted to surprise the reader thau to instruct him.

True it is, that either the existing revenue must be made more productive, or new taxes must be levied to add to it; and it may be that these subtract as much from private incomes as they add to the public income; but whatever may be the pressure thus created, it would equally be felt by an equal increase of iŋcopie applied to diminish debt, or retard its progress in any other man

So far as respects the public purse, the effect is the as that of simple opposed to compound interest. We adnit there is in this nothing peculiar to an appropriated and permanent sinking fund; but we think there are other solid grounds

110, ile TODIDATO which it may be defended.

In justice to the memory of Mr. Pitt, we must say that we cannot discover 113 any.nl sufficient reason for

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Dhe puting to him that, to utility as a powerful instrument, in obtaining the consent of the nation to make its public revenue gradually more equal to

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