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hensive that by endeavouring to reduce a great deal of matter into a limited space we may have failed in perspicuity, than that we shall be accused of having expanded trite remarks, or of having introduced such as have too slight a relation to the subject.

To the account, given by the professor, of the progress and manner of conducting the funded debt (page 59, &c.) we wish to add some circumstances which we believe are very little known, even to those who have a general acquaintance with the history of our finances; many of whom will perhaps be surprised to hear that the plan of providing one per cent, in addition to the interest or perpetual annuity for the redeemable capital of debt incurred, was actually adopted in the very first instance in which any such debt was created. It was not indeed persevered in, and appears to have been totally forgotten; nor is there any reason to suppose that Mr. Pitt was aware of it in the year 1792, when he adopted precisely the same principle in his modification of his system for extinguishing the national debt, as applied to any future increase of it.

During many years after the revolution money was obtained for the public service, in addition to the revenue, by selling annuities for lives or for terms of years. Portions of the revenue were appropriated as funds for securing the regular payment of those annuities; and hence the origin of the distinction between funded and unfunded public debt.

Large sums also had been borrowed of the bank of England, and other trading companies, at stipulated rates of interest until redeemed; but without any specific provision for their repayment.

The first instance of procuring money for the public use by creating what have since been called perpetual annuities was in the year 1711, when Harley, afterwards Earl of Oxford, was chancellor of the exchequer. The legal interest of money at that time was six per cent. ; and in the preceding year 1,500,000l. had been procured by giving for it annuities to continue thirty-two years, at the rate of nine per cent. during that period.

Two acts were passed in the year 1711 (ninth of Queen Anne), for borrowing money at "six per cent, interest, and the principal to be repaid."

As in the former year the annuities created were only to last during 32 years, and consequently the burthen on the public which was caused by them would then terminate, so in this year a provision for the debt and its interest was made, to continue only during an equal term of 32 years, beyond which period no fund or security was provided, either to discharge the interest, or repay the principal money which had been borrowed.

Instead of this, however, so much public revenue was created

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and appropriated as would not only pay the annual interest, but give a surplus sufficient to repay the money borrowed during the period of its continuance and appropriation.

By the first of these acts 1,928,570l. was borrowed, and the annual sum of 135,000/., during 32 years, was appropriated, being (with the excess of a very small fraction) six per cent. for interest, and one per cent. to pay off the principal.

But one per cent. annually employed to pay off portions of the principal debt at six per cent. interest, together with the redeemed interest in like manner employed, or in other words, one per cent. per ann., improving at six per cent. compound interest, was not quite enough to extinguish the debt within the period limited, and the deficiency was made up by an adequate addition to the annual sum appropriated by the second act of the same

year.

By that act 2,602,200l. was borrowed, and the annual sum of 186,670l. was appropriated. Six per cent. for interest, and one per cent. for a sinking or redeeming fund, as provided in the former instance, would only have required an appropriation of 182,1547.; but one pound a year, improving at the rate of six per cent. compound interest, would not amount to 100/. in less han almost 334, instead of 32 years. It was therefore necessary either to prolong the term, or a little increase the annual appropriation, and the latter course was adopted. By adding 4,5167. a year on this occasion, a sufficient provision was made (if strictly employed) to pay off both the debts within the limited term.

Principal borrowed. Debt created. Sinking Fund. £1,500,000

By the first act
By the second act 2,000,000

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1,928,570

19,285

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These united funds, improved at six per cent. compound interest, would, in 32 years, amount to 4,528,3927. 16s., or only 2,377. 48. less than the sum to be discharged; but as some of the duties imposed for this purpose were to take place at an earlier time than the commencement of the interest, this circumstance more than compensated the above-mentioned small deficiency.

It is evident, therefore, that in the very first commencement of our funded debt, the principle, though not the name, of a sinking fund, was systematically adopted, and the appropriation to pay. off each debt respectively was, in the first instance, at the rate of one per cent. of the debt to be redeemed, and afterwards, just so much more as (if duly employed) might pay it off in about 32 years.

We have been the more desirous to explain fully the principle and extent of the provision to pay off debt contracted as it was first introduced by Mr. Harley, on account of its remarkable agreement with the plan of Mr. Pitt in the year 1792, to provide for the separate redemption of every debt which might after that time be funded, by an annual appropriation of one per cent. in proportion to the capital created. In this first instance, the money borrowed was only, as already stated, 1,500,000l., but the appropriation was one per cent. on the debt funded.

Not long after the peace of Utrecht various plans were pro-. posed for accelerating the repayment of the whole national debt; and the great reduction of the rate of interest at which money might be borrowed by private persons, naturally suggested that by a similar reduction of the interest paid by the public an important annual saving might be made, which might be advantageously employed in redeeming the principal money of the national debt.

Sir Robert Walpole was at that time chancellor of the exchequer, and as a preliminary step to such a reduction he had obtained an act for reducing the legal rate of interest on all private debts from six to five per cent. In March 1716-7, he introduced his plau in the House of Commons, and fourteen resolutions were agreed to, which if they had afterwards been adopted in their full extent would have provided the means of paying off the whole debt, including the temporary annuities, within about 35 years.

A part of his plan was to commute the temporary annuities for redeemable capital at five or four per cent, interest, whichever, according to the terms proposed, might be most agreeable to the present proprietors of them. But a change of ministers took place before the bills, founded on his resolutions, were introduced, in consequence of which this important part of his plan was abandoned.

On this occasion three acts were passed, by one of which several former funds, which had been created to pay the interest and principal of certain debts, were united into a general fund, and a provision was enacted to make good any deficiency of it in any quarter of a year in which it might happen, out of the first aids granted by parliament.

The amount of this general fund was 724,8497. 6s. 104d. The two other bills related to the reduction of interest paid to the bank and the South Sea Company.

As very considerable mistakes have been made respecting the produce of the sinking fund, established by these bills, we have. referred to the Journals of the House of Commons, and the va

rious acts which bear on the question, and we believe the following statements are very nearly correct.

The general fund was made up in the following manner : Annual sums appropriated for interest and

to repay the capital of debts contracted in

1711 and 1712, by lottery loans ... £657,676 0 0 Average surplus of taxes imposed on account

of those debts, which was now added to the previous appropriation.

Annual sums which had been appropriated to pay bankers' annuities

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27,317 11 3

39,855 15 7

724,849 6 103

In the first of these annual sums was included 104,8067., originally appropriated beyond the interest of the capital debts created and added to repay them, and also 22,399l. 15s. which was the amount of interest of debt that had been paid off.

Various debts were charged on this general fund, for which no provision had been previously made, or the temporary taxes appropriated to them had expired. By the recital in the South Sea Act (6th Geo. I. 1719) it appears, that the total charge for interest of the original debts, on account of which parts of this fund had been previously appropriated, amounted to £476,717 17 8 And for the debts added by authority of the act, including two large sums for deficiencies and army debentures

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And by two subsequent acts

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102,036 13 2

5,539 0 31 584,293 11 11/

The author of the History of Debts and Taxes states this sum as only 520,000l. a year; and Rapin more nearly at 570,580l. The surplus, therefore, made applicable to pay off the debts charged on this fund was

The difference saved by the bank reductions was.

And by the South Sea reductions

140,555 15 818

130,332 9 H 11

100,000 0 Q

In all £370,888 5 8,

The surplus of the general fund was made subject to any deficiencies of the South Sea fund below the original appropriation of 608,000l.; and on the other hand, might be increased beyond the amount of 724,849l. 6s. 10žd., if the taxes should produce more than that sum, for it was provided that the whole surplus

produce of those taxes, beyond the interest payable out of them, should be applied to pay the principal money, and that any deficiency below this sum in any year should be supplied out of the general revenue.

It is evident, therefore, that (subject to variation from these causes) the original sinking fund amounted to 370,8881. 5s. S2d. We know not on what grounds Sir John Sinclair has stated its actual amount at 636,000l. only, and Professor Hamilton at only 323,4397., for it appears by the recitals in the act 5th Geo. I. when part of the produce of the new sinking fund was applied to assist in paying off exchequer bills held by the bank, that during the preceding year its amount had been as follows:

General fund .£320,436 15 11

South Sea
Aggregate

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As the clause in the general fund act, by which these surpluses were appropriated, has been more than once incorrectly quoted, we give the words as they stand in it. The clause' enacts," that all the monies to arise from time to time as well of or for the excess or surplus of an act made this session for redeeming the funds of the governor and company of the bank of England, and of or for the excess or surplus by virtue of one other act made likewise this session for redeeming the funds of the governor and company of merchants of Great Britain trading to the South Seas and other parts of America, and for encouraging the fishery, as also of or for the excess or surplus of the duties and revenues by this act appropriated as aforesaid; and the overplus monies of the said general yearly fund by this act established, shall be appropriated, reserved, and employed to and for the discharging the principal and interest of such national debts and incumbrances as were contracted before the 25th day of December 1716, and are declared to be national debts, and are provided for by act of parliament, in such manner and form as shall be directed and appointed by any future act or acts of parliament, to be discharged therewith or out of the same, and to or for none other use, intent, or purpose whatsoever."

The next considerable reduction of the interest of the national debt was connected with the South Sea scheme, by means of which the part of Sir Robert Walpole's original plan that related to a commutation of the temporary annuities was carried into effect; and at length, by the ultimate arrangement in settling

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