called the Consolidated Fund. The surplus remaining, after deducting from the taxes thus consolidated all the expenses of the public debts and the civil list, corresponded with what was formerly called the Sinking Fund. This surplus, which Mr. Pitt estimated at £1,000,000 annually, was appointed by parliament to be applied to the gradual extinction of the public debt. This is the basis of what is now called the Old Sinking Fund. This measure was calculated to inspire the utmost confidence in the stability of the national funds. The act was guarded by every provision that could be devised to insure a fidelity in the execution equal to the wisdom and extent of the design, and in its detail so contrived as regularly to afford to the Parliament and the public the clearest and most distinct view of its progressive operation. Mr. Pitt calculated that the progressive increase and final produce of £1,000,000 appropriated annually, with the compound interest thereon at £5 per cent. and funded half-yearly for the term of one hundred years, would amount at the end of that period to £2,875,628,462 10s. 8d. The results of his table of calculations for every ten years, are these:

This Old Sinking Fund, established in 1786, had

actually redeemed in 1792, a period of six years,

£8,200,000, of the capital of the national debt. To this yearly appropriation of £1,000,000, the additional sum of £200,000 per annum was voted by Parliament in 1792; making the sum of £1,200,000, to be the basis of the annual income of the old Sinking Fund.

In the year 1792, also on the suggestion of the late Mr. Fox, and readily adopted by Mr Pitt, another Act of Parliament was passed, providing that on all future loans, in addition to the taxes to be imposed for paying the interest on these loans, a surplus of one per cent. per annum on the capital created should be raised for the redemption of that capital. This is the basis of the annual income of what is now called the New Sinking Fund.

Both these Sinking Funds are perpetually increasing their annual income by the interest of all the capital of the national debt which they respectively redeem; and also by that of the annuities as they expire. Thus, say that the present yearly income of the old sinking fund is £3,000,000; next year we must add to that income the interest of all the capital of debt which these £3,000,000 will redeem; call it £150,000, reckoning the interest at £5 per cent. ; and the income of the old sinking fund will then be £3,150,000; and so on every year will its income progressively increase with a continually augmented velocity and force. The same progress takes place in the perpetually increasing annual income of the new sinking fund. The yearly income of the old sinking fund was, at first, limited to a maximum of £4,200,000, beyond which sum it was not to accumulate; but the annual excess above that amount was to be at the disposal of Parliament, to apply it either to the redemption of the public debt incurred since the year 1792, or to the reduction of taxes annually to the amount of such excess. In the year 1802, however, the old and new sinking funds were

consolidated, and they now jointly operate in redeeming the national debt; there being no limitation of a maximum to fetter their progress; and their income being permitted to go on, progressively increasing to any amount, which the Parliament in its discretion shall allow.

The new sinking fund has, in fact, reduced every public debt in Britain to an annuity; determinable at a period, more or less distant, according to the price of stocks during its course of operation; of which annuity a large proportion of the persons existing at the time of the creation of the debt must, in the ordinary course of human nature, live to see the end. With every additional burden which might be supposed to weaken the security of the public creditor, is thus interwoven a provision for establishing that security; by confining, within certain limits, the extent to which any given debt can be accumulated; and also by ascertaining the redemption of the whole debt, whatever may be its amount, within a given period from its creation. For as every fresh loan is accompanied with a provision in the sinking fund to redeem its whole amount, within a period of time determined by the existing prices of stocks; every fresh portion of public debt becomes an annuity which is sure to expire at the termination of a given number of years. And as this number of years cannot well, under any supposable circumstances exceed forty, a great portion of the people, who see the beginning, will also live to see the end of such a portion of the public debt. No doubt, every fresh burden of debt apparently weakens the security of the stock-holder or public creditor, by increasing the difficulty of raising an annual revenue in the form of taxes, to pay the interest of the public debt. But the new sinking fund in reality strengthens the security of the stockholders; by preventing the too great accumulation of the aggregate debt which is perpetually

diminished by the continual encroachments of that sinking fund upon the capital of the debt; and also by the certainty which it establishes, of redeeming each separate portion of the public debt, within a determinate period from the time of its creation.

On the 29th of January, 1807, Lord Henry Petty (now Marquis of Lansdown) moved, in the House of Commons, to establish a new system of finance; the adoption of which, however, the subsequent change in the British Administration prevented. Its outlines are briefly these. The plan is calculated to provide for an expenditure equal to that of the year 1806, and assumes, that during the war, the annual produce of the permanent and temporary revenues will continue equal to that of 1806. It is proposed, by this plan, that the war-loans for 1807-8-9, shall be £12,000,000 annually; for the year 1810 £14,000,000; and for each of the ten 1ollowing years to wit, from 1815 to 1825, £16,000,000.These several loans, amounting for the fourteen years to £210,000,000, are to be charged on the wartaxes which are estimated to produce £21,000,000 annually. The charge on the war-taxes is to be £10 per cent. on each loan; every loan pledging so much of the war-taxes as is sufficient to meet this charge: namely, a loan of £12,000,000, pledges £1,200,000, of the war-taxes. And every year, if the war be continued, a further portion of the war-taxes to be in the like manner pledged. Whence, at the end of fourteen years, if the war last so long, £21,000,000, the whole estimated produce of the war-taxes would be pledged for the total of the loans; at that time amounting to £210,000,000. The £10 per cent. charge, accompanying each loan, is to pay the interest of the loan; and also to form a sinking fund of £5 per cent. which accumulating, at compound interest, will redeem the capital of the loan in fourteen years. Consequently, the several portions of the war-taxes,

pledged for the several loans, will redeem their respective loans, and be successively liberated in periods of fourteen years from the date of each loan. The portions of war-taxes thus liberated, may, if the war continue, become applicable in a revolving series; and be again pledged for new loans.

But the charge for the interest, and sinking fund of the new loans, being taken from the annual produce of the war-taxes, a deficiency equal to that charge will be created in the yearly amount of the temporary revenue applicable to the war-expenditure; and this is to be made good by supplementary loans which will increase as the deficiency increases. Yet the whole amount of the loan in any one year, (including that charged upon the war-taxes and the supplementary loan) will never, even in a period of twenty years war, exceed £5,000,000 beyond the amount to which the combined sinking fund of that year will reach; and the average of those twenty years will not exceed £3,800,000. The supplementary loans are to be formed on a sinking fund of £1 per cent. per annum on the nominal capital. This charge will be provided for during the first three years, namely 1807-8-9, by expiring annuities, From 1810 to 1816, the annual average of new taxes must be £293,000. At the close of 1816, taking the £3 per cents. at £60, and reducing the whole of the public debts at that rate to a money-capital, the combined amounts of the public debts will be £387,360,000, and the combined amount, or income for that year, of the several sinking funds then existing, will be £22,720,000.

If the war be continued beyond the ten years thus provided for, the public burdens are to be in part borne by the excesses to accrue from the present sinking fund, which, with the additions derived to it from Lord H. Petty's plan, would produce an income of £24,000,000 in the year 1817. But it is not proposed to apply to the charge of new loans a