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The Sinking Fund.

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Sinking Fund consists of a clear surplus of revenue, above the expenditure, applied to the reduction of the Debt, such an assertion is absurd and groundless." Certainly, my Lord, if we have a “clear surplus of revenue," that is a real Sinking Fund, and all we differ about is the mode of applying it. We say, take away your commissioners, let us have no sham, no delusion; if there be an annual surplus, let it be annually applied to the purchase of stock, and all the Sinking Fund machinery abolished as useless and ridiculous. This is all we contend for. We do not say that a nation should go on interminably increasing its debt; by all means let the Debt be reduced; only we say that the most effectual mode of reducing it, is either by applying the surplus revenue directly to that object, or suffering the surplus to remain in the pockets of the people, to be employed in trade and manufactures.

France and America both have Sinking Funds." This is incorrect. America has a surplus revenue, but no sinking fund, in the true sense of that term. The surplus revenue of America is employed, as we wish the surplus revenue of this country to be employed ; namely, in the yearly purchase of stock at the market price.

- The speech goes on " that Fund, the credit of which enabled us to get through the long and arduous contest,” and so on. Yes, my lord, it enabled you to get through wonderfully; but the credit of the Fund is now entirely blown, therefore how can it avail you in future? A nation once deceived cannot be easily deceived a second time by the same artifice.

We have now gone through the whole of our extract, and, to our satisfaction at least, have answered every argument and position it contains. - - At the conclusion of his speech, Lord Liverpool again reverts to the Sinking Fund in a very emphatical manner; his words are so remarkable, that it is unnecessary to apologise for their insertion, notwithstanding the preceding extract being rather lengthy. The whole speech, indeed, is rather a statesmanlike composition, and not at all to be sneezed at. The words in capitals are printed as they stand in the original.

“In the view which I have taken of certain branches of the subject, I am aware that I differ from some of your lordships. But there are two points on which we all agree. I readily admit-first, that our establishments ought to be reduced to as low a scale as may be compatible with our monarchical constitution and the safety of the country; and, secondly, that every reduction that can be made in the expenditure of the country, consistently with the above objects, and with the security of public faith, should be at


The Sinking Fund.

tended with a corresponding reduction of taxation. But, my lords, I must place by the side of these admissions the assertion of another principle which I deem so indispensable, that upon it I am determined to stand or fall,THE STEADY MAINTENANCE OF AN EFFICIENT SINKING Fund.”—P. 64.

Well, my lord, these are your last words, and I trust they will not be forgotten either by your lordship or the public. I confess, however, I have no great faith in the first or last words of any statesman. After witnessing the recent tergiversation of lawyer Plunkett, on the Catholic question; and after witnessing the quibbling apostacy of Wynn and Phillimore on the Salt Tax, I confess it requires a much larger dimension of credulity than I possess, to rely with confidence on the declarations of any public man, with whatever pomp and solemnity they may be delivered.

Mystery of the Funding System.




THE cost of war was formerly defrayed by those who made it. The old barons used to arm themselves and vassals at their own expense, and support them during the contest. There was then no standing army nor permanent revenue,-those who tilled the land fought the battles of the country. Under such a system, wars could neither be very long in their duration, nor very remote in their objects. Foreign expeditions suited as little to the national resources, as the avocations of the people. The only time that could be spared to settle public quarrels, was between seed-time and harvest, and the only treasure they could be provided with before hand was the surplus produce of the preceding year. Hence, wars were generally either carried on languidly, or were of short duration. Their operations were frequently interrupted by truces, and sometimes discontinued through mere feebleness. A warlike leader was often stopped short in his victorious career, either from the want of resources, or the necessity of allowing his followers to return home to provide subsistence for the following season.

The state of the Sovereign was as little favourable to protracted contests as the condition of his subjects. His revenue was derived partly from lands reserved as a royal demesne, and partly from feudal casualties, and afforded a slender provision for maintaining the royal dignity and defraying the ordinary expenses of government, but was altogether inadequate to the support of numerous and permanent armies. Supplies from the people were obtained to a certain extent; but the people neither possessed the means, nor, happily, had acquired the habit of granting liberal supplies. Princes,

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Mystery of the Funding System.

under any emergency, real or supposed, or actuated by any scheme of ambition, bad, recourse either to borrowing or pawning. The loans which they raised were partly compulsory, and, as the repayment was ill secured, the rate of interest was high. Sometimes the jewels of the crown were pledged, and sometimes the crown lands were mortgaged. In this manner, the revenues of most of the powers of Europe were anticipated and encumbered.

A new state of society introduced a new mode of supporting war. Instead of borrowing on their own credit, sovereigns learn to borrow on the credit of posterity. The issue of war no longer depended on a single battle or successful irruption, but on the length of the public purse. It was not inoney, however, that formed the sinews of war, but credit. Credit superceded money, and modern policy found out the expedient of supporting wars for temporary objects, and entailing the burden of them on future generations. This system possessed too many facilities to be abandoned, or not to be carried to the utmost extent of which it was capable. And, accordingly, we find wherever the system of borrowing and funding has been introduced, it has gone on with an accelerated velocity till the payment of the principal became quite chimerical, and governments were obliged to compound with their creditors for the interest.

The Debt of this country, which was inconsiderable at the Revolution, has increased, in little more than a century, to its present magnitude. The increase during every reign, except the pacific reign of George I. has been greater than the preceding. The increase during every war has been greater than during the preceding. The increase during the latter period of every war has been greater than during the earlier period. The increase by every national exertion has been greater than administration held forth when the measure was undertaken. The part of the Debt paid off during peace, has borne a small proportion to that contracted by the preceding war.

No man can tell how far the Funding System may yet be carried, or how it will terminate. In our inquiries on the subject, we shall limit ourselves to four objects : first, to show the rise and progress of the Funding System; secondly, the manner in which it is conducted; thirdly, its probable catastrophe; lastly, the present state of the Debt.

1.-Origin and Progress of the Funding System. The Funding System commenced at the Revolution The Debt existing at that time was inconsiderable, and not reduced to any regular form. Du

Mystery of the Funding System.

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ring the war, waged by King William against the abdicated Monarch and the King of France, who supported his claims, it was found impracticable to raise the requisite sums within the year, and recourse was had to loans ; for discharging which, taxes were imposed to continue for a limited number of years; it being expected that the taxes would discharge the debts in the periods for which they were granted. These expectations were not realized, and the taxes were afterwards rendered perpetual. Loans were also raised during that war on annuities for lives on very high terms, 14 per cent. being granted for single lives, 12 per cent. for two lives, and 10 per cent. for three lives; and the amount of public debt, at its termination, by the peace of Ryswick, in 1697, was £21,515,742. A great part of this debt being contracted upon short anticipations and terminable annuities, before the year 1701, there had been partly paid off, and partly reverted to the public, £5,121,041; a greater reduction of the Debt than has ever yet been brought about in so short a period of time.

In the war which began in 1702, and which was concluded by the treaty of Utrecht, the Debt was considerably augmented. The Spanish war which began in 1739, and the French war which soon followed it, occasioned a still further increase of the Debt, which, in 1748, after the war had been concluded by the treaty of Aix-la-Chapelle, amounted to £78,293,313. The most profound peace of seventeen years, in the reign of George II. had taken little more than eight millions from it. A war of less than nine years' continuance added more than 31 millions to it. The surplus revenue, it was supposed, had been partly expended by Sir Robert Walpole in parliamentary corruption.

During the administration of Mr. Pelham, the interest of the Debt was reduced, or at least measures were taken for reducing it from four to three per cent. ; the Sinking Fund was increased, and some part of the Debt paid off.

To support the wars of Queen Anne, the objects of which wars were purely continental, more than 59 millions were raised by loans. The cost of the first war of George the second has been estimated at £46,418,680. The expense of the second war, called the seven years' war, amounted to £111,271,996. The objects of these two contests were diametrically oppo. site; one being for the humiliation, the other for the aggrandisement of the King of Prussia.

In the reign of George the third there were four principal wars; the war concluded at the peace of 1762 ; the war against the independence of America; the French revolutionary war; and the short war in 1815 against the

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