UC-NRLF $B b33 aM7 A -30 LIBRARY UNIVERSITY OF CALIFORNIA. Accessions No. 1^ £> 3^ Shelf No. OP- •30 ( h-rt^ AN INQUIRY CONCERNING THE RISE AND PROGRESS, THE REDEMPTION, PRESENT STATE, ANU MANAGEMENT, OF THE NATIONAL DEBT OF GREAT BRITAIN. PROM THE SECOND LONDON EDITION, ENLARGED. BY ROBERT HAMILTON, LL.D. F.R.S.E. PHOFESSOR OF NATURAL PHILOSOPHY IN THE MARISCHAL COLLX&E ANIl UNIVERSITY OF ABERDEEN, yr.-^ 'VJ-' PHILADELPHIA X^^ OP THE "^^^ PUBLISHED BY M. CAREY, SOLD BY HIM AND BY WELLS (§* LILLY, BOSTON. J B. A. SKERRETT, prillteV. 1816, ■f ^^> v"^ ^^Jv PREFACE. THE author of the following Inquii'y has attended for a course of years to the progress of the national debt, from the interest which he felt as a member of the com- munity in a subject of so much importance, and which has now assumed so alarming an aspect. As he has ob- served that many persons, in general well informed, were imperfectly acquainted with the facts, and enter- tained crude views of tlie piinciples of finance, he trusts that what he now submits to the public, may not be altogether useless. In the first part, he lays down and enforces some general principles of finance. A person unacquainted with the management of our national debt, may blame him for bestowing labour to prove truisms, or principles which cannot be controverted; but to those who know tliat our financial measures have been conducted for a course of years upon opposite principles, the arguments adduced will not appear unnecessary. iv PREFACE. In the second part, a particular detail is given of the origin, progress, management, redemption, and present state of the national debt. A part of these facts is generally known ; but as few are possessed of full in- formation on the subject, a publication of this kind seemed wanted. The author could not well have fixed upon a ceitain degree of information as what his readers already possessed, and supplied the remainder. Had he attempted to do so, his work would have presented a mutilated appearance, without being a great deal shorter. He has therefore drawn up such a narrative as may communicate all necessary information to a young per- son or a foreigner, who has no previous knowledge of the subject. The materials for the statements previous to the year 1786, are drawii from the best authorities that could be procured ; and, if not altogether correct, at least come near to the facts. — Those since 1786, are taken from the official papers presented to the house of commons, and the acts of parliament relative to finance. The author cannot expect that in so great a variety of figures and statements no error has been committed ; but he trusts that the errors are neither numerous noi' important. In the third part, the propriety of the measures adopted in the management of our finance, is examined. PREFACE. V It cannot give any reasonable ground of offence, that the plans of respectable authors, and the measures of emi- nent statesmen, are discussed with freedom. The author is not conscious of having censured any persons with asperity : but wherever he thought their opinions errone- ous, or their measures improper, he was under the necessity of stating his views and of endeavouring to establish their correctness. In this edition, the statements are continued to the present time, and have been carefully revised, and some errors corrected. An account and examination of Mr. Vansittart's plan of finance, adopted in the operations of the year 1813, is added; — also some general observa- tions on sinking funds. An Appendix is subjoined, con- taining an account of the several stocks, — of the East India Company, — and of the manner of transacting loans and transferring stock; — and several additional Tables are inserted in th^ concluding Appendix. Character of this Work, from the Edinburgh Review. "Dr. Hamilton has performed a most important service to his country, by directing the public attention to just views of this inte- resting' subject. "We have now stated the principal doctrines of this interesting pubhcation. They are widely different from the opinions which have been hitherto prevalent, and which are sanctioned by the authority of great names ; but they are supported by argimients which appear so convincing, and they lead to pi-actical conclusions of such importance, that we trust they will be patiently and thoroughly canvassed; and we have no apprehension that the result will be unfavourable either to the author or his reviewer. It is pleasing to observe, in how simple, yet satisfactory a manner he explains a subject, which has been so long- rendered almost unintelhgible by the barbarous jargon of the Stock Exchange, and the necessary and unnecessary perplexities of official arguments. While he condescends to instruct the young student in the first principles of this important subject, he opens views which deserve the attention of the most experienced statesmen : and if we had not lived so long in this best of all possible worlds, and observed how the great ones of the earth, like the gods of the heathens, have eyes but see not, and ears but do not hear — we shoidd have been astonished that his name has never yet been mentioned in the senate, nor his pi-inciples either refuted or adopted by those who direct our financial operations." CONTENTS. Preface, . - - - - Page iii An Inquiry concerning the National Debt, - - 1 PART I. General Principles of Finance, - - - 7^ PART II. History of the Public Debt of Great Britain. Sect. I. Progress and manner of conducting the funded debt, - - - - - - 47 Sect. II. Plans adopted for the reduction of the funded debt, and their operation. § 1. Sir Robert Walpole's sinking fund, - 80 ^;§*£. Mr. Pitt's sinking funds, - - - 83 § 3. Lord Henry Petty's plan of finance, - 85 y§^4. Mr. Vansittart's plan of finance, - - 88 § 5. Redemption of the national debt by the purchase of the land tax, - - ^ - 92 J^. Operation of the sinking funds, - - 95 , § 7. Irish, Imperial, and Portuguese sinking funds, 97 Recapitulation, - - - - 101 Sect. III. Unfunded debt, 103 PART III. Examination of Plans for the Redemption of the JS*ational Debt, and other Financial Operations. Sect. I. Examination of Dr. Price's views of finance, 109 Sect.^. Examination of Mr. Pitt's sinking funds, - 124 Sect. III. Examination of Lord Henry Petty's plan of finance, - - - - - . . 133 CONTENTS. ■Sect. IV. Examination ofMr.Vansittart's plan of finance, 142 Sect. V. General observations on sinking funds, - 155 Sect. VI. Examination of the system of funding by in- crease of capital, 161 Notes, - - -----. 171 Appendix I. § 1. Account of the Stocks, 193 § 2. Account of the East India Company, - - 200 § 3. Manner of transacting Loans, - - - . 208 § 4. Manner of transferring Stock, - - - 211 Appendix II. Tables. /f. Amount of Funds, 1st January, 1793 and 1st Fe- bruary, 1813, 215 yil. Progress of the funded debt of Britain from 1793 to 1813, with the annual charge on the same, - 216 III. Progress and redemption of the funded debt of Bri- tain and balances unredeemed, according to the nominal capital, and also when reduced to 3 per cents. - - - . . . _ 218 IV. Loans for Ireland guaranteed by Britain, with^the annual charges and redemption, - - - 220 V. Progress of the whole Irish debt payable in Dublin and London, with the annual charge, - - 222 VI. Sinking fund of 1 per cent on loans, - - 224 "'VII. Unfunded debt, 225 VIII. Lord Henry Petty's plan of finance. Part I. Loans on war taxes, - - - _ 226 II. Supplementary loans, _ - _ jjj^ III. Joint view of both loans, - - . 227 IV, Comparison with other systems, - ib. IX. Mr. Vansittart's plan of finance, - - . 228 X. British funded debt redeemed and transferred, 229 XI. Rates of interest and terminable annuities on loans, 23ft A?r INQUIRY COSCERXI^fG THE NATIONAL DEBT. -- INTRODUCTION. THE decision of national contests, in ancient times, depended upon the numbers, courage, and military talents of the contending nations. The invasions of barbarous hordes, destitute of wealth, and impelled to undertake these invasions by poverty, have often accom- plished the subversion of large and wealthy nations, amply provided with all the means of warfare thai wealth can furnish, and long renowned for military prowess; but fallen from their former pitch of valour^ in consequence of the luxury which wealth gives rise to. In this manner were the Roman empires, western and eastern, subverted ; and in this manner have the opulent and luxurious nations of tlie East been icpeatcdly sub- dued by indigent and hardy barbarians. The great alteration in the state of mankind in mo- dern times, and the changes introduced into the art of war, have, in some measure at least, transferred tlie de- cision of national contests k) a different principle. Money 2 INQ^UIRT CONCERNING THE is said to supply the sinews of war; and gold, rather than steel, is accounted the instrument which leads to victory. It cannot be doubted that this is true in a cer- tain degree, although not to the extent that some main- tain. In the middle ages, when the ferocious spirit which had formerly animated the northern nations, had in some degree subsided ; while commerce was still in its infancy, and little national wealth accumulated ,• wars were carried on languidly, and \vere generally of short duration. Their operations were frequently interrupt- ed by truces, and sometimes discontinued through mere feebleness. A victorious army, conducted by a war- like leader, was obliged to stop short in a successful career, from want of resources. It is not our object at present to inquire into the sources of weakness, and incapacity for foreign expe- ditions, inherent in the feudal system, then more or less established in every nation in Europe. Under any sys- tem of government, the general wealth was insufficient to supply the expense of those extensive and long-con- tinued wars which have been waged in later times. The revenue of the sovereign was derived partly from lands reserved as a royal demesne, and partly from feudal casualties, and afforded a slender provision for maintain- ing the royal state, 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 had acquir- ed the habit of granting liberal supplies. Princ«s, under any emergency, real or supposed, or actuated by any scheme of ambition, had recourse to the measure of bor- BRITISH NATIONAL DEBT. 3 rowing. 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 encum- bered. This irregular mode of horrowing gradually gave way to one more systematic; which has now been carried by this nation to an extent far beyond wiiat was ever known in any other age or nation ; far beyond what any person at its commencement, or even after its con- siderable advancement, believed to be practicable. This system is still expanding. Tlie public debt, whicli was inconsiderable at the Revolution, has increased, in little more than a century, to its pfesent magnitude. The in- crease during every reign, except the pacific reign of George I. has been greater than during the preceding. The increase during every war has been greater than during the preceding. The increase during the latter period of every war, except the present, has been greater than in the earlier period. The increase, by every na- tional exertion, has been greater than administration held forth when the measure was undertaken. The part of the national debt paid off, in intervals of peace, has borne a small proportion to that contracted by the preceding war. No man can foresee how far this sys- tem may be carried, or in what manner it will terminate. It, however, presents an aspect sufficiently important and alarming to command our most serious attention. In various periods of its progress it has obtained the attention, perhaps, of statesmen, who were unwilling to publish all they thought; certainly of men who were 4 INqriRY CONCERNING TEtK skilled in the principles of political economy, and well acquainted vnth the state of our finances ; and none of these, it is believed, have considered it in a trivial point of view. Perhaps the unexpected magnitude to Avhicli the public debt is carried, and the ease with wliich tlie funds for its anniial augmentations are procured, have contributed of late to blunt the public feelings on thi« important object. Various schemes have been proposed, by means of sinking funds, for diminishing, and, in course of time, discharging our national incumbrances ; and some of these have been carried into execution to a certain ex- tent. The confidence placed in tlie efficacy of these schemes has contributed further to ease the alarm which the magnitude of the public dcl)t would otherwise have produced. Their princijMBs and probable result ouglit to be scrutinized in the strictest manner. If they be adapted to the relief and ultimate discharge of our na- tional burthens, mider the system of protracted and expensive warfare in which we arc engaged, let us enjoy the comfort, which such a prospect affords, upon rational grounds. If they be, in whole or in part, deceptions, it is proper that the deception should be pointed out, and that we should know the hazards and the limits of our financial system. If we shut our eyes to national dan- gers of whatever kind, we are most likely to be over- whelmed by them. If we see them in their true colours, we stand the fairest chance of encountering tliem Avitli success. If a candid inquiry into this subject should lead to results less favourable than those wiiich have been held forth by high authority, and are readily adopt- ed by tlie sanguine disposition of the public, the inquirer performs the part of a true friend to his country, and m\g\\t not to J)e charged as acting from factious motives. BRITISH NATIONAL DEBT. 5 }n the following Inquiry we propose. First, To lay down some general principles, which, if established, would lead to general conclusions, concern- ing our financial system, and in a great measure, super- sede 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 liave 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 the general principles, to scru- tinize the efficacy of the schemes to which we trust for the relief of our national burthens j and examine the propriety of the methods we have adopted in conduct- ing our financial operation^. ^Liroi PART I. GENERAl PRINCIPXES OF TINANCE. I. The annual income of a nation consists of the united produce of its agriculture, manufactures, and commerce. This income is the source from which the inhabitants derive the necessaries -and comforts of life ; distributed, according to their stations, in various pro- portions ; and from which the public revenue, necessary for internal administration, or for war, is raised. II. The portion of national income which can be ap- propriated to public pui-poses, and the possible amount of taxation, is limited ; and we are already far advanc- ed to the utmost limit. III. The amount of the revenue raised in time of peace, ought to be greater than the expense of a peace establishment, and the overplus applied to the discharge of debts contracted in former wars, or reserved as a re- source for the expense of future wars. IV. In time of war, taxes may be raised to a greater height than can be easily borne in peaceable times; and the amount of the additional taxes, together with the^ surplus of the peace establishment, applied for defray- ing the expense of the war. V. The expense of modern wars has been generally so great, that the revenue raised within the year is insuf- 8 INQUIRY CONCERNING THE ficient to defray it. Hence the necessity of liaving re- course to the system of funding, or anticipation. The sum required to complete the public expenditure is bor- rowed on such terms as it can be procured for ; and taxes are imposed for the payment of the interest ; or perhaps to a greater extent, with a vifew to the gradual extinction of the principal. VI. In every year of war, where this system is adopt- ed, the amount of the public debt is increased ; and the total increase of debt during a war depends upon its duration, and the annual excess of the expenditure above the revenue. VII. In every yc'ar of peace, the excess of the revenue above the expenditure, ought to be applied to the dis- charge of the national debt ; and the amount discharged during any period of peace, depends upon the length of its continuance, and the amount of the annual sui'plus. VIII. If the periods of war compared with those of peace, and the annual excess of the war expenditure, compared witli the annual savings during the peace esta- blishment, be so related, tliat more debt is contracted in every w ar than is discharged in the succeeding peace, the consequence is a perpetual increase of debt; and the ultimate consequence must be, its amount to a magnitude which the nation is unable to bear. IX. The only effectual remedies to this danger, are the extension of the relative length of the periods of peace; frugality in peace establishment; lessening the war expenses ; and increase of taxes, whether perma- nent, or levied duriag war. BHITISH IS^ATIONAI DEBT. 9 X. If the three former of these remedies be impracti- cable, the last affords our only resource. By increasing the war taxes, the sum required to be raised by loan is lessened. By increasing the taxes in time of peace, the sum applicable to the discharge of debt is increased. These measures may be followed to such an extent, that the savings in time of peace may be brought to an equa- lity with the surplus expenditure in time of war, even on the supposition that the periods of their relative dura- tion shall be the same for centuries to come that they have been for a century past. XI. When taxation is carried to the extent mention- ed above, the affairs of the nation will go on, under the pressure of existing burdens, but without a continual accumulation of debt, which would terminate in bank- ruptcy. So long as taxation is below that standard, ac- cumulation of debt advances ; and it becomes more diffi- cult to raise taxation to the proper height. If it should ever be carried beyond that standard, a gradual dis- charge of the existing burdens will be obtained; and these consequences will take place in the exact degree in which taxation falls short of or exceed3 the standard of average expenditure. XII. The excess of revenue above expenditure, is the only real si]iking fund by which public debt can be dischai'ged. The increase of the revenue, and the dimi- nution of ex])ense, are the only means by wliich this sinking fund can be enlarged, and its opeiations render- ed more effectual : and all scliemes for discharging the national 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. 10 INttlTIRY CONCERNING THE The greater part of these propositions are so incoi! trovertible, that it may ap})ear superfluous to adduce any arguments in support of them, and the others may be inferred from these by a very obvious train of reason- ing. Yet measures inconsistent with tliem, have not only been advanced by men of acknowledged abilities, and expert in calcidation, but liavc been acted on by suc- cessive administrations, and annually su])ported in par- liament, and ostentatiously held forth in every minis- terial publication. Tliese seem to have gained possession of the public mind, and v>g liear them daily extolled ajiU confided in by pei'sons, in other respects, candid and intelligent. This not only supplies an apology for exa- mining the principles minutely, but renders such an examination necessary. I. The annual income of a nation consists of the united produce of its agricuUurey manufactures, and commerce. This income is the source from which the inhabitants derive the necessaries and comforts of life; distributed., according to their stations, in various proportions; and from which the pubtic revenue, necessary for internal administration, or for war, is raised. In every nation, a part of the public income must be drawn from the use of the inhabitants, and applied to public purposes. This constitutes the national revenue, and is levied from the people by taxes. The amount re- quired for tlus purpose, even in peaceable times, and when all practicable economy is observed, is considera- ble. The administration of justice and police, the sup- port of such an army and navy as the pi'esent state of surrounding nations renders necessai'y, and various BRITISH NATIOiVAL DEBT. 11 other objects, mjiiire a large expenditure. In time of war, the public expenditure is greatly increased. This expenditure, however reasonable and necessary, is defrayed by subtracting from the funds which supply the wants of the people* and tends to lessen their enjoy- ments. Taxation, therefore, although necessary, is not desireable. It may arise to a magnitude which will press severely on the comforts, and even encroach on the necessaries of the middling and lower ranks. Unneces- vsary public expenditure, whetlier occasioned by enga- ging in wars which might be avoided, or conducting necessary onesM'ith improper prodigality, or by extrava- gance in iuternal administration, is a serious evil to the public. The proposition here laid down concerning taxation, will not be universally admitted. Taxes are aflirmed to be harmless, and even useful, upon two principles. They are said to be a spur to industry ; and the money col- lected is said to be no loss to the community, as it is re- turned by various channels to tlie people from whom it was raised. It is foreign to the object of our present inquiry to enter into a full examination of the arguments adduced in support of these opinions ; and it could not be done without a full discussion of the principles of political economy. In regard to tlic first, we may briefly obsen e, that the desire inherent in every man to improve his circum - stances, is a sufficient and elfectual incitement to exer- tion. Tlie farmer raises all the pniduce he can from his land. If he be deficient, it arises from want of capital, or of pgricultural knowledge.. The manufacturer ex- tends his operations as far as his capital, the extent of the market, and tl»e number of hands he can employ, 12 IN(iUlRY CONCERNING THE permit him. In time of war, the sums exacted in taxes lessen the abilities, and consequently the exertions of both. In regard to commerce, the effects of war are various. Many branches are circumscribed, or altoge- ther destroyed. Others go on with increasing alacrity : but taxation is never the cause of their enlargement. The merchant generally advances the tax, and, as this employs part of his capital, he is obliged to circumscribe his speculations. He is afterwards reimbursed, perhaps with profit, by raising the piice of his commodities, and thereby devolving the tax on the consumer : but the en- hancement of pi'ice can never increase the quantity of merchandize sold. The only classes of men upon whom taxation can be reasonably supposed to operate as a spur to industry, are those of the lower order, who earn their subsistence from day to day by tlie labours of agricultui«e or manufactures. If a man can maintain himself and family by four days work in the week, he will not, it is said, work for six. In regard to those employed in agriculture, this seldom takes place. The unremitted labours of the peasant are obvious to every one. In regard to manufacturei'S and tradesmen, there is more foundation for the observation. A few intem- perate tradesmen, unless compelled by necessity, may spend a day or two weekly in the ale-house. But it is notoi'ious, that the greater number continue regularly at their work, excejit upon rare occasions ; and not a few wear out their constitutions by excessive and too long continued exertions. It is a comparati\"cly small part of the taxes which falls upon persons in these stations of life. The other argument (that taxes are only an ima- ginary evil, because the money is returned by various channels to those from whom it was collected,) is founded BRITISH NATIONAL DEBT. 13 upon the principle of the mercantile system, that money constitutes wealth — a principle which has been ably re- futed by wi'iters on political economy, and is now gene- rally abandoned. The farmer pays part of his produce, or its value, in taxes, and has so much the less for other purposes : that is, he is so much poorer. The money may be brought back to liim to purcliase another part of his produce for the consumption of the army or navy ; but the same men who constitute the army and navy must have been maintained, and Ids produce would have found a market. Even if money were admitted to con- stitute wealth, it is not true that all the money raised by taxes returns to those who pay them. A large part is sent abroad for subsidies to foreign powers, and for the support of armies employed in foreign service. II. The portion of national income which can he appro- priated to public puiposcs, and the possible amount of taxation, are limited^ and we are already far advanced to the utmost limit. The truth of the first part of this proposition is so obvious, that it may seem unnecessary to enlarge on it. Yet the unexpected increase of the public revenue has drawn off the attention of many from its ultimate limit. They will not afiii'm that it may be extended to an in- definite magnitude j but, as it has been carried so much further than our fathers, or we ourselves in early life, believed to be practicable, they maintain, that its future extension may be greater than any one now conjectures; and that its reaching a maximum is so distant an event* that the prospect of it ought not at present to have any influence on our public measures. It may, however, be evinced, that a large proportion 14 1]VQ,UIRY CONCERNING THE of our resources is already exhausted,* and that tlie continued increase of revenue, at a rate equal to what has taken place these last tv.enty years, cannot be car- ried on for a long term of future years. The whole annual income cannot, under any exigency* be appropriated for public revenue. A sufficiency must be reserved for supplying the necessaries of life. The surplus only can be applied to public purposes, and the proportion which can be actually applied to them for any length of time falls much below this limit. Taxes upon articles of luxury, if raised beyond a cer- tain pitch, lessen their consumption, and become unpro- ductive. The same htdds in some degree with regard to taxes on every article not indispensably necessary ? and our government has liitherto wisely been sparing of taxes on the necessaries of life. Taxes upon commerce, for the same reason, have their limit j and it seems to be believed, that the system of indirect taxation, in some respects the most eligible, is now carried nearly as far as it can be done : For, instead of raising all the revenue wanted by taxes of this kind for some years past, recourse has been had to the system, little used before, of direct taxation. Our direct taxes arc of two kinds. The first is a tax upon legacies and successions in case of intestacy, being a certain proportion of the moveable property left by every person at his death, varying according to the pro- pinquity of the successor to the deceased, and amount- ing to ten per cent, on property left to remote relations or strangers. Of the same nature is another tax, a stamp duty on the probates or inventories of personal estates, v.herein no abatement is allowed, in whatever relation the successor may stand to the deceased. The second and more considerable branch of direct taxation is that of a certain proportion of every man's BRITISH NATIONAL DEBT. 15 income, from whatever source it arises. Tliis lias been considered as a war tax, and was first imposed in 1799, under the name of the income-tax, at the rate of ten per cent. After a short intermission during the peace which succeeded the treaty of Amiens, it was revived in 1804, under the name of the property-tax, at the rate of five per cent.; raised in 1806, to six and one-fourth per cent. ; and in 1807, to ten per cent. ; at which rate it has continued since. Incomes under L.50, arising from annuities or professional gains, are exempted ; and incomes of that sort under L. 150, are entitled to cer- tain deductions according to an established scale ; but every income, however small, arising from capital of any kind, is subject to the full tax of ten per cent. The assessed taxes raised upon houses and windows may also be referred to the head of direct taxation. The amount of property-tax levied, at an average of thi-ce years preceding 5tli January 1813, was L.13,281,509; and the whole average amount of taxes, permanent and annual, raised duiing these yeais, after deducting drawbacks, &c. was L.64,860,192. If the property -tax be ten per cent, upon the general amount of income, the whole taxation is nearly fifty per cent., or one -half. The lov. er classes indeed are exempted, or relieved in a certain proportion from tlie property -tax ; and it is probable, that among the higher classes wlio ought to pay ten per cent, considerable e^ asious take place : but as the higher and middling ranks pay al- most the whole of the assessed taxes, and a larger pro- portion of the taxes on consumption, their taxation cannot fall much below one-half of theii' bicomc; and therefore we are already far advanced to tbc utmost limit which taxation can ever i-each. The lower classes indeed pay a smaller proportion; but it will hardly be thought prudent or practicable to raise tlie taxes upon 16 INauIRY C0:^CE11KING THE them in a higher proportion than is done to theii* sii- periors. If we be nearly right in this view, it is impracticable, in the present state of public wealth, to double our pre- sent revenue by increased taxation ; and it would be a measure of great difficulty and danger to enlarge it by one-half. We do not, however, affirm, that the nominal, or even the real amount of our revenue, can never, at any future period, amount to double its present magnitude. A nominal increase may arise from the depreciation of the value of money, which has taken place i-apidly for a century past, and is probably still advancing. This depreciation is necessarily accompanied by a nominal increase of public expenditure j as every article which government has occasion to purchase, and the pay of every person in civil or military employment under government, must be increased in the same proportion. The increase, therefore, of nominal revenue, while its effective power remains the same, affiards no advantage to the public. The increase of the money-price of commodities arises from two distinct sources, of which, although tlie effects be blended, the principles, when analyzed, are of a very different nature. The first is the relative increase of the circulating medium, compared w ith the mass of com- modities in circulation. This, so far as it arises from addition to the quantity of gold and silver in circula- tion, although it first takes place in the nations that are proprietors of the mines of the precious metals, has a tendency, in no long time, to diffuse itself, nearly equally, among all nations connected by a regular com- mercial intercourse. The effect of it is to subject every creditor, public or private, to a loss in proportion to the extent of the deterioration of the value of money. It BRITISH NATIONAL DEBT. 1/ consequently discharges paii of the public debt ; but it produces little effect upon the actual revenue, or the state of commerce. An increase of circulating medium, by the artificial means of paper credit, has the same effect upon tiic price of commodities, and upon the property of creditors, as an increase of circulating coin : but this, although adopted under one form or other by most mer- cantile nations, has not the same tendency to equaliza- tion, and may occasion considerable clianges in the state of commerce ; always to the disadvantage of the nation where fictitious circulating medium most pre- vails.* The second cause of the increase of the price of com- modities, is the taxes imposed upon manufactures, of which we have now a great variety, and upon merchandize im- ported. The amount of the tax is incorporated with the natural price of the commodity, and paid along with it by the consumer. It is nearly the same as if the consumer paid the natural price of the commodity to the manufac- turer or importer, and paid at the same time a tax to government, in propoi'tion to the extent of his consump- tion. Something of this sort actually took place in what was called the (Commutation Tax. When government found it expedient to repeal a part of the duties upon tea, it imposed a tax upon every person for the quantity of tea he was conjectured to consume, as ascertained by the number of windows in the house he possessed. This part of the price of commodities, unless drawn back upon exportation, operates as an obstruction to com- merce ; and even w hen drawn back, the relief is only partial. For it is not merely the amount of tlie tax which the manufacturer must lay upon his commodities: he must have an allowance for the advance of money, * See Note I. 18 IXQ.tJIRY dONCEUNING THE and for the additional wages paid to his workmen to en- able them to pay the taxes on what they consume. Creditors, public or private, do not sustain any special injury by this part of the increase on tlje price of commodities. They only contribute their share, along with othei*s, to the increased exigencies of the public. A real increase of revenue may arise from an in- crease of national wealth ,• and this increase of revenue will be obtained by the existing taxes becom- ing more productive, without the imposition of new ones. Our wealth has increased to an amazing magnitude, and wc do not affirm it has reached its utmost limit : but, considering the extent to which our commerce, a chief source of our wealth, is already carried, it is not reasonable to depend upon its further increase, under growing burdens, as an inexhaustible source for sup- plying all our exigencies in a state of continued waif are. III. The amount of the revenue raised in time of peace, ought to he greater than the expense of a peace estab' Ushment, and the overplus applied for tfte discharge of debts contracted in former rears, or reserved as a re- source for the expense offuhire wars. The propriety of this conduct is obvious, and it has been adopted to a certain extent, but has not been fol- lowed out with important efficacy. In the earlier part of our history, the ordinary revenue was hardly sufficient for the ordinary expenditure; and parliamentary supplies, in time of peace, were rai*ely granted. Henry VII. was tlie last, and, we believe, the only English king, in modern times, who amassed a considerable treasure by a pai*siiBonious and oppressive BRITISH NATIONAL DEBT. 1$ administration, during a reign the greater part of which was passed in peace. This treasure was dissipated in a short time by his successor. It is unnecessary to enter into a detail of the financial measures of each reign, from tliat time to the Revolution. Although the pe- riod, compared with that which followed, was on the wliole pacific, it never afforded any sui^jIus of revenue. The nature and efficacy of the different kinds of sink- ing funds established since the Revolution, will be cou- 'idered in tlie third part of this inquiry. The amount of the payments of the public debt, in time of peace, subsequent to the Revolution, has been as follows : During the peace which followed the treaty of Rys- wick, being a period of four years, from 1697 to 1701, there was discharged L.5,121,041 of funded debt, being L.1,280,260 annually, at an average;* and at the rate of L.5.95 per cent, on the public debt existing at the termination of the preceding war. During the peace which followed the treaty of Utrecht, being a period of twenty-six years, from 1714 to 1740, there was discharged L.7,23 1,508, of funded debt, being L.278,135 annually, at an average; and at the rate of L.0.52 per cent, of the public debt existing at the termi- nation of the preceding war. During the peace whicli followed the treaty of Aix-la- Chapelle, being a period of eight years, from 1748 to 1756, there was discharged L.6,003,640, being L.750,455 annually, at an average, and at the rate of L.096 per cent, of the funded debt existmg at the termination of tlie preceding war. During tlie peace which followed the treaty of Paris, being a period of twelve years, from 1763 to 1775, there * See Part II. Sect. I. 20 lNQ,UniY CONCERNING THE was discharged L.10,996,016, being L.916,334 annually, at an average, and at the rate of L.0.68 per cent, of the funded debt existing at the termination of the preceding war. During the peace which followed the American war, being a period of ten years, from 1783 to 1793, there was redeemed by the commissioners for the reduction of the national debt, L.10,242,100, being L.1,024,210 an- nually, at an average, and at the rate of L.0.43 per cent, of the funded debt existing at the termination of the preceding war. !No debt was paid off in the short peace which follow- ed the treaty of Amiens in 1 802. IV. In time of war, taxes may he raised to a greater height than can be easily borne in j)eaceaUe times; and the amount of' the additional taxes, together with the siirphis of the peace establishment, applied for defraijing the expenses oftJie war. It is not intended to affirm that the power of a na- tion to bear taxes is increased in consequence of its being engaged in war. The contrary is always the case. Commerce, manufactures, and agriculture are tlie sources from which all revenue is derived. The two for- mer may be ameliorated in certain branches by war, but they are depressed on the whole ; and agriculture also suffers in some degree : but the necessity of the case, real or supposed, has a powerful influence on the public mind, and reconciles the community to submit to privations, which in peaceable times would be accounted insupportable. Before the introduction of the funding system, na- tional exertion was limited by the revenue which could BRITISH NATIONAL DEBT. ^ 21 be raised within the year : but so soon as that system was established, the selfish practice of devolving the bur- dens, arising from the exigencies or passions of the pre- sent age, upon posterity, was adopted in its full extent. The first attempt to defray any considerable part of the war expenses by taxes raised within the year was under Mr. Pitt's administration in 1798, when the aid and contribution tax was imposed, being a large addi- tion to the former assessed taxes on houses, windows, servants, horses, carriages, &c. regulated by an in- creasing scale according to the amount of the former assessment. This tax, not succeeding to expectation, only subsist- ed one year, and was succeeded by the income tax, al- ready mentioned. Another war tax, first imposed in 1798, was an additional duty on all goods exported and imported, partly according to a table, and partly at so much per cent, on their real value, as ascertained by the oath of the merchant, together with a tax upon the ton- nage of shipping. This tax is sometimes called the convoy tax, being considered as a compensation for the security wliicli our trade receives in time of war by sailing with convoy. These, together with some smaller articles, amounted in 1812 to L.21,838,166, being about one-tliii'd of our whole taxation, and are proposed to be taken off so soon as peace is restored. Whether this relief will be actually granted, or whe- ther the burdens will prove perpetual, is at present among the secrets of futurity. Past experience shows, that taxes have been often imposed at first for limited terms, and afterwards rendered perpetual ; and the in- croachments that have been already made upon the war taxes, do not promise fair for tlieir speedy removal. In the years 1798, 1799, 1800, a sum of no less than 22 lNq,VlRY CONCERNING THE L.56,445,000 was charged upon the war taxes,* and distinguished from what was then called the permanent funded debt, being intended to be discharged by con- tinuing the war taxes after the restoration of peace. This system, however, was abandoned under Mr. Ad- dington's administration, and the above sum consolida- ted with the rest of the funded debt. The war taxes were discontinued during the short peace. The system adopted by lord Henry Petty, in 1807, would have en- tirely absorbed the war taxes for an indefinite period if it had been continued j and during the only year it was acted on, the war taxes were mortgaged for the interest and sinking fund of the loan of that year, for a term of at least fourteen years, to the extent of - L. 1,200,000 and in 1809 the charges of the loan were again laid upon the war taxes — amount, - 1,040,000 Sum for which the war taxes are pledged, L.2,240,000 The war taxes are also charged with the interest, &c. of the loan 1811, but certain additional duties imposed that year are added to the war taxes, whicli are ex- pected not only to defray that charge, but to afford a surplus. The measure, however, of blending the war taxes in this manner, with the general revenue, is not favourable to the prospect of their speedy removal, f * See Appendix, Table VI. t See Note II. It^r BHTTISn KATIOTTAL PEBT. V. The expense ojmodernwars has been generally so great, that the revenue raised within the year is insufficient to defray it. Hence the necessity of having recourse to the system of funding, or anticipation. The sum required to complete the public expenditure is borrowed on such terms as it can be procured for ; and taxes are imposed for the payment of the interest ; or perhaps to a greater extent, with a vieiv to the gradual extinction of tlie principal. Various causes may be assigned for the increased expense of war in modern times ; the nature of our mili- tary weapons ; the entire separation of tlie character of tlie soldier from that of the citizen ; the extensive system of colonization and foreign settlements, in consequence of which, a national contest, which a few centuries ago would have been decided by a battle on the frontiers of the contending nations, now extends the ravages of war to every corner of the globe : and since the system of the balance of power has prevailed, large sums have been granted by more opulent states, as subsidies to others sup- posed to be interested in the same common cause. While these and other causes have led to great expense, the in- crease of national wealth has supplied the means, and the rulers of this nation in particular, by a strict adherence to public faith, and by a well regulated system of transfer, have been able to draw forth a large proportion of the wealth of their subjects, and a share of that of foreigners, for the exigencies of the public. The progress of our public debt, and manner of conducting it, will be detailed in the second part this inquiry. yi. In every year of war, where this system is adopted^ ike amount of the pMic debt fs increased, mid tM total 24 ISr^iTJIRY CONCERNING THE increase of deU during a-war depends upon its duration^ and the annual excess of the expenditure above the revenue. VII. In every year of peace, the excess of the revenue above the expenditure ought to be applied to the discharge of the national debt; and the amount discharged during any period of peace depends upon the length of its con- tinuance and the amount of the annual surplus. VIII. If the periods of war compared with those of peace, and the annual excess of the ivar fnrj^pnfliturp rmnpared with the annual savings during the peace establishment, be so related, that more debt is contracted in every war than is discharged in the succeeding peace, the conse- quence is a perpetual increase of the debt; and the idti- mate consequence must be its amount to a magnitude which the nation is unable to bear. The two former of these propositions appear incontro- vertible, and the first part of the other follows from them as a necessary consequence. The doctrine of our national debt amounting to a magnitude which the nation is unable to bear, will not be easily relished. We are accustomed to hear of our inexhaustible resources, and we have experienced the amount of our debt to an amazing magnitude with less pressure than might have been expected. The observations already made in illustration of the second proposition show how far our resources are al- ready exhausted. In Part II. Section I. there is given a statement of the amount of the funded debt at the commencement of each war, and of each peace, from the Revolutioji in 1688; to the present time, being a period of 124 years. BRITISH NATIONAL DEBT. 25 and the amount of debli, contracted in each period of war, and discharged in each period of peace. The number of years of war in that period is 63, and thoso of peace 61 : but the duration of war expenditure com- pared with that of peace establishment will be found con- siderably greater than that proportion, for, 1st. A long time is required at the termination of a war, before affairs can be brought to the situation of a peace establishment, and a large expense is incurred during that period. If we add a year of war expendi- ture to the duration of each war on this account, we shall not go beyond the fact. 2d. Besides the wars enumerated in the statement, the nation has been put to expense by several armaments, when national disputes assumed the appearance of war, although they were adjusted with slight or no hostilities. Something of this kind occurred in regard to Spain oftener than once in the early part of the 1 8th century, and again with the same power, in 1770, from a dispute concerning the Falkland islands in the south extremity of South America, and in 1790, from a dispute concern- ing Nootka Sound in the northern extremity of North America. AVhen these circumstances are attended to, the period of war expenditure will be found considera- bly greater than that of peace establisliment. The whole debt contracted during 63 years of war is L.638,129,577, being L.10,129,040 annually, at an aver- age. The whole debt discharged during 61 years of peace is L.39,594,305, being L.649,087 annually, at an aver- age : but the average sums are not those which chiefly claim our attention. It appears by inspection of the table how rajjidly the debt contracted in the latter part of the period has increased ; and future events will more probably assimilate to that than to an eai'lier period. 5 26 1NQ,UIRY CONCERNIXG THE The whole debt contracted during the period of war is to the whole debt discharged during the period of peace, as 16.12 to 1. The average debt contracted annually in war is to the average debt paid annually in peace, as 15.65 to 1. It is maintained by many that there is no cause to be alarmed at the magnitude of the national debt, because the greater part of the national creditors are our fellow citizens, and a debt owing by one part of the commu- nity to another is in eifect no debt at all. Some go so far as to maintain that the national debt is a part of our national wealth, and ought to be reckoned, along with the value of our commerce, manufactures, and agricul- ture, in estimating the amount of the national capital. With these last we shall not undertake to argue. Towards the others we shall partly concede the point : but when every reasonable concession is made, enough still remains to place the magnitude of the national debt in an alarming point of view. The large amount which the public has been able to borrow, is a proof of a large capital existing among the community, and affording a surplus after tlie demands of commerce, manufactures, and agriculture, in theii' actual state, are supplied : but it is imwarrantable to affirm that the conti'action of debt is necessary in order to find employment to this capital, oi* that it could not have been invested in various ways to the further in- crease of our public wealth in its genuine sources. This would have diffused an additional share of the comforts of life through every rank of society. The taxes, whicli the public debt requires, lessen these comforts. The wars in which money has been expended, if not unnes- cessai-y, are certainly unprofitable. The interest of the public debt is, foi' the greater part, drawn from the pro- BRITISH NATIONAL DEBT. 27 iits of the industrious part of society, and paid to the idle and luxurious. It is drawn from the merchant, the manufacturer, the farmer, and paid to the stockholder. The amount so drawn may be augmented till it occasion the ruin of tliose who pay it, and involve the whole com- munity in distress and confusion. Perhaps some think, though they do not venture to say, that matters may be restored, by means of a pub- lic bankruptcy: andtliat this nation, after such a mea- sure, will retain the same degree of internal wealth, and support the same strength and importance in its relations to foreign states as if no national debt had ever existed. It will not be necessary to enter into a long refutation of this opinion. Tlie extent of distress attending a public bankruptcy, whether brought on systematically or overtaking us as the necessary consequence of our being overwhelmed with the magnitude of our debt, would be so great; the present overthrow of every thing valuable so complete ; and their future extrication so uncertain, that we can hardly conceive a greater pub- lic evil. Among its probable consequences we may reckon internal insurrections, and foreign invasions by rival or hostile nations, taking advantage of the time of our distress and weakness. Every friend to Britain, every friend to humanity, must deprecate such an event, and a proper sense of the calamities in which it would involve us, should keep us at a cautious distance from the verge of so dreadful a precipice. " Does the circumstance of our creditors being our fel- low citizens afford no relief to the magnitude and bur- den of our national debt, and are we in the same situa- tion, as if we were indebted to foreigners ?" We do not affirm so. So long as public faith is maintained, there are two ways in which the burden of our debts is allevi- ated bv havina: oui* jcountryinen for oiir creditors. 28 I]NQ,ULRY COACERNING THE Isf. A part of the taxes raised for the payment of in- terest, and also for other purposes, falls upon the stock- holder, and this partis more considerable as the national debt increases, and bears a greater proportion to the whole of the national capital. 2d. The expenditure of the stockliolder may in some measure increase the profit of the industrious citizen — but allowing for these advantages, still, the greater part of the burden falls upon the industrious, and it re- ceives only a very partial relief from any advantage re- sulting from the expenditure of the idle. It is argued by those who still I'etain the generally exploded opinions concerning money, that all the money raised in taxes, at least all that comes to the stockholder, is spent among those who pay it, and that therefore it is no loss to them. This is no less absurd than the defence of a house-breaker, who being convicted of carrying off a merchant's money, should plead that he did him no injury, for the money or part of it would be employed in purchasing the commodities he dealt in, upon which lui would receive a profit. Were a national bankruptcy ever to take place, per- haps less evU might attend it if our creditors were fo- reigners. It would not in that case occasion internal distraction and convulsion. The evil to be dreaded would be war with the injured nations, and as we would retain our full national strength, and our resources would then be unincumbered with debt, they might not find it prudent to attack us. However, as we hold a breach of national faith in detestation, we recollect with pleasure, that the far greater part of our creditors are our fellow citizens.* In part of the foregoing argument we have spoken of * See Note III. BRITISH NATIOJfAI DEBT. S9 the industrious citizen and tlie stockholder as being separate persons, and, in some respects, of opposite interests. In many individuals these characters are blended : but, in most cases, the one or the other cha- racter predominates, and if, in a few, they he nearly equally balanced, it does not affect tlie general argument. IX. The only effectual remedies to this danger are the extension of the relative length of the peiiods of peace ; frugality in the peace establishment; lessening of the war expenses; and increase 9f taxes, whether permanentf or levied during war. As the object of the present inquiry relates to our na- tional revenue, debt, and resources, we shall avoid, as far as possible, the collateral subject of entering into an examination of the necessity or rashness, the expediency or inexpediency, the justice or injustice, of the wai-s in which wc have been engaged. If the result of our in- quiry should be, that we are not able for another cen- tury to carry on our warlike system in a manner simi- lar to that which we have done in the period above reviewed, the rational inference is that wc should en- gage in wars with much circumspection, and terminate them as soon as can be done with safety. If nations could derive wisdom from past experience, and from the judgment whicli is formed of many former wars, now that the passions which excited them are sub- sided, much miglit be urged in favour of a pacific system. It will be admitted that we have frequently engaged in war for trivial or unattainable objects — that the objects have generally not been attained — ^tliat, under pretence of guarding against distant and improbable dangers, we have incurred present and imminent ones — that passjoa StO INQ.UIRY CONCERNING THE and national pride, rather than rational views of national interest, have been often the ruling principles of our public conduct— that, as we have engaged in war rashly, we have persevered in it with obstinancy, and rejected offers of pacification more favourable than those which we were afterwards under the necessity of accepting. The view we entertain of tlie war of the present day is seen through a different medium. Every thing valua- ble to us as men and as a nation is at stake — our national prosperity, our national honour, our national existence — our liberties and lives. No exertion can be too great. The power of our enemy is so formidable, and his am- bition so insatiable, tliat we have no alternative but to prosecute the war with the utmost vigour, till we lay him prostrate at our feet. No pressure of increasing burdens is to be regarded; no dread of exhausting our resources entertained. If he make repeated overtures of pacification, tliey are to be considered as insidious, and rejected with scorn. While these passions prevail, any arguments against our belligerent conduct, whetlier drawn from past ex- perience, or from a cool view of present circumstances, will be ui'ged in vain. As the judgment we now form of the measures of our ancestors is different from theirs, it may happen that the judgment formed of the measures of the present day by posterity, or by the younger part of our fellow citizens, when in advanced life, may be different from ours. Suppose the present war brought to a termination in a manner that left our situation in the scale of na- tions nearly the same as it has been for some centu- ries past, could it be reasonably expected that the suc- ceeding period would be more pacific than the past ? We can hardly expect it would. If reason and past expe- rience were listened to, they have much to urge : but BRITISH NATIONAL DEBT. SI the world is not now in its infancy, and experience has long furnished the same lessons of the inefficacy and destructive tendency of war, in vain. It is likely the same passions will involve rival nations again in the calamities of war, upon slight or no grounds. If there be any circumstance likely to assuage the passion for war, it arises fi'om the pressure of public debt, a system peculiar to modern times, the effects of which, when carried to its utmost extent, have not yet been submitted to the test of expeiience. In regard to the public expense during a future peace, it is generally believed that the state of Europe, under any probable terms by which the present war may be concluded, will be sucli as may render it necessary to keep up a higher peace establishment than we have hitherto done. In regard to the expense of future wars, it is not in general wise, admitting their necessity or propriety, to be sparing in exertion in those points where the contest is likely to be effectually decided. Our operations ought to be as prompt and vigorous as we can make them. Neither ought we to be sparing in any expense that contributes to the health and comfort of the soldier, the care of the sick and wounded, the comfortable provision for the worn-out and disabled : but there are other points in which, without enfeebling national exertion, or without encroaching on the demands of humanity, economy may be properly practised. The following (piestions in regard to the expenses of past wars may be proposed. Have there been no unnecessary and in- effectual expeditions undertaken ? Have not considera- ble armies been kept in places where they could be of little or no use ? Has there been no lavish expenditure in fortifications and barracks ? Has not the system of increasing the number of our foreign colonies, and con- 52 IX(ITJIRY CONCERNING THE sequently tlie expense of establishments and garrisons^ been followed to the utmost extent, and in quarters where it did not weaken our enemy ; and where, by employing a part of our disposeable force, it weakened our exer- tions in points of more importance ? Have the national expenses been conducted with all prudent frugality ? or have not enormous foi'tunes been amassed by public con- tractors ? Have not large sums been retained for long periods of time in the hands of public accountants, and have not large sums been ultimately lost by tlie insol- vency of these accountants, from whom sufficient security liad not been taken? Have not large subsidies been granted to foreign powers whose fidelity we had just cause, from experience, to distrust, and who actually proved unfaithful ? Most of these questions will be generally answered in the affirmative of misconduct : and yet we find the esti- mates of the expense of each succeeding year are form- ed on a larger scale ; that the execution generally ex- ceeds the estimate ; and that motions for iiKpiiry into the public expenditure and correction of abuses, aiM3 generally discouraged ; and that even where abuses in public office are admitted, speedy and effectual measures are not taken for their correction. BJRITISH NATIONAL DEBT. 33 X. If the three former of these remedies be imprazticahle, the last affords our only resource. Bij increasing the war taxes, the sum required to be raised by loan is les- sened. By increasing the taxes in time of peace, the sum applicaUe to the discharge of debt is increased. These measures may be followed to such an extent, that the savings in time of peace may be brought to an equality with the surplus expenditure in time of war, even on the supposition that the periods of their relative duration shall be the same for centuries to come that they have been for a century past. The difficulty and danger of a further increase of our taxes have been already considered. Every new im- position, as we approach the limit of taxation, becomes more oppressive and more unproductive. But if we can- not, or will not, adopt more frugal or more pacific mea- sures, there is no alternative but an increase of our taxes to the extent above mentioned : and, if we can- not bear tliis increase, it is impossible to escape national bankruptcy. We are far advanced to the utmost extent to which taxation can be carried : but we have also gone far to- wards defraying our anmial expenses by money raised within the year. During the last ten years, or thereby, though we have been engaged in a w ar of unpi'cccdent- ed expense, the amount of our taxes has been greater than the expense of the war, but insufficient to answer, along with that expense, the interest of the debt formerly contracted. Taxation is now carried, perhaps, as far as is necessary, upon the supposition that the intervals of peace in future were equal to the time of war. We have now been engaged in war for upwai-ds of twenty years, with scarcely any interval, and witliout having approached to the ostensible object for which it was 34 lNq,UIRY CONCEKNIJfG THE irtidci'taken ; and some maintain, that since the former system of Europe is now dissolved, there is no s(tfety for us but in perpetual war. These, if they were consistent, would perceive the necessity of raising' our taxes to the amount of our full expenditure. We reprobate the idea of eternal war as barbarous and impracticable : but if we have still the prospect of long protracted war, pru- dence requires us to raise our taxes to the measure of our expenditure ; which, however severe a pressure it may occasion at present, must, if deferred, occasion a still heavier pressure at a future period, when our public debt is further accumulated. So long as the practice was followed of defraying al- most all the war expenses by loans, and imposing taxes only for the payment of interest, tlie burdens of the war were so lightly felt, that the national promptness to engage in war was scarcely under any restraint. Now, when a great part of the expense is raised within the 3 ear, and much of it by direct taxation, the burden is far more heavy, and this pressure would go far to indis- pose the nation for w ar, except in a situation where the necessity for prosecuting it was considered as great, or where hostile passions were excited to a more than usual height. Still, however, our burdens are not raised to the measure of our expenditure, and therefore the restraint does not operate so far as it ouglit. Let us now feel the full extent of the burdens we must ulti- mately bear, and let it be tried liow far our I'clish foi- war will continue. Justice to posterity lequires this. Every generation has its own struggles and contests. Of tliese, and of these only, it ought to bear the burden. We at present laboiu' under a heavy debt contracted by our ancestors, in wars, perhaps unnecessary, certainly arising from causes now past and gone, with which we liave no concern j and^ under a still lieavier one, arising BRITISH NATIONAL DEBT. 35 from wars waged in our own days, the burdens of which, at the time, we were unwilling to bear. Had the debt accumulated in these wars not existed, our present taxes would have been more than sufficient to defray all the expenses of our present war, widely as it is extended, and lavishly as it is conducted. XI. When taxation is carried to the extent mentioned above, the affairs of the nation will go on, under the pressure of existing burdens, but without a continual accumulation of debt, which woidd terminate in bank- rwptcy. So long as taxation is below that standard, accumulation of debt advances, and it becomes more dif- ficult to raise taxation to the -proper height. If it should ever be carried beyond that standard, a gradual discharge of the existing burdens will be obtained, and these con- sequences will take place in the exact degree in which taxation fcdls short of, or exceeds the standard of aver- age expenditure. XII. The excess of revenue above expenditure is tJie only real sinking fund by which the public debt can be dis- charged. The increase of the revenue, or the diminution of expense, are the only means by which this sinking fund can be enlarged, and its operations rendered more effectual'; and all schemes for discharging the national debt, by sinking funds operating by compound interest, or in any other manner, unless so far as they are found- ed upon this principle, are illusory. The progress and discharge of tlie debt of a nation are regulated by the same principles as those of an indi- vidual j and experience shows, that measures of public finance are often conducted with a degree of imprudence 36 lS^q,UIRY CUNCEEIVING THE seldom exhibited in the management of private affairs. AVe may, however, extend our views to a greater length of time, in iTgard to the former. It is true, that upon abstract principles, the smallest sum lent out for compound interest will, in length of time, increase to an indefinite magnitude:* but it is ob- vious, that the improvement of money in that way would be limited, at a certain amount, by the want of demand from borrowers, and the impossibility of investing it in productive capital of any kind. It is restricted within a much narrower limit by the mutability of human mea- sures, and the actual impossibility of adherence to the same system, conducted by successive trustees through many generations. It is true that if the system were in- variably adhered to, the sum would increase at the rate which calculation points out, until it was limited by the impossibility of finding borroweis, or employing it in any profitable manner. The system of accumulating a national treasure has been long laid aside, and is not likely to be revived. We may tliercfore dispense with any further considera- tion of nations storing up wealth, and bestow our atten- tion on the actual case of nations labouring under debt: sometimes endeaAouring to discharge it; often obliged to increase it. Suppose an individual has contracted a certain ex- tent of debt, and afterwards attains to circumstances Avhich enable him to discharge it. If no oppressive and usurious measures be practised against liim by liis cre- ditors, and if he pay tbe interest regularly, the sum which he must pay altogether, before he be clear of debt, is the amount of tlic money he borrowed, and tlie simple interest of each portion of the same, from the time of its * See Note IV. BRITISH NATIONAL DEBT, 37 I being borrowed to the time of its repayment. Suppose ]»e borrows L. 10,000, and that for ten years he pays the interest, but no part of the principal. If the rate of in- terest be 5 per cent, lie pays during that time L.500 an- nually for interest, or L.5000 altogether^ and if, by a sudden acquisition of wealth, he is able to discharge the debt at the end of ten years, he pays exactly L. 15,000 altogether. But suppose, by an amelioration of his cir- cumstances, he is enabled to pay L.IOOO annually to his creditors, for principal and interest. The first year he pays L.500 for interest, and L.500 towards the dis- charge of the principal. The remaining debt is L.9500, and the interest of this being L.475, if he can pay L.IOOO next year, he discharges L.525 of the principal, leaving a debt of L.8975. The interest of this is L.448 15s. and next year, by paying L.IOOO, he discharges L.551 5s. of the principal, and reduces the debt to L.8423 15s. If he continue to act in this manner, the whole debt will be discharged in about 14^ years; and the whole sum which he pays, including the L.5000 paid during the first 10 years, is L. 19,250 nearly, being the amount of the principal, of 10 years interest on L. 10,000, of 11 years interest on L.9500, of 12 years interest on L.89r5, of 13 years interest on L.8423 15s. and so on; altogether, the principal, together with the simple in- terest of each portion of the same, from the time that the debt was contracted, till the time that portion was repaid. If he can only spare L.750, and therefore dis- charge L.250 of the principal the first year, it will re- quire somewhat above 22 years to discharge the whole ; and if he can only spare L.600 and therefore discharge L.lOO of the principal the first year, it will requii*e 37 years. In all these cases, it is the surplus of L.500, of L.250, or of L.lOO, which the debtor can spare above the, interest, that enables him to discharge the principal. 38 ISrQ,UIRY CONCERNING THE Instead of conducting the business in this manner, he may pay only the L.500 of interest to his creditors and lend out the other L.500 at interest, and lend again L.500 more at the end of the next year, and so on, ac- rumulating the sums lent by compound interest, till it amount to L. 10,000, and then discharge his whole debt at once. It will requii'e exactly the same time of 14 1 years to accomplish this. If he ti'ansact the business himself, the second way will be attended with more trouble, but the result will be the same. If he employ an agent to transact the loans, he will be a loser by following the last mentioned method, to the extent of the fees paid for agency. If the debtor be able to pay no interest during the first ien years, the creditors will either insist on accumula- ting the interest w ith the principal, in the manner of com- pound interest, or the debtor must borrow annually from other hands, to pay the interest annually to his original creditors, and must also borrow more each succeeding 3^ear, to pay the interest of the debts tlius contracted. In either way, his debt at the end of ten years will amount to L. 16,2 8 9, the interest of which being L.814 9s. an annual payment of L.IOOO would discharge only L.185 lis. of the principal debt the first year, and would require about 35 years to discharge the whole, whether he pay the L, 1,000 annually to his creditors to lessen the principal, after payment of the interest, or whether he accumulate the ovei'plus by compound in- terest till he be able to pay the whole debt at once. Substitute millions, or ten millions, for thousands, and the above reasoning is equally applicable to the pub- lic debt of a nation. If the debt be ever discharged, which can only be i,U,-t^^,^ IRISH FUNDED DEBT. We have already noticed that part of most of the loans made in Britain since 1797, has been for the use of Ireland; and seve- ral separate loans have also been made in Britain for Ireland. The interest and other charges on these loans is annually re- mitted from the treasury of Ireland to the British treasury. Table IV. contains a state of the sums raised by these loans, and the capitals funded in the 3 per cents. 4 per cents, and 5 per cents.; the total capital funded each year; the amount of the Irish debt payable in Britain at the end of each year: also, the interest, annuities, and charges of management, con- tracted by each loan. • See Note XVU. t See Note XVUI. BRITISH NATIONAL DEBT. 75. It appears that the whole sum raised in Britain for Ireland, and guaranteed, to 1st February 1813, is, - L.44,400,000 The capital funded in the 3 per cents. - L.63,303,875 in the 4 per cents. - - 5,054,375 in the 5 per cents. - - 572,000 Amount capital funded in Britain for Ireland, L.68,930,250 Interest of Irish debt funded in Britain, - L.2,129,891 Annuities which terminate in 1860, - - 104,083 Charges of management, . - - 24,132 L.2,258,106 Besides this, L.4,5n0,000, part of the loan raised in Britain in 1811, was for the use of Ireland; for which there was funded L. 5,400,000, in the 3 per cents.; L.900,000 in the 4 per cents.; and a long annuity granted of L. 15,562; but the interest of tliis being paid by Britain, it is not stated in the account of the Irish debt. But this is only part of the Irish funded debt. Another part has been funded in Ireland, the interest of which is payable, and the capital redeemable there. The first operations in that kingdom were by tontine an- nuities. In the years 1773, 1775, and 1777, L.740,000 was raised in that manner, and annuities granted to the extent ot L.48,900. The method generally followed of late is that of granting a funded capital in the 3i per cents, equal to the sum borrowed, and an additional funded capital in the 5 per cents, such as the lender would accept. Sometimes a Douceur in Lish treasury bills has been also granted. The progress of the whole Irish funded debt is cxiiibited in Table V. 7b IliTttUIRY CONCERNING THE The sums raised for Ireland from 1773, when the public debt of that country commenced, to 5th January 1813, were, Irish Currency.* Sums raised in Britain for Ireland, including L. 1,900,000 not guaranteed, L.46,300,000 British currency, - - - L.50,158,333 Sums raised in Ireland, - - - 23,413,517 Total raised, - - = L.73,571,850 Capital funded in Britain, the interest payable in London and guaranteed, L. 68,930,250 and a further sum, the interest of which is also payable in Lon- don, but not guaranteed, - 1,900,000 L.70,830,250 equal in Irish currency to - - L.76,732,772 Capital funded in Ireland, and the interest pay- able in Dublin. 3^ per cents. - L.12,680,972 4 per cents. - 227,600 5 per cents. - 13,195,648 — 26,104,220 Total Irish funded debt payable in London and Dublin, - , - - L.102,836,992 Tfnterest on above, - - - L.3,523,019 Annuities, - . . _ 179,782 L.3,702,801 Management, (5th January, 1812,} - 20,687 * L.12 of British currency at par, is equal to L.13 Irish: but in the actual rate of exchange, the difference is often greater. BRITISH NATIONAL DEBT. 7f By the articles of Union between Britain and Ireland, which took effect 1st January 1801, the debts of each country, exist- ing at that time, and their interest, are to continue as separate charges on the revenues of the respective countries ; and such future expenses as are for the special service of either country, are to be charged on the revenue of the same : but the general charges for the army, navy, &c. being alike for the defence or advantage of each country, are appointed to be charged in the proportion of 15-17thsto Britain, and £-17ths to Ireland. When the Union between England and Scotland was ac- complished in 1707, as Scotland was subjected, by the articles, to the payment of certain duties of customs and excise, then payable in England, and applicable to the debt of England contracted before the Union, it was agreed that the sum of L. 398,085 should be granted by the Parliament of England as an equivalent for the same ; and this sum was applied to the payment of tlie small public debt then due by Scotland, the in- demnification of the losses sustained by the Darien Company, the improvement of fisheries and manufactures in Scotland, and some other public purposes. IMPERIAL LOANS. Two loans have been raised in Britain for the emperor of Germany, and guaranteed by the British government. The interest, if not provided by the emperor, (and he has never made any provision) to be paid from the consolidated fund. The money for these loans was advanced by the subscribers to the British loans, in proportion to their subscriptions. The particulars are. Loan of 1795, contracted at a capital of L.83 6s. 8d. in a fund at 3 per cents, for each L.lOO advanced, and an annuity of L.5 for 25 years. rs lN(tUIRY CONCERNING THE Loan of 1797, at a capital of L.226 10s. in a 3 per cent, fund, for each L.lOO advanced. Year. Sum raised. Funded at 3 per cent. Interest. Annuity. Manage- ment. Total, charge. 1795 1797 4,600,000 1,620,000 3,833,333 3,669,300 115,000 110,079 230,000 4,312 1,651 349,312 111,730 6,220.000 7,502,633 225,079!, 230,000 5,963 1,458 461,042 1,458 Reduction in managementj 4,505 459,584 LOAN TO PORTUGAL. A loan of L.600,000 for the service of Portugal, was raised and guaranteed by Britain in 1809, and connected with the loan of that year, in the manner explained in Note XV. The sum funded in the 3 per cent, reduced, was, L.895,522 Interest, Management, L.26,865 304 Annual charge, (besides sinking fund of L.30,000,) L.27,1 70 MANAGEMENT OF THE NATIONAL DEBT. The management of tlie national debt is conducted by the Bank of England, except a small part which is in the hands of the South Sea Company. The expense of management, in most articles, previous to 1786, was at the rate of L. 562 10s. per mil- lion of capital, whether of a three, four, or five per cent, an- nuity, reckoning L.40,000 of terminable annuities, equal to a million of capital. In 1786, the rate of management was reduced to L.450 per million ; and tliis was confirmed by an act of parliament itt 1791. BRITISH NATIONAI. DEBT. 79 In 1808, the rate of management was further reduced, and settled on the following terms : L.450 per million, if the capital exceeded 300 millions, but fell below 400 millions. L.340 per million, if the capital exceed 400 millions, but fell below 600 milli^ons. L.SOO per million, on such part of the public debt as ex- ceeded 600 millions. No agreement was made for the case of the public debt fall- ing: below 300 millions. Besides these allowances for management, the bank re- ceives considerable sums for conducting loans and lotteries. The sum at present allowed for receiving contributions to the loans, is L.SOO per million, and for transacting the business of the lotteries, at the rate of L.IOOO for each contract of 20,000 tickets. 80 INQUIRY CONCERNING THE SECTION II. Plans adopted for the Reduction of the Funded Debt, and their Operation. §. 1. SIR aOBERT WALPOLE's SINKING FUND.* The first plan for the discharge of the national debt, formed on a regular system, and conducted for some time with a considerable degree of firmness, was that of the Sinking Fund, established in 1716. The autlior of this plan was the earl of Stanhope ; but as it was adopted under the administration of sir Robert Walpole, it is commonly denominated from him. The taxes which had been laid on before, for limited periods, being ren- dered perpetual, and distributed among tlie South Sea, Aggregate, and General Funds, as has been mentioned already, and the produce of these funds being greater than the charges upon them, the surplusses were united under the name of the Sinking Fund, being appropriated for the discharge of the national debt. The legal inte- rest had been reduced from six to five per cent, about two years before, and as that reduction was conforma- ble to the commercial state of the country, government was now able to obtain the same reduction on the inte- rest of the public debt, and apply the savings in aid of the sinking fund. In 1727, a further reduction of the interest of the public debt from five to four per cent, was obtained, by which nearly L.400,000 was added to the sinking fund. And in the year 1749, the interest of part of the debt was again reduced to three and a half per cent, for seven years, and to three per cent, there- after; and in 1750, the interest of the remainder was reduced to three and a half per cent, for five years, and * This account of sir Robert Walpole's sinking fund, is chiefly taken from Dr. Price's %vritings. BRITISH NATIONAI DEBT. 81 to three per cent, thereafter, hy which a further saving of near L.600,000 was added to the sinking fund. The opinion, strongly urged since by Dr. Price, seems to have been entertained at that time, of the importance of applying the produce of the sinking fund invariably to the discharge of the national debt, and borrowing by new loans when the public exigencies required it. Ac- cordingly, the following sums were borrowed towards the supplies, from 1718 to 1731, being a period of peace. n 1718, — — L.505,995 1719, — — 312,737 . 1720, — — 500,000 1721, — — 1,000,000 1725, — — 500,000 1726, — — 370,000 1727, — — 1,750,000 1728, 1,230,000 L.6,1 68,732 1729, — — 550,000 1730, — — 1,200,000 1738, ■ 500,000 L.8,418,732 The sums applied from the sinking fund to the dis- charge of the national debt, from 1716 to 1728, amounted to L.6,64 8,000, being a very little more than the addi- tional debt contracted in that time. In 1728, the sinking fund w^as charged with the inte- rest of the loan, and this was also done in the loans of the following years, and the additional taxes imposed for the payment of the interest of the loans, were ap- plied directly to that fund. Soon after, tlie plan of preserving the sinking fund inviolate, and borrowing by new loans, was abandoned^ 82 lNQ,riRY CONCERNING THE In 1733, L.500,000 was taken from the sinking limd towards the supplies of the year. In 1734, L.l, 200,00 was taken from it for the same purpose ; and in 1735, it was anticipated and mortgaged. Since that time, the operations of the sinking finid, in time of peace, have been feeble, its produce being often diverted to other puiposes : and at tliat time, the nation had no other free revenue, except the annual land and malt taxes, which were inadequate to the expense of a peace esta- blishment on the most moderate scale. It was therefore necessary, if no additional taxes were imposed, to have recourse to the sinking fund, or to the inefficient system of discharging old debts and contracting new ones. In the peace which followed the treaty of Utrecht, being a period of 26 years, the longest which the nation ever enjoyed, the amount of debt discharged was only L.7,231,508. In time of war, the produce of the sink- ing fund was applied to the service of the year, and loans only made for the additional sums wanted. The produce of the sinking fund at its commencement, in 1717, was - - - L.323,4S9 Medium annual produce from 1717 to 1726, both inclusive, . - . 577,614 1727 to 1736, - - - 1,132,251 1737 to 1746, - - - 1,062,170 1747 to 1756, - - - 1,356,578 1757 to 1766, - - .- 2,059,406 and it continued to increase afterwards. It seems unnecessary to trace the operations of this sinking fund further. It was continued nominally in the accounts of the exchequer, until the establishment of Mr. Pitt's sinking fund in 1786; but did little in time of peace, and nothing in time of war, to the discharge of the national debt. Dr. Price says, that at the time he BRITISH NATIONAL DEBT. 8 Q wrote, in 1772, it had afforded about 20 millions towards the payment of the national debt, in 56 years, being nearly L.357,000, annually, at an average. If, from this sum of 20 millions, we subtract the debt co)itracted from 1718 to 1738, the remainder is nearly equal to the debts discharged in the periods of peace which followed the treaties of Utrecht and Aix-la-Chapellc. § 2. MR. Pitt's sinking funds. 1786. The present sinking fund was established under Mr. Pitt's administration, in 1786. The various branches of revenue then existing were united under the name of the consolidated fund.* One million taken from that fund, was vested annually in the hands of commissioners for the redemption of the national debt, to be applied for purchasing capital in such stocks as tliey should judge expedient, at the market prices. To this fund was to be added, the interest of the debt redeemed, and annuities fallen in by the failure of lives, or the expiry of the terms for which they were granted, and life annuities unclaimed for three years were considered as expired, and added to the sinking fund. When this fund amount- ed to four millions, it was enacted that the interest of the redeemed debt, and annuities fallen in, Avere no longer to be applied to it, but remain at the disposal of parliament. 1792. Another sinking fund was establislied this year, of one per cent, on the nominal capital of each loan, to which ' See Note XIX. 84 1NQ,UIRY CONCERNING THE the dividends on tlie capital redeemed by this fund were to be added. When annuities for a longer term than forty-five years, or for lives, were granted, the value which would remain after forty-five years, was appoint- ed to be estimated, and one per cent, on that value set aside for their redemption. This fund was appointed to be kept separate, and applied for the redemption of the debts contracted subsequent to its institution, by which means it was estimated that every loan would be redeemed in forty -five years* at furthest from its con- traction. In the same year, L.400,000 was granted in aid of the former sinking fcmd, and L.200,000 was granted by an- nual acts for the same purpose, till 1 802, when the grant was rendered pei-petual. Savings by reduction of the rate of interest of the national debt, were appointed to be added to that sinking fund^ but no sa^ings of this kind have taken place since its commencement. 1798. This year, the application of one per cent, on tlie capital of the loans to the sinking fund, was deviated from. A part of the loan, (16 millions capital,) was charged on a tax then imposed, called the aid and con- tribution tax ; for which the income tax w as substituted the following year. In like manner, a part, or the whole of the loans for several years, m as charged on the in- come tax, and no sinking fund of one per cent, provided for their redemption. The amount of capital for which no sinking fund of one per cent, was provided, is L.86,796,3r5. Tliis system was abandoned in 1802, when all the loans were united, and the interest of these loans charged on the consolidated fund. * See Note XX, BRITISH NATION AX DEBT. 85 1802. The two sinking funds were united, applicable to the discharge of debts existing in 1802; and the system of a sinking fund of one per cent, on loans subsequent to 1802, was revived, and has been followed in all the loans since, except that of 1807, wiien lord Henry Pet- ty's system was adopted. The limitation of the sinking fund to four millions, enacted at its commencement, and a similar limitation in 1792, were repealed; and the application of annuities whose term was expired, and of savings by the reduction of the rate of interest, to the sinking fund, was repealed. Table VI. contains a state of the loans from 1793, distinguishing those that were charged and those that were not charged with the sinking fund of one per cent, and the present amount of that fund. § 3. LORD HENRY PETTV's PLAN OF FINANCE. A NEW plan of finance was proposed to parliament in 1807, by lord Henry Petty, (now marquis of Lansdown,) chancellor of the Exchequer, and adopted in the ar- rangement of the loan for that year. The annual expenditure duiing war, was estimated at L.32,000,000 beyond what the surplus of tlie conso- lidated fund, and the annual taxes, could supply. The war taxes were estimated at 21 millions, viz. property tax, L.l 1,500,000, and other articles L.9,500,000. The annual deficiency to be supplied by loan was therefore 11 millions, which were proposed to be raised by mort- gaging the war taxes to the extent of ten per cent, on the sum borrowed; the surplus of which sum mortgaged, after paying for interest and management, was to form a sinking fund for redeeming the deht, and thereby dis- engaging the part of the war taxes mortgaged, in a 86 INQ,UIIIY CONCERNING THE certain number of years, according to the rate of interest at which the loan was transacted. Thus, if the interest and management was five per cent, there would remain five per cent, as a sinking fund, and this would pay off the debt in fourteen years. The sums proposed to be borrowed in this manner were 12 millions for the first three years, 14 millions for the fourth, and 16 millions for each of the succeeding ten years, amounting altogether to 210 millions, for which, at the rate of ten per cent, the whole of the war taxes would be mortgaged : but the debt contracted the first year being now paid off by the sinking fund appropriated to it, the portion of the war taxes mortgaged for it would be set free, and be applica- ble to the loan of the following year ; and another por- tion being set free the following and each succeeding year, these loans might be continued on this system without limitation of time. But as the sums mortgaged for these loans werewith- draw^n from the war taxes, it was necessary to replace the same J and this was proposed to be done by raising supplementary loans, the annual amount of which would be equal to the sum mortgaged, deducting the excess of the war tax loan for the year, above the sum of L.11,000,000 wanted. Thus, the first year, the sum borrowed is, L.12,000,000 Of which required, - - - 11,000,00 Excess, ... - L.1,000,000 Portion of war taxes mortgaged, - L. 1,200,000 Deduct above excess, - - 1,000,000 Sum to be raised by supplementary loan, first year, - > - L.200,000 33IIITISH NATIONAX DEBT. 87 The second year an equal portion of the war taxes was proposed to be mortgaged, amounting, together Mith the former, to - - - L.2,400,000 Deduct excess of loan as before, - 1,000,000 Sum to be raised by supplementary loan, second year, - - - L.1,400,000 In tliis manner, the supplementary loan of the four- teenth year, would amount to 16 millions, and the amount of these loans for fourteen years, toL.94,200,000. In the fifteenth year, it would amount to 20 millions, which sum it woidd never exceed, and never fall be- low 16 millions. In twenty years, the amount of these loans would be L.204,200,000 ; and in each period of fourteen years after tlie first, the amount of supplemen- tary loans would be 238 millions. A sinking fund of one per cent, on the nominal capi- tal, supposed funded in the three per cents, at 60, and therefore equal to l-60th of the sum borrowed, was, agreeably to the system of 1792, to be added to the in- terest of these supplementary loans : and this charge to be provided for by imposing new taxes. It was pro- posed to diminish the amount of these taxes, or to super- sede them altogether, by taking aid from the falling in of annuities, and from the surplus of the present sinking fund, after the amount of the same should exceed the in- terest of the debt remaining unredeemed. The sur- plus was expected to become available in the year 1817. If a lai'ger sum than 11 millions was I'equired for the service of any year, it was to be raised by other ar- rangements. As the ministry w ho planned this system did not con- tinue long in office, it was never followed out after tlie first year. Its merits will be considered afterwards. 88 INQ,UIRY CONCERNING THE § 4. MR. vansittart's plan of finance. The plan of finance proposed this year (1813) by Mr. Vansittart, and now adopted by parliament, is a modification of Mr. Pitt's sinking funds ; and, among other objects, is intended to rescind tlie alterations, which have been made in these funds, as originally es- tablished in 1786 and 1792, by subsequent acts of par- liament, and restore them, as far as practicable, to the state in which they would have stood if no such altera- tions had taken place. It will be proper, therefore, to recapitulate the original enactments and alterations, in order to render the new system more clearly intelligible. The original sinking fund of 1786, consisting of an annual grant of L. 1,000,000 from the consolidated fund, (increased in 1792 to L. 1,200,000) together with the intei-est of the debt redeemed, and annuities for lives or years which might expire, but limited not to exceed four millions, was appropriated for the redemption of the debt then existing, of L.238,231,248 ; and therefore when a sum of redeemed debt, to that amount, should be vested in the hands of the commissioners, that debt was to be considered as discharged. In 1792, when the war with France commenced, and new loans became necessary, a sinking fund of one per cent, was created on the nominal sum of each loan, which, it was estimated, would redeem it within 45 years at furthest from its contraction. In the succeeding years this system was so far deviated from, that loans to the amount of L.86,796,375 were contracted, without any sinking fund being provided for their discharge. Had the original system of 1786 and 1792 been adhered to, so soon as the debt of 1786 was redeemed, the nation would have been eased of taxes to the amount of the in- terest of that debt, and of the sum appropriated to the V. BRITISH NATIONAL DEBT. 89.^ first sinking fund ,• or these sums, or any part of them, might have been reserved for the charge of such loans as the exigencies of the times should require. Also, after 45 years, or perhaps a shorter period, from the contraction of each loan, the nation would have been eased of taxes to the amount of the interest and sinking fund of that loan, or these sums reserved to bear the charge of future loans, as above-mentioned. In 1802, the two sinking funds were united and ap- propriated to the discharge of the debt existing at that time, amounting to L.567,008,978, or, deducting the part then redeemed, to L.499,753,063, besides annuities for lives or years. The limitation of the sinking fund to four millions was repealed ; and loans contracted in future were to be accompanied with a sinking fund of one per cent. ; each sinking fund of this kind being ap- plied agreeably to the enactment of 1792, to the separate discharge of the loan to wliich it was attached, until that loan was completely discharged -, and then to terminate, or be released for future exigencies. The effects produced by these alterations in the sink- ing funds were, 1st. The prospect of any relief from existing burdens, or tlie release of any funds at present appropriated, for future exigencies, was protracted by tlie union of the sinking funds to a more distant period. By the original plan, such relief would have taken place when the debt of 1786, amount L.238,231,248, was redeemed, which Avas expected about 1813. By the union of the sinking funds, no relief could be obtained till the debt of 1802, amount L.499,753,06S, should be relieved, which was not expected till 1830. 2d. By repealing the limitation of the sinking fund to four millions, the united amount lias been inci'eased far beyond wliat was originally intended. 13 90 INQ^UIRY COXCEIIHING THE Sd. The amount of taxes for supplying this enlarged sinking fund has been much increased, at the same time that no relief is obtained from tlie repeal of the taxes appropriated to the redeemed debt, until the whole debt existing in 1802 shall be redeemed. The design of Mr. Vansittart's plan is to counteract these effects; to provide at present that relief which the public would have obtained from the original plan; to restrain the excessive increase of the sinking fund ; and, at the same time, to affoi'd equal security to the public creditors as they were entitled to by the act of 1792, by securing the redemption of each loan in some way, within a period not exceeding 45 years at furthest from its contraction. For these purposes it is proposed, 1st, That wliereas a sum equal to the debt of 1786, and bearing an interest nearly equal to the interest of that debt, is now vested in the hands of the commissioners; that so soon as the interest of the debt redeemed sliall become fully equal to that of the debt of 1786, that debt shall be declared dis- charged, and the sums hitherto appropriated for the interest and sinking fund of the same shall be appro- priated, so soon as required, to bear the charge of future loans ; and therefore no new taxes shall be imposed for the interest or sinki)ig fund of the new loans, till the same amount to a sum equal to the interest of that con- sidered as released. By this means the loans of 1813, 1814, 1815, 1816, and part of that of 1817, will be de- frayed without any additional taxes. 2d. Whereas loans to the extent of L.86,796,375 were charged on the consolidated fund in 1802, without any sinking fund attaclicd to them, in consideration that the advantages above-mentioned, given to the general sink- ing fund by the enactments of tliat year, enabled it to bear that burden ; it is proposed, now that these enact- BRITISH NATIONAL DEBT. 91 ments be partially repealed by the new system, in order to place the public creditors in a situation equally fa- vourable to what they held by the establishment of 1792, that the one per cent, sinking fund on the above-mention- ed sum, amounting to L.867,963, should be replaced to it. 3d. That as the amount of excliequer bills in circula- tion, and not redeemed within the year, has much in- creased, and at present is about L.26,000,000, that a sinking fund of one per cent, on that sum, or L.260,000, sliall be provided; and that taxes to the amount of L.l, 127,963 shall be imposed this present year, to meet tbat sum, together with tlie sum mentioned in the last article; and that, in like manner, a sinking fund of one per cent, shall be annually provided for any addition to tlie amount of exchequer bills in circulation, for the discliarge of which, within the year, no funds are pro- vided. 4th. That, in future, instead of allocating the sinking fund of one per cent, for the discharge of each separate loan, the whole funds of this kind shall be united, and applied to the discharge of the first contracted loan ; and so soon as a sum equal to tl»at loan shall be redeem- ed, the charge on the same shall be considered as re- leased for the public service ; and in like manner each successive loan sliall be redeemed, and its charge re- leased, in the order of their contraction, by the united produce of the sinking funds appropriated for the re- demption of all the loans contracted since 1792 : but the whole sinking fund created by the act of 1786, or by any subsequent acts, shall be continued and applied, until the total redemption of all the debt now existing, or to be created during the present war. 5th. As, by this arrangement, the discharge of suc- cessive loans, instead of commencing from their con- traction, is postponed till all prior loans be discharged ; 92 lNq,UIRT CONCERNING THE in order more effectually to secure the payment of each loan within forty-five years, a sinking fund, for the ex- cess of the loan above the sum applicable in the same year to the reduction of the public debt, shall be pro- vided, equal to one half of the interest, and a sinking fund of one per cent, on the nominal capital of the re- mainder, agreeably to the act of 1792.* 6th. That the amount of taxes imposed each year shall be determined as follows : — ^the time of the discharge of each loan, acccording to article 4th, being estimated, and the charge on the loan for the year, according to article 5th : then, if no loan falls in within the year, new taxes shall be imposed equal to the interest and sinking fund of tlie loan contracted ; but, if one or more loans falls in, the interest on these loans, being released, shall be appropriated to the charge of the new one, and taxes imposed for the surplus only ; and if the interest on the loans released exceed the charge on the loans con- tracted, no taxes shall be imposed that year ; and the surplus of interest released shall be resei'ved in aid of the charge of tlie loan of the subsequent year. § 5. REDEMPTION OF THE NATIONAL DEBT BY THE PURCHASE OF THE LAND TAX. Taxes in various forms have been frequently but not permanently imposed on land in England, from a very remote time. The present land tax commenced in 1692, when a valuation of the land was made, and although considerably below the real value at the time, it afforded a revenue of about L. 5 00,000, at one shilling per pound, including a like tax upon personal property, estimated at a very low rate. The valuation made at that time » See Note XXI. BRITISH NATIONAL DEBT. 93 has never been altered ; and the tax has been imposed annually till 1798, sometimes at one shUling, sometimes at two shillings, sometimes at thi*ee shillings, most fre- quently at four shillings, which rate it has never exceed- ed. This tax was long considered as a heavy burden, and much resisted by the landed interest. Of late years it has been less regarded, partly from the increasing influence of the mercantile interest, and partly fi'om its becoming, in consequence of the increase of the rent of land, the deterioration of the value of money, and the general magnitude of our taxes, comparatively an infe- rior object. In 1798, the land tax was rendered perpetual at four shillings per pound, and the proprietors were empower- ed to purchase the sums charged on their estates foi' capital in the three per cents, affording an equal divi- dend. If they did not accept this offer within a limited time, it might be sold to others for capital affording a dividend of one fifth more than the tax purchased. The term for purchase has been since repeatedly extended, and various regulations enacted. In consequence of these enactments, the purchases of land tax amounted the first year to L.l 3,059,586 in the 3 per cents., and the second year to L.3,034,216, but afterwards the pur- chases went on languidly ; and after fourteen years the amount of capital transferred for this purpose, on the 1st February 1813, was L.24,378,804, and the land tax re- deemed, L.731,364, being somewhat more than one- third of the whole. In order to encourage the comple- tion of this scheme, an act was passed last session, in which terms more advantageous to the purchaser were offered.* This plan is, in effect, no other than a transfer of * See Note XXIL 94 lN(tlJIRT CONCERNING THE part of the capital of the funded debt from the former stockholders to the landed proprietors. These last pay a value for the capital with which they redeem their land tax, and their relief from that tax is equivalent to theii' receiAdng a dividend to the same extent. The land- holders may still be considered as subjected to the land tax at its highest rate ; though some of them pay it by drawing a dividend for capital in the funds, which they have purchased for value, and have thereby become stockholders to that extent. The public revenue may still be considered as drawing the whole of the land tax, and paying the w hole of dividends. Could the portions of other taxes payable by particular classes of men be as- certained, it might as well be proposed to them to pur- chase an exemption from these taxes. Such of them as were able might embrace the offer, and after they had paid the value and received their exemption, they would be exactly in the same circumstances as if they had pur- chased capital in the funds, drawn their dividends, and applied them in payment of taxes. The public, in like manner, would lose in taxes what they saved in divi- dends. We cannot, therefore, consider the part of the national debt redeemed by the purchase of tlie land tax as affording any relief to the public burdens. It has always been considei'ed as necessary, upon the principles of the British constitution, that part of the taxes should be granted annually by parliament as a restraint on the power of the crown. The land and malt taxes, producing about L.2,700,000 annually, were formerly reserved for tliis purpose. Since the land tax was rendered perpetual, certain duties on sugar and tobacco, and on offices, pensions, and salaries, have been granted annually, together with the malt tax. The average nett ajinual amount of these taxes for three years preceding 5th January 1813, was L.4, 806,726. BKITISH NATIONAL DEBT. 95 § 6. OPERATION OF THE SINKING FUNDS. The amount of money applied for the redemption of the national funded debt, and of capital and interest re- deemed since the commencement of the sinking fund in 1786, to 1st February 1813, and the produce of the sink- ing fund at that time, are as follows : 3 per cents. 4 per cents. 5 per cents. Sums ex- pended. 126,822,903 6,586,934 126,998 133,536,836 Converted for life annuities, Transferred for purchase of land tax, Capital redeemed. 202,522,956 7,796,400 142,000 210,461,356 1,961,582 212,422,938 24,378,804 236,801,742 Permanent annual grant to sinking fund, Additional permanent annual grant, Amount of 1 per cent, sinking fund, Table VI, Sinking fund of 1 807, on lord Henry Petty 's plan, Annuities, the term of which is expired, Life annuities, of which the nominees have died prior to 5 th July 1802,* Life annuities unclaimed for three years prior to 5th January 1813, Deduct life annuities gi-anted for capital, L.140,333 of which expired, - - - 4,660 Interest redeemed. 6,075,688 311,856 7.100 6,394,644 58,84: 6,453,491 1,000,000 200,000 4,738,683 626,255 79,880 21,141 30,135 13.149,587, 135,673 13,013,914) Amount sinking fund, 1st February 1813, The 3 per cents, were redeemed nearly at 62^ at an average The 4 per cents, at 84 f. The 5 per cents, at 89|. ^mjjgkf See Note XXIII. 96 INQUIRY CONCERNING THE The funded debt, 1st February 1813, was L.812,013,135 Redeemed by sinking fund, - - 210,461,356 L.601, 551,779 Converted for Life annuities, - - 1,961,582 L.599,590,197 Transferred for purchase of land tax, - 24,378,804 Unredeemed debt of Britain, 1st February 1813, L.575,21 1,393 Which debt was invested in the followina: funds. to Bank annuities, - - - . L.l 1,686,800 Loan of 1726, ----- 1,000,000 South sea annuities, including loan of 1751, 16,125,684 3 per cent, consolidated, . . - 312,894,705 3 per cent reduced, - - - 78,760,033 L.420,467,222 4 per cent, consolidated, - . . 61,060,921 5 per cent, consolidated, - L.92,060,254 Loyalty Loan, - - - 1,622,994 93,683,249 L,575,21 1,393 Table III. contains the amount of the capital funded debt each year,* the amount redeemed each year, and the balance, or difference, between the capital funded and the capital redeemed ; also the whole funded debt existing each year, without regard to redemption ; the whole debt redeemed, and the whole debt unredeemed. But this gives an imperfect view of the progress of the public debt; for the loan of the year is perhaps made in * See Note XXIV. BRITISH NATIONAL DEBT. 97 tiie five per cents, and the redemption in the three per cents. ; and therefore, if the capitals only be exhibited, the debt redeemed will appear more in proportion to the debt contracted than it really is. Therefore, other columns are inserted, exhibiting the value of the capital funded, the capital redeemed, and the balance, reduced to 3 per cents. ; the reduction of the capital being made in proportion to the rate of intei-est, when the loan is wholly or partially funded at a higher rate than 3 per cent. If the wliole of the present funded debts were reduced to three per cents, the amount would stand as follows : 3 per cents. ... L.420,467,222 Value of L.61,060,921 — 4 per cents. 81,414,561 of L.93,683,249— 5 per cents. 156,138,478 L.658,020,531 And if this be reduced to 5 per cents, or the sum for which it might be redeemed when the 3 per cents, are at 60, it comes, exclusive of the capital transferred for land tax, to L.394,812,318. § 7. IRISH, IMPERIAL, AND PORTUGUESE SINKING FUNDS. A SINKING fund for the redemption of the Irish Debt payable in Britain, was established in 1797, similar to the British one per cent, sinking fund of 1792. The amount of this sinking fund, 1st February 1813, was, 1 per cent. on-L.68,930,250, being the amount of the Irish debt payable in Britain, L.689,502 Sinking fund on long annuities, - 8,829 L.698,131 Carried forward, 14 98 INQUIRY CONCERNING THE Brought forward, L.698,13i Dividend on L.10,653,499, redeemed at 3 per cent. .... 319,605 Amount of sinking fund for Irish debt paya- ble in Britain 1st February 1813, L.1,017,736 Capital Irish debt payable in Britain, 1st February 1813, - - L.68,9S0,250 Of which redeemed, - - 10,653,499 Unredeemed debt, - - L.58,276,751 Besides L.104,083 annuities, which expire in 1860. This capital is invested in the following funds. 3 per cent. cons. - - L.28,086,904 3 per cent, reduced, - - 24,563,472 4 per cent. cons. - - - 5,054,375 5 per cent. cons. - - 572,000 L.58,276,751 Which reduced to 3 per cents, amounts to L.60,342,875 And to 5 per cents. 36,205,725 The sum paid for redeeming the above capital of L.10,653,499, w^a.s L.6,695,894, being about 62^ per cent, at an average. Table IV. contains, besides the particulars formerly mentioned, the Irish debt payable in London redeemed each year, the total redeemed, and the balances remain- ing iniredeemed each year. There is also a sinking fund, established at the same time, for the redemption of tlie Irish debt payable in Ireland, which consists of a permanent grant of L.67,635j BRITISH NATIONAL DEBT. 99 of a charge of one per cent, on loans payable in Ireland 5 of dividends on stock redeemed ; and of annuities fallen in. The sum appropriated annually to the Irish sinking fund is L.100,000 Irish currency, of which L.32,365 is appropriated for the reduction of the debt borrowed in Britain for Ireland in 1797; and the remainder, L.67,635, together with the expired annuities, is appropriated to the reduction of the remainder of the Irisli debt existing before 1797. The amount of capital debt payable in Ireland, re= deemed on the 5th January 1812,* was, Ii'ish currency- In 3§ per cents. - - L.2,796,829 In 5 per cents. - - _ 1,815,357 L.4,612,186 Which was redeemed for - L.3,709,105 And the sinking fund for the debt payable in Ireland^ 5th January 1812, was. Part of annual grant as above, - L.67,6S5 Expired annuities, . - - 54,043 1 per cent, on loan.s, - - 203,96^ L.S25,640 Interest on debt redeemed, - - 188,657 L.514,297 A sinking fund of one per cent, was charged on the IMPERIAL LOAN of 1797, being L.36j693 annually. There * The account of the debt redeemed in Ireland in 1813 ha3 not been received. 100 INCtUIRY CONCERNING THE was no sinking fund for the loan of 1795. Now the amount of the two imperial loans was L.7,502,633 And the capital redeemed by the above sink- ing fund, 1st February 1813, - 1,361,974 Imperial debt remaining IstFebniary 1813, L.6,140,659 The above debt was redeemed for L.824,328 being about 60^ per cent, at an average. The present imperial sinking fund consists of the above-mentioned charge of one per cent. L.36,693 Dividend on L.1,361,974, redeemed at 3 per cent. . . - - - 40,859 L.77,552 The Loan for Portugal in 1809, was charged with an annual payment of L.30,000, in addition to the inte- rest and charges of management, for its redemption. The capital funded for that loan in the 3 per cent, re- duced, was _ _ . L.895,522 Of which redeemed, 1st. Feb. 1813, - 176,674 And remaining unredeemed, - L.71 8,848 The above debt was redeemed for L. 112,367 being about 65-|- per cent. The present sinking fund is. Annual appropriation, - - L.30,000 Dividend on L. 176,674, redeemed at 3 per cent. 5,300 L.35,S00 BRITISH NATIONAX DEBT. 101 RECAPITULATION. By collecting the particulars above detailed, the state of the funded debt due or guaranteed by Britain, on the 1st February, 1813, appeared as follows: 3 per cents. Amount funded. British debt, Of which converted in- to lite annuities. Irish debt, Imperial debt, Portuguese debt, Of which redeemed by sinking funds. British, - Irish, - Imperial, - Portuguese, - Remaining unredeem ed by sinking funds. British, - Irish, - Imperial, - Portuguese, - Transferred for land tax 649,330,565 1,961,582 647,368,983 63,303,875 7,502,633 895,522 719,071,013 4percents. 68,857,321 5,054,375 202,522,956 10,653,499 1,361,974 176,674 214,715,103 444,846,027 52,650,376 6,140,659 718,848 5 per cents 73,911,696 7,796,400 7,796,400 61,060,921 5,054,375 504,355,910 24,378,804 479,977,106 66,115,296 93,825,249 572,000 812,013,135 1,961,582 94,397,249 142,000 142,000 Total. 810,051,553 68,930,250 7,502,633 895,522 887,379,958 210,461,356 10,653,499 1,361,974 176,674 93,683,249 572,000 ,66,115,296 Reduced to 3 per cents British, (deducting capital transferred for land tax,) Irish, - Imperial, - . . - - Portuguese, .... 94,255,249 94,255,249 658,020,531 60,342,876 6,140,659 718,848 725,222,914 222,653,503 599,590,197 58,276,751 6,140,659 718,848 664,726,455 24,378,804 640,347,651 Reduced to 5 per cents 394,812,318 36,205,725 3,684,395 431,309 435,133,747 102 INQ,UIRy CONCERNING THE And the charge for interest, annuities and management, is as follows : Interest. Annuities Manage- ment. Total. On British debt, - Deduct from interest and ma- nagement, and add to annui- ties, for stock converted. 26,925,472 — 58,847 1,206,174 -i-135,673 294,672 — 667 28,426,318 -t- 76,159 On Irish debt. On Imperial debt, On Portuguese debt, 26,866,625 2,129,891 225,079 26,865 1,341,847 104,083 230,000 294,005 24,132 4,505 304 28,502,477 2,258,106 459,584 27,169 29,248,460 1,675,930 322,946 31,247,336 Of which redeemed by sinking funds. British, - Irish, ... Imperial, - . - Portuguese, - 6,394,644 319,605 40,859 5,300 1 71,556 3,622 463 60 6,466,200 323,227 41,322 5,360 6,760,408 75,701 6,836,109 Semaining unredeemed by- sinking funds. British, - - - Irish, - - . Imperial, - . - Portuguese, - 20,471,981 1,810,286 184,220 21,565 1,341,847 104,083 230,000 222,449 20,510 4,042 244 22,036,277 1,934,879 418,262 21,809 Transferred for land tax, - 22,488,052 731,364 1,675,930 247,245 8,295 24,411,227 739,659 21,756,688 1,675,930 238,950 23,671,568 Such is the extent of the funded debt, due, or guaran- teed by Britain, and the annual charge attending the same. It cannot now be doubted that the Imperial and Portuguese debt are as much a charge upon Britain as any part of its proper debt ; and suspicions may be en- tertained that the Irish debt payable in Britain, or per- haps the whole Irish debt, will terminate in tlie same manner. In regard to tliis, it is premature at present to form a decided opinion. BRITISH NATIONAL DEBT. 103 SECTION III. Uiifunded Debt There is always a large sum, besides the funded debt, due by the British government. This may arise from any national expense for which no provision has been made, or the provision has proved insufficient, or not forthcoming at the time wanted. The forms of the un- funded debt are vai'ious 5 but the following are the prin- cipal branches. I. Exchequer Bills. These are issued from the exchequer, in consequence of acts of parliament, several of which are passed every session. The first were issued in 1696, to the am.ount of L.2,700,000, and being intend- ed as a temporary substitute for money during the i"e- coinage at that period, some of them were then so low as L.lo, and L.5. There are none issued now under L.lOO, and many of them are for L.500, L.IOOO, and still larger sums. Most of them bear interest, generally at the rate of from 3d. to 3^d. per day for L.lOO ; and being distributed among those who are willing to ad- vance their value, they form a kind of circulating me- dium. After a certain time, they are received in payment of taxes, or other monies due to government 5 and the interest due on them at the time is allowed m the payment. They cease to bear interest so long as they are in the hands of the revenue collectors, or othei- public officei's ; but the interest re-commences when they are issued again to the public. The Bank of England often engages to receive them to a certain extent, and thereby promotes their circulation ^ and the daily trans- actions between the bank and the exchequer are chiefly 104 INQ,UIRY CONCERNING THE carried on by bills of L.IOOO, deposited in the exchequer by the bank, to the amount of the sums received by them on account of government. These bills are sometimes granted on the credit of the supplies for the present year ; and in this way the pro- duce of the annual taxes is generally anticipated. Some- times they are charged on the supplies of the following year, and a large sum is generally authorised to be raised on them in time of war, to answer exigencies, by an act, proceeding upon what is called a vote of credit, passed near the conclusion of each session of parliament. New exchequer bills are frequently issued in discharge of former ones ; and they are often converted into fund- ed debt, by granting capital in some of the stocks, on certain terms, to such holders as are willing to accept them. — The operations of this kind since 1791, have been already detailed. II. Navy Bills. These are issued from the navy office, to answer any purpose in that important branch of national expenditure ; and they bear interest after a certain date, if not discharged. A practice had long pre- vailed, when the number of seamen for the ser^ ice of the year was voted, to grant a sum estimated at the rate of L.4 per month for each man, allowing 13 months to the year, for the whole naval expense ; wages, victual- ling, wear of shipping, and ordnance, included. In consequence of the deterioration of the value of money, this allowance became insufficient ; and navy bills, to a large amount, were issued to supply the deficiency ; and these were often funded afterwards in the same manner as exchequer bills. Since 1797, this practice has been discontinued ; and sums, considered as adequate in the present circumstances, voted at once for the service of the navy ; since which, the amount of the navy bills has BRITISH NATIONAL DEBT. 105 not been so great as formerly ; and they have been paid from the money granted for the navy, without recurring to the system of funding. The are now made out at 90 days date, and bear interest at 3 Ml. per day for L.lOO, and are negotiated as bills of exchange. III. Ordnance Bills, or Debentures, are issued in like manner from the ordnance office, for supplying the exigencies in that branch of expenditure. Victualling and transport bills are issued from the respective offices in the same manner. There is also always a large amount of floating debt at the navy, victualling, transport, and ordnance offices, for which no bills have been issued. Table VII exhibits the amount of exchequer bills, navy bills, and ordnance bills, and other debts at these offices, and the whole amount of unfunded debt, in these three branches, on the 5th January of each year, from 1793 to 1813 5 ^Iso the increase or decrease during the preceding year. The fluctuation of the unfunded debt explains in part the cause of the great inequality of the addition to the funded debt, and must be taken into con- sideration along with the increase of the funded debt, after reducing both to the same rate of interest, in or- der to form a judgment of the whole increase of the public debt in any year.* A new kind of debt has originated in the financial arrangemenls of the present year. The holders of ex- chequer bills proposed to be funded, and who were will- ing to contribute a further sum, payable by instalments, to the extent of oiie half of the bills funded, on the terms proposed, received assignable debentures bearing inter- est at 5 per cent, and payable half yearly at the same * See Note XXIV. 15 106 INQ,UIIIY CONCERNING THE terms as the three per cent, reduced stock ; the holders of which are entitled to demand payment in money, on the 5th April 1815, or the 5th April of any succeeding year, upon three months previous notice ; or, in place of money, to receive for each L.lOO in said dehentures, L.lOO in the 5 per cent, cons., L.120 in the 4 per cent, cons., or L.150 in the 3 per cent, reduced, in option of the holder. The sum raised in this manner was L.800,000.* Besides the three principal branches of the unfunded debt, there are always a number of demands on the public, for bills accepted by the treasury ; army charges, and miscellaneous services of various kinds. These are daily fluctuating, and their amount at any particular time cannot be easily ascertained. The amount of these debts on the 5th January 1813, and the two preceding years, together with the whole amoimt of the unfunded debt as reported to parliament these years, and the annual increase, are subjoined to the Table. The amount of the three great 'branches, 5th January 1813, was .... L.54,055,632 Miscellaneous articles, - - - 3,783,064 Amount reported to parliament, - L.57, 838,696 Increase of unfunded debt in 1812, - L.3,800,637 To these sums a large addition may be made, for de- mands due by the public, not brought to account. The outstanding taxes, due to the public, may be placed against the unfunded debt. The only article of this sort deserving notice, is the property tax, on which there is a large ai-rear. It has amounted for some years past to about eight millions; but measures are now adopted for its readier collection, * Resolution, House of Commons, proposed 8th July 1713. H. BRITISH NATIONAX DEBT. 10? The imprest monies, or sums in tlie hands of the treasurers of the army and navy, and other public ac- countants, and which, so far as not expended, are re- funded to the public at clearance, may also be stated against the unfunded debt. The amount of these cannot be ascertained. The unfunded debt of Ireland improvided for, on the 5th January 1813, consisted of Irish currency. Exchequer bills at 5 per cent. - - L.2,508,940 Sum due to Britain on account, - - 2,820,409 L.5,329,349 POSTSCRIPT. Additions to the funded debt, Session 1812—13. 0. Exchequer bills funded, amount - - L.12,000,000 Sum funded at L.115. 10s. in 5 per cent, cons, L.13,860,000 Interest at 5 per cent. .... L.693,000 Management, supposed at L.300, . - . 4,158 Total charge, ..... L.697,158 P. Exchequer bills funded, amount - - 1:5,755,700 Sum funded at L.139 in 4 per cents. - - L.5,220,423 Interest at 4 per cent. . - - L.208,816 Management at L.300, .... 1,566 Total charge, .... L.210,382 i08 INQ,UIRY CONCERNING THE Q. Joint loan for Britain and Ireland, funded at L.llO in the 3 per cent, reduced; L.60 in the 3 per cent, cons.; and a long annuity of 8s. 6d. for 46 J years. Sums raised, Sums funded in 3 per cent, reduced and in 3 per cent. cons. Total funded, - - - Interest, Long annuities, ... Management at L.300, Britain. Ireland. Total. 21,000,000 6,000,000 27,000,000 23,100,000 12,600,000 6,600,000 3,600,000 29,700,000 16,200,000 35,700,000 10,200,000|45,900,000 1,071,000 89,250 306,000 1,377,000 25,500| 114,750 1,160,250 12,878 331,500 1,491,750 1,173,128 The amount money raised for Britain, in Session 1812 — 13, in- cluding exchequer bills funded, is - ' - L.36,755,700 The capital funded in 5 per cents, in 4 per cents, in 3 per cents. Amount funded, - - - Interest, Long annuities. Management, L.13,860,000 5,220,423 35,700,000 L.54,780,423 L.1,972,816 89,250 18,602 Total charge, exclusive of sinking fund. L.2,080,668 PART III. EXAMINATION OF PLANS FOR THE REDEMPTION OF THE NATIONAL DEBT, AND OTHER FINANCIAL OPERATIONS. SECTION I. Examination of Dr. Price^s Views of Finance. Dr. Price's views of the national debt were first announced in his Treatise on Reversionary Annuities, in the year 1771 ; and more fully unfolded in an appeal to the public on that subject, published the following year, and in some subsequent publications. His plan for the redemption of the national debt, is the application of a certain sum of money annually, set apart from the rest of our annual revenue, and appio- priated for the purchase of stock at the current prices ; the interest of the part of the debt thus redeemed being always added to the original sum, to increase the opera- tion of the fund. This system to be inviolably followed, in time of war as well as in time of peace ; and money, when wanted, to be raised by new loans, as if no such fund existed. To secure the steady execution of this plan, the management of the fund to be committed to special commissioners ; acting under penalties in such a man- ner as would take it out of the liands of the treasury, and form a check upon the House of Commons itself. 110 INQ,IJIRY CONCERKTING THE The efficacy of this plan depends upon the operation of compound interest, which he considers as omnipotent. Money, he says, hearing compound interest, increases at first slowly ; hut the rate being continually accele- rated, it becomes in time so rapid as to mock all the powers of imagination. He proceeds to illustrate and enforce his plan in the following manner. There are three ways in which a nation may apply a sinking fund : 1st, The interests disengaged by it from time to time may be applied in payment of the public debt. 2d, They may be applied to current services. 3d, They may be immediately annihilated by abolish- ing the taxes charged with them. In the first way of employing a sinking fund, it always increases, and that with a force which is continually ac- celerated ; and wliich, therefore, however small at first, becomes at length equal to any effect. In the second way, it admits of no increase; because it always acts with the same force. In the first way it resembles a grain of corn sown, and the produce sown again, and so on ; which will soon afford an increase sufficient to support a kingdom. In the second way, it resembles a seed the produce of which is consumed. What has been said of the second way, is true in a higher degree of the third. A fund of the first sort is money bearing com- pound interest ; a fund of the second sort is money bearing simple interest ; and a fund of the third sort is money bearing no interest at all. In illustration of this, the Doctor, supposes an annual sum of L.200,000, set aside as a fund for keeping the debt, which the nation is continually incurring^ in a state of redemption. If applied the first way, a debt of BRITISH NATION All DEBT. Ill L.200,000 IS discharged the first year, which, supposing interest at five per cent., disengages an annuity of L.] 0,000. If this annuity, instead of being spent on ser- vices, is added to the fund, and both employed in paying debts, an annuity of L.l 0,500 will be disengaged the second year, or L.20,500 in both years. Computing in this manner, the amount of annuities disengaged in- creases faster each succeeding year, and in 86 yeare, becomes L.l 3,083,000, which being added to the origi- nal sinking fund, amounts to L.l 3,283,000. The full value, therefore, of an annuity of L.l 3,083,000, will have been paid off in eighty-six yeai-s, that is, nearly 26£ millions of debt, and consequently, though the state had beeen adding three millions to its debt every year, or 258 millions altogether, it would have been more than discharged, and that at no greater expense than the annual saving of L.200,000. In the second way, the sum of annuities disengaged by it would have been eighty-six times L.l 0,000, or L.860,000, and the discharged debt would have been L.17,200,000; but besides this, there would be a debt saved, in consequence of applying every year the dis- engaged annuities to current services ; for which, otherwise, equivalent sums must have been borrowed. L.l 0,000 will be saved at the beginning of the second year : L.20,000 at the beginning of the tliird year ; and L.850,000 at the beginning of the eighty -sixth year; and altogether, L.36,550,000, which, added to the L.17,200,000 of debt discharged, makes the advantage to the public from this plan in eighty-six years, L.53,750,000 ; and as it was 262 millions by the first one, the difference to the public in its favour, is L.208,250,000. In the third way, the whole advantage derived from 112 INCttJIRY CONCERNING THE it, is the discharge of a debt of L.200,000 annually, or L. 17,200,000 in all. Such is the substance of Dr. Price's views. He goes on to illustrate them by other suppositions, which, as his method of arguing is the same, it is unnecessary to recapitulate. His work is written in a very intempe- rate style, and contains, among others, the following as- sertions : 1st, That no benefit is derived from applying a fund in the second of the above-mentioned ways, rather than the first. In both cases, the taxes are continued during the operation of the fund, and the national burdens are the same. The difference in favour of the former, al- ready stated, is gained without any kind of loss or expense. By following the latter, we subject the nation to a loss of 208 millions, from a circumstance absolutely frivolous. 2d, War would increase the efiicacy of the sinking fund ; and any suspension of it then would be the mad- ness of giving it a mortal blow, at the very time it was making the quickest progress. 3d, A state may, without difficulty, redeem its debts by borrowing money at an equal, or even a higher inte- rest than the funds bear, and witliout providing any other funds than such small ones as are necessary to pay the interest of the sums borrowed. In private life, such a measure would be justly deemed absurd. But, in a state, it would be the effect of the soundest policy. It is borrowing money at simple interest, in order to improve it at compound interest. 4th, The sinking fund proposed would render it of little or no consequence what interest a nation paid for its loans. Reduction of interest has not been attended with the advantages commonly imagined, and, as hitherto managed, has only been an expedient to postpone public bankruptcy, by lessening the possibility of avoiding it. BRITISH NATIONAL DEBT. 113 The arguments already adduced in support of our twelfth general proposition, are perhaps sufficient to point out the judgment which ought to be formed of this plan, and of these assertions : for several reasons, howe^'er, they demand a more particular discussion. 1st, The excellent character and high reputation of the author. A pious divine, — a respectable scholar, — an expert calculator, — a vii'tuous man, — and an upright patriot.* 2d, The effects which his plan has produced upon our system of national finance. It lias not shared the com- mon fate of the projects of private individuals, and vanished in neglect and oblivion. It is the basis of Mr. Pitt's sinking fund, adopted fifteen years after its first publication, and now followed out for twenty-seven yearsj and although with some deviations, yet on tlie whole, with a steadiness seldom experienced in public measures for so great a length of time, and under a succession of different administrations. It will be proper, before proceeding, to state distinctly the points in which all agree, and the points at issue. It is universally admitted, that every productive addi- tional taxation tends to prevent the progress of the na- tional debt, if it be in a state of accumulation ; and to accelerate its discharge, if it be in a state of redemption. That every increase of expenditure, whether arising from necessity or profusion, tends to increase its accu- mulation, or retard its discharge. That any sum of money, however small, improved by compound interest, will amount, in length of time, to an indefinite magnitude | and therefore, • We respect highly the integrity of the man, and believe that in all his writings, he was actuated by the purest motives for the pub- Kc welfare ; but we do not mean to iusinuate any opinion i# regard to his principles of civil liberty. 16 114 INQ,riIlY CONCERNING THE That any sui^plus of national revenue above national expenditure, will be sufficient, if it continue for a long^ time, and be faithfully applied, to discharge any national debt, however great. The doctiine maintained by Dr. Price is, that the formation and inviolable appropriation of a sinking fund, operating by compound interest, in tvar as well as in peace, is a measure of the utmost consequence, and that the effects of this system are greatly superior to those of any other application of a surplus, the expenditure and taxation being equal. That this is his opinion, appears from the passages above quoted, and many others to the same purpose. His work means this, or it means nothing : for it was never called in question that saving of expenditure, or increase of taxation, have a powerful effect on the state of national finance. In opposition to Dr. Price's doctrine, it is maintained, that the separation of a sinking fund from the general revenue, is a measui'e of no efficacy whatever ; — that the first and second methods of applying a surplus above- mentioned, are merely different modes of official arrange- ment, leading to the same result ; — that in time of war, \yhen the expenditure exceeds the revenue, the preser- vation of the sinking fund, and consequent increase of loans, is a system from which no advantage can arise 5 if it could be conducted without expense, it would be nugatory ; as it is necessarily attended with expense, it is pernicious ; — that at the conclusion of a war, any sur- plus revenue, applied for the discharge of debt during the subsequent peace, operates by compound interest, during the continuance of peace : but the notion of uniting that period to another period of peace, or to a still longer period of alternate war and peace, in ordec to obtain the powerful effect of compound interest acting for a great length of time, is illusory. BRITISH NATIONAL DEBT. 115 We return to the case supposed by Dr. Price, above mentioned, and compare the eifects of the first and second methods of applying the surplus, either in time of peace or war. In time of peace, when the second method is followed, L. 10,000, being the interest of the debt discharged the fii'st year, is applied to the current services of the second year ; L.20,000, the third year ; and these sums are supposed requisite to complete what the service of each year requires ; and, as Dr. Price observes, they must have been borrowed, if the first method had been followed. If loans be made for this purpose, either taxes must be imposed for the payment of the interest, or the sums borrowed accumulate by compound interest. In the former case, the nation is subjected to the burden of taxes for payment of the interest of L. 10.000 the first yearj of L.20,000 more, or L.30,000 altogether, the second year ; and of L.36,550,000 the eighty-sixth year ; none of which would have been imposed according to the second method. It is this gradually increasing, and idtimately large additional taxation, that occasions the difference of L.208,250,000 stated by Dr. Price, as the loss arising from the second method. If the same taxes be imposed when the second method is followed, their produce is not wanted for the services of the year, and must accumulate at the end of the period to the above- mentioned sum in favour of the public. If taxes be not imposed to pay the interest of these loans, then to the L.20,000 borrowed the second year, there must must be added a sum sufficient to pay the interest of the loan of tlie former year ; and, in like manner, a sum must be borrowed each succeeding year, equal to the interest of all the former loans, by which means the amount of these loans would accumulate by compound interest against the public. 116 IH^UIBY CONCERNING THE The disengaged annuities under the second method, may be dissipated by profusion, and tlien there will be a difference between the methods equal to what Dr. Price states ; but it is the profusion, and not the mode of application, that is the cause of tliat difference. They may be applied to the construction of canals, harbours, and other objects of national utility ; and the benefits accruing from these to the public, may repay the ex- pense of their execution, or otherwise ; but the propriety of this mode of application of surplus revenue, does not belong to our present inquiry. In war, let us adopt Dr. Price's supposition of three millions being required annually in addition to the sums raised within the year, and of continuing the application of L.£00,000 as a sinking fund ; which sum is compre^ hended in the loan of three millions. The debt con- tracted in three years, is nine millions ; and the addi- tional taxes for payment of interest at five per cent, come to L.450,000. The national debt redeemed by a sinking fund of L.200,000, operating by compound inte- rest in three years, is L.630,500, and therefore the addi- tional unredeemed debt is L.8,369,500. If no sinking fund be continued during the war, a loan of L.2,800,000 only will be required the first year, the interest of which is L.140,000. But the taxes imposed that year amount to L. 150,000, (for we suppose the ex- tent of taxation in both methods equal,) therefore there is a surplus of L.10,000 applicable to the service of the second year. The loan required for the second year will therefore be L.2,790,000 ; the two loans together, L.5,590,000 ; and the interest upon them L.279,500. The additional taxes imposed the two first years amount to L.300,000, leaving a surplus of L.20,500 applicable to the service of the third year. The loan required the third, iB therefore L.2j7r9,500, and the amount of tlie three loans BRITISH NATIONAL DEBT. 117 L.8,369,500, exactly the same as the unredeemed debt when a sinking fund is continued ; and it is obvious tlie same equality will hold for any number of years. When Dr. Price says that a debt of 258 millions might be discharged in eighty-six years, at no greater expense than an annual saving of L.200,000, he overlooks the taxes imposed year after year, for the payment of in- terest; a great part of which would not have been needed, if that annual sum had not been separated from the public revenue. The reasoning used above is equally applicable to any other supposition of war ex- penditure, whatever be the annual deficiency, whether uniform or varying, — whether continued for three, or thirty, or a hundred years, still the taxation and ex- penditure of each year being the same, the finances of the nation will be found in the same condition at the end of the period, whether the sinking fund be pre- served inviolate, or entirely laid aside. If no sinking fund be kept up for thirty years, a little alteration of the arrangement of public accounts would bring them exactly to the same state as if it had been uniformly adhered to ; and conversely, the present form of our financial accounts arising from a sinking fund, may be brought by a like alteration of arrangement, to the form in which they would have stood, if no sinking fund had ever been thought of. It is impossible that a mere change of order in the public accounts, capable of being reversed at any time, can be attended with advan- tage to the public. At the termination of a war, the nation remains charged with a certain debt, and it possesses, or ought to possess, a certain surplus revenue. The efficacy of this surplus to discharge the debt, depends upon its pro- portion to the debt, and the length of time during which it is applied to that purpose, and upon these alone. It 118 1NQ,UIRY CONCERNING THE operates by compound interest : but the manner in which the debt was contracted, or the surplus obtained, have no relation to the progress and period of its discharge. It is of no avail that a sinking fund had been operating by compound interest during a former peace. When war breaks out again, the operation of compound interest is at an end. In place of continuing to discharge debt, an additional debt is contracted. When peace returns, the operation of discharge re-commences from a new basis, according to the state of finance at the time. The public debt is certainly increased ; — ^the proportion of surplus revenue to that debt, and therefore the time requisite for its complete discharge, may be greater or less than at the former peace ; but the two periods of peace cannot be united to obtain a powerful effect from the long con- tinuance of compound interest. The doctor's plan for discharging the national debt by borrowing money at simple interest, in order to im- prove it at compound interest, is, we apprehend, com- pletely delusive. He admits the absurdity of such a measure in private life, — and its absurdity in national finance is exactly the same. Tlie cases differ only in extent of sum, and duration of time, which nowise alter the general tendency of the measure. Suppose a million borrowed for this purpose, and assigned to commissioners for the redemption of the national debt, in whose hands it operates by compound interest. The interest of this loan is L.50,000, which must either be provided for by some additional tax, or saved by some measure of public economy j or if neither of these be adopted, an additional loan must be made next year to pay the interest. In the former case, it is the tax or the economy, and not the operation described, that bene- fits the revenue ; and they would have produced the same effect by affording an additional surplus improved BRITISH NATIONAX DEBT. 119 at compound interest, mthoiit any loan. In the latter case, an additional sum of L. 50,000 is borrowed the second year ; and a sum equal to the interest of both loans, or L. 102,5005 the third year; and thus the debt accumulates by compound interest against the public exactly to the same extent that the money vested in the hands of the commissioners accumulates in its favour. Dr. Price's assertion, that it is of little consequence what interest a nation pays for its loans, is untenable. In time of war, additional interest must be met by addi- tional taxes, or accumulate by compound interest against tlic public. In time of peace, reduction of interest pro- duces or increases a suiijIus, upon the application of which the redemption of national debt entirely depends. The doctor remarks, that a debt bearing a high rate of interest, with a sinking fund attached, is redeemed in less time than the same debt with the same sinking fund at a low rate of interest; and he considers this circumstance as a recompense for the burden of the high interest. He overlooks that as a much larger sum is annually raised from the public when the interest is high, a great part of this additional burden being paid to the national creditors, is entirely lost to the public ; and a part only being added to the sinking fund as the redemption of the debt advances, accelerates tiie course of its discharge. A debt of ten millions, bearing in- terest at six per cent, is redeemed by a sinking fund of L. 100,000? in about 33^ years. If the rate of interest be only 3 per cent, it will require 47 years : but in the former case, the annual burden on the public is L.700,000, and the whole burden L.23,4 50,000 5 and in the latter case, the annual burden is L.400,000, and the whole burden L. 18,800,000. If the sum of L.700,000 had been raised annually while the debt bore interest at three per cent, it would have been discharged in 19 years for 120 INQUIRY CONCERNING THE L. 13,300,000. Or if L.477,000 had been raised an- nually, it would have been discharged in 3 3 ^y ears, for 15,979,500. Dr. Price supposes the case of a state burdened with debt, bearing five millions of interest, and able, by its utmost exertions, to raise a million more as a sinking fund. " This, if the debts bear interest at 6 per cent, will pay off three-fifths of them in twenty -three years, and the state may be saved ; but if the interest be no more than 3 per cent, it will not give the same relief in less than double that time, and a public bankruptcy may prove unavoidable."* He does not mention that, in the former case, the debt supposed to exist, and to be discharged, is L83,S3S,333, and in the latter case, L. 166,666,666. The same national exigencies must have required the contraction of an equal debt. What he proves is only that a debt of half the amount, but bearing interest at a double rate, will be discharged in less time by the same sinking fund. Dr. Price, in comparing the different ways of apply- ing the disengaged annuities, says, that if they be not applied the first way, they might, for aught he knows, be best employed in the last way, tliat is, in the aboli- tion of taxes ; for a kingdom will then be sure of re- ceiving some relief. We have endeavoured to evince that the first and second methods are the same in sub- stance, and differ only in form. We esteem them greatly superior to the third. It is by continuing the taxes, and thus supporting the surplus during a period of peace> that any tiling effectual can be done for discharging the national debt. Dr. Price communicated to Mr. Pitt, in 1786, three plans for the redemption of the national debt.f * Observations on Reversionary Annuities, 4th edit. vol. i. p. 189, I Morgan's Review of Dr. Price's writings on the Finances of Great Britain. BRITISH NATIONAL DEBT. 121 One of these. No. III. is the application of a million surplus, exactly the same as was adopted in the sinking fund cstahlished that year, which will be examined in the following section. Another, No. II. proposed that the siiiking fund should be raised from a million to L.l,6oO,000, by addi- tional taxes imposed at the following periods. P^irst year, - - - - L. 60,000 Second year, . - - . 180,000 Third year, . - - - 120,000 Fourth year, - . . _ 120,000 Fifth year, . - - . 120,000 L.600,000 This plan is more efficacious than the former, as the sum appropriated is greater ; but of the same general tendency. In the other plan. No. I. it is proposed to impose the same additional taxes, but apply tlicir produce as fol- lows : — A part of the three per cent, stocks to be con- verted into four per cents., and the additional interest to be paid by these taxes. The holders of the three per cent, stock converted to advance an adequate sum for tlie increase of interest, and this sum to be applied in addition to the million for the redemption of the national debt. We entirely agree w ith Dr. Price in the disadvantage of borrowing at a low rate of interest, with an increase of nominal capital ; and the last mentioned plan, so far as it tends to counteract that system, appears beneficial. The doctor, in a subsequent publication,* presu- * Preface to the third edition of Observations on Reversionary Anmiities, p. 14, 8;c. This article is omitted in the folIo\ying edition, 17 122, lNq,VIRY CONCERNlTirG THE jning that the sinking fund would strenghten tlie public credit, and raise the three per cents, considerably above par in intervals of peace, lays down a plan, founded upon that supposition, for reducing the national debt. Instead of a reduction of interest, which, he says, would retard the extinction of the public debt, he proposes a reduction of capital ; and, supposing the three per cents, at 110, he assumes, that the public creditors would agree to have their capital reduced from L.lOO to L.80, if secured of the present interest for fifteen years. At the end of that period, the reduced capital, bearing interest at 3| per cent, would sell much above par, and a similar operation might be repeated upon terms still more ad- vantageous, and by this scheme, the operation of com- pound interest itself would be aided. Admitting the price of stocks, and consent of the creditors, as supposed, this appears to us one of the best parts of the doctor's plans. The methods he pro- poses to improve the surplus value of the stock for the public emolument, is, perhaps, the most effective that could be taken. The advantages expected by Dr. Price and his friend, Mr. Morgan, from the execution of his plans, depend in a considerable degree upon the confidence which they suppose these measures would give in government security, and the rise of the price of stocks which that confidence would produce. All this is so hypothetical as to render a more minute examination of these plans, so far as they rest upon that expectation, unnecessary. Much has been said by Dr. Price and others, of the advantage which a sinking fund produces in supporting the price of stock. We apprehend it is incapable of producing any such effect. The price of stock, like that of any commodity, depends on tlic proportion of BRITISH NATIONAX DEBT. 123 supply and demand. Whatever sums are brought into the money market, and applied by the commissioners for the purchase of stock ; equal sums are withdrawn from the money market, by the additional loans re- quired to replace what is invested in the hands of the commissioners. Dr. Price justly observes,* that what- ever eifect borrowing every year has in sinking the funds, paying every year would have an equal contrary effect. He has not attended to the obvious consequence, that, if the payment be made by means of borrowing, it can produce no alteration in the price of the funds at all. He supposes ten millions borrowed every year to defray the expenses of war, nine millions only of which would have been wanted had not the surplus million been locked up ; and further, that this scheme, by keep- ing up public credit, and throwing money every year into the hands of the lendei-s, enables government to borrow at four instead of five percent, and thereby save L.50.000 of interest. He overlooks that the effect of throwing a million in the hands of the lenders, is com- pensated by demanding from them an additional million in the loan. The purchases made by the commissioners, no doubt, support the funds at a higher rate than they would stand, if there were no such purchasers in the field, and the loan for the year the same ; and this advance takes place at a time when a high price is disadvantageous to the public : but the additional loan which the sinking fund requires, must have as great an efiect in depressing the funds, and that depression takes place at a time when a low price is disadvantageous to the public. * Preface to third edition of Observ^ktionjj on Reversionary An- nuities. 124 lNQ,riRT CONCERNING THE SECTION II. Examination of Mr. Pittas Sinking Funds, The system of finance recommended by Dr. Price, is the same as that carried into excution under the ad- ministration of Mr. Pitt, and continued since. In the former section, we considered its merit and tendency on general principles. In this, we are to consider the ef- fects it has actually produced. The result of the foi-egoing reasoning is, that a sink- ing fund connected Avith an increasing debt, provided the loans be obtained on the same terms the debts were re- deemed, and the additional operations conducted witliout expense, is attended with no consequence, good or evil: but in every loan, the contractors have profit at the expense of the public ; and when the system of a sinking fund is followed, the public, besides expense, sustains a loss equal to the banns attending the additional loans. It is of importance to ascertain whether the nation has sustained a loss of this kind, and to what extent. If the fact be ascertained, it corroborates the fore- going reasoning ; if it be considerable, it leads us to inquire for what reason the system is persevered in. The whole sum raised by loans from 1793, (wlien the first loan was made after the establishment of the sink- ing fund) to 1st February 1813, after deducting the part of the loyalty loan repaid, is - L.322,358,532 And by funding exchequer and navy bills, 62,25 8, 1 73 L.384,616,705 And there was expended in that period, by the cominis- sionei-s for the redemption of British debt, L.133,536,83{3. BRITISH NATIONAI. DEBT. 125 During the whole of that period, the national debt annually increased ; the sums borrowed by loans, or otherwise, exceeding the debt redeemed. Now, if no system for redeeming the national debt had been adopted, the amount of taxes and expenses remaining the same, the requisite money raised by loans or funded bills would have been less by the last mentioned sum made over to, and expended by, the commissioners. The sum raised by loans or funded bills, as above, was, - - - - L.384,616,705 And the capital funded for these were. In the 3 per cents. - - L.461,719,310 In the 4 per cents. - - 36,107,321 In the 5 jjer cents. - - 75,955,255 L.573,781,886 And long annuities have been granted, at a medium for 60 years, - - - L.435,861 Now these may be reduced to 3 per cents, by allowing a capital in proportion to the rate of interest, which is the natural value, and, although there be some fluctua- tion in the market price, comes near enough to the actual value. Sum funded in 3 per cents. - L.461,719,310 Value of L.36,107,321 in 4 per cents. 48,143,095 of L.75,955,255 in 5 per cents. 126,592,091 Value of L.435,861 annuities for 60 years, at 18.9 years purchase, L. 823,773, in 5 per cents, and in 3 per cents. - 13,729,621 Whole value of funded capital and annui- ties, reduced to 3 per cents. = L.650,184,117 1£6 INQ,UIRY CONCERNING THE Now the capital redeemed by the commissioners R. N. D. for L.133,536,8S6, was, 202,522,956, 3 per cents, redeemed for 126,822,904 7,796,400, 4 per cents, redeemed for 6,586,934 142,000, 5 per cents, redeemed for 126,998 L.210,46l,356 L.1S3,536,836 And the capital redeemed, reduced to 3 per cent, is, L.202,522,956 L.7,796,400 — 4 per cents. - 10,395,200 142,000 — 5 per cents. - 236,666 L.213,154,822 Now as L.384,6 16,705 (the sum raised) is to L.650,184,117, (the capital required to be funded in the 3 per cents, in order to raise that sum) so isL.133,53o,836 (the sum delivered to, and expended by the commission- ers, R. N. D. and which might have been deducted from the loans, if no such commission had existed,) to L.225, 740,402, the sum which would have been saved from the funded capital, (3 per cents.) by lessening the loans. Debts contracted from 1793 to 1812, reduced to 3 per cents. - - - L.650,184,117 If no sinking fund had existed, it would have been less by - - L.22 5,74 0,402 And would have amounted only to L.424,443,715 From above sum of L.650,184,117 Deduct debt redeemed 213,154,822 Unredeemed debt, - - L.437,029,295 Loss to the public by the sinkinj fund, . .. - L.12,585,580 JS BRITISH NATIONAL DEBT. 127 But the present excess of national debt occasioned by the sinking fund is much higher. A portion of this loss has occurred each year for a period of twenty years; and the whole effect ought to be estimated by accumulated computation of interest. If the last mentioned sum be equally divided, the annual loss is L.629,279, and this, in twenty years, at compound interest, amounts to above twenty millions. Something, however, may be deducted from this statement, because the loss was not equally diffused througli the period ; the portions appertaining to the early part being considerably smaller. Neither has any thing been charged for the expense of the commission for the redemption of the public debt. This branch of public expense, indeed, has been very moderate; but its amount, with compound interest, ought to be added to the other loss, in order to asceitain the whole. We are next to examine that part of Mr. Pitt's plan Avhich attaches a sinking fund of one per cent, to the nominal capital of every loan, imposing taxes to that ex- tent beyond what are required for the payment of the interest. This plan was also suggested by Dr. Price.* Tliere is an inequality in the extent of this fund from its being applied to the nominal capital. If the loan be made in the 3 per cents, it amounts to i-60th of the sum borrowed. If it be made in the 5 per cents, to 1-lOOth. Like the other parts of the plan, it occasions a loss to the public by borrowing upon higher terms, in order to redeem a part of the debt upon lower ones. It is equally destitute of all real efficacy for the discharge of debt, un- der equal circumstances of taxation and expenditure. The ultimate effects of adherence to this system, dii - * Appeal to the Public, p. 40, 41. 128 INQUIRY CONCERNING THE ring a long period of continued warfare, remains to be ascertained. Suppose the annual deficiency to be sup- plied by loan is 1 1 millions : this funded in the 3 per cents, creates a capital of L. 18,333,333, the interest of which is L.550,000, and the sinking fund, L. 183,333. It is obvious that if no more taxes be imposed than are required to pay the interest, the annual deficiency of 1 1 millions remains the same. A loan to that extent must be made annually, and taxes imposed for the payment of the interest, and our debt, interest, and taxes, increase annually, by equal sums, without tlie most distant pros- pect of relief. But if taxes be imposed to a greater amount than the interest of the loan, the surplus fills up some part of the deficiency. On the foregoing supposition, L. 183,333 is deducted from the 11 millions, leaving a deficiency of L.10,816,666; and if an equal amount of taxes be imposed the second and each succeeding year, the part of the de- ficiency supplied will increase by compound interest; and in a course of years, the whole ll millions will be supplied, and no further loans or additional taxes will be needed, provided the expenditure remain the same as at the beginning of the period. Now, as an annuity of L.l, at five per cent, com- pound interest, amounts to L.60 in about twenty-nine 3'ears, that length of time is required before the defi- ciency of 11 millions be supplied. During that time, L.733,333 of additional taxes are imposed annually, or L.21,266,666 altogether. The result is, that if the na- tion, which cannot at present raise 1 1 millions more to equalize its taxes to its expenditure, shall increase them gradually for twenty-nine years, till the addition amount to 21 millions, the point of equalization will be obtained| or, to use the language of the sinking fund, the debt y BRITISH NATIONAL DEBT. 129 annually redeemed, will then become equal to the debt contracted. If the loan of 1 1 millions be made in a five per cent, fund, the sinking fund is L.l 10,000, which, added to the interest, gives an annual charge of L. 660,000. Upon this supposition, thirty-seven years are required before the deficiency is supplied ; and the additional taxes imposed, amount to L.24,420,000. A sinking fund of this kind is preferable in ultimate efficacy to one founded on the appropriation and accu- mulation of a fixed annual sum. It increases with the increase of the funded debt ; and, in a long time, will be equal to the dischai'ge of any debt, however great, provided the nation bear the taxes which it requires. An annual sum, esteemed large at first, is likely to be- come inadequate to the discharge of a debt which in- creases beyond expectation. A sinking fund of L.l, 200,000 would require forty-seven years and a half to fill up a deficiency of 11 millions; and the additional taxes im- posed, would amount to above 28 millions. We have stated the case of continued warfare, as being more simple in calculation. In the case of alter- nate war and peace, the periods would be different, but the relative merits of the different systems the same. But the chief point to be attended to is, that none of these plans, nor any possible plan, has any intrinsic power to discharge, or aid the discharge of our national burdens. An opinion prevails that the minister who in- stituted the sinking fund has put a powerful machine in action, which, although its first operations were feeble, has now become of great efficacy, and that the efficacy will continue to increase without any further exertion on our part, like the acceleration of falling bodies by the power of gravity, till it amount to an indefinite magni- tude, 18 130 IKtlUIRY CONCERNING THE Wlien a minister establishes a sinking fund connect- ed with a system of borrowing, he acknowledges the inability of the nation to bear at present the expense which his system of administration requires; and his plan, whatever it be, does no more than inform the pnb- lic, that if posterity be able and willing to raise such sums, by extended taxation, at certain periods wliich his plan points out, as will make np for our deficiencies, with interest, and furnish besides what is wanted for the exigencies and contests of their own time, the pub- lic debt which he contracts will then be discharged. That minister would have reason to doubt whether posterity would submit to all this. Yet, the plan of our sinking funds established in 1786 and 1792, have been adhered to with great steadiness, and our taxes raised to an amount beyond precedent or expectation. The sums anmially raised by taxes, since the com- mencement of the war, are as follows:* Year ending 5th January. 1793 L.17,656,418 1804 L.38,858,373 1794 17,170,400 1805 46,578,564 1795 17,308,811 1806 51,339,045 1796 17,858,454 1807 54,982,035 1797 18,737,760 1808 60,189,414 1798 20,654,650 1809 63,026,563 1799 50,202,915 1810 65,227,264 1800 35,229,968 1811 69,188,041 1801 33,896,464 1812 66,973,208 1802 35,415,096 1813 66,444,108 1803 37,240,213 From this statement it appears that the amount of our taxes, which was nearly stationary for some years after the commencement of the war, has increased progres- sively, (with one or two slight exceptions) since the year See Note XXV. BRITISH NATIONAL DEBT. 131 1795 ; that the increase was most rapid some years after the re-commencement of the war, when heavy war taxes were imposed, and that the present amonnt of taxes is about four times what it was at the commencement. The whole amount of taxes, upon the average of the three Ia,st years, after deductions, is about 65 millions; a sum more than sufficient to defray the expense of the war, enormous as it is ; but not sufficient to provide at the same time for the interest of debt formerly con- tracted. Our present national revenue would therefore have been sufficient to support, without limitation of time, the expense of the present war on the scale it is conducted, if the taxation during* former wai's, and the early period of the present one, had been equal to the expenditure. The cause of this is, not that certain sinking funds were established twenty or thirty years ago, but that we now submit to a taxation of 65 millions, and to the pri- vations occasioned thereby. The same amount of taxa- tion would have produced the same effiect, although none of these funds had ever been established. Convinced that the sinking fund has contributed noth- ing to the discharge of tlie public debt, and that it has occasioned a large addition to our public burdens, we next inquire, whether any and what advantages have been derived from it. The means, and the only means, of restraining the progress of national debt, are, saving of expenditure, and increase of revenue. Neitlicr of these have a neces- sary connectioii with a sinking fund : but if they have an eventual connection; and if tlie nation, impressed with a conviction of the importance of a system esta- blished by a popular minister, has, in order to adhere to it, adopted measures, either of frugality in expendi- ture, or exertion in raising taxes, which it would not 132 1NQ,UIRT CONCERNING THE otherwise have done, the sinking fund ought not to be considered as inefficient ; and its effects may be of great importance. We are not of opinion that the sinking fund has con- tributed in any degree to frugality in expenditure. The time during which it has operated, has not been a time of national frugality. Ministers have had the full power of raising what loans they pleased, to supply the means of any expenditure, however lavish ; and it will not be said they have used this power with a sparing hand. In regard to increase of taxes, we are of opinion that the sinking fund has had a real effect in calling forth exertions, which, although they might have been made as well and as effectually, would not have been made, unless to follow out the line which tliat system required. A loan is made, and the revenue is consider- ed as charged, not only with the interest, but a certain proportion of the principal, annually. Taxes are imposed to meet the one as well as the other. If the sinking fund had not been in view, it is likely taxes would have been imposed for the interest only. If the sinking fund could be conducted without loss to the public, it would not be wise to propose an alteration of a system which has gained the confidence of the pub- lic, and which points out a rule of taxation that has the advantage at least of being steady. If that rule be laid aside, our measures of taxation might become entirely loose: but if the sinking fund be attended with a heavy loss, it seems proper to inquire whether a plan might be followed that would deliver us from this loss, and at the same time carry on the necessary measure of increased taxation. The present propoi'tion of one per cent, on the nominal capital might be continued. If a loan of twenty millions be transacted in the 3 per cents, the sinking fund attached to it on the present system is L.333,333. SBITISH NATIONAI. DEBT, 133 Now taxes may be imposed to that extent, besides what are xequired for interest^ and that sum, instead of being made over to commissioners, may be deducted from the loan. Thus the nation would save the loss it at present sustains, of borrowing on lower, and paying on higher terms; and the imposition of L.333,333 additional taxes, which is the only measure of real efficacy, would be the same as before.* SECTION III. Examination of Lord Henry Petty' s Plan of Finance. We have already given an account of lord Henry Petty's plan of finance. It was proposed to parliament and the public, in the year 1807, accompanied with an elaborate set of tables. Being very complex, it was not generally understood. As it promised to raise the neces- sary loans with little or no increase of taxes, it was favourably received, and probably would have been continued for some years, if the ministry who brought it forward had remained in office. The scheme, as proposed, though sufficiently complex in itself, is blended with many circumstances extraneous to its general merit. Advantage is taken of the falling in of annuities at different periods, by the expiring of their term, and of the reduction of the rate of management, and of an expected surplus from the present sinking * See Note XXVI. 134 IN(tUIRY CONCERNING THE fund. The savings by annuities and management, must give the same relief to the national annual burdens, under any system of finance ; and if it be a beneficial measure to call in the aid of the surplus of the present sinking fund, when it attains a certain magnitude, the advantage resulting from it will be the same, with what- ever other measures it be connected. The proper way to judge of the new scheme, is to lay these extraneous circumstances aside ; to leave the old debt to combat with tlie sinking funds already provided for its redemp- tion, aided by any other means which existing circum- stances supply ; and to consider the operation of the new scheme, in regard to the new debt, contracted dui*- ing the time it is in force, compared with the effects of the continuance of the former system. This will I'ender our view of the subject simpler ; and if the new scheme will not bear the test of examination when applied in this manner, it will not bear it at all. The first point which presents itself to our view, is, that the sums proposed to be raised by new taxes, dur- ing the first years of the scheme, are much less than the interest of the debts contracted ; and therefore money must be borrowed, not only to supply the excess of the war expenditure above the sum raised within the year, but also to pay the interest of a great part of the loan, and thus subject the nation to the heavy and increasing expense of compound interest. The sums borrowed the first year were. On war taxes, - - - - L. 12,000,000 I5y supplementary loan, - - - 200,000 L.12,200,000 Carried forward. BRITISH NATIONAI. DEBT» 1S5 Brought forward, L.12,200,000 But there was applied to the redemption of the war tax loan from the mortgaged taxes, ... - 600,000 Nett loan, deducting part redeemed, L.11,600,000 The sum required to complete the expen- diture is - - - - 11,000,000 And the remainder applied to pay the interest of the war loan is - - L. 600,000 The only additional taxes imposed, are L.10,000 for interest of the supplementary loan, and L.3,333 for a sinking fund on the same ,• and as the former of these is appropriated, the latter only is to he stated against the interest of L.l 1,400,000, added to the funded debt, exclusive of the supplementary loan, of which only 11 millions were applied to the public service. In the second year, the sums proposed to be borrowed were, On war taxes, - - - L.12,000,000 By supplementary loan, - - 1,400,000 L.13,400,000 Of which applied to the redemption of war tax loans, by taxes mortgaged this and former year, - - - 1,200,000 Nett loan, deducting part redeemed, L.l 2,200,000 Sum required for expenditure, - 11,000,000 Remainder applied to pay the interest of the war loans for two years, - L. 1,200,000 136 1NQ,UIRY CONCERNING THE Against which there is to be stated. Sinking fund of supplementary loan of first year, \vith interest, - - L.3,500 Sinking fund of supplementary loan, second year, _ _ _ _ 23,333 Interest of war tax loan redeemed first year, 30,000 L.56,833 Leaving an additional interest, for which no taxes are laid on, of L.l, 143,667. If we trace the proposed operations of this scheme further, we will find that the same pernicious mode of borrowing, for payment of the interest as well as the principal, continues for a course of years, though at a rate gradually diminishing, because the interest on the loans annually raised on the credit of the war taxes, for which no new provision is made, becomes less, owing to the redemption of part of that debt ; and the interest on the supplementary loans, for which, together with a sinking fund, provision is made, increases, together with these loans themselves. In order to show what the progress andefiects of this system, if continued, would have been in a period of twenty years, unincumbered with extraneous matter. Table VIII is inserted in the Appendix, divided into several parts. Part I, relates to the loans on the war taxes ; Part II, relates to the supplementary loans ; and Part III, ex- hibits a general view of the effects of both loans com- bined. The debts contracted and redeemed, inserted in tliis table, are according to theii' real value. If invested in a three per cent, fund, as was proposed, the nominal sum BRITISH NATION AX DEBT. 137 will be greater, (supposing the three per cents, at 60,) in the proportion of five to three. By comparing the two last columns of Part III, it will appear how far the sums raised annually by taxes imposed since the commencement of the scheme, would fall short of the interest on additional debt contracted, for which taxes ought to have been provided. At the commencement, the difference is very great; and al- though they come near to an equality towards the end of the period, yet, taking in the whole, the difference is great. The necessary effect of this deficiency of taxa- tion, is to subject the public to the loss incurred by com- pound interest. Part IV is added to assist us in forming a judgment of the effects of this system compared with others. It exhibits the amount of debt existing, and taxes paid each year, for twenty years : first, upon the supposition of no sinking fund being established, and taxes imposed annually for the payment of the interest of the loans only ; secondly, upon the supposition of a sinking fund of 1-lOOth of the sum borrowed; thirdly, of a sinking fund of l-60th of the same. The first of these was the old system ; and, though not a good one, may be taken as a standard of comparison, whereby to judge of the merit of the others ; the second is, the present system, when the loan is made in a five per cent, fund at par | and the third, when it is made in a three per cent, finid. It appears from this table, that, at tlie end of fourteen years, the period at which the wliole war taxes are mortgaged, the amount of unredeemed debt, by lord Henry Petty's system, is L.202,784,803, and the amount of taxes paid duringthese fourteen years, is L.28,4 1 3,333. When no sinking fund is established, the amount of ex- isting debt at the same period is L. 154,000,000, and the taxes paid, L.57,750,000, The additional debt Gon= 19 138 IXQ,UIRY CONCERNING THE tracted by the former, is L.48,784,8C3, and the saving in taxes, L.29,336,666. The excess of the additional debt above the saving in taxes, is L. 19,44 8, 13 7. At the end of twenty years, the amount of unredeemed debt, by lord Henry Petty's system, is L.285,5 19,205, and the amount of taxes paid dui'ing these twenty years, is L.92,893,333. The amount of debt on the old system is 220 millions, and of taxes, 115 millions. The additional debt contracted by the former, is L.65,519,205 ; and the savin.g in taxes, L.22, 106,667 j the excess of additional debt above the saving in taxes, L.43,412,538. In the system where a sinking fund of 1-1 00th is es- tablished, the unredeemed debt at the end of fourteen years, is L.139,527,162; and the amount of taxes, L.69,300,000. The debt is less by L.14,472,838 than according to the old system ; and to obtain this saving, there is paid in additional taxes, L.l 1,55 0,000. The debt saved exceeds the additional taxes by L.2,922,838, At the end of twenty years, the unredeemed debt is L.187,617,650 ; the taxes, L.138,600,000. The saving in debt is L.32,382,350,- the additional taxes, L.23,600,000. The excess in the saving of debt above the additional taxes, L.8,782,350. In the system where a sinking fund of l-60th is esta- blished, the unredeemed debt at the end of fourteen years, is L.129,878,604, and the amount of taxes, 77,000,000. The debt is less by L.24,121,396, than according to the old system, and the additional taxes amount to L.l 9,250,000, and the debt saved exceeds the additional taxes by L.4,87 1,396. At the end of twenty years the unredeemed debt is L.l 66,029,4 17, and the amount of taxes, L.l 54,000,000. ThesaviugindebtisL.53,970,583; the additional taxes L.39,000,000 j- and the debt saved exceeds the additional taxes by L.14,970,583. Thus it appears that lord Henry Petty's system is by BRITISH NATIONAL DEBT. 139 far tlie worst, and in twenty years brings on an addi- tion of funded debt, (five per cents.) besides what is ap- plied to the public service, of - L.65,5 19,205 By the old system, the debt contracted, is equal to the sums applied to the public service. By the systems of a sinking fund of 1 -100th, the debt contracted is less than the sums applied to the public service, by - - - - 32,382,350 By the system of a sinking fund of l-6Gth, the debt contracted is less than the sums applied to the public service, by 55,970,583 The general result might liave been known without calculation. In lord Henry Petty's system, taxes are only imposed for a part of the interest of the loan, and in the first years only for a small part ; and the inte- rest not provided for, must accumulate in the manner of compound interest, to augment the capital debt. In the system where a sinking fund of 1-lOOth is established, a part of the loan is annually paid, and its interest of course cancelled ; and as taxes were imposed for the full interest, the part tiuis saved, operates in depressing the capital debt : and this effect takes place in a higher degree when a sinking fund of l-60th is established. In comparing the merit of different systems, the only points necessary to be attended to are, the amount of the loans contracted, — the part of these loans redeemed, — the interest incurred, — and the sums raised by taxes. The arrangement of the loans under different branches, and the appropriation of particular funds for payment of their respective interests, are matters of official regu- lation ; and the state of the public finance is neither the better nor the worse whether they be conducted one way 140 INQUIRY CONCERNING THE or other. A complicated system may pei-plex and mis- lead, but it can never ameliorate. It is frivolous to maintain that a part of the public debt is charged on the war taxes, and, being in a course of discharge, ought to be separated from the remainder, in forming an estimate of the whole. That part, as much as any other, is a burden on the nation. It must be discharged, if ever it be so, by taxes levied in future on the nation; and until it be paid, its interest must be provided for by such taxes ; otherwise compound inte- rest accumulates against tlie public. It is of no conse- quence whetlier these taxes be of the kind originally imposed under the name of war taxes, and afterwards rendered permanent, at least for a period, by such ap- propriation ; or new taxes of a different kind, imposed when the war taxes are discontinued.* As well might a land steward, when required by his employer to lay before him a state of his rents and debts, reply, that it was unnecessary to bring the whole into view at once ; that he had allocated a part of the rents of such a manor for the gradual discharge of a certain bonded debt, and those of another manor for the discharge of another bond ; that, if the remaining rents, after these defalcations, were insufficient to support his lordship's expenses, he could easily borrow what money might be wanted ; and if a growing deficiency should be the result of these operations, it might perhaps be made up at some future time, when the present leases on the estate expired, and the rents might rise. We have heard it maintained, that a system may be so constructed, that, although it does harm in the first years of its operation, the result, after a long continu- ance, will be beneficial. From its effects after a few * See Note XXVIL BRITISH NATIONAL DEBT. years, we may judge with certainty of its ultimate ten- dency. Suppose, after a trial of ten years, it has ren- dered the state of our national finance so many millions worse than it would have been under a different system, but after that period it takes a beneficial turn. Were this possible, it would be better to follow the measures of that other system for these ten years, and then commence, upon a better basis, the measures of the for- mer: but the supposition of a change of tendency is absurd. If it do harm in the beginning, it will do more harm the longer it is persevered in. We have stated the loss to the public by lord Henry Petty 's system in twenty years, at L.65,5 19,205, or, deducting the saving in taxes, at L.43,412,538 : but it may be justly estimated at a sum considerably higher. The above is the sum which the public must pay to the national creditors, or remain under the burden of, in addition to the sums raised by loan, and applied to the national service. It arises from the operation of com- pound interest against the public, and is incurred for the sake of postponing the payment of interest, which should commence when the debt is contracted, to a distant time: but besides this, another loss is incurred by the system of borrowing larger sums than are wanted, in order to maintain a sinking fund, the consequences of which were considered in the last section ; and a further loss is incurred by borrowing in a three per cent, fund dur- ing war, when the price is low, to be repaid during peace when the price is high, the consequences of which will be further considered in a following section. These two sources of loss, indeed, attach to other systems, where similar measures are followed, as well as to lord Henry Potty's ; but they take place in his system to a greater degree, because the measures from which they arise, are carried on to a greater extent. 142 INQUIRY CONCERNING THE I'he distinction of war tax loans and supplementary loans, is in itself entirely futUe j but occasion is taken from it to ascertain the portions of debt for which the interest shall be levied in taxes, and the portions, for the interest of which no provision shall be made at pre- sent. The proportion of these, like the scheme from which they arise. Is altogether arbitrary, and very irregular, — the taxes imposed in the early part of the system being much smaller than those imposed after- wards. After a continuance of twenty years, the sum raised in taxes within the year, is L.13,613,333, being L. 2,613,333 more tlian it would have been under the , old system, though less by L.662,627 than it ought to be, in order to cover the interest of the debt. This, and an additional capital of L.65,5 19,205, is incurred, for the sake of saving L.22,106,677 in taxes during these twenty years, chiefly in the early part of them. In the 16th and following years, the taxes raised within each year are greater than those required by the old system. SECTION IV. Mxainination of Mr. VansitfarVs Plan of Finance. I. This plan has been assailed as trenching on the sinking funds formerly established, and thereby dimin- ishing the security of the public creditors, to whom the national faith is pledged on the terms of these funds. It does not seem liable to any just censure upon this BKITISH NATIONAX DEBT. 143 ground. It is justly observed, that "the separation kept up for tlic purposes of account between the origi- nal sinking fund of 1786, and the additions subsequently made to it, is only nominal j it neither has been nor can be attended to in practice, because the whole of the debt contracted since the establishment of the sinking fund having becen borrowed upon the old stocks, and no dis- tinction made between the old and new proprietors, the whole debt is now considered as one indiscriminate mass, to which the purchases made by the sinking fund are equally applicable. No right of priority of redemption can exist in any particular class of stockholders, nor any conditions of repayment be claimed (except in the instance of the 5 per cent, loan of 1797) beyond those laid down in the act of 1792, under the faith of which all subsequent loans may be considered as contracted. By that act, provision is made for the redemption, within forty-five years, of all the debts subsequently created ; and witliin this limit, parliament has the power to regu- late the mode of redemption at its discretion."* The advantages given to the public creditors by the regulations of Mr. Vansittart's plan, appear to place them in a situation equally favourable to that which they held under the enactments of 1792. After all, the security of the public creditors is not so much affected by any regulations adopted in the management of our finance, as by the magnitude and increase of the national debt. If tlie amount of the loans be greater than what the capitalists can easily supply, the consequence is a depression of the funds j and this, at the same time that it occasions tlie lo3,ns to be contracted on unfavourable terms, induces a loss upon those stockholders who are obliged to sell. The * Outlines of a Plan of Finance, 1813, pages 6 and 7 144 INQUIRY CONCERNING THE largeness of our late loans, and the high amount of funded capital, are the real causes of the depression of the funds ; and no security ever was or could be given to the public creditors, at tlie contraction of any loan, that could limit the contraction of such debts in future as the exigencies of the times might require ; and if the amount of debt seem to approacli to its utmost limit, while the public expense is still increasing, the dread of a national bankruptcy will depress the funds in a still liigher degree. A private creditor attends to the amount of the debts, and the comparative state of the income and expenses of his debtor. If he finds liis debts increasing beyond the measure of his estate, his alarms will be excited, and they will not be much relieved by any detail of the arrangement of his affairs which the steward may com- municate to him. II. It is observed, that " nothing more can be ex- pected in a permanent war system than to provide for such a scale of expense as must necessarily arise out of the war, without including that great increase which has been occasioned by our extraordinary exertions abroad in the four last years, — wliich must be consi- dered as only of an occasional nature, — ^that the equali- zation of the public income and expenditure may be considered as a primary advantage of the sinking fund ; and this object, so far as is requisite to meet that part of the expenses of the war, which may be considered as necessarily permanent, appears to have been already accomplished."* The doctrine here laid down cannot be admitted with- out considerable allowances. If the situation of a nation, • Outlines 1813, pages 4 and 5. BRITISH NATIONAL DEBT. 145 as connected with surrounding nations, and the system of conduct ohserved toward them, be such as to promise alternate periods of war and peace at no long intervals, the proportion of revenue and expenditure may be regu- lated with a view to such a prospect. When there is a probability of a long continued war, (and tbe outlines appear to be drawn with a view to that case) the public revenue must be raised to the average of war expendi- ture, in order to prevent the risk of our finances being overwhelmed. If, during the continuance of war, the expense of one year, or a few years, should, from special circumstances not likely to recur, much exceed the average war expenditure, it is consistent witli safety, and proper, tliat the revenue should equal tlie average expenditure, and not tlie increased expenditure of these years. There is the .same reason for this, as for regu- lating the revenue under a system of alternate peace and war, to the average expenditure of a period which comprehends both. So far the doctrine is admitted : but the application to existing circumstances should be made w itli caution. We ought to inquire what reason there is to believe, on tbe supposition of the continuance of the present war, that the expense of the following years will be less than that of the present and immediately j)receding ones. Shall we have fewer enemies ? Do we propose to carry on our operations, by sea or land, on a less extensive scale ? Can we support our armies and navy, or defray any branch of public expenditure, at a lower, or even an equal sum, as we did some years ago? Have we fewer foreign possessions to defend ? Shall we be less lavish in bestowing subsidies at every quarter ? We have often flattered ourselves, during this war, that our expensive exertions would not be of long continuance, and these hopes have been uniformly disappointed. If 20 146 irrctuiRY concerning the our present prospects be not more favourable, our measures should be regulated accordingly. III. No observation is juster, or of more importance, than that already quoted from the outlines, of consider- ing the whole public debt as one indiscriminate mass. We have had occasion to enlarge on this point in former parts of the present inquiry. By the system of fritter- ing down tbe public debt in various portions, and allo- cating different funds for the discharge of each, and noticing the time when this and the other part would be discharged, the public has been misled, and even our financiers have not escaped embarrassment. In the outlines, however clearly the above principle is laid down in limine, it seems to be lost sight of in the detail. In the annexed tables, the time when each loan will be discharged, according to the different systems and sup- positions, is calculated with special care, and seems to be considered as an important circumstance. IV. The system now under consideration is attended with the same palatable feature which accompanied that of lord Henry Petty, of promising an exemption from additional taxes for the three next years, and a smaller amount of them in the succeeding years. The manner of obtaining the former of these points is by declaring the debt of 1786 cancelled, and allocating the sinking fund, provided for it, to bear the charge of the new loans. This is merely a point of official regulation. Tlie measure itself is attended with no injury to the na- tional creditors ; but it is not clear tliat it is salutary to the public. Whenever a nation does not tax to the amount of its expenditure, an increase of debt, to a higher amount than the sum saved in taxes, is inevita- ble^ and in the comparison of different systems, those BRITISH NATIONAL DEBT. 147 which impose the lightest taxes must always hring on an increase of debt in a still higher degree. This prin- ciple has been fully illustrated in former parts of this inquiry : we shall now state its application to the dif- ferent suppositions considered in the outlines. The first hypothesis, contained in Table A, is that of an annual loan of 28 millions, at 5 per cent, which is reduced in the then existing system to 27 millions, in the year 1821, but continues mthout diminution in the new system. To exhibit the comparative effect of these systems on this hypothesis, Table X, is inserted in our Appendix,* from which it appears that the amount of additional taxes to be laid on from 1814 to 1821 inclu- sive, according to the existing system, is L. 14,933,328 According to the new system, - 7,099,110 The whole amount of additional taxes levied these eight years, by the exist- ing system, is - - L.67,199,976 by the new system, - - 22,227,352 Excess of taxes by the existing system, L.44,972,624 The debt created, by either system in these eight years, is - - L.224,000,000 The amount of the sinking fund, existing system, - - - L. 152,912,380 new system, - - - 99,278,439 Additional debt unredeemed, existing system, - - L.71,087,620 new system. . _ . 124,721,561 * See Note XXVIIT. 148 INQ,UIRT CONCERNING THE The national debt (reduced to 5 per cents.) is greater, after eight years, in the new system, by - - L. 5 3,633,941 Saving in taxes, new system, during that period, ... 44,972,624 Excess of additional debt, above saving in taxes, . . . L.8,66l,317 The amount of additional taxes to be imposed in sixteen years from 1814 to 1829 inclusive, by the existing system, is - - - L.29,333,328 by the new system, - - 16,524,392 The whole amount of additional taxes levied these sixteen years, by the ex- isting system, - - L.25 1,466,600 by the new system, - - 118,859,736 Excess of taxes by the existing system^ L. 132,606,864 Debt contracted in these sixteen years, existing system, - - L.440,000,000 new system, . - - - 448,000,000 Amount sinking fund, existing system, - - L.403,586,488 new system, - - - 226,114,350 A-dditional debt unredeemed, existing system, - - L.36,413,512 new system, - - - 221,885,650 The national debt (reduced to 5 per BRITISl! NATIONAL DEBT. 149 cents.) is greater after sixteen years, in the system, by - - - L.l 85,472,133 Saving in taxes, new system, during that period, - . - - 132,606,864 Excess of additional debt above saving in taxes, L.52,865,274 The hypothesis in Table B, is that of an annual loan of 25 millions, at 5 per cent, reduced, in the existing system in 1821, to 24 millions. According to tliis hypo- thesis, there is more additional debt contracted and unredeemed by the new system, in the first eight years, to the amount of - - - - L.51, 543,153 The saving taxes is - - - - 43,626,793 Excess of additional debt above saving in taxes, ... - - L.7,916,361 The unredeemed national debt (reduced to 5 per cents.) will be greater in the new system, alter sixteen years, by - - . - - L.l 84,692,891 Saving in taxes, .... 130,208,242 Excess of additional debt above saving in taxes, L.54,484,649 The hypothesis in Table C, is that of an annual loan of 12 millions, at 3 per cent, reduced, in the existing system in 1826, to 11 millions. According to this hypo- thesis, the national debt, on the new system, is greater after sixteen years, by - - - L.53,566,359 Saving in taxes, . . _ _ 46,992,592 150 INQ,UIRY CONCERNING THE Excess of additional debt above saving in taxes, L.6,573,767 The hypothesis in Table D, is that of the continuance of war until 1820, and afterwards alternate periods of ten years peace and war; annual loans of 25 millions, during war, but reduced in the existing system after 1821 to 24 millions; interest during war 5 per cent., during peace 4 per cent. According to this hypothesis, the national debt is greater by the new system, at the end of 7 years war, by - - - L.42,000,234 And the saving in taxes, - _ _ 35,600,907 Excess increase of debt above saving in taxes, L.6,399,327 During the next ten years of peace, the sum ap- plicable to the discharge of the public debt, in the exist- ing system, is greater by - - L.l 14,435,708 And the aggregate of additional taxes in that period is greater by - - 81,383,850 Excess of sum applicable to discbarge of debt above additional taxes, - - L.S3,05 1,858 V. The next circumstance which claims our attention is the periods "t Avhich additional taxes are proposed by the new system. All the late systems of finance have held fortli a distant piospect, that after a certain period, more or Isss remote, the national revenue would become equal to its expenditure, even in a state of continued warfare, and therefore no further taxes would be need- ed. If that period shovdd ever arrive, it is obvious tliat the amount of taxes then levied must be much greater BRITISH NATIONAL DEBT. 15l than what would at present cover our expense. For what reasons then do we not now raise them to that amount? We shall not ascribe this to our propensity to stave off tlie evil day at present, and leave posterity to provide for themselves as they can. In whatever degree this motive may operate, it is too unprincipled to be openly avowed. The only other reasons we remember to have heard ad- duced, are, that the nation is increasing in wealth, and will be better able to bear heavier taxes at a future time ; and that a sudden increase of taxes would occa- sion so much discontent that a minister dare not attempt it ; whereas taxes, at first moderate, and increased at in- tervals, are submitted to with less reluctance, and do nut become unproductive in an equal degree by occasioning the disuse of the articles taxed. Wg shall not at pre- sent enter into a discussion of these reasons. Whether wc refer the defcr)*ed and gradual increase of taxation to either or both of them, or to any other that can be imagined, they concur in tliis point, that additional taxes should be imposed annually and equally while the public necessities continue the same. By the new system, the amount of taxes imposed in different years is very un- equal. According to the first hypothesis there are no additional taxes imposed in the years 1814, 1815, and 1816. In 1817, the additional taxes come near to L.l, 300,000; in 1818, they fall below L.700,000 ; in each of the three following years they amount to about L. 2,000,000; in 1822, there are no additional taxes; and in 1823, the additional taxes little exceed L.600,000. Like inequalities occur in the following years, and ac- cording to the other suppositions. The reason of this is, that the amount of taxes imjjoscd is regulated by the periods at which the loans of former years are declared to have been redeemed. If several loans, or one large loan fall in, no new taxes are imposed. If none fall in 152 INQ,U111Y CONCERNING THE within the year, a large amount of additional taxes is had recourse to. Thus the amount of taxes to be im- posed in future yeare is made to depend on the amount of loans contracted many years ago, and the period of the redemption of these loans, as ascertained by their terms, and the sinking funds appropriated to them at their contraction, under the regulations of the new sys- tem. There seems to he no good reason for regulating the periods of additional taxation in this manner. The several loans constitute the public debt, united into one indiscrimhiate mass. If the means adopted to meet the increase of this debt be a progressive increase of taxa- tion, the progress ought to be uniform ; or if otherwise, any diversity ought to arise from the circumstances and exigencies of the times when the taxes are imposed, and not from the dischai'ge of former loans as estimated by an artificial system. In time of war, there is no real discharge of debt, but an annual contraction of debt, equal to the difference between the capitals created and the capitals redeemed. VI. An advantage of a very extraordinary kind is affirmed to result from this system. "The principal advantage of the proposed plan in time of peace, would be the facility of keeping in reserve a large sum (sup- pose L. 100,000,000) as a resource in the case of the I'enewal of hostilities. This fund, which would be form- ed in a few years by the redeemed stock standing in the name of the commissioners, would be continually in- creasing, unless checked in the manner above-mentioned^ and in no case should be reduced below such a sum as may be thought amply sufficient to support the con- fidence of the country at home, and maintain its dignity abroad. It would indeed be such a treasure as no otli£r country has eter possessed, and the first example of an BRITISH NATIONAI. DEBT. 15S immense accumulation of public property, formed with- out the impoverishment of any individual, or any em- barrassment of the general circulation."* We are altogether at a loss to form a distinct con- ception of the nature of the valuable treasiire here held forth. So soon as any stock is purchased by the com- missioners, and stands invested in their name, a like amount of the public debt is in fact discharged. — Whether a parliamentary declaration to that effect be made or not, is only a matter of form. If the money remain vested in the name of the commissioners, no doubt it may be transferred again to purchasers, in the stock exchanged, when war breaks out anew, and money may be raised for the public in this manner; but this is in every respect a new loan. It is an application to the public to invest their capital in the purchase of this dormant stock. The capitalists must be possessed of the sum wanted ; and they will not part with it, except upon terms from which they derive a profit. They would do tliis with equal readiness, if a loan was proposed to them in the ordinary form. We can discover no facility or advantage which the public could derive from a loan conducted in this manner, rcather than any other. In- deed the inefficacy of this reserved treasure appears so clear, that we almost doubt whether we have rightly apprehended tlie nature of the resource held forth : but we are not able to affix any other meaning to it. If it be said that the whole capital of funded debt was once in circulation, and although a part of it is for a time withdrawn, it may be brought into circulation again, this amounts to no more tlian that the nation having once borne a greater amount of debt than at the rime alluded to, it may be expected to be able to bear a " Outlines, pag"e IT. Of 154 lNQ,tlRY COACfiRNlNG THE like amount again. This may be affirmed either of a nation or a private estate, if other circumstances remain the same ; but it is not mucli to the purpose. The pro- prietor of the private estate, who has experienced the hardships that result from being in debt, will feel little solace, after these arc relieved, from the considera- tion that if he chooses to engage in a fresh career of ex- travagance, he will only be plunged again into the same difficulties j and if ever the public be partially delivered from that load of debt which cramps its national opera- tions, and occasions privations to the individuals who compose the public, it will be no gi'eat soui'ce of rejoicing that it may engage in new wars for a season without undergoing greater hardships than those which it had experienced before. It is ti'ue, that if the taxes imposed dunng war for the purpose of a sinking fund, be continued after peace is restored, till a large sum (suppose L. 100,000,000) be vested in the hands of the commissioners, the public, upon the renewal of war, may spend to that amount without imposing fresh taxes. This amounts to no more than that if we chose, during peace, to submit to the hardships of war taxation after our debt is partially dis- charged, we may engage again in war, without bearing heavier burdens than those from which we might have been deli^ ered, if we had repealed the taxes as the debt was dischai'ged. VII. In examining tliis and the other systems of finance, we have chiefly confined ourselves to a view of the effects expected from them, during the first 16 years or thereby from their establishment. Such a period is fully sufficient to ascertain their merits. In the Tables annexed to the plan, their opeiation is traced for a much longer time. That of the sinking fund, Table C. 2. is BRITISH NATIONAL DEBT. 155 t'Xtended as far as the year 1866 ; and we are informed in a note, that the remaining debt will be redeemed ac- cording to the existing system in the year 1912, and ac- cording to the new system in the year 1875. It is altoge- ther unnecessary to ti'ace their operation to such distant periods. It is morally impossible any system can be adhered to so long. Sir Robert Walpole*s sinking fund was never supported with efficacy. Mr. Pitt's sinking fund commenced in 1786, and was corroborated in 1792; considerably infringed on in 1798; underwent a great alteration in 1802; was laid aside for lord Henry Petty*s plan in 1807; revived in 1808; and is now superseded by Mr. Vansittarfs plan in 1813; and it may be al- most certainly foreseen that measures different from those now proposed will be had recourse to by succeed- ing financiers. This will arise, not only from the dif- ferent vie\^'s of different men, but from the change of cii'cumstances which the fluctuation of human affairs always induces. The proper measures to be followed in that great department of national administration half a century hence, will depend on the exigencies and resources of the time, and cannot be foreseen at present. SECTION V. General Observations on Sinking Funds. I. In the resolutions frequently proposed by ministry to parliament, in order to exhibit a general and com- parative view of the state of our finance at different periods, the proportion of the sum applicable to the dis- charge of debt, to the debt itself, is introduced, and 156 INQUIRY CONCERNING THE seems to be considered as an important circumstance. This proportion in 1786, was -^^g, in 1795 it was ^g^, 1803, ^\, in 1809, y^, and in 1813, ^V- The infe- rence drawn from this growing proportion is, that al- though tlie national debt has greatly increased, the means provided for its discharge have increased in a still higher degree, and therefore its present magnitude affords no cause of alarm. The extent of the sinking fund is artificial, and may be brought, by a mere change in the arrangement of the public accounts, to bear any proportion to the amount of debt, without the slightest advantage, or any tendency to promote its discharge. In time of war, we raise a certain sum by taxes for the expense of the year, and borrow what further is wanted. If a sinking fund be maintained, the sums appropriated are deducted from what would have otherwise been expended on the war, and a greater loan is required. We may throw into the sinking fund any share of the revenue we please. "We have only to add as much to the loan, and we shall raise a larger sum in the form of loan, with the same facility, by the effect of the sums thrown into the money market for the stock purchased by the commissioners. In time of war the sinking fund is nominal ; in time of peace a large sinking fund will discharge the debt more quickly ; but this amounts to no more than that a con- tinuance of the taxes, Avhich we paid in war, after peace is restored, will be attended with a speedier reduction of debt, than what would take place if a large part of these taxes were repealed. II. A similar circumstance, held forth to ease the alarms arising from the magnitude of the national debt, is the progress already made in its discharge by the sinking fund, and the large sum redeemed. We are told BRITISH NATIONAL DEBT. 157 that these operations have succeeded beyond expectation, and that the whole debt existing in 1786, amounting to 238 millions, is already paid off. This is altogether fictitious and delusive. We may pay off as much debt as we please at any time by borrowing : but the only real alteration in the state of our finance is the difference between the debt contracted and the debt paid off; and while the former of these exceeds the latter, our situa- tion is growing worse to the extent of that difference. A private gentleman, whose estate is incumbered, may, if he have any credit, pay off all his debt every year, by borrowing from other hands ; but if he spends more than his free income, his embarrassments will con- tinually increase, and his affairs are so much the worse by being conducted in this manner, from the fees he pays to his agents. The absurdity of deriving any satisfaction from this annual discharge of his debts will appear still stronger, if we suppose him, instead of borrowing from other hands, only to renew the securi- ties to the same creditors annually, paying a fee to the agents, and a douceur to the creditors themselves on the renewal. All these observations are equally applicable to the debt of a nation, conducted as ours is. It would not be impracticable, or very difficult, to redeem our whole debt in any year, if the measures we follow be redemption. It would only require a large loan every month, and the large sums we were thus enabled to pay would supply the funds for these loans. Our capi- talists would be well pleased to promote these loans, as they would derive a bonus from each. Such asystem would be ruinous in the extreme ; and the system we follow is the same on a smaller scale, and is therefore only per- nicious in a less degree. In the year 1786 our funded debt was 238 millions. We have paid all this off, but we have contracted rex- 156 iNQ,tJIRY CONCERNING THE elusive of the loans of 1813) a new debt of 574 millions. Does not this amount to the same, as that we have paid no debt at all, but contracted an additional debt of 336 millions ? III. The dangers, arising from the magnitude and progressive increase of the national debt, ought to be laid before the public without exaggeration, but without palliation. Another source of alarm has been started of late years, of the evils to be appi'ehended from too great an increase of the sinking fund, and too rapid a dis- charge of the national debt, or too sudden a repeal of taxes. These fears were first announced (at least with any degree of energy) on the publication of lord Henry Petty*s Plan of Finance, in 1807^ and they seem to have taken considerable possession of the public mind. *' It [the plan of 1802] would throw such large and dis- proportioned sums into the public market, in the latter years of its operation, as might produce a very dan- gerous depreciation of tlie value of money. Many in- conveniences might also arise from the sudden stop which might be put to the application of these sums, when the whole debt shall have been redeemed, and from the no less sudden change in the price of all com- modities, which must follow from taking off, at one and the same moment, taxes to an extent then probably much exceeding 30 millions."* — " This successive re- demption is, indeed, a point of no small importance to the regulation of the money market, as the rate of inte- rest, and the ^ alue of money might be very inconveniently affected by the too rapid increase, or the too sudden re- duction of the sums brought into circulation by the sinking fund. It should not, therefore, be suffered to * Plan of Finance. 1807, p. 14. BRITISH NATIONAL DEBT. 159 accumulate for too long a period, while, on the other hand, it should not be too much diminished, by extin- guishing at once too large a proportion of the public debt."* We have seen the fears of these inconvenien- cies urged in some private publications, in still stronger terms. They appear to us altogether groundless. The operation of the sinking fund during war, when loans to a higher amount are annually contracted, we trust we have evinced to be altogether fictitious. It is not pro- bable, whatever be the continuance of the war, that our taxes will be raised to the measure of our war expendi- ture j but they are likely to exceed much what is wanted for a peace establishment ; and the excess is likely to be larger, the longer the war is continued. We shall then be possessed of a surplus revenue at the restoration of peace, which we may either diminish or annihilate altogether, by the repeal of taxes, or apply to the dis- cliarge of the public debt. It is proper and probable that we shall embrace both measures ^ and the propor- tions of surplus revenue to be disposed of, the one way or the other, are completely at command, and ought to be determined from the state of affairs at the time, and not from the results of an artificial system, laid down many years before. It is generally believed that, when the present war is terminated, prudence will require us to support a higher establishment than we ever did during any former peace. This prospect alone may allay our fear of bad conse- quences from too sudden a discharge of debt. Those who believe, as we do, that the load of public debt is a great evil, and that its discharge would be a great deliverance, may at tlie same time admit, that a sudden alteration^ however beneficial in its ultimate i*e- sult, would be attended with serious inconveniences, * Plan of Finance, 1813, p. 9. 160 INQ,U1RY CONCERNING THE and that every precaution should be employed to prevent or alleviate these. The inconveniences apprehended, arise from the diffi- culty of employing the capital paid off, and the reduc- tion of the rate of interest. A low rate of interest is generally esteemed beneficial, and is said to have prevailed in the wealthiest and most flourishing nations, while the rate has been much higher in those that were in a semibarbarous state. We do not admit this doctrine without considerable qualifica- tion ; but we could not discuss the argument without a length of digression unsuitable to this place. We have no doubt that the whole capital, at present invested in the funds, may be beneficially employed in agriculture, manufacture, and commerce, and thereby prove a source of increasing wealth to the country : but this cannot be done all at once. These objects must expand by degrees, and no more capital should be paid off in any year than can be otherwise disposed of to ad- vantage. We have little apprehension that we sliould have more to offer ', but, if the case should be otherwise, we can restrict it, in any degree, by the repeal of taxes. Apprehensions of inconveniences from the sudden amelioration of the circumstances of the middling and lower ranks, arising from the repeal of taxes, have been insinuated. We cannot enter into these views. Tliat numerous part of the community, which has for some time laboured under great privations, when they feel this relief, will afford themselves a greater share of the comforts of life; and by their additional consumption, give encouragement to agriculture, manufacture, and trade. Excess, in a certain measure, will be the conse- quence of affluence in every rank ; but it will not be maintained that, in order to avoid that evil, nations should always be kept in a state of depression. The sudden dismission of many of the oflicers employed in BKITISU NAXXOWAIi DEBT. 161 collecting the revenue is surely too trivial an object, and admits of too obvious remedies to merit notice. One evil apprehended from the sudden repeal of taxes is the loss which dealers would sustain, by the fall in price of the commodities on hand, on which the taxes were re- pealed. This class of men gained by the rise in price of commodities on hand when the taxes were imposed. We would not, however, wish them to undergo a loss on their repeal. This might be greatly alleviated, it not altogether prevented, by allowing a considerable time between the enactment and repeal, and by other regu- lations suited to that purpose. A funded capital, transferrable as ours, is considered to be beneficial, as affording an easy and secure way of investing small sums belonging to persons in the lower ranks of life — the hard earned savings of indus- try. There is something in this ; but there is no reason to apprehend the amount of our funded debt will ever fall so low as to be insufficient for that purpose. SECTION VL Examination of the System of Funding by Increase of Capital. In the early part of the funding system, the capita! assigned to the public creditor seldom exceeded the sum advanced by him. We find only two slight deviations from this rule during the seven years' war, and one in the American war, before 1781: but after that year,» when the difficulty of raising loans increased, capitals were assigned to the creditors much higher than the 9,9, 16^2 IK 0,1) IKY UOACliilMNti THE sums advanced ; and this practice has been continued since to a great extent. It has been maintained in the house of commons, on the part of ministry, and, if we mistake not, even ad- mitted by the opposition, that it was the duty of a finan- cier to raise the loan at the least annual expense it could be procured for, without regard to the amount of the nominal capital. We apprehend that this opinion is indefensible, except upon the supposition that all views of discharging the national debt, or any part of it, are forever laid aside, and that the measures founded on it are very pernicious. The nation ought to pay no more in discharge of debt than tlie sum borrowed, together with the interest during the time the debt subsists. By the system now followed, it pays besides, the excess of the capital assigned above the sum borrowed, in case the redemption be at par : or, if the price of the funds enable the commissioners to redeem the debt on lower terms, the nation pays, in addition to the sum borrowed, the difference between the price of stock at the times oJT borrowing and paying, which is always great. The terms of the debt contracted during the American war, and since the commencement of the war in 1793, have been already given. The excess of the capital funded, above the money borroAved, is as follows : Debt contracted during American war. Loans from 1793 to 1812, inclusive, Bills funded in that period, Of which redeemed by the Commis- missioners. Excess of capital funded above sums raised, Sums raised. Capital funded 91,763,842 322,358,532 62,258,173 115,267,993 498,861,867 74,920,020 476,380,547 133,536,836 689,049,880 210,461,356 342,843,711 478,588,524 342,843,711 ed, 135,744,813 BRITISH NATIONAL DEBT. 163 Thus it appears, that if the funded debt, contracted since the commencement of the American war, were paid off at par, the nation would pay above 135 millions more tiian it ever received, which is about four-tenths of the debt contracted. The far greater part of this excess has risen since the war of 1793, and almost the whole of it since the year 1780. The national creditors are not obliged to accept of payment under par, that is, a sum equal to their nominal capital: but as they cannot, like private creditors, de- mand payment, and as the price of those funds which bear a low rate of interest is generally under par, it has been in the power of the public, in former intervals of peace, to pay off part of the national debt considerably under par, with the voluntary consent of the creditors j and the same end is now obtained, in a more constant manner, by the purchases made by tlie commissioners. Dr. Price was of opinion, at the time he wrote, that the three per cents, on the return of peace, would rise to par, or above it ; and he considered that as a desirable event. Whether it would be so, we may hesitate to pro- nounce, when we attend to the variety of interests in- volved. It could not take place without a general re- duction of the rate of interest ; and this must be accom- panied by a like reduction of the profits on trade and manufacture. It would obstruct the redemption of the national debt under par, and prevent its being accom- plished, unless at the loss abovementioned. But we do not consider the rising of the three per cents, to par as a probable event ; and had Dr. Price lived to see the magnitude which our debt has now at- tained, it is likely he would have been of the same opinion. From the establishment of the sinking fund to the 1st of February 1791, there was L.6,772,350 of the three per cents, redeemed for L.5,424,592, being 164 I]Vq,UIKY CONCERNING THE at the rate of 80 nearly. It is therefore a probable sup- position, that on the return of a steady peace, the three per cents, may rise to 80. Now, if we suppose the three per cents, redeemed at 80, and the four per cents, and five per cents, at par, the sum required for the redemption of the above-mentioned debt would be, L.323,846,354 Capital in three per cents at 80, - - L.259,077,083 154,742,170 Capital in 4 and 5 per cents at par, - 154,742,170 L.478^588,524 redeemed for - L.413,819,253 sum borrowed, - 342,843,711 L.60,975,542 Hence the loss incurred by the public on this favourable supposition would be 60 millions, in discharging the whole capital, and a like proportion for any part of it that might be discharged during a period of peace. This system was only in its infancy when Di*. Price wrote, and he censures it in the following terms : — " In 1759, the lenders of L.6,600,000 were entitled to a capi- tal of L.115 for every L.lOO subscribed, or L.7,590,000 in the stock of the thi-ee per cent, annuities : the conse- quence of which must be, that, in discharging this debt, 15 per cent, or nearly a million, must be paid, which was never received, and by which nothing has been gained. Were a person in private life, to borrow L.lOO, on con- dition it should be reckoned L.200 borrowed, at two and a half per cent, he would, by subjecting himself to the necessity (if he ever discharged the debt,) of paying double the sum he received, gain somewhat of the air of borrowing at two ^nd a half per cent, though he really BRITISH NATIONAX DEBT. 165 borrowed at five per cent.: but would such a person be thought in his senses ? One cannot, indeed, without pain> consider how needlessly the capital of our debts has been, in several instances, increased. — Thus do spend- thrifts go on, loading their estates with debt, careless what difficulties they throw on the discharge of the principal, leaving that to their successors, and satisfied with any expedients that will make things do their time."* This censure, severe as it is, appears in a great mea- sure deserved. We ought, however, to pay attention to any saving of interest, which is the inducement for con- tracting the public debt in the manner that has been fol- lowed. The natural proportion of the price of capital in the three per cent, four per cent, and five per cent, funds, is the same as that of the respective rates of interest. Thus, if the five per cents, be at par, the four per cents, should be at 80, and the three per cents, at 60 ; and this proportion, except some slight deviations from transient causes, would continue to hold when the prices rose, pro- vided the debt was irredeemable. The only object, in that case, in which the national creditors are interested, is to draw an annuity for the money they advance ; and it would be to them a matter of indifference what de- nomination be given to the fund from which the dividends were drawn. If the three per cents, rose to 75, the four per cents, should rise to 100, and the five per cents, to 125 : but as all the funds are redeemable at par,f the actual price can never much exceed it. So soon as the five per cents, rise above par, the financier wUl off*er pay- ment, and by doing so, induce the creditors to submit to * Preface to 3d ed. of Observations on Reversionary Annuities, t See Note XXIX. 166 lNQ,UIRy CONCERNING THE a reduction of interest. The holders of stock in a three per cent, or four per cent, fund, have thus a prospect of gain by the rise of value, in which the five per cent, stockholders do not participate ; and, in like manner, when the three per cents, rise above 75, the holders have a further gain in which the four per cent, stock- holders do not participate. In consequence of these ex- pectations, the pi'ice of four per cents, is highei*, com- pared with that of the five per cents. ; and the price of the three per cents, higher than that of either of the othei's, than the propoi'tion of the rates of interest ; and loans are transacted in the 3 per cents, on easier terms. The lender expects to gain by the rise of stock ; and what he gains, the public loses, at re-payment on re- demption. In order to estimate the extent of the difference of in- terest occasioned by funding in capitals of different sorts, we may consider the rates of interest paid by the public on those loans, and the sums funded, where the contract was made at one rate only, and not incumbered with a long annuity. There have been eleven loans of this sort, in the three per cents, since the commencement of the war in 1793, the amount borrowed being L.158, 650,000, and the sum funded L.259,21 5,875, the interest of which is L.7,776,476, being at the rate of L.4. IBS', per cent, on the simi borrowed 5 the particulars being as follows : BRITISH NATIONAL DEBT. 167 Sums raised. Sums funded. Interest. 4,500,000 3,000,000 12,500,000 18,500,000 25,500,000 23,000,000 10,000,000 20,000,000 18,000,000 8,000,000 15,650,000 6,250,000 5,624,250 21,875,000 29,045,000 44,816,250 30,351,375 18,200,000 34,400,000 29,880,000 11,230,000 27,544,000 187,500 168,727 656,250 871,350 1,344,488 910,541 546,000 1,032,000 896,400 336,900 826,320 158,650,000 259.215,875 7,776,476 1793, 1798, 1799, 1800, 1801, 1802, 1804, 1805, 1806, 1810, 1812, The only loan at 4 per cent, was that of 1808, when L.8,000,000 was raised, and funded for L.9,454,000, the interest of which, L.378,160, is at the rate of L.4. 14s. 6d. per cent. There have been three loans, and six operations of funding bills, in the 5 per cents., viz. 1794, Bills, 1795, Bills, 1796, Bills, Loyalty loan 1810, Bills, 1811, Bills, Loan, 1812, Bills, -. Loan, Sums raised. Capital funded. Interest. 1,907,451 1,926,526 96,326 1,490,647 1,609,898 80,495 4,226,727 4,414,074 220,703 18,000,000 20,124,843 1,006,243 8,311,000 8,581,108 429,055 7,018,700 7,278,392 363,919 4,981,300 5,166,319 258,316 5,431,700 5,866,236 293,312 6,789,625 7,332,795 366,639 58,157,150 62,300,191 3,115,008 L.58,157,150 money borrowed and bills funded in the 5 per cents, for L.62,300,191, interest L.3, 11 5,009, being at the rate of L.5. 7s. Id. per cent. But if the loyalty loan, which was remarkably unfa- vourable for the public, be set aside, the sum raised is 168 IN(tUIR¥ CONCERNING THE L.40,157,150 funded in the 5 per cents, for L.42,175,338y interest L.2,108,767, being at the rate of L.5. 5s. per cent, and 7s. more than on the money funded in the S per cents. Another consideration considerably reduces this dif- ference in the interest. In the loans, the public pays the whole interest for the year that the loan is transacted, although the money be advanced by instalments, or discount allowed if the whole be paid up at once. If the lender did not obtain this advantage, he would demand an additional capital at least equivalent to L.2. 10s. in the five per cents, and yielding an interest of 2s. 6d. Nothing similar to this occurs in the transactions of funding bills, from which the greater part of the 5 per cent, stock arises. Thus, for a difference not exceeding five or six shil- lings per cent, on the interest, the public incurs almost a certainty of paying L.133 for every L.lOO borrowed, and a risk of paying L.166, when the debt comes to be discharged.* This simple view of the result is sufficient to reprobate the system of borrowing on an advance of capital, and a low nominal interest. The capital funded should never exceed the sum raised, and such a rate of interest should be allowed on this capital as the lender is willing to accept of. At the present price of the funds, money cannot be borrowed at 5 per cent. ; and perhaps it might be thought improper to give, in direct tei-ms, a higher rate of interest than can be legally taken in private transactions, thougli there is a necessity for doing so in an indirect manner. To avoid this, the highest rate of interest on the capital might be fixed at 5 per cent; and in addition to this, when necessary, a long annuity might be granted 5 and when the funds are higher, the » See Note XXX. BRITISH NATIONAL DEBT. 169 I'ate of interest might be fixed at three or four per cent, together with a long annuity, if necessary. It is impossible to go over this subject without being struck with the great variety of modes that have been resorted to in raising money. — From 1793 to 1812 inclusive, there ha^ e been twenty-five loans, of which fifteen have been in three per cents, and four of these liave been aided by a long annuity. One has been fund- ed in the four per cents, and three in the five per cents. Five have been funded piirtly in the three per cents, and partly in the four per cents. ; all of them accompanied by a long annuity : and one pai'tly in the three per cents, and partly in the five per cents. In the same period there have been ten operations of funding bills, of which six have been altogether in the five per cents. ; two partly in the four per cents, and partly in the five per cents. ; and two, jointly in the three, four, and five per cents. ; and to one of these a long annuity is attachedi 2S NOTES. Note I. — Page 17. &^ The increase of circulating medium, of whatever kind, by deteriorating the value of money, enhances the money price of manufactures and native produce, and thereby obstructs, cceteris paribus, their sale in foreign markets. In this respect, paper money is always disadvantageous. It may give en- couragement to industry by extending private credit, and thereby prove beneficial ; but its application in this way is apt to be carried too far. The consideration of its influence upon the rate of exchange with foreign countries, and the other effects it produces, would lead us beyond the bounds of our present subject. Note II. — Page 22. Since the imposition of war taxes in 1798, the permanent revenue has been divided into two great branches : 1st, The consolidated fund, consisting of all the branches existing in 1786, when Mr. Pitt's sinking fund was established, and many taxes which have been imposed since, and charged with the interest of the public debt, tiie sums payable to the commissioners for its redemption, the allowance to the civil list, ^nd pensions and other grants by parliament. The sur- plus, which is always considerable, is applied to the current services of the year. 17£ KOTES. 2d, The war taxes, consisting of the property -tax, the con- voy-tax, and some other articles, and charged with the in- terest, &c. of the loans of 1807 and 1811, the amount of which is transferred to the consolidated fund. To these may be added, 3d, The duties granted annually. These were formerly the land and malt -tax : Since the land-tax was rendered perpetual, certain duties on sugar and tobacco, and on offices, pensions, and salaries, besides the malt-tax, have been granted annually. Note III. — Page 28. The amount of foreign property in the British funds, as ascertained by the claims of exemption from property -tax in 1806, was L.18,528,666, besides L.17,147 jser annum of ter- minable annuities. This account does not include the bank stock, the duty on the dividends of which are paid by the company. The whole amount may be estimated at about 22 millions, being about 1 -25th of the funded debt then existing. The foreign property in the British funds, in 1762, has been estimated at 18 millions, being about l-7th of the funded debt at that time. Note IV. — ^Page 36. Pakadoxical eftects are ascribed to the increase of money by compound interest. One penny put out at the Christian era, at five per cent, compound interest, would, before this time, have increased to a greater sum than could be contained in Jive hundred millions of earths, all of solid gold. Mr. Ricard appointed by his will, that the sum of 500 livres should be divided into five portions. The first, at the end of a hundred years, amounting to 13,100 livres, to be laid out in prizes for dissertations proving the lawfulness of putting out money to interest. The second, at the end of two centuries. NOTEiJ. 175 amounting to 1 ,700,000 iivres, to be employed in establishing a perpetual fund for prizes in literature and arts, and tor vir- tuous actions. The third, at the end of tliree centuries, amounting to more than 226 millions of Iivres, to be employ- ed for establishing patriotic banks, and founding museums with ample establishments. The fourth, at the end of four centuries, amounting to 30,000 millions, to be employed in building a hundred towns in France, containing each 150,000 inhabitants. The fifth, at the end of five centuries, amounting to four millions of millions of Iivres, to be appropriated for the payment of the national debt of Britain and France, — for pro- ducing an annual revenue to be divided among all the powers of Europe, — for buying up useless offices, purchasing a royal domain, increasing the income of the clergy, and abolishing fees for masses, — for maintaining all children born in France till they be three years of age, — for improving waste lands, and bestowing them on married peasants,— for purchasing manors, and exempting the vassals from all servitude, — for founding houses of education, workhouses, houses of health, and asylums for females, — for portioning young women, — » for conferring honorary rewards on merit; — ^besides a large surplus to be appropriated at the discretion of his executors. Dr. Franklin planned a similar will. It is theoretically true that compound interest may accom- lish all these things ; but such extravagances rather tend to throw ridicule on the subject, than increase our confidence in, its operations. Note V. — Page 48. In early times, all interest for money, or usury, as it was then called, was unlawful. Yet, in defiance of heavy penalties, necessity enforced the payment of interest, often upon exorbi- tant terms. The first statute authorising and limiting the rate of interest in England, was in the reign of Henry VIII, in the year 1546, when it was fixed at ten per cent. In the reign of his successor, Edward VI, all interest was again prohibited. 174 NOTES. In the year 1572, in the reign of Elizabeth, interest was per- mitted at the rate of ten per cent. In 1624, in the reign of James I, the rate was reduced to eight per cent. In 1651, during the usurpation of Cromwell, it was reduced to six per cent; and this was confirmed at the restoration. In 1714, it was reduced to five per cent. ; at which, as the legal rate, it has continued since. All these reductions by law seem rather to have followed than anticipated the actual rate of interest, arising from the commercial state of the nation. To compel the lending of money at a lower rate of interest than that which naturally results from existing circumstances, is equally impracticable as to prohibit interest altogether :— but when the actual rate of inte- rest fell below the legal standard, that rate was reduced to prevent particular acts of oppression. In Italy and other states where commerce was earlier esta- blished, interest was reduced sooner and lower than in Eng- land. In Scotland, the reduction took place a little later. Interest there was reduced to eight per cent, in the year 1633, being nine years later than in England: and it was reduced to six per cent, in 1661, ten years later than in England. Note VI.— Page 49. The tenns of this tontine were, That the subscribers of L.IOO. 5s. being distributed into six classes according to their ases, should receive the undermentioned annuities, with benefit of survivorship in their respective classes, till the annuity on the original share amounted to L.IOOO, after which the sur- plus is to fall to the public. 1st Class, under 20 years of age, - - - L.4 3 2d Class, from 20 to 30, - - - - 4 5 6 3d Class, from 30 to 40, - - - - 4 8 6 4th Class, from 40 to 50, 4 13 6 5th Class, from 50 to 60, - - - - 5 1 6 6th Class, above 60, - - - - ^ 5 12 NOTES. 175 The amount of annuities granted on these terms (including a subsequent addition) was _ . - L. 18,847 For the remainder, annuities for 69j years were allowed at the rate of L.4. 5s. for each subscription, as above, amounting to - - - - L.24,S65 and in order to place those persons who retained their shares in the tontine on the same footing as if the whole had been filled up, the treasury was empowered to nominate lives among persons in public station, to be distributed in the seve- ral classes, in the same proportion as the nominees appointed by the subscribers; by whose death, as well as that of the actual holders of the tontine, the benefit of survivorship should be regulated. The amount of annuities entered in these names was L.24,681 : thus the sum payable by the public is variable, according as a greater proportion of deaths happens among the real or fictitious nominees. 'O Note VII.— Page 51. O' The branches of revenue formerly appropriated to the civil list, were the profits of the post-office ; a few branches of the excise and customs; part of the duty on wine licences; tlie remains of the ancient hereditary revenue ; and a further sum of L.120,000, charged on the aggregate fund. At the begin- ning of the present reign, these branches were added to the aggregate fund, and that fund was charged with an annual payment of L. 800,000, as the full and permanent allowance for the civil list. This sum has been since augmented several times, and now amounts to L.95 8,000, besides allowances to the branches of the royal family ; — an augmentation by no means adequate to the deterioration of the value of money during the period; and although considerable sums have been granted to supply the deficiencies of the civil list, the whole money appropriated to it during this reign, is inferior to the produce of the branches of revenue which formerly belong- ed to it. ITS NOTES. Note VIIl.-— Page 54 In the account of the public debt presented to the house of commons in 1799, it is said, that " it has been found impractica- ble to ascertain the amount of the sums raised at diiferent periods, which created the capitals composing the several funds existing prior to 33 Geo. III. Anno 1793." This avowal of ignorance, which may appear surprising where every means of official information was at command, may excuse a private inquirer, if his statements at an earlier period be imperfect. An error, in the former edition, of stating the sums raised by lotteries during the American war, as being in addition to the loans, is now corrected. "We have not attempted a statement of the financial operations by fund- ing bills during that period. Note IX— Page 55. All the loans contracted in the American war were con- nected with lotteries. The subscribers to the loan of 1776 received for every L.lOO subscribed, stock in the 3 per cents. L.77 10 And three lottery tickets (in all 60,000) valued at L.IO. The prizes being funded, the holders of the fortunate tickets received a capital in the same fund of - - - - 30 L.107 10 This arrangement was intended to aftbrd a profit on the lottery tickets to the subscribers, and a plan still more bene- ficial was adopted in the loans of the following years. The subscribers to the loan of 1777 received 50,000 tickets, being one ticket for every L.lOO subscribed. The subscribers to the loan of 1778 received 48,000 tickets, being eight tickets for every L.IOOO subscribed. NOTES. 177 Tiie subscribers to the loan of 1779 received 49,000 tickets^ being seven tickets for every L.IOOO subscribed. The subscribers to the loan of 1780 received 48,000 tickets, being four tickets for every L.IOOO subscribed. The subscribers to the loan of 1781 received 48,000 tickets, being four tickets for every L.IOOO subscribed. The subscribers to the loan of 1782 received 40,500 tickets, being three tickets for every L.IOOO subscribed. The subscribers to the loan of 1783 received 48,000 tickets, being four tickets for every L.IOOO subscribed. The subscribers to the loan of 1784 received 36,000 tickets, being six tickets for every L.IOOO subscribed. The subscribers to the loans subsequent to 1776 paid for their tickets at the rate of L.IO in addition to the sum ad- vanced by them for the loans; and the prizes were not funded, as they had been in the seven years' war, and in the lottery of 1776, but were paid to the holders of the fortunate tickets, to the extent of L.IO per ticket, in the spring of the following year. Note X. — Page 57. The following annuities, expired before 1793, were trans- ferred to the commissioners for the redemption of the national debt. Old long annuities, William and Mary, - L.54,881 Annuities, 17 Geo. IIL - - - - 25,000 L.79,881 Which added to the annuities existing in 1792, - 1,293,870 Makes up the sum stated by the select committee of finance, in 1797, - - - L.1,373,751 Note XL— Page 60. In funding the navy bills, 1797, option was given to the holders to receive capital either in the three per cents, the four .24 178 NOTES. per cents., or the five per cents, at different rates, according to the dates of the bills, as exhibited in the following table : Bills dated before. 1st January, 1796, SOth April, 31st July, 37th October, If all the navy bills then funded, had been at the second of these rates, (which were the rates allowed for the exchequer bills funded at the same time) the amount would have stood as follows :— L.9,293,483 in 3 per cents, at L.176 19 9^ L.16,438,175 544,982 in 4 per cents, at 137 18 7i 765,428 3 per cent. 4 per cent. 5 per cent. L.178 11 5 176 19 9| 175 8 9 173 18 3 L.138 17 9^ 137 18 7k 136 19 8i 136 1 1 L.119 111 118 6 lOi 117 12 111 116 19 2 1,728,617 in 5 per cents, at 118 101 L.l 1,567,082 2,034,890 L.19,238,493 But the amount of navy bills actually funded, was L.l 1 ,595,529 ; therefore the average rates must have been lower than those of the second class. Note XIL— Page 61. The loan of L.l 8,000,000 in the year 1796, (commonly called the Loyalti/ Loan,) was contracted on the following terms : The subscribers of L.lOO, received a capital of L.112. 10s. in a separate fund at five per cent.; and it was agreed that the holders, two years after the ratification of a definitive treaty of peace, should be entitled either to receive pajment, or to have their stock converted into three per cents, at the rate of L.133. 6s. 8d. for L.lOO capital : but this loan is not re- deemable on the part of government, till three years after the other five per cents, be paid. The subsciiption was filled up in a few days, the sum funded being L.20, 124,843. This agreement came to be implemented in 1804. The consequent operations were continued for several yeai'S, and NOTES. 179 some portion of this loan has been paid every year since j but these are all introduced in the table, in the year 1805. In consequence of the renewal of the war, the price of the funds was so low, that the holders of the loyalty would have been losers by accepting of L.133. 6s. 8d. in the three per cents. It was necessary, therefore, either to pay them, or offer them more advantageous terms. By act 44 Geo. Ill, cap. 99, the holders of the loyalty loan were intitled to receive L.lOO in the five per cent, consols; and so much additional in the three per cent, reduced, as would make up the value of L.lOO, at the current price. By act 45 Geo. Ill, cap. 8, the holders of L.4,448,817 were to receive so much capital in the five per cent, consols, or the tliree per cent, reduced, as would be equal in value to L.lOO ; and so much additional capital in the three per cents, reduced, as would be equal to ten shillings more ; and these terms were accepted by the holders of about three-fourths of that sum. By act 45 Geo. Ill, cap. 73, the same terms were granted to other holders of the loyalty loan, to the extent of L.1,254,629. ' The money required to pay such as did not accept of these terms was obtained by allowing the same terms in the way of loan ; and the capital granted in the five per cents, for every L.lOO advanced, as settled by the average price of stock for the ten preceding days, was L.113. 13s. 4d. The holders of the five per cent, annuities 1 802, amount, L.2,227,612, which was joined to the loyalty loan, were enti- tled to the same terms. The effect of these operations was to make an addition to the three per cents, of - - - L.7,426,233 And to subtract from the five per cents. - 4,045,502 Making an addition to the funded debt of L.3,380,731 And tliere has been paid of the loyalty loan, L.l, 762,394 180 JfOTES. The particulars are as follows 1804 1805 Sums transfer- red from loyal ty loan. 13,263,553 2,678,561 2,019,661 1,005,290 18,967,067 Capitals added tooper. cts.and 5percts. cons. subscribed into 5 per cent. cons. And an additional capital granted in 3 per cents, reduced, of subscribed into the 3 per cent, reduced. And an additional capital of Afterwards a further additional capi- tal of Capital added to 3 per cents. subscribed into 5 per cent. cons, and an additional capital granted in the same of - - - - borrowed in 5 per cent. cons, to pay oft' loyalty loan, And an additional capital of Sums added to 5 per cent, capital, Sums transferred from loyalty loan to 3 per cents, as above, - - _ Loyalty loan paid off in 1806, 1807, 1808, 1809, 1810, 1811, 1812, 2,716,815 2,678,561 1,785,707 245,149 7,426,233 265,018 130,436 395,454 L.2,678,561 L.979,257 336,088 153,697 60,867 18,776 113,416 100,292 1,762,394 Sums deducted from 5 per cents. L.4.440,956 Sums added to 5 per cent. cons, as above 395,454 Balance deducted from 5 per cents., L.4,045,502 And the present state of the loyalty loan is as follows : — Amount loyalty loan, - - L.20,124,843 Five per cents. 1802, - - 2,227,612 Carried forwai-d, L.22,352545-5 NOTES, 181 Brought forward, L.225352,455 Sums tranferred as above, L. 18,967,067 Sums paid off as above, 1,762,394 20,729,461 Remaining of loyalty loan, 1st Feb. 1812, L.1,622,994 By these operations on the loyalty loan, there is added to the interest on the public debt, L.20,513 And to the management, _ _ » 1,682 L.22,195 Note XIII.— Pages 64 and 68. »^ A METHOD was resorted to in adjusting the terms of the loan 1802, which indicated considerable pressure on our resources : L.125 was granted in the three per cents. ; and as part of the annuities for terms of years expired in 1808, an additional capital was granted to complete the necessary emolument, the interest of which was deferred till these an- nuities should expire. Thus the relief in view, by the falling in of the^fSe anuuities, was disappointed to a certain extent. The bidding for the loan was on this deferred stock, and it was taken at L.6. 19s. 3d. Note XlV.—Page 67. The loan of 1 807 was raised on lord Henry Petty 's plan an account of which is given, page 85, &c. L,12,000,000 was chai-ged on the war taxes, and L. 1,200,000 of these taxes inortgaged for interest and redemption. The remaining L.200,000 was raised as a supplementary loan in the common manner, with a sinking fund of one per cent. A separate account is kept of this loan : but this plan, though intended to be perpetual, was never followed out aftenvards. 182 ' KOTEi?. Note XV.— Page 69. The loan of 1809 was raised at L.60 in the three per cent, reduced, L.60 in the four per cent. cons, and a long annuity of 8s. lOd. L.600,000 of this loan was for Portugal; and instead of distributing that sum among the different funds charged with the general loan, L.895,522 was set aside in the three per cent, reduced, as an equivalent, and a sinking fund of L.30,000 provided for its redemption. Note XVI.— Page 69. An option was given this year to the holders of the ex- chequer bills proposed to be funded, that they might receive either L.103. 5s. in the five per cent, cons., or L.81. 8s in the five per cents, and L.26. 5s. in the four per cents. A similar option was given next year. Note XVII.— Pages 57 and 74. Annuities for lives have been granted at various times, io the amount of L. 151,437, exclusive of those which were con- verted, or entirely fallen in before 1786; generally on single lives; sometimes on two or three lives; and sometimes with the benefit of sui-vivorship. They were reduced by death in 1786, to L.94,878; at which time the present sinking fund \vas established, and the sums saved by their further reduc- tion, appointed to be carried to that fund. They were reduced in 1798 to L.79,185; in 1802, to L.73,796; and in 1812, to L.65,571 ; and as a considerable part of this last sum has not been demanded for these three years, the reduction by death is probably greater. The particulars of the original amount of these annuities; their state at the commencement of the NOTES, 183 sinking fund ; and their present state, are exhibited in the fol- lowing table i ACTS. Original ^^P'^^"^ Remain, beiore . ^^.-.^ Sim"-™-! amount. 1786. ing i^ao. to 1813. mg l»lo. 5 Will, and Mary, 22,633 14,438 8,195 8,195 18 Geo. II, 22,500 10,182 12,318 4,034 8,284 19 Ditto, 45,000 22,533 22,467 - 7,517 14,949 30 Ditto, 33,750 9,183 24,567 8,406 16,161 6 Geo. Ill, tontine, 540 . 540 - 540 18 Ditto, 2,849 80 2,769 232 2,538 19 Ditto, 5,318 143 5,175 923 4,252 29 Ditto, tontine, 18,442 18,442 18,442 151,032 94,473 65,166 Addition to tontine. 405 - 405 - 405 151,437 56,559 94,878 29,307 65,571 Amount of annuities granted for years or lives, L.1,729,731 Addition to tontine of 1789, - - 405 L.l, 730,137 Deduct annuities fallen in by expiry of the term in 1805, 6, 7, and 8, - - L.494,656 By death of annuitants from 178G to 1813, - - - 29,307 523,963 Addition to tontine, L.523,963 405 Sum deducted from annuities in Tab. II, L.523,557 L.1,206,174 Add life annuities for capital converted, - 135,673 Amount of annuities existing 1st February, 1813, L.l, 341, 847" Note XVIII.— Page 74. An account of the allowances for the management of the national debt is given, page 78 and 79. It has been diminish- £84 NOTES. ed by the reduction of the rate,— by the falling in of annuities, •—the redemption of the capital by the sinking fund, — and the transferrence for land tax. It was thought unnecessaiy to in- troduce the portions of abatement in the statement of each year's charge, and the whole is deducted at the end of Table II. The savings in management by the reduction of the rate, and annuities fallen in, is - - - L.54,493 For capital redeemed by the sinking fund, - 71,556 For capital transferred for purchase of land tax, 8,295 L.134,344 For capital converted into life annuities, - 667 L.135,01l Note XIX.— Page 83. •&^ The interest, &c. of all the debt, whether existing at the establishment of the consolidated fund, or contracted since, as well as the civil list, and other parliamentary grants, are charged on the consolidated fund; and it is credited with all the taxes in force at its commencement, or imposed since, ap- plicable to these purposes : — but the articles on both sides preceding 1803, are now charged promiscuously; and the charges on the loans since 1803, are placed against the branches of revenue appropriated to each. The interest, &c. of the loan 1803, is charged on L.250,000 reserved out of the consolidated customs; L.59,965 from the consolidated stamp duties; and a variable sum from the as- sessed taxes. The interest, &c. of the loan 1804, is charged on the con- solidated stamp duties, which were augmented by a duty on the transfer of property according to its value. The interest, &c. of the loans 1805, is charged on consoli- dated stamp duties and customs, to which certain additions were made ; on additional postage ; additional duty on horses; and additional excise, on salt, auctions, bricks, coffee, cyder, glass, vinegar, and wine. NOTES. . ISo r. The interest, &c. of the loan 1806, is charged on additional duties on wine and spirits; an addition of ten per cent, on as- sessed taxes ; and a small charge on the stamp duties. The interest. Sec. of the loan 1807, is charged on the war taxes, agreeably to lord Henry Petty's system. The interest, &c. of the loans 1808, is charged on additional assessed taxes and stamp duties. The short annuities, now fallen in, and savings by the reduction of the rate of manage- ment, were brought in aid of this year's charge. The interest, &c. of the loans 1809, was charged on the war taxes, except an allowance ofL. 105,000 from the consolidated customs. The interest, &c. of the loans 1810, was charged on the surplus of stamp duties, produced by theii- increase and con- solidation. The interest, &c. of the exchequer bills funded in 1811, was charged on additional duties on spirits ; and that of the loan, on the war taxes : to replace which, additional duties- were imposed on timber, ashes, and foreign linen, and added to the war taxes. The interest, &c. of the debt contracted 1812, was charged on additional asseseed taxes ; additional duties on glass, hides, tobacco, and snuff; and additional postage. The sum required by the system adopted in 1813, is charged on additional duty on tobacco, additional customs, (except on tea, sugar, wine, raw silk, and cotton wool,) additional duty on French wine, and additional war taxes on imports and exports. Note XX.— -Page 84. The term of forty-five years was mentioned when the one per cent, sinking fund was announced, as that in which each loan would be repaid at furthest. The actual term depends upon the rate of interest, and the comparative prices of stock wlien the debt is contracted, and during the period of its re- demption- 25 il^. 186 NOTES. Supposing these equal, and the sinking fund 1-lOOth of the sum borrowed, the periods required for redemption are, At 3 per cent, interest, - 47 years. At 3^ per cent. - - 44 years. At 4 per cent. - - 41 years. At 5 per cent. - - 37 years. But if the loan be funded in the three per cents, at 60, and therefore the sinking fund l-60th of the sum borrowed, the peiiods required for redemption are, At 3 per cent. - - 35 years. At 3^ per cent. - - 33 years. At 4 per cent. - - 31 years. At 5 per cent. - - 29 years. Note XXI. -Page 92. To place the sinking fund proposed on the loans, upon Mr. Vansittart's plan, in a clear point of view, we shall detail its application to the financial operations of the year 1813.* Exchequer bills funded at L.115. 10s in 5 per cents. . . . Ditto funded at L.139 in 4 per cents. Loan funded at L.170 in 3 per cents. Estimated sum applicable to the dis charge of the national debt, 1st Fe- bruary 1813, Additional debt contracted, - The sinking fund to be provided on the former is 1 per cent, on the funded capital, and on the latter, one half of the inte- rest. Sums borrowed 12,000,000 5,755,7(. 21,000,000 36,755,700 13,013,914 23,741,786 Capitals funded. 13,860,000 5,220,423 35,700,000 54,780,423 * See act 52 Geo. HI, cap. 95. THE5 NOTES. The charge on the former part is, funded for Ex. Bills, L.12,000,000 L.13,860,000 Interest, Ditto. 1,013,914 1,409,340 Interest, L.693,000 56,374 L.13,013,914 L.15,269,340 Interest, L.749,374 Management, 4,580 1 per cent. 152,693 Amount charge on former part. L.906,647 The charge on the latter part is, Ex. Bills, L.2,741,786 L.3,811,083 Interest, L.152,443 One half, 76,221 Management, 1,144 L.229,808 Amount charge on Exchequer bills, Loan, 21,000,000 35,700,000 Interest, L.1,071,000 535,500 L.23,741,786 L.39,511,083 One half, 13,013,914 15,269,340 Long annuity, 89,250 L.36,755,700 L.54,780,423 Management, 12,878 Amount charge on loan, on Exchequer bills, Amount charge on latter part, on former part, AVhole charge, - _ . And the sinking fund is, One per cent, on former part, Half interest on latter part, and - Whole sinking fund on debt of 1813, L. 1,708,628 229,808 L.1,938,436 906,647 L.2,845,084 L.76,221 - 535,500 L. 152,693 611,721 L.7G4,414 188 NOTES. Now, to meet the above charge of - - L.2,845,084 tlie following capitals are ordered to be cancelled: 3 per cent. cons. L.46,884,600 3 per cent, reduced, 47,892,500 L.94,777',100 Interest, L.2,843,S13 Note XXII.— Page 9 o o. The terms for the purchase of the land tax, now offered, are the following, in option of the purchaser: 1st. Transfer of stock at one time, or by four instalments in two years. 2d. Payment of money at like periods, the amount being regulated by the current price of stock. 3d. Transfer of stock in sixteen years, by two instalments each year. 4th. Payment of money at the like periods, and to the like amount. 5th. Land tax on houses may be redeemed at 18 years' pur- chase, to be paid within three months. 6th. Land tax on lands not exceeding L.IO, maybe redeem- ed by a double assessment of land tax for 18 years. 7th. By a double assessment of land tax, until the quantity of stock purchased therewith, and the dividends and interest accruing thereon be sufficient for the redemption of the land tax, giving the proprietor the benefit of accumulation at com- pound interest. This mode, at the present price of stock, will redeem the land tax in 14 yeare. Note XXIII.— Page 95. In the official account of the funded debt of Great Britain, 1st February 1812, the amount payable to the commissioners for annuities fallen in by death is L.29,o07 : but in the ac- NOTES. 189 count of the progress made in the redemption of the debt, the sum applicable to the reduction of the debt from the death of nominees to life annuities, prior to 5th July 1802, is stated only at L.21,141; and the same diiference occurs in the statements of the former years. Note XXIV.— Pages 96 and 105. The inequality of the funded debt contracted in different years is remarkable. The expense was much greater in some years than others ; but the inequality is partly to be account- ed for from the loans having sometimes been made near the end of the year, and applied to the service of the following year; and also, from the increase or diminution of the un- funded debt. The debt contracted annually since the renewal of the war in 1803, has been less than in the former war, owing to the large sums raised by war taxes and otherwise, within the year. It is remarkable that the debt redeemed in 1803, be- fore reduction to 3 per cent, is greater than the debt con- tracted. The increase of the public debt for Britain, in 1812, may be thus estimated. Reduced to 3 per cents. L. Funded in 5 per cents. L.5,866,2S6 L.9,r77,060 M. Funded in ditto, - - 7,332,795 12,231,325 JV*. Funded in 3 per cents. 27,544,000 L.49,542,385 Increase of unfunded debt, 3,800,637 6,334,395 Redeemed by sinking fund in 3 per cents. 20,922,876 Addition to public debt, estimated in 3 per cents. L.34,953,904 and estimated in 5 per cents. - - 22,972,342 And the increase in other years may be estimated in the same manner. ^ 190 NOTES. Note XXV.—Page 130. These sums (exept the two last) are taken from the return to an order of the house of commons, dated l9th February 1811. Tliey do not comprehend the charges of collection, amounting now to above three millions, nor the money repaid on drawbacks, bounties, and like allowances. They compre- hend the rents of crown lands, and some other parts of here- ditary revenue, which do not form any part of taxation. They comprehend the balance in the hands of the collectors and receiver-general, and the bills in the hands of the receiver- general at the commencement of each year; and as the balances and bills outstanding at the end of the year, are not deducted, the sums contained in the table are larger than the amount of tlie taxes by the amount of these balances, which, on the 5th January 1811, were L. 1,877,518; and on the 5th January 1812, L.2,0315826; and on the 5th January 1813, L.2,1 95,888. Notwithstanding these inaccuracies, this table exhibitts a competent view of the progress of our taxation. Note XXVI.— Page 133. The high encomiums bestowed upon Mr. Pitt's sinking funds, rendered it necessary to enter into a full discusion of their merits. " To the consolidated fund the country has looked for the interest of its debt, and for its extinction to the sinking fund. The best eulogium that could be made on the sinking fund, was the plain statement he had made. There could be but one opinion in the house on the subject. It urns owing to the instl^ tution of the sinking fund that the country was not charged with a much larger amount of debt. It was an advantage gained by nothing, and a system likely to be attended with still greater advantages. Therefore, independent of consider- ations of good faith, which should induce the house to hold JfOTES* 191 and cling to a system once adopted, it was pledged to sup- port it, having positive trial and experience of its utility."— (From lord Uennj Petty^s speech at opening the budget, 9,9th March, 1806, as reported in the neicspapers at the time. J " On the same principle which guided the determination of parliament in 1786, another act was passed in 1792, which provided, that on all future loans, a surplus of one per cent, per annum on the capital, should be raised for the redemption of the capital. This was an idea conceived in the spirit of in- jlexible integrity and economy, of which nations rarely afford an example, though, like tlie slme virtues in private life, it is calculated to promote, in the highest degi'ee, their prosperity." ■ — (Examination into the Increase of the Revenue, from 1792 to 1799, by George Rose, Esq. J Quotations of a like kind might be adduced to a large extent. Note XXVII.— Page 140. Ik Mr. Rose's Examination into the Increase of the Revenue, &c. 1799, a table is given of the money borrowed, and capital debt contracted since the commencement of the war, in which the loan of 1798 is stated at nine millions, with a correspond- ing capital, and the columns summed accordingly. He adds, indeed, in a note, that " the loan of 1798 was for 17 millions; but the charge on the consolidated fund was only for nine mil- lions, as the remaining eight millions is to be supplied from the aid and contribution tax, in purchasing stock to the extent of the capital created by that sum." Did he believe, or did he expect his readers to believe, that this part of the loan, which he endeavours to keep out of view, was less a burden on the public, because it was then proposed to discharge it by a certain tax to be levied on the public}— an arrangement which was soon vafter relinquished? 192 NOTES. Note XXVIIL— Page 147, In the first part of Table X, which exhibits the progress of taxation and of the sinking fund on Mr. Vansittart's plan, com- pared with that of the former system, the years marked on the margin are higher by one, than in the outlines. Table A. 1; because the taxes imposed, suppose in 1813, can hardly be- come effectual before the 1st August of that year, and, there- fore, their produce the first year, or from 1st August 1813 to 1st August 1814, ought to be set in opposition to the produce ©f the sinking fund during the same time. - Note XXIX.— Page 165. In order to support the value of the five per cent, stock, it was enacted that it should not be redeemed till 25 millions of the three per cents, were paid off with money applicable to the redemption of the public debt. This restriction is now removed by the condition being fulfilled. The loyalty loan is not re- deemable at par till the expiration of three years after the con- solidated five per cents, are paid off. Note XXX.— Page 168. The subject of this section is more fully examined now than it was in the former edition, and the result is more favourable to the system of funding in the 3 per cents. Nothing, how- ever, appears sufiicient to alter our general judgment on the pubject. APPENDIX I, § 1. ACCOUNT OF THE STOCKS. , The term Fund properly signifies any sum of money, or annual revenue, appropriated to a particular purpose. Thus, the part of the revenue which is set aside for the payment of the national debt is called the Sitiking Fund. But when we speak of the funds, we generally mean those large sums which have been lent to government, and constitute the national debt, and for which the lenders or their assignees receive interest from the public revenue. These persons are said to invest their money in the funds. The term Stock is used neai'ly in the same sense ; and is also applied to the simis which form the capital of the Bank of England, the East India and South Sea Company, and other public companies, the proprietors of ^vhich are entitled to a share of their respective profits. The funds which at present constitute the public debt, or are connected with it, are, Bank Stock. The Bank of England was incorporated in 1694. Their original stock, raised by subscriptions, not ex- ceeding L.20,000 in one name, was L. 1,200,000, which was lent to government at 8 per cent, interest, and L.4000 allowed for management, amounting together to L. 100,000. In the year 1709, the bank advanced L.400,000 more to government;, 25 \ 194 APPENDIX I. without additional interest, which reduced the interest re- ceived by them to 6 per cent. They afterwards advanced various sums to government, by withdrawing exchequer bills or otherwise, until the permanent debt due to them amounted, in 1746, to L.l 1,686,800, at which it has remained since. The rate of interest has been gradually reduced, and is now 3 per cent. Besides this permanent debt, the bank has been long in the practice of assisting government, by advancing money on exchequer bills, in anticipation of the land and malt taxes, and now of the annual taxes substituted for the former; by payment of bills drawn on the treasury, and otherwise, to a great extent. The stock of the bank has been enlarged, at a rate nearly keeping pace with their advances to government, but not exactly the same : the sum upon which they divide is L.l 1,642,400. The first term of the charter of the bank was only to the year 1705, and it has since been extended from time to time, being liable to dissolution at the term specified in each charter, upon twelve months notice, and repayment of the money ad- vanced, by government. It is also provided by the various loan acts, that the bank shall remain an incorporation after the term specified in the charter, for the purpose of transact- ing the business of these loans, till they be redeemed. In the year 1800, at which time their charter stood extend- ed to 1802, it was agreed, upon the advance of L.3,000,000 by the bank to government for six years without interest, to pro- long their charter till the end of twelve months notice, after 1st August, 1833 ; and, in 1806, it was agreed to continue this advance till six months after the conclusion of a definite treaty of peace, at 3 per cent, interest. In 1808, a further advance of L.3,000,000 was agreed to be made by the bank, without interest during the war, in con- sideration of tlie large deposits of public money made in their hands, the average of which was estimated to exceed ten mijl- lions. The state of these agreements staiids'thus : APPENDIX I. 195 Interest on L.5,000,C00, advanced by the hank, at 5 per cent. would be .-...-- L.300,000 But government pays only interest on L.3,000,000, at 3 per cent. 90,000 Balance in favour of government, - - L.21 0,000 The bank have also advanced to government L.376,739, and afterwards L.500,000 more, without interest, in consider- ation of the large sum of unclaimed dividends on the public funds always i amaining in their hands. The dividend on the bank stock at its establishment in 1694, was 8 per cent. In 1697 it rose to 9 per cent, but soon afterwards fell, and varied from 6 to 5^, and 5 per cent.; and in 1754 fell so low as 4i per cent. In 1788 it rose to 7 per cent, and in 1807 to 10 per cent., at which rate it has con- tinued since. The dividends are payable on the 5th April and 10th October. In the interval between 1788 and 1807, the followiiig bo- ^luses were paid to the proprietors of bank stock, in addition to the dividend, from the surplus profits. Ladyday, 1799, L.IO per cent, in the loyalty loan. in the navy 5 per cents. in ditto. in money. in money. in money. Ladyday, 1800, 5 Michaelmas, 1802, 2 10 Michaelmas, 1804, 5 Michaelmas, 1805, 5 Michaelmas, 1806, 5 In all, - - L.32 10 The income of the bank arises from the interest of the per- manent debt, and temporary advances to government; the allowance for the management of the public funds; for re- ceiving contributions for loans, and ti-ansacting the business of lotteries ; from the interest of stock held by the company, the discount of bills of exchange, and some smaller articles. The South Sea Company was incorported in the year 1711. for the ostensible purpose of trading to the western coast of 196 APPENDIX I. America. Their original capital was L.9,17'r,96r, lent to go* vernment, for which they received 6 per cent, interest, and L.8000 for management. In 1715 the capital was increased to L.] 0,000,000, and in 1719 to L.l 1,746,844, chiefly by adding arrears of interest unpaid to the former capital. In 1720 a scheme was formed for uniting all the public funds into one ; and, for that purpose, the company was authorised to purchase the debts and annuities due by government, and enlarge their capital in proportion to the extent of their purchase, and sell this additional stock on the most advantageous terms they could procure. The amount of these debts and annuities, (besides those due to the Bank and East India Company, and not comprehended in the scheme) was, Redeemable debts, bearing interest at 5 per cent. L.l 1,779,660 Ditto, bearing interest at 4 per cent. 4,776,822 Amount of redeemable debts, - - - L.l 6,556,482 Long annuities for 89, 96, and 99 years, - L.666,821 Lottery annuities for 32 years, - _ - 127,260 Amount (Jf annuities, ----- L.794,081 This scheme gave rise to an extraordinary scene of national infatuation, generally called the South Sea Bubble. The ex- pectations entertained of advantage to be derived from tJiis agreement with government, and from the extended trade to the South Sea were so extravagant, that the price of their stock rose in a short time to 1000 per cent, and soon after, «pon a discovery of the delusion, fell as rapidly, to the ruin of many. The folly of this national credulity is the more sur- prising, as a similar delusion, of the Mississippi Company, had taken place in France about a year before, attended with con- sequences still more fatal. The greater part, however, of the public debt was subscribed into the stock of this company, and their capital was raised to L.37,802,483, of which four millions were purchased by the bank in 1722. The only branches of trade in which the com- pany ever engaged, were that of conveying slaves to the Spa- APPENDIX I. 19?" nish colonies, and the whale-fishery; and these being attended with loss, were abandoned. Since 1748 they have carried on no trade whatever. Their stock has since undergone various modifications, and has been considerably reduced by pay- ments from government, and tlie rate of interest has sustained the same reductions as in the other public funds. It is at pre- sent distributed into the following branches: — South Sea Stock, considered as the trading capital of the company, though they have long ceased to trade. This was fixed, in 1733, at L.3,662,784, and has remained invariable since. The dividend received by the proprietors of this stock is 3 A per cent, of which 3 per cent, is paid by government, and the remaining half per cent, by tlie company. This they are enabled to make from fines to which they are entitled from ships trading within tlie bounds of their charter, and thfe allowance received from government for management. This article amounted, in 1786, to about L. 15,000, but is since re- duced in consequence of the purchase of part of tlie capital under their management by the commissioners, Old South Sea Annuities. These were separated from the other funds of the company in 1723, when they amounted to L.16,901,099, bearing interest at 5 per cent., reduced in 1727 to 4 per cent., in 1751 to 5h per cent., and in 1757 to 3 per cent. Part of the capital being paid off at different times, it was reduced in 1775 to L.l 1,907,470, at which it remained till Mr. Pitt's sinking fund was established in 1786. JVew South Sea Annuities, separated from the other funds of the company in 1733, when they amounted to L.10,988,318, bearing interest at 4 per cent. The capital was reduced in 1775 to L.8,494,830, and the interest has undergone the same reductions as that of the old annuities. Three 'per cent, annuities, 1751, ai-e also under the manage- ment of the South Sea Company. This fund consisted origi- nally of L.2, 100,000, borrowed for the purpose of paying off those holders of South Sea annuities who did not consent to the reduction of interest wliich took place at that time,,. 198 APPENDIX I. It was reduced in 1775, by payments at various times, to L.1,919,600. A considerable part of these three last mentioned funds has been redeemed by the commissioners since 1786. The dividends on the South Sea slock, the new South Sea annuities, and the 3 per cents. 1751, are payable 5th January and 5th July; those on the old South Sea annuities 5th April and 10th October. Three j;er cent, reduced annuities. This fund commenced in 1746, and was then formed of various articles of public debt which formerly bore a higher rate of interest, from which circumstance it derived its name. But many additions have been made to it by subsequent loans which never bore interest at any other rate. The dividends are payable 5th April and 10th October. Tfiree per cent, consolidated annuities. This is the largest of all the public funds. It commenced in 1731, but derived its present name from the consolidating act in 1751, being formed by the union of several capitals formerly kept sepa- rate. Many additions have since been made to it. The divi- dends are payable 5th January and 5th July. Three per cent, annuities, 1726. This fund consists of L.1,000,000 borroAved by lottery in that year, for the discharge of exchequer bills issued for paying the arrears of the civil list. The interest was at first charged on a duty of 6d. per L.l on pensions, but it is now paid from the consolidated fund; though the fund itself, for reasons which do not ap- pear, is still kept separate. The dividends at the same terms as those of the 3 per cent. cons. A fund bearing interest at 3^ per cent, was established in 1756, but the sums it was charged with have have been since reduced to 3 per cent, interest, or paid off. Four per cent, consolidated annuities. This fund com- menced in 1760; but L.23,500,000 borrowed on it, ^n that and the following years, being paid off, or the rate of interest reduced, the earliest article now belonging to it is a loan of L.5,0005000, in 1777, to which various other loans, or parts of APPJEJVUix I, 199 loans, have since been added. The dividends are payable at the same terms as those of the 3 per cent, reduced. JYavyfive per cent, consolidated annuities. This stock com- menced in 1784, and was first applied for funding the navy, victualling?, and transport bills, then in circulation, from which it derived its name. It has since received many additions, chiefly by funding exchequer bills. The dividends are paya- ble at the same terms as those of the 3 per cent. cons. Loyalty Loan, or five per cent annuities, 1797 and 1802. An account of this fund is given in Note XII. The dividends are payable at the same terms as those of the 3 per cent, re- duced. Imperial three par cent, annuities. An account of this fund is given, pages 77, 78. The dividends, though due November 1st and May 1st, are not paid till January and July. Irish five per cent, annuities, are not guaranteed by Britain, but transferrable at the Bank of England, and the dividends payable there on the 25th March and 25th September. And the terminable annuities are, Annuities on lives. The amount of these, standing in the books of the exchequer, including tontines, on the 1st Fe- bruary, 1813, was L. 65,571; but a considerable part had not been demanded for upwards of tJiree years, and is probably expired. They are payable at the exchequer half yearly, on the 5th January and 5th July, and are transferrable by assign- ment indorsed on the order, which must be registered at the exchequer. Any person receiving an annuity, knowing the nominee to be dead, forfeits L.500, and treble the sum re- ceived. See Note XVII. Long annuities. These terminate on the 5tii January i860, and are now payable half yearly, at the bank, on the 5th April and lOtli October. The amount on the 1st February, 1813, was, British, - - - - L.i,140,601 Irish, - - . • , 104,083 L.1,244,684 200 APrENDix 1. Converted life annuities. [See page 73.] The amount of stock converted on the 5th January, 1813, was, 3 per cent. cons. . - - L.l, 365,145 3 per cent, reduced, - - - 596,437 L.1,961,582 and the subsisting annuities amounted to - L.135,675 payable at the same terms as the dividends of the converted stock. Imperial annuities^ granted along with the last imperial loan for 25 years, and payable at the same terms as the dividends on that loan. They expire in May, 1819, amount L.230,000, § 2. OF THE EAST INDIA COMPANY. The affairs of the East India Company have been, and still are, so much blended with the public revenue, that some ac- count of their progress and present state belongs to the subject of our inquiry. This company presents a singular example of a mercantile society commencing on slender funds, and gradually expand- ing, but not assuming for a century and a half any great politi- cal importance ; and afterwards acquiring the sovereignty of a mighty empire, exceeding the British Isles in extent and popu- lation, perhaps in wealth; still remaining in complete subjec- tion to the parent state, witliout contributing much, at least not directly, to the public revenue. The first charter was granted by queen Elizabeth in 1600, and conferred the exclusive privilege of trade to all countries, from the Cape of Good Hope to the Sti'eights of Magellan, for fifteen years. Their original capital was only L.72,000 in shares of L.50 each; and it was not formed into a joint stock ATiPENDIX t, SO I for some years after, and for a long time their exertions v/ere feeble. In the reign of James I, they received a new charter, and their stock was enlarged. The company was dissolved during the usurpation of Cromwell in 1755, and the trade laid open to the public ; but this being attended with inconveni- ences, it was re-established about three years after, at which time their nominal stock was L.r39,782, whereof only one half, or L. 369,891 was paid up, and v/as properly their trading capital. In the subsequent period, the renewals of their char- ter were frequent, there being no fewer than six between the restoration and the revolution, and three between the revolu- tion and 1698. These charters conferred sovereign power. The company had been invested witli criminal jurisdiction by the charter of James I. They were now authorised to possess all plantations, forts, and factories, in the East Indies, and erect new fortifications there, and at St. Helena, a7id to make war or peace ivith any prince or people that ivere not Chris- tians. The other charters were chiefly granted for enlarging their powers to suppress interlopers. In 1693, a tax of 5 per cent, was imposed on their stock, which at that time amounted to L.744,000, and their charter was forfeited for non-pa^nnent, but was immediately restored. These charters were not limited in point of time, but reserved a power of dissolving the company upon three years' intimation, if its privileges should be found prejudicial to the public. A new East India Company was established by king Wil- liam in 1698, which advanced L. 2,000,000 to government, at 8 per cent, interest. Their right of trade was to continue till 1714, after which they might be dissolved upon three years' notice, and repayment of the money due by the public; and a similar clause was inserted in all the subsequent charters. In 1702, the two companies were united, and, in 1708, the united company lent a further sum of L. 1,200,000 to government without interest, which reduced the rate of interest to 5 per cent, upon which their charter was prolonged to 1729. In 1712, it was further prolonged to 1736, and again in 1730 to 1769, on which occasion tiie company gave L. 200,000 to the public revenue, and agreed to the reduction of the rate of in= P. 7 20S APPENDIX 1. terest on their debt to 4 per cent. The next prolongation of their charter took place in 1743, when they advanced L. 1,000,000 to government at 3 per cent, interest, and ob- tained an extension to 1783. When a general reduction of the interest on the public debt took place in 1749, the interest of the whole debt of L.4,200,000 due to the company was re- duced to 3 per cent, and they were empowered to borrow by the sale of annuities to that extent, and did borrow L.2,992,440 accordingly. The debt due them by the public remained in this state as a separate fund till 1793, when it was joined to the 3 per cent, reduced stock. The annuitants on the com- pany agreed to accept of 3 per cent, reduced stock in ex- change for their annuities, and the company themselves be- came holders in that stock, to the extent of L. 1,207,560, being the residue of the debt of L.4,200,000. This is the only debt now due by the public to the company. The dividends of this company, arising from the profits of trade, have been variable, and the value of their stock exposed to greater fluctuation than that of any other of the other pub- lic funds. Previous to 1757, although invested in some mea- sure with sovereign power, their possessions in India were limited to forts and factories, with a small contiguous terri- tory ; but soon after that time, in consequence of the con- quests made by lord Clive and others, they acquired extensive dominions, which they held at first by dependent nabobs, whom they raised and removed at pleasure, but afterwards as- sumed into their immediate possession. From these dominions they drew an ample revenue, which soon attracted the atten- tion of government, as an object in which the public had a right to participate. An agreement was made in 17G7, that the company should pay L.400,000 annually for two years, and in 1769 it was extended for five years more, as a consi- deration for being permitted to retain the revenue of their acquired territory. The company, however, have been so often engaged in expensive wars Avith the native powers, that the prospect of deriving a revenue to Britain from their pos- sessions was never realized for any length of time. In 1773, they were not only unable to make the stipulated annual pay- APPENDIX I. 203 went, but were obliged to apply to government for a loan, and received one of L. 1,400,000, their dividends being limited to 6 per cent, till it should be repaid. Tiiis debt was paid up in 1777, and the restriction on their dividends of course re- moved. In 1781, a new agreement was made with the company. A payment of L.400,000 made that year was accepted of, in dis- charge of all former claims ; their exclusive privileges were extended to 1794 5 and, their dividends being at that time 8 per cent, it was stipulated that three -fourths of their surplus profits should be appropriated to the public service, and the other fourth retained by the company for the enlargement of their dividends ; which, however, were not to be increased above one per cent, in any year, and never to exceed 12 J per cent. The public never derived any revenue from this agree- ment; for, in the following years, the nett profits of the com- pany did not amount to 8 per cent., and their affairs fell under such embarrassment, that government was induced to postpone the payment of customs due by them, and also to issue ex- chequer bills to the amount of L.300,000, upon which tlie Imnk advanced money for their relief. By an act passed in 1784, the board of commissioners for the affairs of India, generally called the board of control, was established, to whose orders the directors of the East India Company are subject in all matters of civil and military go- vernment, and who have also the power of regulating the administration of their territorial revenue; and " tvhereas schemes of conquest and extension of dominion in India are, measures repugnant to the ivish, the honour, and the interest of this nation,'^ the governor -general was prohibited from com- mencing hostilities, or entering into any treaty for making war against any of the princes of the country, unless hostilities have been committed, or preparations made for hostilities against them or their allies. Tlie history of the succeeding thirty years will show how far the conduct of Britain to the native powers of India has been conformable to this excellent principle. At the next renewal of their charter, in 1793, the exclusive 204 APPENDIX I. privileges of the company underwent some restrictions. Every British subject was permitted to export any goods, except military stores and copper, to India, but not to China; and the civil servants of the company, and merchants residing in India under their protection, were permitted to import any goods, except piece goods of cotton and silk, on board the company's ships to London; and for these exports and im- ports in private trade, the company was obliged to appropriate 3000 tons of shipping, at L.5 per ton outwards, and L.15 in- wards, of freight, in time of peace, with an addition in time of war. Under these limitations, their exclusive privileges were extended to 1st April, 1814. The full extent above- mentioned of tonnage for private trade outwards has never been required. The clear profits of the company were directed to be applied as follows: 1st, in payment of 10 per cent, dividend on their stock, besides one half per cent, more, eventually, from a se- parate fund; 2d, in payment of L. 500,000 annually of bills drawn from India for the liquidation of the debt due by the company in that country; 3d, in payment of L. 500,000 an- nually to the exchequer for the public service. The surplus after these payments to be applied to the further discharge of the debts in India, till it should be reduced to two crores* of rupees; and of the bonded debt in England, till it should be reduced to L. 1,500,000; after which one-sixth of the surplus profits was to be applied to the augmentation of the dividends, and the remaining five-sixths to be paid into the bank of Eng- land, to be placed to the account of the commissioners for the reduction of the national debt, till it should amount to 12 mil- lions, (which sum was to be a guarantee fund for securing the stock and dividends of the company;) and when that fund was completed, the foresaid five-sixths of surplus profits was to be paid into the exchequer as the property of the public. The above-mentioned payment of L. 500,000 to the exchequer, has not been made since April, 1794. It is unnecessary to add, that the guarantee fund has never been made up; and, ' A Ci'ore of rupees is nearly equal to a million sterling' APPENDIX I. 205 consequently, that the public have never participated in any surplus profits. In 1812, the embarrassed state of the com- pany's affairs obliged them to apply again to government for aid; and, accordingly, a loan of L.2,500,000 was granted to them, joined to the loan of that year.* The sum funded for this was L.4,400,000 in the 3 per cents. ; and the company was bound to pay into the bank of England, besides the inte- rest and charges of management, L. 11 0,820 as a sinking fund for the discharge of the principal, being about 2^ per cent, on the funded capital. The charter being now [^1813] on the eve of expii'ing, the object, so long contended for, of laying the trade to India open to the public, is at last, in a great measure obtained. Permis- sion is granted to every British subject to trade to India, but not to China, both in export and import, after 10th April, 1814. This trade, however, is subjected to various regula- tions, the most important of which are : — That no vessel shall proceed on private trade, to India, without a licence from the directors, which shall be granted, on application, of course, to the principal settlements of Fort-William, Fort-George, Bom- bay, or Prince of Wales' Island; but no vessel may fit out to other places, unless specially authorized ; and in case the di- rectors refuse to grant such special licence, the board of con- trol shall ultimately determine in regard to the same : that no vessel under 150 tons sha,ll be employed: that goods im- ported in private trade shall be brought to some port in the united kingdom which shall have been declared fit for that purpose by order in council : that the importation of articles of silk and cotton manufacture, for home consumption, shall be confnied to the port of London, and the goods deposited in the company's warehouses there: and the importation of tea, in private trade, is prohibited without licence from the company. The company retain, till 10th April, 1834, the government and revenue of their territorial acquisitions, subject to the regulation of the board of control, and the exclusive trade to China, and may trade as a corporation to India, in common, with his majesty's other subjects. * See page 73, JV. 206 APPENDIX I. The same hopes of procuring a revenue to the public, ■which have so often before proved delusive, are still held forth. The enactments for the distribution of their territorial and com- mercial revenue are nearly the same as at the renewal of their charter in 1793. Their commercial profits are to be employ- ed, 1st, in payment of bills of exchange; 2d, in paying debts, (the principal of the bond debt in England excepted,) and commercial charges; 3d, in payment of a dividend of 10^ per cent, on their capital ; 4th, in the reduction of their bond debt. No annual payment to government, except the interest and sinking fund of the loan of 1812, is required. The territorial revenue in India is applicable for the civil and military charges in that country, the payment of the interest, and liquidation of the Indian debt, and of the bond debt at home; and when the Indian debt is reduced to 10 millions, and the bond debt to 3 millions, then the surplus revenue, both territorial and commercial, shall be paid into the exchequer, and applied, in the first place, for raising a guarantee fund of twelve millions; and when that fund is completed, one-sixth of the surplus shall belong to the company, and the other five-sixths become the property of the public. The progress and present state of the stock of the company is as follows :— Capital. Sums advanced. 1708, L.3,200,000 at 87^ per cent. L.2,800,000 1786, 800,000 at 155 per cent. 1,240,000 1789, 1,000,000 at 174 percent. 1,740,000 1793, 1,000,000 at 200 per cent. 2,000,000 L.6,000,000 L.7,780,000 In 1797, an act was passed authorising the company io augment their capital by L.2,0005000; but this has not yet been carried into execution. The dividends on India stock have been as follows: — Ladyday, 1709, 5 per cent. Michaelmas, 1709, 8 per cent. Michaelmas, 1711, 9 per cent. Christmas, 1716, 10 per cent. APPENDIX I. Midsummer, 1722, 8 per cent. Christmas, 1732, 6 per cent. Midsummer, 1733, 7 per cent. Christmas, 1755, 8 per cent. Christmas, 1766, 6 per cent. Midsummer, 1767, 10 per cent. Midsummer, 1769, 11 per cent. Midsummer, 1770, 12 per cent. Midsummer, 1771, 12^ ( per cent. Christmas, 1772, 6 per cent. Christmas, 1776, 7 per cent. Midsummer, 1778, 8 per cent. Midsummer, 1798, 10^ I per cent. 207 And they have continued at that rate since. India Bonds. The company owes a large sum on transfer- able bonds, generally of L. 100 each, the rate of interest on which has frequently varied, and is at present 5 per cent, payable twice a year, on the 3 1st March and 30th September, clear of property tax, which is paid by the company. Govern* ment have several times interfered to restrict the amount (S this debt. In 1773, their dividend was limited to 7 per cent, till their bond debt was reduced to L. 1,500,000; and this was effected in 1778. Being afterwards enlarged to L.3,200,000, they were again required to restrict it to L. 1,500,000, asia condition of the increase of their capital ; but this reduction was not completed, and this debt has been enlarged since, with consent of the board of control, occasioned partly by the transference of part of the debt due by tlie company in India, to Britain. These bonds are received by the company as cash, when there is six months interest due on them, and are a very marketable security, generally bearing a premium, being very convenient to be kept by merchants or public com- panies to answer exigencies. When transferred, the interest. to the day of sale, together with the premium, is added to the sum of the bond, and paid by the purchaser. 208 APP£N1>1X I. § 3. MANNER OF TRANSACTING LOANS. In the early part of the funding system, the subscription for loans was taken at the exchequer; but, since 1714, they have been transacted at the Bank of England; and this Mas formerly done by open subscription. Terms were proposed to the public, and as these were calculated to afford a profit, the subscription was generally filled up in a short time. If tlie terms were not judged sufficient, and consequently the sub- scription not filled up, others more advantageous were offered afterwards. For a considerable number of years, a mode of transacting loans still more favourable to the public has been adopted. The chancellor of the exchequer fixes upon the funds in wliich the loan is to be made. These are often of different kinds, and not unfrequently a long annuity forms part of the emolu- ment. He then gives public intimation that he is ready, on a ^iertain day, to receive offers, and assign the loan to those vho are willing to accept of the lowest terms. If a long an- nuity be a part of the proposed emolument, the other funds to be assigned to the lenders are fixed at a rate somewhat lower tlan the estimated value for each L.lOO borrowed, and the bidding is on the long annuity, the loan being gi-anted to those wio will accept of the least annuity in addition to the capital offered. If the loan be in difierent funds, but without an an- Titity, the capitals in all the funds except one are previously fixed ; and the bidding is on that fund, the loan being granted to those who will accept of the least capital. The chancellor of the exchequer is generally attended, at the time appointed, by several of the principal bankers in London, who deliver their offers, having previously made up a list of persons M'ho are willing to share with them to a certain extent, in case theu- offer be accepted ; and the loan is assigned to the offerer who proposes the lowest terms. Tins metliod, since its adop- tion, has been conducted with the utmost impartiality, and, being a fair and open competition for the public benefit, has been uniformly ratified by parliament. The only deviation APPENDIX I. 209 from it, since its first adoption till the present year, was in the loan of 1796, called the Loyalty Loan, when the method of open subscription at the bank was resorted to. In the loan of November 1813, a preference was given to the con- tractors of the former loan. The loans are always payable by instalments at different periods of the year : but the dividends are payable on the whole from the first usual term of the funds in which the loan is made. Thus the lender receives dividends during the whole of the first year, although he only advances the money on the days appointed for payment of the instalments ; or if he advances the whole at first, he is allowed a suitable dis- count, and he derives part of his profit from these allowances; and, according to the terms of the loan, he is generally possess- ed of several interests; so much perhaps in a 3 per cent, fund, so much in a 5 per cent, fund, so much in a long annuity, and formerly so much in lottery tickets. After the loan is com- pleted, these interests are assignable separately ; but when the loan is in progress, they may be either assigned separately or together. The separate parts in this stage of the business are called serip, and their united amount is called omnium. In oi'der to obtain a loan it is necessary that the value of omnium at the time should be above par. This difference, which often amounts to 5 per cent, or upwards, is called the bonus to the lenders. Instances, however, have occurred, in which the price of omnium fell below par, before the loan was completed. Lenders who do not pay their instalments at the appointed terms forfeit their subscriptions. The Bank of England not unfrequently lends its aid in advancing some of the instal- ments. The terms of the loan of 27 millions, contracted in June, 1813, were, L.llO in 3 per cent, reduced scrip, valued at 57 i, L.63 10 6 60 in 3 per cent. cons, scrip, valued at 56|, 33 15 Long annuity scrip, of 8s. 6d. for 46j yeai-s, at 14 years' purchase, 5 19 Value of omnium, - - . , . L.103 4 6 28 510 APPENDIX I. Bonus i6 subscribers, besides discount for prompt payment, 346 i^nd the loan was payable by the following instalments : Deposit at subscription, - - L.IO July 23d, ... - 10 August 20th, - - - - 15 September 17th, - - - 10 October 22d, - - - - 15 November 19th, - - - 10 December 17tli, - - - 10 1814. January 21st, - - - - 10 February 18th, _ . . lo Q L.lOO Upon payment of the first instalment, a separate sheet is delivered to the original holder for the sums paid on each component part of the loan, containing, on one side, a receipt for the sum paid, and on the other, a form of assignment. When a sale takes place, the original holder puts his name to the assignment, without filling it up, and delivers it thus blank indorsed to the purchaser; and, in this manner, scrijJ and omnium pass from hand to hand like bank notes. These re- ceipts are so made out, before delivery from the bank, as to show how much money must be paid upon the several scrips^ at each instalment. Thus, in the above-mentioned loan there was paid for each L.IOOO subscribed at the fiist instalment, L.60 on the 3 per cent, reduced. 34 on the 3 per cent, cons. 6 on the long; annuities. 'a L.lOO being 10 per cent, on the loan ; and like sums were pay- able at the instalments in July, September, November, and December, 1813; and in January and February 1814; and one-half more, or 15 per cent, on the instalments in August and October, 1813. The holders of scrij) must attend to the payment of these instalments at the bank on the appointed days, under pain of forfeiture ; and when the last instalment is paid at its term, or the whole paid up at an earlier time, APPENDIX I. 2U with allowance of discount, the scrip is converted into stocky and consolidated with the mass of the stock of the same name previously existing, from which it cannot afterwards be dis- tinguished. The value of scrijj, after any given number of payments liave been made thereon, is computed by deducting the amount of the remaining payments from the value of the stock, at the market price. eas § 4. MANNER OF TRANSFERRING STOCK. Agreements for the sale of stock are generally made at the Stock Exchange, which is frequented by a set of middlemen called Jobbers, whose business is to accommodate buyers and sellers with the exact sums they want.* A Jobber must be possessed of considerable property in the funds 5 and he de- clares a price, suppose 59 i or 594 ^^ ^^^^ three per cent, cons.; that is, he is willing to buy any sum from any person at 59 J, or sell him at 59^. By this means, one who wishes to sell, suppose L.375. 10s. and could hardly find a purchaser for that precise sum without the assistance of a Jobber, obtains his purpose, and the smallest sums are purchased and sold with the utmost facility. The Jobber's profit is generally 4 per cent, for which he transacts both a sale and a purchase; and these persons often engage in no other stock speculation, but go away when the business of the day is over, possessed of the exact sum of stock they had in the morning. The bargain, being agreed on, is carried into execution at the transfer ofilce, at the bank, or the South Sea house. For this purpose the seller makes out a note in writing, which con- tains tlie name and designation of the seller and purchaser, * This is the proper acceptation of the term Jobber, in the lan- guage of the Stock Exchange. In common conversation, we g"cue- rally understand by it, a speculator in the stocks. 212 APPENDIX I. and the sum and description of the stock to be transferred. He delivers this to the proper clerk,* and then fills up a re- ceipt, a printed form of which, with blanks, is obtained at the office. The clerk, in the meantime, examines the seller's ac- count, and if he find him possessed of the stock proposed to be sold, he makes out the transfer. This is signed in the book by the seller, who delivers the receipt to the clerk ; and upon the purchasers's signing his acceptance in the book, the clerk signs the receipt as witness. It is then delivered to tlie purchaser upon payment of the money, and thus the business is completed. This business is generally transacted by brokers, who derive their authority from their employers by powers of attorney. Forms of these are obtained at the respective offices. Some authorise the broker to sell, others to accept a purchase, and others to receive the dividends. Some comprehend all these objects, and the two last are generally united. ' Powers of attorney, authorising to sell, must be deposited in the proper office for examination one day before selling. A stockholder acting personally, after granting a letter of attorney, revokes it by implication-t The person in whose name the stock is invested when the books are shut, previous to the payment of the dividends, re- ceives the dividend for the half year preceding; and, there- fore, a purchaser, during the currency of the half year, has the benefit of the interest on the stock he buys, from the last term of payment to the day of transfer. The price of stock, therefore, rises gradually, ccmteris paribus, from term to termj and when the dividend is paid, it undergoes a fall equal thereto. Thus the 3 per cent, cons, should be higher than the * The letters of the alphabet are placed round the room, and the seller must apply to the clerk who has his station under the initial letter of his name. In the 3 per cent. cons, office, there are also supervising clerks, who join in witnessing the transfer. t The rate of brokerage is 2s. 6d. per L.lOO for buying or sellin.q;-. A letter of attorney costs L.l. Is. 6d. The registration ofa wiiJ, 2s. 6d. The transfer of bank stock under L.25, costs 9s., above it, 12s.; of South Sea stock under L.lOO. 10s., above it, 12s.; of India slock, L.l. 45. Government stock is transferred without any charge. APPENDIX I. 213 3 per cent, reduced, by | per cent, from 5th April to 5th July, and from 10th October to 5th January; and should be as much lower from 5th January to 5th March, and from 5th July to 10th October; and this is nearly the case. Accidental circum- stances may occasion a slight deviation. The dividends on the different stocks being payable at dif- ferent terms, it is in the power of the stockholders to invest their property in such a manner as to draw their income quarterly. The business of speculating in the stock is founded on the variation of the price of stock, which it probably tends, in some measure, to support. It consists in buying or selling stock, according to the views entertained by those who en- gage in this business of the probability of the value rising or falling. This business is partly conducted by persons who have property in the funds : but a practice also prevails among those who have no such property, of contracting for the sale of stock, on a future day, at a price now agreed on. For example, A. may agree to sell B, L. 10,000 of three per cent, stock, to be transferred in twenty days, for L. 6,000. A has in fact no such stock ; but, if the price on the day appoint- ed for the transfer, be only 58, he may purchase as much as %vill enable him to fulfil his bargain forL.5,800, and thus gain L.200 by the transaction. On the other hand, if the price of iha.t stock should rise to 62, he will lose L.206, The business is generally settled without any actual purchase of stock, or transfer, by A, paying to B, or receiving from him, the differ- ence between the price of stock on the day of settlement, and the price agreed on. This practice, which amounts to nothing else than a wager concerning the price of stock, is not sanctioned by law; yet it is carried on to a great extent : and as neither party can be compelled by law to implement these bargains, their sense of honour, and the disgrace attending a breach of contract, are the principles by which the business is supported. In the language of the Stock Exchange, the buyer is called a Bull, and the seller a Bear, and the person who refuses to pay his loss is called a Lame Duckj and the names of these de- 214 APPENDIX I. faulters is exhibited in the hall of the Stock Exchange, where they dare not appear afterwards. The most usual times for which bargains of this sort ai-e made, are the first transfer days in February, May, August, and November, These ai'e called rescontre, or settling days. Sometimes, instead of paying the difference on the rescontre day, the settlement is deferred to a future day on such terms as the parties agree on. This is called a continuatioti. All the business, however, which is done in the stocks for time, is not of a gambling nature. In a place of so extensive commerce as London, opulent merchants who possess proper- ty in the funds, and are unwilling to part with it, have fre- quently occasion to raise money for a short time. Their resource, in this case, is to sell for money, and to buy for a future time ; and although the money raised in this manner costs more than the legal interest, it affords an important accommodation. The following statement has been given of the highest and lowest prices of the stocks, since 1720. HIGHEST PRICES. 1 S per cents. June 1759, L.107 4 per cents. August 1791, 107-1 5 per cents. Ditto — 122| Bank stock, February 1792, 219 South Sea stack, May 1768, 111 India stock, December 1768, 2765 LOWEST PRICES. 3 per cent. cons. January 1798, L.47I 3 per cent, reduced. > June 1797, 47 4 per cents. January 1798, 59^ 5 per cent, navy. January 1798, 69| Bank stock. January 1782, 91 South Sea stock. February 1782, 62 India stock, January 1784, im APPENDIX II. # TABLE I. Amount of the different Funds on the 1st January, 1793, and 1st February, 1813, with the sums redeemed, and balances unredeemed; including the debts for Ireland, Germany, and Portugal, guaranteed by Britain. 3 per cent. South Sea stock, - 3 per cent, okl South Sea annuities, 3 per cent, new South Sea annuities, 3 per cent, annuities, 1751, Amou7it transferrable at the South Sea house, - - - - Bank of England, - . - 3 per cent, annuities, 1726, 3percent.cons.^;^Pt;s^''* ' * 3 Insh, - -\ British,§ 3 per cent, reduced, C Irish, J Portuguese, 3 per cent. Imperial loans. Amount 3 per cents. Redeemed before 1793, 4 per cent. cons. 1 British, - ■ 5 Irish, 1 Britis ' 5 Irish, 5 per cent, loyalty loan. 5perce„..„»y,|S*.- Debt,Jaji.5, 1793. Debt, 1st Fobruarv, 1813. 3,662,784 11,907,470 8,494,830 Contracted.! Kedeem'd. I 24,065,084 1,919,600 25,984,684 11,686,800 1,000,000 107,399,696 41,540,073 187,611,255 10,242,100 177,369,155 32,750,000 17,869,993 227,989,148 3,662,784 11,907,470 8,494,830 1 24,065,084 1,919,600 25,984,684 11,686,800 1,000,000 404,730,558 33,235,125 205,928,521 30,068,750 895,522 7,502,633 l^. 859,000 91,835,854 5,148,221 127,168,488 5,505,278 176,674 1,361,974 721,032,593 68,857,321 5,054,375 92,202,254 572,000 1,622,994 889,341,537 241,055,489 7,796,400 142,000 248,993,899 Unredeem'd 3,662,784 12,462,900 11,686,800 1,000,000 312,894,704 28,086,904 78,760,033 24,563,472 718,848 6,140,659 479,977,104 61,060,921 5,054,375 92,060,254 572,000 1,622,994 640,347,648 * In the following tables, and also in the foregoing statements, the figui-c marked in tlie unit place of the sum of a column is often different from what it will be found on trial, owing to the omission of the shillings and pence. f The capitals transferred for the purchase of land tax, and tliose converted into life annuities, as well as those purchased by the commissioners, are included in the statement of the redeemed debt here given. i L.1,400,000 funded in the 3 per cent. cons, for a loan to the East India Com- pany, in 1812, is not included. § L.3,000,000 funded in the 3 per cent, reduced, for the East India Company, a.-; above, is not included. 216 APPENDIX 11. TABLE II. Progress of the Funded Debt of Britain fiom 1793 to 1813, Preceding 1793, - 1793 Loan - 1794 Loan Navy Bills - 1795 Loan Navy Bills - Loan ... 17^6 Loan ... Navy Bills Navy and Exch. Bills LoTALTr Loan 1797 Loan ... 1798 Loan - Loan ... 1799 Loan - 1800 Loan 1801 Loan - 1802 Exchequer Bills Loan ... 1803 Loan - 1804 Loan 1805 Loan - Operations Lotai.tt Loan* 1805 Loan 1807 Loan - 1808 Loan Exchequer Bills - Interest dcfcn-ed 1802, 1809 Loan Exchequer Bills - 1810 Exchequer Bills Loan ... 1811 Exchequer Bills - Loan - - . Loan ... 1812 Exchequer Bills - Loan ■ - - . Loan ... Reduction management! Expired annuities^ Converted into life annuities Debts contracted since 1793, By loans By funding bills, Contracted before 1793 - C /J, E F H I K L M\ Sums raised. CAPITAL FUNDED. unknown. 4,500,000 11,000,000 1,907,451 18,000,000 1,490,647 18,000,000 7,500,000 4,226,727 13,029,399 18,000,000 13,000,000 15,000,000 3,000,000 12,500,000 18,500,000 25,500,000 8,910,450 23,000,000 217,064,674 10,000,000 10,000,000 20,000,000 257,064,674 —1,762,394 255,302,281^ 18,000,000 12,200,000 8,000,000 4,000,000 11,000,000 7,932,100 8,311,000 8,000,000 7,018,700 4,981,300 12,000,000 5,431,700 6,789,625 15,650,000 3 per cent. 187,611,255 6.250,000 11,000,000 18,000,000 26,095,800 10,793,825 18,437,874 22,750,000 30,000,000 5,624,250 21,875,000 29,045,000 44,816,250 4,455,225 167,105,854 16,000,000 18,200,000 34,400,000 535,705,854 7,426,233 543,132,087 29,880,000 17,080,000 6,064,478 11,230,000 14,400,000 27,544,000 384,616,705 322,358,532 62,258,173 64y,330,565 -1,961,582 647,368,983 4 per cent. 32,750,000 2,750,000 6,000,000 869,860 2,600,000 4,455,225 49,425,085 49,425,085 49,425,085 9,454,000 237,900 6,960,000 380,336 2,400,000 68,857,321 5 percent. 17,869,993 1,926,526 1,600,898 4,414,074 2,305,092 20,124,843 2,227,612 50,478,039 50,478,039 —4,045,502 , 46,432,537 1,293,200 4,001,354 7,873,308 8,581,108 ,392 5,166^319 7,2/ 5,866,239" 7,332,795 y3,«25,249 68,857,321 93,825,249 438,826,211 22,893,099 384,616,705 461,719,310 187,611,255 30,164,000 5,943,321 29,871,655 46,083,600 36,107,321 32,750,000 649,330,565 68,857,321 75,955,255 17,869,993 y3,8i!5,249 * See Note XIT. f See Not- XVUI. f See Note XVIT APPENDIX II. 217 With the Annual Charge on the same. Total. ANNUAL CHARGE ON EACH LOAN. | Whole an- nual charge. Interest. | Annuities. Manag'ement. Total. ^38,231,248 7,831, 83(' 1,293,870 116,127 9,241,834 y,241,834 A 6,250,000 187,500 - 2,812 190,312 9,432,146 B 13,750,000 440,000 62,792 6,894 509,686 9,941,832 C 1.926,526 96,326 - 867 97,193 10,039,025 D 24.000,000 780,000 85,500 11,762 877,262 10,916,928 E 1,609,898 80,495 . 724 81,219 10,997,506 F 26,095.800 782,874 58,500 12,401 853,775 11,851,281 G 10,793,825 323,815 20,582 5,039 349,486 12,200,767 H 4,414,074 220,703 - 1,986 222,689 12,423,456 I 21,612,826 703,185 - 9,726 712,911 13,136,397 K 20,124,843 1,006,243 - 9,056 1,015,299 14,051,666 L 25,350,000 786,500 39,000 11,864 837,364 14,989,030 M 30,000,000 900,000 36,875 13,915 950,790 15,939,820 N 5,624,250 168,727 - 2,530 171,257 16,111,077 21,875,000 656,250 - 9,843 666,093 16,777,170 P 29,045,000 871,350 - 13,070 884,420 17,661,590 Q 44,816,250 1,344,488 - 20,167 1,364,655 19,026,245 li 11,138,063 423,247 7,796 5,099 436,142 19,462,387 S 30,351,375 862,500 - 12,937 875,437 20,337,825 567,008,978 18,466,040 1,604,915 266,870 20,337,825 T 16,000,000 480,000 32,083 5,713 517,796 20,855,621 U 18,200,000 546,000 - 6,188 552,188 21,407,809 V 34,400,000 1,032,000 - 11,696 1.043,696 22,451,505 635,608,978 2U,524,040 1,636,993 290,467 ZJ,4:51,5U5 +3,380,731 4- 20,513 - +1,682 + 22,195 22,473,700 638,989,709 20,544,55o 1,636,998 292,149 22,473,700 X 29,880,000 896,400 - 10,159 906,559 23,380,259 Y 18,373,200 577,060 . 6,247 583,307 23,963,566 .4 9,454,000 378,160 - 3,214 381,374 24,344,940 n 4,239,254 209,584 - 1,441 211,025 24,511,965 - 48,041 - - 48,041 24,604,006 c 13,024,478 460,334 51,233 4,864 516,431 25,120,437 n 8,253,644 408,879 - 2,806 411,685 25,532,122 E 8,581,108 429,055 - 2,917 431,972 25,964,094 F 11,230,000 336,900 - 3,818 340,718 26,304,712 II 7,278,392 363,919 - 2,385 366,304 26,671,116 I 5,166,319 258,316 - 1,550 259,866 26,931,982 K 16,800,000 528,000 41,500 5.392 574,892 27,506,874 L 5,866,236 293,312 - 1,760 294,072 27,800,946 M 7,332,795 366,639 . 2,200 368,839 28,169,775 A' 27,544,000 826,320 - 8,263 835,583 29,004,368 812,013,135 26,925,472 1,729,731 349,16o 29,004,368 - - - —134,344 — 134,344 28,870,024 ■ " - — 523,557 - — 523,537 28,346,467 1,206,174 214,821 ii8,346,467 — 1,961,582 — 58,847 -t- 135,673 — 667 + 76,159 28,422,626 810,051,553!28,S66,625 1,341,847 214,154 28,422.626 498,861,867 74,920,020 15,864,930 3,228,705 428,065 1 7,796 5 125,296 19,654,792 573,781,887 19,093,635 435,861 125,296 iy,654,792 238,231,248 7,831,8,37 770,313 89,525 8,961,675 812,01.3,] 35'26,925,472 1,206,174 1 214,821 28.346,467 29 218 APPENDIX II. TABLE III. Progress and Redemption of the Funded Debt of Great Britain, Preced- 1791 1791-2 1793 1794 1795 1796 1797 1798 1799 1800 1801 1802 1803 1804 1805 1806 1807 1808 1809 1810 1811 1812 A, B,C, D,E, F,G,H, I,K,L, M, N.O, P. Q, R, S, T, V, Operat. L. Loan, X, Y, c,n, E,F, H, I, K, L, M, jV, Capital funded each year. 238,231,248 6,250,000 15,676,526 25,609,898 41,303,699 67,087,669 30,000,000 27,499,250 29,045,000 44,816,250 41,489,438 Capital redeemed each year. 567,008,978 16,000,000 18,200,000 34,400,000 635,608,978 3,380,731 638,989,709 29,880,000 18,373,200 13,693,254 21,278,122 19,811,108 29,244,711 40,743,031 812,013,135 Transfen'ed for life annuities, for land tax. - 6,7;-2,350 3,469,750 2,174,405 2,804,945 3,083,455 4,390,670 6,695,585 7,779,807 7,151,984 7,247,560 8,018,393 7,667,011 Balance each vear 51,458,898 67,255,915 10,442,552 11,305,292 12,142,043 101,145,802 101,145,802 12,714,715 14,076,585 13,871,014 14,234,820 15,512,087 17,983,457 20,922,876 210,461,356 1,961,-582 24,578,804 236,801,742 227,989,148 4,075,595 12,871,581 22,526,443 36,913,029 60,392,084 22,220,193 20,347,266 21,797,440 36,797,857 33,822,427 499,753,063 5,557,448 6,894,708 22,257,957 Total funded. 238,231,248 238,231,248 244,481,248 260,157,774 285,782,672 327,071,371 394,159,040 424,159,040 451,658,290 480,703,290 525,519,540 567,008,978 534,463,176 3,380,731 638,989,709 537,843,907 17,165,285 4,296,615 — 177,760 7,043,302 4,299,021 11,261,254 19,820,155 583,008,978 601,208,978 635,608,978 Total redeemed, 6,772,350 10,242,100 12,416,505 15,221,450 18,304,905 22,695,575 29,391,160 37,170,976 44,322,951 51,571,111 59,588,904 67,255,915 668,869,709 687,242,909 700,936,163 722,214,285 742,025,393 771,270,104 812,013,135 601,551,779 77,698,915 89,003,759 101,145,802 101,145,802 113,860,517 127,937,102 141,808,116 156,042,936 171,555,023 189,538,480 210,461,356 212,422,938 236,801,742 Debt un- redeemed. 231,458,898 227,989,148 232,064,743 244,936,323 267,457,767 304,375,796 364,797,880 386,889,073 407,355,339 429,132,799 465,920,636 499,753,063 505,310,511 512,205,219 534,463,176 537,843,907 555,009,192 559,305,807 559,128,047 566,171,349 570,470,370 581,731,624 601,551,779 599,590,197 575,211,393 APPENDIX II. 219 And Balances unredeemed. A, B.C, D,E, F,G,H, I,K,L, M, N,0, P, Q, R,S, V, REDUCED TO THREE PER CENTS. Capital funded each year. X, Y, c, n, ■E,F, H, I, K, L, M, J\'', 261,061,243 6,250.000 17,877,543 28,683,163 44,246,415 83,197,579 30,000,000 27,499,250 29,045,000 44,816,250 44,459,587 Capital redeemed each year. 617,136,030 16,000,000 18,200,000 34,400,000 685,736,030 683,730 686,419,760 29,880,000 19,2o5,3o3 19,591,456 28,973,773 25,531,846 38,341,185 49,542,385 897,515,738 6,772,350 3,469,750 2,174,405 2,804,945 3,252,455 4,390,670 6,695,585 7,779,807 7,151,984 7,247,560 8,246,726 8,142,14,4 Balance each year. 254,288,893 68,128,381 10,442,552 11,399,958 12,142,043 102,112,934 583,623,096 683,730 102,112,934 12,714,715 14,076,585 14,430,447 15,012,820 15,900,987 17,983,457 20,922,876 213,154,821 1,961,582 24,378,804 t239,495,2U7 250,819,143 4,075,595 15,072,598 25,430,708 39,855,745 76,501,994 22,220,193 20,347,266 21,797,440 36,569,524 36,317,443 549,007,649 5,557,448 6,800,042 22,257,95 Total funded. 261,061,243 261,061,243 267,311,243 285,188,786 313,871,949 358,718,364 441,315,943 471,315,943 498,815,193 527,860.193 572,676,443 617,136,030 584,306,826 17,165,285 5,158,748 5,161,009 13,960,953 9,630,859 20,357,728 28,619,509 684,360,917 633,136,030 651,336,030 685,736,030 Total redeemed. 6,772,350 10,242,100 12,416,505 15,221,450 18,473,005 22,864,575 29,560,160 37,339,967 44,491,951 51,739.511 59,986,237 68,128,381 686,419,760 716,299,760 733,535,093 755,126,549 784,100,322 809,632,168 847,973,353 897,515,738 78,570,933 89,970,891 102,112,934 102,112,934 114,827,649 128,904,234 143,334,681 158,347,5U1 174,248,488 192,231,945 213,154,821 215,116,403 239,495,207 Debt un- redeemed. 254,288,893 250,719,143 254,894,738 269,967,336 295,398,044 335,253.789 411,755,783 433,975,976 454,323,242 476,120,682 512,690,206 549,007,649 554,565,097 561,365,139 583,623,096 584,306,826 601,472,111 606,630,859 611,791,868 625,752,821 635,383,680 655,741,408 684,360,917 682,399,335 658,020,531 :220 APPENDIX II. TABLE IV. Loans for Ireland, guaranteed by Britain, with the annual Charges j Preced. 1797 1798 1799 1800 1801 1802 180.3 1804 1805 Sep. loan 1806 1807 Sep. loan 1808 Int. def. 1809 1810 Sep. loan 1811 1812 Sums raised. 3 per cent. 4 per ct. 5 per cent. Total each year. Amount tundeddebt K M O P R S T U V w X Y Z .4 c F G 1,500,000 2,000,000 3,000,000 2,000,000 2,500,000 2,000,000 2,625,000 4,000,000 5,250,000 3,140,000 4,393,750 2,639,250 300,000 - - 2,925,000 4,000,000 5,250,000 3,140,000 4,393,750 2,639,250 2,925,000 6,925,000 12,175,000 15,315,000 19,708,750 22,348,000 25,548,000 33,738,000 38,038,000 38,398,000 41,718,000 44,730,000 47,139,625 50,094,000 53,694,000 59,309,000 61,274,250 68,930,250 13,000,000 2,000,000 4,500,000 2,500,000 1,500,000 2,000,000 2,000,000 1,500,000 2,500,000 3,000,000 4,000,000 1,400,000 4,500,000 22,048,000 3,200,000 8,190,000 4,300,000 3,320,000 2,800,000 2,409,625 1,800,000 5,615,000 1,965,250 7,656,000 300,000 2,954,375 1,800,000 360,000 212,000 22,348,000 3,200,000 8,190,00t 4,300,000 360,000 3,320,000 3,012,000 2,409,625 2,954,375 3,600,000 5,615,000 1,965,250 7,656,000 44,400,00063,303,875 5,054,375 572,000 68,930,250 APPENDIX II. 2.51 Also the Redemption of the same. K Sum red. each year. Amount redeemed. Amount um-edeemed. Interest. Annuity. Manage- ment. Total charge each year. 20,468 20,468 2,904,532 90,750 4,500 1,349 96,599 M 91.466 111,934 6,813,066 120,000 4,916 1,855 126,771 O 130,185 242,119 11,932,881 157,500 - 2,362 159,862 P 233,360 475,479 14,839,521 94,200 - 1,413 95,613 R 310,928 786,40^- 18,922,343 131,812 - 1,977 133,789 S 337,008 1,123,415 21,224,585 75,000 - 1,125 76,125 1,123,415 669,262 9,416 10,081 888,759 T 472,256 1,595,671 23,952,329 96,000 6,417 1,142 103,559 U 579,338 2,175,009 31,562,901 245,700 . 2,785 248,485 V W I 738,939 2,913,948 35,484,052 ^ 129,000 18,000 75,000 1,462 760 130,462 93,760 X 807,393 3,721,341 37,996,659 99,600 . 1,129 100,729 Y Z I 907,585 4,628,926 42,510,699 ^ 94,600 72,289 - 1,024 819 95,624 73,108 A 951,463 5,580,389 44,513,611 118,175 . 1,004 119,179 . ■ - 4,178 . . 4,178 C 1,013,577 6,593,966 47,100,034 126,000 13,250 1,337 140,587 F G 1 1,135,716 1,356,276 7,729,682 9,085,958 53,544,568 ^ 52,188,292 168,450 58,957 - 1,909 667 170,359 59,624 JV 1,667,541 10,653,499 58,276,751 229,680 - 2,414 232,094 10,653,499 2,129,891 104,083 26,534 2,402 2,260,508 2,402 Deduct reduction in management. Deduct interest and management of 24,132 2,258,104 debt redeemed. 319,605 - 3,622 323,227 Interest, &c ;. unredeen led, 1,810,286 104,083 20,510 1,934,879 t)PQ APPENDIX II. TABLE V. Progress of the whole Irish Funded Debt, payable in Dublin Sums raised Capital funded, payable in Dublin — Years. Irish currency. Irish currency. of percent. 4 per cent. 5 per cent. Total. 1773-5-7 740,000 - . - . 1787 200,000 200,001) - - 200,000 1788 918,240 918,240 - - 918,240 1791, &c. 174,600 - 174,600 - 174,600 1793 200,000 - - 200,000 200,000 Vote Cr. 150,000 - - 150,000 150,000 1794 1,029,650 - - 487,983 487,983 1795 1,591,666 - - 400,000 400,000 1796 640,000 - - 640,000 640,000 Vote Cr. 325,000 - - - - 1797 2,018,700 - - 635,000 635,000 1798 3,424,476 - - 2,054,950 2,054,950 1799 5,261,000 - - 2,011,000 2,011,000 1800 4,666,666 - - 2,500,000 2,500,000 1801 2,750,319 - - 41,985 41,985 1802 3,791,666 1,770,232 - - 1 ,770,232 27,881,985 2,888,472 174,600 9,120,918 12,183,990 1803 2,166,666 - - - - 1804 6,125,000 - . 1,404,531 1,404,531 1805 4,333,333 - . - - 1806 4,166,666 2,780,000 - - 2,780,000 1807 3,844,666 - 53,000 - 53,000 1808 3,458,333 1,012,500 - - 1,012,500 1809 4,500,000 1,500,000 - - 1,500,000 1810 5,856,198 • - 6,198 6,198 1811 2,501,000 3,000,000 . 1,000 3,100,000 1812 6,388,000 1,500,000 - 313,000 1,183,000 71,221,850 12,680,972 227,600 10,845,648 23,754,220 Bank of Ireland, prec. 1797 600,000 ^ - 600,000 600,000 1797 500,000 - . 500,000 500,000 1808 1,250,000 - 1,250,000 1,250,000 73,571,850 12,680,972 227,600 13,195,648 26,104,220 APPENDIX II. 223 and London, with the Annual Charge. Capital funded, pay. ir I London — Annual c ;harge — i Years. British currency. Irish currency. j 3 per cent. 4 per cent. 5 per cent. Interest. Annuities. 1773-5-7 • . _ - 48,900 1787 - . 7,000 - 1788 . . . 32,138 - 1791, &c. - - - 6,984 - 1793 - - - 10.000 - Vote Cr. - _ 7,500 - 1794 - - 500,000 51,482 - 1795 - - 1,100,000 79,583 - 1796 - - - 32,000 - Vote Cr. - - 300,000 16,250 - 1797 2,625,000 300,000 - 130,062 4,875 1798 4,000,000 - 232,747 5,326 1799 5,250,000 - 271,175 - 1800 3,140,000 - - 227,050 - 1801 4,393,750 . - 144,896 - 1802 2,639,250 - ' 147,735 - 22,048,000 300,000 1,900,000 1,396,604 59,101 1803 3,200,000 - - 104,000 6,951 1804 8,190,000 - - 336,401 - 1805 4,300,000 - 360,000 159,250 81,250 1806 3,320,000 - 205,200 - 1807 5,209,625 - 212,000 182,916 - 1808 ^ 2,954,375 - 163,460 - 1809 1,800,000 1,800,000 - 189,000 14,354 1810 7,580,250 - - 246,668 - 1811 - . . 105,050 . 1812 7,656,000 - - 316,970 - 63,303,875 5,054,315 2,472,000 3,405,519 161,656 Bank of Ireland, prec.1797 - - - 30,000 1797 - - - 25,000 18,125 1808 - - 62,506 - 63,303,875 5,054,315 2,472,000 3,523,019 179,782 £24 APPENDIX II. TABLE VI. Sinking Fund of 1 per cent, on Loans. Years. Loans charged Loans not 1 Annuities. Sink.fund Sink, fund with 1 per ct. charged, j on loans. ^n annuities. 1793 Loan 6,250,000 I - 62,500 _ 1794 Loan 13,750,000 • 62,792 137,500 9,680 Navy Bills 1,926,526 - - 19,265 . 1795 24,000,000 - 85,500 240,000 12,835 Navy Bills 1,609,898 - - 16,099 . 1796 26,095,800 - 58,500 260,958 8,460 Navy Bills 4,414,074 - - 44,140 - 10,793,825 - 20,582 107,938 2,925 Loyalty Loan 20,124,843 - - 201,248 . 1797 25,350,000 - 39,000 253,500 5,308 Navy Bills 19,238,493 - - 192,384 . Excheq. Bills 2,374,333 . . 23,743 1798 Loan 14,000,000 16,000,000 17,209 140,000 2,240 5,624,250 . - 56,242 _ 1799 Loan 2,625,000 19,250,000 • 26,250 . 1800 Loan 7,850,000 21,195,000 - 78,500 . 1801 Loan 44,816,250 - - 448,162 . Excheq. Bills 11,138,063 . 7,796 111,380 841 1802 Loan - 30,351,375 - - - 241,981,355 86,796,375 291,379 2,419,813 42,289 1803 Loan 16,000 000 - 32,083 160,000 3,138 1804 Loan 18,200,000 . . 182,000 . 1805 Loan 34,400,000 - - 344,000 - Operat. L. L. 3,280,731 . . 33,807 . 1806 Loan 29,880,000 - . 298,800 . 1807 Loan 301,200 18,072,000 - 3,012 - 1808 Loan 9,454,000 - - 94,540 - Excheq. Bills 4,239,254 - - 42,392 . 1809 13,024,478 - 51,233 130,244 2,669 Excheq. Bills 8,253,644 - . 82,536 - 1810 E. B. 8,581,108 - . 85,811 - Loan 11,230,000 • . 112,300 . 1811 E. B. 7,278,332 . . 72,784 _ Loan 5,166,319 - . 51,663 . Loan 16,800,000 - 41,500 168,000 1,451 1812 E. B. 5,866,236 - - 58,662 . Loan 7,332,795 . . 73,327 . Loan 27,544,000 - - 275,440 - 468,913,512 104,868,375 416,195 4,689,135 49,528 Not charged 104,868,375 ■ 19,666 49,548 - 573,781,887 438,861 4,738,683 Total,lp.ct. Debt preced- ing- 1793 Whole funded 238,231,248 debt 812,013,135 APPENDIX II. TABLE VII. Unfunded Debt. iSa Vear ending 5th January 1793 1794 1795 1796 1797 1798 1799 1800 1801 1802 1803 1804 1805 1806 1807 1808 1809 1810 1811 1812 1813 Excheq. Ly , , ^ r;h. ;Navydebt, Bills. Oi-dnance debt. 11,361,100, 11,849,000 10,111,300 13,781,000 13,218,600 13,368,400 14,310,400 20,360,700 26,080,100 20,588,100 16,456,000 19,067,600 5,253,500 27,180,400 27,207,500 34,942,400 39,301,200 39,164,100 38,286,300 41,491,800 45,406,400 3,450,134 6,709,748 10,413,164 12,321,828 4,485,799 6,150,588 5,556,033 5,992,228 8,705,819 7,100,800 3,105,648 4,037,307 5,011,567 5,911,588 5,885,819 6,561,237 7,221,167 8,263,175 7,595,838 7,883,890 7,748,872 91,501 303,45b 755,564 1,235,631 763,153 548,233 983,249 631,831 823,113 701,428 399,760 682,343 l,260,48u 1,104,512 1,255,071 1,165,822 861,364 1,015,360 Total. Increase or decrease. 14,802,375 18,862,306 20,524,464 27,348,459 18,464,552 20,414,666 20,849,683 26,984,819 35,628,099 28,400,408 19,961,408 23,787,521 32,515,548 34,196,50^.. 34,348,391 39,679,960 47,383,632 48,442,635 1,078,476 900,360 1,089,44146,971,579 50,454,166 54,055,632 + 4,059,571 + 1,662,158 + 6,823,995 — 8,880,907 + 1,947,114 + 435,017 -{- 6,135,136 + 8,643,280 — 7,227,691 — 8,439,000 -\- 3,826,113 + 8,728,027 + 1,680,952 -h 151,981 + 5,331,569 + 7,703,672 -I- 1,059,003 — 1,470,886 + 3,482,587 + 3,601,466 Whole Unfunded Debt reported to Parliament. Exch. Bills, Navy and Oi'd- nance debt. Miscellaneous articles. Total. Increase. 1811 1812 1313 46,971,579 50,454,166 54,055,632 3,648,368 3,573,893 3,783,064 50,619,947 54,038,059 57,838,696 -f- 3,418,112 -1- 3,800,637 30 22G APPEKDIX IT. TABLE VIII. Lord Henry Petty's Plan of Finance. Part I. — Loans on War Taxes. re 1 Loans on war taxes. 2 War taxes mortgagee eacli year. o 3 Amount war taxes mortgaged 4 Sum redeemed each year. 5 Whole sum redeemed. 6 Interest on amount redeemed. 18U7 1808 1809 1810 1811 1812 1813 1814 1815 1816 isir 1818 1819 1820 12,000,000 12,000,000 12,000,000 14,000,000 16,000,000 16,000.000 16,000,000 16,000,000 16,000,000 16,000,000 16,000,000 16,000,000 16,000,000 16,000,000 1,200,000 1,200,000 1,200,000 1,400,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 600,000 1,200,000 1,800,000 2,500,000 3,300,000 4,100,000 4,900,000 5,700,000 6,500,000 7,300,000 8,100,000 8,900,000 9,700,000 10,500,000 600,000 1,230,000 1,891,500 2,686.075 3,620^378 4,601,398 5,631,467 6,713,041 7,848,693 9,041,128 10,293,184 11,607,843 12,988,235 14,437,647 600,000 1,830,000 3,721,500 6,407,575 10,027,953 14,629,351 20,260,818 26,973,859 34,822,552 43,863,680 54,156,864 65,764,707 78,752,942 93,190,589 30,000 91,500 186,075 320,378 501,398 731,467 1,013,041 1,348,693 1,741,127 2,193,184 2,707,845 3,288,235 3,937,647 4,659,529 1821 1822 1823 1824 1825 1826 210,000,000 12,000,000 12,000,000 12,000,000 14,000,000 16,000,000 16,000,000 21,000,000 1,200,000 1,200,000 1,200,000 1,400,000 1,600,000 1,600,000 75,100,000 10,500,000 10,500,000 10,500,000 10,500,000 10,500,000 10,500,000 93,190,589 14,559,529 14,687,505 14,821,880 14,862,974 14,806,123 14,746,429 107,750,118 122,437,623 137,259,503 152,122,477 166,928,600 181,675,029 5,387,505 6,121,880 6,862,974 7,606,123 8,346,429 9,083,751 292,000,00ui 29,200,000 181,675,029 Part IL- —Supplen entnrij Loans. re 7 Supplemen- tary loans. 8 Interest. Sinking fund. 10 Sum I'cdcemed e.acli vear. 11 Whole sum redeemed. 12 \ Interest on amount redeemed. 1807 1808 1809 1810 1811 1812 1813 1814 1815 1816 1817 1818 1819 1820 200,000 1,400,000 2,600,000 2,000,000 1,600,000 3,200,000 4,800,000 6,400,000 8,000,000 9,600,000 11,200,000 12,800,000 14,400,000 16,000,000 10,OOU 70,000 130,000 100,000 80,000 160,000 240,000 320,000 400,000 480,000 560,000 640,000 720,000 800,000 0,000 Zo,ooo 4a,ooo oo,ooo 26,666 5o,ooo 80,000 106,666 160,000 186,666 Zlo,ooo 240,000 266,666 o,ooo 26,833 71,508 108,416 140,504 200,863 290,906 412,118 566,057 754,360 978,744 1,241,015 1,543,065 1,886,886 o,ooo 30,166 101,674 210,090 350,594 551,457 842,363 1,254,481 1,820,538 2,574,898 3,553,642 4,794,657 6,337,722 8,224,608 166 1,508 5,083 10,504 17,530 27,573 42,118 62,724 91,027 128,744 177,682 239,732 316,886 411,230 1821 1822 1823 1824 1825 1826 94,200,000 20,000,000 20,000,000 20,000,000 18,000,000 16,000,000 16,000,000 4,710,000 1,000,000 1,000,000 1,000,000 900,000 800,000 800,000 1,570,000 -T .-, .T .^ r, i-i OOOyOOO <-,,-,.-, rt L-« .T 000,000 o .-> 't .-\ -^ .-> 000,000 300,000 266,666 266,666 8,224,608 2,314,563 2,763,624 3,235,139 3,696,896 4,148,407 , 4,622,494 10,539,171 13,302,795 16,537,934 20,234,830 24,383,237 29,005,731 526,958 665,139 826,896 1,011,741 1,219,161 1,450,286 204,200,000 10,210,000 0,403,333 29,005,731 APPENDIX II. 22 Lord Henry Petty "s plan of Finance continued. Part III. — Joint View of both Loans. 18U7 1808 1809 1810 1811 1812 181.3 1814 1815 1816 i8ir 13 Amount war tax loans. 1;;!,0ju,000 34,000,000 36,000,000 50,000,000 66,000,00(J 82,000,000 98,000,000 114,000,000 1.30,000,000 146,000,000 162,000,000 18181178,000,000 181 y|l9 1,000,000 1S2J:1>10,000.000 18211222,000,000 18->2|234,000,000 182.31246,000,000 |il824!260,000,000 1825j2/6,000,000 18261292,000,000 14 Amount supplemen tai-v loans. 200,000 1,600,000 4,200,000 6,200,000 7,800,000 11,000,000 15,800,000 22,200,000 30,200,000 39,800,000 51,000,000 63,800,000 78,200,000 94,200,000 114,200,000 134,200,000 1.54,200,000 172,200,000 188,200,000 204,200,000 15 War tax loans unre- deemed. 11,400,000 22,170,000 32,278,500 43,595,425 55,972,047 67,370,649 77,739,182 87,026,141 95,177,448 102,136,320 107,843.136 112,235,293 115,247,058 116,809,411 114,429,882 111,562,382 108,740,50: 107,877,528 109,071,405 110,324,976 16 Supplemen- tai-y loans unred. 17 Total loans unred. 196,666 1,569,833 4,098,326 5,989,910 7,449,406 10,448,543 14,957,637 20,945,519 28,379,462 37,225,102 47,446,358 59,005,343 71,862,278 85,975,392 103,660,829 120,897,205 137,662,066 151,965,170 163,816,763 175,194,229 11,596,666 2o,739,833 36,377,126 49,585,335 63,421,453 77,819,19 92,696,819 107,971,660 123,556,910 139,361,427 155,289,494 171,240,636 187,109,336 202,784,803 18 Interest on loans unred. 19 Amount taxes raise each year 218,090,711 232,459,587 246,402,568 259,842,693 272,888,168 285,519,205 579,^2, 1,186,991 1,818,856 2,479,266 3,171,072 3,890,959 4,634,841 5,398,58j 6,177,845 6,968,071 7,764,474 8,562,031 9,355,466 10,139,411 72,127,353 10,904,535 11,622,979 12,320,128 12,992,135 13,644,408 14,275,960 147.887,498 106,66 280,0C 413,3o 520,0C l,053,3i 1,480,0( 2,013,3: 2,653,3: 3,400,0( 4,253,3: 5,213,3: 6,280,0( 28,413,3, 7,613,3; 8,946,6( 10,280,0( 11,480,0( 12,546,6< 13,613,3; 92,89: Part IV. — Comparison with other Systems. 20 _ 21 IVo sinldno: fund. JJeht. 1807 1803 1809 1810 1811 1812 1813 1814 1815 1816 1817 1818 1819 1820 1821 1822 1823 1824 1825 1826 11,000.000 22,000000 33.000,000 44,000,000 55,000,000 66,000,000 77,000,000 88,000,000 99,000,000 110,000,000 121,000,000 132.000,000 143,000,000 154,000,000 Taxes. 550,000 1,110,000 1,650,000 2,200,000 2,750,000 3,300,000 3,850,000 4,400,000 4,950,000 5,500,000 6,0.50,000 6,600,000 7,150,000 7,700,000 92 23 Sinking' fund of 1-100. Debt unred Taxes. 165,000,000 176,000,000 187,000,000 198,000,000 209,000,000 220000,000 57,750,000 8,250,000 8,800,000 9,350,000 9,900,000 10,450,000 11,000,000 115,000,000 10,890,UUU 21,664,500 32,317,725 42,843,611 53,235,792 63,487,582 73,591,961 83,541,559 93.328,627 102,945,069 112,382,323 121,631,439 130,683,011 139,527,162 660,0U0 1,320,000 1,980,000 2,640,000 3,300,000 3,960,000 4,620,000 5,280,000 5,940,000 6,600,000 7,260,000 7,920,000 8,580,000 9,240,000' 24 25 Sinking- fund of 1-60. i)(.'bt unred 10,816,666 21,440,833 31,862,875 42,072,685 52,059,653 61,812,636 71,319,935 80,569,265 89,547,729 98,241,782 106,737.206 114,719,067 122,471,687 129,878,604 148,153,520 156,551,196 164,708,756 172,614,194 180,254,904 187,617,650 69,300,000 9,900,000 10,560,000 11,220,000 11,880,000 12,540,000 13,200,000 138,600,000 Taxes. 1,466,666 2,200,000 3,666,666 4,400,000 5-1 o o .-* --> .1 5,866,666 6,600,000 8,066,666 8,800,000 9.. .-> ,-, .T .-, --^ ,DOO,000 10,266,666 136,922,535 143,585,328 149,847,928 155,690,322 161,091,507 166,029,417 77,000,000 11,000,000 J,/oo,ooJ 12,466,666 13,200,000 o,9o3,ooo 14,666,666 154,000,000 APPENDIX II. TABLE IX. Amount of British Funded Debt redeemed and transferred. Years. 3 per cents, redeemed. 4 per cents, re- deemed. 5 per cents, re- deemed. Total redeemed. 3 per cents, transferred for land tax. 3 per cts. converted into life annuities. Total. Prec.1791 1791 1792 1793 1794 1795 1796 1797 1798 1799 1800 1801 1802 1803 1804 1805 18!)6 1807 1808 1809 1810 1811 1812 6,772,350 1,507,100 1,962,650 2,174,405 2,804,945 2,576,455 4,390,670 6,695,585 7,779,807 7,151,984 7,247,560 7,333,393 6,241,611 10,442,552 11,163,292 12,142,043 12,714,715 14,076,585 12,192,714 11,900,820 14,345,387 17,983,457 20,922,876 507,000 685,000 1,425,400 1,678,300 2,334,000 1,166,700 142,000 6,772,350 1,507,100 1,962,650 2,174,405 2,804,945 3,083,455 4,390,670 6,695,585 7,779,802 7,151,982 7,247,560 8,018,393 7,667.011 10,442,552 11,305,292 12,142,043 12,714,715 ] 4,076,585 13,871,014 14,234,820 15,512,087 17,983,457 20,922,876 13,059,586 3,034,216 1,907,346 1,179,439 1,967,301 646,419 531,433 390,465 260 624 237,569 207,070 284,623 234,966 437,747 465,951 .558,56] 290,777 290,751 355,542 6,772,350 1,507,100 1,962,650 2,174,405 2,804,945 3,083,455 4,390,670 6,695,585 7,779,807 20,211,570 10,281,776 9,925,739 8,846,450 12,409,853 11,951,711 12,673,476 13,105,180 14,337,209 14,574,534 15,000,451 16,087,487 18,509,174 21,716,165 202,522,950 7,796,400 142,000 210,461,356 24,378,801 1,961,582 236,807,742 10,643,499 176,674 1,361,974 Irish debt redeemed, 3 per cents. Portug'uese debt redeemed, ditto - Igiperial debt redeemed, ditto 248,993,899 APPENDIX II. TABLE X. Comparison of Mr. Vansittart's plan of Finance with the former System. Part I. — Compar ison of Taxes Levied. Year ending- 1st Aug-. 1814 1815 1816 1817 1818 1819 1820 1821 Former System. New System. Excess of taxes by for- mer system. Taxes im- posed ann. Taxes levied annually. Taxes im- posed ann. Taxes levied annually. 1,866,666 1,866,666 1,866,666 1,866,666 1,866,666 1,866,666 1,866,666 1,866.666 1,866,666 o,7oo,Jo-i 5,599,998 7',466,664 9,333,330 11,199,996 13,066,662 14,933,328 1,127,963 1,290,206 676,775 2,008,333 1,995,833 1,127,963 1,127,963 1,127,963 1,127,963 2,418,169 3,094,944 5,103,277 7099,110 736,703 2,605,369 4,472,035 6,338,701 6,915,161 8,105,052 7,963,385 7,834,218 1822 1823 1824 1825 1826 1827 1828 1829 14,933,328 1,800,000 1,800,000 1,800,0.0 1,800.000 1,800,000 1,800,000 1,800,000 1,800,000 67,199,976 16,733,328 18,533,328 20,333,328 22,133,328 23,933,328 25,733,328 27,533,328 29,333,328 7,099,110 1,987,500 624,431 1,158,356 1,979,166 1,095,316 618,013 1,962,500 22,227,352 9,086,610 9,086,610 9,711,041 10,869,397 12,848,563 13,943,879 14,561,892 16,524,392 44,972,624 7,646,718 9,446,718 10,622,287 11,263,931 11,084,765 11,789,449 12,971,436 12,808,936 29,333,328 251,466,600 16,524,392 118,859,736 132,606,864 P ART II. — Comparison of sinking Funds. Sinking Sinking Excess of Excess of sink- Years. fund, former fund, new sinkingfund, ing fund, 0. s. a- system. system. old system. bove add. taxes. 1814 14,423,455 13,647,817 775,638 36,935 1815 15,634,627 12,860,207 2,774,420 169,051 1816 16,906,357 12,033,217 4,873,140 401,105 1817 18,241,674 11,164,877 7,076,797 738,096 1818 19,643,757 11,607,837 8,035,920 1,120,759 1819 21,115,944 11,428,842 9,687,102 1,582,050 1S20 22,661,740 12,639,033 10,022,707 2,059,322 1821 24,284,826 13,896,609 10,588,217 2,553,999 152,912,380 99,278,439 53,633,941 8,661,317 1822 24,718,019 15,208,314 9,509,705 1,862,987 1823 26,426,419 14,498,729 11,927,690 2,480,972 1824 28,220,239 14,409,318 13,810,921 3,188,634 1825 30,103,750 14,876,057 15,227,693 3,963,762 1826 32,081,437 16,227,984 15,853,453 4,768,688 1827 31,158,008 16,719,465 17,438,543 5,649,094 1828 36,338,408 16,734,351 19,604,057 6,632.621 1829 38,627,828 18,161,693 20,466,135 7,657,199 403,586,488 226,114,350 177,472,138 44,865,274 > 230 APPENDIX II. TABLE XL Rates of Literest and Terminable Annuities on Loams. Years. Sums Interest. Terminable Duration of Total. bon'owed. annuities. annuity. r.. S. D. 1. S. D. 1.. S. 1). ^ *1755 900,000 - - - 3 *1756 1,500,000 10 - - - 3 10 and by lottery, 500,000 ■J - - - 3 C3 1757 3,000,000 --> 1 2 6 life 4 2 6 ? *1758 4,500,000 10 24 years 3 10 £ and by lottery, 500,000 o - - - 3 *1759 *1760 6,600,000|3 8,000,000 3 9 1 9 1 7 21 years 3 9 4 2 4 a n761 11,400,000 1 2 6 99 years 4 2 6 and by lottery, 600,000 - - - 3 Ul 1762 12,000,000 -T o ?1 19 years \ 98 years 5 5 L *1763 3,500,000 4 - - 4 6 C *1766 ^: -^ *1767 1,500,0003 l,50n,000;3 - - - 3 3 1,900,000 3 - - - 3 f *1776 2,000,000 4 6 » . . 3 4 6 . - ^1777 5,000,000 4 10 10 years 4 10 rt ■ rl778 6,000,000 o O 2 10 Iife,or30vs. 5 10 ^ ■ hl779 5,000,000 3 15 life,or29ys. 6 15 f\< - ^1780 12,000,000 4 1 16 3 80 years 5 16 3 ■ [-1781 12,000,000 5 10 - . - 5 10 P - ^1782 13,500,000 5 G 17 6 78 years 5 17 6 -»1 - rl7B3 12,000,000 4 13 4 77 years 4 13 4 ^ ^1784 6,000,000 5 5 6 75 i years 5 7 6 t3 r "S 1764 1,482,000 .J 3 .= <; 1784 -^ 1 1785 6,397,900 5 7 6 - - - 5 7 6 9,865,942 5 11 4 - - - 5 11 4 m L * The subscribers to the loans marked thus had also the profits of lotteries, the prizes in which were funded. When funded on the same terms as the rest of the loan, thpj are joined to it in the above Table; but when funded on different terms, they are stated separately. f The subscribers to the loans marked thus had also the profits of lotteries, the prizes in which were paid. Fractions under a penny in the rate of interest are omitted. APPENDIX II. 231 TABLE XL—Contimied. \ears. Sums borrowed. Interest. Terminable annuities. Duration of annuities. Total. s V f 1793 1794 1795 1796 1797 1798 1799 1800 1801 4,500,000 11,000,000 18,000,000 18,000,000 7,500,000 18,000,000 14,500,000 17,000,000 3,000,000 15,500,000 20,500,000 28,000,000 L. S. D. 4 3 4 4 4 6 8 4 7 4 7 5 12 6 6 10 6 5 12 5 5 5 4 14 2 5 5 5 L. S. J). 11 5 9 6 6 6 5 6 6 4 11 Years. 66i 63i 64i 63^ 62J 61| 1. S. II. 4 3 4 4 11 5 4 16 2 4 13 6 4 12 6 5 12 6 6 7 6 4 11 5 12 5 5 5 4 14 2 5 5 5 Peace. 1802 25,000,000 3 19 2 - - 3 19 2 o uO r- 1 t-i OS j== < u il r 1803 1804 1805 for Ireland, 1806 1807 for Ireland, 1808 1809 1810 for Ireland, 1811 1812 1813 12,000,000 14,500,000 22,500,000 1,500,000 20,000,000 14,200,000 1,500,000 10,500,000 14,600,000 12,000,000 1,400,000 4,981,300 12,000,000 6,789,625 22,500,000 27,000,000 22,000,000 4 16 5 9 2 5 3 2 1 4 4 19 7 4 14 7 4 16 4 4 14 6 4 4 4 4 2 4 4 2 5 2 10 4 8 5 8 5 5 7 5 2 5 6 2 6 5 5 8 10 6 11 8 6 56 a 54| 504^ 48 1 46-1 » 2 5 5 9 2 5 3 2 6 4 4 19 7 4 14 7 4 16 4 4 14 6 4 12 10 4 4 2 4 4 2 5 2 10 4 14 11 5 8 5 5 7 5 10 6 5 6 2 Interest, &c. of Debt contracted by Funding Bills. Years. Amount Interest. Terminable Duration of Total bills. annuities. annuities. L. 9. B. L. 9. D. Years. L. S. D. 1794 1,907,451 5 10 - . 5 10 1?'95 1,490,647 5 8 - . 5 8 1796 4,226,727 5 4 2 . « 5 4 2 13,029,399 5 7 11 . _ 5 7 11 1802 8,910,450 4 15 10 9 58^ 5 5 9 1808 4,000,000 5 4 9 - _ 5 4 9 1809 7,932,100 5 3 1 . _ 5 3 1 1810 8,311,000 5 3 3 - . 5 3 S 1811 7,018,700 5 3 8 - . 5 3 8 1812 5,431,700 5 8 . ., 5 8 1813 12,000,000 5 15 6 . . 5 15 6 3,755,700 5 11 2 . 5 11 2 APPENDIX II. POSTSCRIPT II, TO PART II. A loan was contracted in November, 1813, at L.llO in the 3 per cent, reduced, and L.67 in the 3 per cent. cons. Sums raised, . . . . L.22,000,000 Sum funded in 3 per cent, reduced, - L.24,200,000 and in 3 per cent. cons. - - 14,740,000 Total funded, - . _ . L.38,940,000 Interest, _ . . . L. 1,1 68, 200 Exchequer Bills were received, to the extent of one-half of this loan, at the rate of L.IOO. 5s. for each L.lOO of Exchequer Bills. Five per cent, discount was allowed for payment by advance. The allowance on former loans was generally 4 per cent. The omnium of this loan soon rose to an unparalleled height, and is now [February, 1814,] transacted at about 20 per cent. ADDITION TO PAGES 117, 118. Irish currency. The amount of Irish debt payable in Dublin, re- deemed on the 5th January, 1813, was. In the 3i per cents. - - - L.3,521,088 In the 5 per cents. - - - 1,823,967 L. 5,345,055 Which was redeemed for - ~ L.4,242,529 31 234 APPENDIX 11. Irish currency. Amount redeemed in Britain, L. 10,653,499 British, - - - - L.l 1,541, 290 in Ireland, - - 5,345,055 Total ledeemed. Leaving unredeemed, - L.l 6,886,345 85,950,647 L.102,836,992 The charge of management of the Irish debt, at that time, amounted to L. 22,886. And the sinking fund for the debt payable in Ireland was, Part of annual grant of L.l 00,000, Expired annuities, 1 per cent, on loans, Interest on debt redeemed, - Amount sinking fund, 5th January, 1813, L.67,649 54,043 221,962 L.343,654 - 214,436 L.558,090l V^O THTS BOOK IS DITE ON THE LAST DATE STAMPED BELOW AN INITIAL FINS OF 25 CENTS . WILL BE ASSESSED FOR FAILURE TO RETURN THIS BOOK ON THE DATE DUE. THE PENALTY WILL INCREASE TO SO CENTS ON THE FOURTH DAY AND TO $1.00 ON THE SEVENTH DAY OVERDUE. CCD jll W^ Str •'" ••^ OCT 11 WS 2lJunDEAD «fc^o-'«C« 1^'63*^^'* ^v^\l lx>^^ LD 21-100m-12,'43 (87968) I r~ H, T ^, Vf S- UNIVERSITY OF CALIFORNIA LIBRARY