several others, which, by this act, were likewise
rendered perpetual, were accumulated
into one common fund, called the aggregate
fund, which was charged not only with the
payment of the bank annuity, but with several
other annuities and burdens of different
kinds. This fund was afterwards augmented
by the third of George I., c. 8., and by the
fifth of George I., c. 3, and the different duties
which were then added to it were likewise
rendered perpetual.
In 1717, by the third of George I., c. 7,
several other taxes were rendered perpetual,
and accumulated into another common fund,
called the general fund, for the payment of
certain annuities, amounting in the whole to
L.724,849 : 6 : 10½.
In consequence of those different acts, the
greater part of the taxes, which before had
been anticipated only for a short term of years
were rendered perpetual, as a fund for paying,
not the capital, but the interest only, of the
money which had been borrowed upon them
by different successive anticipations.
Had money never been raised but by anticipation,
the course of a few years would have
liberated the public revenue, without any
other attention of government besides that of
not overloading the fund, by charging it with
more debt than it could pay within the limited
term, and not of anticipating a second
time before the expiration of the first anticipation.
But the greater part of European
governments have been incapable of those attentions.
They have frequently overloaded
the fund, even upon the first anticipation;
and when this happened not to be the case,
they have generally taken care to overload it,
by anticipating a second and a third time,
before the expiration of the first anticipation.
The fund becoming in this manner altogether
insufficient for paying both principal and interest
of the money borrowed upon it, it became
necessary to charge it with the interest only,
or a perpetual annuity equal to the interest;
and such improvident anticipations necessarily
gave birth to the more ruinous practice of
perpetual funding. But though this practice
necessarily puts off the liberation of the public
revenue from a fixed period, to one so indefinite
that it is not very likely ever to arrive;
yet, as a greater sum can, in all cases, be
raised by this new practice than by the old
one of anticipation, the former, when men
have once become familiar with it, has, in the
great exigencies of the state, been universally
preferred to the latter. To relieve the present
exigency, is always the object which principally
interests those immediately concerned in
the administration of public affairs. The future
liberation of the public revenue they leave to
the care of posterity.
During the reign of queen Anne, the market
rate of interest had fallen from six to five
per cent.; and, in the twelfth year of her
reign, five per cent. was declared to be the
highest rate which could lawfully be taken for
money borrowed upon private security. Soon
after the greater part of the temporary taxes
of Great Britain had been rendered perpetual,
and distributed into the aggregate, South-sea,
and general funds, the creditors of the public,
like those of private persons, were induced to
accept of five per cent. for the interest of their
money, which occasioned a saving of one per
cent. upon the capital of the greater part of
the debts which had been thus funded for perpetuity,
or of one-sixth of the greater part of
the annuities which were paid out of the three
great funds above mentioned. This saving
left a considerable surplus in the produce of
the different taxes which had been accumulated
into those funds, over and above what
was necessary for paying the annuities which
were now charged upon them, and laid the
foundation of what has since been called the
sinking fund. In 1717, it amounted to
L.323,434 : 7 : 7½. In 1727, the interest of
the greater part of the public debts was still
further reduced to four per cent.; and, in
1753 and 1757, to three and a-half, and three
per cent., which reductions still further augmented
the sinking fund.
A sinking fund, though instituted for the
payment of old, facilitates very much the contracting
of new debts. It is a subsidiary fund,
always at hand, to be mortgaged in aid of any
other doubtful fund, upon which money is
proposed to be raised in any exigency of the
state. Whether the sinking fund of Great
Britain has been more frequently applied to the
one or to other of those two purposes, will
sufficiently appear by and by.
Besides these two methods of borrowing,
by anticipations and by a perpetual funding,
there are two other methods, which hold a
sort of middle place between them; these are,
that of borrowing upon annuities for terms of
years, and that of borrowing upon annuities
for lives.
During the reigns of king William and
queen Anne, large sums were frequently
borrowed upon annuities for terms of years,
which were sometimes longer and sometimes
shorter. In 1693, an act was passed for
borrowing one million upon an annuity of
fourteen per cent., or L.140,000 a-year, for
sixteen years. In 1691, an act was passed
for borrowing a million upon annuities for
lives, upon terms which, in the present times,
would appear very advantageous; but the
subscription was not filled up. In the following
year, the deficiency was made good, by
borrowing upon annuities for lives, at fourteen
per cent. or a little more than seven years
purchase. In 1695, the persons who had
purchased those annuities were allowed to exchange
them for others of ninety-six years,
upon paying into the exchequer sixty-three
pounds in the hundred; that is, the difference