396 LAISSEZ FAIRE 
A.D. 1776 
—1850. 
ind while 
Pitt's 
Sinking 
Fund. 
generations. Pitt was keenly alive to the disadvantages of 
public borrowing, and endeavoured to avoid it; but circum- 
stances were against him. He was alarmed by the rate at 
which the debt was increasing ; £121,000,000 had been added 
juring the American War’; the amounts were large, and 
the terms which ministers made with the public creditors 
were extravagant; instead of borrowing at a high rate of 
interest, in the hope of subsequently financing the debt, they 
borrowed at a low rate of interest, and were forced to offer all 
sorts of extra inducements. Thus in 1782 for every £100 
subscribed, the Government allotted £100 in the three per 
cents., £50 in the four per cents. with an annuity of 17s. 6d. 
for seventy-eight years? and extra inducements were given 
in floating the loans by connecting them with lotteries’. The 
permanent indebtedness was swelled from time to time by 
funding Exchequer and Navy Bills‘, and in 1786 the debt 
amounted to £245,466,855, involving an annual charge of 
£9,666,541% Pitt set himself to reduce this terrible in- 
debtedness, and established a Sinking Fund, by means of 
which he was able to pay off about £10,000,000, before the 
exigencies of the Revolutionary and the Napoleonic Wars 
rendered fresh borrowing inevitable. The main outlines of 
the scheme which Pitt introduced® had been formulated by 
1 Sinclair, History of the Public Revenue, mv. 93. 
? 22 Geo. III. ¢. 8. 
' Hamilton, dn Inquiry concerning the Rise and Progress of the National 
Debt of Great Britain (1814), p. 212. 
¢ Sir John Sinclair thus describes the progress of the debt. * At first when 
3 nation borrows, it is under the necessity of providing a fund for defraying not 
nly the principal but the interest of its debts. The creditor is afterwards perfectly 
wtisfied, if he is secured in the punctual payment of the interest, knowing 
serfectly well that his capital will at any time fetch an adequate value in the 
market: and in process of time he is contented without any fixed security either 
lor his principal or interest, except the general faith and credit of the public. In 
bis manner the unfunded debt of the nation has arisen. At present it consists of 
Exchequer Bills, of bills granted by the navy and victualling boards, and of various 
:laims and other expenses.” History of the Public Revenue, m. 258. Hamilton 
points out that ¢“ the funded capital has been increased in a manner different from 
loans. Exchequer and Navy Bills have been funded to a great extent. That is, 
nstead of paying these bills, capital in one or more funds has been assigned to the 
nolders on such terms as they were willing to accept of.” Inquiry concerning the 
Rise and Progress of the National Debt, 64. 
8 Fenn, Compendium of the English and Foreign Funds, 5. 
3 96 Geo. IIL. e. 31.