THE NATIONAL DEBT AND THE SINKING FUND 697
Dr Price!, and it avoided the errors which had rendered AD
Walpole’s Sinking Fund nugatory?. There was now ample
security that the money set aside every year should really be whick
devoted to the reduction of debt, and not diverted, as Walpole’s A
Sinking Fund had been, to bear the ordinary expenses of , oro
government. According to Pitt's scheme £1,000,000 a year
was paid to commissioners who were to invest in the National
Debt, until a sum stood in their names which gave an income,
along with the £1,000,000 contributed by the country, of
£4,000,000 a year: With the £4,000,000, which thus be-
came their annual income, they were to buy up additional
portions of the National Debt, the dividends of which should
be extinguished. In this way it was hoped that the charge
for interest would be gradually reduced while the principal
debt would be transferred to the credit of the commissioners
ab the rate of £4,000,000 a year. Upon paper, the scheme
appeared to be admirable?; and it had many merits; indeed
it was in its very plausibility that its chief danger consisted, inspired
a8 it appears to have lulled the mind of the ministers and oe,
she public into a false sense of security in the matter of
borrowing®. Possibly the vast additions to the debt would
have taken place under any circumstances; as a matter of
fact £271,000,000 was borrowed during the Revolutionary
War, and £618,000,000 in the struggle with Napoleon; but it
seems probable that the House of Commons was much more
somplacent over this unexampled increase of the National
! The State of the Public Debts and Finances (1783), p. 29: also see the
[ntroduction.
3 Price, Observations on Reversionary Payments (1773), 163.
} 26 Geo. III. c. 31, § 20.
* This provision was repealed in 1802 (42 Geo. ITI ¢. 71). An admirable
history of the Sinking Fund will be found in the Explanatory and Historical
Notes of the Several Heads by Public Income and Expenditure, which forms
Appendix 13 to the Account relating to Public Income and Expenditure, 1868-9.
dccounts and Papers, 1868-9, xxxv. 1197, printed pagination 713.
8 For a very sanguine view of the operation of the Sinking Fund see G. Rose,
4 Brief Examination into the Increase of the Revenue, Commerce and Manyu-
factures of Great Britain from 1792 to 1799, p. 26.
8 This was a point on which Cobbett laid stress, “By giving people renewed
confidence in the solidity of the Funds and Stocks it rendered Government
borrowing more easy.” Paper against Gold (1815), 1. 65. Cobbett was a vigorous
critic of the Sinking Fund in 1803 and onwards (Noble Nonsense (1828), p. 10),
before Hamilton wrote or Grenville was convinced of its futility.
