598 LAISSEZ FAIRE 
Debt, because they were under the impression that a self- 
acting mechanism for paying off debt was in operation, and 
that, however recklessly they borrowed, the Sinking Fund 
would soon suffice to set things straight. 
The Sinking Fund did not provide new sources of wealth, 
as it did not afford means of either using the land, or applying 
labour to better advantage. It did not give us fresh resources, 
it only served as a mew method of keeping account of the 
monetary resources at the command of the community; there 
sould be no real discharge of debts when the available in- 
come did not exceed expenditure’. It was an entire mistake 
to suppose that the country was becoming more solvent? 
when the Government borrowed large amounts on one side, 
and paid off small amounts on the other’. Indeed during 
some part of the operation of the Sinking Fund, which existed 
from 1786 to 1829 things were really going from bad to 
it served to worse, as new debt, incurred at high rates of interest, was 
encourage ' 
wiles used to pay off sums that had been borrowed on easier 
borrowing. 4o.no8 There was a curious irony in the fact that the 
A.D. 1776 
—18350. 
1 This was the point insisted on by Hamilton, “ The excess of revenue above 
sxpenditure is the only real Sinking Fund.” Inguiry, p. 10. 
2 Grenville [Essay on the Sinking Fund (1828)] discussed the principles of 
» sound scheme and showed the inutility of all borrowed sinking funds, and the 
:mpossibility of deriving benefit from a sinking fund which continued to operate 
in times of deficient revenue (p. 72), since the discharge of debt could only 
take place through the existence of surplus revenue. Price had made it an 
sssential that the fund should continue undiverted in time of war as well as of 
peace. State of Public Debts, 35. 
8 During the period from 1793 to 1829 there was only one year (1817) in which 
money was not raised by loan in order to aid the Sinking Fund. Accounts relating 
to Public Income and Expenditure, Appendix 13, 1868-9. Xxxv. printed pag. 718. 
4 10G.IV.c. 27. 
8 Fourth Report from Select Committee on Public Income and Expenditure, 
1828, v. 557. The case is stated more fully in a subsequent paper. * The actual 
result of all these Sinking Fund operations was that the total amount of 
£330,050,455 was raised at £5. 0s. 6d. per cent. per annum to pay off debt carry- 
‘ng interest at 44 per cent. per annum. The difference between these two rates is 
10/6 per cent. per annum, amounting upon the total capital sum of £830,050,455 
bo £1,627,765 per annum, which may be set down as the increased annual charge 
of our Funded Debt, and a real loss to the public from this deceptive Sinking 
Fund System, without taking into account the expenses of management of the 
Sinking Fund, and the increased amount of capital of debt, consequent upon 
the practice of borrowing on less advantageous terms, far larger sums than were 
required to meet the actual public expenditure.” Accounts relating to Public 
Income and Expenditure. Pt. m., Ap. 13. 1868-9. xxxv. 1202, printed pag. 718.