In February 1803 the debt amounted to L. 480,572,470, and the produce of the joint sink ing fund to L.6,311,626. In 1786 the proportiOn of the sinkine fund to the debt was as 1 to 288, in 1792 as 1 to 160, and in 1803 as 1 to 77.
This was the first deviation of importance from Mr Pitt's plan ; and this alteration made by Lord Sid mouth was not, perhaps, on the whole, injurious to the stockholder. He lost, indeed, the immediate ad vantage of an additional sinking fund of L. 867,963, the amount of 1 per cent. on the capitals created by the loans of 1798, 1799, 1800, and 1802; " but, in lieu," says Mr Huskisson, " of this sinking fund, a reversionary sinking fund was created to com mence, indeed, in about twelve to fifteen years from that time ; but to be of such efficacy when it should commence, and to be so greatly accelerated by sub.. sequent additions in its progress, as, under the most unfavourable supposition, to be certain of reducing the whole of this debt within 45 years. This rever sionary sinking fund was to arise in the following manner ; by continuing the old sinking fund at com. pound interest, after it should have reached its maximum of four millions ; and by continuing also the new sinking fund or aggregate of the one per cents of the loans since 1792, after such one per cents should have liquidated the several loans, in re spect of which they are originally issued. There is nothing, therefore, in the act of 1802, which is a de. parture from the spirit of the act of 1792." • The next alteration that was proposed to be made in the sinking fund was in 1807 by Lord Henry Petty, then Chancellor of the Exchequer. His plan was extremely complicated ; and had for its object, that which ministers are too much disposed at all times to view with complacency, namely, to lessen the burthen of taxation at the present, with the cer tainty of aggravating its pressure at a future day.
It was estimated by Lord Henry Petty that the expenses of the country during war would exceed its permanent annual revenue by thirty-two millions. For twenty-one millions of this deficiency, provision was made by the war-taxes, the property-tax amount ing to L. 11,500,000, and the other war-taxes to L. 9,500,000. The object then was to provide eleven millions per annum. If this sum had been
raised by a loan in the three per cents, when their price was 60, provision must have been made by taxes for the interest and sinking fund, so that each year we should have required additional taxes to the amount of L.733,333. But Government wished to raise the money without imposing these additional taxes, or by the imposition of as few as circumstan ces would permit. For this purpose, they proposed to raise the money required, by loan, in the usual way, but to provide, out of the war-taxes, for the in terest and redemption of the stock created. They pro. posed to increase the sinking fund of every such loan, by taking from the war-taxes 10 per cent. on its amount for interest and sinking fund, so that if the in. Wrest and management absorbed only 5 per cent. ; the sinking fund would also amount to 5 per cent., if the interest amounted to 4 per cent., the sinking fund would be 6 per cent. The sums proposed to be borrowed, in this manner, were twelve millions for the first three years, fourteen millions for the fourth, and sixteen millions for each succeeding year, mak ing together, in fourteen years, 210 millions, for which, at the rate of 10 per cent., the whole of the war-taxes would be mortgaged. It was calculatal, that, by the operation of the sinking fund, each loan would be paid off in fourteen years from the time of contracting for it ; and, therefore, the L. 1,200,000 set apart for the interest and sinking fund of the first loan would be liberated and available for the loan of the fifteenth year. At the end of fifteen years a like sum would be set free, and so on each succeeding year, and thus loans might be continued on this sys tem, without any limitation of time.
But these successive sums could not be withdrawn from the war-taxes, for interest and sinking fund on loans, and be at the same time applied to expendi ture ; and, therefore, the deficiency of eleven mil lions, for which provision was to be made, would, from year to year, increase as the war-taxes became absorbed, and at the end of fourteen years, when the whole twenty-one millions of the war taxes would be absorbed, instead of eleven millions, the deficiency would be thirty-two millions.