merit, in that time, of the stock now existing ; as the sinking funds attached to future loans will be employed in paying our present debt. On Mr Pitt's plan, those sinking funds would be used for the payment of the new debt to be created ; that is to say, of the loans to which they are re spectively attached. We shall be more in debt at every subsequent period, it is true ; but, as our debt may be divided into old stock and new stock, I am correct when I say, that we shall have the power of completing the repayment of the debt, meaning by the debt the stock now existing, sooner than by the present course.
This plan of Mr Vansittart was opposed with great ability, both by Mr Huskisson and Mr Tierney. The former gentleman said, " The very foundation of the assumption that the old debt has been paid off, is laid in the circumstance of our having incur red a new debt, of a much larger amount ; and, even allowing that assumption, Mr Vansittart would not have been able to erect his present scheme upon it, if the credit of the country bad not been, for the last twenty years, materially impaired by the pres sure of that new debt. On the one hand, had the sinking fund been operating at S per cent. during that period, he would not have touched it, even un der his own construction of the act of 1792. On the other hand, had the price of the stocks been still lower than it has been, he would have taken from that sinking fund still more largely than he is now, according to his own rule, enabled to take. This, then, is the new doctrine of the sinking fund ;.— that, having been originally established " to prevent the inconvenient and dangerous accumulation of debt hereafter" (to borrow the very words of the act), and for the support and improvement of pub lic credit, it is in the accumulation of new debt that Mr Vansittart finds at once the means and the pretence for invading that sinking fund; and the degree of depression of public credit is, with him, the measure of the extent to which that invasion may be carried. And this is the system of which it is gravely predicated, that it is no departure from the letter, and no violation of the spirit, of the act of 1792 ; and of which we are desired seriously to be lieve, that it is only the following up and improving upon the original measure of Mr Pitt!—of which mea. sure the clear and governing intention was, that every future loan should, from the moment of its creation, carry with it the seeds of its destruction; and that the course of its reimbursement should, from that moment, be placed beyond the discretion and control of parliament."—Mr Huskisson's Speech, 25th March
1818.
This is the last alteration that has taken place in the machinery of the sinking fund. Inroads more fatal than this which we have just recorded have been made on the fund itself; but they have been made silently and indirectly, while the machinery has been left unaltered.
It has been shown by Dr Hamilton, that no fund can be efficient for the reduction of debt but such as arises from an excess of revenue above expendi ture.
Suppose a country at peace, and its expenditure, including the interest of its debt, to be forty mil lions, its revenue to be forty-one millions, it would possess one million of sinking fund. This million would accumulate at compound interest ; for stock would be purchased with it in the market, and placed in the names of the commissioners for paying off the debt. These commissioners would be entitled to the dividends before received by private stock holders, which would be added to the capital of the sinking fund. The fund thus increased would make additional purchases the following year ; and would be entitled to a larger amount of dividends ; and thus would go on accumulating, till in time the whole debt would be discharged.
Suppose such a country to increase its expendi ture one million, without adding to its taxes, and to keep up the machinery of the sinking fund; it is evi dent, that it would make no progress in the reduc.
tion of its debt, for, though it would accumulate a fund in the same wanner as before in the hands of the commissioners, it would, by means of adding to its funded or unfunded debt, and by constantly borrow. ing, in the same way, the sum necessary to pay the interest on such loans, accumulate its million of debt annually, at compound interest, in the same manner as it accumulated its million annually of sinking fund.
But suppose that it continued its operations of in vesting the sinking fund in the purchase of stock, and made a loan for the million which it was defi cient in its expenditure, and that, in order to defray the interest and sinking fund of such loan, it im posed new taxes on the people to the amount of L. 60,000, the real and efficient sinking fund would, in that case, be L. 60,000 per annum and no more, for there would be'L. 1,060,000 and no more to in vest in the purchase of stock, while one million was raised by the sale of stock, or, in other words, the revenue would exceed the expenditure by L.60,000.