The plan of raising money by annuities for a term of years was .begun shortly after the revolution.
In 1693, an act was passed for borrowing one million upon an annuity of 14 per cent, or of 140,000/. for sixteen years. In the same year an act was passed for borrowing a million upon annuities for lives, upon terms which, in the present times, would appear very advantageous, but which could not then produce the sum required. In the following year, the deficiency was made good by borrowing upon annuities for lives, at 14 per cent. or at a little more than seven years pur chase. In 1695, the persons who had purchased those annuities were allowed to exchange them for others of ninety-six years, upon paying into the exchequer 63 pounds in the hundred ; that is, the difference between 14 per cent. for life, and 14 per cent. for ninety-six years, was sold for 63 pounds,. or for four and a half years purchase ; and, in the then precarious state of the government, even these terms procured few purchasers. In the reign of queen Anne money was, upon different occasions, borrowed both upon annuities for lives, and upon annuities for terms of thirty-two, of eighty-nine, of ninety-eight and of ninety-nine years. In 1719, the proprietors of the annuities for thirty-two years were induced to accept, in lieu of them, South Sea stock to the amount of eleven and a half years purchase of the annuities, together with an additional quantity of stock equal to the arrears which happened then to be due upon them. In 1720, the greater part of the other annuities for terms of years, both long and short, were subscribed into the same fund. The long annuities at that time amounted to 666,8211. 88. 31d. a-year. On the 5th of
January, 1775, the remainder of them, or what was not subscribed at that time, amounted only to 136,4531. 12s. 8d. During the two wars which began in 1739, and in 1755, little money was borrowed, either upon annuities for terms of years, or upon those for lives.
Such annuities were seldom granted but as premiums to the subscribers to a new loan, over and above the redeemable annuity to interest, upon the credit of which the loan was supposed to be made. They were grant ed, not as the proper fund upon which the money was borrowed, but as an additional encouragement to the lender.
The plan of raising money by means of annuities for a fixed term of years, was occasionally assisted by the establishment of sinking funds for the redemption of debt. In 1716, the reduction of the interest on the na tional debt, placed a surplus at the disposal of govern ment, which was converted into a sinking fund, appli cable to the discharge of the whole debt. This fund, however, being encroached upon on every real or fan cied emergency, was at length wholly dilapidated. No attempt was afterwards made to limit the amount of the national debt, till the year 1786, when the annual sum of one million was set apart for that purpose. In 1792, 200,0001. was voted to be annually added to it ; and another sinking fund was established, of one per cent. on all future loans. The annual amount of both these sinking funds is at present, (1809), between ten and eleven millions. By a sinking fund of one per cent. a debt is annihilated in forty.three years. By means of this regulation, therefore, the whole debt of Britain is, in reality, converted into annuities for the term of forty three years. g)