Another method of debt payment, which has been followed by England largely since the breakdown of the sinking fund policy, is that of anuities. If the public debt is thrown into this ther as terminable or life annuities, the principal of the debt is automatically reduced as these fall in or mature. The objection to them is similar to the objection to the old sink ing fund, that it commits the government to fixed annual payments whether these are con venient or not.
This criticism leads to the statement of the correct policy of debt payment, which consists in the establishment of a permanent appropria tion beyond the annual interest charge. But such an appropriation must be out revenue and therefore cannot be No automatic machinery can compel the extinc tion of a public debt unless there exists a clear net revenue to devote to that purpose. Consid erable discretion must therefore be granted in the administration of a system of debt payment, for it must necessarily be suspended in periods of deficit. One favorable feature may be con
ceded to the sinking fund policy, which was that it committed a government definitely to the pol icy of debt payment. And to-day it has a place in local finance, where most of the debts are for purposes of improvement, and where accordingly it is essential that definite provision be made for debt payment. More recently, however, the principle of serial has been adopted as a b t It g ular o e t navment. ee NATIONAL tIEBTS OF THE ORLD.
Bibliography.— Adams, H. C.,