The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-11-15
FL ANcIAL.
The Sinking Fund Systems Of Great
Britain = Their origin and
Progress from I7I7
70 1887, Etc.

Great Britain, which is larger than that of an
other nation was laid in the latter part of th
wear l692 during the reign of William anC
Mary, one hundred and seventy-four years ago
On the 10th of December of that year the HOUSE
of Commons authorized the financial minister
10 borrow from the people for the use of tht
crown one million of pounds sterling. From
that time the debt went on increasing in mag
nitude through the contest with Louis tho
Fourteenth OF France, when ii rose TO fifty mil
lions OF pounds; through the war of Austrian
succession, when it reached eighty millions
and on through other wars and difficulties
with continental nations, until during the
administration of the first William Pitt IL had
attained what was then thought to be the enor.
nous proportions of one hundred and forty mil
lions OF pounds sterling, or less than seven hun
dred millions of dollars. The unsuccessful war
TO keep the American colonies in subiectlon
ADDED one hundred and thrty-three millions to
the debt, and the great struggle with republican
france and the Napoleonic war raised the debt
70 lts eliminating point; and when the beaten
emperor was finally and securely placed upon che
island OF st. Helena the national liabilities OF
England, consisting of funded and unfunded
stock, aggregated eight hundred millions of
pounds sterling, equal to four thousand millions
of dollars.
The first sinking fund system of Great Britain
was lnaugurated in l7l7 by Sir Robert Walooe.
who was then First Lord Commissioner of the
Treasury. The debt was then com par atiyelv n
mere bagatelle. Parliament in accordance
with the. recommendation of Mr.. Walpole,
enacted that all the public funds BEARING a
higher interest than five per cent should be re.
deemed or converted into an annuity not ey
ceeding five per cent, and that the surpluses
arising as well from the proposed reduction OF
interest from SIX to five per cent. as from the
excesses of the several taxes appropriated 10
the payment OF interest, should be solely and
unalienably applicable to the discharge of the
principal of the national debt. The fund
which was thus created was denominated a
"Sinking Fund.-
Ten years thereafter, in 1927, a further reduc.
ton OF interest on the public stock, from five to
louT per cent; took place. by which this sinking
fund was made to yield Gl, 200, 900 per annum'
In 1888, Mr.. Walpole, thinking, no doubt, that
his system was working too well, succeeded in
getting an act through Parliament granting him
permission to rob the sinking fund of half a
million OF pounds ostensibly for current eX-
penses. The ice was thus broken. Depredations
having been permitted to be made upon the ad-
miraole working Of the system, it soon became
SGomparatYely valueless; and from 1888 to l776,
u can be said to have existed only in name
from the time of its adoption down to the break
ing out of the war OF the American revolution it
mad contributed to the redemption of but twenty
millions of the public debt.
1t was charged upon Mr.. Walpole that his
system was used to foster corruption, and as
evidence OF the fact letter of his was pub
lshed In which he informed Cardinal de Fleury
that ne was compelled to subsidZe King George
ii, and play Bank of England notes into the
hands of one-half the members of Parliament.
IN order to maintain the successful workings of
his own ideas, and to keep down the war spirit
which was then inclined to be rampant. In one
OF his letters, Mr. Walpole said:-"Gold is a
metal that has a prodigious effect IN cooling
hot blood and martial spirits. There is no i'm
petuous warrior in the Parliament but a pen.
SION OF two thousand pounds would make ex-
Ceedmgly gentle" The pensions thus referred
to- were distracted, it was alleged from the
sinking fund, and thus the main objects of Mr.
Walpoles creation were defeated by his own
acts.
The system itself could not be charged with
any lack of machinery to do the work designed
Tor II, but the numerous outrages that were GER
mltted by special acts or Parliament to be per-
petIated upon It, caused the public to distrust
ana 10 denounce the scheme as one fraught with
injury to the finances Of of the nation.
In 17S6 William Pitt became Prime Minister
ana chancellor of the EXchequer. Immediately
al aItef ms lnstalment into the Office OF head Of
tpe tSe nnances, he set about working up plan for
the eXtinguishment of the national debt, which
was then about five hundred and thirty millions
OF pounds. He brought forward bill in Par.
lament for the appropriation of one million
annually to the sinking fund, and in order TO
secure its reversion to its legitimate purposes,
he stipulated that two hundred and fifty thou
sand pounds should be applied quarterly to the
purchase OF stock for the period of tWenty-eigbt
years, at the end OF which time he calculated
that the sinking fund would receive an income
OF four millions year. Mr.. Fox was at that time
the great leader OF the opposition, and he pro-
posed that whenever new loan should be made
the sum in the hands of the Sinking Fund Com
missioners should be deducted from the amount
OF the loan for example, if six millions was
authorized to be borrowed, and there should he
one million IN the sinking fund, the Commits
sioners should take that amount of the loan
SO that in fact only f5,0OO,OOO would be bor
roWed. AS this amendment did not materially
interfere with the ideas and plans of Mr.. pitt
he accepted 1t, and the act was passed. In I793
Parliament added f200, 900 to the fl OOO 600 pre-
Vlously appropriated, which would have made
the annual revenue to what has since been
termed the '0ld Sinking Fund" fl 200, OOO But
Mr. Pitt was not satisfied with this. He pre.
vailed upon Parliament to pass another act
which provided that upon all sums thereafter
borrowed by the Government, in addition to the
taxes necessary TO pay the interest, one per
cent. should be imposed, to be applied to the re-
New Sinking Fund.-" and it became the basis of
Mr.. Pitts popularity as a financial minister
Under this system fl0, 500 900 of the public stock
was redeemed In the year 1900, and in 1901
Government bonds to the amount of ell 900, 600
more were paid of. The system was pet of Mr..
Pitts and during the whole term OF mis- adminis-
traton, ne applied himself assiduously to the
Keeping OF 1t IN working order and to laying by
one per cent. annually for the discharge of the
public debt. For period of twenty years it
worked harmonlously with all the ramiications
of trade and finance, and seems to have given
general satisfaction both to the Government and
the people. From the commencement of the
present century TO the year 1914, when the
financial affairs of the nation fell into new hands
the following sums were appropriated from the
sinking fund to the redemption of the Govern
ment stock:-
1900. 610 $50 OO4 1903 .u...... fl6O64 962
lsQl' 1918 1853 1905 ..,,,,., l6lSl CSC
1902 .'.',," l0491 1926 1910 ....,.,... 1866 ,643
1903 ',.,..,,, 9436 389 1911 ,,,,,, II S84 394
1904 .,.,..,,., 13 181, ,667 1872 ~ % 739 954
1905. .,.,,,.., u $50, ,629 lsl8,...... 24246 059
!SO5' ,s''''''. I5169671 lSl4......... 81 SO $50