TRANSACTIONS OF SECTION F. 679 



Plan No. 7. 



Diminishing Sinking Fund or Annuities .... 2,655,982 

 Perpetual Annuities £30,000 x 91 years = £2,730,000 

 Add debt still owing .... 1,000,000 3,730,000 



Annuities for terms of years, £3 4s. 4d. 



each X 91 years = £292 Us. id. x 10,000 . . . 2,927,166| 



I now request your attention to plans 6 and 7, which are drawn up especially 

 for practical purposes, not to demonstrate the capacity for modification of my 

 principle, or the vastness of the economies to be eSected. Examining plan No. 6, 

 it is noticeable that after 40 years the excess for sinldng fund entirely ceases. 

 From the 41st to 50th year the annual payment is the same as for perpetual in- 

 terest, and from the 51st to the last year it is decreasingly less. The total disburse- 

 ment on account of the sinking fund is, in the forty years, some 140,000/. per 

 million, or 99,400,000/. for the funded debt ; while in the last 39 years the total 

 saving is 165,000/. and 117,150,000/. respectively, which more than compensates 

 for the earlj' sacrifice. If we study the problem from an every-day, instead of a 

 theoretical, standpoint, it is evident that to redeem the debt need cost the country 

 NOTHING. This generation lays out 99,400,000/. by 40 instalments, to be retiu-ned 

 with interest to its successors. If 89 years is considered too long a term, the 

 payments from the 41st year can be equalised at 3 per cent, on the capital, 

 and the debt annihilated in 81J years. The net cost of redemption will then be 

 99,400,000/. or 14 per cent. 



I will now ask you to inspect plan 7. You will observe that the same method 

 of repayment is continued up to the 80tli j'ear, but that from the 81st the annuity 

 is 2/. instead of 21. 5s., and the annual payment is fixed at 20,000/. instead of 

 22,500/. per million. In introducing this variation my object is to impress upon 

 the mind, with redoubled force, the extraordinary potency of compound interest, 

 when judiciously applied. Although the funded debt charge for the final period 

 averages 1,775,000/. less by the last plan, liquidation occupies little more than a 

 year longer ; while the aggregate sum required for interest and sinking fund is 

 augmented by 2,737,050/. only. Prolonging the term of redemption has the 

 effect of showing up the new philosophy in more brilliant colours — the saving 

 when compared with perpetual annuities being 63,145/. per million more, or when 

 compared with annuities for terms of years or cumulative sinking funds, 

 271,184/. 13s. 4c/. against 225,539/. 13s. M. The correct figures for the funded 

 debt are, as against perpetual annuities, 12,689,830/. by plan No. 6, and 52,552,780/. 

 by plan No. 7. This is excluding the 710,000,000/. capital paid ofi'. When com- 

 pared with annuities or cumulative sinking fund loans terminating in 89 or 91 

 years, the net savings are over 160 and 192 millions respectively. The limitation 

 of time prevents notice being taken of many other important phenomena which 

 occur to my mind, but I trust sufiicient information has been given to enable 

 economists and financiers to thoroughly investigate this neo-philosophy in sinking 

 funds and annuities, and that sooner or later we may see its principles adopted in 

 this and other countries. 



TUESDAY, AUGUST 31. 

 The following Papers were read : — 



1. What is Capital? The Contradictory Responses of Economists to this 

 question examined from the ground of Actual Fact and Life. By 

 W. Westgaeth. 



The author, after alluding to the late Mr. Bagehot's remark, that many who 

 were conversant with economic theory were not so with economic facts, and vice- 

 versa, went on to illustrate this by the case of capital, which is still so disputed a 



