which means„and.fro:r. great mismanagement 
of the public finances, the debt rapidly in- 
creased, and on tiie 3 1st December 17 lb, 
amounted to 48,364,501/. 8s. Ad. This 
amount was considered, in the language of 
the king and parliament, as an “ insupport- 
able weight;” and the house of commons ex- ; 
pressed their determination to apply them- j 
selves, with all possible diligence and atten- ' 
tion, to the great and necessary work oi re- 
during by degrees this heavy burthen, as the 
most effectual means of preserving to the , 
public funds a real and certain security. 
The current rate of interest having lowered 
considerably, a plan was adopted for. redu- 
cing the rate of interest payable on stich part 
of the public debts as carried 6 per cent, 
interest, which causing a surplus in tire 
funds appropriated to the payment of the , 
interest, the overplus remaining; after satis- j 
fving the charges upon the respective funds, ! 
"was formed into a separate fund, under the 
title of the sinking fund, for the express pur- ; 
pose of discharging such national debts as j 
were incurred before December 1716, and 
“ tor no other use, intent, or purpose, what- 
soever.” This arrangement was well calcu- 
lated for effecting a gradual reduction of the 
amount of the debt, and gave a new confi- ! 
deuce to the public creditors, from a persua- 
sion that the provisions made would prevent j 
the inconveniences which had formerly arisen 
from the interest of particular debts being 
frequently long in arrear; and that instead of ; 
tire depression of the current value of their 
securities, which generally attends the in- 
crease of public debts, this value would in- 
crease in proportion to the progress of re- j 
demption. The public had also a distant ; 
hope at least of being relieved from some of; 
the many taxes which it had been necessary i 
to impose for paying the interest of the debt, 
the pernicious effects of which, both on the j 
foreign trade and the internal state of the 
country, began to be sensibly felt. 
The expectations entertain *d from the 
sinking fund were, however, soon disappoint- j 
ed; as the period of its strict application to ; 
the purpose for which if was established did 
not exceed 10 or 11 years. The famous 
South Sea scheme was likewise to have fur- 1 
nishecl a considerable sum to be employed in 
the reduction of the public debts; instead of j 
which it increased their amount bv an addi- 
tion to the capital of 3,034,769/. *1 1.?. 1 Id., ' 
white the annual charge was rather augment- ! 
ed than diminished by the allowance for ma- 
nagement on the increased capital: a further j 
reduction of a part of the interest wras how- : 
ever secured by this transaction. 
In i 727 the interest payable on 29,962,979/. ! 
12.s. 9\d South Sea stock and annuities, and j 
©n 7,775,027 /. 17s. 10 \i. due to the Bank, j 
was reduced from 5 to 4 per cent, which pro- j 
duced such an important augmentation of the j 
sinking fund, that had it been faithfully ap- 
plied to the purpose for which it was intend- 
ed, and received no other increase than what 
would have arisen dioin a judicious applica- 
tion of it, the national debt would at this time 
have been wholly annihilated. During the 
reign of George I. th,e fund continued to be 
appropriated to the purposes for which it was 
formed: little progress, however, was made 
in discharging the public debts; for at the 
Same instant that old incumbrances were 
thus paid off, new debts were contracted ; so 
NATIONAL DEBT. 
that at the end of the year 1727, the total of 
the funded debt amounted -to 51,258,939/. 
4y. 9J~d., of which it must be remembered 
that upwards of three millions arose from the 
additional capital created by the South Sea 
company’s subscription. 
'1 he whole sum paid off by the sinking fund 
from its establishment to the year 1739, was 
only 8,328,354/. 17j : . 11 d.\ and the total 
amount of the debt at tiiis period 46,954,623/. 
3v. 4 d.\. 
The war with Spain and France, which 
began in this year, increased the debt to 
78,293,313/. 1?. lOrff., the interest on which 
amounted to 3,06 1 ,004k ] 1 l \d. per ann 
I he interest ot money,, which had risen 
during the war to upwards oi 4 percent, fell, 
when the cessation of hostilities terminated 
the loans of government, to 3 per cent. ; and 
the administration seized the moment of in- 
creased prosperity to propose another impor- 
tant reduction of interest. Towards the end 
of 1749, 3 per cent, stock had been for some 
months above par : an act was therefore pass- 
ed by which the interest was reduced on all 
the public debts redeemable by law, which 
then carried 4 per cent, interest, foi ming to- 
gether a capital of 57.703,475/. 6s. A\d. 't he 
proprietors, on signifying their consent to the 
reduction, were to have 4 per cent, interest 
to the 25th December following, thence 3£ 
per cent, till 25 December, 1757, and after- 
wards 3 per cent, per annum. Upwards of 
three millions remained unsubscribed, which 
was therefore paid off, by money borrowed 
at 3 percent., and thus a saving of 612,735/. 
per annum was effected, which ought to have 
contributed materially to the reduction of the 
debt. Little progress, however, was made in 
diminishing the capital of the debt ; and at 
the commencement of tire war in 1755 it 
amounted to 74,9S0,886/. 8s. 2±d. 
The great expences of the war rendered 
the loans of greater magnitude than had ever 
before been raised, and the debts incurred 
were somewhat increased by the practice of 
entitling the persons lending the money to 
a greater capital than the sum actually ad- 
vanced ; so that at the end of the war, includ- 
ing the loan of 1763, they amounted to 
141,691.313/. 13s. Ad., and the annual inter- 
est to 4,706,734/. 11 d. 
During the succeeding 12 years of peace, 
little was done in reality towards diminishing 
the amount of the debt; for although in each 
year from l765 to 1775, some small portion 
of the funded debt was paid off, the whole 
amounted to only 11,983,553/. being a less 
amount than had sometimes been borrowed 
in one year of war ; and the debt was far from 
being diminished even this amount, as during 
the same period a new debt of 5,052,500/. 
was contracted, by borrowing money on 3 
per cent, stock, in order to redeem 4 per 
cents. 
T he American war was entered into with 
a funded debt of 132,343,051/., including an 
estimated value of the long annuities and 
exchequer annuities, and an unfunded 
debt of about 3,600,000/., making together 
135^)43,05 1 /. the interest on which amounted 
to 4,476,821/. per annum. The expences of 
this war greatly, exceeded those which had 
preceded it ; and the increase of the debt was 
much greater than Lad ever been incurred 
by any country In the same space of time. 
Fhe folowing statements will shew the ex- 
253 
/ 
tent of the sums borrowed, and the additions 
thus made to the annual burthens of the 
country : 
Money bor. Debt created. Interest. 
64,500' 
225.000 
330.000 
472.500 
697.500 
660.000 
793,125 
560,000 
316.500 
1776 
2, 000,000 
•2,150,000 
1777 
5,000,000 
5,000,000 
1778 
6,000,000 
6,000,000 
1779 
7,000,000 
7,000,000 
1780 
12,000,000 
12,000,000 
1781 
12,000,000 
21,000,000 
1782 
1 3,500 ,000 
20,250,000 
1783 
12,000,000 
15,000,000 
1784 
6,000,000 
9 000,000 
£ 75,500,000 
97,400,000 ' 
From which it appears that a nominal capital 
ot 21,900,000/. was added to the sum of 
75,500,000/. actually borrowed, and that the 
interest on the whole amounted to 5/. 9s. Id. 
per cent., on which the perpetual interest 
was equal to 4/. 6s\ per cent, on the whole 
sum. In addition to the above sums, a very 
considerable amount of navy debt was funded 
after the conclusion of the war, which being 
properly part of the expences of it, the total 
debt incurred by the American war may re- 
stated as follows : 
Debt created; Interest. 
In 3 per cents. 64,648,000 1.939,440 
4 per cents. 32,750,000 1,310,000 
5 per cents. 17,869,992 893,499' 
Terminable annuities 869,623 
£\ 15,267,992 5,012,562 
The whole amount of the funded and un- 
funded debts, including, a valuation of the 
terminable annuities, was on the 5th jam 
1786, 268,100,379/. 1 S.y. 8 d., and the amount; 
of the annual interest 9,512,2 32/. 7s. 9d. 
The magnitude of the public debt, and tile 
consequent low price of the funds, appear at 
this period to have engaged the serious atten*-- 
tion of the government ; in consequence of 
which some new taxes were imposed, i reorder 
to raise a surplus of revenue, as the foundation, 
of a plan for establishing a new sinking fund. 
In order to ascertain what portion of the re- 
venue might be appropriated to this purpose, 
a select committee of the house of commons 
was appointed to examine and state the ac- 
counts presented to the house relating to the 
public income and expenditure,. anil tore- 
port what might be expected to be the annual 
amount of the income and expenditure in fu- 
ture.. On the 21st March, 1786, the com- 
mittee made their report; and. conceiving 
that the circumstances of the times rendered 
any average drawn from tne amount of the 
revenue in former, periods in a great degree 
inapplicable to the situation of the country, 
they formed an account -of the public receipt 
and ex; ea i u.e to Michaelmas 1785, .and to 
January 1786, troin which it appeared, that 
at the former period there was a surplus of 
9 *1,001/.,. and at the latter a. surplus of 
919,293/. As it was evident that a fund cf 
less than one million per annum would be 
very inadequate to the purpose for which it 
was designed, new tax' s were imposed for 
raising. the surplus revenue to this sum ; and 
in .order the more effectually to prevent mi- 
nisters from diverting it to any other purpose, 
tiie mode was adopted which had been Ire- 
quently suggested, of vesting the annual sum 
in the hands of commissioners : some other- 
