OUTLINES, &c.

FROM the period of the complete introduction of the Funding System in the early part of the last century, to the close of the American War, the object of our measures of Finance during War appeared to be only to provide for the immediate expenses of the year, by borrowing such Sums as were necessary for any extraordinary charge incurred, and by imposing such Taxes as might meet the interest of the Loan, leaving to the period of Peace the consideration of any provision for the repayment of Debt; and this be ing attempted at irregular periods, and on no permanent system, was never carried into effectual execution; the total amount of Debt redeemed between the Peace of Utrecht and the close of the American War being no more than .8,330,000.

The accumulated expenses of the American War, and the depressed state of Public Credit and of the Revenue at the close of that War, impressed on the vigorous mind of Mr. Pitt the necessity of adopting a more provident system, of which he laid the basis, with admirable judgment, in the Sinking Fund Acts of 1786 and 1792.

At the commencement of the War of the French revolution, Mr. Pitt thought it sufficient, to meet the charge of military anḍ

naval expense by Loans, accompanied by that provision for gradual redemption, which had been established by the Act of 1792.

The increased expenses of the War, and the prospect of its long continuance, induced him, however, in 1797, to aim at the most efficacious system by which a long duration of War can be supported, that of equalizing the Income with the Expenditure of the Country.

For this purpose he proposed, in 1798, the establishment of a general Tax on Income; intended, with the aid of some other War Taxes, to provide within the year, for a considerable part of the public expenses, and also to repay within a few years after the conclusion of peace, all Debt contracted beyond the amount of the Sinking Fund in each year.

The plans adopted for increasing the National Income upon the renewal of the War, by Lord Sidmouth, and afterwards by Lord Grenville and Lord Henry Petty, in 1803, 4, and 6, were on a much larger scale; and there is every appearance that the income of the Nation, might at this time have equalled or exceeded its expenditure, if the necessity of a large increase in our foreign expenses had not arisen.

The total amount of the public Expenditure, exclusive of the Sinking Fund, was on an average of the years 1806 and 1807, about £.61,600,000. The Income of 1807 (taking the Property Tax, according to its assessment, at about £.11,400,000.) was about £.59,700,000,

The net produce of the public Income, on an average of the years 1809, 1810, and 1811, deducting the arrears of Property Tax paid in beyond the assessment of each year, was about £.64,000,000. which, with the addition of the Taxes imposed in i811 and 1812, would appear to leave a considerable surplus beyond the amount of the Expenditure of 1807; but to this Expenditure must be added the increased charge of unredeemed Debt since that year. This amounts to about £.2,300,000. which added to the before-mentioned sum of £.61,600,000. being the Expenditure of 1807, makes together nearly the above sum of £.64,000,000.

The Expenditure of the same years 1809, 1810 and 1811, amounted, it is true, on an average, to nearly £.73,000,000. and

that of the year 1812 may be estimated at about £.81,000,000. exclusively of the repayment of Exchequer Bills and Loyalty Loan.

The amount, therefore, of the sum to be provided, in order to equalize the receipt and expenditure of Great Britain on an average of the years 1809, 1810 and 1811, allowing for the increased charge of unredeemed Debt, may be estimated at £.9,000,000. or, taking the Expenditure at £.81,000,000. at about £.17,000,000. from which sums must however be deducted the future produce of the Taxes imposed in 1811 and 1812, which may be estimated at about £.2,500,000. and which would reduce the former sæm to £6,500,000. and the latter to £.14,500,000.

To raise even the lowest of these sums by an immediate imposition of new Taxes, in addition to the great exertions already made, would, however, be considered as a very heavy burden; and one, the severity of which might be felt still more sensibly, from an apprehension, by no means unreasonable, that such a sacrifice might eventually prove to have been unnecessary, as many supposable and even probable cases may arise during the continuance of the War, in which it would be possible very considerably to reduce our expenses.

Nothing more, therefore, can be expected as a permanent War system, than to provide for such a scale of Expense as must necessarily arise out of the state of War, without including that great increase which has been occasioned by our extraordinary exertions abroad in the last four years, and which, in whatever way it may appear to the wisdom of Parliament most proper to provide for it, must be considered as of only an occasional nature.

In the foregoing Statement it is assumed, that the Sinking Fund is no portion of the national expenditure. In fact, by cancelling a certain portion of Debt in each year, it reduces the Debt really incurred, to the amount in which the sum borrowed exceeds the sum to be redeemed. It is evident indeed, that whether the Fund is applied in the purchase of stock already existing, or in reducing the amount of stock to be created, the effect will be nearly the same; and the equalization of the public income and expenditure may consequently be considered as a primary advantage of the Sinking Fund, no less than the actual redemption of Debt

'The former of these objects, so far as is requisite to meet that part of the expenses of the War, which may be considered as necessarily permanent, appears, by the foregoing Statement, to have been already accomplished. It has, indeed, been effected by means which, while they show the extent of the resources of the Country, and evince its firm and unshaken spirit, point out at the same time the expediency of not calling for any further sacrifices which may be avoidable: for this great object has, in fact, been accomplished by the extraordinary payment of more than 200 Millions of War Taxes. This unexampled exertion may be considered as no less powerfully co-operating with the Sinking Fund, in its other great object of the reduction of the Debt, since the creation of a new Debt to an equal amount has thereby been avoided.

These considerations may be thought sufficient to point out the general expediency of any alteration of the present arrangement of the Sinking Fund, which, without violating the provisions of the Act of 1792, may diminish the weight of those further burdens, which the progress of the War may still impose upon the Nation; and with this view, it may be proper to advert to the remarkable period at which the Redemption of the Debt has actually arrived.

When the establishment of the Sinking Fund was proposed by Mr. Pitt, in 1786, the Debt amounted to near £.240,000,000 ;* a sum, of which, few then living ever hoped to see the Redemption, but which, by the steady perseverance of Parliament, in this important measure, has already been redeemed.

It is true, that this Redemption has been effected, not solely by the operation of the Sinking Fund established in 1786, but in great part by the provision made for the redemption of Loans since contracted, and also by the redemption of the Land Tax, and, in some degree, by the purchase of Life Annuities. These additional exertions show the spirit and perseverance with which the original system has been carried into execution, amidst all the difficulties of an expensive and protracted Warfare. The separation, kept up, for purposes of account, between the original Sinking Fund of 1786

1 .288,231,248.

and the Additions subsequently made to it, is, however, only nominal; it neither has been, nor can be attended to in practice; because the whole of the Debt contracted since the establishment of the Sinking Fund, having been borrowed upon the Old Stocks, and no distinction made between the Old and the New Proprietors, the whole Debt is considered as one indiscriminate mass, to which the purchases made by the Sinking Fund are equally applicable. No right of priority of redemption can exist in any particular class of Stockholders, nor can any conditions of repayment be claimed (except in the instance of the Five-per-cent Loan of 1797) beyond those laid down in the Act of 1792, under the faith of which all subsequent Loans may be considered as contracted.

By that Act, provision is to be made for the redemption, within 45 years, of all Debts subsequently created; and within this limit, Parliament has the power to regulate the mode of the redemption at its discretion; and has in fact exercised that discretion in several instances.

In the years 1798, 1799 and 1800, for example, no provision was made for the immediate reduction of that part of the Loans which was charged upon the Income Tax; but it was intended that those sums should be redeemed by a prolongation of that Tax in time of Peace. In 1802, when the Income Tax was repealed, and other Funds were provided for defraying the interest of those Loans, it was again thought unnecessary to make immediate provision for the redemption of the Principal, which was left to be redeemed by the prolonged operation of the Sinking Funds already existing.

It may therefore be considered as decided, not only by the recorded opinion, but by the established practice of Parliament, that while provision is made, in any manner, for the redemption of each respective portion of the Public Debt, within 45 years from the time of its being created, the enactments of the Act of 1792 are complied with.

It would consequently be equally consistent with the Act of 1792, either to redeem any number of Loans, by applying to the separate redemption of each the distinct portion of Sinking Fund created at the time of its being contracted, or by applying the