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tallies and orders; the rate of interest was extremely high, annuities being frequently granted for 99 years, at 15 years' purchase, In 1694 the sum of £1,200,000 was borrowed of the Bank of England, at 8 per cent. interest, and it was stipulated that the lenders should not require the re-payment of the money during the continuance of the charter then granted by the legislature ;

this was the first approach to the present system of funding or borrowing money on interminable annuities. The war having been brought to a close in 1697, the national debt was found to amount to £20,000.000, and the revenue was deficient the sum of £5,000,000; at this time, from the irregularity with which the interest upon the floating debt was paid, exchequer tallies and orders were at a discount of 40 per cent., and government, to redeem the credit of the nation as well as to provide for the deficiency of the revenue, were obliged to contract a further debt, and to fund a portion of the floating securities. In the following year, 1698, the New East India Company advanced to government, at 8 per cent. interest, the sum of £2,000,000, in consideration of certain privileges granted to the corporation ; this debt and that due to the Bank of England, were nearly the whole of the public liabilities which consisted of interminable annuities, the remainder of the debt being in the form of annuities for lives and for a fixed term of years : the terminable annuities gradually expiring effected a reduction in the amount of the public debt, which at the close of this reign in 1702 was about £16,000,000, taking the terminable annuities at a valuation, the annual charge for interest and annuities being £1,300,000.

The return of war, on the accession of Queen Anne, brought with it an increased expenditure to the country, and a consequent addition to the public debt; various expedients were resorted to in order to raise money, and the terms of the loans appear to have been but little regarded ; life annuities, and annuities for fixed terms,

tontines, and lotteries were the means most frequently made use of in order to provide the necessary supplies for the exigences of the state. The financial embarrassment of the nation led to the establishment of the South Sea Company in the year 1711, after the war had continued for nine years, this association was projected with the avowed intention of carrying on trading intercourse with the South Seas, and the North West Coast of America, but its chief object appears to have been to assist the government in its financial operations : the various government obligations outstanding at this period, amounted to about £9,000,000, which from the pecuniary difficulties of the nation, had borne little or no interest, and were consequently at a heavy discount; the South Sea Company were empowered to receive these obligations as subscriptions for stock in the company, and were thus constituted the chief creditors of the state—the amount of stock thus created was £9,471,325, which was increased in 1715 to £10,000,000, by the addition of certain arrears of interest to the capital stock; for this sum the company received 6 per cent. interest, and £8,000 per annum for the expenses of management.

At the close of the reign of Queen Anne in 1714, the public debt had increased to upwards of £52,000,000, bearing an annual charge for interest and annuities of £3,350,000. Of this the permanent debt was about £21,000,000, the unfunded obligations about £5,000,000, and the temporary annuities were valued at about £26,000,000.

In the year 1717, the interest on part of the permanent debt was reduced from 6 to 5 per cent., and a regular sinking fund was provided by Act of Parliament, (3 Geo. I., c. 7) for the redemption of the permanent debt; by the former operation an annual saving was effected of £328,560, but very little appears to have been accomplished by the action of the sinking fund, although the falling in of annuities effected a trifling reduction, the national debt at the close of the reign of George I., amounting to about £2,000,000 less than at the conclusion of the previous reign; the annual charge was considerably diminished by the reduction of interest in 1717, and by a further reduction from 5 per cent. to 4 per cent. in 1727, at the end of which year the annual charge was £2,217,551.

In the peace which prevailed during the greater part of the interval from 1727 to 1739, upwards of £5,000,000 of the debt was discharged by the operation of the sinking fund, and the falling in of temporary annuities. On the 31st of December in the latter year it amounted to about £47,000,000, whereof about forty millions constituted the permanent debt, and the remainder consisted of terminable annuities and unfunded securities; the annual charge was about £1,960,000.

From the year 1739, the national debt received vast additions annually, for several years; the disturbed state of this country owing to the landing of Charles Edward Stuart in 1745, and the war in which the nation engaged in 1740, in support of the Queen of Hungary's pretensions to the throne of Austria, involved the government necessarily in very large expenses; the debt on the 31st of December 1749, soon after the treaty of peace concluded at Aix-la-Chapelle, amounted to above £76,000,000, being an increase during the war of £29,000,000.

In the short interval of peace which succeeded the treaty of 1748, the government was enabled by the rise in the price of stocks to effect a reduction of interest on the 4 per cents., this was done on the 29th of November, 1749, the stock-holders were to receive 4 per cent. until the 25th of December, 1750, from that time till the 25th of December, 1757, they were to be allowed 31 per cent., after which time the interest was to be reduced to 3

In the year 1751, several of these stocks were consolidated into one fund, amounting collectively to £9,137,821,--this was the origin of the present consolidated 3 per cent. annuities. Various other stocks

per cent.

were consolidated at the same period to the amount of £17,701,323, forming the commencement of the present 3 per cent. reduced annuities.

The war with France, which broke out in 1756, though it continued but seven years, added nearly £64,000,000 to the public debt, which at the conclusion of the war in 1763 amounted to £138,800,000, entailing an annual charge upon the nation of £4,800,000. During the twelve years of tranquillity which succeeded the peace of Paris, about £10,400,000 of the debt was discharged, so that at the commencement of the American war in 1775, the debt amounted to £128,500,000; during the seven years in which this country was engaged in war with the United States, the national debt was more than doubled, for although the independence of America was acknowledged in 1782, yet loans were raised in several subsequent years in order to defray the remaining expenses of the war, it was not until 1786 that the revenue was found to be sufficient for the expenditure; on the 5th of January in that year, the debt amounted to £268,100,000, including the terminable annuities taken at a valuation ; the annual charge was £9,500,000. It was in this year that a sinking fund was established for the reduction of the debt, that constituted by 3 Geo. I., c. 7 having become obsolete, the Act of Parliament by which the sinking fund of 1786 was established, (26 Geo. III., c. 31)

appointed certain commissioners to carry its object into effect, who are continued in office by the Act 9 Geo. IV., the commissioners are the Speaker of the House of Commons, the Chancellor of the Exchequer, the Master of the Rolls, the AccountantGeneral of the Court of Chancery, and the Governor, and Deputy-Governor of the Bank of England, for the time being : the fund was to consist of £1,000,000 annually, and after passing through various modifications, it was finally amended by the Act 10 Geo. IV., c. 27, passed the 1st of June, 1829, which provides that from the 5th of July 1829, there shall be issued out of the consolidated fund only such annual sum as shall appear to be the actual surplus revenue of the united kingdom, to be applied towards the reduction of the national debt by the commissioners appointed for that purpose; and that the lords-commissioners of the Treasury shall, every quarter, make up accounts of the annual revenue for the four preceding quarters, and one fourth of the annual surplus to be issued to the commissioners for the reduction of the national debt, who are to publish in the London Gazette the sum which will be so applicable in the ensuing quarter. It was further enacted that all stock and annuities for terms of years standing in the names of the commissioners for the reduction of the national debt on the 5th of July, 1829, should be cancelled, and the dividends cease to be issued out of the consolidated fund, and that in future all stock purchased by the commissioners should be cancelled from the day of transfer. The commissioners were empowered to purchase Exchequer-bills, which were to be cancelled within seven days after the expiration of

each quarter

Early in the year 1793, the war with France commenced, which continued with only a very short interruption until 1815, a period of 22 years; this long contest brought with it an immense increase to the expenditure of the country, and a consequent augmentation of the public debt; stock to the amount of upwards of £600,000,000 was added to the national debt during this contest, and upwards of £22,000,000 to the annual charge.

The following Statement from Mr. Mc Culloch's Statistical Account of the British Empire," exhibits the State of the Public Debt at several important periods:

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