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advanced, with interest in the mean time (h). funded debt, a more particular account may ceptable.

But of the

here be ac

[In order to take a clear and comprehensive view of the nature of this] part of the [national debt, it must first be premised, that after the Revolution, when our new connexions with Europe introduced a new system of foreign 'politics, the expenses of the nation, not only in settling the new establishment, but in maintaining long wars, as principals, on the continent, for the security of the Dutch barrier, reducing the French monarchy, settling the Spanish succession, supporting the House of Austria, maintaining the liberties of the Germanic body, and other purposes, increased to an unusual degree, insomuch that it was not thought advisable to raise all the expenses of any one year by taxes to be levied within that year, lest the unaccustomed weight of them should create murmurs among the people. It was therefore the policy of the times to anticipate the revenues of their posterity, by borrowing immense sums for the current service of the State, and to lay no more taxes upon the subject than would suffice to pay the annual interest of the sums so borrowed: by this means, converting the principal debt into a new species of property, transferable from one man to another at any time and in any quantity. A system which seems to have had its original in the state of Florence, A.D. 1344; which government then owed about 60,0007. sterling; and, being unable to pay it, formed the principal into an aggregate sum, called metaphorically a mount or bank, the shares whereof were transferable like our stocks, with interest at five per cent., the prices varying according to the exigencies of the State (i). This policy of the English parliament laid on Exchequer bills, 20 Vict. c. 17.

(h) As to exchequer bills, see 48 Geo. 3, c. 1; 4 & 5 Will. 4, c. 15; 5 & 6 Vict. c. 66; 6 & 7 Vict. c. 1; 14 & 15 Vict. c. 9; 15 & 16 Vict.

c. 10; 19 & 20 Vict. c. 105, s. 2. See a recent Act for raising money

(i)" Pro tempore, pro spe, pro commodo, minuitur eorum pretium atque augescit."-Aretin. See Mod. Un. Hist. xxxvi. 116.

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[the foundation of what is called the national debt, (for a few long annuities created in the reign of Charles the second will hardly deserve that name): and the example then set was so closely followed during the wars in the reign of Queen Anne,] and afterwards in the wars with the revolted provinces of America and with revolutionary France, that the capital of the unredeemed funded debt of Great Britain and Ireland amounted, on 31st March, 1856, to about 775,312,6947. independently of an unfunded debt to the extent of about 28,182,7001. more (j).

The form of the security held by the public creditors, in respect of the funded debt, is that of annuities granted by parliament to those who originally advanced the money, and granted for the most part in perpetuity, affording a certain rate of interest for ever upon the principal sum due. To the payment of these annuities the public faith is pledged; but the annuitants have no right to call for payment of the principal; while on the other hand the public has, in general, a right to insist on making that payment, whenever it shall be in a condition to do so,- and thereby redeeming the annuities (k). These annuities are denominated the public funds (l); and are not only transferable by the holder, but pass by law to his representatives, and are subject, indeed, in every material particular, to all the incidents ordinarily attaching to other personal property (m).

The liability thus fastened upon the present generation, to discharge the interest of a public debt, the bulk of

(j) The Finance Accounts for the year ended 31st March, 1856.

(k) See the recent Acts for raising money on such annuities, 18 & 19 Vict. c. 18; 19 & 20 Vict. c. 6.

(1) The term public funds, it may be observed, inserted in a will, has been held not to include bank stock. Grainger v. Slingsby, 25 L. J. (Ch.) 573.

(m) Property in the public funds,

was not formerly subject to execution for debt, but may now be charged for that purpose by order of a judge; 1 & 2 Vict. c. 110, s. 14. As to authorizing the payment of dividends on letters of attorney, and as to testamentary disposition of stock, see 8 & 9 Vict. c. 97. As to unclaimed dividends, see 56 Geo. 3, c. 60; 8 & 9 Vict. c. 62.

which was contracted before they came into existence, may at first sight carry the air of hardship, but there can be no reasonable doubt of the right of our ancestors to impose the burthen. The loans out of which the debt principally arose were incurred in the support of wars which they deemed necessary for the maintenance of the public freedom, honour, or prosperity-objects of a lasting and descendible kind, in which their successors were not less interested than themselves. The supplies required for the purpose were too large to have been defrayed in their own times, nor would it have been just that they alone should struggle under the burthen, when their descendants were to share the benefit. Though the necessity for engaging in these wars should now appear to be in any instance questionable, the argument remains unaltered. In the nature of things, the then existing race were the only judges of that necessity; and it is in the order of Providence, that in this (as in other particulars) the interests of unborn generations should be confided to the management of their predecessors.

The funding system, while thus unimpeachable in point of natural justice, is on the other hand attended in some respects with considerable advantage to the public. It affords a ready, safe, and easily convertible species of investment for capital that would otherwise lie unproductive, or be laid out in securities of a more troublesome and hazardous kind. It is also so far a source of strength to the country, that it gives that numerous class of individuals who constitute the fundholders, and whose dividends depend upon the produce of the taxes, a direct interest in the stability of the national institutions, and the preservation of the public welfare.

It cannot, however, be denied, that these taxes, in their more direct operation, tend to impair the productive ability of the industrious classes, and that the amount of them required to discharge the interest of the enormous debt for which the nation is now liable weighs heavily upon the

country, and darkens our prospect for the future (m). The more immediate alarm, indeed, which it is calculated to excite, is perhaps for the safety of the public creditor. For it is obvious, that the capital invested in the funds exists, (like any other debt,) in name and in paper only, and that its value depends entirely upon the degree of reliance that can be placed in the good faith and resources of the government. But if the confidence of the fundholder should in either of these points be deceived, (a danger that manifestly increases as the debt increases,) the ruin in which so large a class of the community would inevitably be involved, and the irreparable shock to public credit, might have general and national results of a nature too painful to be steadily contemplated.

To return to the subject of the taxes; it is to be observed, that [the respective produces of customs, excise, stamps, and several other taxes, were originally separate and distinct funds; being securities for the sums advanced on each several tax, and for them only. But at last it became necessary in order to avoid confusion, as they multiplied yearly, to reduce the number of these separate funds by uniting and blending them together.] There were formerly three capital funds in existence, which had been thus produced by the aggregation of several component parts: [the aggregate fund and the general fund, (so called from such union and addition,) and the South Sea fund,-being the produce of the taxes appropriated to pay the interest of such part of the national debt as was advanced by the South Sea Company and its annuitants.] But in 1787 (n) the public accounts were again newly arranged, by abolishing these divisions and including the whole in one, called the consolidated fund; which has been

(m) When Blackstone wrote, the capital of the national debt, funded and unfunded, was only 136,000,0007. Yet he says, "The enormous taxes "that are raised upon the necessaries

"of life, for the payment of the in

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terest of this debt, are a hurt both

to trade and manufactures, &c."— Vol. i. p. 328.

(n) See 27 Geo. 3. c. 13.

since combined with that of Ireland, and forms with it the Consolidated Fund of the United Kingdom (o).

The consolidated fund now comprises the produce of all the taxes which have been enumerated, added to some small receipts from the royal hereditary revenue (surrendered, as before explained, to the public use), and from other sources; and constitutes almost the whole of the ordinary public income of the United Kingdom of Great Britain and Ireland; which income amounted for the year ending 31st March, 1856, to about 70,552,145l. (p) The consolidated fund is pledged for the payment of the whole of the interest of the national debt of Great Britain and Ireland; and, besides this, is liable to several other specific charges imposed upon it at various periods by act of parliament (q), such as the civil list and the salaries of the judges and ambassadors and other high official persons (r); after payment of which, the surplus is to be indiscriminately applied to the service of the united kingdom under the direction of parliament (s). Of the civil list it will be proper here to give some further explanation.

(0) See 56 Geo. 3, c. 98; 14 & 15 Vict. c. 3, s. 101; 19 & 20 Vict. c. 59.

(p) Finance Accounts for the year ended 31st March, 1856.

(q) See 2 & 3 Will. 4, c. 116; 17 & 18 Vict. c. 94; 19 & 20 Vict. c. 59, c. 108; 20 Vict. c. 20.

(r) See 2 & 3 Will. 4, c. 116; 19 & 20 Vict. c. 108, s. 80. By 17 & 18 Vict. c. 94, "in order to bring the gross income and expenditure of the United Kingdom and the Isle of Man under the more immediate view and control of parliament," certain payments of a miscellaneous description, and the salaries of certain official persons, formerly charged on the consolidated fund, are directed to be provided for by annual votes of parliament.

(s) See 56 Geo. 3, c. 98, s. 1. By this act, the consolidated fund is in the first place to be chargeable with and shall be applied indis

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'criminately to the payment of the "whole of the interest of the national "debts of Great Britain and Ire"land, and the sinking funds appli"cable to the reduction thereof, as one joint consolidated national "debt and sinking fund." The sinking fund is now regulated by 10 Geo. 4, c. 27, amended by 3 & 4 Will. 4, c. 24. It consists of onefourth of surplus revenue of the kingdom beyond the actual expenditure; which is directed to be applied towards the reduction of the national debt. At a former period the fund called the sinking fund was founded on the following prin

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