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expenses annually incurred by the government, in respect of the public services, including therein the maintenance of the royal dignity; and a very large proportion of these expenses consist in payments made on account of the interest of the National Debt, a subject of which it is proper therefore to take some notice in this place.

The national debt is in part funded and in part unfunded the former being that which is secured to the national creditor upon the public funds (the nature of which will be presently explained), and the latter, that which is not so provided for. The unfunded debt is ordinarily but of small amount, and is secured by treasury bills, which are instruments issued by the Bank of England under warrant from the Treasury, in accordance with Acts of Parliament passed for the purpose; they are issued for three, six, nine, or twelve months, and are put up to tender, and sold at a discount, and thus do not carry interest (z). But of the funded debt, a more particular account must here be attempted.

[In order to a proper view of this part of the national debt, it must be borne in mind, 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 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 kindred purposes, increased to such an unusual degree, 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

(2) Treasury bills issued under the authority of Parliament are charged upon and paid out of the consolidated fund; as to them, see the Exchequer and Treasury Bills Acts, 1866 and 1877, the National Debt Act, 1889, s. 5, and the Bank

Act, 1892, ss. 3, 4; and H. of C. Paper 187 of 1889. (Treasury bills have taken the place of exchequer bills, which, after an existence of 200 years, ceased to be issued in 1861, and were finally paid off in in 1896-7.)

[murmurs among the people. It was therefore the policy of those 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.] This policy of the English parliament was the first commencement of what is called the national debt. The debt has since been largely increased owing to divers successive emergencies; and, notwithstanding certain provisions for its gradual reduction, it amounted, on the 31st March, 1903, to 640,085,7267., independently of the outstanding unfunded debt to the extent of 75,133,000l. more (a).

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. These annuities are called the public funds, and they are transferable by the holder, and pass by law to his representatives; being subject, in every material particular, to all the incidents ordinarily attaching to other personal property (b). The annuitants have no right to call for the payment of the principal of the debt (ie., to have their annuities redeemed), although the government has always the right of redemption; and this right on the part of the government has been exercised to a very considerable extent under the provisions of the National

(a) This does not include the value in stock of terminable annuities, of which (at the same date) the estimated capital value was 55,560,036/, nor other capital liabilities (not charged directly on the consolidated fund) amounting to 27,570,4287. See the Finance Accounts for the year ending 31st March, 1903. (Cd. 1581.)

(b) In the National Debt Act, 1870, there are a variety of enactments relating to the national debt, having reference chiefly to the payment of dividends, and to unclaimed dividends, and to the issue to stockholders of stock certificates with coupons annexed made payable to bearer.

Debt (Conversion) Act, 1888 (c), whereby the stock theretofore called the New Three per Cents. has been converted into a new stock to be called 23 per Cent. Consolidated. Stock till the 5th April, 1903, and to be called 2 per Cent. Consolidated Stock after that date. And in the same Act, as supplemented by the National Debt Redemption Act, 1889 (d), are contained provisions for the compulsory redemption of all existing Consolidated Three per Cent. Stock and Reduced Three per Cent. Stock, and for the corresponding increase of the new stocks created under the National Debt (Conversion) Act, 1888, just referred to. And by the National Debt Redemption Act, 1893, the like provision was made for the redemption after the 5th January, 1894, of the New Three Pounds Ten Shillings per Cent. Annuities referred to in the Act, which were made redeemable after that date by the National Debt Act, 1870.

The national debt is, doubtless, a heavy burden upon the state; and if England were a poor country, it would be an intolerable burden. But it is nevertheless, according to some economists, a great benefit to the whole nation, affording, as it does, a ready, safe, and easily convertible species of investment for the immense capital which would otherwise either lie unproductive, or be laid out in securities of a troublesome and hazardous nature. It conduces also, in a very sensible degree, to the stability of the national institutions, and to the preservation of the public welfare; so that, unless England should become an impoverished country, the arrangements made for the ultimate permanent reduction of the principal of the debt by means of a sinking fund (e), are not of much practical

(c) Amended by the National Debt (Supplemental) Act, 1888. (d) And see the National Debt Act, 1889.

(e) A sinking fund was first established in 1716 by the Act of

S.C.-II.

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3 Geo. 1, c. 7, and one was again set up by Pitt in 1786. The present sinking fund, known as the New Sinking Fund, depends on the Sinking Fund Act, 1875.

value. The New Sinking Fund has been suspended on several occasions, e.g., in 1886 (f), in 1897 (), and during the late war (h); the Finance Bill for 1903 proposes to fix the annual charge for the National Debt at £27,000,000.

[The respective produces of the several taxes before mentioned, were originally distinct funds, being securities for the sums advanced thereon, and for them only. But these distinct funds have been more or less aggregated; and as the result of such aggregation, there were formerly three capital funds in existence, namely, (1) the aggregate fund, (2) the general fund, and (3) the South Sea fund.] But in the year 1787 the public accounts were again newly arranged, by abolishing these divisions and including the whole in one, called the Consolidated Fund (i), which fund was still later combined with that of Ireland, and now forms with it the Consolidated Fund of the United Kingdom (k).

The net receipts of income paid into the exchequer in the financial year ending 31st March, 1903 (after deducting repayments, &c.), amounted to 161,200,000l. (1); and that income, under the name of the consolidated fund, is pledged for the payment of the whole of the interest of the national debt of Great Britain and Ireland (m), the yearly income being liable for the yearly interest. In addition, the consolidated fund is liable to several other specific charges imposed upon it at various periods by Act of Parliament, such as the Civil List and the salaries of ambassadors, the salaries and pensions of the judges (including county court judges (n)), and the salaries of

(f) National Debt Act, 1886. (g) Military Works Act, 1897, s. 3.

(h) Finance Acts, 1900 and 1901. (i) Consolidated Fund Act, 1787 (k) See Consolidated Fund Act, 1816; Revenue (Transfer of Charges) Act, 1856.

(7) This amount includes the sum of 9,648,000. paid to local taxation accounts. H. of C. Paper 119 of 1903. (m) Consolidated Fund Act, 1816.

(n) County Courts Act, 1888, ss. 23, 24.

certain other official persons (o); after payment of all which, the surplus is to be indiscriminately applied to the service of the United Kingdom under the direction of parliament (p). And, in order to bring the national income and expenditure under the more immediate view and control of parliament, certain payments and salaries formerly charged on the consolidated fund were in 1854 directed, for the future, to be paid out of supplies from time to time provided, and annually appropriated by parliament for the purpose.

The Civil List above mentioned is an annual sum granted by parliament at the commencement of each reign, for the expense of the royal household and establishment, as distinguished from the general exigencies of the State; and is the provision before stated to be made for the crown out of the taxes, in lieu of the crown's proper patrimony, and in consideration of the assignment of that patrimony to the public use. It must be pointed out that, though

there has been a Civil List so called since the Revolution, the king was originally required to provide out of the income so assigned to him practically all the expenses of the civil government; it is only since the reign of William IV. that the Civil List has been freed from all public charges, and come to mean the income granted for the personal expenses of the monarch. The amount fixed for the Civil List has been subject in different reigns to considerable variation. At the commencement of the

(0) See also, as to "superannuation allowances" or "retiring pensions," the following Acts:-as to prison officials, Prison Act, 1977, ss. 36, 53; Prison (Officers' Superannuation) Acts, 1878 and 1886; and as to the police, Police Superannuation Act, 1865; Police Acts, 1890 and 1893; and as to subordinate officials generally, Superannuation Acts, 1834, 1859, 1860,

1876, 1887, and 1892. See also Ecclesiastical Commissioners (Superannuation) Act, 1865; Colonial Governors (Pensions) Act, 1865; Superannuation Act, 1866; Political Offices Pension Act, 1869; Pensions Commutation Act, 1871; Metropolitan Police Staff (Superannuation) Act, 1875.

(p) Public Revenue and Consolidated Fund Charges Act, 1854.

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