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National Progress (continued) page 3


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A " sinking fund," for the extinction of public debt, was established by Sir Robert Walpole in 1716, but used up in 1733. Having done little in time of peace, and nothing in time of war, towards the discharge of the National Debt, the purpose of its inviolable application was abandoned, and the hopes entertained of its efficacy entirely disappointed. A new sinking fund was established by Mr. Pitt, in 1786, to be formed by the appropriation to it of 1,000,000 per annum, which was to be allowed to accumulate at compound interest by the addition of the dividends on the stock which it purchased, till it amounted to 4,000,000, after which the dividends arising from the stock purchased were to be applied to the diminution of taxes, or any other object that parliament might direct. Further additions were made to the fund; and in 1792 a sinking fund of a new character was constituted, by which it was proposed that, besides a provision for the interests of each loan which should be contracted, taxes should also be imposed for a one per cent, sinking fund on the capital stock created by it, which should be exclusively employed in the liquidation of that particular loan - a result which, it was hoped, would be accomplished, under the most unfavourable circumstances, in forty-five years. Lord Macaulay speaks very contemptuously of Mr. Pitt's scheme of a sinking fund. " Very idle apprehensions," he says, " were generally entertained that the public debt, though much less than a third of the debt which we now bear with ease, would be found too heavy for the strength of the nation. Those apprehensions might not, perhaps, have been easily quieted by reason, but Pitt quieted them by a juggle. He succeeded in persuading first himself and then the whole nation - his opponents included - that a new sinking fund, which, so far as it differed from former sinking funds, differed for the worse, would, by virtue of some mysterious power of propagation belonging to money, put into the pocket of the public creditor great sums not taken out of the pocket of the taxpayer. The country, terrified by a danger which was no danger, hailed with delight and boundless confidence a remedy which was no remedy. The minister was almost universally extolled as the greatest of financiers." Lord Henry Petty made an attempt, in 1807, to render the sinking fund more effective for its purpose - a very complicated system, which, according to Dr. Hamilton, an able writer on the subject, only tended to mislead and perplex the public mind. He showed that the whole amount of taxes that would have been paid in twenty years for the annual loan of 11,000,000 on the old plan of a sinking fund of one per cent., would be 154,000,000. On Lord Henry Petty's plan these taxes would in the same time have been 93,000,000 - a difference in favour of the latter of 61,000,000; but to obtain this exemption, we should have been encumbered with an additional debt of 119,000,000 capital. In 1813, Mr. Vansittart made another alteration in the sinking fund, in connection with which Mr. Huskisson said that the very foundation of the assumption that the old debt has been paid off, is laid in the circumstance of our having incurred a new debt of much larger amount; the sinking fund having been originally established " to prevent the inconvenient and dangerous accumulation of debt hereafter." This fund, in fact, instead of diminishing the debt, tended to increase it, because it was formed by borrowing, because it encouraged expenditure, and because it was repeatedly invaded whenever there was an emergency. In the year 1825, 5,000,000 were appropriated to a sinking fund, which was afterwards reduced to 3,000,000. In the year 1828 a committee was appointed, which, says Mr. J. L. Ricardo, " after full consideration, came to the only reasonable conclusion, that the true principle upon which to calculate the amount applicable as a sinking fund for the redemption of the debt was the excess of revenue over expenditure. But this decision did not cause the sound policy to be observed, and the deficiency bills payable out of the current revenue were met by the fund destined for the extinction of the debt; and so the whole history of the sinking fund, from 1716 up to the last moment, goes to demonstrate the obvious fact, that the redemption of the debt by the application of borrowed capital to the purchase of stock is a sham and a delusion, and that the accumulation by any means of a large amount of the securities of the state in the hands of commissioners has failed in its object of securing inviolate the sinking fund for its destined purpose." "Dr. Hamilton, of Aberdeen," observes a writer in the " Encyclopaedia Britannica," " has the merit of having dissipated this extraordinary delusion - the grossest, certainly, by which any civilised nation ever suffered itself to be imposed upon. He showed that the excess of revenue over expenditure is the only real sinking fund, the only means by which any portion of the public debt had ever been, or ever could be, paid off; and that all sinking funds operating at compound interest or otherwise, excepting in as far as they happened to be founded on this principle, were mere quackery and delusion. In fact, upon examining into the matter, it was found that the public debt would have been decidedly less had the sinking fund never been heard of. After such an exposition, the existence of the sinking fund was impossible; and having undergone various modifications, it was finally abolished by the 10th George IV., cap. 27, which enacts that the sum thenceforth annually applicable to the reduction of the public debt shall consist of the actual surplus revenue beyond the expenditure."

Mr. Porter has very concisely expressed the operation of this financial system in the following words: - "The establishment and support of the sinking fund was long considered as a master-stroke of human wisdom. Having since had sufficient opportunity for considering its effects, we have arrived at a different conclusion, and can no longer see any wisdom in the plan of borrowing larger sums than were wanted, and paying, in consequence, more dearly for the loan of what was actually required, in order to lay out the surplus to accumulate into a fund for buying up the debt at a higher price than that at which it was contracted."

England bears a heavy burden of taxation, yet she does not seem to feel it. Some time ago Mr Disraeli, in the House of Commons, called the National Debt a " flea-bite." It is not quite so light a matter as that; still, it does not seem to render her step less firm, nor retard her progress, nor give her much trouble. It is a matter of wonder to foreigners how the English people manage to have so much money after paying so smartly in the shape of taxes, and spending so much on food, clothing, and household accommodation. The secret lies in the wonderful industry and thrift in the masses of the people. They work hard, live well, and waste nothing. The number of people who live in England without labouring in any way for their support with head or hand is wonderfully small. Of 5,812,000 males twenty years of age and upwards living in 1831, no less than 5,466,000 were engaged in some calling or profession. In the census of that year, the population was classified as follows: - In agriculture, 2,470,111; in trade and manufactures, 1,888,768; in labour not agricultural, 698,588; in domestic service, 132,811; as bankers, clergymen, professional men, &c., 275,904. This leaves only about 350,000 men unemployed, which is not much more than the number who were seventy years of age and upwards. The progressive well-being of the middle classes of England has been indicated very satisfactorily by the improved character of their dwellings. If the country is more healthful than the city, one cause may be found in the less crowded state of the habitations. In the-country the proportion is about five and a half persons on an average in each house; in London it is about a third more. In Scotland the proportion was six to ten in 1831, and in Ireland it was six to twelve, taking the capital in each case as representing the urban population. The number of inhabited houses which England contained in 1821 was 1,952,000; in Ireland the number was 1,142,602; in Scotland it was 841,474. In 1841 the numbers were - England, 2,753,295; Ireland, 1,328,839; Scotland, 503,357. The large increase in Scotland is accounted for by the fact that in the returns of 1841 "flats" were set down as houses, which was not the case in the first return. The tax on inhabited houses rated in three classes from 10 to 20, from 20 to 40, and from 40 up. From the year 1821 to 1833 the houses rated at 40 and upwards increased in England from 69,000 to 84,000. The other two classes of houses increased in about the same proportion. The house duty was repealed in 1834. There was a duty on bricks till 1850, by Which means the quantity consumed was ascertained, and the increase between 1821 and 1847 was 130 per cent. At a meeting of the Statistical Society of London, Colonel Sykes estimated the expense of keeping a man-servant in Great Britain at 70 per annum. Taking 60 as a more moderate estimate, it was found that in 1821 the English people paid 5,000,000 to male servants, and in 1836 6,250,000. There were at the same time in Great Britain 900,000 female servants, whose board and wages would cost 35 per annum. From these calculations it appears that the cost of domestic servants in Great Britain in the year 1841 was more than 38,000,000. In 1831 there were about 99,000 male servants, and 253,000 female servants in Ireland. Allowing from 10,000,000 to 11,000,000 for their support, we shall have paid for domestic service in the United Kingdom the vast sum of nearly 50,000,000.

Between the years 1821 and 1841 the use of carriages- with four wheels increased 60 percent. - double the ratio of the increase of the population. In the meantime hired carriages had increased from 20,000 to 33,000. Colonel Sykes counted the cost of keeping a four-wheeled private carriage, including servants, at 250 a-year. This may be too high an estimate; but taking four-wheeled and two- wheeled carriages together, Mr. Porter thinks the average expense was not less than. 100 a-year for each, which would give more than 5,000,000 for this luxury in 1821, more than 9,000,000 for 1831, and more than 10,000,000 for 1841 - a proof of wealth which no other country in Europe could show. In 1838 there were about 90,000 persons in Great Britain who kept one horse each, and 33,000 who kept two. In 1821 England used nearly 90,000 lbs. of candles, which in 1829 had increased to 110,000 lbs. No excise duty having ever been charged on candles in Ireland, the quantity consumed in that country cannot be ascertained. England paid duty for tallow candles one penny per pound, and for spermaceti three- pence-halfpenny per pound. The amount of revenue from this source in 1821 was 396,000, and in 1830 it rose to upwards of 480,000. The duty was taken off in 1832. The effect of the duty on candles was that no improvement was ever made in their quality; but the moment the manufacturers got free, they began to use their skill to good purpose, and gave a better article at a lower price, greatly to the advantage of the public.

In 1801 property to the value of nearly 200,000,000 was insured against fire; in Ireland, nearly 9,000,000; and in Scotland about half that amount. In 1821 Scotland had insured 1,000,000 more than Ireland, and continued thenceforth to leave the latter country far behind in this matter - a fact which is to be mainly ascribed to the progress of manufactures in North Britain. In 1841 England had insured nearly 606,000,000; Scotland, nearly 45,000,000; and Ireland, only 31,000,000. The vast difference here between England and the other parts of the United Kingdom is remarkable. Comparing 1801 with 1841, the amount insured in the three kingdoms had increased at the rate of 193½ per cent. The policy duty on life insurances not being paid annually does not afford the same means of ascertaining the amount insured on lives; but there is no doubt that it was very large, considering the number of life insurance offices that were established, and continued to flourish. Mr. Porter estimates that the sums accumulated in the hands of various life insurance offices in the kingdom, which formed part of the savings of the insured, amounted, in 1850, to at least 40,000,000 - an amount which would not be considered extravagant when the assets in one office, the Equitable Assurance Company, formed one-fourth of that sum. The legacy duty, also, has afforded evidence of the rapid accumulation of wealth in this country during the last two reigns. The number of persons who died in 1841, and whose property was subjected to legacy and probate duties, was only about 23,000. The sum on which legacy duty was paid in 1819 was 1,300,000,000; in 1824, 1,500,000,000: in 1829, 1,700,000,000; and in 1841 it reached two billions. "The addition of 1,000,000,000 to the value of property during thirty-one years of peace," says Mr. Porter, " will not appear improbable if we recall to mind the fact that during the last ten years of the war the public expenditure exceeded on an average 83,000,000 a year, while the average in the following twenty-four years did not exceed 50,000,000. The difference between these two sums would alone suffice in that period to make up the sum of 1,000,000,000. In the year 1838 790,000 was paid as probate duty in Great Britain, upon about 17,000 wills, bequeathing property to the amount of nearly 46,000,000, of which 2,500,000 only belonged to Scotland. In the same year the amount of duty paid upon letters of administration was 137,000, upon 6,000 estates, value nearly 5,000,000. The duty on probates was 790,000, on nearly 46,000,000 of capital; the total being for administrations and probates duty 927,000, on capital amounting to 50,500,000, of which about 3,000,000 belonged to Scotland. No mortality tables had been published for Ireland, but it was ascertained that probate and administration duties in that country in 1838 were paid upon 2,196 estates, representing a capital of about 4,500,000. Assuming the same rate of mortality that existed in England and Wales, it would appear that the personal property in Ireland which in succession contributes to this branch of the revenue is about 168,000,000. In the half century ending with the accession of Victoria, the capital on which legacy duty had been paid in Great Britain was 1,470,000,000. The legacy duty in the same period amounted to 43,500,000, and the duty on probates and administrations to 35,000,000. The average receipts from probate duty generally have been steadily increasing with the progressive prosperity of the country.

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Pictures for National Progress (continued) page 3


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