The Wealth of Nations Adam Smith (best novels to read for beginners txt) 📖

In 1709, those duties were all (except the old subsidy of tonnage and poundage, which was now left out of this fund altogether) still further continued for the same purpose to the first of August, 1716 and were called the fifth general mortgage or fund.1576 The sum borrowed upon it was £922,029 6s. 0d.

In 1710, those duties were again prolonged to the first of August, 1720, and were called the sixth general mortgage or fund.1577 The sum borrowed upon it was £1,296,552 9s. 11¾d.

In 1711, the same duties (which at this time were thus subject to four different anticipations), together with several others, were continued forever, and made a fund for paying the interest of the capital of the South Sea company, which had that year advanced to government, for paying debts and making good deficiencies, the sum of £9,177,967 15s. 4d.;1578 the greatest loan which at that time had ever been made.

Before this period, the principal, so far as I have been able to observe, the only taxes which in order to pay the interest of a debt had been imposed for perpetuity, were those for paying the interest of the money which had been advanced to government by the Bank and East India Company, and of what it was expected would be advanced, but which was never advanced, by a projected land bank. The bank fund at this time amounted to £3,375,027 17s. 10½d. for which was paid an annuity or interest of £206,501 13s. 5d.1579 The East India fund amounted to £3,200,000 for which was paid an annuity or interest of £160,000;1580 the bank fund being at six percent,1581 the East India fund at five percent interest.

In 1715, by the first of George I c. 12 the different taxes which had been mortgaged for paying the bank annuity, together with several others which by this act were likewise rendered perpetual, were accumulated into one common fund called The Aggregate Fund, which was charged, not only with the payments1582 of the bank annuity, but with several other annuities and burdens of different kinds. This fund was afterwards augmented by the third of George I c. 8 and by the fifth of George I c. 3 and the different duties which were then added to it were likewise rendered perpetual.1583

In 1717, by the third of George I c. 7.1584 several other taxes were rendered perpetual, and accumulated into another common fund, called The General Fund, for the payment of certain annuities, amounting in the whole to £724,849 6s. 10½d.

In consequence of those different acts, the greater part of the taxes which before had been anticipated only for a short term of years, were rendered perpetual as a fund for paying, not the capital, but the interest only, of the money which had been borrowed upon them by different successive anticipations.

Had money never been raised but by anticipation, the course of a few years would have liberated the public revenue, without any other attention of government besides that of not overloading the fund by charging it with more debt than it could pay within the limited term, and of not anticipating a second time before the expiration of the first anticipation. But the greater part of European governments have been incapable of those attentions. They have frequently overloaded the fund even upon the first anticipation; and when this happened not to be the case, they have generally taken care to overload it, by anticipating a second and a third time before the expiration of the first anticipation. The fund becoming in this manner altogether insufficient for paying both principal and interest of the money borrowed upon it, it became necessary to charge it with the interest only, or a perpetual annuity equal to the interest, and such unprovident anticipations necessarily gave birth to the more ruinous practice of perpetual funding. But though this practice necessarily puts off the liberation of the public revenue from a fixed period to one so indefinite that it is not very likely ever to arrive; yet as a greater sum can in all cases be raised by this new practice than by the old one of anticipations, the former, when men have once become familiar with it, has in the great exigencies of the state been universally preferred to the latter. To relieve the present exigency is always the object which principally interests those immediately concerned in the administration of public affairs. The future liberation of the public revenue, they leave to the care of posterity.

During the reign of queen Anne, the market rate of interest had fallen from six to five percent, and in the twelfth year of her reign five percent was declared to be the highest rate which could lawfully be taken for money borrowed upon private security.1585 Soon after the greater part of the temporary taxes of Great Britain had been rendered perpetual, and distributed into the Aggregate, South Sea, and General Funds, the creditors of the public, like those of private persons, were induced to accept of five percent for the interest of their money,1586 which occasioned a saving of one percent upon the capital of the greater part of the debts which had been thus funded for perpetuity, or of one-sixth of the greater part of the annuities which were paid out of the three great funds above mentioned. This saving left a considerable surplus in the produce of the different taxes which had been accumulated into those funds, over and above what was necessary for paying the annuities which were now charged upon them, and laid the foundation of what has since been called the Sinking Fund. In 1717, it amounted to £323,434 7s. 7½d.1587 In 1727, the interest of