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to all Funds, call them by what name you please. Their infinite differences and omnipotent powers immediately vanish. A fund of 200,000l. per annum, or a million per annum, continued for 500 years, would avail nothing, unless the people could besides, and over and above these sums, discharge the interest of the present debt and defray their current expenses. Without such abilities a sinking fund is a mere chimæra, and a new debt might accumulate with twice the rapidity that the old one could be cancelled. 'Twould be like holding a double chalk in one hand and a sponge in the other, and making two strokes with the right, while one was rubbed out with the left; the longer you chalk and rub, the larger and longer would be the account. That money at compound interest would accumulate in the surprising manner you have said, is demonstrably certain ; and it is just as certain that the interest of money borrowed, if not punctually discharged, would accumulate in the very same manner and with equal celerity.' (Wimpey's Remarks on Price [1772]. Overstone Collection, p. 368.)

These remarks may never have fallen under the eyes of Mr. Pitt, and it is undoubtedly true that Dr. Price’s reveries found almost universal acceptance with the statesmen and the people who were the contemporaries of Adam Smith. Yet the whole fallacy must have been detected had Mr. Pitt asked himself the simple question, 'Whence is this increment to come ?' Money cannot beget money, though the use of capital may: but here the only source of increase was an additional sum annually set apart from the taxes on the people. It was reserved to Dr. Hamilton of Aberdeen to expose and demolish the system by the publication in 1813 of his • Inquiry into the Rise and * Progress of the National Debt,'* and the demonstration has been completed by the more ample information since collected by Mr. M‘Culloch. We are now enabled by that writer to demonstrate what the exact effect of Mr. Pitt's Sinking Fund really was:

· From these facts it may easily be shown that the Sinking Fund was not a clumsy only, but a costly imposture. In proof of this we beg to state that the loans contracted in each year from 1794 to 1916, both inclusive, amounted in all to 584,874,5571., at an annual charge to the public of 30,174,3641. Of these loans the Commissioners of the Sinking Fund received 188,522,3501., the propor. tional annual charge on such portion being, of course, 9,726,090l. But it further appears, from the accounts referred to, that the stock which the Commissioners purchased with this sum of 188,522,3501., transferred to them out of the loans, only yielded an annual dividend

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* Dr. Hamilton's pamphlet is now scarce : but an able review of it will be found in this Journal, vol. xxiv. p. 294. The work itself is, however, reprinted in Lord Overstone's Collection.

of 9,168,232l.; so that, on the whole, the operations of the Commissioners during the war occasioned a direct dead loss to the country of 557,8571. a year, equivalent to a 3 per cent. capital of 18,595,233l., exclusive of the expenses of the office, which amounted to above 60,0001. Such was the practical result of Mr. Pitt's famous Sinking Fund, so long regarded as the palladium of public credit and the sheet anchor of the nation.' (M'Culloch's Introduction to Lord Overstone's Collection, p. xiii.)

Adam Smith had long before remarked that a Sinking Fund, though instituted for the payment of old, facilitates very much the contracting of new debts: and, in reality, that was the purpose to which Mr. Pitt's Sinking Fund was soon applied. Perhaps it enabled the Minister to raise loans on less disadvantageous terms than he must otherwise have accepted, from a belief, though a delusive belief, that some mysterious means were in operation for cancelling a portion of the previous debt. However this may be, it is certain that the Minister who had signalised his accession to office by an ardent and laudable desire to diminish the burdens caused by the American war, did in fact enormously augment those burdens. The sum total of Mr. Pitt's financial administration may be described in three figures :- The National Debt at the time of the Peace of Versailles, 1783, was 249,851,6281. In the ten years of peace from 1783 to 1793, the sum paid off was 5,732,9931. In nine years of war from 1793 to 1802, the debt rose to 520,207,101l.; the increase was at the rate of 30 millions a year: yet England cannot be said during the whole of that time to have had an efficient army in the field, or an ally whom she could trust on the Continent. In many respects we have seen that Mr. Pitt's opinions were ahead of his times, and he was not unfrequently compelled to sacrifice those opinions to the prejudices of his contemporaries. But on this question of the Sinking Fund, which was the keystone of his financial system, we now know that all the leading men of the day were alike deceived ; and it is impossible to concede to men who could be so imposed upon, the highest honours due to financial knowledge and penetration.

The seven years which elapsed from 1785 to 1792 were, however, in this country, years of tranquillity and progress; and the results of Mr. Pitt's administration, aided by his wise treaty with France, justified the proud complacency with which in the latter year he introduced his budget to the House of Commons. The imports had risen from 9,714,0001. in 1782 to 19,130,0001. in 1790. In August 1791, the four per cents and five per cents were sold at 1074. and 1221. respectively for 100.

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stock. The revenue had risen to sixteen millions and a half, a sum which left a surplus of 400,0001. in addition to the million of the Sinking Fund: and Mr. Pitt fondly anticipated that in fifteen years more, namely, in 1808, the fund would have reached the sum of four millions per annum, to be at the disposal of Parliament. With more truth he wound up that sanguine and triumphant survey of a successful minister by an eloquent tribute to the industry and energy of the country, to the effects of the accumulation of capital, and to the freedom of the people of England. We may yet, indeed'—these were his concluding words be subject to those fluctuations which often happen in the affairs of a great nation, and which it is impossible to calculate or foresee: but as far as there can be any reliance on human speculations, we have the best ground 'to look with satisfaction to the present and with confi*dence to the future.' Such was the language of the Minister on the eve of that tremendous conflict into which he was des. tined to plunge before the month of February returned a contest which would compel him to add enormous burdens to the taxation of the country, to augment the National Debt with inconceivable rapidity, and to arrive in less than five years at a suspension of cash payments. No man who has studied the policy of Mr. Pitt can impute to him any eagerness to engage in war, or any disposition to prolong it: on the contrary, he was singularly blind to the perils of it, even when they stared him in the face, and singularly embarrassed both to conduct and to terminate it. At this moment, however, we are considering its effect on his financial system, and it is evident that whatever was good in it was blown to the winds of heaven by the events of the next few years, whilst the burdens of debt and taxation were saddled more firmly than ever on posterity.

Before we quit this part of the subject, one topic remains to be noticed, which has not, so far as we know, attracted the attention of any of Mr. Pitt's biographers. Mr. Pitt first took office under Lord Shelburne at the close of the American war. One of his first great ministerial orations was a defence of that peace of 1783 which was censured in the House of Commons by a majority of 17. He defended it mainly on the ground that the British fleet (we had but one) was inferior to the fleets of France, Spain, and Holland; that it was notorious that

new levies could scarcely be torn on any terms from this depopulated country;' and that three thousand men were the utmost force that could have been sent from England on any offensive duty. On the proud and patriotic soul of Mr. Pitt that peace left a wound not the less painful that it was inevit

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able. Years afterwards, when he proposed, in 1786, the fortification of the dockyards (another measure on which he was defeated, though only by the casting vote of the Speaker, and which it was reserved for our own times to undertake), Mr. Pitt exclaimed, in speaking of that war which his illustrious father had carried on with so much success : The last war the last war! would to Heaven we could call it the last war ! not indeed the last war, but the last on which Britons could

reflect without a sigh or a blush — the war of contrast with the • last—the war in which the name of Britain was exalted above 'the highest and proudest of nations, by successes as stupend'ous and conquests as glorious, as our late miscarriages and

defeats have been calamitous and disgraceful!' Mr. Pitt showed in the quarrel with Spain about Nootka Sound, with Russia about Oczakow, with France in the affairs of Holland, that he was resolved to uphold the honour of the country; and in 1793 he did not finch from a contest with revolutionary France. But what preparations had he made during ten years of peace and prosperity to place the naval and military establishments of the country on an efficient footing ? The American war was a tremendous lesson to this country, not so much from the loss of the revolted colonies, as from the inferiority in which it had placed the king's forces by sea and land. It demonstrated that our armies were ill equipped and ill commanded - that the whole transport service was abominable—and that even the fleet was insufficient to protect the flag and the shores of England. Can it be believed that a minister, with the power and the resources enjoyed by Mr. Pitt for that period, should have done nothing to raise the military and naval services from this prostration? Yet the fact is, that on the declaration of war in 1793, when it was thought necessary to send an expedition to Holland, the forces were in the same discreditable condition which had led to the reverses of the American war. Our army,' says Sir Henry Bunbury, in his narrative of the Dutch campaigns, ‘was bad in its discipline, entirely without system, and very weak in numbers. There was no uniformity of drill or movement; professional pride was rare; pro'fessional knowledge still more When the English Ministers were trying, with the miserable means at their command, to assist the House of Orange - Dumourier having just overrun Holland -about 1,700 Foot Guards, with a few score of artillerymen, were all that could be mustered; 3,000 infantry and 700 dragoons were the whole British force the Duke of York had under his command in 1793; transports there were none, and these troops were huddled into such

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colliers as could be found in the Thames, which luckily conveyed them to the coast of Holland.* Such was the manner in which Mr. Pitt commenced the greatest war in modern history. We cannot but think that, even if he had deluded himself with the notion that peace was to be eternal, he was guilty of the gravest omission in not having long before taken effectual steps to organise a more efficient army, and in leaving from 1788 to 1794 the Admiralty in the notoriously incapable hands of his brother, the Earl of Chatham. No doubt the calamities which ensued, and which in less than five years reduced this country to a most perilous and exhausted condition, were mainly attributable to the total want of competent officers and well-equipped troops in the first years of the

No truth is more elementary in politics than that to carry on war with success, and to terminate it with promptitude and glory, the ground must be laid, not during warfare, but in the preceding years of peace and prosperity. This duty was altogether overlooked by Mr. Pitt.

Some additional particulars as to the campaign of 1793 are supplied by the Correspondence of Lord Auckland '(vol. iii.), who was British agent in the Low Countries at the time. The Editor of these papers professes to show in opposition to Lord Stanhope) that Mr. Pitt's Cabinet was a party to the designs of the Austrians for the curtailment and even the partition of France; but we are not satisfied that the evidence bears out this assertion. Lord Grenville instructed Lord Auckland (3rd April 1793) that His Majesty approved the plan of indemnification on the side of Flanders, and that the Austrians were to be directed to look to the acquisition of a new barrier in the Netherlands rather than to the exchange of these provinces for Bavaria. Lord Auckland accordingly intimated to those concerned the expediency of retaining those conquests (Condé, Maubeuge, and if possible, Lille). Ministers at that time clearly contemplated an extended frontier of the Low Countries and of Holland; and this design led the King to direct the expedition against Dunkirk. Somewhat later, after his return to England (July 1793), Lord Auckland communicated to Lord Grenville a scheme for the partition of France, and talked of the Austrian idea of ' acquiring the Somme for their new boundary. He even added that it was worth consideration, whether, in that case, "we ought not to insist on holding Dunkirk, and, perhaps, also Calais' (vol. iii. p. 79.); and forwarded a memorandum on the

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* This statement is confirmed by Sir H. Calvert in his journals,

p. 22.

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