Paper Against Gold: Or, The History and Mystery of the Bank of England, of the Debt, of the Stocks, of the Sinking Fund, and of All the Other Tricks and Contrivances, Carried on by the Means of Paper Money

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J. Doyle, 1834 - Finance - 432 pages
 

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I had to give Mr. Cobbett a mere three stars for this reason: he fails to understand the underlying principle of the "sinking fund", which unfortunately puts a damper on his line of argument.
I
refer you to Mr. Brand's point on page 83.
He points out that additional "dividend", or interest, earned by the sinking fund (by "redeeming" the principle and thus paying the "dividend", or interest to the government) is ultimately applied to the principle, which will compound into more interest earned the following year, again used to pay off more of the principle. This is how home mortgages work today.
Mr. Cobbett retorts by claiming that the debt actually grew while the sinking fund was in operation, and so it's obviously not working. The truth of the matter is that the government borrowed money FASTER than it was PAYING OFF the principle of the initial debt, and thusly the sinking fund is not having the desired affect. The sinking fund would only work, in theory, if no additional money was borrowed, or at the very least, less new money was borrowed than paid off yearly by the fund.
At this point I almost stopped reading the book. I was disappointed, given the fact that Mr. Cobbett was a supremely arrogant bastard, a maverick, if you like. It's hard not to root for him, especially when he rails against the corrupt establishment.
I kept reading on, however, for two reasons: the book is a veritable treasure trove of interesting historical information, and he does have good points on other matters, such as the aforementioned government corruption, etc.
*Edit: I stopped reading the book. I'm sure I can find a modern text with more accurate information. Also, at least a quarter of his writing is unnecessary, and another quarter of it is personal attacks against people he feels have slighted him. Ridiculous--Isn't that what diaries are for?
 

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