English Public Finance from the Revolution of 1688: With Chapters on the Bank of England

WE may now profitably consider the early sinking fund operations. There were two of these, known respectively as Walpole's sinking fund and Pitt's sinking fund.

When Robert Walpole became Chancellor of the Exchequer in October, 1715, the public debt, including the capitalized value of the annuities, amounted to around fifty million pounds and the annual charge to £3,164,000.

The people were genuinely alarmed at the magnitude of the debt. It had increased during the thirteen years of Anne's reign over 200 per cent. The debt charge had risen from about £1,200,000 to over £3,000,000. A capital levy was being seriously urged. It was imperative that steps be taken to quiet the alarm and to stop this discussion about a capital levy which was most distasteful to the moneyed classes. Therefore, Walpole brought forward in March, 1717 a plan for a sinking fund. Before he had fairly launched this plan there was a change in the Government and he was out of the Exchequer for four years, beginning with April, 1717. However, his plan was adopted by Stanhope, his successor, who laid proposals before Parliament on May 20, 1717, which led to legislation appropriating the surplus revenues of the Bank, the South Sea Company and what was known as the General Fund to the redemption of the debt incurred prior to December 25, 1716.

By Christmas, 1727, £6,626,000 of this old debt had been retired, but in the interval it had been necessary to borrow

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