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 
payment 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
In 1717, by the third of George I., c. 7, 
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 
L.724,849 : 6 : 10½. 
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 not of 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 improvident 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 anticipation, 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 
per cent.; and, in the twelfth year of her 
reign, five per cent. was declared to be the 
highest rate which could lawfully be taken for 
money borrowed upon private security. 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 per cent. for the interest of their 
money, which occasioned a saving of one per 
cent. 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 
L.323,434 : 7 : 7½. In 1727, the interest of 
the greater part of the public debts was still 
further reduced to four per cent.; and, in 
1753 and 1757, to three and a-half, and three 
per cent., which reductions still further augmented 
the sinking fund
A sinking fund, though instituted for the 
payment of old, facilitates very much the contracting 
of new debts. It is a subsidiary fund
always at hand, to be mortgaged in aid of any 
other doubtful fund, upon which money is 
proposed to be raised in any exigency of the 
state. Whether the sinking fund of Great 
Britain has been more frequently applied to the 
one or to other of those two purposes, will 
sufficiently appear by and by. 
Besides these two methods of borrowing
by anticipations and by a perpetual funding
there are two other methods, which hold a 
sort of middle place between them; these are, 
that of borrowing upon annuities for terms of 
years, and that of borrowing upon annuities 
for lives
During the reigns of king William and 
queen Anne, large sums were frequently 
borrowed upon annuities for terms of years
which were sometimes longer and sometimes 
shorter. In 1693, an act was passed for 
borrowing one million upon an annuity of 
fourteen per cent., or L.140,000 a-year, for 
sixteen years. In 1691, an act was passed 
for borrowing a million upon annuities for 
lives, upon terms which, in the present times
would appear very advantageous; but the 
subscription was not filled up. In the following 
year, the deficiency was made good, by 
borrowing upon annuities for lives, at fourteen 
per cent. or a little more than seven years 
purchase. In 1695, the persons who had 
purchased those annuities were allowed to exchange 
them for others of ninety-six years
upon paying into the exchequer sixty-three 
pounds in the hundred; that is, the difference