Dead-weight Annuity Project.

We are induced shortly to notice this project, because it is the most recent, and, we believe, the last attempt which will ever be made to play tricks of legerdemain in matters of finance.

In the year 1822 a plan was adopted for relieving the country, in some degree, from the immediate pressure of the Dead Weight, by extending the payment of it over a longer series of years than the natural duration of the lives of the individuals holding half-pay, pensions, and allowances, under this denomination, would extend to. For this purpose an annuity of £2,800,000 was appropriated, out of the existing revenue, for 45 years, and vested in trustees for the discharge of the then payments, which, for that year, were estimated at £4,900,000, subject to yearly diminution by the death of annuitants. It was computed, that, according to the ordinary duration of human life, these annuities for the lives of the then holders would be equal to the annuity of £2,800,000 for forty-five years. The trustees, were, therefore, empowered to sell, from time to time, such portions of this annuity as would provide the funds required for the payment of the dead weight, according to a computation made of the amount which would, probably, be due in each year. The act by which this arrangement was sanctioned took effect from the 10th of October, 1822.

The trustees failed in their first negotiation, which was entered into with some public companies, and ultimately made an engagement with the Bank of England, for supplying the funds required for six years, by the transfer to that corporation of an annuity of £585,740, part of the above £2,800,000. The terms of the sale were settled by actuaries on either side, according to the current value of the public stocks. The sum which the Bank undertook to provide in the period specified was £13,089,419, the last payment upon which was made in July, 1828.

Now, to the measure of raising money by the sale of a temporary annuity there is no objection, when practised by the state, no more than by an individual: it may be resorted to, in order to meet an extraordinary charge; and to diffuse the charge at a diminished rate, for each year, over a longer space of time. But the framers of the dead weight expedient sought by the means of it to create an addition to the income of the state, whereby a Sinking Fund of five millions might be provided, notwithstanding a considerable reduction of the taxes then existing. It was in this the delusion consisted. The money for the reduction of debt was certainly forthcoming, by the sale of the annuity, and, therefore, positively applicable to the purchase of stock in the market; but the sale of the annuity was itself a creation of debt, and it was, therefore, not correct to call that a Sinking Fund which only served to extinguish, in one shape, a debt which it established in another.

Such an intricate contrivance was evidently a revival, in a new shape, of the fundamental error of the Sinking Fund, namely, an attempt to extinguish debt by borrowed money, and, like that famous juggle, it entailed an unprofitable charge on the country for management. As the objectionable part of the project has been abandoned, under the recommendation of Sir Henry Parnell’s Finance Committee, it is not necessary further to expose its fallacy. We may, also, congratulate our readers on the virtual relinquishment of the Sinking Fund; since, by the 10th Geo. IV. c. 27, which came into operation July the 5th, 1829, it is provided that the sum, in future, applicable to the reduction of the debt, shall be merely what happens to be the actual annual surplus revenue above the expenditure of the United Kingdom. The actual surplus revenue, for reasons assigned in the last section, will, we trust, be kept at a minimum, at which point, or below, it seems to have arrived; being at present (Jan. 1832) something worse than nothing, or, as algebraists term it, a “negative quantity.”

A mere detail of the fiscal blunders and oversights of the Oligarchy would form a most ludicrous display of human folly and presumption. It can never be forgotten that the Omnipotent Parliament of 1810 actually passed a resolution that a pound note and a shilling were equal in value to a guinea, though the latter was openly and publicly sold for twenty-eight shillings! Then think of the conduct of the “Guardians of the Public Purse” in granting annuities on lives. The Tory statesmen of Oxford and Cambridge appear to have been wholly ignorant that the average duration of human life, especially in females, had greatly extended of late years; and, in consequence, up to the year 1829, and until they were apprised of the circumstance by a private individual, continued to grant life annuities on the most disadvantageous terms, and by which, for many years, an annual loss of £100,000 was sustained by this tax-paying community.

It would be easy to cite similar examples of the waste of public treasure through mere incapacity in our rulers; but it is necessary to conclude. Our exposition of the origin and downfal of the great Sinking Fund bubble, which deluded the country for nearly half a century, cannot fail to be amusing and instructive. If we revert to the history of the Boroughmongers, we shall find that their system has been carried on for many years by a series of moral, political, and financial bubbles. The French war was all a bubble. It commenced under the pretext of protecting property and averting infidelity and immorality. These, however, were mere bubbles; the real objects being to prevent reform in the representation, the administration of justice, and the tithe oppression. Abuses in all these were endangered by the principles of the revolution; but then, government could hardly go to war on the barefaced pretext of supporting them, so they went to war on the pretext of supporting religion and social order. New circumstances require new delusions. The country is now at peace; but we shall be marvellously surprised, if some new bubble is not blown to justify interference with the regenerated states of the Continent and the New World.