Alexander Hamilton's Hidden Sinking Fund

I am half mad with a project which will give our supplies the effect almost of magic in the reduction of debt.1 Thus did prime minister William Pitt, in I783, express his undiluted enthusiasm for what had become a craze in public finance: the sinking fund. Introduced by the finance minister Robert Walpole in I 7 I 6 as a means to reduce the English national debt, the sinking fund had later lost prestige, for its existence had only encouraged politicians to raid it for other projects.2 Then, in the early I770s, Richard Price rediscovered and popularized it in England as a panacea to liquidate the largest debt that a State could have occasion to contract, at a small expense, and in as little time as its interest could possibly require. 3With the debt reaching enormous proportions, certainly by eighteenth-century standards, it is no wonder that a sinking fund caught the attention of Price's compatriots. At Pitt's behest, Parliament created a Board of Commissioners of the Sinking Fund in I 786 and gave it a permanent appropriation of ?1 million annually.4 Price's marvelous discovery had wide appeal in the United States,5 which had a debt that seemed exceedingly large, although hardly comparable to its counterparts in England and France.6 Many Americans were in a mood to welcome anything that promised to eliminate debt quickly. The Continental Congress was so impressed with Price and his sinking fund

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