Grenville on War Finance and the Sinking Fund

One of the prominent supporters of the Pitt’s sinking fund, as well as promoter and architect of the fund implemented by the shortlived Ministry of All the Talents, Grenville, in 1828, in his essay on the supposed advantages of a sinking fund, gave the final blow to a system which had played a vital role in the handling of British public finance since 1716. This paper discusses the reasons that led Grenville to change his opinion. The functions performed by the sinking fund, over a century in which extensive military commitments went hand in hand with the development of public credit, were manifold. Among these, during the French Revolutionary and Napoleonic wars, two emerged as prominent: the first concerned the attempt to make indiscriminate use of the public debt to finance the war; the second instead touched on the relationship between government and Parliament, and on how the former could emancipate himself from the latter over how and how much to spend. After focusing on these functions of the sinking fund and their fading away with the end of hostilities wartime, the paper highlights some differences between Grenville and Ricardo on war finance and the sinking fund.