und it necessary to borrow L.110,
instead of merely L.100, it was virtually the same as if he applied
L.10 of the borrowed money for his sinking-fund. Thus for the year
1808, the state required L.12,200,000 in loan above what the taxes
produced. But in the same year L.1,200,000 were applied to the
sinking-fund; consequently, it was necessary to borrow so much more,
and therefore the whole loan of that year amounted to L.13,400,000.
The loan was increased exactly in the way in which our friend added
the L.10 to the L.100. It was borrowing money to pay loans.

The application of millions in this manner by our statesmen, was in a
great measure owing to the enthusiastic speculations of Dr Richard
Price, a benevolent, ingenious, and laborious man, who, unfortunately
for the public, possessed the power of giving his wild speculations a
tangible and practical appearance. He was, to use a common expression,
'carried off his feet' by arithmetical calculations. He believed
compound interest to be omnipotent. He made a calculation of what a
penny could have come to if laid out at compound interest from the
birth of Christ to the nineteenth century, and found it would make--we
forget precisely how many globes of gold the size of this earth. He
did not say, however, where the proper investments were to be made;
how the money was to be procured; and, most serious of all, he
overlooked that where one party received such an accumulating amount
of money, some other party must pay it, and to pay it must make it. In
fact, the doctor looked on the increase of money by compound interest
as a mere arithmetical process. The world, however, finds it to be a
process of working, and the making of money by toil, parsimony, and
anxiety.

When any one seizes on such a theme he is sure to be carried to
extremities with it. It was one of Price's favourite theories, that
the time when interest was highest was the best time for borrowing
money, because the borrowed sinking-fund would then bring the highest
intere

William Babington Maxwell (18661938) was a British novelist. He was a son of novelist Mary Elizabeth Braddon. Though nearly 50 years old at the outbreak of the First World War, he was accepted as a lieutenant in the Royal Fusiliers and served in France until 1917.

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