Editing Sinking fund (section)

==Historical context==

=== Great Britain ===
[[File:Sir Thomas Lawrence (1769-1830) - William Pitt (1759-1806) - RCIN 400645 - Royal Collection.jpg|thumb|''[[Portrait of William Pitt (Lawrence)|Portrait of William Pitt]]'' by [[Thomas Lawrence]], 1807. Pitt is shown pointing to a document entitled Redemption of the [[United Kingdom national debt|National Debt]].]]
The sinking fund was first used in [[Kingdom of Great Britain|Great Britain]] in the 18th century to reduce [[national debt]]. While used by [[Robert Walpole]] in 1716 and effectively in the 1720s and early 1730s, it originated in the commercial tax syndicates of the Italian peninsula of the 14th century, where its function was to retire redeemable public debt of those cities.

The fund received whatever surplus occurred in the national Budget each year.<ref>{{Cite journal |last=Ross |first=Edward A. |date=1892 |title=Sinking Funds |url=https://www.jstor.org/stable/2560478 |journal=Publications of the American Economic Association |volume=7 |issue=4/5 |pages=9–106 |issn=1049-7498}}</ref> However, the problem was that the fund was rarely given any priority in government strategy. The result of this was that the funds were often raided by the Treasury when they needed funds quickly.

In 1772, the [[Nonconformist (Protestantism)|nonconformist]] minister [[Richard Price]] published a pamphlet on methods of reducing the national debt. The pamphlet caught the interest of [[William Pitt the Younger]], who drafted a proposal to reform the ''Sinking Fund'' in 1786.<ref>{{Cite journal |last=Cone |first=Carl B. |date=1951 |title=Richard Price and Pitt's Sinking Fund of 1786 |url=https://www.jstor.org/stable/2599127 |journal=The Economic History Review |volume=4 |issue=2 |pages=243–251 |doi=10.2307/2599127 |issn=0013-0117|url-access=subscription }}</ref> [[Lord North]] recommended "the Creation of a Fund, to be appropriated, and invariably applied, under proper Direction, in the gradual Diminution of the Debt". Pitt's way of securing "proper Direction" was to introduce legislation that prevented ministers from raiding the fund in crises. He also increased taxes to ensure that a £1 million surplus could be used to reduce the national debt. The legislation also placed administration of the fund in the hands of "[[Commissioners for the Reduction of the National Debt]]".

The scheme worked well between 1786 and 1793 with the Commissioners receiving £8 million and reinvesting it to reduce the debt by more than £10 million. However, the outbreak of [[French Revolutionary Wars|war with France]] in 1793 "destroyed the rationale of the Sinking Fund" ([[Eric J. Evans|Eric Evans]]).{{citation needed|date=June 2018}} The fund was abandoned by [[Lord Liverpool]]'s government only in the 1820s.

=== United States ===
A federal '''Sinking Fund Commission''' was established by the [[1st United States Congress]].<ref name=":0">{{Cite journal |last=Chabot |first=Christine Kexel |date=2020-11-13 |title=Is the Federal Reserve Constitutional? An Originalist Argument for Independent Agencies |url=https://scholarship.law.nd.edu/cgi/viewcontent.cgi?article=4925&context=ndlr |journal=[[Notre Dame Law Review]]}}</ref>

Sinking funds were also seen commonly in investment in the 19th century in the United States, especially with highly invested markets like railroads. An example would be the Central Pacific Railroad Company, which challenged the constitutionality of mandatory sinking funds for companies in the case ''In re Sinking Funds Cases'' in 1878.<ref><blockquote>'''SECT. 3.''' That there shall be established in the Treasury of the United States a sinking-fund, which shall be invested by the Secretary of the Treasury in bonds of the United States; and the semi-annual income thereof shall be in like manner from time to time invested, and the same shall accumulate and be disposed of as hereinafter mentioned. And in making such investments the Secretary shall prefer the five per centum bonds of the United States, unless, for good reasons appearing to him, and which he shall report to Congress, he shall at any time deem it advisable to invest in other bonds of the United States. All the bonds belonging to said fund shall, as fast as they shall be obtained, be so stamped as to show that they belong to said fund, and that they are not good in the hands of other holders than the Secretary of the Treasury until they shall have been indorsed by him, and publicly disposed of pursuant to this act.

'''SECT. 7.''' That the said sinking-fund so established and accumulated shall, at the maturity of said bonds so respectively issued by the United States, be applied to the payment and satisfaction thereof, according to the interest and proportion of each of said companies in said fund, and of all interest paid by the United States thereon, and not reimbursed, subject to the provisions of the next section. [http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=99&invol=700]
</blockquote> by SIMZAH
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