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The Age of George III |
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During the period before the French Wars Pitt the Younger undertook a series of economic reforms. In 1786 he reintroduced a Sinking Fund using an idea first implemented by Walpole in the 1720s. The Sinking Fund required an annual investment of £1 million per annum invested at a compound interest, to underpin the national finances. Below is a hypothetical guide to how this fund would have built up over a five year period had interest been at 10% per annum and the £1 million had been invested every year.
| Investment and interest | £ |
| Sum invested in 1786 | 1 000 000 |
| Compound interest at 10% | 100 000 |
| Grand Total | 1 100 000 |
| Investment for 1787 | 1 000 000 |
| Sub-total before interest | 2 100 000 |
| Interest | 210 000 |
| Grand total | 2 310 000 |
| Investment for 1788 | 1 000 000 |
| Sub-total before interest | 3 310 000 |
| Interest | 331 000 |
| Grand total | 3 641 000 |
| Investment for 1789 | 1 000 000 |
| Sub-total before interest | 4 641 000 |
| Interest | 464 000 |
| Grand total | 5 105 000 |
| Investment for 1790 | 1 000 000 |
| Sub-total before interest | 6 105 000 |
| Interest | 610 510 |
| Grand total | 6 715 610 |
| Investment for 1791 | 1 000 000 |
| Sub-total before interest | 7 715 610 |
| Interest | 771 561 |
| Grand total | 8 487 171 |
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Last modified
12 January, 2016
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