Sir Robert Walpole introduced the idea of a sinking fund in 1716. The concept of the sinking fund was to set aside surplus revenue each year and accumulated for the purpose of running down the national debt. The device was partially successful in the 1720's and 1730's but its potential had been limited by the fact that ministers kept raiding the fund for immediate purpose during short-term crises rather than letting it accumulate as intended. The idea was re-vamped in 1772 by the Nonconformist minister Richard Price, he advocated a fund, which would be regularly topped up and not drawn out on a short-term need.
By earning compound interest it would eventually extinguish the debt. Pitt introduced the Sinking Fund in 1786, which had modifications from Walpole's original mechanism. Every year the government would put some surplus revenue into the bank. So that the bank wouldn't be raided in 'crisis-raiding', which had occurred in the past. Exclusively ministers managed it but also by a statutory board of six commissioners, who included the governor and deputy governor of the Bank of England. The Sinking fund did work as the debt was reduced by almost i??
11 million. As an added bonus the Sinking Fund boosted business confidence and therefore indirectly stimulated the volume of investment. In this way it could be argued that the Sinking Fund made a wider contribution to the 'National Revival' than just paying off the debt. Pitt was well aware that Britain's prosperity depended on overseas trade, and was therefore linked to its diplomatic and foreign policy. Pitt sought to open negotiations with the other major European states to secure reciprocally lowered tariffs.
The Eden Treaty Signed with France in September 1786 was, however, the only major, if temporary, result of this policy. The treaty meat that manufactured goods from both countries would be allowed in on easier terms than before, and that duties on other types of goods such as silk and wine would be lowered. The treaty certainly enabled Britain to gain the benefit of lower prices of French products imported into Britain. As a result of the treaty it meant that international relations increased, however after the outbreak of the war with France in 1793 it brought the arrangement to an end and led to a return to protectionism.
This meant that Pitt brought about a national revival in international trade with France from 1786-1793. It did increase international trade in these 7 years, however it did mean that Britain returned to protectionism. Pitt also contributed to the national revival by reducing spending and making taxes more efficient. He wanted to reduce spending by making the government more efficient. His basic problem was that the system was neither systematic nor structured in such a way as to encourage efficiency.
Pitt's solution was to avoid confrontation with established and powerful vested interests by simply allowing 'offices of profit' to lapse on the holder's death. Most of the 180 posts which the public accounts commissioners recommended should be abolished in 1786 disappeared in the next 20years. Departmental management was gradually made more efficient. Pitt introduced A Treasury Commission of Audit in 1785 to oversee public expenditure. Transfers from the Treasury and the Excise Board reinforced the board of taxes.
Talented people were encouraged to promote and develop administrative policies on their own initiative. This all greatly increased administrative efficiency, reducing the amount of labour required and the level of confusion. The consolidation Fund Act of 1787 meant that 103 accounts were combined and controlled by the treasury. He targeted smuggling very well and reduced it a lot gaining the government a lot of money. With the policy of new taxes and efficiency of taxes he went about this the right way and reduced spending and saved money.
The sinking fund was an excellent policy as it paid off 11 million in debt. Free trade benefits the most efficient producer, and Pitts most successful move in the direction of free trade, the Eden Treaty with France, favoured Britain hugely and was a major benefactor in the national revival. I think that Pitt was very responsible for the national revival as he introduced these policies. Some may say that Pitt was a lucky beneficiary of circumstance as he had time to introduce these policies because he was in power so long.