is called the rate of interest. At the end of each year an amount acquires for a factor unity plus the rate of interest; it increases then according to a geometrical progression of which this factor is the ratio. Thus in the course of time it becomes immense. If, for example, the rate of interest is 120 or five per cent, the capital doubles very nearly in fourteen years, quadruples in twenty-nine years, and in less than three centuries it becomes two million times larger.
An increase so prodigious has given birth to the idea of making use of it in order to pay off the public debt. One forms for this purpose a sinking fund to which is devoted an annual fund employed for the redemption of public bills and without ceasing increased by the interest of the bills redeemed. It is clear that in the long run this fund will absorb a great part of the national debt. If, when the needs of the State make a loan necessary, a part of this loan is devoted to the increasing of the annual sinking fund, the variation of public bills will be less; the confidence of the lenders and the probability of retiring without loss of capital loaned when one desires will be augmented and will render the conditions of the loan less onerous. Favorable experiences have fully confirmed these advantages. But the fidelity in engagements and the stability, so necessary to the success of such institutions, can be guaranteed only by a government in which the legislative power is divided among several independent powers. The confidence which the necessary cooperation of these powers inspires, doubles the strength of the State, and the sovereign himself gains then in legal power more than he loses in arbitrary power.
