§ The year 1906 sees the close of two sets of terminable annuities set up by the National Debt Act, 1883. First there are the converted annuities, the annual charge for which is £684,000, which came to an end in February last; and, secondly, there are the Chancery funds annuities, the annual charge for which is £2,324,516, in respect of which the final payment will be made next July. The two together amount to a little over £3,000,000; but, as there are still two quarters, April and July, to be paid on account of the Chancery funds annuities, the sum of which the State will be relieved in the present financial year will be only £1,846,280. I have had to consider whether, in substitution for these expiring annuities, I should 295 set up fresh annuities, and I have come to the conclusion not to do so. Terminable annuities are in many ways a convenient and useful instrument of Debt reduction. They wrap up and disguise the process of repayment, and they are supposed—;though recent experience has shown that that is not always the case—;to be safe from temporary suspension or reduction at the hands of a hardly-pressed Chancellor of the Exchequer. It is a mistake to suppose that the expiry of these annuities adds anything to the provision for repayment of Debt. As long as the fixed charge is not encroached on or enlarged, it makes no real difference if the balance, after paying interest and cost of management, is applied to the reduction of Debt, whether it passes through the devious channel of terminable annuities or whether it goes straight and direct into the new Sinking Fund. In determining which method you ought to adopt, you must determine what part of the capital you are most anxious to attack; and, in view of all the circumstances, for reasons which I prefer not to elaborate now, I shall leave this annual sum, which has been hitherto tied up in annuities, in a more liquid form and free to discharge any kind of debt to which it can be legally devoted. The result of the non-renewal of the annuities is neither to increase nor to reduce the total applicable to redemption, but simply to give greater latitude in its application.