Sinking Fund

A fund that consolidated various other funds of state revenue. It was to be used only to pay interest and principal of National Debts contracted before Christmas 1716.

An arrangement under which a portion of a bond or preferred stock issue is retired periodically in advance of fixed maturity. The company may either purchase a stipulated quantity of the issue itself, or supply funds to a trustee or agent for that purpose. Retirement may be made by call at a fixed price, or by inviting tenders, or by purchase in the open market The amount of the sinking fund may be fixed in dollars, or as a percentage of the issue, or based upon volume of production or earnings.