Depreciation .- This word has several meanings economy. Named to the fact of paying just debts, and to a procedure that is reimbursed, by means of partial deliveries and regular communications, capital employed in industry or received loan, and is also called bonus depreciation, amortization or alone, to each of the many or sums devoted to that object. -It is noteworthy, as this is committed impropriety, saying repayment of capital, precisely when it is available again, it dies and dies is not a capital, but on the contrary, a debt. Finally, amortization means the state of that property has been awarded perpetually certain owners, who are deprived, while the power to alienate.
As a means of capital formation, depreciation has the great advantage of allowing you to use the powerful force of compound interest, which can be accrued on the cumulative sums, but only an effective remedy, when they meet two conditions of a long period of time and product-placement calculation determines, in each case, the annual amount and the time or interest, which are needed to get some capital ..
He wanted to apply to the payment of public debt amortization for the interest compound; pore results did not correspond to the high hopes based on this idea, for lack of the conditions listed above. Governments believed that they could enjoy the benefits of that system, and created to achieve the so-called Amortization boxes. The loan contract stated a fixed annual amount, usually 1 per 100, and delivered to the Fund, which invested in titles, taking advantage of market fluctuations, then the interest charged in these securities and should be employed in conjunction with the annual budget on acquiring new ones to own them all. So a loan of 100 million to 5 100, 6 million per year indicated in the budget to a repayment to the Fund, and after the first year were no more than 99 million in the hands of creditors at the end the second year, Cash had also received a million for the interest of securities, acquired in the first, and continue to be paid as if they were in circulation, and used all other securities, in the third year I had a million fixed plus interest for the previous two, and in this way, with 1 in 100 year and the interest interests in a period of thirty-six years – that is, apparently 36 million – the Fund should acquire all the securities loan debt extinguished.