74* 



PUBLIC STOCKS. 



ignorant of such occupation of their property. At 

 length, after a long series of years, it became im- 

 possible to dispossess them, however wrongful their 

 possession, in its origin, may have been. 



PUBLIC STOCKS OR FUNDS; the name 

 given to the public funded debt, due by the govern- 

 ment of a country to individuals. 



I. British Stocks. The practice of borrowing 

 money in order to defray a part of the war expen- 

 diture, began, in Kngland, in the reign of William 

 HI. At first it was customary to borrow npon the 

 security of some tax set apart as a fund for dis- 

 charging the sum borrowed ; but afterwards the 

 practice of borrowing for a fixed period, or upon 

 terminable annuities, was almost entirely abandoned 

 and most loans were made upon interminable annu- 

 ities, or until such time as government might find 

 it convenient to pay off the principal. The interest 

 stipulated for loans during the reigns of William 

 III. and Anne was various. But latterly, instead 

 of varying the interest upon the loan according to 

 the state of the money market at the time, the rate 

 of interest was generally fixed at three or three and 

 a half per cent.; the necessary variation being 

 made to the principal funded. Thus suppose gov- 

 ernment preferred borrowing in a three per cent, 

 stock, and that they could not negotiate a loan for 

 less than four and a half per cent., they effected 

 their object by giving the lender, in return for 

 every 100 advanced, 150 three per cent, stock ; 

 that is, they bound the country to pay him or his 

 assignees 4 10s. a-year in all time to come, or, 

 otherwise, to extinguish the debt by a payment of 

 150. In consequence of the prevalence of this 

 practice, the principal of the debt now existing 

 amounts to nearly two-fifths more than the sum 

 actually advanced by the lenders. Britain, as is 

 well known, has a greater public debt than any 

 other nation. In 1833, the total funded and un- 

 funded debt amounted to 781,378,549 10s. 2!d. 

 (See the article Britain ; also the table in the arti- 

 cle Europe.) But the resources of this country are 

 so great, and the punctuality with which its obli- 

 gations are discharged so unfailing, and the mon- 

 eyed men in the country so numerous, that its stocks 

 are the most in demand. The national debt of 

 Britain consists chiefly in stocks which are vari- 

 ously designated, partly according to the rate of 

 interest which the government engages to pay; as 

 five, four, and three per cent, stock; and partly 

 from the financial operations to which they have 

 been subjected; thus the name of reduced funds is 



?iven to those on which the interest has been re- 

 uced, in consequence of the option which the gov- 

 ernment has offered to the public creditors to 

 receive back their capital, or to take a lower rate 

 of interest. Consolidated annuities is a name 

 derived from an operation of the government, com- 

 menced in 1751, when an act of parliament was 

 passed, by which the various loans, for the repay- 

 ment of which particular funds had been assigned, 

 were united, and all the funds, including the sink- 

 ing fund, consolidated into one. These various 

 names convey no idea of important differences to 

 the owners and purchasers of British stocks. Even 

 the distinction between funded and unfunded debt 

 is connected with no difference in the degree o 

 their security. For although a regular portion o 

 the national revenue is appropriated to the pay- 

 ment of the former, yet the interest of the latter is 

 equally secure; and they are changed into fundec 

 debts whenever the state finds it impolitic to dis 

 charge them in the common way, and the creditor 

 concur in the alteration. For the gradual reduction 

 of the funded debt3. a sinking fund was established 



designed to diminish the debt by repurchasing the 

 hares at their current price a method which has 

 >een adopted by many European states. It has 

 )een lately discontinued, (See Sinking Fund.) 

 n Britain, it has served, from the beginning, to 

 teep up the credit of stocks, as it has maintained a 

 constant demand for them in the market ; and this 

 t has done the more effectually in proportion to its 

 mount ; for, in case the stocks should fall too low, 

 he price may be raised again by extinguishing a 

 part of the debt. This effect of the sinking fund, 

 n facilitating the sale of the public stocks, greatly 

 contributes to recommend them. For capitalists 

 "eel it extremely convenient to hold certificates of 

 stock, which not only yield a regular interest, but 

 may, at any moment, be turned into money without 

 oss, and perhaps with profit. The history of the origin 

 of the various debts of Britain, their conditions, the 

 measures adopted for the payment of interest, or the 

 repayment of the capitals, or the sinking them by 

 repurchase, may be found in Grellier's History of 

 National Debt, and in Hamilton's work on the same 

 subject. A concise view of the same has been pre- 

 sented by Bernard Cohen in his Compendium of 

 Finance (London, 1822). Although a large 

 amount of the British stocks always remain sta- 

 tionary in the hands of companies, public institu- 

 ;ions, and many private persons, who retain them as 

 the safest source of income, still a large proportion 

 are bought and sold every day; and they are a very 

 important article of traffic in Britain. As the three 

 per cent stock is the most in the market, the price 

 n the public papers relates to this, if the kind of 

 stock be not particularly designated. Moreover, it 

 regulates the price of the three and a half, four, 

 5ve, and six per cent, stocks, which vary propor- 

 tionally with it. Those public obligations which 

 entitle the holder to payment of the capital at a 

 time designated, or to an equal amount in the 

 public stocks, as exchequer bills, navy bills, &c., 

 naturally bring a price proportionally higher. The 

 best standard of the credit of the public stocks is 

 the rent of land. At present, land in Britain is 

 generally sold at thirty-six years' purchase in times 

 of peace, and at thirty years' purchase in time of 

 war ; that is, capital invested in landed property 

 yields two and seventy ninths per cent, in time of 

 peace, and three and one-third per cent, in time of 

 war. Within the last thirty years, the three per 

 cent, stocks have been worth from fifty-eight to 

 eighty-two per cent.; so that the stocks, at the 

 highest rate during this period, have yielded but 

 about the amount of land rents in time of war ; for 

 a man, who purchases three per cent, stocks at 

 eighty-two per cent., receives but about three and 

 a half per cent., on his capital. In buying stocks 

 in Britain, the purchaser does not receive any cer- 

 tificate; but his name is merely registered in the 

 great national debt books, together with all his char- 

 acteristic designations. If he ever sells the whole, 

 or a part of it, this is transferred from his name to 

 that of the purchaser. Every proprietor can, in- 

 deed, have a certificate of what is due to him in the 

 national debt books ; but., in the stock-market, this 

 certificate is not considered of value, and a person 

 may sell and transfer his property in the funds 

 without being asked for it. Every stockholder 

 must receive his interest, or make his entry and 

 transfer of stock himself, or by a representative 

 regularly authorized. It would be impossible to 

 conceive, how the book-keepers could be convinced 

 that the multitude of claimants who appear before 

 them, are the true proprietors, if it were not known 

 that the greatest part of the business, both the 

 transfer of capital and the receipt of interest, is 



