The Sun.
London, England, 1822-07-08 00:00:00

culations, are without estimating the superior value of a Go-
Nernmenf security.* . -
An estimate of the probable market-price of such a stock
might also be made by the price of Bank 'stock, if there existed
no public apprehension that the resumption of, cash payments
might diminish the profits of the. Bank, and probably,, the di-
vidend : likewise by the price of India stock, if this were af.,t
fected by the same contingencies as a Government security.—,
Bank-stock paYs 10 per cent. per annum the market-price
being about:24o, one half is 120 for a 5 per cent stock.
The long annuities, also, are some indication of the probable
price of such a new stock. Twenty and a half years' purchase
have, in 1822, been given for these annuities, which will expire
in thirty-eight years. Thit is paying, in other words, 102/.10s:
for a 5 percent. stock, both the capital and interest of which
will be wholly extinguished in thirty-eight years, leaving no-
thing to the purchaser. If such a stock be worth 1021. 10s.;
what ought to be the purchase money of a stock which is to pay
5 per cent. interest for 25 or 30 years, and at the end of the pe-
riod is' entitled to 1001. sterling ? • Or, if we again refer to Mr.
Baily's authority for the present value of 100/. payable at the
end of thirty-eight years, we shall find it to be 27/. Is. 2d. cal-
culating interest 3i per cent. which, added to 1021. 10s., will
show 129/. lls. 2d. to be the present value of a 5 per cent.
stock irredeemable for 38 years.
At the present time, for example, therefore, the 3 per cents.
being about 80, it might well be expected that a 5 per cent.
stock, to be permanent for twenty-five years, would be, worth
in the market, at least 120 per cent and that, for such stock,
the State would receive, at least, 120/. upon condition of ulti-
mately paying 100/. for every hundred pounds stock created in
the very first operations of the plan. Consequently, if, for ex-
ample, 12,000,000/. Exchequer-bills were fundcd in such stock,
the State would, in_ fact, purchase them for 10,000,000/. of 5
per cent. stock, and ultimately pay no more for them, saving,
by this plan, 2,000,000/. sterling. And supposing such amount
of bills were_funded in the navy 5 per cents. the interest would
be 600,000/. per annum ; but, by this plan the interest would
be only 500,000/. per annum. Therefore, the saving would, be
both 2,000,0001. of capital and 100,000/. per annum of interest ;
beside the saving in the charges of management.'—Upon the
same principle, the interest of the 5 and 4 per cents:might be
immediately reduced, at a great saving both of capital and an-
nual charge." - •
" But the most important application of the principle of the
plan would be to buy Up, as it were, the greater part of the 3
per cents. and pay for them in this new 5 per cent. stock ; as-
signing a full equivalent, in new 3 per cents. to every holder of
3 per cents. consenting to the exchange.
There are more than 500 millions of 3 per cents. If the
holders, to the extent even of 450 millions, were .to consent to
their conversion, upon equitable tends, into the new 5 per cent.
stock, an immense saving of the capital and annual expense of
the National Debt would be accomplished : and this is the main
design of the plan.
It the 3 per cents could be converted, for example, at 75 per
cent. including a bonus, and t4e,new 5 per cents. rated, after
the promulgation of the plan, at 120 per cent. the interest on.
450 millions, 3 per cents. being - - £13,500,000
Sinking Fund, 1 per cent. - 4,500,000
Charges of management, 340/. per million 153,000