The Sun.
London, England, 1829-11-21 00:00:00

ON THE PRESENT ST Tr OF THE

sent year, the fliT.rence rose from 51 to 10 per
cent., and fell b k a, ,in in October to 5 per
cent. That the pr .per value of these Inscriptions,
as perpetual apinnitirsi, is not yet felt, is rendered
more apparent by the eirru,nstance that the late
5 per Cent. Itubsian Loan, contracted with Hope
and -Co., of Amsterdam, which is redeemable at
par, and the interest of which is only payable in
annual rates, is not lower. loan was made at

PUBLIC FUNDS

(From the Berb'n Slate Gazette.)
The tendency to a rise which the public funds
almost every where exhibit, opens to the observer
of financial phenomena the prospect of various new
and interesting results. Having for the most part
originated in the war, or in the protracted distress
which followed it, those funds were lonz a rich
source of -profit to annuitants and stockjobbers.
This source, however, must necessarily gradually
diminish, in proportion as the system of general
peace, only slightly interrupted as it has been by the
interposition of unfavourable events, encourages the
rise of the funds ; and the necessity which formerly
compelled the borrower to submit to the hard con-
ditions imposed by the lender, is now transferred to
the latter, who finds it convenient to put up with a
considerable reduction of the rate of interest, in
order to avert a threatened repayment of his capital.
The public securities have, solely by their own
operation, produced this favourable change, which
has not only been already turned to advantage by
several provinces of Prussia, and particularly by the
city of Berlin, but the impending influence of which
is indicated by the money transactions of some of
the greatest European States, since the immense
masses of capital represented by the Government
paper of different countries can find no opportunity
for investment cxept that of being laid, out at interest.
On this circumstance, and not on any substantial
resources which do not sufficiently exist, depends
the power which, in modern systems of finance, enables
the debtor, step by step, to obtain an advantage
over the creditor; and so strong has been the ten-
dency of public securities in this direction, that the
first bold project for a reduction of interest on a
great scale,: formed at a time when the current price
did not lead to such a measure by a natural course,

a time when Villele's project fur the reduction of the
French Rentes was in full activity, but as only I
per cent. was assigned to the sinking fund, the
same disadvantage to the public finances did not
take place from the rise of the nominal value, as
occurred with respect to the French Rentes. Now,
though the existing French 3 per Cent. itentes have
been raised, partly in consequence of the operation
of the powerful sinking fund being entirely confined
to them, yet the Anglo-Danish Obligations follow
them with a distant but steady progression. How-

ever, these Obligations, according to their present
price, secure to the holder scarcely 4 1-sth per cent.
interest, while the Russian Inscriptions, which have
with respect to their capital a less limited and twice
more operative sinking fund, yield an interest of

almost fully 5 per Cent.
The Berlin Stock Exchange is at this moment the
centre whence an impulse is given to several funds
of foreign states, the p4oices of which have constantly
here a tendency to resolve into an equilibrium with
the price of the Prussian National Debt Certificates,
which had for a time reached a fixed point at par,
and which are at present only 1 1-6th per cent.

under it. In a tabul.jr view of the course of the most im-

portant funds, subjoined to this essay, interest at 4 per
cent, is taken at a proportional rule, according to which
the gradation of the course is to be determined. In this
table the 5 per cent. redeemable effects form a particular
class, because their higher price above par may be held to
indicate precisely a lower degree of public credit, since
that price is the consequence of a more remote prospect of
the redemption, as appears on a comparison of the Aus-
tiian 5 per Cent. Metalliques with the Anglo-Prussian
Obligations. It is further to be considered, that the
Prussian National Debt Certificates being lower than the
French and English 3 per Cents., is a circumstance which
must be ascribed to the great value of the denominative
capital of the latter.
A distinct class is besides formed of public securities,
repayable at axed terms, with a premium, to which the

skewed the possibility of the execution by its imme-
diate operation. Villele's celebrated plan for the
conversion of the French 5 per Cent. Reines into
3 per Cents, afforded, however, only a distant pros-
pect of rapidly raising the course of the funds to the
height which the plan required. Indeed the scheme
was too rashly brought forward, even upon a perfect
certainty of its practicability, to promise a sufficient
advantage to the state. By the conversion of the 5
per Cent. R,entes, into 3 per Cents. the holders
were to be indemnified by an augmentation of capital
to the extent of 33i per cent. Thus the State was
to gain only 1 per cent. annually on the interest, but
even this advantage was nearly wholly counter-
balanced by the extraordinary magnitude of the French
Sinking Fund, which was then in a situation to
extinguish the reducible national debt of France in
twenty-one years, at par. A large sinking fund not
only diminishes the advantage obtained by a reduc-
tion of interest, by limiting the period of its opera-
tion, but also causes a rise of price, which has in a
certain degree an unfavotnaAe counteraction. Now
calculation proves that twenty years' saving of in-
terest at 1 per cent. would be to a trifle absorbed by
the sinking fund, if during the same time it were,
instead of operating on the 5 per Cents, at par, to
be applied to the redemption of the 3 per Cents.
at the average price of 87k per cent.
The optional conversion, afterwards arranged
with consent of the Chambers, was better adapted
to this object, as there was thereby created, only
provisionally, in connexion with the milliard granted
to the emigrants, upon the whole a 3. per cent.
debt, to obtain for the advantage of public credit a
fixed rule towards a comprehensive reduction of in-
terest. indeed, when a redeemable stock approaches
par, its price can no longer be regarded as the mere
result of the interest connected with it. This the
present current rate of the funds every where proves.
For example, the price of one franc rente in the
French 3 per Cents. is 27 1-sth, and in the 5 per
Cents. 21 3-sths ; the price of one rix-dollar an-
nual interest in the' Prussian Debt Certificates is
nearly 25, while that of the same amount of interest
in the Anglo-Prussian Obligations is about 20. The
influence of this kind of difference has, within the
last few months, begun to operate on the Austrian
paper. There lately appeared suddenly in circula-
tion 4 per Cent. Obligations of old and almost far-
gotten loans, and these securities soon rose to a
price, which, with reference to the interest they
bore, far surpassed the 5 per Cent. Metalliques.
The new loan of 20,000,000 or 25,000,000 of guil-
ders may also be mentioned in connexion with this
topic. That financial measure must not be appre-
ciated solely by the stipulated price; for that price,
which is kept up against the current rate of the 5
per Cents., notwithstanding the disadvantage of the
rise of the capital has been diminished by the con-
temporaneously arranged limitation of the sinking fund,
does not at first appear advantageous to the State, but
seems rather calculated to obtain the before-mentioned
certain rule for public credit, with aview to the future
introduction of a new and grand financial operation.
The case is different with the Russian 5 and 6
per Cent. Inscriptions, the prices of which kept
pretty nearly in the relation of their respective in-
terests. In fact these funds, in consequenee of the
express condition by which the holders never repaid
the capital, are to be regarded as perpetual annuities,
and even bear that name, so that the designation of
the capital is merely a matter of form. Thus they
are protected against every reduction of interest ;
and any such reduction which may take place with
respect to other public securities, can only have the
effect of raising the value of the Russian securities.
Their present price, however, indicates scarcely the
commencement of this effect. In a Berlin Exchange
list, the Hamburg certificates for Russian 5 per
Cent. Inscriptions in the year 1825 wire long
quoted at 3 per cent. below the Prussian National
Debt Certificates; they afterwards rose to an equa-
lity, and fluctuated within that boundary until the
war with Turkey produced a fall. The greatest
declension, which amounted to about 4 per cent.,
took place in June and July last, when they were
left much behind on the rapid rise of the Prussian
Debt Certificates. On the conclusion of peace,
however, a complete change took place, and they
are now 3k per cent. higher than those certificates,
if we take into account the settled value of this
paper in Berlin, which is at the rate of 100.91 rix
dollar for the silver ruble, and compare that with the
real worth of the 100.91 rix dollar.
Compared with the Austrian 5 per Cent. Metal-

incitement of higher gain gives a peculiar value. As,
however, that gain only accrues to individuals at the ex-
pence of the whole community of the persons interested,
and as such funds are therefore far front being the most
proper for a solid investment of capital, their course rises
above par in proportion as the capital required for each
share is less, and the more the shares are distributed among
the public. Thus, for example, the Polish Partial Obli-
gation, the most recent paper of this class, have not yet, on
account of their novelty, taken their proper station in the
course with respect to other loans of the same description.
Interest at the rate of 5 per cent. had been fixed upon as
the basis for a great proportion of these effects at the period
of their first emission. The substitution, however, of
4 per cent. annual interest, which, according to the pre-
sent calculation of the par, appears proper, produces a
difference, which becomes the greater in proportion as the
sinking fund belonging to the plan operates tardily.
How far the funds of great States may depart from a

position corresponding to a fundamental interest of 4 per
cent. is exemplified in a striking degree by the course of
the 3 per Cent. English Console, which only yield an in-
terest of 3 1-3 d per cent. without any considerable
sinking-fund operating on them, and giving a considera-
tion to the nominal capital. If the cause of this be, that

in England the profit on merchandize and the general rule
of interest is lower than in the other countries of Europe.
it must be allowed that the existing public securities may
also inversely produce by the advance of their course a rise
in the price of goods as well as a depression in the general
rate of interest, and thus become a powerful engine in
giving a new and extensive activity to trade. In fact,
the relation between labour and tranquil enjoyment
is essentially expressed by the rate of interest. The less
that rate is, the more an individual has to acquire to en-
able him to retire from business, and the greater is the
amount of the forces which come into competition.—
Those, therefore, who consider the rise of public securi-
ties injurious to the State, because the sinking-fund is
thereby obliged to purchase at a higher rate, overlook not
only the influence just mentioned, but also the direct ad-
vantage which the finances derive from a reduction of in-
terest. To the traffic in public securities,—much as it
has been declaimed against on account of partial abuses
and contradictory phenomena,—belongs the merit of hav-
ing given to public credit a real value, whereby it has
been brought into the same lists, and enabled to compete
advantageously with private credit. The distinction is no
longer made that the capitals which are at first procured
from the lender, cannot be recalled. This condition is
rather an imperfection, which attaches to private cre-
dit ; tho State, on the contrary, having a much more
elevated and universal existence, never fails to obtain a
competition of capitals, whereby an infinitely more prompt
and convenient realization takes place. Even the tempo-
rary fluctuations are in this way no obstacle of importance,
as money can always be easily borrowed on public securi-
ties, and especially on domestic paper.
The price of public securities is besides in reality no-
thing else than the manifestation of the constant change of
value to which all kinds of property and objects of com-
merce are liable. The holder of public securities is there-
fore in this respect not the lender of an unalterable capital.
but participates to a certain degree in the relations of the
owners of other property, in a sphere, however, in which
the course of political events, which affects all relations,
directly manifests its influence. Upon the whole, the
vast extent to which public securities have in the present
times been carried may be regarded as a great historical
indication. It is the decided and unceasing tendency of
the age towards a universality of system, which here shows
itself. The impulse towards the raising of public credit
through generalisation of value and its own movement,
produced long since in Prussia the excellent system
of pawn-certificates, the advantage of which is still
not sufficiently understood in other countries. The
modern national debt system has the effect of bringing
into operation the potentiality of those relations whereby
the whole private credit of the country is elevated into
the general sphere of public credit. However, as the
great amount of the private debts in a country is not ne-
cessarily a sign of poverty and depressed trade, so it may
be presumed that the magnitude of a national debt is also
not in itself an evil ; it may indeed rather be presumed
that the wants out of which it has grown would have been
satisfied in some other way to the disadvantage of the
country. Public credit "is therefore justly regarded as a
most important power which it is the duty of Govern-
ments to create and preserve by every means, and more
especially by the guarantee of publicity joined to economy.
With regard to the traffic in public securities, that is an
affair which, as experience has proved, is best left to take
its oavn free course, in which a counteraction to its incon-
veniences will always be found. At the same time, the
State must take care not to create ideal values, or to give,
by unhealthy incitements, like lotteries, such an undue en-
couragement to dealings in paper as would make the trans-
action degenerate into agiotage.
ACE IN THE COURSE OF CERTAIN FUNDS SINCE
RY, 1828.

liques, the Russian Inscriptions were, in 1825 and
1826, at least 10 per cent. lower, and about 7 per
cent. in the greater part of the s ear 1827. In the
period between January, 1828, and April of the pre-
VIEW OF THE CHANGE WHICH HAS TAKEN FL
JANUA

Rise.
26 Date. Price. Date,. Price.
1
---- -,----
5 per Cent. Anglo-Prussian Obligations, 1818... Berlin . ..... .., 3 Jan., 1828 99% ....
Oct., 1829 104% 4.88 perceni
3 per Cent. English Consols (London - 84 20 - 89%* 6.54 -
4 per Cent. Bavarian Obligations Augsburg; 3 - 9414 20 - 10014 6.63 -
5 per Cent. French Rentes Paris 2 - 10014 • 20 - 108 3-200 '7.88 -..
4 per Cent. Prussian National Debt Certificates Berlin 3 - 87 26 - 98 5-6 13,69
21 per Cent. Dutch Stock 'Amsterdam... 1 - 52 24 - 10 14.29 --..
5 per Cent. Austrian Metalliques Vienna 2 - 88 13-16 21 -.., lON 16.25 -
3 per Cent. Russian Inscriptions in Hamburg*
Certificates - 102!,4 18.40 -
4 per Cent. Polish Pawn Certificates Berlin „„ 3 .... 79% 24 - 91% 18.64 -
5 per Cent. Neapolitan Stock Paris 2 - '74 20 - 88. 18.92 -
3 per Cent. French Rentes Paris 2 - 67 1-5 20 - 81 13-20• 21.50 -
3 per Cent. Anglo-Danish Obligations Hamburg 4 - 56% 24 - 69 15-16 13.24 -
• After deduction of the interest includad in the price. . .
VIEW OF THE PRESENT STATE OF THE COURSE OF CERTAIN FUNDS IN BES,PECT TO THEIR PAR,
CALCULATED ON THE BASIS OF 4 rEP, CENT. INTEREST.
Par. I Calculated at I Price. I Under par. Over par.
A. 5 PER CENT. REDEEMABLE FUNDS. I Per Celit. Per Cent.
French Rentes
.
Bavarian Oligations 123 'Augsburg
.1.,v. 10311 17.20
Austrian Metalliques
Dutch Russian Obligations
Anglo-Prussian Obligations, 1818
Igedin gltix-dolars per £ sterliug. 104% 19.19
B. 4,3, 2% PER CENTS. AND UNREDSEM-
ABLE FUNDS.
1E100?34.413,20 .. itl'37
3 per Cent. English Consols .., '7s 'London
3 per Cent. French Rentes -
.. .
4 per Cent. Bavarian Obligations lOO Augsburg
4 per Cent. Prussian National Debt Certif. 100 Berlin ..„., ~.
. . u,,,08 5-6 1.17
2% per Cent. Dutch Obligations
9 per Cent. Anglo-Danlsh Obligations 75 Hamburg... 14 Marks Banco per £ sterl. 69 15-16 6.75
4 per Cent. Austrian Metalliques
5 per Cent. Russian Inscriptions in English 132
Certificates
, 5 per Cent. Russian Inscriptions in Ham ..
I-., 102!i 20.06
burg Certificates
Last rate pay- Par on Nov. 1.
C. LOAN SHARES. able.
Hesse Darmstadt Partial Obligations
Austrian 100 Guilder Shares 'June 1, 1810 1( 0 38-100 florins in 20 guilders :: 174% B.9ti
Baden Partial Obligations 'March 1, 1844 72 1-10 florins in 24 guilders ...... 18 8.32
Austrian Obligations "'(Jan. 1, 1848 318 3-4 florins in 24 guilders 33ln 3.95
1 lolish Obligations .,,,!May 15, 1854, 3<4 2-3 Polish guilders
2.25