Star.
London, England, 1830-05-06 00:00:00

uetj

No. 13,467. THURSDAY EVENING, 11 AY 6, 1830.

THE FOUR PER CENT. QUESTION.

From the Circular to Bankers.

It. is extremely difficult to exhibit, by any series of figures, all the
involved and complicated considerations connected with the Public
Funds. It is this difficulty which gave to Mr. Musket (an officer
in the King's Mint,) a great advantage, in constructing his Tables,
and making his calculations; because he had access to materials
and evidence to which men not in office cannot have habitual re-
morse. Fortunately, however, the activity of Mr. flume, and the
spirit of inquiry awakened amongst other members, have caused re.
turns to be made to Parliament, which arc exceedingly useful and
instructive. FrUtri'auek documents, we fresent to our Subeatees
the following calculations, which will render manifest the partiality
and injustice of the measure of reducing the dividend paid on the
New Four per Cents. and, we think, will exhibit, altogether, a view
of the operations respecting the Public Funds, which, we humbly
believe, can never have been deliberately taken by his Majesty's
Ministers :

According to the resolutions relating to the National Debt and
the operations of the Sinking Fund, which we adverted to in our
" Circular" of the 19th of March last, as having been drawn up by
Mr. Marshall, the statistician, and submitted to the consideration of
Parliament by Mr. Hume, on the 25th of July, 1822, it appears,
that, in the twenty-nine years, 1793-1821, £579,791,388 net money,
were raised by loans and funding Navy and Exchequer Bills. And
that, for this amount of money, the following amounts of .nominal
capitals were created :
viz .0708,750,353 of 3 per Cents.
49,982,119 of 4 "
120,567,471 of 5 "

Total Capita1c...J:879,289,9435t an annual charge
of M9,289,668
To this add, annuities for 25 years from 1797 230,000
And others terminable in 1880 654,095

Makings total annual charge of.. £30,174,363
Reducing the terminable into a perpetual annuity, at the average
rate at which the perpetual sums were created, it gives an annual
charge in perpetuity, of 30,040,4451 or an average rate of interest
of 51.35. 74d. per annum, on the whole 579,791,3881. net money
I raised.
Of the 120,557,4711. of 5 per Ct. capital created, 20,124,8441.
were created in 1797, at the exorbitant rate of 51. 17s. 4d. per cent.
This was denominated the Loyalty Loan. But that stock was
wholly paid off, prior to the termination of the war; except that,
in 1806, 1,525,46131 of money were received from the holders, for
converting a portion of it into 3 per Cents. and for which amount of
money 5,143,1261. of 3 pet Cent. Stock were created. Of the re.
mainder of the 5 per Cent. Stock, 89,613,0001 were created, exclu-
aively, in that stock, at an average rate of 51. 9s. 3d. per cent ; the
bills funded, and money received, for that amount of capital, having
been 82,001,0711. and the balance was funded, jointly with 3 and
4 per Cents. at rates collectively below 5 per cent. Against this,
there appears to have been upwards of 224,000,0001. of money
funded, exclusively, in 3 per Cents. at an average rate of about
SL 7e. Od. per cent. per annum ; but, to take an extreme case,—for
117,832,0451. net money received, 3 per Cent. Annuities were ere.
sta, to the amount of 6,668,7061. and Long Annuities, terminable
in 1860, of 166,5401. making the annual rate of interest, en this
portion of the sum, not less than 51. 15a. 84d. per cent. Exorbi-
tant as this appears, is favour of the 3 per Cent. Stockholder it by
no means exhibits the extent of his advantage : for we notice, by
the 26th resolution in the paper before refer to, that, during the 29
years in which the 679,791,388 were raised, 270,638,7961. were re-
expended in the purchase of 3 per Cent. Stock; and that the pro-
portion of 3 per Cent. Stock, which 270,838,7961. of money created,
was 466,0410,2621 whilst the amount re-purchased was only
416,903,0001. the difference being equal to a bonus of no less than
38,146,2621. of 3 per Cent. Stock, or an annuity, in perpetuity, of
1,444,3871. Nor Is this all : for we find that, in 1818, 27,272,0001.
of 3 per Cents. were converted into 34 per Cents. on terms equal to
a further bonus of 700,0001. of 3 per Cents. or 21,0001. per annum;
and that, In the seven years, 1822.8, the following amounts have
been paid for 3 and 3i per Cent. Stocks, viz-
-3 per Cent. 31 per Cent.
In 1822 P 3,953,076 for £4,041,907 £802,121
1823 :1,252,619 3,432,6511 540,393
1824 3,598,473 3,627,225 180,226
1825 2,450,770 2,368,510 328,295
1826 1,712,397 1,700,653 417,253
1827 4.727,346 5,163,696 392,085
1828 4,017,566 4,016,164 610,899

£23,712,279 money for £24,350,813 £3,271,275
Total 3 per Cents. £24,350,813
Total Capitals purchased £27,822.088

The equivalent of money received for the above 27,622,0881. of
nominal capital, was 16,116,5831. ; being a difference of no less
than 7,595,6981. paid for the re-purchase, over and above the sum
received ; and, consequently, a further bonus to that amount, to the
holders of 3 per Cent. Stock, since the first reduction flan the
holden of 5 per Cents took place. It should also be remembered,
that, as far as this 7,593,6961. is concerned, a great portion of the
16,116,5831. of money received by the Government for the creation
of the Stock, was so depreciated that it could be exchanged for gold
only by giving 51. 1 Is. Od. per oz. for it ; whilst the whole of the
23,712,2791. has been paid by the Government, in money which
would purchase gold at 31. 17s. 100. per oz. Regarded by the test
of the power to purchase gold, the operation, if measured by that
metal, would shew that 600,000 ounces of gold were paid by the
Government, for less than 300,000 ounces received by the Govern-
ment.

The extraordinary—indeed, the appalling cue of bad e-
ment, which this calculation appears to exhibit for the contempla-
tion of his Majesty's ministers, might be left with this simple state-
ment of figures ; but it would not be complete, unless we chewed,
that, if the Bank of England be not a State Bank, as we are in the
habit of considering it to be, that Corporation, nevertheless, parti-
cipates in some of the advantages which the friends of the Govern-
ment look for, from a confidential intercourse, in business, with the
Chancellors of the Exchequer. Since the first reduction of the 6
per Cents. took place, the Government have borrowed 13,0191,4191.
from the Bank of England, on terms more than equivalent to bor-
rowing money at an interest of 5 per cent. per annum. The trans-
actions are so exceedingly complicated, that it is difficult to state
the terms intelligibly, to persons not familiar with such involved
concerns ; but this is the issue, and this is the extravagant rate of
interest at which the Government have borrowed that sum from the
Bank of England.
Although a large portion of the b per Cents. was created an rats
of 51. 9a. 3d. per Cent, it is probable, that, at the time the fiat re-
duction took place, the then holders were not receiving so much, on
an average, as 3 per Cent. per annum, for the money actually in-
vested ; bemuse the Stock was purchased, in the first instance, by
the Loan Contractors and Jobbers, who retailed it out to persons of
small property with narrow incomes. Such persons compose the
great body of the holders of the present Four per Cent. Stock : and
it does appear to us, that no just and equitable Minister could select
these, and these alone, for the operation of his pruning-knife. At
the least, such a proceeding should not have been undertaken with-
out the most mature consideration, and the most grave and anxious
investigation into the merits of the cue.
The Government take advantage of a low rate of interest of
money, to reduce the dividend of the 4 per Cents. If the market-
rate of interest should, at no distant day, rise to five per cent. the
Government must give the holders of the present 4 per Cents. a dl.
vidend corresponding with that rise ; or what becomes of that im-
mutable principle of justice, which Honourable Members are so
loud in professing to take for their guide ? These unfortunate
holders of stock have not the power to increase their dividends, bow.
ever high the rate of interest may rise. And,aeeosdhg to our view
of the case, this consideration renders the measure such as WA Mi.
nister, if be maturely reflected on his COMO of policy, esoli re.
commend, unless he were forced to It by semi sash uellimt mei
overwhelming necessity. as would compel him is take a pardons sit
the dividends of all fundholders, upon a just and equal Kale are-
duction.

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