THE FUNDS.
"What are the Funds?" The writer has been asked this question over and over again, though it seems scarcely credible that, in these days, any person of ordinary intelligence should be ignorant of the meaning of the term. Unfor- tunately these things are not usually taught in our schools.
"The Funds," generally speaking, is the term applied to the National Debt of Great Britain, the money borrowed by the Government from the people, chiefly for the purpose of carrying on the great wars at the beginning of the present century. For these loans as much as 5 per cent. has in former years been paid, but at present 2 3/4 is the rate payable on the great bulk of the debt.
The year after the Battle of Waterloo the National Debt amounted to nine hundred mil- lions of money; at the present time it amounts to about five hundred and seventy millions, and is steadily diminishing. This being the case, there is of course no need of further borrowing at present, but the loans outstanding - any por- tion of them - may be bought and sold in the market; that is, any lender may transfer all or any part of his loan to some other person, and as there are, daily, hundreds and thousands of individuals wanting to buy or to sell, there is no difficulty whatever, through the medium of the Stock Exchange, in arranging so that a person can obtain, or dispose of, the exact amount of stock he desires.
The chief method by which the National
Debt is reduced is described under the head of
Terminable Annuities.
STOCKS AND SHARES.
The stock of an institution or company is a fixed sum forming the capital upon which the concern is carried on, or it is the fixed sum bor- rowed for certain purposes. Any quantity of stock may be purchased, but shares, which represent the capital of a company, can only be purchased in whole numbers.
The nominal or face value of stocks and shares by no means necessarily represents their market value; in fact it is the exception that they should do so. The market price is con- tinually fluctuating. Thus, if the price of a given stock is quoted in the lists and news- papers at 110, it means that for every £100 of such stock £10 additional has to be paid, and the stock is said to be at 10 premium. If, on the other hand, it is quoted at 90, it means that £100 of such stock can be purchased for £90, and the stock is said to stand at a discount of 10. The interest in either case is of course calculated on the face value, that is, £100.
This applies to all kinds of stock on the same principle, the prices varying according to the esteem in which they are held, or, in other words, the credit they have with the moneyed world.
The shares of companies, which are only purchasable in whole numbers, are of various denominations, or face values; and again these face values by no means represent the market value. Shares of £5 each (nominal value) may be quoted as selling at 6, which would be 1 pre- mium, but the dividend or interest would be calculated on £5. On the other hand, a £5 share quoted at 4 would be 1 discount, but the dividend or interest would still be calculated on the face value of £5.