These stocks stand as high in the estimation of the public as the British Government Funds. They consist of loans raised in this country for the use of the Indian Government and are two in number, bearing interest respectively at the rate of 3 and 3 1/2 per cent.
There is also what is termed a Rupee Paper Loan, raised in India at 3 1/2 per cent. per annum. The interest is paid in the currency of the coun- try, which is the rupee, and that coin being worth only a little more than half its nominal value in this country, the investor in this stock would receive in the shape of interest little more than half the £3 10s. a year. The price of the stock in the market is consequently in the same proportion, and at the present moment is about £62 for every £100 stock.
CHAPTER VII. LOANS TO CORPORATIONS AND COUNTIES OF THE UNITED KINGDOM.
THESE are loans raised by boroughs and coun- ties, and other authorities in this country, for local purposes, upon the security of the rates or other assured income. Before the money is borrowed the consent of the Local Government Board is necessary to make the loan legal, and evidence is required that the resources of the borrowers are ample to meet their obligations.
On most of these stocks the rate of interest is 3 per cent., though there are some few at 3 1/2 per cent. The principal is redeemable at fixed dates, or by a sinking fund, that is, by setting aside so much a year to pay off the loan at a fixed time, or as opportunity offers. For instance, in times when money is scarce or dear there is a proba- bility of these stocks falling below their par value, and the Sinking Fund is then used to buy the stock in the market. Thus the Corporation may be able in effect to pay off a loan of £100 for £90 or £95, whatever the price may be, and so gain the amount of the difference.
Investments in securities of this kind may be considered absolutely safe, although certainly there is the contingent risk of a town, after bor- rowing up to its full powers, drifting into decay from the loss of its staple trade, and so finding itself unable to meet its obligations. The in- vestor should, however, find no difficulty in discovering where such a contingency would be possible.
The interest on these loans is usually sent direct to the stock-holders, by means of an order on a bank.
COLONIAL GOVERNMENT SECURITIES.
Loans made to the various Colonies of Great Britain have always been a favourite mode of investing money, as they command a better rate of interest, at least they have done so in the past, although the confidence which the Colonies have succeeded in inspiring now enables them to borrow money at a low rate of interest. At the same time the old stocks have advanced to a very considerable premium.
Experience has shown that, so far, the invest- ment has been a safe one, although great fluc- tuations have from time to time taken place in the value of some of the stocks, owing to a check in prosperity, depression of trade, or diminished confidence in the stability of the Colony from various causes. These transient clouds have, however, in time, passed away, and confidence has again been established.