Let it, however, be supposed to advance its price only to 102l. when the 3 per cents. are at 78; that is, when the ratio of the rates of interest required the price to be at 104. In these circumstances, 4.850,000l. of the five millions would have been advanced for an equal capital carrying 194,000l. interest at 4 per cent.; and the remaining 150,000l. would have been advanced for the lottery: And thus the whole expence of the short annuity, and 150,000l. capital, would have been saved.—And had the same sum been obtained by selling a 3 per cent. capital, the amount of interest, though the least possible, would not have been much less;[148] but, at redemption, there would have been a necessity of paying above a MILLION AND A QUARTER for which no value had been received.—When such advantages, uncompensated by any loss, can be obtained by so easy and simple a regulation as only changing the ORDER of paying the public debts,[149] what possible reason can there be against adopting it?
There is another method by which the value of any stocks bearing high interest might be raised, which would probably be no less effectual; I mean, by ordering that no part of such stocks shall be redeemed, without at the same time redeeming an equal, or any larger sum, in other capitals. This is the regulation proposed in the section on public loans, ([page 98]); and it will not be amiss here to give an illustration of it, by supposing, that EIGHT MILLIONS will be wanted for the necessary supplies of this year; and that this sum will be procured by selling, as was done in the last loan, a capital equal to the sum advanced, bearing 4 per cent. interest. Were the interest in this case made irreducible, and the capital incapable of being redeemed without at the same time redeeming four times as much of the 3 per ct. or some other stocks, an increase of value would be communicated to it which would render all Douceurs unnecessary. For it would be a capital, the redemption of which could not be completed without discharging in all FORTY[150] MILLIONS of the public debts.—I cannot doubt but that, in these circumstances (supposing the price of the 3 per cents. to continue near 78) a 100l. in money would be given for 100l. in such a stock, and the whole extravagant expence of short annuities, lotteries, and artificial capitals would be saved.
In short. With the aid of such regulations as those now proposed, EIGHT MILLIONS might this year be borrowed (supposing the 3 per cents. not lower than 78 or 77) probably at an interest of 4 per cent., but certainly at an interest an EIGHTH or a QUARTER higher, without offering any premiums. Whereas, if no such regulations are established, either an artificial debt of near[151] two millions and a half must be created; or 5 per cent. for 15 or 20 years certain, together with the profits of a lottery, must be given; and a new tax laid which will produce 400,000l. per ann.
It may deserve to be added, that an unprosperous state of public affairs, and apprehensions of public danger, would have a tendency, by placing the redemption of our debts at a greater distance, to promote, rather than obstruct the success of schemes attended with such regulations.
There remains one proposal more on this subject which I wish may be attended to.
I have observed, that our reductions of interest have been the effect of too narrow a policy. It seems to me, that one of the best measures that could now be adopted, would be to undo what we have done in this instance, by restoring the 3 per cent. capitals to a higher interest, and making this restoration, one of the means of raising the necessary supplies. That this is practicable, and that it would be advantageous, will appear from the following scheme, and observations.
For 20l. in money, let 110l. stock bearing 3½ per cent. interest, be offered, in exchange for every 100l. of the 3 per cent. stocks; and let the new 3½ per cent. flock be capable of being redeemed at any time, but never under par, unless when the price of the 3 per cents. happens to be below 85l.—By this scheme the public would procure 20l. from the conversion of every 100l. 3 per cent. stock into 110l. stock carrying 3½ per cent.; or FIVE MILLIONS from the conversion of TWENTY-FIVE MILLIONS. The new additional capital would be only TWO MILLIONS AND A HALF, (or 10 per cent. of the old capital); and the additional interest would be 17s. (that is, a half per cent. added to 7s. the interest of 10l. at 3½ per cent.) for every 20l. advanced; or 4¼ per cent. for the whole loan.
That such a scheme would afford ample encouragement to subscriptions, supposing the 3 per cents. at or near 78, will appear from considering, that the interest offered is above a quarter per cent. more than could be made by purchasing any perpetual annuities, and at the same time, in consequence of forming a part of the interest of a THREE AND A HALF per cent. capital, is incapable of reduction, and therefore nearly on an equal footing with the interest of any 3 per cent. capital.—But to be a little more explicit.