[141] Ten payments of 9,650l. and seventeen payments of 34,375l. make 680,875l.
[142] It may be worth observing, that during this whole war they never fell below 82, except for a few months during the rebellion in 1745; that after the Peace in 1748 they rose to 105, and in the succeeding war never fell so low as they are now, except in the two last years; that after the Peace in 1763 it was expected they would again rise above par; but that, instead of this, they have in general during the whole peace kept 12 or 13 per cent. below par, and 15 or 16 per cent. below the price they bore before the two last wars.—One of the reasons of the great alteration which has taken place since the last war is, I think, pointed out in the 3d Section of the 3d Part of this Tract.
[143] Since the reduction in 1749 there has been no FOUR per cent. capital created except that of the last year.
[144] What is here said has been verified, in the particular instance of a million and a half borrowed in 1756, which was to carry 3½ per cent. interest till 1771, and then to become redeemable.—During the last war, and for about three years after the commencement of peace, there was a general expectation that the THREE per cents. would rise above par as they had done in the former peace; and while this expectation continued, this stock reckoned no better than a THREE per cent. stock with a short annuity of a half per cent. annexed; and for this reason it bore, during that period, a lower price than another stock of 4 millions and a half which was to bear the same interest till 1782, and then to become redeemable, and to sink to an interest of 3 per cent.—In the latter end of 1767 and beginning of 1768 the price of the former stock rose above that of the latter, and continued not far from par from that time to the time of its redemption in 1771. The reason must have been, that being a small stock bearing a higher interest than the other stocks, it was expected, that it would be paid off at par, and therefore with a considerable profit, as soon as it became redeemable; which accordingly happened. See Postscript, ([page 177]).
[145] Nothing has been more undervalued in the Alley than Annuities on lives. They have been always granted, very unreasonably, without any limitation of age; and their value has been taken at no more than 12 or 13 years purchase; tho’ really worth one with another 16 or 17 years purchase. This is a strong reason for preferring short annuities to them in all schemes for raising money. Short annuities for 21 years will be taken for as much as life-annuities; and yet experience has proved that in this time not a quarter of the life-annuities will drop; and the whole expence brought by them on the public will not be removed in less than 70 or 80 years. See Note 15, ([Page 134]).
[146] I would except here the first reduction in 1717. This was then necessary to gain a fund for sinking the public debts; and had the fund thus gained been applied, as the laws required, invariably to this purpose, and all farther reductions been avoided, we should now have been burthened with no debts.
[147] That is; never capable of being redeemed by substituting one debt for another; or of being saved from redemption by accepting lower interest.
[148] Supposing the 3 per cents. sold at 76½, the capital necessary to produce 4.850,000l. in money would be 6.339,869l. the interest of which at 3 per cent. is 190,195l.
[149] When the amount of interest, payable for a sum obtained by selling a 4 per cent. capital, is the same with the amount of interest, payable for an equal sum obtained by selling a 3 per cent. capital, which is nearly the present case, postponing, in the manner I have proposed, the redemption of the former, becomes as indifferent as it would be to postpone in the same manner the redemption of any 3 per cents.
[150] In this case only a FIFTH of the surplus to be at any time employed in redeeming debts could be applied to the redemption of this particular loan. The rest after nine years might be employed in redeeming the 4 per cent. stock created last year; or jointly with it, such parts of future loans bearing high interest, as, in borrowing on the same plan, might be left redeemable. And thus no obligation would arise from this mode of borrowing to prefer the redemption of 3 per cents. to the redemption of capitals bearing higher interest. In particular; had this been the plan of borrowing through the last war, all surplus monies might have been ever since employed intirely in paying off 4, 4½ and 5 per cent. capitals preferably to any others; and at the same time, no douceurs would have been granted in order to procure the loans, no artificial debt contracted, or extraordinary charge incurred.