The safest investment for all who are nervous about losing their money is in the Government Stock—as it is called—of our own country. They thus become creditors of the British nation, than whom no people can be imagined more secure.
What is known as the funded or permanent debt of Great Britain represents debt which the Government is under no obligation to pay off at any fixed time. It includes at present loans distinguished as Consols, Reduced Three per Cents., New Three per Cents., Two and a Half and Two and Three-quarters per Cents., and some other stocks of less consequence. “Consols,” we may add, is an affectionate abbreviation of “Consolidated Three per Cent. Annuities.” This permanent debt at the present time amounts to nearly six hundred and forty millions; the unfunded debt and terminable annuities—the latter being sums paid for a certain number of years and then terminating altogether—amount to over a hundred millions more. It is melancholy to reflect that almost the whole of the large sum represented by those different items has been raised for the prosecution of war, and spent in supplying food for powder, spreading misery and destruction, and making widows and orphans.
The possessors of Government Stock—that is to say, the creditors who hold this debt between them—are changing every day and hour. People can sell their stock with the greatest readiness, and there are always plenty of buyers.
The price which national stock fetches is not always the same. It improves when the prospects of the country improve, and declines in times of difficulty and danger. In the year 1800 war and dear corn, not to speak of other things, made the national bond for £100 sell for only £61, but since then peace, improved prospects, and no lack of money seeking investment, have forced the price up. The average market value of £100 Consols in 1881 was just £100; in 1882 it was £100 10s.; in 1883, £101 3s. 9d.; in 1884, £101; and in 1885 it fell back to £99 2s. 6d.
There are two ways of purchasing Government Stock—to any amount through a stockbroker, and to a limited amount through the Post Office. In the former case you may either write to your banker, who will employ his broker, or you can give the order to your own broker. The commission charged by brokers either for buying or selling is very moderate. For transactions in either British or foreign funds the rate is usually 2s. 6d. for every £100 of stock.
To get payment of dividends on Government Stock you may either go yourself to the Bank of England or sign what is called a power of attorney for your banker or broker or someone you can trust to receive the dividends for you. “In order to protect you from fraud,” says the author of a “Guide to the Unprotected,” “the power of attorney should be made out for dividends only. That is to say, it should authorise the person who is to act on your behalf only to receive dividends and not to sell the stock.” After a power of attorney has been obtained no new power for dividends is requisite by reason of your increasing or lessening the amount of your holding in the same description of stock. Besides payment personally at the Bank of England, stockholders can have their dividends transmitted by post at their own risk, and under certain regulations.
In selling stock you can manage the transaction, just as you effected the purchase, either through your banker or your own broker.
We mentioned that Government Stock to a limited amount could be bought through the Post Office. When this is done the Post Office relieves you of all trouble in purchasing and in collecting dividends. The amount invested must not be less than £10, and not more than £100 of stock can be credited to an account in any one year ending the 31st of December, and when you have bought through the Post Office £300 of stock in all you can invest no more in this way, but must go to a regular broker.
Suppose you wish through the Post Office to buy £50 worth of “Consols,” you fill up a form of application to be had at any post office, and hand over the necessary amount to the postmaster. Of course the latter part of the performance will be unnecessary if you have the sum already lying at your credit in the Savings Bank. You then forward the form of application, together with your deposit book, to the head office.
In a few days your book will be returned and you will find yourself debited with the cost of the stock at the market price. Suppose “Consols” are selling at £102, then your fifty pounds worth will cost you a half of that, and there will be an entry in your book as a “withdrawal” of “Investment £50 Consols, £51,” and besides that will be entered “Commission, 1s. 3d.”