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become a popular measure with the lead- forty-nine or ninety-nine years, at the erers of parties in Rome, to pass agrarian piration of which the capital is retained by laws, in order to take away these occupied the state, because the lender bas been sufilands from the rich legal proprietors, and ciently compensated for it by the income confirm them to those, who, like our he has received; or else the payments are squatters, had no other claim to them than continued till the state returns the capital ! mere possession. Accordingly we are (perpetually). In this latter case, hower

. told by writers on this subject, that the er, the state is at liberty to refund the capleading provisions in the agrarian laws ital whenever it is inclined to do so, or to were those which affected the right of retain it forever. The creditor has to possession, and which were, in principle, legal claim, except upon the stipulated like our laws on that subject. From the interest. 2. Life annuities and tontine unequal distribution of property between were another invention to bring capital the nobles and plebeians of Rome, the into the public treasury. The former contest would be proportionably more vi- cure to lenders a certain income during olent than in a state of society like ours. their lives. This income is regulated by The lands naturally fell into the hands of the age of the persons thus advancing the moneyed men, and they were almost their money, being greatest for the mos literally the patricians alone. We have aged. Many prefer this mode of disposhere attempted to illustrate our views of ing of their property, because, with : this subject by an example from only one small capital, they may enjoy a larger inof our states; but similar laws have been come than could be obtained in any other made in other states of the Union. The way. Life annuities have been frequently public lands belonging to the general gov- secured on the life of another person whe ernment of the U. States, and not under had a prospect of long life, and who, beinz the control of any individual state, being generally known, it was unnecessary to situate at a great distance from the main furnish attestations respecting his age body of our population, have not yet, we health, &c. Thus many annuities were believe, been subject to the same embar- formerly taken out in France on the life rassments from conflicting rights, as those of the king and other individuals of eriwhich lie within the jurisdiction of the nence in the state. Any person holding particular states of the Union.

such an annuity was at liberty to transfi Public Stock

is property in a public it to any one else, or to bequeath it. The debt (see Public Debt); and the evidences tines are stipulations by which a company of this property are certificates issued by of shareholders are to receive a certain the state, showing its obligation to its cred- interest from the state (somewhat higher itors. These public stocks now exist in than can be otherwise obtained on gove! almost all Christian states, and are so vari- security) for the whole capital which the ous, that it is a particular study to learn members of the company contribute is their nature, their different value, the de- equal shares; so that, while they all lire. gree of their credit, the mode of buying they enjoy this interest; and, when any and selling them, of raising the interest on die, the whole interest goes to the surthem, &c. The shares in these stocks, in vivors ; so that the longest liver finally remodern times, are generally made trans- ceives the whole interest during his life. ferable, so that they have become an There may, however, be many varieties important article of commerce. Various in these contracts. Perpetual rents

, e methods have been adopted to induce they are called on the continent of Europe, capitalists to lend their money to the state. that is, stocks which the governments

The attraction consists in affording them under no obligation to redeem, have be a prospect of receiving a greater income come the means to which states most it from their money in this way, than could sort, and which have found the most favor be procured by any other safe mode of both from states and people, and, by their investing it, and in facilitating the transfer increase, and the facilities which at of the claims, and exempting from taxes afforded for their transfer, bave acquire the income arising froin the property. 1. great importance. The value of all pulse The first was by means of annuities (q. v.), obligations rests fundamentally on the so called ; that is, compacts in which the fact, that taxation annually produces : state pledges itself to pay the lender a fix- revenue suficient to pay ibe stipukke' ed sum for his capital annually, which he amounts punctually, and ihat the goveri could obtain in no other way with equal ment has a love of justice, and prudens, ease and convenience. These payments and skill in the administration, which 12 are either confined to a certain period, as prompt it to regular payment at the app:iied time: thus all national debts are de- security. For although a regular portion pendent on the wealth and income of the of the national revenue is appropriated to people. It would be very difficult to as- the payment of the former, yet the interest sign the amount of these stocks, in Europe of the latter is equally secure; and they alone, with any degree of accuracy. In are changed into funded debts whenever the German Hermes, the interest which the state finds it impolitic to discharge Europe bas to pay every year to its cred- them in the common way, and the credititors is stated at 750,000,000 marks banco, ors concur in the alteration. For the or about 258,000,000 dollars. Suppose, gradual reduction of the funded debts, a now, the rate of interest to be, on an ave- sinking fund was established, designed to rage, five per cent.; then we shall have diminish the debt by repurchasing the more than 5,160,000,000 of dollars embark- shares at their current price—a method ed in these speculations. If we fix it at which has been adopted by many Eurothree per cent., the amount paid on the pean states. It has been lately disconnominal capital of the public debt in Eng. tinued. (See Sinking Fund.) In England, the sum would be still greater. As land, it has served, from the beginning, to the traffic in these obligations is so impor- keep up the credit of stocks, as it has tant, and they often pass through numer- maintained a constant demand for them ous hands, and every commodity in circu- in the market; and this it has done the lation employs a quantity of the common more effectually in proportion to its means of exchange proportioned to its amount; for, in case the stocks should value, it is not too much to assume that, fall too low, the price may be raised again under common circumstances, from 40 tó by extinguishing a part of the debt. This 60,000,000 dollars in specie are requisite effect of the sinking fund, in facilitating to maintain the yearly traffic.

the sale of the public stocks, greatly conI. English Stocks. England has a tributes to recommend them. For capigreater public debt than any other na- talists feel it extremely convenient to hold tion. (See Great Britain, and the table certificates of stock, which not only yield in Europe, also given, in the early copies, a regular interest, but may, at any moafter index to vol. v.) But the resources of ment, be turned into money without loss, that country are so great, and the punctu- and perhaps with profit. The history of ality v'ith which its obligations are dis-, the origin of the various debts of England, charged so unfailing, and the moneyed men their conditions, the measures adopted for in the country so numerous, that its stocks the payment of interest, or the repayment are the most in demand. The national of the capitals, or the sinking them by redebt of England consists chiefly in stocks purchase, may be found in Grellier's Hisredeemable at the pleasure of the govern- tory of National Debt, and in Hamilton's ment

. They are variously designated, work on the same subject. A concise pertly according to the rate of interest view of the same has been presented by which the government engages to pay; as Bernard Cohen in his Compendium of five, four and three per cent. stock; and Finance (London, 1822). Although a partly from the financial operations to large amount of the English stocks always which they have been subjected: thus the remains stationary in the hands of companame of reduced funds is given to those on nies, public institutions, and many private which the interest has been reduced, in persons who retain them as the safest consequence of the option which the gov- source of income, still a large proportion eriment has offered to the public credit- are bought and sold every day, and they ors to receive back their capital, or to take are a very important article of traffic in a lower rate of interest.Consolidated an- England. As the three per cent. stock mulies is a name derived from an opera- is the most in the market, the price in the tion of the government, commenced in public papers relates to this, if the kind 1751, when an act of parliament was of stock be not particularly designated. passed, by which the various loans, for the Moreover, it regulates the price of the repayment of which particular funds bad three and a half, four, five and six per cent. been assigned, were united, and all the stocks, which vary proportionally with it. fuuds, including the sinking fund, consol- Those public obligations which entitle the idated into one. These various names holder to payment of the capital at a time couvey no idea of important differences to designated, or to an equal amount in the the owners and purchasers of English public stocks, as exchequer bills, navy bills, stocks. Even the distinction between &c., naturally bring a price proportionally funded and unfunded debts is connected higher. The best standard of the credit with no difference in the degree of their of the public stocks is the rent of land.

35

VOL. X.

At present, land in England is generally £45,000,000 sterling, both reckoned &sold at thirty-six years purchase in times cording to their nominal capital. But the of peace, and at thirty years purchase in relative amounts are now wholly changed time of war; that is, capital invested in The nominal capital of the national dele landed property yields iwo and seven- of England was, in 1823, about thirteer ninths per cent in time of peace, and three and two thirds that of France. Frane and one third per cent. in time of war. reckons its debt, however, not according Within the last thirty years, the three per to the amount of the capital borrowed, bu cent. stocks have been worth from fifty- only according to the annual amount eight to eighty-two per cent.; so that the money to be paid, which gives a juster stocks, at the highest rate during this peri- idea of its extent, both kingdoms havir: od, have yielded but about the amount of discharged themselves from the obligatio" land rents in time of war; for a man, who to pay back the capital, and being bounc purchases three per cent stocks at eighty- to pay merely the interest. England, it two per cent., receives but about three and fact, pays annually to its creditors abou: a half per cent., on his capital. In buying three and a half times what France pays stocks in England, the purchaser does not The nominal amount of the debts of the receive any certificate; but his name is two states will be found in the table of merely registered in the great national European states, after index to vol. 1. debt books, together with all his character- This is not the place to inquire wbeth* istic designations. If he ever sells the such a difference makes the condition whole, or a part of it, this is transferred England more unhappy than that di from his name to that of the purchaser. France. We will only remark, that the mEvery proprietor can, indeed, have a cer- tional wealth of England during that per tificate of what is due to him in the nation- od has increased in a much greater ra3 al debt books; but, in the stock-market, than the wealth of France, and the En: this certificate is not considered of value, lish stocks have always borne a highe and a person may sell and transfer his price than the French; for, while the property in the funds without being asked French five per cent. stocks are wor. for it. "Every stockholder must receive but ninety-seven per cent., the English ar his interest, or make his entry and transfer commonly worth 145. If we carefui of stock himself, or by a representative examine the bistory of the national de regularly authorized. It would be impos- of France, we cannot help wondering heru sible to conceive, how the book-keepers the French stocks stand so high could be convinced, that the multitude of they do. Immediately upon the death o claimants, who appear before them, are Louis XIV, the regent reduced the bythe true proprietors, if it were not known rowed capital and the interest arbitran that the greatest part of the business, both and without consulting the creditors, a the transfer of capital and the receipt of third ; and both debt and interest still oneinterest, is negotiated by stock-brokers, tinued to be paid as irregularly as ev: who are well known to the book-keepers; In this state of things, Law (q. v.), a Scotia and cases of imposition are, in fact, very projector, promised to cancel the pote: uncommon. Moreover, the direction of debt with paper. But this project emte: all the traffic in stocks is committed to the rassed the finances of the kingdom Inar bank of England. The registry books are than ever. Various measures were takra! arranged alphabetically, and distributed each more fallacious than the precedi: into several chambers, which are marked to improve the state of the treasury, 2 with the initial letters and syllables of the to diminish the national debt. They we books they contain. Thus every one can designed to quiet the clamors of the preeasily find the place of the book which lic creditors, without giving them ga contains his account. The payment of thing but the consolation that they slá. the dividends, which occurs at an appoint- not lose the whole of their demanes ed day, semi-annually, to the amount of The revolution for a long time put an e inore than 68,000,000 dollars every time, to all claims, and almost wholly destu is completed in fourteen days.

ed the value of the stocks; so that, wb II. French Rentes and public Certificates. Bonaparte was in Egypt, a rente of 6. The national debt of France was formerly francs might be purchased for ten, fi far greater than that of England. After and even three francs. In 1798, a the death of Louis XIV, it was estimated disposition was made of the publie er at 3,111,000,000 livres (about 550,000,000 All the claims of the emigrants were se dollars), when England had a debt of only celled; two thirds were struck off fr about one third of this amount, namely, the remainder of the debt; and the us

which was left was changed into five per value of 12,000 francs, paying yearly sixty cent. annuities,called tiers consolidés, which francs at least. If the profits do not yield compose a large part of the present stocks. this amount in any particular year, it is They amounted, in 1798, to 302,000 francs made up from the reserved fund. These a year. Since that period, numerous ad- stocks are transferable. In 1822, they were ditions have been made to the debt by sub- twenty-five per cent. above their nominal sequent loans, so that, in 1822, 178,364,560 value. 3. The obligations of the city of francs were annually required for the dis- Paris. The city of Paris was authorized, charge of the perpetual and funded rentes. in 1816, to create stock to the amount of But there are many unfunded rentes to be 1,500,000 francs, to defray the expenses of paid besides ; and the sinking fund con- the city. The sale was but small during that sumes 40,000,600 francs every year. In troubled period, and the city was therefore 1822, therefore, the whole amount of the afterwards empowered to issue 33,000 cerannual rentes was 228,864,560 francs, exclu- tificates, worth 1000 francs each, and pay- , sive of four millions newly created for the able to the holder, to be discharged within Spanish war. During the last war, the twelve years, ending July 1, 1829. These rentes were again paid irregularly, and the certificates bear an interest of six per cent. arrears accumulated. These and other a year, to be paid quarterly. 4. Another debts, which were contracted in the course kind of paper often found in the market of the war, were paid in obligations bear- consists of actions des ponts. They are ing five per cent. interest, and to be dis- issued by a company which has built three charged at their full nominal value, within bridges over the Seine, and comprise 3780 five years from 1821. These obligations shares, at 1000 francs each. The dividends are called reconnaissances de liquidation, are fixed, every year, at a meeting of the and are likewise transferable. The nominal proprietors. The amount is regulated by amount of those remaining due in 1828, was ihe income of the bridges, which is all diabout 300 million francs. At present, France vided among the shareholders, except seems to be very punctual in the payment one thirtieth. This thirtieth is distributed of its rentes ; and therefore the French into three parts, of which one goes to the stocks, of late years, have brought a high support of the bridges, and the others price, and did so, in fact, even during the form a capital to pay off the stocks, June reign of Napoleon. The economical regu- 30, 1897. Besides, there is a multitude of lations for liquidating claims for the pay, shares of insurance companies. 5. There ment of interest and principal are a good is also in Paris a caisse des depôts et consigimitation of the measures of England, so nations, where money, in coin or notes, is far as relates to the funded five per cent. taken by the bank of France, and three rentes. They are all registered together in per cent. interest paid upon it, commenthe grand livre des dettes publiques, after the cing after it has been in the treasury thirty manner of the books of the bank of Eng- days. The money deposited inay be takland. Each stockholder has a distinct en out at any time by restoring the receipt. leaf for every rente he possesses. The III. Austrian Stocks. Austria has long dividends of the five per cent. annuities had a large debt, and, till the French revare paid twice a year, March 22 and Sepolution broke out, punctually fulfilled its tember 22. The amount paid is stamped obligations to its creditors. But, during on the back of the certificate, and the the war of the French revolution, its owner of it gives a receipt. The divi- finances fell into great disorder; and varideods can be paid not merely in Paris, but ous measures, adopted to remedy the evil, likewise in the provincial towns. Owners did not contribute to the public credit. who cannot receive their dividends person- Among these was the immense increase ally, and are unwilling to let their certifi- of paper money since 1797 ; for, till that cates go out of their hands, appoint a time, the bank paper of Vienna, which, special attorney to receive what is due, for a long period, was the common mediwho is furnished with a certified copy of um of exchange, remained about on a par the original certificate. Besides the con- with specie, it being exchangeable, at any solidated five per cent. inscriptions, there time, for silver, on presentment. But, this are other stocks in France, of various year, the payment of specie was limited, kinds, with which an important traffic is and, the year following, stopped entirely; carried on, and which are subject to differ- and the paper money so increased, that it ent regulations. They include, 1. the be- soon fell rapidly below the value of silver. fore-inentioned reconnaissances de liquida- The means resorted to as an antidote for tion. 2. Bank stocks. The shares in the the consequent embarrassment were inefbank of France are 90,000, each of the fectual. One of the most remarkable was

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adopted in 1798. It was a forced loan, by 'in certificates, bearing an interest of fifty which the holders of public stocks were guilders in convention money, and 2000 compelled to add thirty per cent to what guilders in new bank notes, which he they had already paid, on pain of losing might exchange for convention money at the whole; in consideration of which they the bank, on demand. But the pressure to were to receive five per cent. instead of procure specie in exchange for the bank four. As the loan was all made in conven- notes thus obtained was so great that the tion money, it was understood that the in- supplies and resources of the bank would terest should be paid in the same. But have soon been exhausted, so that the this was extremely difficult for the state, whole system was abandoned a short time on account of the continual depreciation after it was established. Several millions in the value of the paper currency; and, of one per cent certificates were created finally, it seemed to be impossible, when by this operation, and some of them are an attempt, made in 1802, to recruit its de- still in circulation. Bank shares, at 500 clining strength by lottery loans and other guilders convention money, might be obmeasures, failed. In 1811, therefore, the tained for 2000 guilders in paper money interest was reduced to half; and, in order and 200 in convention money. The pato make this half still smaller, the existing per money thus obtained was to be depaper money was changed for redemption stroyed. Both measures, however, only notes, so called, a note of one guilder be- partially effected the desired object, and ing paid for five old paper guilders. It they were soon abandoned. October 2, was hoped that these certificates would be therefore, of that year, a measure was esteemed as valuable as specie. Hence brought forward founded on juster views. the reduced interest was to be paid in this This gave rise to the metalliques, so called. new paper, and not, as before, in coined A voluntary loan was opened, and the demoney. But these notes never fulfilled posits were received partly in public certhe design for which they were created; tificates bearing interest and partly in paand a large amount of new paper, under per money. For an old Austrian certifithe name of anticipation certificates, was cate of 100 guilders, and the additional put in circulation, about equal in amount sum of 80, 100, 110, 120, 130 guilders in to that which the redemption notes had redemption or anticipation notes, accordbeen intended to supersede, so that, in a ing as the old certificate yielded six, five, short time, both kinds of paper sunk as four and a half, four, three and a half, or low as the old bank notes. In this way, three per cent. interest, a new state obliguthe early creditors of the state lost a large tion was giveu of 100 guilders, bearing inpart of their interest and capital. In 1816, terest at five per cent., both payable in the finances of Austria were put under specie. A sufficient fund was, at the better management. The new adminis- same time, provided for the punctual distration devoted their chief attention to charge of the interest, and for the gradual two objects :— First, to raising the value extinction of the capital by repurchase. of the paper money, and, as far as possi- This gave assurance to the proprietors of ble, abolishing it; and next to fixing the these certificates that they might sell them, public credit on a new basis, by restoring with scarcely any loss, whenever so into the old claims a portion of their rights, clined. These metalliques, therefore, soon and by negotiating new loans on a more obtained extensive credit

, and so confirmfirm and solid basis. In 1816, a new bank ed the financial strength of the governwas furnished with funds in specie, and ment, that it boldly resolved to establish empowered to issue new notes, which the public credit on a broader basis. By a were to be paid to the holders on demand patent of Jan. 22, 1817,the sinking fund was in silver money. This bank, to which organized after the example of the sinking was intrusted the whole business of fund of England,and all the funds were unitamending the currency and public credit, ed in one for the payment of all public debts; commenced its task by giving notice, June and, by a regulation of March 21, 1818, 1, that any person might bring in any sum the whole system of debt was reduced to in the old paper money, and receive for it such order that the proprietors of the old cerfive sevenths in new certificates, bearing tificates began to be encouraged that their one per cent. interest in convention money, rights would be restored; and this hope and iwo sevenths in new bank notes, which gave the obligations once more a limited every one might exchange at the bank for circulation. The capital of the old debut, their value in convention money. Thus a of which the interest was reduced to halt proprietor, who deposited 7000 guilders in in 1811, was divided into sections, each paper money, received for it 5000 guilders of one million guilders. Five of these

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