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expression is perhaps the more correct of the two, provided the word fund be applied, not to the securities themselves, but to the taxes or revenue out of which the interest of these securities is paid. It was formerly the practice with government, in negotiating a loan, to set apart certain taxes for the payment of the interest of that loan; and the taxes thus set apart were considered as a separate fund, distinguished by a particular name according to the rate of interest, and the particular purpose for which that loan had been raised. As the loans were multiplied, however, the number of funds necessarily created confusion; and to remedy this, a great proportion of those bearing the same interest were consolidated or thrown into one general fund. Hence the terms 3 per cent. and 4 per cent. consolidated funds, which are usually contracted into 3 per cent. and 4 per cent. consols. About the year 1757, the public creditors, who held certain government securities bearing interest at 4 per cent., received from government their choice either to have their capital paid up, or to reduce their interest from 4 to 3 per cent. The latter being accepted, the fund has since been denominated the 3 per cent. reduced, and is generally written 3 per cent. red. The two funds, 3 per cent. consols and 3 per cent. red., have accumulated so as to comprehend the greater part of the national debt; or, in other words, a great proportion of the taxes is divided into two funds, out of which is paid the interest of almost all the loans that have been contracted for many years past. The interest of both funds is of course the same, but that of the consols is payable on the 3th January and 5th July, and the reduced on the 5th March and 10th October.

When government raises a sum of money by loan, and the interest of that sum is charged on the permanent taxes, the sum itself becomes a part of the permanent national debt; and in this case, the lender, instead of actually receiving a bill or acknowledge ment for the money advanced, as I have hitherto supposed, is simply entered in the books of the Bank of England as a public creditor, and when he sells his stock, it is transferred from his name to that of the person who purchases it. This, however, does

not make any essential difference in the principle of the transaction, as I have already explained it, though it gives rise to a division of the public debt into funded and unfunded. The funded debt is composed of the various kinds of stock mentioned above, of which the public creditor cannot demand repayment, but for which he is entitled to a certain annual interest, according to the sum placed to his credit with the Bank of England. The unfunded debt consists of certain bills issued by government to such as will advance money upon them, and of which the holder is entitled to demand repayment at a certain period. These are chiefly Exchequer Bills, Navy Bills, and Ordnance Bills or De bentures. They are issued for the purpose of supplying the place of taxes that have not been forthcoming, or to meet contingencies for which no provision had been made, and receive their names from the particular service to which they are applied. Instead of being paid off when they fall due, the holders sometimes receive their value in stock; and the bills are then said to be funded, or they constitute a part of the permanent debt.

I have already observed, that when government borrows money on the 3 per cent. fund, the lender receives an acknowledgement or credit in the public accounts, to the amount of £100 for every £60 Sterling advanced. In some cases he receives credit even for more, but seldom less. Now, though to him it is only 5 per cent. on the money lent, because the interest of £100, at 3 per cent., is just equal to the interest of £60 at 5 per cent., still it may appear strange, perhaps, to some of your readers, that government should grant an acknowledgement for a greater sum than it actually receives, or that it should borrow nominally at 3 per cent., when it is actually paying nearly 5, or even upwards of 5. This will appear more strange still when it is considered, that if government ever proposes to pay off the national debt, it must pay not the sums received, but the full amount of the nominal capital for which the stockholder has received credit in the public accounts-that is, £100 at least for every £60 that has been borrowed in the 3 per cent. funds. The only explanation that can be given of this plan of borrowing, must be on the

supposition that it is not in the contemplation of government ever directly to pay off the national debt, and that its object, therefore, is to borrow on the lowest interest possible. Now, the plan that has been adopted will certainly enable it to do so, better than paying on the sum borrowed such an interest as the lender would be willing to accept. It was formerly shewn that, in time of peace, or when the amount of government securities ceases to accumulate, while the demand for them increases, the price of stock may, and does actually, rise higher than what it cost the original lender. This will take place on all kinds of stock, but in a greater degree on 4 per cents. than 5 per cents., and on 3 per cents. than 4 per cents. Though government cannot oblige the public creditor to take less, in payment of his capital, than £100 Sterling for £100 stock, it can at all times oblige him to take that sum, whatever the nature of his stock may be. Whenever stock, therefore, reaches par—that is, whenever £100 of any sort of stock rises in the market to £100 Sterling, a stop is necessarily put to a farther rise of price; because the purchaser, who gives more than £100 Sterling for it, may be called upon the next day to give it up to government for £100. Now, as £100 of 5 per cent. stock is worth £100 Sterling, while £100 of 4 per cent. is worth only £80 Sterling, and £100 of 3 per cent. stock only £60 Sterling, reckoning that price their true value which yields 5 per cent. to the purchaser, it is obvious that 5 per cent. stock cannot rise above its true value, without making the purchaser run the risk of being paid off with less than it cost him; while 4 per cents. may rise £20, and 3 per cents. £40, before the purchaser runs any such risk. The prospect, then, of this rise induces the lender to advance money to government on easier terms than he would be disposed to do if there were no such prospect; and though, with all this advantage, government has seldom been able to borrow at a lower rate than 5 per cent., there is no doubt that the loans have been procured on more favourable terms than they would have been, had the interest been paid on the actual sum borrowed, and not on a nominal capital. It is for the same reason, that when stock rises above its true value (meaning always,

by its true value, the price at which the purchaser has 5 per cent. for his money), the 3 per cents. are higher in proportion than the 4 per cents., and the 4 per cents. than the 5 per cents Thus, on a late occasion, when the 3 per cents. were at 75, the 4 per cents. were at 93, and the 5 per cents, at 106; whereas had the two last risen in the same proportion with the 3 per cents., according to their respective interests, the 4 per cents. would have been at 100, and the 5 per cents. at 123. The latter, indeed, would seldom or ever rise above par were it not understood, or rather had it not been at different times enacted, that the holders of this stock should not be obliged to take payment of their capital till such time as a certain quantity of the other kinds of stock be paid off.

When a loan is negotiated, the public creditor sometimes receives his se curities all in one sort of stock or fund. Thus, in 1808, when eight millions were raised by loan, the len der had assigned to him £118:3:6 of 4 per cent. stock, for every £100 Sterling that he advanced, being at the rate of £4:14: 6 per cent, of interest on the sum borrowed. In gene ral, however, the security granted to the lender, or the capital for which he receives credit, consists of a quantity of stock of different kinds. Thus, in the loan of twenty-two millions in 1812, the lenders received £120 of 3 per cent. red. and £56 of 3 per cent consols, for every £100 Sterling ad vanced. Now, £120 at 3 per cent. yields £3, 12s., and £56 at 3 per cent. yields £1: 13:7, consequently the lender had £5:5:7 per cent. for his money. While the loan is going onthat is, before the last instalment is paid up, the lender or contractor is at liberty to sell or transfer to another, at once, the different kinds of stock which he himself receives, and in the same proportion as he receives them. Thus in the loan of 1812, mentioned above, the contractor had it in his power, so long as his instalments were not all paid up, either to sell the 3 per per cent. red. and the 3 per cent. consols, separately, or to transfer them together, as he received them, in the proportion of £120 of the one and £56 of the other. These two sums, taken together, constitute what is called the omnium of that loan; and as they cost the contractor exactly £100 Sterling,

he would either gain or lose by the contract, according as he could get more or less than £100 for them. If he sold them for £101, omnium would be said to be at a premium of £1; and if for £99, it would be at £1 discount. At the time the loan is contracted, omnium is generally at a premium, and that premium is called the bonus to the contractor.

There is still another circumstance connected with the manner of negociating a loan, which it may be necessary to explain. When the minister is prepared to contract for any given amount, he intimates to the principal bankers or monied men, that he wants such and such a sum in loan, that he will give so much of one or more sorts of stock for every £100 sterling advanced, and that the bidding is to be in another kind of stock. The meaning of this will be best explained by an example. In 1812, when 22 millions were borrowed, the ministers gave notice to the bankers that he was prepared to give for every £100 advanced, £120 of 3 per cent red. stock, together with an additional sum of 3 per cent consols. The bankers were then required to give in each a sealed offer, stating how much consols they would require in addition to the £120 red., and the individual of course was preferred who offered to advance the money for the the least additional sum of consols. In the case alluded to, the offers or biddings were all the same, none being willing to advance £100 for less than £56 consols in addition to the £120 red. Sometimes the bidding takes place, not on any kind of stock, but on a certain annuity, which is to terminate in a given number of years. Thus, in the loan of 12 millions in 1811, it was intimated to the contractors, that for every £100 Sterling which they advanced, they should receive £100 of 3 per cent red., £20 of 3 per cent consols, and £20 of 4 per cent consols, together with an addition of an annuity, to continue 49 years, and the bidding, or point of competition among the contractors, was, who would lend the money for the least annuity in addition to the fixed amount of stock. The lowest bidding on this occasion was 6s. 11d. of annuity; so that the omnium in that loan consisted of the following items £100 of 3 per cent red., £20 of 3 per cent consols, £20 of 4 per cent

consols, and 6s. 11d. annuity, to terminate at the end of 49 years. The interest at which the money was borrowed was £4: 14: 11 per cent during the first 49 years, and £4: 8:0 after that period, being considerably below the legal interest. That loan, however, was considered at the time unusually favourable to the public.

I shall now apply the preceding remarks to the explanation of the newspaper reports of the stocks, and shall take an example from the papers at random. On the 20th of October last, the following report was given of the price of stocks for that day:

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The number in the above table opposite each kind of stock, expresses in Pounds, and a fraction of a Pound Sterling, the price at which £100 of that stock was sold on the day mentioned. The first, viz. Bank stock, 273, means that £100 share of the Bank of England sold at an early part of the day for £2734, or £273: 10:0 Sterling, and afterwards rose to £273, or £213: 15:0. A £100 of 3 per cent red., sold at first for £76: 15: 0, and afterwards fell to £76: 7: 6. A £100 of consols sold in the morning for £77:50, then rose to £77: 7: 6, then to £77: 10: 0, and at last fell to £77: 2: 6. A £100 of 4 per cents sold first at £95: 5: 0, and then rose to £96, and so of the others. The article Long Ann. means the annuities granted in the loan of 1811, mentioned above, and at various other times, payable to the public creditor till 1860, when they drop. They are bought and sold at so many years purchase, in the instance above at 20 years—that is, a long annuity of £100 cost on the 20th of October last £2012: 10 : 0. Omnium on that day was at a discount, first at 17s. 6d. and afterward at 10s, per cent; or, in other words, the contractor was obliged to sell for £99: 2:6 and £99: 10:0, what originally cost him £100.

It appears, from the above table, that the 3 per cent consols on the 20th of October were from one-half to one per

cent higher than the 3 per cent red. This difference is owing, not to the interest which they bear, for that is the same in both cases, but to the different periods at which the interest is payable. The half yearly interest, or dividend on the red., was paid on the 10th of October, and that on the consols on the 5th of July. On the first, therefore, there was only ten days of interest on the 20th, but on the second there was three months and a half, and as the purchaser buys not only the stock, but also the interest due upon it at the time, the consols were more valuable than the red., by about three months interest, or 15s. When it is said that the purchaser buys not only the stock but the interest due upon it, it is meant that at whatever time he purchases, he is entitled to draw the next half year's dividend, though it should fall due a few weeks after. For some days previous to the payment of the dividends, no sale, or rather no transfer, can be made at the bank, in order to give leisure for the payment of the interest. That particular kind of stock is then said to be shut.

In judging what kind of stock it is most advantageous to purchase, various circumstances are to be taken into account, according to the price and the particular views of the purchaser. When all the stocks are at their true value, that is, 3 per cents at £60, 4 per cents at £80, and 5 per cents at £100, they will each yield to the purchaser 5 per cent for his money, and if he intends therefore to invest permanently, it is of little consequence what sort he purchases, because his interest is not to be affected by any subsequent rise or fall in price. If he has the prospect, however, of selling out again, he should prefer the 3 per cents, because, for the reasons already mentioned, they are likely to rise higher in proportion than any other. When all the stocks are above their true value, the purchaser who buys for the purpose of laying out his money permanently at interest, should prefer the 5 per cents, because they will yield the highest interest. Thus, in the above table, taking the price of the 3 per cents at 77, the 4 per cents at 95, and the 5 per cents at 107 in round numbers, the following is the rate of interest which the purchaser draws for his money in cash. In the 3 per cents, he draws £3 for

every £77 invested, being at the rate of about £3 18s. per cent.-in the 4 per cents, he draws £4 for every £95 invested, being at the rate of £4: 4:2 per cent and in the 5 per cents, he draws £5 for every £107 invested, being at the rate of about £4: 13: 5 per cent.

I intended at one time to have constructed a table, exhibiting at one view the different rates of interest which each of the stocks yield at different prices, but the following general rule will perhaps be as acceptable to most of your readers. To find the rate of interest which the 3 per cents will yield at any given price; divide 300 by the price of the stock, and the quotient will be pounds, multiply the remainder by 20, and divide again by the price, the quotient will be shillings, multiply the next remainder by 12, and divide as before, the quotient will be pence-and these pounds, shillings, and pence are the interest drawn for every £100 Sterling invested at that price. Thus, to take the above example, 300 divided by 77, according to the rule, gives £3: 17: 11, or nearly £3 18s. If the stock be 4 per cents, divide 400 by the price, if it be 5 per cents, divide 500 by the price, and the quotients will be the interest required.

There is still another point connected with the subject of the stocks, on which some of your readers, perhaps, may wish to have some information, I mean the Sinking Fund. I have already trespassed so long, however, that I cannot now enter at length upon the subject, and shall therefore simply state the general principle of its operation as a means of redeeming or cancelling the national debt. When government borrows a sum of money, taxes of course are imposed for paying the interest of that money, but to a greater extent than are barely sufficient for the payment of that interest. The surplus constitutes what is called the sinking fund, and is put into the hands of certain commissioners appointed by Parliament. These commissioners employ it in purchasing stock on account of Government, and draw at the Bank of England the half yearly dividends on that stock, in the same way as any other public creditors. These divid ends, or interests, are again laid out in the purchase of new stock, for which they draw interest, and employ it ag

in the same way, so that the original
sum with which they commenced their
purchases goes on accumulating at
compound interest. The stock thus
purchased may be considered as so
much of the national debt redeemed,
because though the public derives no
immediate advantage from it, so long
as the commissioners draw the interest
of their stock (it being a matter of no
consequence whether the interest is
paid to them or other public creditors),
yet as the sum purchased by them is
purchased for government, the latter
becomes its own creditor to that a-
mount, and may cancel or leave off
paying the interest of the same when
ever it thinks proper. Were the com-
missioners allowed to go on purchas-
ing, and no great accumulation of new
debt to take place, it is possible that
they might in time get the whole of
the government stock into their hands,
and of course the whole national debt
would be paid off. During the war
this event was perhaps impossible, and
even now various circumstances concur
to protract it to an indefinitely distant
period. In 1813, the commissioners
had purchased to the amount of 236
millions, the whole debt being about
700 millions. In that year the opera-
tions of the commissioners were stop-
ped, and instead of allowing them to
draw the interest of the 236 millions
for the purchase of new stock, that in-
terest was employed either for the cur-
rent services of the year, or for paying
the interest of new loans. Though a
sinking fund, on this principle, is ob-
viously, in certain circumstances, a
powerful engine towards the redemp-
tion of debt, it has not hitherto pro-
duced all the effects which were at first
expected from it. At the same time
it is undeniable that it has been pro-
ductive of many good consequences,
both direct and collateral, and is in
many respects worthy of the distin-
guished statesmen to whose firmness
and decision it owes all its efficacy.
Such of your readers as wish for more
information on this subject, may con-
sult An Inquiry into the Manage-
ment, &c. of the National Debt," by Dr
Hamilton of Aberdeen, and if my pre-
sent and former communications shall
ten in any degree to facilitate their
study of that profound work, I shall
consider them as not altogether use-
less. I am, Sir, your most obedient
servant,
T. N.

AN HISTORICAL AND GEOGRAPHICAL

ESSAY ON THE TRADE AND COM-
MUNICATION OF THE ARABIANS
AND PERSIANS WITH RUSSIA AND
SCANDINAVIA, DURING THE MID
DLE AGES.

(Continued from page 141.)

THE other commonly frequented
route passed over the Caspian Sea
from Derbend, and the other maritime
and staple towns on its southern coast.
This sea is extremely remarkable, both
on account of its situation in the midst
of extensive countries, between which
it greatly facilitates the communica-
tion, and likewise for this peculiarity,
that notwithstanding its magnitude,
it has no outlet. Many geographers
have therefore supposed, forming an
erroneous conclusion from other seas,
that it had a connexion either with the
Black, Northern, or Eastern Sea. Caz-
wini thinks that it flows into the first,
with which he supposes it to be con-
nected by a subterraneous canal. He
writes thus: "The sea of Alchazr has
neither its origin from (is neither a
bay of) the ocean, or from any other
sea, but it falls into the ocean through
the gulf of Constantinople. This sea
is exceedingly large, for it washes
Chazaria, Dailam (Ghilan), Thabari-
stan, Georgia, and the desert Siah
Kiuh;" and in another place, where
he speaks of seas, he says,
"The sea
of Georgia and Dailam (the Chazarian
sea) is separated from all others, and
is not united with any of the seas
mentioned. Large rivers and springs,
which never fail, discharge their wa-
ters into it. Alhaucali reports, that
this sea is black at the bottom, and
that it unites itself with the Black Sea
under ground. To the west of it lies
Aderbijan, to the south Thabaristan,
to the east Alkaria, and to the north
Chazaria. Its length is 1000 miles,
and its breadth, from Georgia to the
river Aila, 550." "On the north side
of the sea is the Atel (the Kha of the
Greeks, and the modern Volga), a
large river in the country of Chazaria,
which in magnitude resembles the
Tigris. It rises in the country of the
Russians and Bulgarians, and dis-
charges itself into the sea of Chazaria.
Intelligent men affirm, that this river
flows in seventy-five branches, each of
which is itself a large river. Its body
of water is never changed or dimis

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