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 the amount required for payment of interest forming a (new) sinking fund devoted to repayment of capital. This fixed charge was gradually reduced from about 29 millions to 26 millions in 1888, to 25 millions in 1890, and to 23 millions in 1899. The amount paid off during this period by means of old sinking fund, terminable annuities and new sinking fund, down to March 1900, was £155,238,639, or an annual average of £6,468,276.

It will be observed that the burden of the debt incurred previously to 1817 has thus been borne very unequally by different ages of “posterity.” While the generations immediately succeeding the Napoleonic war paid off about £2,000,000 a year, the taxpayers between 1876 and 1900 paid at three times that rate. They did so largely Without knowing it, since a large part of the amount was wrapped up in the terminable annuities; but it is very questionable justice that so large a proportion of the burden should have been imposed upon them.

The great bulk of the funded national debt consists of what are known as “consols.” This name dates from 1751, when nine different government annuities at 3% were consolidated into one, amounting to £9,137,821. These “consolidated annuities” formed the germ of what has since become the type of British government stock. At the same

time some of the annuities at a higher rate of interest were combined and the interest reduced to 3%, and this stock was known as “reduced,” the two 3% stocks remaining side by side, until in 1854 the 3% government stock was also converted into 3%, under the style of “new threes.” “Consols,” “reduced” and “new threes” formed thenceforth a solid body of British 3% stock, until in 1888 the whole amount was converted (see Conversions below) by Mr (afterwards Lord) Goschen into 2%. “Consols” were added to from time to time when fresh loans were needed: from 39 millions in 1771 they rose to 71 millions in 1781, to 101 millions in 1783, 278 millions in 1801, 334 millions in 1811, and 400 millions in 1858; but in 1888 they had decreased, by redemptions, to £322,681,035. “Reduced” were also added to: from 17 millions in 1751 they rose to 164 millions in 1815, and then gradually diminished to 102 millions in 1869, and to £68,912,433 in 1887, when they were converted with “consols” into the new consols (or “Goschens”) at 2%, to be reduced to 2% in 1903.

The lowest price ever quoted for “consols” was 47 on 20th September 1797, owing to the mutiny at the Nore; the highest was 114 in 1896 owing to scarcity of stock, the operation of the sinking funds, and the demand for investment of savings bank moneys.

It may be useful to give the figures for the British national debt in 1902, after the disturbance due to the South African War. During the years 1900 and 1901 the new sinking fund was suspended, as well as the payments on the terminable annuity debt applicable to repayment of capital (except in so far as annuities to individuals were concerned); so that the debt was not reduced, as it would otherwise have been, by £4,547,000 in 1900 and by £4,681,000 in 1901. On the contrary, it was increased by fresh borrowings. Consols were raised (in 1901 and 1902) to the extent of £92,000,000; a “War Loan” of 2% stock and bonds, redeemable in 1910, was raised (1900) to the amount of £30,000,000; 2% exchequer bonds were raised (in 1900) to the amount of £24,000,000, and treasury bills (in 1899 and 1900), £13,000,000. The total war borrowing amounted accordingly to £159,000,000, raised at a discount of (£6,585,000) 4.14%. This includes the whole new borrowing in 1902, a portion of which was intended after the peace to be paid back in the current year; but for this no allowance can here be made. The accompanying table shows the totals for the “dead-weight debt” in 1900, 1901 and 1902, and, for convenience, also the “other capital liabilities.”

“Other liabilities” it must be remembered, represent money advanced (generally by terminable annuity) on reproductive objects—telegraphs, barracks, public works, Uganda railway, &c.—and they could not, obviously, be properly included in the national debt unless at the same time a set-off were made for the valuable assets held by the British government, such as the Suez canal shares, which in 1902 were alone worth upwards of £26,000,000.

British National Debt Conversions.—The great bulk of the funded debt of the United Kingdom consists of annuities, which are described as perpetual, because the state is under no obligation to pay off at any time the capital debt which they represent. All that the public creditor can claim is to receive payment of the instalments of annuity as they fall due. On the other hand, the government has the right to redeem the annuities ultimately by payment of the capital debt; though it may, and frequently does, bind itself not to exercise that right as regards a particular stock of annuities until after a definite period. So long as a stock is thus guaranteed against redemption, the only way in which the annual charge for that portion of the debt can be reduced is by the government buying back the annuities in the open market at their current price, which may be more or may be less than the nominal debt, according to general financial conditions and to the state of the national credit. The liability of the stock to redemption at par, when the period of guarantee has expired, prevents its market price from rising materially above that level. To enable the right of compulsory redemption to be enforced, it is only necessary that the government should