Page:Hints About Investments (1926).pdf/71

 75 a nominally 2 per cent. Sinking Fund actually buys 2⅔ per cent. of the outstanding issue.

For investment in Home Public Debts the buyer's range is practically confined to the obligations of the British Government and those of the municipalities and counties. We saw, when we considered our reasons for the belief that our Government securities are as safe and sound as any securities can be, that these reasons are to a great extent based on considerations which are not capable of exact calculation, that there is a good deal of sentiment behind them, and that this sentiment may be prejudiced by patriotism. When we come to investigate the security behind municipal and county debts, we find the same thing only rather more so, with, however, one advantage in their favour, that they are not debts that have been raised purely for the purpose of waging war.

With them, as with all securities, the most important consideration for the buyer is the income out of which the debtor can meet interest and provide for repayment. This income is derived from the power of the municipal and county authorities to levy and collect the local taxes known as rates from the inhabitants of the area; and any attempt to arrive at an exact estimate of the extent of this power is at least