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Effects: Period I ad finem
10
The consequence
seems to be, that no
individual any longer will buy
Stock Annuities, &
what Stock
Annuities come to be
sold will be bought
in by government,
which at 93 7/8 will
be more advantageous
to pay them off.
11
In this state of things
Government will get
little necessarily in the way of
reduction of inerest, but
it may gain much
probability by forbearance
of receipt of
interest.
12
Government in as far
as it thinks fit to tie
itself to the keeping
up a Stock Fund, will
put itself into a condition
similar to that
of the Bank of deposit
at Amsterdam.
13
So long as it continues
the issue of Annuity
Notes at the original
rate of interest (3 per
cent) it will be out of
its power to reduce the
rate of interest: since
before in order to obrain
money, to threaten to pay
off Stock with, so as
to force an
of 2 1/2 per cent, it
must have issued Annuity
Notes at 3 per
cent, so that nobody
will is not to be paid off, but
everybody will be forselling
out to buy
Notes.
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Effects: Period I ad finem
14
But in the meantime
the existing
Sinking Fund will
be yielding its produce:
and with
that produce Government
will have
it in its power
to pay off 3 per
Cents without
selling Annuity
Notes.
15
This however will
not enable Government
to effect any
such redirection of
interest: since as
fast as the Stock
Annuitants are
paid off, they will
buy Note Annuities.
16
It will be necessary
thereof for
Government to have
it in its power to
stop the issue of
Annuity Notes
whenever Stock
Annuities have
risen to par (or
perhaps thereabouts.)
Yet as soever
will it have stopped
the issue of
Annuity Notes,
than the price of
Annuity Notes in
circulation will
rise.
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Extent
17
As soon as Stocks
are at par, and
the issue of Anny
Notes stopped, then
Annuity Notes will
unavoidably come
to bear a premium.
18
If then a new
Issue is opened at
2 1/2 per Cent, nobody
will take out
the new batch at
that rate till the
old batch has risen
up to a certain
mark: because
till then
it will be more
advantageous to
take the old in
the way of circulation
than the
new in the way
of issue.
19
But the price of
the old batch, having
arrived at this
mark, will continue
at this mark
and will be such
as to be worth
to the holder exactly
or within
a trifle, of the new
i:e: to every yield 2 1/2
per cent as the
new does.
20
By this means
those who continue
to hold their old
Note Annuities will
continue to make
3 per Cent. If they
part with them they
will sell to obtain
this premium: if
they
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Extent
21
When Stock comes
to be bought by
Government, it
must be by the
guineas, and not
by Annuity Notes.
When it comes to
be bought by individuals,
it may
be, and probably
always or mostly
will be by Annuity
Notes. Will
this make any difference in as
between the price
required of government,
and the price required of individuals?
22
When a new
Batch of Annuity
Notes comes thus
to be issued at
a reduced price rate of
interest it is not necessary
that it should be
the price at which
it is issued should
be such as to tally
exactly with an even
rate of interest.
If it were
no new Batch
would be issued at
2 1/2 per cent
till the old were
at 120: and in
all
20
they repurchase
them, they will
have the premium
to pay again, &
will not any more
thenceforward be
able to make more
than the 2 1/2 per
Cent.
---page break---
Extent.
all that time individuals
and not
Government would
be reaping the advantage
from the
reduced rate. Notes
of the New Batch
might therefore be
issued at such a
price as that for
an Annuity of
£3 a year a
man should have
to pay instead
of the £120, £115,
£110, £105, or any
other such intermediate
sum as
should be deemed
most convenient:
i:e: for a Stock yielding
1/2 a farthing
a day interest the
price required might
be instead of £6-6s, £6:10,
6 1/2 Guineas –
£7 or 7 Guineas
&c, according to
the premium borne
and likely to be
borne in the circulation.
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Identifier: | JB/003/037/005 "JB/" can not be assigned to a declared number type with value 3.
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003 |
annuity notes |
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037 |
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005 |
forgery / borrowing |
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|
rudiments sheet (brouillon) |
1 |
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|
recto |
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jeremy bentham |
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19210008 |
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