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CONSOLS

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Originally appearing in Volume V06, Page 980 of the 1911 Encyclopedia Britannica.
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CONSOLS , an See also:

abbreviation of consolidated annuities, a See also:form of See also:British See also:government stock which originated in 1751. Consols now form the larger portion of the funded See also:debt of the See also:United See also:Kingdom. In the progress of the See also:national debt it was deemed expedient, on grounds which have been much questioned, instead of borrowing at various rates of See also:interest, according to the See also:state of the See also:market or the need and See also:credit of the government, to offer a fixed See also:rate of interest, usually 3 or 32 %, and as the market required to give the lenders an See also:advantage in the See also:principal funded. Thus subscribers of £loo would sometimes receive £150 of 3 % stock. In 1815, at the See also:close of the See also:French See also:wars, a large See also:loan was raised at as much as £174 3% stock for £loo. The See also:low rate of interest was thus purely nominal, while the principal of the debt was increased beyond all due proportion. This practice began in the reign of See also:George II., when some portions of the debt on which the interest had been successfully reduced were consolidated into 3 % annuities, and consols, as the annuities were called, and other See also:stocks of nominallylowinterest,rapidlyincreased under the same practice during the See also:great wars. In times of See also:peace, when the rate of See also:money has enabled portions of the debt at a higher interest to be commuted into stock of See also:lower interest, it has usually been into consols that the See also:conversion has been effected. Temporary deficits of the See also:revenue have been covered by an issue of consols; See also:exchequer bills when funded have taken the same form, though not constantly or exclusively; and some government loans for See also:special purposes, such as the See also:relief of the Irish See also:famine and the See also:expenditure in the See also:Crimean and See also:Boer Wars have been wholly or partly raised in consols. The consequence has been to give this stock a pre-See also:eminence in the amount- of the funded debt. See further under NATIONAL DEBT: United Kingdom.

End of Article: CONSOLS

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