Imágenes de páginas
PDF
EPUB

STOCKS AND SHARES.

175

much smaller number of shareholders or partners who all jointly manage the concern.

Also a company is generally a limited one, i.e. one in which the liability of each shareholder is limited to the amount of his shares, whereas a firm is frequently unlimited.

Shares can only be purchased in whole numbers, but any quantity of stock may be purchased. For this reason many companies change their shares into stock. A shareholder who desires to retire from a company can only do so by selling out at the market price of his stock or shares, usually through a stock broker, who charges a commission or brokerage.

The nominal value of a stock is by no means its market value. This depends on the credit and prosperity of the company. The market price is continually fluctuating.

Stocks are said to be at a premium, at par, or at a discount as the price of £100 stock is above, equal to, or below £100 sterling. Similarly shares are at a premium, at par, or at a discount as their price is above, equal to, or below their nominal or face value.

The two prices published each morning in the newspapers opposite any stock are the outside prices given or charged by a stock jobber. The jobber sells. to the broker at the higher price and buys from him at the lower price. The broker sells to a customer at the higher price with brokerage added and buys from a customer at the lower price with brokerage deducted. A broker's charge for Consols is 2s. 6d. per cent. (p.c.), for other stocks from 5s. to 10s. per cent.

Bonds are particular classes of stocks or shares. They are in general certified documents issued by Governments, corporations or companies acknowledging their indebtedness, with the limits and conditions of payment and redemption of the debt. The interest is usually paid by coupons or warrants.

20. The National Debt.

The first item in the Public Debt of this country is the £664,263 repaid to the Goldsmiths of London at the accession of William III. as partial compensation for the loss they sustained at the hands of Charles II. when he closed the Mint and took the money stored there.

Another item is £11,015,100 owing to the Bank of England.

Wars however have been the chief cause of the immense growth of the Debt. William's campaigns added 16 millions, Marlborough's 38 millions, George II. increased it by 87 millions, the American War added 121 millions, and finally the Napoleonic struggle cost 600 millions. In 1816 the Debt was 900 millions, but happily since then great reductions have been made, and it now stands (April 5, 1891) at £681,080,059 (of which the funded portion is £579,472,082). It consists of three parts, (1) the Funded Debt, (2) the Unfunded Debt, (3) Terminable Annuities.

The Funded Debt consists of the unredeemable loans made by private persons to the British Government. They receive interest year by year, but can only recover the principal by selling out at the market price. The Government however has the right of paying off at par with due notice to the holders.

The chief kinds of stocks in the Funds were until recently

(1) The Consolidated Annuities or Consols at 3 p.c., an amalgamation of several loans into one of a uniform 3 p.c. interest.

(2) The Reduced Annuities or Consols, formerly paying higher than 3 p.c., but now reduced to 3 p.c.

interest.

(3) The New 3 p.c. Annuities.

EXCHEQUER BILLS.

177

(4) A few 2 p.c., 22 p.c., 3 p.c. and 5 p.c. Annuities.

Mr Goschen's Act for the Conversion of Consols (1888) made a new stock at 24 p.c.

Holders of Consols, Reduced Consols, and New Threes were offered an equal amount of the New 23, with a small bonus for assenting by a certain date. The holders of all but 47 millions agreed; those who did not, have received the necessary 12 mos. notice that their stock will be paid off at par at the convenience of the Government. When this has been done the National Debt will consist almost wholly of 23 p.c. stock. The Act also enacts that in 1903 the rate of interest will be reduced to 2p.c. and in 1923 the Government will have the right to pay off the debt at par.

The Unfunded Debt consists of securities bearing interest but redeemable by Government at certain (usually) short dates. The common form of these securities is that of Exchequer Bills or orders upon the Exchequer entitling the bearer to the specified sums together with interest at a stated rate p.c. for the time of the bill in days. The usual times of these bills are 1, 2, 3, 4, 6, 12 mos. from the date of issue. They are notified to be paid off or renewed on a given day, and if not sent in on that day the interest ceases. Their price depends on the credit of the nation. Large capitalists eagerly seek after these bills because they are readily convertible and are generally at a small premium to ensure easy borrowing on the part of the Government.

Terminable Annuities are the chief instrument by which the Funded debt is reduced. The Treasury is empowered under various Acts to give Annuities for a certain number of years in exchange for permanent stock. Thus £1000 2 p.c. stock produces £27. 10s. as

yearly interest in perpetuity: the Treasury will give in exchange £55 a year for 20 years, at the end of which all payment ceases and thus in the end £1000 stock is struck off the debt.

The capitalised value of the present annuities paid by the Government stood at about 68 millions on March 31, 1891, but a goodly number of them will fall in from 1901 to 1904.

Sinking Funds of various descriptions have been also employed to reduce the debt, and one is at present in operation: these would have been more successful if they had not been suspended so frequently on emergencies.

20. The Bank of England.

The Bank was originated in 1694, when 40 capitalists joined to lend £1,200,000 to the Government at 8 p.c. interest in return for a charter conferring certain privileges and powers to trade in bills of exchange and bullion.

The charter has been frequently renewed, and the debt of the Government to the Bank is now £11,015,100. This forms part of the subscribed capital, known as Bank Stock, on which 10 p.c. is usually paid.

In 1844 Sir Robert Peel's Bank Charter Act renewed the charter "until the debt of the public to the Bank be paid." It limited the note issue to £14,000,000 upon securities of which the above debt forms part; beyond 14 millions, notes can only be issued against coin or bullion stored in the Bank.

The principal functions of the Bank are:

1°. For the Government: It keeps the Government banking account, superintends the transfers of stock (Consols, etc.) and pays the interest on the National Debt.

THE BANK OF ENGLAND.

179

2o. For the coinage: It buys gold at £3. 17s. 9d. per oz. and sells sovereigns at £3. 17s. 101d. per oz. Thus practically it is the only channel by which gold reaches the Mint.

3°. For the banks: It keeps the reserves of all the larger banks and discount houses.

4°. For the public: It issues notes which it must always cash in gold on presentation. If the issue exceed 14 millions, bullion must be kept to meet all notes beyond. When the supply of bullion is not much above the amount required to meet the notes, the Bank increases its rate of discount to attract gold to the Bank. When the supply is large the rate is lowered. The market rate of discount is largely influenced by the bank rate.

21. The Stock Exchange.

The Stock Exchange is regulated by a committee of 30, including the Chairman and Deputy-Chairman, chosen from among the members by ballot year by year. The members are 2,500 in number, and consist of jobbers or brokers. Jobbers are dealers who buy and sell at market prices.

Brokers deal with the jobbers on behalf of the public and charge commission.

The Stock Exchange only recognises its own members, and all their dealings must follow the usages of" the House."

Settlements take place twice a month, at dates arranged by the committee.

Consols however are settled only once-at the beginning of the month.

Stock Exchange terms:-

1°. Scrip (Subscription) is applied to the certificates of payment of deposits or calls prior to the issue of the real bonds.

« AnteriorContinuar »