On the effects of the usury laws on the funding system

Abstract

The system of funding, by which the greater part of the enormous national debt of England has been created, is that of granting perpetual annuities of #5, #4, or #3, redeemable on the payment of #100. These annuities are called respectively the 5 per cents., 4 per cents., and 3 per cents. The annuities are sold in the market, and the price is what is called the price of the funds. There could be no objection to this mode of borrowing, if the Government always contracted loans in whatever fund was at par; or, in other words, if they granted perpetual annuities of the amount of the market rate of interest at the day of borrowing, redeemable on payment of #100. But, unfortunately, this practice has not been pursued, and the system of contracting for loans by granting annuities, which were not at par, began in the reign of Queen Anne, and has been on most occasions pursued ever since.