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Loan

loans, cent, obtained, public, war, rate and raised

LOAN, in finance, money borrowed by government for defraying the extra ordinary expenses of the state.

The comparative advantage or disad vantage of the terms, on which the public loans have been obtained at different pe riods, has frequently been misrepresented, either from misconception or for party purposes, though it is evidently a subject on which the truth is very easily ascer tained. The economy or extravagance of every transaction of this kind depends on its correspondence or disagreement with the price of the public funds, and the cur rent rate of interest at which money could he obtained on good security at the time the bargain was concluded ; and, conse quently, a loan, on which the highest in terest is paid, may have been obtained on the best terms that could be made at the time it was negotiated. The interest paid, however, forms the real burden of each loan to the country ; for, since the mode of buying up stock at the market price has been adopted in the redemp tion of the debt, the nominal capital that is created has become but of little im portance, though certainly not to be wholly disregarded.

The first loans differed materially from those of subsequent periods, in being raised wholly on terminable annuities; and in having a particular fund assigned for each loan, by the supposed adequate ness or insufficiency of which the interest required by the lenders was frequently influenced, as well as by other causes, which have since ceased to exist.

During the reign of Queen Anne, loans were chiefly raised on annuities for 99 years, till 1711 ; when, by the establish ment of the South Sea Company, a variety of debts were consolidated and made a permanent capital, bearing 6 per cent. interest. About this period lotteries were also frequently adopted f'or raising money for the public service, under which form a. considerable premium was given, in ad dition to a high rate of interest. This mode of raising money was followed in 1712, 1713, and 1714. In the latter year, though the interest paid was equal to only 51. is. 2d. per cent. on the sum bor rowed, the premium allowed was up wards of 241 per but, as peace was restored, and the legal rate of interest had been reduced to 5 per cent. it seems

that a larger premium was allowed, for the sake of appearing to borrow at a mo derate rate of interest.

In the reign of George I. the interest on a considerable part of the public debts was reduced to 5 per cent. and the fen, loans that were raised were, comparative ly, of small amount ; that of the year 1720, was obtained at little more than 4 per cent. interest.

About 1730 the current rate of interest was 31 per cent.; and, in 1736, govern ment was enabled to borrow at 3 per cent. per annum. The extraordinary sums ne cessary for defraying the expenses of the war, which began in 1739, were at first obtained from the sinking fund and the salt-duties ; a payment from the Bank, in 1742, rendered only a small loan neces. sary in that year, which was obtained at little more than 3 per cent. interest. la the succeeding years the following sums were raised by loans.

Sum borrowed. Interest.

L. L. 8. d.

1743 1,800,000 .......,. 3 8 4 1744 1,300,000 3 6 10 1745 2,000,000 4 0 7 1746 2,500,000 5 5 I 1747 ..... 4,000,000 ..... 4 8 0 1748 6,300,000 4 8 0 Loans of the seven years' war.

1756 2,000,000 3 12 0 1757 3,000,000 3 14 3 1758 5,000,000 . ..... 3 6 5 1759 6,600,000 3 10 9 1760 8,000,000 3 13 7 1761 12,000,000 4 111 1762 12,000,000 4 10 9 1763 3,000,000 4 4 2 Loans of the American war.

1776 2,000,000 3 9 8 1777 ........ 5,000,000 4 5 2 1778 6,000,000 .......... 4 18 7 1779 7,000,000 ..... 5 18 10 1780 12,000,000 5 16 8 1781 12,000,000 5 11 1 1782 ..... -.13,500,000 5 18 1 1783 12,000,000 4 13 9 1784 .... 6,000,000 5 6 11 Loans of the war with the French public.

1793 4,500,000 4 3 4 1794 .......11,000,000 4 10 9 1795 18.000,000 4 15 8 1796 18,000,000 ......... 4 14 9 1796 7,500,000 4 12 2 1797 18,000,000 5 14 1 1797 14,500,000 ......... 6 6 10 1798 17,000,000 6 4 9 1799 3.000,000 5 12 5 1799 15,500,000 ..... 5 5 0 1800 20,500,000 4 14 2 1801 .........28,000,000 5 5 5 The sums borrowed since the com mencement of the war, which began in 1803, have hitherto been of somewhat less extent, as it has been deemed neces sary to endeavour to raise a considerable part of the extraordinary sums wanted within the year.