UNFUNDED DEBT. Exchequer bills form the principal part of the un funded public debt. These bills are issued under the authority of parliament for sums varying from 100/. to 10001., and bear interest. They were first is sued in the reign of William III. ; and although their amount has since varied greatly at different times, the convenience which they afford to individuals and their advantage to the public have been such as to cause their constant issue. Their convenience to individuals arises from the circumstance of their passing from hand to hand without the necessity of making a formal transfer, of their bearing in terest, and of their not being subject to such violent fluctuations as sometimes oc cur in the prices of the funded debt. This comparative steadiness in value is caused by the option periodically given to the holders to be paid their amount at par, or to exchange them for new bills to which the same advantage is extended; besides this, when a certain limited period has elapsed from the date of their first issue, they may be paid to the government at par in discharge of duties and taxes. The amount of premium that may have been paid at the time of purchase is conse quently all that the holder of an exche quer bill risks in return for the interest which accrues during the time that it re mains in his possession. The advantage to the public consists in the lower rate of in terest which they carry compared with the permanent or funded debt of the na tion, to which, however, they must in this respect bear some certain proportion. When the price of the public funds is high, the interest upon exchequer bills will be low ; and if the funds should fall in price so as to afford a much more pro fitable investment than exchequer bills, the rate of interest upon these must be raised in order to prevent their payment into the exchequer in discharge of duties: a thing which would embarrass the finan cial operations of government. When first issued in the reign of William III, the interest borne by exchequer bills was 5d. per 1001. per diem, being at the rate
of 71. 12s. Id. per cent. per annum. In the same reign the interest was after wards lowered to 4d. per 1001. per diem, or 61. Is. 8d. per cent. per annum ; and in the following reign the rate was still far ther reduced to 2d. per diem, or 31. Os. 10d. per cent. per annum. During the greater part of the war from 1793 to 1814, the rate of interest upon these securities was fixed at 3101. per cent. per diem, or 51. 68. 50. per cent. per annum. Since the last-mentioned year the rate has been progressively reduced to 24d., 2d., and IV, per 100/. per diem, at which last rate they were in the market at the time of the derangement of the currency which was experienced in the beginning of 1837. Under these circumstances, it was considered important as far as pos sible to relieve the Bank of England, by which establishment a very large propor tion of these securities were then held, and to place it in the most favourable po sition for affording relief to the commer cial classes ; and accordingly the rate of interest upon exchequer bills was raised to 2id. per cent. per diem. The last exche quer bills which were issued (in June, 1846) bore interest at lid. per 100/. per day.
In periods of commercial pressure, advances have been made to merchants, upon the security of goods, by the issue of exchequer bills. A more permanent oc casion for their issue, apart from the im mediate wants of the government, has been the desire of aiding individuals or private associations in the prosecution of works of public utility, such as canals, roads, &c. In these cases the rate of in terest charged to the borrowers is some what greater than that borne by the bills, and the difference has been applied to de fray the expense of management on the part of the public.
The amount of exchequer bills "out standing and unprovided for" at the end of each of the under-mentioned years was as follows:— 1836 . . . 28,155,150 1838 . . . 24,026,050 1840 . . . 21.626,350 1842 . . . 18,182.100 1844 . . . 18,404,500