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The Great War (1914-1918) Forum

Remembered Today:

There's still £2bn wartime debt


John_Hartley
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These "4% Consoles" are often referred to in novels. Presumably for wealthier war widows of officers for example they provided a reliable source of income. I have some War Loan certificates of my father's from WW2, worthless bits of paper.

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I can see it now " have you got great war debt then text a better `o`le" to grabbit and run solicitors specialising in fleecing you, oops sorry. helping you

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I believe that there is still a significant amount due in danegeld. [This could go on for ever]

Dave Swabrick

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These "4% Consoles" are often referred to in novels. Presumably for wealthier war widows of officers for example they provided a reliable source of income. I have some War Loan certificates of my father's from WW2, worthless bits of paper.

Hello Keith

I think that an offer to redeem these was made in the early 1970s. I was working in banking at the time and clearly remember dealing with these certificates and collecting what were, by then, relatively small sums (the face value) for many of our customers.

Consolidated Fund stock - the Consols - has been around certainly since the eighteenth century, as a way for people to invest securely (well, with a nominal government guarantee anyway) to obtain a regular income, and if you needed capital there was always a ready market for it. The price, as with the later War Loan, depended on the prevailing interest rates generally, since these stocks paid interest at fixed rates. Thus, if General interest rates for savers were 7%, the price of War Loan, which paid 3 1/2 %, would be 50p per nominal £1 of stock, so investing £100 would buy £200 nominal of War Loan, which would bring in 200 x 3.5% = £7 of interest per year.

Ron

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As someone who has inherited some of these bonds, the story of the bonds has been one of swings and roundabouts. Currently they pay 4%. There aren't many risk-free places where one can get 4%, so this is good. The original bondholders have been through periods where 4% was a good rate of interest and other times when they've been ripped off because interest rates elsewhere were 10%+. (In fact we have a bond from another period which is fixed at 10% which on the person's original investment of about £100 is quite nice and buys the odd bottle of wine.)

As a tax payer, I will benefit from the government getting rid of the bonds. As a bond owner, I will lose the good rate of interest which will be hard to replicate elsewhere. But the benefit to me as a tax payer will be tiny because that benefit will be shared among all the other tax payers. My losses as a bond holder will be far greater. Swings and roundabouts have become swings.

Gwyn

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As someone who has inherited some of these bonds, the story of the bonds has been one of swings and roundabouts. Currently they pay 4%. There aren't many risk-free places where one can get 4%, so this is good. The original bondholders have been through periods where 4% was a good rate of interest and other times when they've been ripped off because interest rates elsewhere were 10%+. (In fact we have a bond from another period which is fixed at 10% which on the person's original investment of about £100 is quite nice and buys the odd bottle of wine.)

As a tax payer, I will benefit from the government getting rid of the bonds. As a bond owner, I will lose the good rate of interest which will be hard to replicate elsewhere. But the benefit to me as a tax payer will be tiny because that benefit will be shared among all the other tax payers. My losses as a bond holder will be far greater. Swings and roundabouts have become swings.

Gwyn

That depends on when you inherited them them and their then market value.

if aquired at a high interest period, as pointed out by Ron Clifton, and cost, say £50 per£100face value, you will have made a profit of £50 peer £100 face value before taking into account the effects of inflation/spending power of the initial outlay and the effective 8% per anum dividend between purchase and the current redemption.

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The real losers on these bonds were the original loyal buyers but I suppose by extension those who would have inherited their money. My Grandfather put £500 into these bonds which at the time of the investment would have bought him a decent house. They were cashed in at less than par in the 80's I think. So a family financial disaster really. But wars need to paid for!

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  • 1 month later...

The Dutch newspaper "FD" (Het Financiele Dagblad)today says that the UK government has decided to pay back the 1917 " war loan ", the last one. They bring also an old photo of Trafalgar square, making publicity for the loan.

Gilbert

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It's a tribute to the stability of this great country of ours that we still honour dedt of this age and pay it back. It would be illuminating to see a list of countries who reneged on their Great War debt and later debt.

Of course, our ability/willingness to keep doing this explains our still excellent credit rating.

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