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Consols (originally short for consolidated annuities, but subsequently taken to mean consolidated stock) were government debt issues in the form of
perpetual bond A perpetual bond, also known colloquially as a perpetual or perp, is a bond with no maturity date, therefore allowing it to be treated as equity, not as debt. Issuers pay coupons on perpetual bonds forever, and they do not have to redeem the pr ...
s, redeemable at the option of the government. They were issued by the
Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government o ...
and the U.S. Government. The first British consols were issued in 1751. They have now been fully redeemed. The United States government issued consols from 1877 to 1930, which have likewise been redeemed.


History

In 1752 the Chancellor of the Exchequer and Prime Minister Sir Henry Pelham converted all outstanding issues of redeemable government stock into one bond, Consolidated 3.5% Annuities, in order to reduce the
coupon In marketing, a coupon is a ticket or document that can be redeemed for a financial discount or rebate when purchasing a product. Customarily, coupons are issued by manufacturers of consumer packaged goods or by retailers, to be used in r ...
(interest rate) paid on the government debt. In 1757, the annual interest rate on the stock was reduced to 3%, leaving the stock as consolidated 3% annuities. The coupon rate remained at 3% until 1888. In 1888, the Chancellor of the Exchequer, George Joachim Goschen, converted the consolidated 3% annuities, along with reduced 3% annuities (issued in 1752) and new 3% annuities (1855), into a new bond, 2% consolidated stock, under the National Debt (Conversion) Act 1888 ( Goschen's Conversion). Under the Act, the interest rate of the stock was reduced to 2% in 1903, and the stock given a first redemption date of 5 April 1923, after which point the stock could be redeemed at
par value Par value, in finance and accounting, means stated value or face value. From this come the expressions at par (at the par value), over par (over par value) and under par (under par value). Bonds A bond selling at par is priced at 100% of face va ...
by
Act of Parliament Acts of Parliament, sometimes referred to as primary legislation, are texts of law passed by the legislative body of a jurisdiction (often a parliament or council). In most countries with a parliamentary system of government, acts of parliament be ...
. In 1927 Chancellor Winston Churchill issued a new government stock, 4% consols, as a partial refinancing of the
National War Bonds National may refer to: Common uses * Nation or country ** Nationality – a ''national'' is a person who is subject to a nation, regardless of whether the person has full rights as a citizen Places in the United States * National, Maryland, c ...
issued in 1917 during World War I.


Timeline of 2.5% consolidated stock


Final redemption

On 31 October 2014 the UK Government announced that it would redeem the 4% consols in full in early 2015. It did so on 1 February 2015, and redeemed the 3% and 3% bonds between March and May of that year. The final 2% and 2% bonds were redeemed on 5 July 2015. Section 124 of the Finance Act 2015 made the legal provisions for the ending of the consol.Finance Act 2015
s. 124


References in literature

Given their long history, references to consols can be found in many places, including '' Pride and Prejudice'' by Jane Austen, '' David Copperfield'' by
Charles Dickens Charles John Huffam Dickens (; 7 February 1812 – 9 June 1870) was an English writer and social critic. He created some of the world's best-known fictional characters and is regarded by many as the greatest novelist of the Victorian er ...
, ''
Howards End ''Howards End'' is a novel by E. M. Forster, first published in 1910, about social conventions, codes of conduct and relationships in turn-of-the-century England. ''Howards End'' is considered by many to be Forster's masterpiece. The book was ...
'' by
E. M. Forster Edward Morgan Forster (1 January 1879 – 7 June 1970) was an English author, best known for his novels, particularly ''A Room with a View'' (1908), ''Howards End'' (1910), and ''A Passage to India'' (1924). He also wrote numerous short stori ...
, '' Vanity Fair'' by William Makepeace Thackeray, ''
Of Human Bondage ''Of Human Bondage'' is a 1915 novel by W. Somerset Maugham. The novel is generally agreed to be Maugham's masterpiece and to be strongly autobiographical in nature, although he stated, "This is a novel, not an autobiography; though much in ...
'' by
William Somerset Maugham William Somerset Maugham ( ; 25 January 1874 – 16 December 1965) was an English writer, known for his plays, novels and short stories. Born in Paris, where he spent his first ten years, Maugham was schooled in England and went to a German un ...
and '' The Forsyte Saga'' by
John Galsworthy John Galsworthy (; 14 August 1867 – 31 January 1933) was an English novelist and playwright. Notable works include ''The Forsyte Saga'' (1906–1921) and its sequels, ''A Modern Comedy'' and ''End of the Chapter''. He won the Nobel Prize i ...
.


See also

* War bond#United Kingdom *The
Swiss National Bank The Swiss National Bank (SNB; german: Schweizerische Nationalbank; french: Banque nationale suisse; it, Banca nazionale svizzera; rm, Banca naziunala svizra) is the central bank of Switzerland, responsible for the nation's monetary policy an ...
shares work similarly to a consol.


References


External links


Annuity Certificates of the Bank of England Consolidated AnnuitiesCREATING THE CONSOLS- A brief history of the origins of Britain's 3% perpetual bonds
{{DEFAULTSORT:Consol (Bond) Government bonds issued by the United Kingdom 1751 introductions 1751 in Great Britain Economic history of the United Kingdom Public finance of the United Kingdom Politics of the Kingdom of Great Britain zh:金边债券