Consols (originally short for consolidated annuities, but subsequently taken to mean consolidated stock) were
government
A government is the system or group of people governing an organized community, generally a State (polity), state.
In the case of its broad associative definition, government normally consists of legislature, executive (government), execu ...
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 pri ...
s, redeemable at the option of the government. The first British consols 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 Kingdom of England, English Government's banker and debt manager, and still one ...
in 1751. They have now been fully redeemed.
The United States government issued consols from 1877 to 1930, which have likewise been redeemed.
History of British consols
In 1752 the
Chancellor of the Exchequer
The chancellor of the exchequer, often abbreviated to chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and the head of HM Treasury, His Majesty's Treasury. As one of the four Great Offices of State, t ...
and
Prime Minister
A prime minister or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. A prime minister is not the head of state, but r ...
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 ...
(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
In finance and accounting, par value means stated value or face value of a financial instrument. Expressions derived from this term include at par (at the par value), over par (over par value) and under par (under par value).
Bonds
A bond selli ...
by
Act of Parliament.
In 1927 Chancellor
Winston Churchill
Sir Winston Leonard Spencer Churchill (30 November 1874 – 24 January 1965) was a British statesman, military officer, and writer who was Prime Minister of the United Kingdom from 1940 to 1945 (Winston Churchill in the Second World War, ...
issued a new government stock, 4% consols, as a partial refinancing of the
National War Bonds issued in 1917 during
World War I
World War I or the First World War (28 July 1914 – 11 November 1918), also known as the Great War, was a World war, global conflict between two coalitions: the Allies of World War I, Allies (or Entente) and the Central Powers. Fighting to ...
.
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 to British consols in literature
Given their long history, references to consols can be found in many places, including ''Pride and Prejudice
''Pride and Prejudice'' is the second published novel (but third to be written) by English author Jane Austen, written when she was age 20-21, and later published in 1813.
A novel of manners, it follows the character development of Elizabe ...
'' by Jane Austen
Jane Austen ( ; 16 December 1775 – 18 July 1817) was an English novelist known primarily for #List of works, her six novels, which implicitly interpret, critique, and comment on the English landed gentry at the end of the 18th century ...
, ''David Copperfield
''David Copperfield''Dickens invented over 14 variations of the title for this work; see is a novel by English author Charles Dickens, narrated by the eponymous David Copperfield, detailing his adventures in his journey from infancy to matur ...
'' by Charles Dickens
Charles John Huffam Dickens (; 7 February 1812 – 9 June 1870) was an English novelist, journalist, short story writer and Social criticism, social critic. He created some of literature's best-known fictional characters, and is regarded by ...
, ''The Notting Hill Mystery
''The Notting Hill Mystery'' is an English-language detective novel written and serialised under the pseudonym Charles Felix from 1862 to 1863 and published in book form in 1865, with illustrations by George du Maurier. The author's identity w ...
'' by Charles Warren Adams
Charles Warren Adams (1833–1903) was an English lawyer, publisher and anti-vivisectionist, now known from documentary evidence to have been the author of ''The Notting Hill Mystery''. This is often taken to be the first full-length detective n ...
, ''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 wa ...
'' by E. M. Forster, '' Vanity Fair'' by William Makepeace Thackeray
William Makepeace Thackeray ( ; 18 July 1811 – 24 December 1863) was an English novelist and illustrator. He is known for his Satire, satirical works, particularly his 1847–1848 novel ''Vanity Fair (novel), Vanity Fair'', a panoramic portra ...
, '' The Tuppenny Millionaire'' by P G Wodehouse, '' Of Human Bondage'' by William Somerset Maugham and '' The Forsyte Saga'' by John Galsworthy.
See also
*War bond
War bonds (sometimes referred to as victory bonds, particularly in propaganda) are Security (finance)#Debt, debt securities issued by a government to finance military operations and other expenditure in times of war without raising taxes to an un ...
*The Swiss National Bank 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
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