Early Refunding Operations
REFERENCE has already been made, in discussing the affair of the South Sea Company, to the refunding operations prior to 1739. There were only two refunding operations of importance between 1739 and 1817.
Advantage was taken of the period of peace which followed the War of the Austrian Succession to take measures to reduce the interest paid on the debt to a uniform rate of 3 per cent. At that time the funded debt, apart from that due to the Bank of England, South Sea Company and East India Company, consisted of various debts contracted at different periods under several Acts of Parilament and charged on many distinct funds.
Parliament enacted a law in 1749 that all public creditors at four per cent. should be paid the amount of their holdings except those who signified their consent to accept three per cent. after December 25, 1757. These were to have their present interest continued until December 25, 1750, and then to receive 3 ½ per cent. until December, 1757. The amount of these debts, including those due to the Bank and the companies was £57,700,000. The greater part of the creditors accepted the proposition. A modified offer, not quite so favorable, was made to those who held out and was generally accepted, with the result that the Treasury was called upon to pay off only about £3,000,000. As a result of these operations and the payment of 3,000,000 navy debt, there was a net decrease, in round figures, of nearly £5,000,000