A century on, the UK government will start paying back the nation’s first world war debt, which amounts to £2bn ($3.2 billion).
It announced on Friday it would pay off £218m ($348 million) from a 4% consolidated loan on 1 February 2015, as part of a redemption of bonds stretching as far back as the 18th century.
Winston Churchill, then chancellor, issued “4% consols” in 1927 to refinance national war bonds originating from the first world war and other debt.
Most of the bonds are owned by small investors. Of the 11,200 registered holders, 7,700 investors hold less than £1,000 ($1,600) nominal, and 92% of holders own less than £10,000 ($16,000) each.
Barclays bond strategist Moyeen Islam said:
For those of us who love the gilt market it’s a sad day – there’s a few old-timers crying in the corner. But it’s symbolic more than anything.
Some of the debt being repaid relates to the South Sea Bubble crisis of 1720, the Napoleonic and Crimean wars, the abolition of slavery and the Irish potato famine of the mid-18th century.
In 1853, the then chancellor William Gladstone consolidated the capital stock of the South Sea Company which had collapsed in the infamous South Sea Bubble financial crisis of 1720.
The South Sea Sea Bubble was a speculative bubble in the early 18th century involving the shares of the South Sea Company.
The British trading company was granted a monopoly in trade with Spain’s silver and gold-rich colonies in South America and the West Indies, in return for assuming England’s debt for the War of the Spanish Succession.
Nearly all classes of British society got involved in wild stock speculation and when the bubble popped many investors were ruined.
In 1888, chancellor George Goschen converted bonds first issued in 1752 which were later used to finance the Napoleonic and Crimean Wars, the Slavery Abolition Act (1835) and the Irish Distress Loan (1847).
This debt will be repaid through the redemption of the 4% consols.
Some of the bonds now being repaid were used to fund the Napoleonic wars.
Some of the debt originates from the Irish Distress Loan of 1847, related to the Irish Potato Famine that started in 1845 and lasted six years.
This article originally appeared on guardian.co.uk
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