Government, such as its revenue and expenditure for a term of years, the amount of its outstanding debt, and of its assets if any.  If the credit of the Kingdom of Ruritania is good, such a loan as here described would be, or would have been before the war, an attractive issue, since the investor would get a good rate of interest for his money, and would be certain of getting par or L100, some day, for each bond for which he now pays L97.  This is ensured by the action of the Sinking Fund of 1 per cent. cumulative, which works as follows.  Each year, as long as the loan is outstanding the Kingdom of Ruritania will have to put L165,000 in the hands of the issuing houses, to be applied to interest and Sinking Fund.  In the first year interest at 4-1/2 per cent. will take L135,000 and Sinking Fund (1 per cent. of L3,000,000) L30,000; this L30,000 will be applied to the redemption of bonds to that value, which are drawn by lot; so that next year the interest charge will be less and the amount available for Sinking Fund will be greater; and each year the comfortable effect of this process continues, until at last the whole loan is redeemed and every investor will have got his money back and something over.  The effect of this obligation to redeem, of course, makes the market in the loan very steady, because the chance of being drawn at par in any year, and the certainty of being drawn if the investor holds it long enough, ensures that the market price will be strengthened by this consideration.

Such being the terms of the loan we may be justified in supposing—­if Ruritania has a clean record in its treatment of its creditors, and if the issuing firm is one that can be relied on to do all that can be done to safeguard their interests, that the loan is a complete success and is fully subscribed for by the public.  The underwriters will consequently be relieved of all liability and will pocket their 2 per cent., which they have earned by guaranteeing the success of the issue.  If some financial or political shock had occurred which made investors reluctant to put money into anything at the time when the prospectus appeared or suggested the likelihood that Ruritania might be involved in war, then the underwriters would have had to take up the greater part of the loan and pay for it out of their own pockets; and this is the risk for which they are given their commission.  Ruritania will have got its money less the cost of underwriting, advertising, commissions, 1 per cent. stamp payable to the British Government, and the profit of the issuing firm.  Some shipyard in the north will lay down a battleship and English shareholders and workmen will benefit by the contract, and the investors will have got well secured bonds paying them a good rate of interest and likely to be easily saleable in the market if the holders want to turn them into cash.  The bonds will be large pieces of paper stating that they are 4-1/2 per cent, bonds of the Kingdom of Ruritania for L20, L100, L500 or L1000 as the case may be, and they will each have a sheet of coupons attached, that is, small pieces to be cut off and presented at the date of each interest payment; each one states the amount due each half year and the date when it will have to be met.