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  • Writer's pictureHeather Moll

What Are the Four Per Cents?

We all know that by whatever metric or conversion calculator you use, Austen’s Mr. Darcy is very rich. He owns a lot of land, supports his local community, and has ready cash to pay off scoundrels. He’s a member of the gentry, meaning a portion of his income comes from rent. He likely has other investments because there would certainly be non-inheriting children that would need some source of income after his death. (He’s not Mr. Bennet, after all). But most of that ten thousand a year comes from all that land in Derbyshire.

But what about the pseudo-gentry, those in the same socio-economic class who don’t own any land? Where do people keep their savings? How is that second son paying for things? Where is Georgiana Darcy’s fortune until she gets married? Where is Mrs. Bennet’s five thousand pounds sitting that will eventually get divvied up amongst her daughters?

Mr. Collins gives us a clue during his awful proposal to Elizabeth Bennet.

“To fortune I am perfectly indifferent, and shall make no demand of that nature on your father, since I am well aware that it could not be complied with; and that one thousand pounds in the four per cents [italics mine], which will not be yours till after your mother’s decease, is all that you may ever be entitled to.”

That isn’t much. Forty pounds a year. Mr. Bennet spends about 100 pounds on Lydia’s pocket money and purchases. No wonder Mrs. Bennet is worried. But Mr. Collins knows Elizabeth’s future one-fifth of that five thousand pounds is currently invested and earning about four percent interest. When Bingley rents Netherfield, Mrs Bennet learns he has “four or five thousand a year”. If he has no income from an estate like his friend Darcy, and we know he has 100,000 pounds somewhere, it must be earning 4-5% interest a year.

But what are “the four per cents”??

Ready to get a little nerdy? In the 1750s, the Chancellor of the Exchequer converted all outstanding issues of redeemable government stock into one bond, the Consolidated 3.5% Annuities. The goal was to reduce the interest rate on the government’s debt. In 1757, they reduced the annual interest rate on the stock to 3%, leaving the stock as Consolidated 3% Annuities. The rate remained at 3% until 1888.

These annuities became known as ‘Consols’. These were permanent government bonds with annual interest payments of 3%. This means that they had no maturity date, i.e. the holder of the security could expect the government to keep paying 3% of the face value forever and were redeemable pretty much at any time.

(A bond is debt security to support government spending. It’s a low-risk investment because the government backs them.)

Why would the government do this? There was a lot of war debt and civic improvements in the 18th and early 19th centuries. The future regent also loved to spend. In 1795, the national debt was over 400 million pounds. In 1815, at the end of the Napoleonic Wars, it reached 790 million pounds, more than 250% of its GDP. So, how does the government get the money for the army, the navy, armament, home defense, civic improvements, and a prince who loves to spend?

Increase taxes and raise loans.

The government continually paid interest on its own debt. But the rate paid was fixed depending on when they were purchased. In the 1770s, it was about 3.64% return. But Austen wrote at a time of war, when consols tended to be discounted. The cheaper it is to purchase a bond of a particular value, the greater the return. In 1803, for example. it yielded between 4.12—5.99%.

Here we get to our “four per cents” Mr. Collins mentioned.

At the time Austen was writing and revising Pride and Prejudice, around the first decade of the 1800s, that interest rate was about 4.8%. The pseudo-gentry class had sizable sums of capital in government or navy bonds, which paid a fixed interest rate depending on when you bought the stock. Consols paid at least 3% but at this time they were earning above 4% percent a year.

But there was another common investment option, one Austen used herself. The Navy five percent annuities were typically not discounted. Navy annuities, often referred to as Navy five per cents, originated from debts incurred by the English Navy. For an 11-year period from 1810 to 1821, the indebted English Navy issued annuities of its own. Many people cashed in by lending to the military at such high rates, and it became a popular investment vehicle.

Austen invested the profits of her first three published novels in £600 worth of “Navy Fives,” government stock that returned five percent interest annually, bringing her £30 each year.

So here we go: The four per cents were investments in government bonds. You live off the income of these investments without touching the capital.

Georgiana Darcy’s thirty thousand pounds invested in the consols would earn 3%, so her future husband will get 900 pounds a year, but it’s possible she’s getting 4%, which is 1,200 a year. If Wickham had invested Darcy’s payoff and his legacy (4,000 pounds in all) and made 4% off of that, he could have had 160 pounds a year. (Not to mention a salary from that law career he was supposed to have been working toward.)

For Bingley to have 100,000 pounds and earn income—and not have an estate yet—suggests his wealth consists predominantly of consols. He’s got his money invested in bonds that earn him about 4 percent a year. And Mrs. Bennet doesn’t seem to care that the money isn’t from land.

Austen’s characters openly discuss wealth and income, and there are clues in her texts about where their money is and where it came from. It could come from agricultural profits on land, rent from properties, and interest off investments. There’s a financial significance to Mr. Darcy being from Derbyshire, slavery insinuations behind Sir Thomas Bertram’s plantation in Antigua, and the financial implications of Persuasion’s timing. Her contemporaries would have recognized things we miss or gloss over, including what it meant to invest in “the four per cents”.

Wright, J. F. “British Government Borrowing in Wartime, 1750-1815.” The Economic History Review 52, no. 2 (1999): 355–61.

P. Sabor (Ed.) The Cambridge Companion to Emma. pp 52-67.

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