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190 ECONOMIC INQUIRIES AND STUDIES
itself; and second, that the rate of interest before the
emergency comes about has not changed from the
present level, apart from the usual oscillations between
times of good and bad credit. Such a discussion may
bring up interesting points as to the conditions of
national credit, and the use of a sinking fund for the
redemption of debt, or for the provision in some other
way of a reserve against emergencies, by a Govern-
ment in the position of that df the United Kingdom.

The high price of Consols at the present time
naturally suggests that in time of stress the rate at
which new loans could be raised would be correspond-
ingly high. The rate would be less of course than the
present, because any new issue tends to lower the
price for the time of existing issues, and stiII more a
new issue in circumstances like those suggested, but
the rate would still be high. It is the assumption that
the rate would be correspondingly high, which I pro~
pose to dispute. On the contrary, the market for Con-
sols for some years has been an artificial one. When
it becomes a natural market again, as it must do when
large new issues take place, and when practically a
new market would have to be found, the price would
be considerably lower than it is now.
Passing over for the moment the fact of the artificial
character of the market for Con sols at the present
time, there are plenty of precedents to show that if
the market were natural the price will probably not
fall very much at first in the circumstances described.
In the Franco-German war in 1870 the drop in French
3 per cents. on the declaration of war was from 73 to
66. A fortnight before the declaration of war in this
case everything was peaceful, and there was no sign
whatsoever of any such outbreak being at hand. Con-
sequently, the price after the declaration of war and
the price a fortnight before measure the difference
caused by the war itself, and by the apprehensions
immediately excited as to what new issues would be.