In the great majority of cases in modern times, the leading nations are able to borrow without particular reference to any special means of arousing confidence. The long period through which they have faithfully fulfilled all their obligations has so thoroughly established their credit that their bonds stand among the best securities on the market. The only changes that can be made in these debts are such as are intended to make the annual burden as small as possible. Some of the things desired by creditors, and which, while not affecting the credit of the borrowing State, yet add to the readiness with which the bonds sell, are (1) that the debt shall not be redeemed arbitrarily for a capital sum which would not yield, at the market rate of interest, the same annual income as the bond ; (2) that any chance gains that may arise, as from a fall in the market rate of interest, may for a time at least accrue definitely to the holder.

By far the larger part of European debts consist of the so-called " perpetual " bonds. These bonds, which generally name a certain capital sum at which they may be redeemed, contain no date at which they mature. They are redeemable whenever the debtor (the State) chooses, subject in some instances to certain limitations for the greater security of the lender. For example, the publication of notice of intention to redeem or promise not to redeem for a certain period. These " perpetual " bonds are for both parties a very convenient form. What they amount to is that the State sells an annuity for what it will bring, with the privilege of redeeming it at any time for a certain sum, but it cannot be compelled to redeem it at any inconvenient time. The creditor, owing to the publication which to-day attends all public affairs, knows what provisions can be made for the repayment, and consequently knows approximately how long his annuity will run. He can, moreover, easily dispose of it through the stock market if he should need the money for other purposes.

This form was once used in the United States, but traditions of rapid payment led to the adoption of different forms.1 The first debts of the United States had been made in the form of simple perpetual bonds with nolimits. The debts created after the War of 1812 were also of that variety, with a limit of time set within which it was promised not to redeem them. But the variation just referred to was introduced in 1862. This form has been called the "limited option " debt. The bonds were " redeemable at the pleasure of the United States after five years, and payable twenty years from date " of issue. They were called "five-twenties." A similar plan was followed in the so-called " ten-forties." The only advantage gained by thus fixing a limit at which the creditor is to expect the payment, is that the fiscal officers may have a definite goal toward which to work. If a termin is set, it is easy to urge the extinction of the debt at or before that time, and consequently the adoption of special means and efforts toward that end.

1 See Adams, Public Debts, p. 162.