My recollection is that a 3% return on invested money was considered normal for those days, which would give her 150 pounds a year – enough to maintain her, somewhat precariously, at the lower bound of the middle class. She wouldn’t have starved, but she wouldn’t have been considered affluent, either.
ENugent
September 18, 2007, 7:23pm
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In Anthony Trollope novels (mid 1800’s) that mention both principal amounts and income, 4% or 5% seem to be the expected rates of return. (No cites, as I don’t feel like going through my 40-book collection looking for examples.)
My recollection is that a 3% return on invested money was considered normal for those days, which would give her 150 pounds a year – enough to maintain her, somewhat precariously, at the lower bound of the middle class. She wouldn’t have starved, but she wouldn’t have been considered affluent, either.
There was, apparently, an investment vehicle known as The Funds , which paid 3 or 5 per cent per annum on the principal.
From The Funds in Victorian Literature :
Throughout English literature of the nineteenth century, people of moderate wealth invest money in “the funds” and receive a three or five percent return annually. The funds are, because of this, sometimes called “the three precents” or “the five percents”. Acquiring a sum which can be invested in the funds is sometimes an ultimate goal and sometimes a surprise redemption.
Three or five percent as opposed to three to five percent is an interesting use of language. Here’s an extract which highlights a three percent fund:
In Surtees & Money , Tim Congdon writes:
The most fundamental choice in mid-Victorian England was among the safety of “the funds” (i.e., government debt, particularly Consolidated stock or “Consols”), the relative safety of land and mortgages on land, and the riskiness of equities and other asset types. Broadly speaking, the yield on Consols was a stable, predictable, and reliable three percent. This was not much, but—in a society where long-run price stability was an established fact—it was a real return.
And here’s another which extols the virtues of a five percent fund:
In Victorian Culture and History Professor Tamara Ketabgian mentions the funds with a passing reference to Victorian literature:
The “funds” was simply another term for the national debt, since it was generally being paid off with the revenues from various accounts or funds. As the debt was backed up by the government and didn’t involve the risks entailed in buying privately issued securities, the funds were a popular investment. In addition, they generally paid a perfectly respectable 5 percent. When Jane Eyre’s uncle dies, leaving her the money that finally gives her independence, her cousin informs her that “your money is vested in the English funds,” and in Vanity Fair, we are told that the selfish and disagreeable heiress Miss Crawley “preferred the security of the funds.” “The great rich Miss Crawley,” Becky Sharp calls her, “with seventy thousand pounds in the five per cents…”
The above observations discuss the same time period as far as I can make out. If anyone can tell me the difference between a three percent fund and a five percent fund I’d be grateful, as long as the answer isn’t two percent.
In Women Writing About Money Edward Copeland touched more closely on the Funds. They were in the background of most women’s fiction, “amongst the prime ingredients in the cup of human happiness”, wrote Jane West. Copeland writes that in “contemporary women’s fiction” of that time,
Any lump sum is automatically calculated by the contemporary novel-reader for its annual, spendable income. A simple formula suffices: the amount of a lump sum inheritance multiplied by 5 percent, the annual yield a heroine can expect from the investment of that sum in the 5 percent government funds. An heiress with an inheritance of £10,000, as any reader would know, would possess an income of £500 a year. An heiress like Miss Grey in Sense and Sensibility, with £50,000 as an inheritance, has an income of £2,500 a year.
Not just women made this calculations in novels. Jasper Milvain thinks in exactly this manner of his potential incomes and marriage prospects.
Copeland puts these numbers in perspective by describing the kind of life a woman might expect at incomes ranging from £25 to £5,000. At £200 per year, a person of “modest expectations” might live independently, though it was a “very narrow income”, and £400 could “support a household with two servants”.
These all compared to the £25 a year income of the “laboring poor”.
So £25 per annum was only about ten percent as good as a very narrow income.
Hard times indeed.