![In order to marry Anne Boleyn, it was necessary to annul the
marriage with Catharine of Aragon. King Henry VIII., after
seventeen years of union found himself smitten with scruples as to
the legitimacy of his marriage with the widow of his brother; he
found proof of the wrath of God in the numerous losses which had
been sustained by his family. The queen had given him six children,
but had lost all save her eldest daughter, the Princess Mary. He
very ostentatiously displayed his affection for Catharine, but the
delicacy of his conscience did not permit him to live in peace with
her. He began to experience a desire to surround himself with
learned doctors able to throw light upon the laws divine and human
which he might have involuntarily violated. Various secret motives
favoured the passion of the king. Notwithstanding the declarations
of Henry VIII. with regard to the impossibility of the Lutheran
heresies taking root in the soil of England, the doctrines of the
Reformation had silently made great progress; the partisans of the
new doctrine knew Queen Catherine to be ardently and sincerely a
Catholic; there was no support to be expected from her. On the
other hand, Wolsey, the faithful servant of the Church of Rome,
was exasperated against the emperor, the nephew of Catharine,
who had failed him in the pontifical elections, and he wished to
strengthen the alliance which united his master to France, by
inducing him to marry Renee, the second daughter of Louis XII.
The cardinal did not foresee any serious obstacles to his project
from the affair of Anne Boleyn, but the divorce served his policy.
Negotiations were then in progress for the marriage of the Princess
Mary with the Duke of Orleans, son of the King of France, and the
ambassadors of Francis I. were enabled to assure themselves
personally of the truth of the rumours which attributed to the King
an insane love for Anne Boleyn. He danced with her all night at the
masquerade given in their honor. Wolsey soon afterwards
proceeded to France, magnificently escorted in his embassy, like
Thomas a Becket in former times. When he came back, the alliance
between the two crowns was closer than ever, and he had himself
assured Louise of Savoy that she would soon see a princess of her
blood seated upon [the] throne of England; but the king had spent](https://image.slidesharecdn.com/11566-250416190619-4136d56a/85/Solutions-Manual-to-accompany-Bond-Markets-Analysis-and-Strategies-8th-edition-013274354x-27-320.jpg)
Solutions Manual to accompany Bond Markets, Analysis and Strategies 8th edition 013274354x
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- 5. © 2013 Pearson Education, Inc. 2 The Treasury Sector The Treasury sector includes securities issued by the U.S. government. These securities include Treasury bills, notes, and bonds. This sector plays a key role in the valuation of securities and the determination of interest rates throughout the world. The Agency Sector The agency sector includes securities issued by federally related institutions and government- sponsored enterprises. The securities issued are not backed by any collateral and are referred to as agency debenture securities. The Municipal Sector The municipal sector is where state and local governments and their authorities raise funds. This sector is divided into two subsectors based on how the interest received by investors is taxed at the federal income tax level: the tax-exempt and taxable sectors. The municipal bond market includes two types of structures: tax-backed and revenue bonds. The Corporate Sector The corporate sector includes (i) securities issued by U.S. corporations and (ii) securities issued in the United States by foreign corporations. Issuers in the corporate sector issue bonds, medium- term notes, structured notes, and commercial paper. The corporate sector is divided into the investment grade and noninvestment grade sectors. The Asset-Backed Securities Sector In the asset-backed securities sector, a corporate issuer pools loans or receivables and uses the pool of assets as collateral for the issuance of a security. The Mortgage Sector The mortgage sector is the sector where securities are backed by mortgage loans. These are loans obtained by borrowers in order to purchase residential property or an entity to purchase commercial property (i.e., income-producing property). The mortgage sector is then divided into the residential mortgage sector and the commercial mortgage sector. OVERVIEW OF BOND FEATURES A more detailed treatment of bond features is presented in later chapters. Type of Issuer There are three issuers of bonds: the federal government and its agencies, municipal governments, and corporations (domestic and foreign).
- 6. © 2013 Pearson Education, Inc. 3 Term to Maturity The maturity of a bond refers to the date that the debt will cease to exist, at which time the issuer will redeem the bond by paying the principal. There may be provisions in the indenture that allow either the issuer or bondholder to alter a bond’s term to maturity. Generally, bonds with a maturity of between one and five years are considered short-term. Bonds with a maturity between 5 and 12 years are viewed as intermediate -term, and those with a maturity of more than 12 years are called long-term. With all other factors constant, the longer the maturity of a bond, the greater the price volatility resulting from a change in market yields. Principal and Coupon Rate The principal of a bond is the amount that the issuer agrees to repay the bondholder at the maturity date. This amount is also referred to as the redemption value, maturity value, par value, or face value. The coupon rate, also called the nominal rate, is the interest rate that the issuer agrees to pay each year. The annual amount of the interest payment made to owners during the term of the bond is called the coupon. The holder of a zero-coupon bond realizes interest by buying the bond substantially below its principal value. Interest is then paid at the maturity date, with the exact amount being the difference between the principal value and the price paid for the bond. Floating-rate bonds are issues where the coupon rate resets periodically (the coupon reset date) based on a formula. The coupon reset formula has the following general form: reference rate + quoted margin. The quoted margin is the additional amount that the issuer agrees to pay above the reference rate. An important non-interest rate index that has been used with increasing frequency is the rate of inflation. Bonds whose interest rate is tied to the rate of inflation are referred to generically as linkers. The coupon on floating-rate bonds (which is dependent on an interest rate benchmark) typically rises as the benchmark rises and falls as the benchmark falls. Exceptions are inverse floaters whose coupon interest rate moves in the opposite direction from the change in interest rates. To reduce the burden of interest payments, firms involved in LBOs and recapitalizations, have issued deferred-coupon bonds that let the issuer avoid using cash to make interest payments for a specified number of years. Amortization Feature The principal repayment of a bond issue can call for either (1) the total principal to be repaid at maturity or (2) the principal repaid over the life of the bond. In the latter case, there is a schedule of principal repayments. This schedule is called an amortization schedule. For amortizing securities, a measure called the weighted average life or simply average life of a security is computed.
- 7. © 2013 Pearson Education, Inc. 4 Embedded Options It is common for a bond issue to include a provision in the indenture that gives either the bondholder and/or the issuer an option to take some action against the other party. The most common type of option embedded in a bond is a call provision. This provision grants the issuer the right to retire the debt, fully or partially, before the scheduled maturity date. An issue with a put provision included in the indenture grants the bondholder the right to sell the issue back to the issuer at par value on designated dates. A convertible bond is an issue giving the bondholder the right to exchange the bond for a specified number of shares of common stock. An exchangeable bond allows the bondholder to exchange the issue for a specified number of common stock shares of a corporation different from the issuer of the bond. Describing a Bond Issue There are hundreds of thousands of bonds issues. Most securities are identified by a nine character (letters and numbers) CUSIP number. CUSIP stands for Committee on Uniform Security Identification Procedures. The first six characters identify the issuer: the corporation, government agency, or municipality. The next two characters identify whether the issue is debt or equity and the issuer of the issue. The last character is simply a check character that allows for accuracy checking and is sometimes truncated or ignored. The CUSIP International Numbering System (CINS) is used to identify foreign securities and includes 12 characters. RISKS ASSOCIATED WITH INVESTING IN BONDS Bonds may expose an investor to one or more of the following risks: (1) interest-rate risk, (2) reinvestment risk, (3) call risk, (4) credit risk, (5) inflation risk, (6) exchange rate risk, (7) liquidity risk, (8) volatility risk, and (9) risk risk. In later chapters, other risks, such as yield curve risk, event risk, and tax risk, are also introduced. Interest-Rate Risk If an investor has to sell a bond prior to the maturity date, an increase in interest rates will mean the realization of a capital loss (i.e., selling the bond below the purchase price). This risk is referred to as interest-rate risk or market risk. Reinvestment Income or Reinvestment Risk Reinvestment risk is the risk that the interest rate at which interim cash flows can be reinvested will fall. Reinvestment risk is greater for longer holding periods, as well as for bonds with large, early, cash flows, such as high-coupon bonds. It should be noted that interest-rate risk and reinvestment risk have offsetting effects. That is, interest-rate risk is the risk that interest rates will rise, thereby reducing a bond’s price. In contrast, reinvestment risk is the risk that interest rates will fall.
- 8. © 2013 Pearson Education, Inc. 5 Call Risk Call risk is the risk investors have that a callable bond will be called when interest rates fall. Many bonds include a provision that allows the issuer to retire or “call” all or part of the issue before the maturity date. The issuer usually retains this right in order to have flexibility to refinance the bond in the future if the market interest rate drops below the coupon rate. For investors, there are three disadvantages to call provisions. First, the cash flow pattern cannot be known with certainty. Second, the investor is exposed to reinvestment risk. Third, the capital appreciation potential of a bond will be reduced. Even though the investor is usually compensated for taking call risk by means of a lower price or a higher yield, it is not easy to determine if this compensation is sufficient. Credit Risk Credit risk is the risk that the issuer of a bond will fail to satisfy the terms of the obligation with respect to the timely payment of interest and repayment of the amount borrowed. This form of credit risk is called default risk. Market participants gauge the default risk of an issue by looking at the default rating or credit rating assigned to a bond issue by rating companies. The yield on a bond issue is made up of two components: (1) the yield on a similar maturity Treasury issue and (2) a premium to compensate for the risks associated with the bond issue that do not exist in a Treasury issue—referred to as a spread. The part of the risk premium or spread attributable to default risk is called the credit spread. The risk that a bond price will decline due to an increase in the credit spread is called credit spread risk. An unanticipated downgrading of an issue or issuer increases the credit spread sought by the market, resulting in a decline in the price of the issue or the issuer’s debt obligation. This risk is referred to as downgrade risk. Consequently, credit risk consists of three types of risk: default risk, credit spread risk, and downgrade risk. Inflation Risk Inflation risk or purchasing-power risk arises because of the variation in the value of cash flows from a security due to inflation, as measured in terms of purchasing power. Exchange-Rate Risk A non-dollar-denominated bond (i.e., a bond whose payments occur in a foreign currency) has unknown U.S. dollar cash flows. The dollar cash flows are dependent on the exchange rate at the time the payments are received. The risk of the exchange rate causing smaller cash flows is referred to as exchange rate or currency risk. Liquidity Risk
- 9. © 2013 Pearson Education, Inc. 6 Liquidity or marketability risk depends on the ease with which an issue can be sold at or near its value. The primary measure of liquidity is the size of the spread between the bid price and the ask price quoted by a dealer. The wider the dealer spread, the more the liquidity risk. Marking a position to market, or simply marking to market, means that the portfolio manager must periodically determine the market value of each bond in the portfolio. Volatility Risk The value of an embedded option rises when expected interest-rate volatility increases. The risk that a change in volatility will affect the price of a bond adversely is called volatility risk. Risk Risk There have been new and innovative structures introduced into the bond market. Risk risk is defined as not knowing what the risk of a security is. There are two ways to mitigate or eliminate risk risk. The first way is to keep up with the literature on the state-of-the-art methodologies for analyzing securities. The second way is to avoid securities that are not clearly understood.
- 10. © 2013 Pearson Education, Inc. 7 ANSWERS TO QUESTIONS FOR CHAPTER 1 (Questions are in bold print followed by answers.) 1. What is the cash flow of a 10-year bond that pays coupon interest semiannually, has a coupon rate of 7%, and has a par value of $100,000? The principal or par value of a bond is the amount that the issuer agrees to repay the bondholder at the maturity date. The coupon rate multiplied by the principal of the bond provides the dollar amount of the coupon (or annual amount of the interest payment). A 10-year bond with a 7% annual coupon rate and a principal of $100,000 will pay semiannual interest of (0.07/2)($100,000) = $3,500 for 10(2) = 20 periods. Thus, the cash flow is an annuity of $3,500 made is 20 payments at the same two points in time for each of the ten years. In addition to this cash flow, the issuer of the bond is obligated to pay back the principal of $100,000 at the time the last $3,500 is paid. 2. What is the cash flow of a seven-year bond that pays no coupon interest and has a par value of $10,000? There is no periodic cash flow as found in the previous problem. Thus, the only cash flow will be the principal payment of $10,000 paid by the issuer (and received by the bond purchaser) at the end of seven years. This type of cash flow resembles a zero-coupon bond. The holder of such a bond realizes interest by buying the bond substantially below its principal value. Interest is then paid at the maturity date, with the exact amount being the difference between the principal value and the price paid for the bond. 3. Give three reasons why the maturity of a bond is important. There are three reasons why the maturity of a bond is important. First, the maturity gives the time period over which the holder of the bond can expect to receive the coupon payments and the number of years before the principal will be paid in full. Second, the maturity is important because the yield on a bond depends on it. The shape of the yield curve determines how the maturity affects the yield. Third, the price of a bond will fluctuate over its life as yields in the market change. The volatility of a bond’s price is dependent on its maturity. More specifically, with all other factors constant, the longer the maturity of a bond, the greater the price volatility resulting from a change in market yields. 4. Explain whether or not an investor can determine today what the cash flow of a floating- rate bond will be. Floating-rate bonds are issues where the coupon rate resets periodically based on a general formula equal to the reference rate plus the quoted margin. The reference rate is some index subject to change. The exact change is unknown and uncertain. Thus, an investor cannot determine today what the cash flow of a floating-rate bond will be in the future.
- 11. © 2013 Pearson Education, Inc. 8 5. Suppose that coupon reset formula for a floating-rate bond is: 1-month LIBOR + 220 basis points. (a) What is the reference rate? The reference rate is the 1-month LIBOR. (b) What is the quoted margin? The quoted margin is the 220 basis points (or 2.20%). (c) Suppose that on a coupon reset date that 1-month LIBOR is 2.8%. What will the coupon rate be for the period? The coupon reset formula is: 1-month LIBOR + 220 basis points. Therefore, if 1-month LIBOR on the coupon reset date is 2.8%, the coupon rate is reset for that period at 2.80% + 2.20% = 5.00%. 6. What is a deferred coupon bond? Deferred-coupon bonds are coupon bonds that let the issuer avoid using cash to make interest payments for a specified number of years. There are three types of deferred-coupon structures: (1) deferred-interest bonds, (2) step-up bonds, and (3) payment-in-kind bonds. 7. What is meant by a linker? A linker is a bond whose interest rate is tied to the rate of inflation. The U.S. Treasury issues linkers, and they are referred to as Treasury Inflation Protection Securities (TIPS). 8. Answer the below questions. (a) What is meant by an amortizing security? The principal repayment of a bond issue can be for either the total principal to be repaid at maturity or for the principal to be repaid over the life of the bond. In the latter case, there is a schedule of principal repayments. This schedule is called an amortization schedule. Loans that have this amortizing feature are automobile loans and home mortgage loans. There are securities that are created from loans that have an amortization schedule. These securities will then have a schedule of periodic principal repayments. Such securities are referred to as amortizing securities. (b) Why is the maturity of an amortizing security not a useful measure? For amortizing securities, investors do not talk in terms of a bond’s maturity. This is because the stated maturity of such bonds or securities only identifies when the final principal payment will be made. For an amortized security, the repayment of the principal is made through multiple
- 12. © 2013 Pearson Education, Inc. 9 payments over its maturity and not just at the end of its term to maturity. Thus, the maturity is not a useful measure in terms of identifying when the principal is repaid. 9. What is a bond with an embedded option? A bond with an embedded option is a bond that contains a provision in the indenture that gives either the bondholder and/or the issuer an option to take some action against the other party. For example, the borrower may be given the right to alter the amortization schedule for amortizing securities. An issue may also include a provision that allows the bondholder to change the maturity of a bond. An issue with a put provision included in the indenture grants the bondholder the right to sell the issue back to the issuer at par value on designated dates. 10. What does the call provision for a bond entitle the issuer to do? A call provision grants the issuer the right to retire the debt, fully or partially, before the scheduled maturity date. 11. Answer the below questions. (a) What is the advantage of a call provision for an issuer? Inclusion of a call feature benefits bond issuers by allowing them to replace an old bond issue with a lower-interest cost issue if interest rates in the market decline. A call provision effectively allows the issuer to alter the maturity of a bond. The right to call an obligation is included in most loans and therefore in all securities created from such loans. This is because the borrower typically has the right to pay off a loan at any time, in whole or in part, prior to the stated maturity date of the loan. (b) What are the disadvantages of a call provision for the bondholder? From the bondholder’s perspective, there are three disadvantages to call provisions. First, the cash flow pattern of a callable bond is not known with certainty. Second, because the issuer will call the bonds when interest rates have dropped, the investor is exposed to reinvestment risk. Reinvestment risk is the risk that the investor will have to reinvest the proceeds when the bond is called at relatively lower interest rates. Finally, the capital appreciation potential of a bond will be reduced because the price of a callable bond may not increase much above the price at which the issuer will call the bond. 12. What does the put provision for a bond entitle the bondholder to do? An issue with a put provision included in the indenture grants the bondholder the right to sell the issue back to the issuer at par value on designated dates. The advantage to the bondholder is related to the possibility that if interest rates rise after the issue date (thereby reducing a bond’s price) the bondholder can force the issuer to redeem the bond at par value.
- 13. © 2013 Pearson Education, Inc. 10 13. The Export Development Canada issued a bond on March 17, 2009. The terms were as follows: Currency of denomination: Japanese yen (JPY) Denomination: JPY100,000,000 Maturity date: March 18, 2019, or an optional redemption date Redemption/payment basis: Redemption at par value Interest payment dates: March 18 and September 18 in each year Optional redemption dates: The issuer has the right to call the instruments in whole (but not in part) at par starting on March 18, 2012 Interest rate: Fixed rate for the first three years up to but excluding March 18, 2012: 1.5% March 18, 2012-September 18, 2012 1.75% − 6 month JPY LIBORBBA September 18, 2012-March 18, 2013 1.75% − 6 month JPY LIBORBBA March 18, 2013-September 18, 2013 2.00% − 6 month JPY LIBORBBA September 18, 2013-March 18, 2014 2.00% − 6 month JPY LIBORBBA March 18, 2014-September 18, 2014 2.25% − 6 month JPY LIBORBBA September 18, 2014-March 18, 2015 2.25% − 6 month JPY LIBORBBA March 18, 2015-September 18, 2015 2.50% − 6 month JPY LIBORBBA September 18, 2015-March 18, 2016 2.50% − 6 month JPY LIBORBBA March 18, 2016-September 18, 2016 2.75% − 6 month JPY LIBORBBA September 18, 2016-March 18, 2017 2.75% − 6 month JPY LIBORBBA March 18, 2017-September 18, 2017 3.00% − 6 month JPY LIBORBBA September 18, 2017-March 18, 2018 3.00% − 6 month JPY LIBORBBA March 18, 2018-September 18, 2018 3.25% − 6 month JPY LIBORBBA September 18, 2018-March 18, 2019 3.25% − 6 month JPY LIBORBBA Answer the below questions. (a) What is meant by JPY LIBORBBA? The reference rate for most floating-rate securities is an interest rate or an interest rate index. The mostly widely used reference rate throughout the world is the London Interbank Offered Rate and referred to as LIBOR. In debt agreements LIBOR is often referred to as BBA LIBOR. The rate is reported for ten currencies including the Japanese yen (JPY). So, for example, the JPY BBA LIBOR is the rate for a LIBOR loan denominated in Japanese yens as computed by the British Bankers Association (BBA). (b) Describe the coupon interest characteristics of this bond. The characteristics are based on the floating-rate bonds, which are issues where the coupon rate resets periodically (the coupon reset date) based on a formula. The formula, referred to as the coupon reset formula, has the following general form:
- 14. © 2013 Pearson Education, Inc. 11 reference rate + quoted margin The quoted margin is the additional amount that the issuer agrees to pay above the reference rate. For example, suppose that the reference rate is 3.5% and the quoted margin is 150 basis points. Then the coupon reset formula is 1-month LIBOR + 150 basis points = 3.5% + 1.5% = 5.0% If the 1-month LIBOR on the coupon reset date is 3.5%, the coupon rate is reset for that period at 5.0% . (c) What are the risks associated with investing in this bond if the investor’s home currency is not in Japanese yen. From the perspective of a U.S. investor, a non-dollar-denominated bond (i.e., a bond whose payments occur in a foreign currency) has unknown U.S. dollar cash flows. The dollar cash flows are dependent on the exchange rate at the time the payments are received. For our situation, an investor purchases a bond whose payments are in Japanese yen. If the yen depreciates relative to the U.S. dollar, fewer dollars will be received. The risk of this occurring is referred to as exchange-rate or currency risk. Of course, should the yen appreciate relative to the U.S. dollar, the investor will benefit by receiving more dollars. 14. What are a convertible bond and an exchangeable bond? A convertible bond is an issue giving the bondholder the right to exchange the bond for a specified number of shares of common stock. Such a feature allows the bondholder to take advantage of favorable movements in the price of the issuer’s common stock. An exchangeable bond allows the bondholder to exchange the issue for a specified number of common stock shares of a corporation different from the issuer of the bond. 15. How do market participants gauge the default risk of a bond issue? It is common to define credit risk as the risk that the issuer of a bond will fail to satisfy the terms of the obligation with respect to the timely payment of interest and repayment of the amount borrowed. This form of credit risk is called default risk. Market participants gauge the default risk of an issue by looking at the default rating or credit rating assigned to a bond issue by one of the three rating companies—Standard & Poor’s, Moody’s, and Fitch. 16. Comment on the following statement: Credit risk is more than the risk that an issuer will default. There are risks other than default that are associated with investment bonds that are also components of credit risk. Even in the absence of default, an investor is concerned that the market value of a bond issue will decline in value and/or the relative price performance of a bond issue will be worse than that of other bond issues.
- 15. © 2013 Pearson Education, Inc. 12 The yield on a bond issue is made up of two components: (1) the yield on a similar maturity Treasury issue and (2) a premium to compensate for the risks associated with the bond issue that do not exist in a Treasury issue—referred to as a spread. The part of the risk premium or spread attributable to default risk is called the credit spread. The price performance of a non-Treasury debt obligation and its return over some investment horizon will depend on how the credit spread of a bond issue changes. If the credit spread increases—investors say that the spread has “widened”—the market price of the bond issue will decline. The risk that a bond issue will decline due to an increase in the credit spread is called credit spread risk. This risk exists for an individual bond issue, bond issues in a particular industry or economic sector, and for all bond issues in the economy not issued by the U.S. Treasury. 17. Explain whether you agree or disagree with the following statement: “Because my bond is guaranteed by an insurance company, I have eliminated credit risk.” Credit risk consists of three types of risk: default risk, credit spread risk, and downgrade risk. These risks are not necessarily eliminated if there is a financial guaranty by a nongovernment third-party entity such as a private insurance company. This is because insurance companies themselves can face financial difficulties. This fact was brought home to market participants at the end of 2007 when specialized insurance companies that provide financial guarantees faced financial difficulties and the downgrading of their own credit rating. Thus, one would disagree with the statement because one’s bond guarantee is only as good as the insurance company guaranteeing it. 18. Answer the below questions. (a) What is counterparty risk? Counterparty risk is a form of credit risk that involves transactions between two parties in a trade. The risk to each party of a contract is that the counterparty (or other party) will not be able to live up to its contractual obligations. In financial contracts, counterparty risk is known as “default risk.” (b) Give two examples of transactions where one faces counterparty risk. For a first example of counterparty risk, consider the strategy of a borrower using the borrowed funds from a lender to purchase another asset such as a bond. In this transaction, the lender is exposed to counterparty risk. Counterparty risk is the risk that the borrower will fail to repay the loan if his bond purchase defaults. A second example of counterparty risk involves a trade in a derivative (which is an investment that derives its value from the value of an underlying asset). A derivative, such as an option or a futures contract, is traded on an exchange that becomes the ultimate counterparty to the trade as it guarantees payments on money owed to the purchaser of the derivative instrument. For derivative instruments that are over-the-counter instruments, the counterparty is an entity other than an exchange. In such trades, there is considerable concern with counterparty risk.
- 16. © 2013 Pearson Education, Inc. 13 19. Does an investor who purchases a zero-coupon bond face reinvestment risk? The calculation of the yield of a coupon paying bond assumes that the cash flows received are reinvested at the prevailing rate when the coupon payment is received. Because this rate is not known in advance it creates uncertainty and so it is called by the name of reinvestment risk to indicate there is risk or uncertainty in the reinvesting of coupon payments. For zero-coupon bonds, unlike bonds that pay a stream of coupon payments over time, the payment is reinvested at the same rate as the coupon rate. This eliminates any risk associated with the possibility that coupon payments will be reinvested at a lower rate. However, if rates go up, then the zero coupon bond will fall in value because its “locked-in” rate is below the higher market rate. 20. What is meant by marking a position to market? Marking a position to market means that periodically the market value of a portfolio must be determined. Thus, it can refer to the practice of reporting the value of assets on a market rather than book value basis. Marking to market can also refer to settling or reconciling changes in the value of futures contracts on a daily basis. 21. What is meant by a CUSIP number, and why is it important? By a CUSIP number, we mean a unique number assigned to a firm’s security to identify it. Thus, its importance lies in its ability to singularly identify each security. Most securities are identified by the characters (letters and numbers) found in its CUSIP number. CUSIP stands for Committee on Uniform Security Identification Procedures. For securities that have nine characters, the first six characters identify the issuer: the corporation, government agency, or municipality. The next two characters identify whether the issue is debt or equity and the issuer of the issue. The last character is simply a check character that allows for accuracy checking and is sometimes truncated or ignored. The CUSIP International Numbering System (CINS) is used to identify foreign securities and includes 12 characters.
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- 18. the army, which numbered fifteen thousand men only, of whom three thousand were volunteers, and one thousand German mercenaries; the season was late, the English traversed Artois and followed the banks of the Somme, ravaging the country, burning down villages, but avoiding the castles and fortified towns. The French army had instructions not to risk a pitched battle; but it cruelly harassed the English. The rain assisting, grave distempers broke out among the troops of Surrey; in the middle of October, the English, abandoned by their foreign auxiliaries, were compelled to retreat to Bethune without having accomplished anything; the money collected with so much difficulty was expended, and the exchequer was again empty. The King of France once more sought to obtain support in the neighbourhood of his enemies; he endeavoured to stir Ireland to revolt, and addressed himself with this object to the Earl of Desmond, who claimed a certain independence, promising him troops and money if he would act for him in enrolling his fellow countrymen; Desmond applied himself to his task, but neither French money nor soldiers were forthcoming, and the earl stood alone exposed to the vengeance of the English government. Affairs were not much better directed in Scotland. The regent Albany, still in contention with Queen Margaret, asked of his Parliament authority to repair to France to seek assistance; upon his return with a small body of troops, he found everything in confusion, and Margaret caused the regency of her second husband, the Earl of Angus, to be proclaimed. Having shortly afterwards quarrelled with him, she demanded a divorce, which King Henry VIII., who had not yet had an affair of the sort himself rigorously opposed it. The disorders went on increasing in Scotland; the most violent accusations were hurled from one party to the other. Albany was recalled to power; Henry VIII. insisted that he should be dismissed as the friend of France; and upon the refusal of the Scottish Parliament, he declared war. Lord Shrewsbury, made the first attempt at an invasion which was repulsed, and the regent entered England with a numerous army. Lord Dacre, who was in command
- 19. at the frontier, had scarcely any troops, but he talked so loudly of the forces that were approaching—of the anger of King Henry VIII., of the dangers which were about to befall Scotland, that Albany took alarm and obtained the promise of an armistice of one month, in order that a peace might be negotiated. The skillful guardian of the frontiers allowed the retreat of the army against which he would not have been able to contend, and the Duke of Albany set sail for France. It became necessary at length to convoke a Parliament in England; loans, taxes, benevolences were exhausted. Notwithstanding the taste of Henry VIII. for absolute power, he had a sense of necessity and knew how to submit to it. Sir Thomas More was chosen as speaker of the House of Commons; he had been drawn into the service of the court several years before; the king delighted in his brilliant and varied conversation and gave every mark of recognition to his learning and ability. Under his direction, the Commons proved less obstinate than had been anticipated; they claimed the right to inquire into affairs, and the nation supported them from without by the interest which it took in all that was said in the House, "Why do they concern themselves so much with my affairs?" the king exclaimed angrily. Wolsey hoped to intimidate the Commons by presenting himself before them in person, accompanied by a numerous retinue which filled the House; the cardinal-chancellor set forth in a pompous speech that the war promised to England all that it had formerly possessed in France, and that the Commons assuredly would not hesitate to vote a tax of twenty per cent, upon property. Sir Thomas More had given the word to his colleagues; it was agreed not to discuss in the presence of the cardinal, and this exorbitant demand was listened to in silence, with downcast eyes; no reply was made. Wolsey called upon several members one after the other; all rose at his haughty voice, then sat down again without saying anything. The minister flew into a passion; More then placed one knee upon the ground, alleging as the excuse of the Commons that they were agitated by the presence of so great a personage, and that, besides, they wished to discuss amongst themselves the demand which had been made of them. Wolsey was compelled to retire, and the Commons
- 20. sent a deputation to the king, asking for a reduction of the tax. Wolsey returned, more and more exasperated, endeavouring to draw the members of the House into discussion by interrogating them upon their objection. The Commons remained firm, and granted only a tax of a tenth—half of what the cardinal had demanded. He was unsuccessful also before the convocation of the clergy, and, notwithstanding his power as legate, he found himself compelled to accept, instead of the fifty per cent, which he boldly demanded at first, a gift of a tenth for five years. Reduced as were the subsidies, they still exceeded all that had ever been hitherto granted to the sovereigns of England. "I pray to the Lord Almighty," wrote at this period Mr. Ellis, a member of the House of Commons, "that the subsidy may be paid to his Grace, without reserve, and without his losing the hearts and good will of his subjects, treasures which I hold more precious to a king than silver and gold; the gentle entrusted to collect the money will not, I think, have a small task." Already during the session of the Parliament, the members had been insulted in the street by the inhabitants of London, who dragged them by the sleeve, crying, "You are going to give four shillings in the pound; May our malediction accompany you even to your dwellings!" Insurrections took place in several counties; but the king threw the whole obloquy of the measure upon the cardinal, and washed his hands of it while pocketing what remained of the money after the plunderings of the tax collectors, great and small. A fresh expedition was being prepared against France. The Duke of Suffolk had placed himself at the head of the troops in the month of August, 1523. A powerful auxiliary was counted upon at the very court of Francis I.; the Constable Bourbon offended by his master, pursued by the jealous hatred of Louise of Savoy, who had hoped to become his wife, had succumbed to his desire for vengeance; he had betrayed his country and undertaken to serve her enemies. As soon as the King of France should have crossed the Alps, in his expedition to Italy, the Constable, with seven thousand men, was to co-operate in the attacks of the English and Imperialists. The
- 21. plot was suspected; King Francis delayed his departure, and the Constable, who had feigned an illness, was compelled to fly into Italy. The allies entered upon the campaign alone and too late; they were moreover disconcerted in their operations by the absence of the troops of the Constable. Francis I. everywhere faced the enemy in France, while his faithful servant, Admiral Bonnivet, commanded the army of Italy. The Duke of Suffolk was not destined for more glory than the Earl of Surrey; he delayed before St. Omer, instead of affecting a junction with the Germans who had invaded Burgundy; at length, when he desired to pass, it was too late, the French army cut off his communications; he was without provisions, his troops were suffering from grave distempers. It was necessary to fall back upon Calais. This unfortunate campaign almost cost the Duke of Suffolk his head, so great was the anger of King Henry. Pope Adrian VI. had died (4th of September, 1523) after a pontificate of twenty months; his austere conscience had so greatly exasperated the Italians, that the physician who had attended him during his illness was styled the "Saviour of his country." The hopes of Wolsey blossomed again; he hastened to write to King Henry to assure him of the repugnance which he should experience at leaving his good master and burthening himself with so heavy a duty as the government of Christendom. Henry understood, and caused the emperor to be reminded of all his promises, commanding his ambassador at Rome also to spare nothing in order to insure the election of the minister. This time Wolsey was among the number of the candidates; he had even brought together sufficient votes, but the Italians, the people of Rome, came almost beneath the windows of the conclave, crying out that there had been too many barbarians on the seat of St. Peter, and that they would have no more. This opposition, supported by the efforts of the French cardinals, secured the tiara to cardinal Julius de Medicis. He had had the intention of retaining
- 22. his name, but he was reminded that no Pope who had done so had reigned two years, and he assumed the title of Clement VII. Wolsey was too sagacious not to contrive to conceal his disappointment; the instructions of Henry VIII. were, moreover, to assist Cardinal de Medicis if the election of the chancellor of England was impossible; the new Pope immediately confirmed Wolsey in his office of legate, authorizing him even to suppress in England the religious houses which he should find to be corrupt. The cardinal made use of this authority with moderation, employing the property of the closed monasteries in endowing the colleges and universities, in order, he said, to instruct learned doctors "capable of refuting the ever-growing and widespread heresies of the monster, Martin Luther." The French army, under the orders of Admiral Bonnivet, had obtained some success in Italy; but when that commander had to deal with the Constable Bourbon, placed by the emperor at the head of his troops, he suffered check after check; the loss of nearly all the towns was crowned by the death of the brave Bayard, the flower of European chivalry. The invasion of France was resolved upon, and Charles V. besought Henry VIII. to make an attack in the north; but England was weary of making war without glory, and the king, who had, while advancing in years, conceived as little liking as he had little aptitude for the command of armies, refused his co- operation, promising money, however, which he did not pay. Bourbon and the Marquis of Peschiera entered France, but, contrary to the advice of the Constable, who wished to march upon Lyons, they delayed at the fruitless siege of Marseilles, and the generals, urged by the proximity of the army which Francis I. had gathered together at Avignon, re-entered Italy. To his misfortune the king of France followed them there; the struggle began before Pavia, which the French were besieging; all the forces of the empire were united there, and on the 24th of February, 1525, when the combat ceased, the French army was decimated and the king a prisoner. "All is lost, save honour!" wrote the captured monarch, who had
- 23. valiantly defended himself, to his mother. He was immediately conducted to the fortress of Pizzighitone, and people rejoiced greatly in England at the victory of the emperor, as though King Henry VIII. had not been upon the point, a few months before, of separating himself from the league, in order to become reconciled with the King of France. The victory caused the scale to incline to the side of Charles V., and Henry hastened to despatch ambassadors to him, promising to invade France in conjunction with the emperor, in order to divide that kingdom amicably. As preliminaries of the treaty, the King of England proposed to ascend the throne of France, which belonged to him by right of inheritance, while Charles should content himself with the provinces formerly dependant upon the House of Burgundy. In order to accomplish this dazzling project, fresh taxes were demanded without any vote of Parliament, recent experience of the temper of that body not having been favourable; but this was too much. Insurrections broke out on all sides; placards insulting to the king and the cardinal were affixed by night upon the walls; arms were taken up against the commissioners. Wolsey perceived that it was necessary to yield, and the king, more bold in words than in deeds, speedily announced that he revoked and annulled his demands; it was also repeated very loudly that the cardinal had always been opposed to this fresh benevolence, that it was at his entreaty that the king abandoned it; but the people said, "God bless the king; as to the cardinal, we know him but too well." The rejoicing had been neither general nor spontaneous in England after the battle of Pavia and the captivity of Francis I. "I have heard it related," wrote Warham, Archbishop of Canterbury, formerly a minister of Henry VII., to the cardinal, "that the people said in several places that it would be a subject rather for weeping than for rejoicing that the King of France was a prisoner; if he could recover his liberty, and there should be a good peace, the king would no longer dream of retaking France, the conquest of
- 24. which would be more burdensome to England than profitable, and the maintenance more burdensome than the conquest." Charles V., deemed himself henceforth master of the situation, and the style of his letters changed in tone after the battle of Pavia. He was weary of the oscillations and perfidies of the English policy; he no longer wrote to his good uncle with his own hand, and his letters were signed Charles, without any reminder of the ties of kindred. He rejected the idea of invading France. "The game was in the toils," it was said; "of what use was it to chase it any longer?" Francis I. had been transferred to the Alcazar of Madrid, at his request, and was anxious to negotiate personally with the emperor, but no interview was granted him. The negotiators demanded of the captive king the renunciation of all his pretensions upon Italy, the rehabilitation of the Constable Bourbon in his rank and property, and the cession of Burgundy. Francis I. resisted this last point; he struggled for a long while, and even abdicated in favour of the dauphin. At one moment he threatened to starve himself to death, and the emperor saw himself upon the point of losing all the fruits of his victory. At length, on the 14th of January, 1526, after eleven months' captivity, the King of France signed the treaty of Madrid, taking care, however, to protest before a priest, a notary, and some friends, against the constraint placed upon him; then springing upon his Barbary-horse, brought for him to the frontier, he galloped back to his territory, crying, "I am king once more." All the conditions of the treaty were already trodden under foot. During the captivity of Francis I., Henry VIII. had concluded a close and advantageous alliance with Louise of Savoy, regent of the kingdom; a sum of two millions of crowns had been promised him, as well as a pension of a hundred thousand crowns. The cardinal received thirty thousand crowns for the cession of the bishopric of Tournay, and a hundred thousand crowns as a reward for his services to France. The Dowager Queen of France, Mary, duchess of Suffolk, was to have her dowry liquidated. It was moreover
- 25. forbidden the Duke of Albany to re-enter Scotland during the minority of James V. As soon as he had arrived in Paris, Francis I. ratified the engagements made by his mother, assuring the emissaries of Henry VIII. that he cared for nothing when once he was in good and faithful friendship with his Grace, the King of England. The league formerly concluded against the King of France, was reformed against the emperor; the Pope absolved Francis I. of his oaths, and allied himself with the Kings of France and England, with the republics of Florence and Venice, and with the Duke of Milan, with a view to recommence hostilities. A coldness had arisen since the preceding year (1525) between King Henry and his all-powerful minister; the king had found, it was said, that the cardinal abused the authority which had been confided to him by the Pope, and that he had driven too many monks from their monasteries. The rumour of this disagreement reached Germany, and it was upon this point that Luther wrote to Henry VIII., attributing to Wolsey all the evil which had been wrought in England, and congratulating the king on his having rejected "this monster and abomination to God and man, the ruin of the kingdom, and the blight of all England." The compliments of Luther were premature; the king and the cardinal had become reconciled, and Henry answered the reformer with emphatic encomiums upon Wolsey, and bitter reproaches directed against Luther for his marriage with Catherine of Bora. The two sovereigns of France and England did not keep their promises to the Pope better than those made to the emperor. All the weight of the war fell upon Clement VII., who was soon compelled to throw himself upon the mercy of Charles V. A treaty was signed between them, but less than a month afterwards the Spaniards entered Rome by surprise, and the Pope was compelled to take refuge in the castle of St. Angelo. Passing from convention to convention, from perfidy to perfidy, with alternations of
- 26. successes and reverses, Clement VII. found himself at length in the month of May, 1527, besieged in Rome by the Constable Bourbon, who was killed in the assault of the 5th of May, at the moment when his ferocious soldiers were taking possession of the city, which they gave up to fire and sword. Not even from the Gauls and the Goths had the Eternal City suffered so much. Notwithstanding the corruption of the Roman Church and the secret indignation which was felt against her, a cry of horror was raised from one end to the other of Christendom. Wolsey wrote to Henry VIII. to remind him of his title of Defender of the Faith, and to ask him to act in favour of the papal authority; but the king was absorbed in matters which were destined to undermine all his old devotion to Rome. He followed the example of King Francis I., and both monarchs abandoned to his unhappy fate the ally whom they had involved in an unequal struggle. The King of England had recently, in fact, entered upon a course which was in the end to lead him further and to change his policy more than he had foreseen. An inconsistent and faithless husband, he had caused his wife, Queen Catharine of Aragon, many sorrows, which she had borne with grave dignity and a somewhat rigid meekness. He had, nevertheless, retained a certain respect for her; the queen was generally beloved and esteemed, but Henry VIII. had made the acquaintance of a young maid of honour of her court —beautiful, intellectual, graceful, brought up in France, whither, when yet quite a child, she had accompanied the Princess Mary, when she went there to espouse Louis XII., and Anne Boleyn had awakened a violent passion in the heart of the king. Did she from the first lay claim to the position of her royal mistress. Did she resist the love of the king from virtue or from ambition? None can say. She was of good birth; her father, Sir Thomas Boleyn, had been several times employed in diplomatic missions by the king and the cardinal; her mother was the daughter of the Duke of Norfolk. She lived constantly at the court, and the queen could not have been ignorant of an intrigue which, since 1527, had formed a subject of conversation among all the courtiers.
- 27. In order to marry Anne Boleyn, it was necessary to annul the marriage with Catharine of Aragon. King Henry VIII., after seventeen years of union found himself smitten with scruples as to the legitimacy of his marriage with the widow of his brother; he found proof of the wrath of God in the numerous losses which had been sustained by his family. The queen had given him six children, but had lost all save her eldest daughter, the Princess Mary. He very ostentatiously displayed his affection for Catharine, but the delicacy of his conscience did not permit him to live in peace with her. He began to experience a desire to surround himself with learned doctors able to throw light upon the laws divine and human which he might have involuntarily violated. Various secret motives favoured the passion of the king. Notwithstanding the declarations of Henry VIII. with regard to the impossibility of the Lutheran heresies taking root in the soil of England, the doctrines of the Reformation had silently made great progress; the partisans of the new doctrine knew Queen Catherine to be ardently and sincerely a Catholic; there was no support to be expected from her. On the other hand, Wolsey, the faithful servant of the Church of Rome, was exasperated against the emperor, the nephew of Catharine, who had failed him in the pontifical elections, and he wished to strengthen the alliance which united his master to France, by inducing him to marry Renee, the second daughter of Louis XII. The cardinal did not foresee any serious obstacles to his project from the affair of Anne Boleyn, but the divorce served his policy. Negotiations were then in progress for the marriage of the Princess Mary with the Duke of Orleans, son of the King of France, and the ambassadors of Francis I. were enabled to assure themselves personally of the truth of the rumours which attributed to the King an insane love for Anne Boleyn. He danced with her all night at the masquerade given in their honor. Wolsey soon afterwards proceeded to France, magnificently escorted in his embassy, like Thomas a Becket in former times. When he came back, the alliance between the two crowns was closer than ever, and he had himself assured Louise of Savoy that she would soon see a princess of her blood seated upon [the] throne of England; but the king had spent
- 28. the time during his absence in seeking in Leviticus and in St. Thomas Aquinas arguments against his marriage with Catharine, and the first news which saluted the cardinal upon his return was the announcement, made by the king, of his fixed determination to make Anne Boleyn Queen of England. Wolsey fell upon his knees; his policy and principles, such as they were, revolted at this marriage. In earlier times the Kings of England had frequently married their female subjects; but that period was gone by, and the regal dignity was too exalted to be brought so low. At the first remonstrance, the minister perceived that discussion was useless; he bowed his head, and resolved to serve his master according to his will and pleasure. He did not, however, infuse any ardour into the business: Anne Boleyn soon perceived this, and conceived thenceforth an enmity against the cardinal which was destined to bring about his ruin. The task of examining the Treatise upon the divorce was assigned to Sir Thomas More, but the learned jurist felt the danger of such a trust, and consulted several bishops; the greater number hesitated: all referred to the Pope the decision of so great an affair. A scruple analogous to that which had so suddenly arisen in the mind of the king had preoccupied many people at the time of the marriage. The bull of the Pope had satisfied all minds, and it was thought hard to find the question resuscitated after so many years of agreement. It was absolutely necessary to take the matter before Clement VII. The emperor had foreseen the blow, and had prepared to avert it. Considering the projected divorce as an insult to his family, he had been careful, before negotiating with the Pope, besieged by the imperialists in the castle of St. Angelo, to forewarn him against the intentions of the King of England, and to make mention of them in conversation. Clement VII., however, had escaped, and from his refuge at Orvieto, he awaited the approach of the French army under the orders of Lautrec. Instead of the soldiers that he expected, he was attacked by the agents of King Henry, who demanded authorization for the Cardinal Legate in England to
- 29. decide the question of the divorce, with the assistance of a second legate, sent from Rome. The Pope was greatly embarrassed; the army upon which he counted was partly maintained by English gold. He signed the authorization, thus letting the weight of the decision fall again upon Wolsey. The matter of the bull of Julius II. was referred to a commission which was competent to revoke it if the dispensation had been obtained by means of false representations. Out of consideration for the Princess Mary, she was to be legitimated in case of the divorce of her mother. Such was the result of the negotiations which were prolonged, with various alternations, from the end of the year 1527 to the beginning of the year 1528. This decision, which fully satisfied Henry VIII. greatly troubled the cardinal; he demanded that Cardinal Campeggio should be sent to him from Rome to share the dreaded responsibility which was imposed upon him; he gently suggested to the king the doubts and difficulties which several bishops had expressed to him. The king flew into a passion, forgetting in his fury the long services of his minister. Wolsey tremblingly yielded, and caused the Pope to be implored to sign the decretal bull which was to approve his decision by anticipation. The Pope signed, at the same time charging Cardinal Campeggio to keep the bull secret and to produce it only in case of absolute necessity. An epidemic, known as the sweating sickness, which caused the death of many persons, and even placed Anne Boleyn in danger, arrested, for a while, the progress of affairs; terrified by this visitation, the king became reconciled with Queen Catherine, zealously resumed all the practices of religion, and appeared to forget Anne Boleyn, who was in the country, suffering from illness. But with the danger the good resolutions of Henry disappeared, and the great noblemen of the court received an order to present themselves at the levee of the favorite as at that of the queen. Cardinal Campeggio had just arrived in England, and it was expected that the legates would at once convoke the commission.
- 30. But affairs in Italy once more changed aspect; the emperor was again assuming the ascendant in that country, and the Italian legate was too crafty to set the Pope at variance with a conqueror, who might perhaps shortly be imposing laws. Lautrec, who for a while had appeared victorious, was besieged by the imperialists within his camp, near Naples, where he died on the 15th of August, from grief as much as from sickness. The unhappy remains of his army were compelled to capitulate, and the Pope opened up secret negotiations with the emperor. Campeggio continued to procrastinate; it was necessary to gain time at any price. For a moment the Pope had been thought to be dying, and Wolsey had appeared to be very near the height of his ambition; but Clement recovered his health, and the King of France himself was negotiating with the emperor. Henry VIII. despatched, under the great seal, the formal order to the two legates to assemble their commission, and to proceed to the inquiry into the divorce. The court met in the great Hall of the Black Friars, on the 13th of May, 1529. The king and queen had been summoned; when his name was called, Henry replied without hesitating, "Present," Catherine, accompanied by four bishops, instructed to plead her cause, did not respond to the summons; but she arose, and, crossing the hall, threw herself at the feet of the king, imploring him in most touching terms, with affecting dignity and sweetness, to have pity on her, to remember the duties which she had rendered him, and not to inflict upon her a dishonor which she did not deserve. She rose amidst the involuntary emotion of all present, and left the hall whilst the king was protesting his attachment to her, and attributing all these persecutions to the scruples of his conscience. "It was not," he said, "my lord cardinal who had suggested the idea of the divorce, as the queen asserted; but the Bishop of Lincoln, his confessor, and several other prelates, had enjoined him to address himself to the Pope."
- 31. Catherine had refused to be present henceforth at the sittings; the inquiry therefore proceeded without her. The advocates of the king, who alone spoke, proved, or pretended to prove, all the facts which they had advanced; they, concluded by pronouncing the invalidity of the marriage. The king urged Wolsey, and Wolsey pressed Campeggio to deliver the judgment; but the affairs of the Pope had been arranged; he had concluded, on the 29th of June, an advantageous treaty with the emperor, and no longer feared the anger of the king. Again, on the 23rd of July, when the advocates of the king demanded a definitive reply, "I have not come here," said Campeggio, "to satisfy a man from fear or from hope of a reward, be he king or potentate. I am old, sick, and infirm, and every day I expect death. Of what avail would it be therefore, to me to place my soul in danger of perdition for the favour of a prince? In the doubt and difficulties which shroud this affair, wherein the defendant will not plead her cause, I defer the decision until we shall have had the advice of the Pope and other experienced persons of his council. I adjourn the tribunal until the month of October." As he finished speaking, the Duke of Suffolk, brother-in-law of King Henry, struck his fist upon the table, exclaiming, "Never has a cardinal done any good for England." Wolsey took this reproach upon himself, and, turning towards Suffolk, he reminded him angrily of the services he had rendered him. "Without me," he said, "cardinal as I am, you would not at this hour possess a head upon your shoulders, or a tongue to insult us with. We are here only as deputies charged to examine an important matter, and we cannot proceed without the decision of our supreme chief. Be calm, my lord, remember what you owe me, and what I thought never to reveal to living man for your dishonor and my glory." The court assembled no more; but it was soon known that, a fortnight previously, the Pope had revoked the mission of the legates, and that he had received the appeal of Queen Catherine. Campeggio was preparing to quit England, and Henry VIII. was
- 32. able to control his resentment so far as to take leave of him with courtesy, even offering him presents; but at Dover, at the moment when the aged legate was about to embark, a troop of men-at- arms penetrated into his apartment, and searched all his coffers, pretending to seek a treasure belonging to Wolsey, but doubtless, in quest of the decretal bull signed by the Pope, of which the cardinal was known to be the bearer. Nothing, however, was found, and Campeggio set sail, leaving his compeer of the sacred college to bear alone the whole weight of his master's anger. As long as Anne Boleyn had not been assured of the favour of the king, she had sought the good graces of Wolsey; but for a long time since then she had sworn to destroy him. All the great noblemen, weary of the yoke which weighed upon them, and ashamed of having been so long governed by the son of a butcher, united themselves to her who was about to become their queen, in order to precipitate the ruin of the minister. The king lent ear to all the statements against Wolsey; he was above all seduced by the hope of confiscation; for the fortune of Wolsey was enormous. The court made a short journey, and the cardinal was not invited to take part in it. However, when he contrived to meet the king at Grafton, in Northamptonshire, Henry received him so affectionately, that the conspirators were greatly discouraged. The influence of the beautiful mistress Anne Boleyn, restored the position of affairs. On the morrow, Wolsey received orders to return to London; He was never again to see the face of his master. It was the period of the opening of the courts of justice; Wolsey took his seat in the court of chancery, but none of the servants of the king hastened any longer to do honour to him; the hour of disgrace had come; and on the same day, Hales, the attorney- general, accused him of having illegally exercised in England the office of papal legate. None knew better than Wolsey the worth of the laws in the eyes of his master; they had together made and violated many, but Wolsey also knew that his ruin had been resolved upon, and all his courage disappeared under this
- 33. conviction. He confessed all; the crimes that he had committed as well as those which he had not committed; he admitted all the counts of the indictment, and placed himself solely at the mercy of the king. On condition of retaining his rank and ecclesiastical property, he voluntarily deprived himself of all that he was possessed of in favour of his royal master, saying that he held all through his favour. But so much haste could not disarm his enemies; the Dukes of Suffolk and Norfolk ordered him to retire to his mansion at Esher, as the king counted upon installing himself in his palace of York Place (since known as Whitehall). The cardinal made no resistance; but when the emissaries demanded the great seal, Wolsey drew himself up: "The great seal of England was consigned to me by my sovereign," he said, "I hold it for life in virtue of his letters patent, and I cannot deliver it up upon a simple word from your mouth." He held out notwithstanding their insults, and only resigned the great seal on the morrow, upon the order signed by the king. "I am grieved to think that your Grace is about to be taken to the Tower," said his treasurer, Sir William Gascoyne, whom he was commissioning to remit to the king an inventory of his wealth. "It is a cowardly falsehood!" cried Wolsey angrily; "I have done nothing to deserve to be arrested; it simply pleases the king's grace to take possession at once of this residence," and he embarked for Esher. The people gathered in crowds on both banks of the Thames, expecting to see the fallen minister take that "traitor's" highway, which was rarely traversed a second time; their expectations were disappointed; the boat glided along softly as far as Putney. As the cardinal was mounting his mule to proceed to Esher, one of the chamberlains of the king, Sir John Norris, presented himself before him, and consigned to him a ring which the king had sent with some words of consolation. "Take courage," added Sir John, "and we shall see you higher than ever." Wolsey dismounted, knelt in the dust at the side of the road, returned thanks to God for the return of favour which the king manifested towards him; and then rising, "I have no longer anything to give," he said, "and your news would deserve half a kingdom." He offered, however, to Sir John Norris, a small golden chain
- 34. accompanied by a crucifix. "Yet," he added, "if I could send to my sovereign at least a token of my gratitude—" and as he was seeking about him, his looks fell upon his jester: "Take him," he said, "for the amusement of a noble master; he is well worth a thousand pounds." The gleam of favour from the king was destined to be transitory. He felt difficulty in separating himself completely from a friend of twenty years' standing, who had flattered, amused, served, and governed him for such a long time past; but the cabal was more powerful than past services, and Wolsey, lonely and cast down, soon fell ill. "Nothing that he had told me excited so much compassion in me as his appearance," wrote the French ambassador, who had been to see him; "his countenance has fallen away by one half. He is ready to give everything, even to the gown which he wears, provided the displeasure of the king be withdrawn from him." The fallen minister in vain besieged the monarch with the most humble epistles. No token of the royal favour came back to lighten his darkness until the moment when his life was actually in danger. Henry VIII. then relented; he sent his physician to the sick prelate, saying that he would not lose him for twenty thousand pounds, and this mark of remembrance did more than all the remedies for the cure of the cardinal. He had been condemned in the Court of King's Bench, and an indictment had been presented to the Parliament which Henry VIII. had recently convoked; but the indictment was rejected, and the king extended his protection to his old servant. At the same time, he took possession of all his ecclesiastical benefices, so that Wolsey found himself deprived of everything, and in want of the necessaries of life. Henry VIII. granted his pardon, and caused some articles of furniture and a little money to be remitted to him; but orders were given to him to reside henceforth in his diocese. Slowly and regretfully, Wolsey set out for York, forsaking that court where he had passed his life, and where his heart still lingered. Having arrived at the seat of the duties which yet remained to him, he embraced them with unexpected ardour. The fallen minister appeared to comprehend the
- 35. importance of his episcopal office, and to seek from God the consolations which men refused him. His clergy, delighted, became more and more attached to him, and wished to formally celebrate his enthronization. Wolsey consented, on condition that no great display should be made; but on the day fixed for the ceremony, as the cardinal was at table, it was announced that the Earl of Northumberland was coming. Wolsey rose to receive him; the earl had been brought up in the cardinal's house, and no doubt he brought good tidings from the king. Northumberland appeared agitated; he hesitated; at length, placing his hand upon the shoulder of the old man, "My lord cardinal," he said, "I arrest you on a charge of high treason." Wolsey remained dumb and motionless; when he recovered his speech it was to burst into sobs and lamentations. His enemies had discovered a correspondence which he still carried on with the Pope and the King of France; they had persuaded Henry that it tended to prevent his marriage with Anne Boleyn. The prelate was doomed this time to be lodged in the Tower. He was, however, not destined to travel so far. The fatal blow had been struck. The population of his diocese was attached to him, and would have willingly attempted to rescue him; but the cardinal made no resistance; he followed Northumberland like a condemned man marching to his execution. On the way, he was attacked by a violent indisposition, and was compelled to stay for a fortnight at the residence of the Earl of Shrewsbury. When he resumed his journey, he was so weak that it was found necessary to support him upon his mule. He arrived in the evening at Leicester Abbey; on entering this refuge he said to the abbot, "My father, I have come to lay my bones among you." The monks carried him to his bed; he was never to rise from it again. Swoon followed upon swoon; his servants, who were passionately devoted to him, saw that he was dying; they summoned Kingston, the Lieutenant of the Tower, who was entrusted with his keeping, and whom Wolsey had asked for. "Remember me humbly to his Majesty," said the cardinal in a feeble voice; "beg him, in my name, to retrace in his
- 36. recollection what has passed between him and me from the beginning, particularly with regard to Queen Catharine, and let him say himself whether I have offended him or not. He is a prince of royal heart and marvellous courage, for rather than renounce the smallest part of his will, he would risk one half of his kingdom. I have often begged him upon my knees, for three hours, to forego his resolution; but I have not been able to succeed therein. And I will tell you, Master Kingston, that if I had served God as diligently as I have served my king, He would not have abandoned me in my old age; it is my just reward; I have not considered my duties towards God, but only my duty towards my prince." Shortly after these words, which were to be repeated a hundred and fifty years later by Colbert, dying in the service of Louis XIV., Cardinal Wolsey expired, on the 29th of November, 1529, in his sixtieth year, and was buried without pomp, at midnight, in the Chapel of Our Lady, in the same monastery. Cavendish, the chamberlain of the cardinal, who had been present during his last moments, himself came to announce to the king the death of his master. Henry was at Hampton Court, a magnificent palace built by Wolsey, who had offered it to the king. He was shooting with a bow when the messenger presented himself before him: a momentary emotion appeared upon his countenance, then he added quickly, "I know that the cardinal had hidden in a certain place the sum of fifteen hundred pounds; do you know it?" The sum had been consigned to a priest, whom Cavendish indicated. The king caused the assertion to be repeated. "Hold your tongue about that," he said, "it is a matter between you and me; three keep a secret easily when two are cut off: if my cap knew what I think, I would cast it into the fire. If I hear a word of this spoken I shall know who has revealed it." The king sent the chamberlain away with some praises for his fidelity towards his old master. The conscience of the sovereign acquitted him, no doubt, of all excess of kindness towards his old servant.
- 38. Henry VIII.
- 39. Chapter XVII. The Royal Reform. Personal Government Of Henry VIII. (1529 — 1547). The fall of Wolsey was mainly due to the ascendancy of Anne Boleyn, the first victim, and the precursor of many other ruined fortunes, that were to spring from the guilty passions of Henry VIII. The new ministers that surrounded him were the great noblemen who had overthrown the cardinal; the Dukes of Norfolk and Suffolk and Sir Thomas Boleyn, now become Viscount Rochford, and subsequently Earl of Wiltshire. Sir Thomas More had with regret accepted the onerous duties of chancellor, perhaps in the hope of serving the public welfare, perhaps through a weakness which he was to pay dearly for. All questions then resolved themselves into that of the divorce of Catherine of Aragon; all politics turned upon this pivot. The king had consulted all the universities of Europe, the theologians and lawyers; Oxford and Cambridge had taken sides, and opinions were there keenly discussed from each point of view; but the king had gained ground among the prelates; his agents were skilful and numerous. Cranmer, formerly a tutor in a wealthy family, now a chaplain to Henry VIII., had recently published a learned treatise in favour of the divorce, insisting that the word of God alone should decide the question without any appeal to the Pope, and maintaining that the Bible, interpreted by the Fathers of the Church, interdicted marriage with the widow of a brother. The opinion of the two English universities in favour of the divorce was
- 40. obtained. The Italian universities, Bologna, Padua, Ferrara, declared themselves for King Henry; it was a question of money. The Germans had still more fear of the Emperor than taste for English gold; they were all opposed to the divorce—the Protestant theologians were as outspoken as the Catholics. "It were better that the King of England should have two wives than be divorced from Catherine to marry another," said Luther. The Pope published, in the month of March, 1530, a brief, which formally forbade the King of England to conclude a second marriage, under pain of excommunication. A few days later, the Earl of Wiltshire presented himself at Bologna, where the Pope and the Emperor were at that time; people were shocked to see the father of Anne Boleyn employed in this mission. "Let your colleagues speak, my lord," said Charles V. to him, "for you are a party to this matter." The assurance of the earl, and his offers of money, completed the exasperation of the Emperor. "I will not sell the honour of my good aunt Catherine!" he exclaimed angrily. The embassy retired without having obtained anything, and the Earl of Wiltshire was compelled to confine his intrigues to the French universities, from which he contrived to secure several favourable opinions. But of what use were all the decisions of the faculties when the Pope refused his assent? This assent was of supreme importance, for the time had come when the bonds which held the crown of England to Rome were about to be broken abruptly for bad and shameful reasons, but not without a certain assent from the mass of the people. None among the prelates who surrounded the king had dared to advise him to brave the will of the Pope; Cranmer himself, who had secretly married the daughter of a German pastor, was too timid to break his lance in the face of the court of Rome; it was a servant of Wolsey, who had become a servant of the king, Thomas Cromwell, the son of a blacksmith at Putney, a man as bold as he was corrupt and skilful, who struck the great blow and opened up to Henry VIII. the path in which he was henceforth to walk. The king was troubled by the obstinate resistance of the Pope; he had hoped to
- 41. obtain the divorce without great difficulty; he hesitated, and a rumour of the disgrace of Anne Boleyn was already circulated among the courtiers, when Cromwell approached his royal master. "The embarrassments of your Grace arise from the timidity of your ministers," he said; and he explained that with the favourable opinions of all the universities, and the assent of the English Parliament, which it was not difficult, to procure, it was easy to proceed without troubling the Pope. "The king could even," he added, "follow the example of the German princes, who had shaken off the yoke of the court of Rome, and declare himself purely and simply the head of the Church of England. The clergy thus depending solely upon the king, he would become the absolute master of his kingdom, instead of being only half king." This bold conception was designed to please King Henry VIII.; his vanity, his taste for power, and his avidity alike found satisfaction in it. Neither his conscience (such as it was), nor his convictions ever belonged to the new faith. Internally and by doctrine he remained a Catholic, but his policy and interest, like his passion impelled him in another direction; he accomplished in his country a religious reform—governmental as well as liberal, aristocratic and popular— the effects of which were immense and profoundly advantageous to England; but he accomplished all this without religious faith and without general principles, for the sake of his personal desires and with selfish aim. It was to God, through the hands of Henry VIII., that England owed this great step in her history; she has no obligation to be grateful to the despotic and corrupt monarch who severed his connexion with Rome in order to repudiate his wife and to dispose of the ecclesiastical benefices at his pleasure. The door, however, had been opened, and Parliament, being at once convoked, received a communication detailing all the proceedings of the king for the purpose of surrounding himself with learned authorities upon the question of the legitimacy of his marriage. At the same time the clergy were assembled. Very uneasy at a royal act which involved them all in a common disgrace
- 42. as guilty of having seconded and supported Cardinal Wolsey, by admitting his authority as legate—an authority which had been confirmed by Henry himself—the prelates, accustomed to the demands of the king, immediately offered a hundred thousand pounds sterling in order to appease his anger. Henry VIII. accepted the offering, but announced that he would grant the pardon only on condition of a vote of the ecclesiastical convention which should recognize him as "the protector and supreme head of the Church and the clergy of England." Three days were occupied in discussion; the opposition was powerful and numerous, but timidity gained the ascendant; there was a disposition to admit the supremacy of the king, with this reservation: Quantum per legem Christi liceat (as much as it is permitted by the law of Christ). "I will have neither tantum nor quantam," replied the king, when Cromwell came to tell him how matters stood; "return to them, and let the vote be given without quantums or tantums." The reservation was, however, maintained, and the king consoled himself with his hundred thousand pounds sterling, augmented by a small gift of the clergy of the north. After the prorogation of Parliament Henry VIII. endeavoured to intimidate Catherine, and to compel her to accept the decision of four prelates and four lay peers. She steadily refused; being transferred from Greenwich to Windsor, and from Windsor to Hertfordshire, she was at length sent to Ampthill, where she fixed her residence. "To whatever place I may be made to go, I remain the legitimate wife of the king," she said. In the main the nation was of her opinion, and no one was more convinced of it than the chancellor. Sir Thomas More; weary of serving as an instrument of a policy of which he disapproved, but which he could not modify, he asked permission to retire, and on the 16th of May, 1532, he returned peaceably to his mansion at Chelsea, delivered of a burden which had weighed him down, and free to devote himself to the learned studies which constituted the charm of his life.
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