The whole of this Work is contained in the Bankers’ Magazine for 1850.

CHRONICLES AND CHARACTERS
OF THE
STOCK EXCHANGE.

BY

JOHN FRANCIS.

AUTHOR OF

THE HISTORY OF THE BANK OF ENGLAND, ITS TIMES AND TRADITIONS.

FIRST AMERICAN EDITION.

TO WHICH ARE ADDED STOCK TABLES FROM 1732 TO 1846; DIVIDENDS ON BANK
OF ENGLAND STOCK FROM 1694 TO 1847, &c.

BOSTON:

WM. CROSBY AND H. P. NICHOLS,

111 Washington Street.

1850.

INSCRIBED,

BY PERMISSION,

TO SAMUEL GURNEY, Esq.

THIS VOLUME, RECORDING CITY SCENES, AND RELATING TO CITY TRANSACTIONS, IS, TO SAMUEL GURNEY, ONE OF LONDON’S MOST EMINENT CITIZENS, RESPECTFULLY DEDICATED, BY

HIS MOST OBEDIENT SERVANT,

JOHN FRANCIS.

PREFACE.

To gather the many remarkable incidents connected with the National Debt; to present an anecdotical sketch of the causes which necessitated, and the corruptions which increased it; to reproduce its principal characters; to detail the many evils of lotteries; to relate the difficulties in the early history of railways; to popularize those loans, of which the Poyais, with its melancholy tragedy, and the Greek, with its whimsical transactions, were such striking exemplars; and to group these subjects around the Stock Exchange, is the object of a portion of the present volume.

Any work which tends to familiarize the origin and progress of the National Debt, which shows that it was raised for no idle cause, and increased for no trifling purpose, may be useful in the consideration of that encumbrance which must, sooner or later, be reduced or repudiated.

The volume does not profess to be statistical,—there are abundant works of a financial kind upon the subject. Mr. Van Sommer’s valuable Tables, to which the writer acknowledges his obligations, and which, with Mr. Wilkinson’s Law of the Public Funds, should be possessed by every member of the Stock Exchange; the works of McCulloch, of Hamilton, of Grellier, of Fenn, render such a production unnecessary. The present volume is a popular narrative of the money power of England, intended to be at once interesting and suggestive.

Shooter’s Hill.

CONTENTS.

CHRONICLES AND CHARACTERS

OF THE

STOCK EXCHANGE.

CHAPTER I.

Ancient Mode of supporting Governments.—Ignorance of Political Economy.—Mercantile Greatness.—Early Supplies.—Tulip Mania.—Accession of William.

The national debt has been designated by some a national nuisance; by others it has been termed a national necessity. In the earlier history of the world, when war was a war for dominion, and spoliation followed conquest, the victor returned rich with the treasures of conquered states, and his captive paid trebly the expenses of the war. It was thus that the mistress of the world became an emporium for the gathered wealth of temples, for the gorgeous ornaments of a subdued aristocracy, and for the gold which had filled the treasury of barbarous but luxurious nations. These accumulations, together with annual tributes, prevented the formation of a public debt. The Goth, when he poured from his barren recesses upon the cultivated plains of Italy, ignorant of political economy as a science, felt it as a principle, and more than repaid the expenses of his foray by exacting the riches of imperial Rome. Modern Europe teaches us to similar purport; and Napoleon, in those wars which, to some a memory, are to others history, acted upon the same plan, and made Paris a receptacle for the spoil of many nations.

In the early annals of England, the feudal system prevented the creation of a national debt. The Saxon serf was compelled to follow the banner of his Norman master. The Norman baron, at the command of his sovereign, called his followers to the field, and having, if successful, enriched himself, retraced his path to his mountain fastness and his island home. In these rude ages the art of levying money was unknown; and victorious armies were often dispersed for want of funds. The conqueror of Pavia was compelled to disband 24,000 men because he could not raise taxes to support them; and it is a suggestive fact, that when, during the reign of the third Henry, it was necessary to procure £50,000, and a tax of £1 2s. 4d. was levied on each parish in England, it only produced about £9,500, there being but 8,500 parishes; so ignorant were the authorities of the very machinery of the state they governed.

From a very early period, the mercantile capacity of England has been developed; and her insular position, which at once suggested and favored commerce, was taken advantage of by laymen and churchmen. Bishops entered into speculations in herrings, and abbots did not disdain to unite the smuggling with a more saintly calling. But there were other and more legitimate followers of that pursuit which has since made the name of an English merchant a symbol of English greatness. Among these, William de la Pole stands prominently forward; and the founder of the House of Suffolk is familiar to the student of commercial history. William Canyng—that name so intimately connected with the fortunes of “the marvellous boy who perished in his pride”—and Richard Whittington—dear to household memories, and the founder of many princely charities—were others whose munificence was only surpassed by their wealth.

A slight sketch of the tyranny and injustice employed by our earlier monarchs in the production of revenue, may not be unamusing to the readers of the present volume. The records of the Exchequer prove that barbaric acts were performed to obtain money; that justice was openly bought and sold; that the supreme judicature of the country could only be approached by bribes to the monarch. The county of Norfolk paid a large sum to Henry I. to secure fair dealing. Yarmouth paid heavily to prevent a king from violating his own charter. Commerce was controlled, and trade was harassed. Corporations and monopolies were created at the monarch’s pleasure; and, as nothing was too small to escape his notice, so nothing was too large to escape his grasp. The wife of Hugh de Neville paid two hundred hens to enjoy the society of her husband twelve hours in prison; and an abbot paid largely for permission to secure his wood from being stolen. To mitigate the king’s anger, or obtain the king’s services, money was equally necessary. When peer and prior were sufficiently strong to resist, or sufficiently poor to escape, the farmer and the peasant were visited. The approach of the court was like the approach of the plague; and men ran to conceal their effects and their persons until the royal plunderer had passed.

Extraordinary emergencies caused extraordinary expenses; and the call to arms which resounded throughout Europe when Peter the Hermit preached deliverance to the captive Sepulchre, was responded to by Richard I. with the vehemence and energy of his character. To compass his aim, he mortgaged the customs and he farmed the revenues. He exacted money from his subjects in proportion to their wealth, and declared he would sell London itself rather than forego his cherished object. He feigned the loss of his signet, to procure fees; and, to crown all, resumed, on his return, the property he had previously sold, on the pretence that he had no right to alienate it.

King John adopted the notable plan of imprisoning the mistresses of the priests, confident that the money he could not obtain from their cupidity he would from their lust. Henry III. seized the merchandise of his subjects, and borrowed a large sum besides, for which he paid a high interest, and which the Parliament refused to discharge. Edward I. seized the money and plate of monasteries and churches, feigned a voyage to the Holy Land, and, when funds were collected to aid him, kept the money, and refused to go. Edward III. erected monopolies, exacted loans, levied arbitrary fines, imposed arbitrary taxes, and, notwithstanding the determined remonstrances of the Commons, claimed the right of doing so at pleasure.

Richard II. pawned the jewels of the crown, sold the furniture of the palace, went from place to place in the fashion of one soliciting alms, and was deposed partially because he extorted large sums which he never repaid. The reign of Henry V., brilliant as it was, would have proved yet more so, had an authorized mode of raising supplies been then organized. Although he took from all quarters, sold his jewels, and borrowed on the security of his crown, he was often compelled to stop in a career of the most splendid success for lack of money. Edward IV. was called the handsomest tax-gatherer in his kingdom; and when he kissed a widow because she gave more than he expected, it is said she doubled the amount, in expectation of a second kiss. Henry VII. adopted all modes and methods; and, having levied a benevolence, made a large claim on those who lived frugally, because they must have saved by their frugality; while, if they lived splendidly, they were dealt with as opulent. It must, however, be recorded of this monarch, that he lent money, without interest, to many merchants whose capital was not sufficient for their commercial operations. When the eighth Henry attempted to raise a forced loan of unusual amount, with unusual rigor, the people said, if they were treated thus, “England was bond, and not free.” The county of Suffolk rose in arms; and had not even this man’s stubborn spirit quailed before it, the resistance would have changed into rebellion. No sooner had the monarch exhausted all Parliamentary supplies, than he carried out, on a grand scale, the robberies he had often achieved on a small one, by seizing the accumulated property of the monastic classes. In 1522, he required a general loan of ten per cent. upon all property from £20 to £300, and a higher rate on larger sums. By courtesy, it was termed a loan; but when, seven years afterwards, a subservient Parliament acquitted him of all obligation to pay it, a harsher name was recorded in the minds, than the tongues of the people dared to express.

To the English sovereign a certain power over commerce had always been intrusted; but Elizabeth stretched her prerogative, and granted monopolies by scores. Prices rose enormously, and the evil was felt by every family in the realm. The House of Commons remonstrated. When a long list of patents for monopolies was read, one sturdy member demanded, “Is not bread there?” “Bread!” quoth one. “Bread!” cried another. “Yea, bread!” said Mr. Hackwell; “for, if care be not taken, bread will be there before next Parliament.” Nor was this all: the coach of the chief minister was surrounded by the populace; menacing murmurs were heard cursing patents; and indignant voices declared that the old liberties of England should not be encroached on by new prerogatives. With admirable sagacity, the queen saw the necessity of yielding, and did it while she could with grace and dignity. But this sovereign improved upon the plans of her predecessors,—she kept the temporalities of bishoprics in her own hands for years, and appropriated the landed property of sees. Under the name of New Year’s gifts, she extorted large sums from the frequenters of the court; she ordered companies to lend her money,—to borrow, if they did not possess it,—and, if she had more than she required, she would return part, provided they would pay her interest for that on which she paid them nothing. To the citizen of the nineteenth century this must appear a fable; but it is a recorded fact, that Elizabeth borrowed money from the citizens, found she had more than she required, and, instead of repaying it, re-lent it to them at seven per cent. on the security of gold and silver plate.

Charles I. seized the money of his merchants; and his bonds were hawked about the streets, were offered to the people as they left church, and sold to the highest bidder. The Commonwealth were debtors, on the security of the forfeited estates. Charles II. took money from France, shut up the Exchequer, borrowed from his friends, and did any thing rather than run the risk of being again sent on his travels. Thus, it would seem, the exchequer of the earlier monarchs was in the pockets of the people; that of Henry VIII. in the suppressed monasteries; Elizabeth in the corporations; and Charles II. wherever he could find it.

The abdication of James II. and the arrival of William III. form an era in the history of the monetary world. The plans adopted by the latter to crush the power of France, and raise the credit of England, were the commencement of that great accumulation known as the National Debt, and the origin, though remote, of that building celebrated throughout Europe as the Stock Exchange. The rapid sketch now presented of the mode in which money was supplied confirms the remark of Mr. Macaulay, that “there can be no greater error than to imagine the device of meeting the exigencies of the state by loans was imported into our island by William III. From a period of immemorial antiquity, it had been the practice of every English government to contract debts. What the Revolution introduced was the practice of honestly paying them.”

The earliest instance of that fatal love of speculation, so ruinous to the character and credit of all who possess it, occurred in 1634; and the history of the tulip mania in Holland is as instructive as that of any similar period. In the above year, the chief cities of the Netherlands engaged in a traffic which destroyed commerce and encouraged gambling; which enlisted the greediness of the rich and the desire of the poor; which raised the value of a flower to more than its weight in gold; and which ended, as all such periods have ended, in wild and wretched despair. The many were ruined, the few were enriched; and tulips were as eagerly sought in 1634, as railway scrip in 1844. The speculation was conducted on similar principles. Bargains were made for the delivery of certain roots; and when, as in one case, there were but two in the market, lordship and land, horses and oxen, were sold to pay the deficiency. Contracts were made, and thousands of florins paid, for tulips which were never seen by broker, by buyer, or by seller. For a time, as usual, all won, and no one lost. Poor persons became wealthy. High and low traded in flowers; sumptuous entertainments confirmed their bargains; notaries grew rich; and even the unimaginative Hollander fancied he saw a sure and certain prosperity before him. People of all professions turned their property into cash; houses and furniture were offered at ruinous prices; the idea spread throughout the country that the passion for tulips would last for ever; and when it was known that foreigners were seized with the fever, it was believed that the wealth of the world would concentrate on the shores of the Zuyder Zee, and that poverty would become a tradition in Holland. That they were honest in their belief is proved by the prices they paid; and the following list shows that the mania must indeed have been deep, when goods to the value of 2,500 florins were given for one root:—

Another species commonly fetched two thousand florins; a third was valued at a new carriage, two gray horses, and a complete harness. Twelve acres of land were paid for a fourth; and 60,000 florins were made by one man in a few weeks. But the panic came at last. Confidence vanished; contracts were void; defaulters were announced in every town of Holland; dreams of wealth were dissipated; and they who, a week before, rejoiced in the possession of a few tulips which would have realized a princely fortune, looked sad and stupefied on the miserable bulbs before them, valueless in themselves, and unsalable at any price. To parry the blow, the tulip-merchants held public meetings, and made pompous speeches, in which they proved that their goods were worth as much as ever, and that a panic was absurd and unjust. The speeches produced great applause, but the bulb continued valueless; and, though actions for breach of contract were threatened, the law refused to take cognizance of gambling transactions. Even the wisdom of the Deliberative Council at the Hague was at fault, and to find a remedy was beyond the power of the government. Many years passed before the country recovered from the shock, or commerce revived from the depression which followed the Tulipomania; and which, not confined exclusively to Holland, visited London and Paris, and gave a fictitious importance to the tulip in the two greatest capitals of the world.

CHAPTER II.

The Earliest National Debt.—History of Tontines.—Of the Money Interest, its Origin, Extravagance, and Folly.—Royal Exchange.—First Irredeemable Debt.—Tricks of the Brokers.—Jobbing in East India Stock.—False Reports.—Importance of the English Funds.—Picture of the Alley.—Systematic Jobbing of Sir Henry Furnese, Medina, and Marlborough.—Thomas Guy, a Dealer in the Alley.

The creation of a national debt has been attributed to the Dutch, but is really due to the Venetians. The immediate treasury of the Doge was exhausted; money was necessary; and the most eminent citizens of that great republic were called upon to redeem the credit of their country. A Chamber of Loans was established, the contributors were made creditors, four per cent. was allowed as interest, and she,

“Who once held the gorgeous East in fee,

And was the safeguard of the West,”

resumed her credit, and increased her power.

So fruitful a source of wealth was not allowed to fall into desuetude. The Florentine republic, experiencing a deficiency in her revenue, established a mount, allowed five per cent. interest, and, says Sir William Blackstone, these laid the foundation of our national debt. The Dutch were not long following the example. When the great persecution occurred, which forced the Spanish Jew—the aristocracy of the chosen race—from the place of his nativity, he brought with him to Holland the craft and the cunning of the people. He taught the Dutch to create an artificial wealth; and the people of that republic, by its aid, maintained an attitude of independence, which rendered them so long the envy and the hatred of the proud states which surrounded their territory. Their industry increased with the claims upon them. They cultivated their country with renewed perseverance; they brought the spices of the rich and barbarous East to the shores of the cultivated and the civilized West; they opened new sources of profit; their merchant-vessels covered the waters; their navy was the boast of Europe; their army was the scourge of the great Louis in the height of his pride and power. The markets of Holland evinced a full activity; the towns of Holland increased in importance; and the capital of Holland became the centre of European money transactions, partly in consequence of the great bigotry which banished the Jew from Spain.

When, therefore, the chief of that small yet powerful republic was called to sit upon an English throne, he brought with him many of those whose brains had contrived and whose cunning had contributed to produce these great changes; and from his reign, whatever evils may have arisen from a reckless waste of money, there commenced that principle which, for a century and a half, has operated on the fortunes of all Europe,—which proclaimed that, under every form and phase of circumstance, in the darkest hour of gloom as in the proudest moment of grandeur, the inviolable faith of England should be preserved towards the public creditor. Up to this period, the only national debt on which interest was acknowledged was that sum which had been seized on in the Exchequer; and even these dividends were irregularly paid. Many debts had been incurred by our earlier kings, but all the promises and pledges which had been given for their redemption were broken directly the money was gained; and it remained, we repeat, for William, whatever his errors may have been, to establish the principle, that faith to the public creditor must be inviolate.

The reign of William was productive of all modes and methods of borrowing. Short and long annuities, annuities for lives, tontines, and lotteries, alike occupied his attention. The former are still in existence, the two latter have fallen to decay. The lotteries have been expunged from the statute-book, and their evils will be fully developed at a fitting period; while to the brain of a Neapolitan, and the city of Paris, William was indebted for the knowledge of the tontine. Lorenzo Tonti, in the middle of the seventeenth century, with the hope of making the people of France forget their discontents in the excitement of gambling, suggested to Cardinal Mazarin the idea of annuities, with the benefit to the survivors of those incomes which fell by death. The idea was approved by the Cardinal and allowed by the court. Parliament, however, refused to register the decree, and the scheme failed. Tonti again endeavoured to establish a society on this plan, and to build by its means a bridge over the Seine; but the unfortunate inventor christened it Tontine, and not a man in Paris would trust his money to a project with an Italian title. A complete enthusiast, he allowed Paris no rest on his favorite theme, and proposed to raise money for the benefit of the clergy in the same way. The Assembly reported on the scheme, and the report contained all that could flatter the projector’s vanity, but refused a permission to act on it; and again it was abandoned. The idea, however, which could not be carried out for the people, which was refused for the benefit of the city, and not allowed for the clergy, was claimed as a right for the crown; and in 1689, Louis XIV. created the first tontine to meet his great expenses. From this period they became frequent; and William was too determined to humble the pride of his rival, not to avail himself of this among other modes of raising funds.[1]

The moneyed interest—a title familiar to the reader of the present day—was unknown until 1692. It was then arrogated by those who saw the great advantage of entering into transactions in the funds for the aid of government. The title claimed by them in pride was employed by others in derision: and the purse-proud importance of men grown suddenly rich was a common source of ridicule.

Wealth rapidly acquired has been invariably detrimental to the manners and the morals of the nation, and in 1692 the rule was as absolute as now. The moneyed interest, intoxicated by the possession of wealth which their wildest dreams had never imagined, and incensed by the cold contempt with which the landed interest treated them, endeavoured to rival the latter in that magnificence which was one characteristic of the landed families. Their carriages were radiant with gold; their persons were radiant with gems; they married the poorer branches of the nobility; they eagerly purchased the princely mansions of the old aristocracy. The brush of Sir Godfrey Kneller, and the chisel of Caius Cibber, were employed in perpetuating their features. Their wealth was rarely grudged to humble the pride of a Howard or a Cavendish; and the money gained by the father was spent by the son in acquiring a distinction at the expense of decency. They were seized upon by the satirist and the dramatist as a new object of ridicule; and under various forms they have become a stage property. The term which they had chosen to distinguish them became a word of contempt; and the moneyed class was at once the envy and the laugh of the town. Nor was it until that interest became a great and most important one, that the term assumed its right meaning, or that the moneyed contended with the landed interest on a more than equal footing. The former have always clung to the house of Brunswick; the latter have often used their exertions against it. In time, however, the moneyed became a landed interest, and vied in taste as well as magnificence with the proudest of England’s old nobility. Among these was Sir Robert Clayton, director of the Bank, whose banqueting-room was wainscoted with cedar, whose villa was the boast of the Surrey hills, whose entertainments imitated those of kings, whose judicious munificence made him the pride of that great city to the representation of which he was called by acclamation. But there were other and less reputable directors of the great Bank; and a pamphlet, published shortly afterwards, drew public attention to acts which either prove that morality in one commercial age is immorality in the next, or that some of the governors of the corporation were wofully deficient in the organ of conscientiousness.

In the Royal Exchange, erected for less speculative and more mercantile pursuits, were the early transactions of the moneyed interest in the funds carried on. In 1695, its walls resounded with the din of new projects; nor could a more striking scene be conceived than that presented in the area of this building. The grave Fleming might be seen making a bargain with the earnest Venetian. The representatives of firms from every civilized nation—the Frenchman with his vivacious tones, the Spaniard with his dignified bearing, the Italian with his melodious tongue—might be seen in all the variety of national costume; and the flowing garb of the Turk, the fur-trimmed coat of the Fleming, the long robe of the Venetian, the short cloak of the Englishman, were sufficiently striking to attract the eye of the painter to a scene so varied. There, too, the sober manner of the citizen formed a strong contrast to the courtier, who came to refill his empty purse: and there also, as now, might be seen the broken-down merchant, pale, haggard, and threadbare, haunting the scene of his former glory, passing his now valueless time among those who scarcely acknowledged his presence, and, as he had probably dined with Duke Humphrey, supped with Sir Thomas Gresham.

“Trampling the Bourse’s marble twice a day,

Though little coin thy purseless pockets line,

Yet with great company thou art taken up,

For often with Duke Humphrey dost thou dine,

And often with Sir Thomas Gresham sup.”

A new impulse had been given to trade, and the nation was beginning to feel the effect of the Revolution. William had already tried his power in the creation of a national debt: jobbing in the English funds and East India Stock succeeded; and the Royal Exchange became—what the Stock Exchange has been since 1700—the rendezvous of those who, having money, hoped to increase it, and of that yet more numerous and pretending class, who, having none themselves, try to gain it from those who have.

The charter granted by William to the Corporation of the Bank of England is the first instance of a debt bequeathed to posterity. Annuities had hitherto been the mode of raising supplies; and the day, therefore, which witnessed the establishment of the Bank is worthy of notice, as being also the day on which William laid the foundation of an irredeemable national debt.

It was soon found that the duties appropriated to the various payments of interest and annuities were insufficient to meet the claims. In 1697, the national debt amounted to twenty millions, and the revenue was deficient five millions. The payment in consequence grew uncertain, and the moneyed men of the day, watching the course of events, made large sums out of the distresses of government. “The citizen,” says an old writer on the subject, “began to decline trade and turn usurer.”

To prevent this, a law was passed against the stock-brokers and jobbers, which limits the number of the former, enacts some severe regulations, and makes some severe remarks upon the entire body.

At this period the broker had a walk upon the Royal Exchange devoted to the funds of the East India and other great corporations; and many of the terms now in vogue among the initiated arose from their dealings with the stock of the East India Company. Jobbing in the great chartered corporations was thoroughly understood. Reports and rumors were as plentiful then as now. No sooner was it known that one of the fine vessels of the India Company, laden with gold and jewels from the East, was on its way, than every method was had recourse to. Men were employed to whisper of hurricanes which had sunk the well-stored ship; of quicksands which had swallowed her up; of war which had commenced when peace was unbroken; or of peace being concluded when the factories were in the utmost danger. Nor were the brains of the speculators less capable than now. If at the present day a banker condescends to raise a railway bubble 50 per cent., the broker of that day understood his craft sufficiently to cause a variation in the price of East India Stock of 263 per cent.; and complaints became frequent that the Royal Exchange was perverted from its legitimate purpose, and that the jobbers—the term was applied ignominiously—ought to be driven from a spot polluted by their presence. Mines of gold, silver, and copper were so temptingly promised, that the entire town pursued the deception. Tricks and stratagems were plentiful; the wary made fortunes, and the unwary were ruined.

In 1698, the dealers and jobbers in the funds and share market, annoyed by the objections made to their remaining in the Royal Exchange, and finding their numbers seriously increase, deemed it advisable to go to ’Change Alley, as a large and unoccupied space, where they might carry on their extensive operations.

“The centre of jobbing is in the kingdom of ’Change Alley and its adjacencies,” said a pamphleteer a few years after. “The limits are easily surrounded in about a minute and a half. Stepping out of Jonathan’s into the Alley, you turn your face full south; moving on a few paces, and then turning due east, you advance to Garraway’s; from thence, going out at the other door, you go on still east into Birchin Lane; and then, halting a little at the sword-blade bank, you immediately face to the north, enter Cornhill, visit two or three petty provinces there on your way to the west; and thus, having boxed your compass, and sailed round the stock-jobbing globe, you turn into Jonathan’s again.”

The English funds were assuming a greatness they have ever since maintained. The Hebrew capitalist, who came over with William, had increased the importance of the jobbers by joining them. The English merchant—even at this early period—found that money might be gained in the new operation; and ’Change Alley, so well known in Parliamentary debates and the correspondence of the time as “the Alley,” was for a century the centre of all dealings in the funds. Here assembled the sharper and the saint; here jostled one another the Jew and the Gentile; here met the courtier and the citizen; here the calmness of the gainer contrasted with the despair of the loser; and here might be seen the carriage of some minister, into which the head of his broker was anxiously stretched to gain the intelligence which was to raise or depress the market. In one corner might be witnessed the anxious, eager countenance of the occasional gambler, in strong contrast with the calm, cool demeanor of the man whose trade it was to deceive. In another the Hebrew measured his craft with that of the Quaker, and scarcely came off victorious in the contest; while in one place, appropriated to him, stood the founder of hospitals, impressing with eagerness upon his companion the bargain he was about to make in seamen’s tickets.

It was soon felt practically that the air of England is cold and its climate variable. The more respectable among the jobbers, therefore, gathered beneath the walls of one of those coffee-houses which formed so marked a feature of London life in the eighteenth century, until the chance became a customary visit, and the coffee-house known as Jonathan’s became the regular rendezvous of all the dealers in stock, and consequently the scene of transactions as extensive as any the world ever witnessed.

In 1701, the character of those who met in ’Change Alley was not very enviable. It was said, and said truly, that they undermined, impoverished, and destroyed all with whom they came in contact. “They can ruin men silently,” says a writer of the period, with great vehemence; “undermine and impoverish, fiddle them out of their money, by the strange, unheard-of engines of interest, discount, transfers, tallies, debentures, shares, projects, and the devil and all of figures and hard names.”

Every thing which could inflate the hopes of the schemer was brought into operation by the brokers. If shares were dull, they jobbed in the funds, or tried exchequer bills; and if these failed, rather than remain idle, they dealt in bank-notes at 40 per cent. discount. These new modes of gambling seized upon the town with a violence which sober citizens could scarcely understand. Their first impulse was to laugh at the stories currently circulated of fortunes lost and won; but when they saw men who were yesterday threadbare pass them to-day in their carriages,—when they saw wealth, which it took their plodding industry years of patient labor to acquire, won by others in a few weeks,—unable to resist the temptation, the greatest of the city merchants deserted their regular vocations and speculated in the newly-produced stocks. “The poor English nation,” says a writer, “run a madding after new inventions, whims, and projects; and this unhappy ingredient my dear countrymen have in their temper,—they are violent, and prosecute their projects eagerly.”

No sooner had the members of the jobbing community taken their quarter in ’Change Alley, than the city of London was seized with alarm, and tried to keep the brokers at the Royal Exchange. They grew indignant at their deserting so time-honored a place, and bound them in pains and penalties not to appear in ’Change Alley. Pocket, however, triumphed over prerogative; brokers resorted where bargains were plentiful; ’Change Alley grew famous throughout England; but it was not till nearly a century and a quarter after its first transaction, and a quarter of a century after ’Change Alley ceased to exist as a sphere for the stock-jobbers, that the ancient and useless provision not to assemble in ’Change Alley was expunged from the broker’s bond.

Among those who employed their great fortunes in the manner alluded to was Sir Henry Furnese, a Director of the Bank of England. Throughout Holland, Flanders, France, and Germany, he maintained a complete and perfect train of intelligence. The news of the many battles fought at this period was received first by him, and the fall of Namur added to his profits, owing to his early intelligence. On another occasion he was presented by William with a diamond ring, as a reward for some important information, and as a testimony of this monarch’s esteem. But the temptation to deceive was too great, even for this gentleman. He fabricated news; he insinuated false intelligence; he was the originator of some of those plans which at a later period were managed with so much effect by Rothschild. If Sir Henry wished to buy, his brokers were ordered to look gloomy and mysterious, hint at important news, and after a time sell. His movements were closely watched; the contagion would spread; the speculators grew alarmed; prices be lowered 4 or 5 per cent.,—for in those days the loss of a battle might be the loss of a crown,—and Sir Henry Furnese would reap the benefit by employing different brokers to purchase as much as possible at the reduced price. Large profits were thus made; but a demoralizing spirit was spread throughout the Stock Exchange. Bankrupts and beggars sought the same pleasure in which the millionnaire indulged, and often with similar success.

The wealthy Hebrew, Medina, accompanied Marlborough in all his campaigns; administered to the avarice of the great captain by an annuity of six thousand pounds per annum; repaid himself by expresses containing intelligence of those great battles which fire the English blood to hear them named; and Ramilies, Oudenarde, and Blenheim administered as much to the purse of the Hebrew as they did to the glory of England.

In the midst of these excitements arises a name which, to the dwellers in London, is well known. Thomas Guy, the Bible contractor, was a frequenter of ’Change Alley; and here, duly and daily, might be seen that figure, which the gratitude of his fellow-men has rendered familiar in the statue raised to his memory.

FOOTNOTES:

[1] The tontine is simply a loan raised on life-annuities. In consideration of a certain amount paid by a certain number of persons, government grants to each a life-annuity. As the annuitants die, their shares are divided among the survivors, until the annuity granted to the whole becomes centred in the longest liver; at his death the transaction ceases.

CHAPTER III.

Enormous Bribery by William.—Increased Taxation.—Speech of Sir Charles Sedley.—Wrongs of the Soldiers.—Defence of William.—Moral Disorganization of the Country.—First Exchequer-Bill Fraud.—First Foreign Loan.—Romantic Fraud in 1715.—Political Fraud of ’Change Alley.—Interference of the House of Peers.—First Hoax.

The Parliamentary records of William’s reign are curious. The demands which he made for money, the hatred to France which he encouraged, and the frequent supplies he received, are remarkable features in his history. Every art was employed; at one time a mild remonstrance, at another a haughty menace, at a third the reproach that he had ventured his life for the benefit of the country. The bribery during this reign was the commencement of a system which has been very injurious to the credit and character of England. The support of the members was purchased with places, with contracts, with titles, with promises, with portions of the loans, and with tickets in the lottery. The famous axiom of Sir Robert Walpole was a practice and a principle with William; he found that custom could not stale the infinite variety of its effect, and that, so long as bribes continued, so long would supplies be free. Exorbitant premiums were given for money; and so low was public credit, and so great public corruption, that, of 5 millions granted to carry on the war, only 2-½ millions reached the exchequer. Long annuities and short annuities, lottery-tickets and irredeemable debts, made their frequent appearance; and the duties, which principally date from this period, were most pernicious. The hearth-tax was nearly as obnoxious as the poll-tax. The custom and excise duties were doubled. The hawker and the hackney-coach driver, companies and corporations, land and labor, came under his supervision. Births, burials, and bachelors were added to the list, and whether a wife lost a husband, or whether a widow gained one, the effect was alike. Beer and ale, wine and vinegar, coal and culm, all contributed to the impoverished state; and although some who looked back with regret occasionally indulged their spleen, the general tone of the Parliament was submissive. Still, there were times when the truth was spoken; and truths like the following were unpleasant:—

“We have provided,” said Sir Charles Sedley, “for the army; we have provided for the navy; and now we must provide for the list. Truly, Mr. Speaker, ’tis a sad reflection that some men should wallow in wealth and places, while others pay away in taxes the fourth part of their revenue. The courtiers and great officers feel not the terms, while the country gentleman is shot through and through. His Majesty sees nothing but coaches and six, and great tables, and therefore cannot imagine the want and misery of the rest of his subjects. He is encompassed by a company of crafty old courtiers.”

The corrupt transactions which tended so greatly to increase the national debt are very remarkable. The assembled Commons declared in a solemn vote, “it is notorious that many millions are unaccounted for.” Mr. Hungerford was expelled from the lower house for accepting a bribe of £21; and the Duke of Leeds impeached for taking one of 5,500 guineas. The price of a speaker—Sir John Trevor—was £1,005, and the Secretary to the Treasury was sent to the Tower on suspicion of similar practices. Money-receivers lodged great sums of public money with the goldsmiths at the current interest. Others lent the exchequer its own cash in other persons’ names; and out of 46 millions raised in 15 years, 25 millions were unaccounted for. The Commissioners of Hackney-coaches were accessible, and peculation in the army was discovered by a chance petition of the dwellers in a country town. By this it appeared that the inhabitants of Royston in Hertfordshire had large claims made upon them for money, by colonels, captains, and cornets, in addition to the food and lodging which was their due. A few independent members took up the question; the public supported them; and at this juncture a book was delivered at the lobby of the house, which asserted that the public embezzlement was as enormous as it was infamous, and that the writer was prepared to make discoveries which would astonish the world. The offer was accepted; a searching inquiry was made, and defalcations were discovered so great, that all wonder ceased at the increase of the national debt, and at the decrease of the national glory. The abuses in clothing the army were plain and palpable. The agents habitually detained the money due to the soldiers, and used it for their own advantage, or compelled them to pay so large a discount, that they were in the utmost distress.

The subaltern officers were not better off. Colonel Hastings, afterwards cashiered for the offence, made them buy their raiment of him. If they hesitated, he threatened; if they refused, he confined them. In 1693, an inquiry was made into the application of the secret-service money, when great and deserved animadversion was passed upon those through whom it circulated. The power possessed by government under such abuses may be imagined. They were sure of the votes of those who had places and pensions, and they were sure also of the votes of that large class of expectants which always haunts a profuse ministry; and thus “the courtiers,” as the ministerial party was long designated, could baffle any bills, quash all grievances, stifle any accounts, and raise any amount of money.

These discoveries inflamed the people, and murmurs that corruption had eaten into the nation became general. Court and camp, city and senate, were alike denounced. The pamphleteers spoke in strong language. “Posterity,” said the author of one, termed The Price of the Abdication, “will set an eternal brand of infamy upon those members, who, to obtain either offices, profitable places, or quarterly stipends, have combined to vote whatever hath been demanded.”

It has been the fashion of a certain class to decry William because he founded the national debt. But the war which he waged was almost a war of necessity, and could not be supported without liberal supplies. There was, however, with William a personal pride in the contest. He had been taught, from his boyhood, hatred to France, and almost in boyhood had checked the universal dominion aimed at by Louis. With him, therefore, opposition to France was a passion; and he who, at the age of twenty-three, bade defiance to the combined power of the two greatest nations of the modern world, remembered, as soon as he reached the English throne, that proud, though bitter moment, when, surrounded by French force, his people determined to let loose the waters which their skill had confined, and from the homes and hearths of their fathers bear their goods, their fortunes, and their persons, and to erect in a new land the flag they would not see dishonored in the old. When, therefore, William of Orange became monarch of England, his first thought was the humiliation of France. To this point he bent the vast energies of England and his own unconquerable will; for this only was his crown valuable, and for this purpose was the power of England strained to the utmost tension.

The importance of France was then at its height. Louis sought to sway the councils of Europe; and whoever else might have succumbed, the statesmen of England had been in his power, and a monarch of England in his pay. He saw, therefore, with dislike which was not attempted to be concealed, the throne mounted by one who was resolved, not merely to maintain its ancient greatness, but to quell the power of its ancient rival. Louis sheltered the abdicated king, and encouraged his mock court and his mock majesty. This was sufficient proof of his feeling; nor were other indications wanting: and it is a complete fallacy to suppose that the debt was unnecessarily incurred; in it lay the power of William and the safety of the land.

Had the new king employed the arbitrary mode of levying supplies of the earlier monarchs; had he made forced loans and never repaid them; had he seized upon public money, and wrung the purses of public men, the country might as well have been governed by a James as a William, and would in all probability have recalled the exile of the unfortunate House of Stuart. The evils of William’s reign were in the facts that his power was not sufficiently established to borrow on equitable terms; that the bribery, abuses, and corruption of men in high places increased with their position; and, above all, that, instead of paying his debts by terminable annuities, he made them interminable. Lord Bolingbroke declares, that he could have raised funds without mortgaging the resources of the nation in perpetuity, and that it was a political movement to strengthen the power of the crown, and to secure the adherence of that large portion of the people by whom the money had been lent.

The war was necessary, and the contraction of the debt equally so; for, although William engaged in the contest with something like personal pride, it was essentially a national war. A free people had driven away the Stuarts; a despotic king would have forced them back. If ever, therefore, a contest directly interested both subject and sovereign, it was that which created the national encumbrance; and England was fortunate in the man she had chosen to champion her rights. The contest, which dated from 1688 and ended in 1697, which cost us 20 millions in loans and 16 millions in taxes, was only closed because both nations were fatigued. It produced no great results, no grand achievements, no lasting peace. It did but prove that the strength which had departed from England during the two previous reigns had slumbered, but was not withered. The earlier history was, as many of England’s great wars have been, comparatively unsuccessful. The parties into which the nation was divided prevented the unanimity necessary to great deeds. They agreed only in robbing the people. Public principle was with them a public jest. Incapacity and corruption pervaded all branches. By corruption a Parliamentary majority was procured, and through incapacity the commerce of the country was decaying. Talent was only employed in devising its own benefit; patriotism was perverted; national virtue was forgotten; and the allies found that on sea and land the enemy had the advantage. The navy was daring, but divided; the admirals were accused of disaffection. While the foe was intercepting our merchandise in the Channel, the vessels of England were building in the docks. On the sea, our own peculiar boast, we were dishonored; our flag was insulted; and English admirals retreated before French fleets. Ships of war were burnt; merchant-vessels were sunk; and a million of merchandise was destroyed.

But the clamor of the people reached her councils. It was said our plans were betrayed to the enemy; treachery was justifiably suspected; and all who were familiar with the period will join the writer in thinking it not only possible, but probable.

During these trials the spirit of William remained unchanged; and, rejecting all overtures from France, he exhibited to the world the soldiership for which he was remarkable. At Namur he fought in the trenches, ate his dinner with the soldiers, animated them with his presence, shared their dangers, and won their hearts. Namur capitulated, and the scene changed. The French power was shaken in Catalonia; its coasts were assailed; its people were suffering, and Louis, whose great general was dead, was sufficiently humbled to renew his proposals for peace, which, after nine years’ war, costing Europe 480 millions of money and 800,000 men, was gained by the pacification of Ryswick.

A deep thinker of the present day has said of the war anterior to 1688,—and the argument is supported by that school of which Cobbett was chief,—“The cost happily fell upon those who lived about the time,—it was not transmitted to posterity, according to the clever contrivance devised in a more enlightened and civilized age. They spent their own money, and not that of their grandchildren. They did as they liked with their own labor and its results; they did not mortgage the labor of succeeding generations.”

Men do not argue thus, ordinarily. The case is very similar to that of a land-proprietor mortgaging his estate to defend it from a suit which endangers it. His posterity may regret, but they cannot complain; they know it is better to have the estate partially mortgaged than not to have an estate at all. It seems, to the writer, similar with the national debts of the reign of William. He was bound to defend the people who had chosen him; war was then, as now, a popular pastime; and William is no more to be blamed that he was not in advance of the time, than the nobles of the present day are to blame because they bring up their younger sons to be shot at for glory and a few shillings a day, instead of seeing, as their successors will probably see, the anti-progressive and anti-Christian nature of the principle thus supported.

The one great evil was, that the difficulty of getting money tempted William to borrow on irredeemable annuities. Had he borrowed only on annuities terminable in a century, he would have attained his money at a little extra cost, but the pressure on the people would have decreased year by year, the credit of the government have increased, and the discontent of the nation been less.

If, however, any blame be attached to the government of William, how much greater must be that which is attached to succeeding ministries. They knew, for they felt, the evil of perpetual debts. Sir Robert Walpole said, when the nation owed 100 millions it would be ruined; but he, and those who preceded with those who followed him, persisted in neglecting the only principle of action which could save the country. It is the misfortune of governments to abide by that which is only venerable from its antiquity, and persist in following precedents when they should act upon principle. They forget—and the fact cannot be urged too strongly—that government is a progressive science, and that improvement is a law of nations as well as of nature.

In 1696, while the gold was being recoined, exchequer-bills, principally for £5 and £10, were introduced. Being issued on the security of government, they supplied the place of coin, and were found a great convenience, acting as state counters, which passed as money, because the people knew that the government would receive them at full value. The Lords of the Treasury were authorized to contract with moneyed men to supply cash; and though these bills were at one time at a discount, their credit rose daily, until they reached 1 per cent. premium. They at first bore no interest; but when they were reissued, £7 12s. per cent. per annum was paid, and they became a favorite investment. The genius of Mr. Halifax invented them; and it has required no genius on the part of succeeding ministers to issue a supply whenever the wants of the government have demanded them. When it is not convenient to pay these securities off, and they have accumulated to an amount which attracts the notice of the Opposition, or is calculated to depress the price, the consent of Parliament is procured, and they are liquidated by being added to the fixed debt of the country. They now form a regular supply to the ministry, and are part of the floating or unfunded debt of England, bearing a premium or discount in proportion to the credit of the nation.

The first fraud in exchequer-bills occurred within a year of their creation; when receivers-general, members of Parliament, and deputy accountants formed a confederacy fraudulently to indorse some of these securities, to which their position gave them access. The robbery was discovered; and a Mr. Reginald Marryot, one of the accomplices, saved himself by discovering the plot. The House of Commons expelled from its members the men whose dishonor was increased by their position; and, as the estate of Mr. Charles Duncombe, one of the accused, was worth £400,000, they fined him £200,000, being the amount wrongfully circulated. In the House of Lords it fell to the Duke of Leeds to give the casting vote. Mr. Duncombe’s estate was saved, but the Duke’s credit suffered, for he gave his decision in favor of the defaulter; and it was said that Mr. Duncombe paid no inconsiderable sum for the benefit he received at the hands of his Grace. The charge was never brought home; but the Duke’s after-conduct gave a sufficient coloring to the suspicion.

The first foreign loan was negotiated in ’Change Alley in 1706. The victories of the Duke of Marlborough had raised the pride of the English people; and even ’Change Alley possessed a somewhat similar feeling. When, therefore, his Grace proposed a loan of £500,000 to the Emperor, for eight years, at 8 per cent., on the security of the Silesian revenue, it was received with acclamation, and was filled in a few days by the first commercial names of England.

During that period, which, now a romantic, was then a terrible reality, when it was known, in 1715, that the best families in the North of England had assembled in arms to change the dynasty, no pains were spared by the jobbers to procure correct and to disseminate false intelligence: and it was with mingled feelings of alarm and pity that the inhabitants of a small town between Perth and the seaport of Montrose—where James embarked after his unhappy expedition—saw a carriage and six, travelling with all the rapidity which the road would allow. It was known that the rebel army was dispersed; that its chiefs were scattered; and that the unfortunate Stuart was wandering through the country, with life and liberty alike endangered. It excited, therefore, no surprise in the village when the carriage was surrounded, and the apparent prize conveyed with great ostentation towards London. Letters soon reached the city that the fugitive Stuart was taken, and the letters were confirmed by the story related, which quickly reached London. The funds of course rose, and the inventors of the trick laughed in their sleeves as they divided the profit. By this time the jobbers must have reached a somewhat high position, as, the same year, one Quare, a Quaker and a celebrated watchmaker in ’Change Alley, having successfully speculated in the shares and funds with which it abounded, was of sufficient importance to invite to the marriage-feast of his daughter, Sarah Jennings, Duchess of Marlborough, and the Princess of Wales, who, with three hundred guests of distinction, graced the wedding entertainment.

But ’Change Alley was notorious for other dealings than those in the funds. When that desperate struggle for power occurred between the old and new East India Company; when their varying claims were on every man’s tongue, and their bribes in every man’s hand; the election of a member of Parliament was an affair of moment. The partisans of each Company sided with their friends; bought boroughs; shed their money lavishly and largely; used every art that self-interest could devise; and so extensive was the interference of the brokers, that the only question heard in ’Change Alley was, “Is he for the New or the Old Company?” It was the touchstone of a principle more sacred than the Hanoverian succession, and more important than England and Hanover united. It was probably found profitable; and it was said in 1720, that elections for members of Parliament came to market in ’Change Alley as currently as lottery-tickets.

The first political hoax on record occurred in the reign of Anne. Down the Queen’s Road, riding at a furious rate, ordering turnpikes to be thrown open, and loudly proclaiming the sudden death of the queen, rode a well-dressed man, sparing neither spur nor steed. From west to east, and from north to south, the news spread. Like wildfire it passed through the desolate fields where palaces now abound, till it reached the city. The train-bands desisted from their exercise, furled their colors, and returned home with their arms reversed. The funds fell with a suddenness which marked the importance of the intelligence; and it was remarked that, while the Christian jobbers stood aloof, almost paralyzed with the information, Manasseh Lopez and the Jew interest bought eagerly at the reduced price. There is no positive information to fix the deception upon any one in particular, but suspicion pointed at those who gained by the fraud so publicly perpetrated.

The invasion of 1715, as it caused extra expenses, demanded extra grants. The House of Commons voted them; but the House of Peers, a portion of which possessed strong Jacobite feeling, attempted to modify without mending it. Though they did not reject the bill, the lower house resented the mere interference. At an early hour on the morning of the 13th February, Lord Harcourt went to the House of Peers, and made an anxious search for precedents of amendments to money bills. The search proved unsuccessful, as, since the Restoration, the Commons had defended their right of not allowing the Lords to make any alterations in these acts. A committee was appointed, and the Peers fought bravely for their claim; but though the court was willing to support them, money was so immediately necessary, that, at the request of the government, they yielded under protest.

CHAPTER IV.

Charitable Corporation Fraud.—Its Discovery.—Appalling Effects and Remedy.—Marlborough’s Victories, their History, and the Loans they brought.—Augmented Importance of the Stock Exchange.—Dislike to the Members.—Increased Loans.—Difficulties in procuring them.—Statement of Sir Robert Walpole.—Gifts of Contractors to Clothiers.—First Payment of Dividends by the Bank.—South-Sea Anecdotes.

In the early part of the eighteenth century, a prospectus was issued to the commercial world and the members of ’Change Alley, in which the wants of the needy and the infamy of the pawnbrokers, the purest philanthropy and a positive five per cent., were skilfully blended. It was shown that then, as now, the poor were compelled to pay a greater interest than the rich; that thirty per cent. was constantly given by the former on a security which the usurer took care should be ample; and it was proposed that the wealthy capitalist should advance, for the benefit of the needy, a sufficient sum to enable the company to lend money at five or six per cent. The proposal proved eminently successful. A capital of £30,000 was immediately subscribed, a charter obtained, and the “Charitable Corporation,” the object of whose care was the necessitous and industrious poor, appeared to flourish. For some years the concern answered, the poor received the assistance which they required, and the company was conducted with integrity. In 1719, however, their number was enlarged; their capital increased to £600,000; an augmentation of business was looked for; cash credits were granted to gentlemen of supposed substance; and the importance of the corporation was unhappily recognized by that numerous class of persons compelled to pay in maturity for the excesses of youth. They acted also as bankers, and received deposits from persons of all classes and conditions. Its direction boasted men of rank, its proprietary men of substance, and its executive men of more capacity than character. The cashier of the company was a member of the senate; Sir Robert Sutton, a director, was one of his Majesty’s Privy Council; and Sir Archibald Grant, who took a prominent part in the affairs of the corporation, was also a member of the lower house. Every confidence was reposed in such a body, and it was regarded as a rich and prosperous society.

Under these circumstances, the surprise of the public may be conceived when it was first whispered, and then openly announced, that the cashier, with one of the chief officers, had disappeared in company. The alarm spread to the proprietors; the public participated; the poor assembled in crowds; the rich clamored for information; a meeting was called to inquire into the case, when a most pernicious, but scarcely comprehensible, piece of villany was unravelled, and a most disgraceful tissue of fraud discovered. £30,000 alone remained out of half a million. The books were falsified; money was lent to the directors on fictitious pledges; men of rank and reputation were implicated; suspicion and censure followed persons of importance. Some managers were found to have connived at scenes so disgraceful, that their character was lost for ever. Many had concerted active plans of fraud, which ended alike in their own ruin and the ruin of the corporation; while others were guilty of personally embezzling the funds of the company. Petition after petition was presented to the Commons. A bill was brought in to prevent the defaulters from leaving the kingdom; and the scorn of all England pointed at the men who, under the guise of charity, had enriched themselves. The interest which was taken in the discovery by the entire country attracted the attention of the Jacobites; and, as one of the party had fled to Rome with the spoils, the Pretender endeavoured to enlist the sympathy of the nation, through one Signor Belloni, who wrote to the committee, stating that the refugee had been seized and placed in the castle of St. Angelo. The Whig party, ever jealous of the Pretender, voted that the letter should be burned by the hangman at the Royal Exchange.

The distress occasioned by this bankruptcy was appalling, pervading nearly every class of society. Large sums had been borrowed at high interest. The small capitalist was entirely ruined; and there was scarcely a class in English life which had not its representative and its sufferer. The poor were unable to get their goods; the rich were robbed of their jewels; families accustomed to affluence were starving; delicate women, hitherto irreproachable, were compelled to exchange their persons for bread. Similar evils have been known to exist during sieges; and, in the public streets of Lisbon, women of unblemished virtue offered themselves for sale during its occupation by the French; but the writer believes there is no other parallel in commercial history.

All that the wisdom of the senate could devise was attempted to mitigate the evil. The revenge of the losers was appeased by several members being expelled the house; their fear of loss was reduced by the confiscation of the estates of the offending parties; a lottery was granted for the advantage of the sufferers; and though a dividend of nearly ten shillings was eventually paid, the fraud of the Charitable Corporation was remembered long after the evils caused by it had ceased to exist.

The next great increase of debt was through the War of Succession in Spain, to the crown of which several princes laid claim. According to the ordinary rule of inheritance, the Dauphin, by virtue of the marriage of Louis XIV. with the eldest sister of the king, should have succeeded; but as all right to the throne had been solemnly renounced on the marriage, it was supposed that the claim was vacated; and the principal powers of Europe, knowing the necessity that so great an inheritance should not descend to any state possessed of territorial importance, formed the celebrated partition treaty.

By this, France, England, and Holland agreed that Spain, the Indies, and the Netherlands should descend to the Archduke Charles, and, in return, that France should be possessed of the rich province of Lorraine. There is no doubt that governments regard treaties in proportion to the physical rather than the moral necessity to abide by them; and France, under Louis Quatorze, was no exception to the rule. A succession of cabals in Spain gave the latter the influence he required. His ambassador won the court and city; the Archbishop of Toledo was of his party, and gained the Spanish king, who, sick body and soul, priest-ridden, a prey to mental and physical agony, was, after a succession of intrigues, induced to fix his name to that will which annexed the splendid possession of the empire of Spain to the grandeur of France.

At once Louis violated the partition treaty, accepted the noble legacy for his grandson, and sent the whole court of France to accompany him to the Pyrenees, that frontier which he said in his pride had ceased to exist. When the news reached William, he was at the Hague, but instantly returned to London. Vigorous preparations were made; but he did not live to see the declaration of the war, which began in 1782, agitated Europe for thirteen years, and added so much to the great debt of which this volume treats.

England, Holland, and the Empire were opposed to France, Spain, and Bavaria; and the war thus commenced was a memorable contest. Marlborough and Peterborough, than whom England boasts none greater, made her name a word of dread for many years. The knight-errantry of Peterborough conceived schemes which only his ardent and fiery imagination could achieve. He took towns by storm, under circumstances little less than marvellous; he reduced the largest and strongest cities of Europe with a handful of soldiers; he made forced marches, shared the fatigues of his men, and took entire reinforcements prisoners. With 3,000 troops he harassed a regular army, cut off communications, and raised sieges; he forced towns with horse-soldiers, and chivalrously mortgaged his estates to pay the expenses incurred in the cause of his country.

The victories of John Churchill, Duke of Marlborough, were more important to the nation than those of the adventurous Peterborough; and if his glory was tarnished by the love of gold, yet the name of Marlborough as a captain is unsullied. The battle of Blenheim was his first great achievement in the War of Succession, and it made the people consent to pay the additional taxes imposed upon them. Innumerable trophies,—hundreds of flags and standards, tents, cannon and mortars, casks and barrels filled with the precious metals,—evinced the glory of the contest, and added to the pride of the nation. The thanks of the House were voted to the Duke; medals were struck in his honor; Addison celebrated him in poetry; but dearer far to Marlborough than medal, poetry, or thanks, was the rich manor and the noble mansion of Woodstock, voted to him by the nation. Scarcely had the people recovered from the joy occasioned by the battle of Blenheim, and from the increased taxation which ensued, than another battle—that of Ramilies—seized them with delight. Forgetful of the consequences, men talked of the old days of England,—of the ancient victories of her armies,—of the time when the great Cromwell made the English name terrible,—and, in their excitement, they magnified the grandeur, and diminished the cost. The pride of Louis was indeed humbled. He made proposals for a congress; he tampered with the Dutch; he besought the interposition of the Head of the Church; he offered to cede Spain, Milan, Naples, or Sicily; and felt bitterly the consequences of having provoked the vengeance of the island he hated. Ambition had, however, seized upon the nation; conquest only was thought of; and, remembering the glory of the past, the English people deemed themselves entitled to some privilege for the blood which was shed. They forgot that a new campaign would bring new costs; and they forgot, what their successors yet feel, that every fresh victory brought a fresh loan. Oudenarde, the third of that splendid series of victories which has made the name of Marlborough renowned in the land, was followed by Malplaquet, the glory of which was superior to its results, and the blood of which was shed to maintain the court influence of the Duke.

But a change of ministry brought a change of measures; and a Tory government refused to maintain a Whig policy. The ministers triumphed, and the treaty of Utrecht was concluded. Then arose that war of words which enlisted the pens of Steele, of Addison, of Swift, and of a host of other and lesser spirits. The Tories said the Whigs had sold us to the Dutch, to fill the pockets of Marlborough. The Whigs said the Tories had sold us to the French, to facilitate the return of the Pretender. The waste of life, the suspension of trade, the accumulation of debt, without an adequate return, were so terribly evident, that the Commons remonstrated, and told her Majesty that £35,302,107 of the supplies were not accounted for.

It must be evident that every fresh war, every new loan, and every public peculation, increased the importance of the members of the Stock Exchange; and when men saw the broker and jobber assuming a position the public was unwilling to grant, they mistook the effect for the cause; and a hundred voices were raised, and a hundred essays written, to prove that the brokers of ’Change Alley were the bane of the nation. A member could hardly make a financial speech, a pamphleteer write a political pamphlet, or a dramatist employ his pen for the public, without dragging in the jobber as an illustration and a cause of the misery of England. Those who had lost their money in the many speculations with which the ’Change abounded, deemed also they had earned a right to decry it. The following is a specimen of their opinion:—“It is a complete system of knavery, founded in fraud, born of deceit, and nourished by trick, cheat, wheedle, forgeries, falsehoods, and all sorts of delusions; coining false news, whispering imaginary terrors, and preying upon those they have elevated or depressed.” Archibald Hutcheson, whose life was afterwards endangered from the determined manner in which he opposed the South-Sea bubble, says that the jobbers vied with the first nobility in the kingdom. Pope wrote,—

“Statesmen and patriots ply alike the Stocks,

Peeress and butler share alike the box;

And judges job, and bishops bite the town;

And mighty dukes pack cards for half-a-crown.”

At any rate, it is certain that, if the national glory was aggrandized, the national debt increased in proportion. From 16 millions to 54 was fearfully felt,—thirty-seven millions and a half being raised by loan, besides thirty millions in taxes, during the war of the Spanish succession.

In 1716, great difficulty was experienced in procuring a loan of £600,000. The interest offered was four per cent.; and while the propriety of the loan was being debated on the second evening, Mr. Lechmere entered the House hastily, and told them that only £45,000 had been subscribed. Sir Robert Walpole instantly rose, and said, “I know that the members of the Stock Exchange have combined not to advance money on the loan. Every one is aware how the administration of this country has been distressed by stock-jobbers.” The interest of four per cent. appeared so low to men accustomed to the enormous premiums of a few years previous, that they treated the proposed terms with contempt, and enlisted the sympathy of the public by reporting that it was the first step towards the reduction of the interest on the national debt. When the same minister proposed a loan of £1,700,000, to supply a deficiency, the opposition was so great, that, had not Sir Robert appealed to an empty exchequer, and declared that the debt had been incurred by a previous government, he would have been refused. The feelings of the House were greatly incensed by the discovery that the money was jobbed away with unequalled recklessness; and public-spirited men were not wanting to resist, in the name of the country, such shameless expenditure. They protested, because—and the protest drawn in 1729 would do for 1849—“the national debt ought not to be increased when the taxes are heavily felt in all parts of the country; when our foreign trade is encumbered and diminished; when our manufactures decay; when our poor daily multiply; and when national calamities surround us.” The report of the commissioners appointed to inquire into public accounts sanctioned the opposition which such men as Sir John Barnard gave to unjust demands. They proved that colonels received large sums from clothing contractors, as premiums for their favor, and that £1,400 had been given for a single contract. “The practice,” said the report, “is so notorious and universal, that it wants no representation.” Some barefaced practices were related in the same document; nor can there be any wonder that, with such gross mismanagement, it was said,—“The army was in the field, no money in the treasury,—none of the remitters would contract again. The Bank refused to lend £100,000 on good security. The navy was 11 millions in debt, and the yearly income greatly deficient.”

In 1717 the Bank first undertook the payment of dividends to the national creditors, previous to which they were paid quarterly; when, however, they were undertaken by the Bank, this plan was found inconvenient, and since that period they have been paid half-yearly.

Sir John Blunt was the projector of the South-Sea bubble, which, in 1720, produced such extraordinary effects in England. As the scheme did not at first prove successful, rumors were spread that Gibraltar and Port Mahon would be exchanged for Peru. The stock soon rose to 1,000 per cent., and the excitement lasted till September, by which time it had sunk to 150. Several eminent goldsmiths and bankers were obliged to abscond; and every family in the kingdom felt the shock.

In other works the anecdotes of this memorable period have been presented in proportion to their effects upon commerce; in the present, those only will be given which either affect the Stock Exchange or possess a general interest.

On May 15th, 1719, the king went abroad, and many who went with him sold all their funds. The Bank of England was accused of assisting the bubble by lending money, for the first time, on the security of its stock; “and this,” said Mr. Aislabie, “furnished an additional supply of money to gamesters in the Alley.” The stories of the period are very widely spread, and prove how all ranks were affected. The Marquis of Chandos embarked £300,000 in it, and the Duke of Newcastle advised him to sell when he could make the tolerable profit of cent. per cent. The Marquis was greedy, hoped to make it half a million, and the advice was declined. The panic came, and the entire investment went in the shock.

Samuel Chandler, the eminent nonconformist divine, risked his whole fortune in the bubble, lost it, and was obliged to serve in a bookseller’s shop for two or three years, while he continued to discharge his ministerial duty.

The elder Scraggs gave Gay £1,000 stock, and, as the poet had been a previous purchaser, his gain at one time amounted to £20,000. He consulted Dr. Arbuthnot, who strongly advised him to sell out. The bard doubted, hesitated, and lost all. The doctor who gave such shrewd advice was too irresolute to act on his own opinion, and lost £2,000; but, with an enviable philosophy, comforted himself by saying it would be only 2,000 more pairs of stairs to ascend.

Thomas Hudson, a native of Leeds, came to London, and filled the situation of government clerk. Having been left a large fortune, he retired to the country, where he lived until, tempted to adventure in the scheme, he embarked the whole of his fortune in it. After his loss he came to London, became insane, and Tom of Ten Thousand, as he called himself, wandered through the public streets, a piteous and pitiable object of charity.

One tradesman, who had invested his entire resources in the stock, came to town to dispose of it when it reached 1,000. On his arrival it had fallen to 900, and as he had decided to sell at 1,000, he determined to wait. The stock continued to decline, the tradesman continued to hold, and became, as he deserved, a ruined man.

Others were more fortunate. The fine mansion of Sir Gregory Page, at Blackheath, was made out of the profit made by his guardians; and two maiden sisters, who sold the stock at 970, reinvested their money in navy-bills, at a discount of 25 per cent., which in a very short time were paid off at par.

The wags of the day were not idle. A pretended office was opened in ’Change Alley to receive subscriptions for raising one million. The people flocked in, paid five shillings for every thousand they subscribed, fully believing they would make their fortunes. After a large sum had been subscribed, an advertisement was published, that the people might have their money without any deduction, as it was only a trial to see how many fools might be caught in one day.

Similar anecdotes to these are scattered over the private and the public histories of the period; but they have been rendered too familiar by recent works to narrate them in the present volume.

CHAPTER V.

Life of Thomas Guy.—Imposition in Sailors’ Tickets.—Foreign Loan attempted.—Sir John Barnard.—Expresses of the Jobbers.—Foreign Commissions.—Origin of Time-Bargains.—Attempt to stop them.—Its Inadequacy.—Proposal to reduce the Interest on the National Debt.—Opposition of Sir Robert Walpole.—New Mode of raising Loans.—Comparative Interest in Land and Funds.—Punishment of Manasseh Lopez.—The first Reduction of Interest.—Life of Sir John Barnard.

In 1724 died the founder of Guy’s Hospital, and a sketch of this remarkable man’s career is a curious picture of the period. The son of a lighterman and member of the senate,—one year the penurious diner on a shop-counter, with a newspaper for a table-cloth, and the next the founder of the finest hospital in England,—at one time a usurious speculator, and at another the dispenser of princely charities,—the wearer of patched garments, but the largest dealer in the Alley,—beginning life with hundreds, and ending it with hundreds of thousands,—Thomas Guy was one of the many remarkable men who, tempted from their legitimate pursuit, entered into competition with the jobbers of the Stock Exchange, and one of the few who devoted their profits to the benefit of a future generation.

His principal dealings were in those tickets with which, from the time of the second Charles, the seamen had been remunerated. After years of great endurance and of greater labor, the defenders of the land were paid with inconvertible paper, and the seamen—too often improvident—were compelled to part with their wages at any discount which the conscience of the usurer would offer. Men who had gone the round of the world, like Drake, or had fought hand to hand with Tromp, were unable to compete with the keen agent of the usurer, who, decoying them into the low haunts of Rotherhithe, purchased their tickets at the lowest possible price; and skilled seamen, the glory of England’s navy, were thus robbed, and ruined, and compelled to transfer their services to foreign states.

In these tickets did Thomas Guy deal; and on the wrongs of these men was the vast superstructure of his fortune reared. But jobbing in them was as frequent in the high places of England as in ’Change Alley. The seaman was poor and uninfluential, and the orders which were refused payment to him were paid to the wealthy jobber, who parted with some of his plunder as a premium to the treasury to disgorge the remainder. By these means, and by fortunate speculations during the South-Sea bubble, Mr. Guy realized a fortune of £500,000.

It must be borne in mind, that, a century and a quarter ago, half a million was almost a fabulous fortune. It was only to be acquired by speculation in the funds, and by ventures which merely commercial dealings failed to produce. In the literature of the past century, a “plum” is mentioned as the great prize of a lifetime, and as the extent of mercantile ambition. The enormous sums lately realized were then almost unknown, or arose from some chivalrous adventure, such as marked the lives of a Robert Clive or a Warren Hastings; and it was left for the present century to witness the achievement of fortunes which in the past would have been beyond credence.

In attaining so great a result, Mr. Guy was doubtless assisted by his penurious habits; but he did not possess a penurious mind. The endower of a princely charity, the founder of alms-houses, the enricher of Christ’s Hospital, the support of his relations, and the friend of the poor, must be regarded as one of those contradictory characters which, at all periods and in all portions of the world, have marked the human race. His dealings in the Stock Exchange were continued to a late period of his existence. In 1720, he speculated largely in the South-Sea Stock; and in 1724 he died, at the age of eighty-one, leaving by will £240,000 to the hospital which bears his name. His body lay in state at Mercer’s Chapel, was carried with great funeral pomp to St. Thomas’s Hospital, and on February 13th, 1734, just ten years after his death, a statue was erected to his memory in the square of that asylum, partially raised by profits from the hard earnings of English seamen.

It was, indeed, to this improvidence in supplying funds to meet the demands for the navy that the South-Sea Company owed its origin. So largely had the unpaid sailors’ tickets increased, that nine millions were unprovided for. Cash was scarce, the holders were clamorous, and Parliament, as a premium for forbearance, erected them into that body which ended so disastrously for the commercial interests of England.

In 1730, a loan of £400,000 was attempted for the Emperor of Germany. ’Change Alley was ready to advance it on sufficient interest and sound security; but Sir Robert Walpole brought in a bill to prohibit his Majesty’s subjects and others resident in the kingdom from advancing money to any foreign state, without license from the king under his privy seal. The opposition experienced by the minister was very strong. The great city commoner spoke against the bill, and it required all the power of Sir Robert Walpole to counterbalance the influence of Sir John Barnard in a matter pertaining to business.

It was very natural that men’s minds should be turned to that portion of the town which, ever and anon, gave signal symptoms of great frauds, great gains, and great gambling; and Sir John Barnard endeavoured, in 1732, to draw the attention of the House of Commons to the dealings and the doings of the Stock Exchange. It had, even at this early period, a complete and organized system. The expresses of its rich members came from every court in Europe, and beat—as the expresses of jobbers always have—the messengers of the government. Sir Robert Walpole not only declared this, but with great naïveté added, “It is because they are better paid and better appointed.” The very fact that brokers did beat the government despatches was regarded as a crime; and the public continued, year by year, to pour its maledictions on the frequenters of ’Change Alley.

The funds were said to be the nursery of fraud. In the leading companies the interest of the citizen was sacrificed to the jobber. The whole town was converted into a corporation of brokers and usurers, which could lie the government into credit one week and out of it the next. The magistracy of the city encouraged it, and the aristocracy of the city pursued it. ’Change Alley was called a gaming-house publicly set up in the middle of London, towards which the heads of our merchants and tradesmen were turned instead of to their legitimate pursuit; and it was said that £80,000 were paid annually by foreigners in the shape of commissions to the brokers of the Alley. But it was to the bargains for time that public attention was principally pointed by the city member. The origin of these bargains is obvious, and may be traced to the period of six weeks in each quarter, when the bank books were—as it was then thought—necessarily closed to prepare for the payment of the dividend. As no transfer could be made during this period, it naturally enough became a practice to buy and sell for the opening. The habit grew by what it fed on; and, in time, periodical dates for the payment of funds, purchased or sold when it could not be transferred, were fixed on by the Stock Exchange Committee, at intervals of about six weeks. As in these transactions the possession of stock was unnecessary, and the payment of the difference in the price was sufficient, bargains for time became common, and not only English, but foreign capitalists, were attracted by the chance of gain, while the Hebrews flocked to ’Change Alley from every quarter under heaven.

In consequence of the view which Sir John Barnard took of these facts, he succeeded in carrying that enactment which, intended to prevent gambling in the funds, has been utterly and singularly powerless in its effect. It provided that no loss in bargains for time should be recoverable in the courts, and placed without the pale of the law all such speculations. One hundred and sixteen years have passed, the act is still in force, and speculative bargains have not only increased, but form the chief business of the Stock Exchange. The greatest corporation in the world has availed itself of the principle, and the effect of the statute is, not to prevent respectable men from speculating, but to make rogues refuse to pay their losses, knowing that, while the law is inefficient, the blackboard of the Stock Exchange is their only punishment. To such men such punishment is ridiculous; they only feel through the purse, and in that they know they are safe by virtue of an act in which they rejoice.

That a feeling of gambling was encouraged is indisputable, and the attempt of Sir John Barnard was, therefore, honorable. But this propensity seems a natural principle of humanity. The savage in a state of nature, and the peer at the highest point of civilization, alike indulge in it. Every man who trades beyond his power to pay, every merchant who purchases goods on delivery, is, strictly speaking, a gambler; and it is well known to be a common practice of the first merchants to buy goods for arrival without the slightest intention of receiving them, and directly a profit can be gained, or too great a loss averted, they are resold without even the bill of lading being visible to the buyer.

It is these things which lead to disgraceful bankruptcies. The intelligent author of “Partnership en Commandite” says:—“On the banks of the Danube, the Vistula, the Rhine, and the Tagus,—on the shores of the Baltic and the Mediterranean,—on the plains of Poland,—I have met with men who have asked me for charity, because they had been ruined by connection with some of the first English houses.”

The first effect of Sir John Barnard’s Act was serious; and bargains for time, or the “race-horses of ’Change Alley,” as they were termed, were said to have expired. It was soon found, however, that to make the brokers responsible would answer every purpose; and business flourished as gayly as if the father of the city had never had an existence.

Though this measure was with difficulty passed, the wonder is that it passed at all, as the reasoning brought in its favor was very slight; and the following is a fair specimen of the speeches in its behalf:—

“The broker comes to the merchant, talks of the many fatigues and dangers, the great trouble and small profits in the way of trade. He then tells him if he will allow him to dig in the rich mine of ’Change Alley, he could get more in a day than he could by his trade in twelve months. The merchant is persuaded, he engages, goes in for some time, and is quite undone. His just creditors are surprised. ‘What,’ say they, ‘this man had a good stock to begin with, and he has had a good trade for several years; he never lived extravagantly; what is become of his effects and his money?’ They inquire, and find that the whole was gamed away in ’Change Alley.”

The fears of the brokers outran their discretion as soon as the bill passed into law; and the maledictions poured upon Sir John were loud, deep, and frequent. They thought that the principal and most profitable part of their trade was departed; and it was declared—how truly, time has since shown—that it would be only possible to get an estate by the slow, dull way of commerce. Every effort was made to ruin his reputation and his character; but both were too firmly established to receive any injury from the malevolent stories which were currently circulated.

A proposition was made in 1737, by the same gentleman, to reduce the interest on the national debt from four to three per cent. Nothing could be more just than this, as the public might either receive their principal in full, or one per cent. less interest. The House was at first disposed to entertain the proposal with the fairness it merited; but the moneyed men rose in a body, and Sir Robert Walpole, fearing to disoblige them, fearing to lose those votes on which he had hitherto relied, and envying also the popularity Sir John might acquire, determined to crush the scheme. He interested the king and queen; he employed his ministerial power; he intimidated some, he bribed others, he puzzled and persuaded more; until, his purpose being effected, the bill—than which nothing could be more reasonable—was rejected. The popular feeling attributed this opposition to the royal family, who possessed great funded property; but to popular feeling, unless it rose to a storm, as with the Excise Bill, Sir Robert Walpole was very indifferent.

In the same year, an inquiry being instituted into the books of the Bank of England, it was calculated that ten millions were held by foreigners in the English funds; a remarkable proportion of the amount at which the national debt then stood.

In the reign of George II. a new mode of raising loans was adopted. Instead of varying the interest according to the state of the money-market, the rate was fixed from three to five per cent., and the subscribers remunerated by an additional amount of stock. It was the first public announcement that the debt was perpetual; and has made the present principal two fifths more than the sum originally advanced. In the earlier history of borrowing, the government named its own terms; and as this generally afforded a profit, the loan was soon filled. If, however, the ministerial proposals were not sufficiently liberal, the executive altered the terms to the real value of money; and it is by no means an uninstructive fact, that it was found in 1748, after a close calculation, that for thirty previous years land had produced a higher interest than the funds.

Although an act had been passed by which it was declared illegal for one individual to have more than twenty lottery-tickets allowed him, it soon became notorious that the rule was flagrantly and frequently violated. Manasseh Lopez, whose dealings on the Stock Exchange entitled him to be termed a leader, had bribed the commissioners to permit an indirect violation of the law, by accepting a long list of feigned names as candidates for tickets. He was prosecuted by the Attorney-General, and sued in the Court of King’s Bench. A fine of one thousand pounds was awarded as punishment; but as he had made more than fifty times the amount, it might be regarded as a very successful speculation.

The first reduction in the interest of the national debt—from four to three per cent.—was effected in 1750, and was received with a storm of indignation similar to that which arose in 1737, on the mere attempt. Sir John Barnard, to whom every thing connected with the funds was of importance, is mentioned as having proposed it to Mr. Pelham, who brought it forward in the House of Commons. The best men in the city protested against so bold a measure, and the foes of the minister encouraged the opposition of the fundholder; his friends overwhelmed him with entreaties to withdraw the motion; and every engine which could be brought into operation by the moneyed interest was employed. Reasons which time has since repudiated, fallacies which almost repudiated themselves, evils which had no existence save in the brain of the prophet, were freely circulated. It was said that the landed gentry and the noble families of England would be ruined, and their children would become beggars; that the interest of younger sons’ portions would not enable them to associate with the cooks and coachmen of their elder brothers; and that merchants, shopkeepers, and tradesmen would be ruined. The farmers would lose their farms; families would be undone; and such a deluge of distress be brought upon all ranks, that the consequences would be fatal to that “free and happy constitution” which has been so often ruined in the brains and in the prophecies of partisans.

Its first reception was so lukewarm by the minister’s friends, and the opinions of the people so strong, that, coupled with the previous failure of a similar measure, its miscarriage was confidently calculated. “Mr. Pelham,” says the flippant chronicler of the times, “who has flung himself entirely into Sir John Barnard’s hands, has just miscarried in a scheme for the reduction of interest, by the intrigues of the three great companies and other usurers.” Horace Walpole mistook the voice of his little circle for the voice of the country. The scheme did not miscarry; and it is remarkable that this, the first reduction in the interest of the national debt, was planned in a most masterly manner, and reflected great honor upon Sir John Barnard. A loss of one per cent. upon the income of an annuitant is important, and acts prejudicially upon all with limited means. To obviate this evil, if the fundholder declined receiving his capital, the interest was reduced from 1750 to 1757 only one half per cent., 3½ being paid during that period; after 1757 it was reduced the remaining half per cent. The great resources of England have ever been regarded with wonder by foreign nations; and they looked with astonishment on the power of a people which, after a heavy war and an increased debt, enabled the state to repay its creditors or reduce its interest.

The name of Sir John Barnard, the father of the city, its honest representative for six sessions, the remodeller of the Stock Exchange, and the reducer of the interest on the national debt, occupies a prominent place in all questions connected with the funds. Born of the same persuasion as William Penn, he retained during life much of the simple honesty of the creed he originally professed; and even Sir Robert Walpole respected him, although he was constant in his opposition to bad measures, and could never be bought nor bribed. “I address myself to you, Mr. Speaker, and not to your chair,” he said, when Sir Robert Walpole, secure in a majority, withdrew the attention of the Speaker; “I will be heard; and I call that gentleman to order.” Lord Chatham gave him, half in jest and half in earnest, the proud title which was afterwards appropriated to himself, of “the great Commoner.” His pride was indomitable. The members of the Stock Exchange, who were always spoken of with great contempt by Sir John, thoroughly detested him, and greatly helped to fan the unpopularity which fell upon him when he opposed public feeling, as, with a most unbending integrity, he invariably did, if his conscience prompted. “He grew,” said Horace Walpole on one occasion, “almost as unpopular as Byng.” On commercial subjects his opinion was greatly regarded. When any remarkable feature in financial politics occurred, the town echoed with, “What does Sir John say to this? What is Sir John’s opinion?” And he had the honor of refusing the post of Chancellor of the Exchequer in 1746. It is somewhat at variance with the proud character of the man, that, from the time his statue was erected in the Royal Exchange, he never entered the building, but transacted his business in the front. The blood of Sir John Barnard yet flows in the veins of some of the best houses in the commercial world, his son having married the daughter of a gentleman known in contemporary history as “the great banker, Sir Thomas Hankey.”

CHAPTER VI.

Origin of New Loans.—Fraud of a Stock-broker.—East India Stock.—Sketch of Sampson Gideon, the great Jew Broker.—East India Company.—Restriction of its Dividends.—Liberality to its Clerks.—Important Decision.—Robbery at Jonathan’s.—Curious Calculation concerning the National Debt.

The Spanish war, and the war of the Austrian succession, was the origin of the next increase of the national debt. It was alleged that the commerce and the merchants of Great Britain were injured by the Spaniards; that the subjects of England were sent to the Spanish mines; and though one remonstrance followed another to the court of Madrid, promises were more plentiful than performances from the haughty Spaniard. The people were excited to believe that their honor was insulted; a dramatic exhibition was made at the bar of the House of Commons; and this war, partly to please the populace, partly to heal the wounded national pride, and partly to secure British subjects from the right of search in American seas, was openly declared in 1739. The heralds were attended in their progress by the chiefs of the opposition, and the Prince of Wales drank success to England at Temple Bar; but Sir Robert Walpole, as he heard the merry peal from the city steeples, muttered, “They may ring their bells now, they will wring their hands before long.”

The misfortunes with which the campaign opened justified the minister’s prophecy, and the war was violently attacked in the House; but the majority of Sir Robert was an irresistible argument, and calamity continued to mark the progress of the British arms. An armament, with 15,000 sailors, and as many soldiers, completely equipped, failed disgracefully before Carthagena. The squadrons of our admirals were dispersed. Fontenoy witnessed a signal defeat, and Tournay was taken. Scotland was entered by a Stuart, under circumstances which promised success. England was threatened with invasion; the vast armies of the English allies, paid by English money, raised by loans through the Stock Exchange, were inactive or defeated; and it was only when a more promising aspect was shed over our efforts, when the assistance of Russia would have assured a supremacy, and British fleets had intercepted the treasures of France and Spain, that the ministry, tired of a war which brought so many reverses, and alarmed at the voice of public opinion, consented to treat for peace.

But their treaty was as disgraceful as their war. The principal cause of the latter, the right of search, was not even alluded to; no equivalent was received for forts restored to the enemy; and, for the last time in English history, the nobles of the land were given as pledges for the country’s faith. “The whole treaty,” says one historian, “is a lasting memorial of precipitate counsel and English disgrace.” It is melancholy to add, that this unhappy war added £31,333,689 to the permanent debt, took £15,080,000 in taxes, and, says a pamphleteer of the day, “increased the contemptible crew of ’Change Alley.”

The early mode of raising money was somewhat curious. When a new tax was imposed by Parliament, any person might advance any sum not less than £100. For this, a tally was given at the Exchequer, with an order for repayment of the principal, and the payment of interest. The sums thus advanced were to be paid off in regular order, as the money arising from the tax was received. But as this was generally found to be insufficient to redeem the loan, it became necessary either to prolong the term, or raise a new loan to pay off the old one.

The interest on loans during the reigns of Anne and William was very uncertain. In the reign of George II. a new principle was adopted. Instead of varying it according to the state of the money-market, the rate was generally fixed at 3 or 3½ per cent., and the necessary variation made in the sum funded. In consequence of this practice having prevailed, the principal of the debt now existing amounts to nearly two fifths more than the sum actually advanced.

As early as 1762, a stock-broker, named John Rice, met the fearful penalty so liberally awarded to crime by the civil code of the eighteenth century. A client of Rice, for whom he was accustomed to receive her dividends, was, under false pretences, induced to grant a power to sell as well as to receive the interest. As the temptation to speculate on the Stock Exchange is great, the temptation to divert property from its legitimate channel is equally so, when confidence or carelessness has granted the power. The stock-broker sold all his client’s money, employed it to meet his losses, and kept up his deception by sending her the dividends as usual. The lady, moved by doubt, or by some cogent but unknown cause, intimated to Rice her intention of visiting the city. Unable to restore the money, the conscience of Rice took the alarm, and he fled, leaving with his wife £5,000 of the misappropriated property. Ignorant of his evil deeds, and anxious to join her husband, she embarked for Holland. The weather proved rough; the vessel was driven back; and the persons sent in search of the husband apprehended the wife, who yielded the money in her possession, leaving herself entirely destitute; and it is to the credit of the directors of the South-Sea Company, that they settled a small pension on the unhappy woman.

The search continued for Rice, who was discovered in the old town of Cambray, where he had taken up his residence. The English ambassador at Paris applied for his delivery; the misguided man found that Cambray was no city of refuge for him; and the last sad penalty of the law was enacted on the body of John Rice, the stock-broker.

In February, 1674, the jobbers were taken by surprise, and a sudden fall of fourteen per cent. in India Stock occurred, owing to an unexpected war in the East. The incident is only remarkable, that from this period, marked by a fall in their stock to so large an extent, commenced the political greatness of the Company. A violent dispute had arisen between Lord Clive and the directors; but their foreign affairs assumed so serious an aspect, that the latter were forced to yield. Every vessel brought alarming tidings. The natives, unable to bear the oppressive exactions to which they were subject, arose and defied the government. The directors of the Company grew alarmed. They forgot their feuds, they remembered only their dividends, and called Clive to their rescue. But Clive refused to act so long as one Sullivan, his bitter enemy, occupied the position of chairman; and as the proprietors would have removed the whole court of directors rather than miss the services of Clive, Sullivan not only lost his chairmanship, but was within a single vote of losing his seat as director. During this exciting period, so great was the bustle, that Cornhill and Cheapside were filled with the carriages of the voters; and from this dispute, which commenced with so ominous a fall in their stock, may the territorial dignity of the East India Company be dated.

Sampson Gideon, the great Jew broker, as he was called in the city, and the founder of the house of Eardley, as he is known to genealogists, died in 1762. This name, as the financial friend of Sir Robert Walpole, the oracle and leader of ’Change Alley, and the determined opponent of Sir John Barnard, was as familiar to city circles in the last century as the names of Goldsmid and Rothschild are to the present. A shrewd, sarcastic man, possessing a rich vein of humor, the anecdotes preserved of him are, unhappily, few and far between. “Never grant a life-annuity to an old woman,” he would say; “they wither, but they never die.” And if the proposed annuitant coughed with a violent asthmatic cough on approaching the room-door, Gideon would call out, “Ay, ay, you may cough, but it sha’n’t save you six months’ purchase!”

In one of his dealings with Mr. Snow, the banker,—immortalized by Dean Swift,—the latter lent Gideon £20,000. Shortly afterwards, the “forty-five” broke out; the success of the Pretender seemed certain; and Mr. Snow, alarmed for his beloved property, addressed a piteous epistle to the Jew. A run upon his house, a stoppage, and a bankruptcy, were the least the banker’s imagination pictured; and the whole concluded with an earnest request for his money. Gideon went to the bank, procured twenty notes, sent for a phial of hartshorn, rolled the phial in the notes, and thus grotesquely Mr. Snow received the money he had lent.

The greatest hit Gideon ever made was when the’ rebel army approached London; when the king was trembling; when the prime minister was undetermined, and stocks were sold at any price. Unhesitatingly he went to Jonathan’s, bought all in the market, advanced every guinea he possessed, pledged his name and reputation for more, and held as much as the remainder of the members held together. When the Pretender retreated, and stocks rose, the Jew experienced the advantage of his foresight.

Like Guy, and most men whose minds are absorbed in one engrossing pursuit, Mr. Gideon was no great regarder of the outward man. In a humorous essay of the period, the author makes his hero say, “Neither he nor Mr. Sampson Gideon ever regarded dress.” He educated his children in the Christian faith, but said he was too old himself to change. Being desirous to know the proficiency of his son in his new creed, he asked, “Who made him?” and the boy replied, “God.” He then asked, “Who redeemed him?” to which the fitting response was given. Not knowing what else to say, he stammered out, “Who—who—who gave you that hat?” when the boy, with parrot-like precision, replied in the third person of the Trinity. The story was related with great unction at the period.

“Gideon is dead,” writes one of his contemporaries, in 1762, “worth more than the whole land of Canaan. He has left the reversion of all his milk and honey, after his son and daughter, and their children, to the Duke of Devonshire, without insisting on the Duke taking his name, or being circumcised.” That he was a man of liberal views, may be gathered from his annual donation to the Sons of the Clergy, from his legacy of £2,000 to the same charity, and of £1,000 to the London Hospital. He died in the faith of his fathers, leaving £1,000 to the Jewish synagogue, on condition of being interred in the burying-place of the chosen people.”

The question of the sinking fund has greatly occupied the attention of financial men, and upon few schemes have so many and such various opinions been given. To view the subject by the light of common sense, it seems palpably absurd that more money than was necessary should be borrowed for the sake of paying it again, or that, while a surplus fund remained in the Exchequer, new loans should be raised. Paine afterwards declared it was like a man with a wooden leg running after a hare,—the more he ran, the farther he was off.

The first sinking fund is usually called Sir Robert Walpole’s, because it was adopted by him; but its author was the Earl of Stanhope. The taxes, which had at first been for limited periods, being rendered perpetual, proved greater than the charges they were meant to defray. The surpluses, therefore, were united under the name of the Sinking Fund, and appropriated for the discharge of the national debt.

The opinion which Dr. Price has since so strongly urged was very prevalent; and as much anxiety concerning the debt existed, it was considered important to apply this surplus invariably to the discharge of the great debt, and to borrow by new loans when the public exigencies required it. Thus, although from 1718 to 1731 was a period of peace, the following sums were borrowed:—

The money procured by the sinking fund for the discharge of the national debt, from 1716 to 1728, amounted to £6,648,000, being a trifle more than the debt contracted during the same period.

In 1728, it was found that the principle could not be preserved; and the interest of the loan of that and the following year was charged on the fund, while the additional taxes imposed to pay the interest of the loans were applied to increase it. A short time after, the plan of preserving the sinking fund inviolate was abandoned; and in 1733, £500,000 was taken to meet the expenses of the year; in 1734, £1,200,000 was taken for the same purpose; and in 1735, it was even anticipated, and the principle, in effect, abandoned. From that time its operations grew feeble, its produce was often devoted to other purposes, and it was found necessary to have recourse to it when the expenses exceeded the revenue, and no new taxes were imposed. In the peace which followed the treaty of Utrecht,—a period of twenty-six years,—£7,231,508 was the amount of debt discharged by the sinking fund; and in war the produce was applied to the expenses of the year,—loans being raised for the additional sums required.

This fund produced at its commencement, in

The further and feeble operations of this fund are unnecessary to trace, as, although it continued nominally in the accounts of the Exchequer until 1786, when Mr. Pitt’s sinking fund was introduced, it did little in peace, and nothing in war. From 1717 to 1772 it produced but twenty millions, being about £357,000 annually.

If the increase to the debt last recorded was caused by a disgraceful war and a powerless ministry, that which followed was no less remarkable for the brilliancy of its operations and the greatness of its achievements. Since the treaty of Aix-la-Chapelle, the English and French East India Companies had been fighting for supremacy, and the animosity spread to the colonies. A British force was cut off in America, and some French vessels were taken on the West India seas. War seemed necessary, and, when commenced, proved at first sufficiently humiliating. Hanover was attacked by France, and petty German princes were subsidized to defend it. Minorca, commanded by Blakeney, a superannuated general, was taken by Richelieu, a superannuated fop. Braddock was defeated in America; Admiral Byng refused to engage the French fleet; and an outcry arose for his life, which appalled the men who governed the councils of the country. Shops were filled with libels; walls were covered with satires. The English people, rarely yielding to the thirst for blood, demanded that of the unpopular admiral; and the prime minister trembled for his neck. Our navy could scarcely keep the sea, and the army was commanded by men desirous only of seeking emolument and avoiding risk. Enterprise and energy were absent. In the West, our power was paralyzed; in the East it was endangered. From every county in the kingdom, from every town in the empire, vengeance was demanded. The Duke of Newcastle vacated the place of prime minister; a change was effected; and from that period a succession of conquests filled the kingdom with pride, and raised the fame of the country. The accession of Mr. Pitt to the post of prime minister was felt in every department. France, attacked on some, and menaced on all points, suffered disastrous defeats, retired from Germany, and saw her West and East Indian colonies wrested from her. In one action, thirty-six sail of the line, fifty frigates, and forty-five sloops were taken or destroyed, and the sea swept clear of the fleets that had insulted our coasts and our colonies. Triumph after triumph, conquest after conquest, and, it must be added, loan after loan, were witnessed. Goree and Guadaloupe were taken. The Heights of Abraham beheld the fall of Wolfe and of Quebec; Montreal was subdued; and the total cession of Canada followed. The fleet to which the French court had confided its American possessions was destroyed, and captured standards were borne through the streets amidst triumphant shouts, which deadened the roar of the cannon.

The accession of George III. did not interfere with the conduct of the war. Nineteen millions were voted the first year of his reign; and though Mr. Pitt retired from the councils of his Majesty, the contest was carried on with the same energy; while the system of subsidies was continued with a profusion which has been rarely paralleled. Triumphs such as these produced their effects on the opponents of England. Spain and Portugal were anxious for peace; France was impoverished, the plate of her monarch converted into money; and, in 1762, a just and honorable peace was concluded.

It is remarkable, also, that public distress was never less apparent than during this war; and the rare picture was presented of a people supporting without murmurs the trials and the taxes of a wide and costly contest. Prosperity and wealth at home hid the price at which the victories were purchased abroad. London was never more thriving; and the importance of several manufacturing districts dates from the success of the seven years’ war. During this period, the whole continent of America fell into our power. Twenty-five islands were captured; twelve great battles won; nine fortified cities, and forty forts and castles, taken. One hundred ships of war and twelve millions of specie acquired; sixty millions added to the national debt, and fifty-two millions raised by taxes.

To produce the peace which followed this contest, bribery was resorted to, and the public money wasted. “The peace of 1763,” said John Ross Mackay, private secretary to the Earl of Bute, and afterwards Treasurer to the Ordnance, “was carried through and approved by a pecuniary distribution. Nothing else could have surmounted the difficulty. I was myself the channel through which the money passed. With my own hand I secured above one hundred and twenty votes on that vital question. Eighty thousand pounds were set apart for the purpose. Forty members of the House of Commons received from me a thousand pounds each. To eighty others I paid five hundred pounds apiece.”

The continued corruptions produced continued irregularity. George II. said he was the only master who did not see his servants remunerated; adding, to Mr. Pelham, that if the civil list were not paid, he would find another minister. Remonstrances on the injury to the national and individual interest were so frequent, that the king declared he would inspect the accounts himself.

The Duke of Newcastle, then prime minister, bowed, and promised to send the papers; and the following morning, a cart loaded with official accounts was paraded in the court-yard of the palace. With much violence, the monarch demanded the cause of the display. “They form a portion of the accounts your Majesty desired to inspect,” was the reply; “there is another wagon-full on the road.”

One specimen of the accounts his Majesty had offered to investigate was, however, quite sufficient; and the public complaint remained unalleviated.

In 1742, £1,384,000 6s. 3d. was under the sole direction of the Earl of Orford for secret-service money, of which £50,077 18s. went to the newspapers; and the amount of this supply expended in the six weeks preceding the resignation of the Earl of Orford was more than during the three previous years.

In 1766, the House of Commons compelled the East India Company to rescind a vote which the excitement of the time had induced them to pass. The success of Lord Clive, the important commercial consequences to which it led, and the plunder which rewarded the victories of the soldier, had fired the brains of the East India proprietary. The most extravagant reports were promulgated, and half-yearly dividends of fifty per cent. were confidently promised. The value of the stock rose enormously; and the directors divided at the rate of thirteen per cent. per annum. When it was found that the corporation were enabled to divide thus liberally, Parliament, under the pretence that it might lead to a dangerous panic, interposed with a strong hand, directed that the annual dividend of the Company should be limited to ten per cent., and that all accumulations beyond should accrue to the state. Great opposition was evinced. The corporation, having paid liberally for their charter, would not quietly submit to an interference which so materially decreased its value; and, having formerly bribed with success, tried the same process, but without the same result. The changes in the opinion of the “independent” members, as they were bribed by the Company or awed by the minister, were somewhat curious; and the cause of Charles Townshend’s tergiversations was probably only a type of many. Having dealt largely in India Stock, he cried up the Company’s claims to serve himself. He then sold out at a profit, and cried them down to serve his friends. It was a complete South-Sea year. A third of the House of Commons was deeply engaged in the traffic; and jobbing was the thermometer by which patriots were made or marred. “From the Alley to the House,” said Walpole, “is like a path of ants.” Most of the members were in Mr. Townshend’s position, and the East India Company were, therefore, restricted in their dividends. The result was, that this corporation is worthy the study of others in the liberality with which it rewards the labors of its clerks. Acting on the fine Mosaic principle, that the ox shall not be muzzled which treadeth out the corn, the Company have made their servants’ interests their own; they have made them understand that their old age shall be liberally protected if they faithfully serve; they have made them know that their widows and orphans shall not be forsaken; and they have, therefore, made them feel that the service of such a company is a pleasure, and not a pain; a love, and not a labor.

It is the curse of English commerce, of English banking, and of English trading generally, that, while large fortunes are made by the principals, the clerks are often remunerated at a rate inferior to that which the merchant pays his favorite domestic. The small number necessary to produce a great income takes away all excuse for this penury; and as four or five are frequently sufficient to produce annual thousands, it is to be regretted that, while the principal seeks the most luxurious abode which wealth can produce, the clerk goes to some cheap suburban home, in which, with his family, he can scarcely unite respectability with life.

In corporations and in public offices this is peculiarly hard. The additional salary would not be felt, and there is a responsibility on the clerks which demands that their payment should be proportioned to it. It is an honor to them that, with the lax notions entertained of corporate and national property, the frauds should be so rare; but it is a dishonor to commercial nature, that, considering the profits made by merchants, the daily intercourse they hold with their clerks, and the trust they are compelled to place in them, they pay in so small, and work in so great a degree. It is a most suggestive fact, that, where the functionaries are remunerated the worst, the frauds are most numerous.

But there is another evil felt by the stipendiary. His personal treatment is not in accordance with his claims as an educated man. The coldest look and the haughtiest answer are reserved for him. The smallest amount of intercourse necessary to business is awarded him. The common courtesies of life are denied him. The merchant too often enters his counting-house without recognition, and leaves it without an adieu.

In similar establishments abroad, the clerks are treated with care and kindness. They are not made hourly to feel the great gulf between them and their wealthy superiors. They visit the homes of the latter; they are confidentially consulted; they are allowed time to think; they are treated as men, not as animals. And thus it was in England in the olden time. The merchant of that school invited his clerk to his home, took an interest in his affairs, and recognized him as a friend. They worked the fortunes of the house together, and, if the merchant was repaid by his clerk’s fidelity, the latter was often admitted into the firm he had served. This is not so now. But the master is the greatest loser; for there is no service so fruitful as that which arises from kindness, or so grateful as that which has its root in affectionate respect.

An important point was decided against the presumed privilege of the city in 1767. Two gentlemen, wishing to purchase stock, employed friends, not brokers, to procure it. The chamberlain, deeming this an invasion of the civic prerogatives, commenced proceedings against them. In both cases, however, the defendants gained the day. “And,” says the authority, “it is now settled that every person is at liberty to employ his friends to buy or sell government securities without employing a broker.”

Some of the frequenters of Jonathan’s were dexterous manipulators, and, however the speculator might congratulate himself on his success in the Alley, it occasionally happened that he found himself lightened of his profit. Thus, in one day in the above year, no fewer than four brokers were robbed of their pocketbooks, containing large amounts of property. The thief was taken; but, in place of expressing contrition, he gave a voluntary and unexpected opinion, that one man had as much right to rob as another, and that he was only acting as an honorary magistrate, in taking that of which they had cheated their neighbours.

In 1771, a somewhat curious calculation was made, that if the debt of 130 millions were counted in shillings at the rate of 100 a minute, it would occupy one person 49 years, 158 days, and 7 hours. The same person also declared its weight in the same coin to be 41,935,484 troy pounds; and that it would require 279,570 men to carry it.

CHAPTER VII.

Crisis of 1772.—Indian Adventurers, their Ostentation, their Character.—Failure of Douglas, Heron, & Co.—Neale, Fordyce, & Co.—Sketch of Mr. Fordyce.—His Success in the Alley.—Alarm of his Partners.—His Artifice.—His Failure.—General Bankruptcy.—Liberality of a Nabob.—Reply of a Quaker.—Witticism of John Wilkes.—War of American Independence.—Artifices of Ministers.—Anecdote of Mr. Atkinson.—Value of Life on the Stock Exchange.—Longevity of a Stock-broker.

The crisis of 1772 has been entirely overlooked by those who have bestowed their thoughts upon such subjects. It had its origin in a variety of circumstances; but the exciting cause was the failure of the bank of Douglas, Heron, & Co., established in 1769. It was the period when the success of adventurers in our Indian empire had contributed to the wealth of England. Immense sums were accumulated in a few months. Large purchases of land were made at high prices. All the early and late symptoms of speculation were apparent. The vast fortunes brought home were ostentatiously displayed. A contempt for the slow gains of trade, a feverish excitement, and an ungovernable impatience to be rich, marked the period. The nabobs were not disposed to hide their wealth under a bushel. They built magnificent mansions, and mistook ostentation for taste. They raised the prices of all articles of consumption; they were bowed to before their faces, and dreaded behind their backs. Dark deeds were told of them; and the shrewd peasantry shuddered as the massive carriage rolled by, which held the man whose wealth had been obtained at the expense of his humanity. The ephemeral literature of the day is filled with the popular opinion of the character; and the nabob is commonly represented as a man with a bad liver and black heart. Scott, with his exquisite conception of the ludicrous, makes one of his characters define a nabob as “one who comes frae foreign parts, with mair siller than his pouches can hold: as yellow as oranges, and maun hae a’ thing his ain gate.”

For thirty years the public was filled with impressions of their wealth and crimes; and so late as twenty years ago, Lord Clive was described to the writer as keeping memorials of his guilt in a box beneath his bed, and as having destroyed himself because his past enormities were too great for his conscience to bear. The drama, the story, and the poem, were colored with their eccentricities; while newspapers occasionally recorded facts which marked that, in some at least, a fine generosity was mixed with their grossness.

The effect, however, of these things was to make money plentiful; to raise a spirit of emulation, and a thirst for gold. In addition to this, the banking-house of Douglas, Heron, & Co. circulated its paper with a freedom which had an effect upon the population of Scotland remembered to the present day. Discounts for a time were plentiful. Bills presented by farmers, and accepted by ploughmen, were readily cashed. As is usual in these cases, the dashing character attained by the bank attracted those who should have known better; and many, who boasted of their foresight, paid for their presumption.

In 1771, the result of reckless trading was apparent; and Douglas, Heron, & Co. failed. The shock was felt throughout the empire. The Royal Bank of Scotland tottered to its base; the banking-houses of England shook with a well-grounded fear; and the great corporation of the Bank of England was beset on all sides for assistance, but from none more vehemently than from Mr. Fordyce, of the house of Neale, Fordyce, & Co.,—a firm which, from its position, the importance assumed by its partners, and the known success of some of its speculations, was generally supposed to be beyond suspicion. The career of the man who thus craved assistance was somewhat out of the ordinary way of his craft, and may, perhaps, prove interesting, as the sketch of an adventurer in whose power it lay to make or mar the fortunes intrusted to him; and also as a specimen of the mode in which the Stock Exchange is sometimes resorted to by bankers with the balances of their customers.

Bred a hosier at Aberdeen, Alexander Fordyce found the North too confined for any extensive operations, and, repairing to London as the only place worthy his genius, obtained employment as clerk to a city banking-house. Here he displayed great facility for figures, with great attention to business, and rose to the post of junior partner in the firm of Roffey, Neale, & James. Scarcely was he thus established, ere he began to speculate in the Alley, and generally with marked good fortune.

“The Devil tempts young sinners with success”;—

and Mr. Fordyce, thinking his luck would be perpetual, ventured for sums which involved his own character and his partners’ fortune. The game was with him; the funds were constantly on the rise; and, fortunate as daring, he was enabled to purchase a large estate, to support a grand appearance, to surpass nabobs in extravagance, and parvenus in folly. He marked the “marble with his name” upon a church which he ostentatiously built. His ambition vied with his extravagance, and his extravagance kept pace with his ambition. The Aberdeen hosier spent thousands in attempting to become a senator, and openly avowed his hope of dying a peer. He married a woman of title; made a fine settlement on her Ladyship; purchased estates in Scotland at a fancy value; built a hospital; and founded charities in the place of which he hoped to become the representative. But a change came over his fortunes. Some political events first shook him. A sensible blow was given to his career by the affair of Falkland Island;[2] and he had recourse to his partners’ private funds to supply his deficiencies. Like many, who are tempted to appropriate the property of others, he trusted to replace it by some lucky stroke of good fortune, and redoubled his speculations on the Stock Exchange. Reports reached his partners, who grew alarmed. They had witnessed and partaken of his good fortune, and they had rejoiced in the far ken which had obtained the services of so clever a person; but when they saw that the chances were going against him, they remonstrated with all the energy of men whose fortunes hang on the success of their remonstrances. A cool and insolent contempt for their opinion, coupled with the remark, that he was quite disposed to leave them to manage a concern to which they were utterly incompetent, startled them; and when, with a cunning which provided for every thing, an enormous amount of bank-notes, which Fordyce had borrowed for the purpose, was shown them, their faith in his genius returned with the possession of the magic paper; and it is doubtful whether the plausibility of his manner or the rustle of the notes decided them.

But ill-fortune continued to pursue Mr. Fordyce. His combinations were as fine, his plans as skilful, as ever. His mind was as perceptive as when he first began; but unexpected facts upset his theories, and the price of the funds would not yield to his combinations. Every one said he deserved to win; but he still continued to lose. Speculation succeeded speculation; and it is remarkable, that, with all his great and continued losses, he retained to the last hour a cool and calm self-possession. After availing himself of every possible resource, his partners were surprised by his absenting himself from the banking-house. This, with other causes, occasioned an immediate stoppage, and a bankruptcy which spread far and wide. But Mr. Fordyce was not absent long. He returned at the risk of his life; the public feeling being so violent that it was necessary to guard him from the populace while he detailed a tissue of unsurpassed fraud and folly. He manfully took the blame upon himself, and exonerated his partners from all, save an undeserved confidence.

It need hardly be added, that the assistance earnestly begged by Mr. Fordyce of the Bank of England was refused. Whatever impression might be entertained by others of his house, the corporation to which he applied was equally aware of his speculative propensities, as of the sphere in which he indulged them; and they refused assistance, upon a well-founded principle, to the man who employed his customers’ capital and his own energies in incessant speculations on the Stock Exchange. Fordyce, however, only advanced the crash. The Scotch bankers were the cause; and the Bank of England saw the necessity of stopping the dangerous game commenced by the Bank of Ayr. The failures continued in the commercial world. He broke half the people in town. Glyn and Halifax were gazetted as bankrupts;[3] Drummonds were only saved by General Smith, a nabob,—the original of Foot’s Sir Matthew Mite,—supporting their house with £150,000. Two gentlemen, ruined by the extravagance of the city banker, shot themselves. Throughout London the panic, equal to any thing of a later date, but of shorter duration, spread with the velocity of wildfire, and part of the press attributed to the Bank the merit of supporting the credit of the city, while part assert that it caused the panic. The first families were in tears; nor is the consternation surprising, when it is known that bills to the amount of four millions were in circulation, with the name of Fordyce attached to them.

The attempts of the speculating banker to procure assistance were earnest and incessant. Among those to whom Mr. Fordyce went was a shrewd Quaker. “Friend Fordyce,” was the reply of the latter, “I have known many men ruined by two dice, but I will not be ruined by Four-dice.”

In 1774, the number of Hebrew brokers was limited to twelve; and the privilege was always purchased by a liberal gratuity to the Lord Mayor. During this year, the mayoralty of Wilks, one of the privileged being at the point of death, Wilks, with characteristic boldness, openly calculated on the advantage to be attained, and was very particular in his inquiries after the sick man. The rumor, that Wilks had openly expressed a wish for the death of the Hebrew, was spread by the wags of ’Change Alley, and the son of the broker sought his Lordship to reproach him with his cupidity. “My dear fellow,” replied Wilks, with the readiness peculiar to him, “you are greatly in error. I would sooner have seen all the Jew brokers dead than your father.”

“It is the nature of colonies, as of children, at a certain period in their history, to cease to be dependent upon their parents. By judicious counsel and control they may be retained, but they must eventually separate; and, with the one as with the other, the future influence of the parent depends upon that parent’s behaviour during the nonage of the child.” Such was the opinion of William Pitt, first Earl of Chatham; and it is to be lamented that the behaviour of England to her American children was not likely to be remembered with kindness, when the tie was violently broken. The story of that disastrous war, when men of the same ancestry and the same habits were arrayed in hostility, when they who spake the same tongue spake it only in unkindness, is pitiable and humiliating. From the time when the inhabitants of Boston refused to be taxed, to the signing of the treaty with the young republic on terms of equality, the measures adopted were as severe as they were injudicious; and to the obstinacy of George III. may be traced the cause and the continuation of the contest, and the increase of the national debt. The first blow was struck at Boston. On the evening of December 16th, 1773, a number of citizens, disguised as Mohawk Indians, boarded the vessels containing the tea which they would not allow to be taxed, and discharged it into the water, while other cargoes were not only refused a landing, but were sent back with contempt.

When the news reached London, various restraining measures were passed. The place which had witnessed the outrage was declared closed for all exports and imports; and though the bold stand of the provincials astonished the mother country, it was supposed to be but temporary. It was soon found, however, that Boston was not alone; other provinces joined; and British America called a general congress. Magazines were formed; ammunition was provided; plans were drawn up for the defence of the country; and a large body enrolled, termed minute-men, engaged to turn out at a minute’s notice. Every contingency was prepared for; and an aspect called rebellious by the mother country was boldly presented. The first blood was shed at Lexington, where British soldiers fled before American militia. Emboldened by success, they reduced two forts, took Montreal, and attempted Quebec. Nor was England idle in the struggle. An addition to the land and sea force was voted; loans were raised; reinforcements were ordered to Boston; and the military ardor which had seized the Americans found fuel on which to expend itself.

With fire-arms formed by themselves; with weapons wrought from the plough; with artillery so clumsily fashioned that it burst more often than it discharged; with men who had only the determination to die free rather than live bond,—the American generals beat the veteran troops of England. Her forts were taken, her forces surrounded, her armies destroyed, and her officers made prisoners. The principal powers of Europe looked with delight upon a struggle between the soldiers of the mother country and the raw recruits of the colony; between discipline on the one side and patriotism on the other; on the entire power of England baffled by men from the pen and from the plough, from the shop and from the counting-house. The loans of this disastrous period were most unpopular. The increased taxation which followed was drawn with the utmost difficulty from the pockets of the people.

Political misfortunes and military disasters made the subjugation of America chimerical. Earl Cornwallis surrendered himself and his army as prisoners of war; and when the contest was extended to Europe,—when England stood alone against Holland, France, Spain, and America,—when our navy was defeated,—when the English coast and harbors were insulted, our West India Islands ravaged, and our trade swept away,—the discontents of the country increased, and the debates in the House grew violent and acrimonious. “You sheathe your sword, not in its scabbard, but in the bowels of your countrymen,” said one; and on some unhappy boast of driving the Americans into the sea,—“I might as well,” said Lord Chatham, “think of driving them with my crutch.” The people grumbled at defeat following defeat, at trade crippled, at taxes augmented, and debts enlarged.

Loan succeeded loan; a cry arose about the corruption of contracts; and the feeling of discontent increased so strongly, that the stubborn obstinacy of the king, who said he would sooner lose his right arm than his colonies, was compelled to yield to a unanimous resolution of the Commons, that the House would consider as enemies all those who advised the continuance of the war. Had any other monarch sat upon the throne, the large accumulation of debt would, probably, have been avoided; and England would now be spared the painful task of looking back upon “a nation convulsed by faction; a throne assailed by the fiercest invective; a House of Commons hated and despised; a rival legislature sitting beyond the Atlantic; English blood shed by English bayonets; our armies capitulating; our conquests wrested from us; our enemies hastening to take vengeance upon us for past humiliations; and our flag scarcely able to maintain itself in our own seas.”

Such was the aspect of public affairs during a war which cost thirty-two millions in taxes, and added one hundred and four millions to the national debt.

In 1778, when a loan was proposed, the usual number of applications was delivered from the bankers, merchants, and members of the Stock Exchange. To their surprise the answers were not received so soon as usual; and, as political events were threatening, the applicants grew anxious. The funds fell greatly; and, when the replies came, it was found that the whole of this unfortunate loan was fixed upon them. Had the funds risen, the members and the minister’s friends would have had a good portion; but, as the scrip was sure to be at a discount of three per cent., the whole was divided among those who were either without interest or were opposed to the government. In 1781, on a new loan being proposed, the same houses applied; but as the scrip went to a premium, it was divided with due regard to senatorial interests; and many who had lost on the last loan had no opportunity of retrieving on the present.

Prior to the allotment, one firm was waited on by a stranger, and told, that, if they would add his name to their list, they would be favorably considered. The house declined the proposal, and sent in a tender for two millions; when, to their surprise, they received, with an allotment of £560,000, an intimation that the odd £60,000 was for the gentleman who had waited on them, and of whom they knew nothing.

£240,000 was nominally given to another house; but of this £200,000 was for members whose votes were desirable. Mr. Dent, the head of the house of Child, and a senator, received £500,000, being two thirds of his tender; while Drummonds and other bankers, not members, received only tenths and sixteenths of the sums they requested. Some applicants, without Parliamentary interest, though as good as any in the city, were totally neglected, while “to a number of mendicants,” said Mr. Fox, “obscure persons, and nominal people, were given large amounts.”

The mendicants and obscure people, thus politely alluded to by the great gambler, were the Treasury and Bank clerks, to whom a portion of the loan was usually presented as a compliment for their services.

It is curious to notice the increase of applications for the loans so constantly required. Thus, in 1778 only 240 persons applied; in 1779 the number increased to 600; in 1780, to 1,100; and in 1781 it reached 1,600.

In 1785, Mr. Atkinson, said to be an adventurer from the North, was a great speculator. That he acted with judgment may be gathered from the fact of his dying possessed of half a million. A curious, but not a parsimonious man, he occasionally performed eccentric actions. During one of the pauses in a dinner conversation, he suddenly turned to a lady by whom he sat, and said, “If you, madam, will trust me with £1,000 for three years, I will employ it advantageously.” The character of the speaker was known; the offer so frankly made was as frankly accepted; and in three years, to the very day, Mr. Atkinson waited on the lady with £10,000, to which amount the sagacity of the citizen had increased the sum intrusted to him.

It is probable, although the fact is difficult of attainment, that the lives of the members of the Stock Exchange are, at the present day, less valuable than the ordinary average of human life. The constant thought, the change from hope to fear, the nights broken by expresses, the days excited by changes, must necessarily produce an unfavorable effect upon the frame. Instances, however, of great longevity are not wanting; and one John Riva, who, after an active life in ’Change Alley, had retired to Venice, died there at the patriarchal age of one hundred and eighteen.

FOOTNOTES:

[2] “The stocks have got wind of this secret,” said Horace Walpole, “and their heart is fallen into their breeches, where the heart of the stocks is apt to lie.”

[3] Sir Thomas Halifax had not a high reputation for liberality. During a severe winter, when requested to join his neighbours in a subscription for the poor, and told that “he who giveth to the poor lendeth to the Lord,” he replied, “He did not lend on such slight security”; and it is curious, that, when he afterwards applied to a rich neighbour for assistance, a similar reply, couched in similar language, was given to his application.

CHAPTER VIII.

Invention of Lotteries.—The First Lottery.—Employed by the State.—Great Increase.—Eagerness to subscribe.—Evils of Lotteries.—Suicide through them.—Superstition.—Insurances.—Spread of Gambling.—Promises of Lotteries.—Humorous Episodes.—Legal Interference.—Parliamentary Report.—Lottery Drawing.—Picture of Morocco Men.—Their Great Evil.—Lottery Puffing.—Epitaph on a Chancellor.—Abolition of Lotteries.

The history of lotteries is one of those anomalies which it is the duty rather than the pleasure of the annalist to record. A minute picture, however, of the progress of these institutions, is as necessary to the financial annals of the Stock Exchange as it is to the development of the social history of a people. Invented by the Romans to enliven their festivities, they were to that luxurious people a new excitement; and the prizes distributed to their guests were in proportion to the grandeur of the giver. Fine estates, magnificent vases, and beautiful slaves, with other and less expensive prizes, gratified at once the pride of the founder and the cupidity of the guest.

The application, however, of lotteries to the service of a state originated at Genoa, the government of which established the principle for its own benefit. The Church was not long in following the example at Rome, where the inhabitants deprived themselves of necessaries to share the chances which their excited imaginations magnified a hundredfold.

The first on record in England was drawn in 1569. The harbors and havens of the whole line of coast were out of repair, and the only mode of procuring money was by lottery. The prizes were partly in money and partly in silver plate, and the profits to be applied to the above purpose. But the drawing was a very important task; and, as 400,000 lots were to be drawn, night and day for nearly four months were the people kept in a state of excitement. The time occupied must have been somewhat tedious; and, as this was the first lottery, and there were but three offices in London, it is to be supposed that the drawing of that period bore the same proportion to the drawing at a later time, that the coaches then bore to the railroads now. In 1612, another lottery was allowed for the benefit of the Virginia colonies, in which a tailor gained the largest prize of 4,000 crowns. But thus early was it found that lotteries and demoralization went hand in hand. Sanctioned by the state as a source of gain, they were found equally profitable to private individuals; and the town teemed with schemes which brought wretchedness and ruin in their train. In March, 1620, however, they were suspended by an Order in Council; but it was only a suspension, and the evil was once more revived by Charles I., who, to assist a project of conveying water to London, granted a lottery towards its expenses. That which the first Charles allowed for so great a purpose, the second of the name allowed as a boon to those whom he could reward in no other way. It was in vain for censors to preach, divines to sermonize, or the House of Commons to legislate. While there was the chance of a great gain for a small risk, men ran in crowds to subscribe. Those who could not pay a large sum found plenty of opportunities to gamble for a small amount, and penny lotteries became common.[4] In 1694 they were again employed by the state, William III. having appealed to the propensities of the people, and raised one million by the sale of lottery-tickets, the prizes of which were funded at four per cent. for sixteen years. The voice of the moralist continued to be raised; and the public papers show, that, directly the state sanctioned the nuisance, the evil increased tenfold, and that schemes were introduced which were a loss to all save the promoters. “What a run of lotteries we have had!” says one. “With what haste they all put in their money! What golden promises they made!”

The anecdotes connected with these abominations, the grim, grotesque despair of the losers, and the eager delight of the gainers, was for the time the great entertainment of the town. Men ran with eager haste after the lotteries of merchandise; and “the people were tickled,” says a pamphleteer, “with the proposals of prodigious profits, when the proposers intended it only for themselves.” The writer concludes somewhat vehemently:—“Indeed, the people have been so damnably cheated, they have no need of dissuading, and their own sufferings are sufficient to convince them it is their interest to forbear.”

The system of lotteries sanctioned and employed by the legislature was a terrible temptation to human nature. The chance, however remote, of gaining a large sum by a small risk, with the feeling of anxious and not unpleasing excitement, rendered lotteries a favorite phase of English gambling; for the voice of the people had not spoken so peremptorily the great truth, that the state must not purchase a nation’s wealth at the price of a nation’s morals. That which a government employs as an instrument of wealth, is sure to be followed by the people to a lower extent, but in a more mischievous manner. In 1772, lottery magazine proprietors, lottery tailors, lottery stay-makers, lottery glovers, lottery hat-makers, lottery tea merchants, lottery snuff-and-tobacco merchants, lottery barbers,—where a man, for being shaved and paying threepence, stood a chance of receiving £10,—lottery shoe-blacks, lottery eating-houses,—where, for sixpence, a plate of meat and the chance of sixty guineas was given,—lottery oyster-stalls,—where threepence gave a supply of oysters and a remote chance of five guineas,—were plentiful; and, to complete a catalogue which speaks volumes, at a sausage-stall in a narrow alley was the important intimation written up, that for one farthing’s worth of sausages, the fortunate purchaser might realize a capital of five shillings. Quack doctors—a class which formed so peculiar a feature in village life of old—sold medicine at a high price, giving those who purchased it tickets in a lottery purporting to contain silver and other valuable prizes.

The eagerness of the populace grew with the opportunity. The newspapers teemed with proposals; and the rage for gambling reigned uncontrolled. Every ravenous adventurer who could collect a few articles advertised a lottery. Shopkeepers, compelled by the decrease of business, took the hint, and disposed of their goods in lottery. Ordinary business among the lower tradesmen was greatly suspended. Purchasers refused to give the full price for that which might be obtained for nothing. Large profits were procured upon worthless articles; and in 1709, so great was the eagerness to subscribe to a state lottery, that Mercers’ Hall was literally crowded with customers, and the clerks were insufficient to record the influx of names. It was, however, from those which were termed “little goes,”—which drew the last penny from the pockets of the poor man,—which saw the father gambling and the daughter starving, the mother purchasing tickets and the child crying for bread,—that most evil arose. The magistracy, not always the first to interfere, grew alarmed, and announced their determination to put in practice the penalties which, if earlier enforced, would have been beneficial, but, unhappily, were incompetent to put down that which they might easily have prevented. It was found, also, impossible to restrain in private adventurers the wrong that the state sanctioned in public.

It was known that lotteries were injurious to morals and to manners; it was known that crime followed in their wake; it was known that misery and misfortune were their attendants; but the knowledge was vain, and remonstrance useless, under the plea of the necessities of the state.

Lotteries continued to be employed by ministers as an engine to draw money from the pockets of the people, at a price alike disgraceful to the government and demoralizing to all. The extent to which the evil had reached may be inferred from the fact, that money was lent on these as on any other marketable security; that, in 1751, upwards of 30,000 tickets were pawned to the metropolitan bankers; and this, when, to have an even chance for any prize, a purchaser must have held seven tickets; and it was ninety-nine to one that, even if a prize were drawn, it did not exceed £50.

Suicide through lotteries became common. The streets swarmed with unhappy wretches, who, while they suffered for the past, were making imaginary combinations for the future. All arts were resorted to. Lucky numbers were foretold by cunning women, who, when their art failed, shrouded themselves in their mysticism; and if fortune favored them, paraded their prophecies to the public.

The most gross and revolting superstition was practised to discover lucky numbers. Rites which surpassed the darkest imagination of a Maturin, and ceremonies which appear like relics of the elder world, were resorted to for the same purpose.

It was in vain that the smaller lotteries were put down; they only gave way to an evil which preyed upon the very vitals of English society. Insurance, an art upon which hundreds grew rich, while hundreds of thousands grew poor, was commenced with terrible success. Those who were unable to buy tickets, paid a certain sum to receive a certain amount if a particular number came up a prize. A plan like this was available for all, as the amount could be varied to the means of the insurer.

It is almost impossible to describe the many iniquities, the household desolation, the public fraud, and the private mischief, which resulted from insuring. Wives committed domestic treachery; sons and daughters ran through their portions; merchants risked the gains of honorable trade. “My whole house,” wrote one, “was infected with the lottery mania, from the head of it down to my kitchen-maid and post-boy, who have both pawned some of their rags that they might put themselves in fortune’s way.” The passions and prejudices of the sex were appealed to. Lovers were to strew their paths with roses; husbands were plentifully promised, and beautiful children were to adorn their homes through the lottery. And all these glories were promised when Adam Smith declared, as an incontrovertible fact, that the world never had, and never would, see a fair lottery. So great were the charms of insuring, while the chances were so small, that respectable tradesmen, in defiance of the law, met for this illegal purpose, on the following day to that on which some of their body had been taken handcuffed before a magistrate. The agents were spread in every country village, and the possession of a prize was an absolute curse to the community. Its effects were witnessed alike in the shock it gave to industry, and the love of gambling it spread among the people. It is due to those whose voices were lifted up against these abominations to say, that their appeals to the good feeling of the government were incessant; but the state replied in that language which is so unanswerable when held by a firm government, that the necessities of the state overbalanced the evils of the lottery.

Nor could ignorance be pleaded of its fatal effects. The domestics of the senators themselves purchased shares with their masters’ money; and members of the lower and upper house were unable to resist the fascinations of the game they condemned. The most subtle language was not wanting to support the cause. Scripture was used to defend it; and as the Bible was perverted by the supporters of the slave-trade, and lately by the discoverers of the virtues of chloroform, so was it now wrested to prove the antiquity and sanctity of lotteries. “By lot,” they said, “it was determined which of the goats should be offered to Aaron. By lot the land of Canaan was divided. By lot Saul was marked out for the kingdom. By lot Jonah was discovered to be the cause of the storm.”

There are many incidents, which, recorded in contemporary annals, have been either overlooked or disregarded as insignificant. There is, however, nothing insignificant connected with so important a topic, and nothing ought to be overlooked on an evil which has eaten to the very heart of society, and which may again be used by some unscrupulous minister for some unscrupulous purpose. The declaration of Sir Samuel Romilly, that “whenever the House voted a lottery, they voted that the deserving should become depraved,” with the additional assertion, that “the crimes committed would be chiefly bought off by the paltry gain to the state coffers,” was entirely disregarded.

Let it be remembered that a chancellor declared “he could not see that lotteries led to gambling,”—that though the Corporation of London presented an earnest petition for their abolition, as injurious to commerce and injurious to individuals,—that though Lord Mansfield said the state exhibited the temptation and then punished for the crime to which it tempted,—that though, on one occasion, out of twenty-two convicts who left the country, eighteen commenced their career with insuring,—that though forged notes were encouraged from the carelessness with which lottery-office keepers received and passed them,—that though it was iterated and reiterated that no circumstances conduced so much to make bad wives and bad husbands, bad children and bad servants,—that though men threw themselves into the river from the infatuation of their wives,—though the plate of respectable families was pledged to assist the mania,—that though the poor-rates were increased, and the consumption of excisable articles diminished, during the drawing,—that though the gambling and lottery transactions of one individual only were productive of from ten to fifteen suicides annually,—that though half a million sterling yearly came from metropolitan servants,—that though four hundred fraudulent lottery-offices were in London alone,—that though no revenue was ever collected at so great an expense to the people,—that though families pawned every thing they had, sold the duplicates, and were reduced to poverty,—that though women forgot the sanctities of their sex,—that though the parishes were crowded with applicants who had reduced themselves by insurances,—that though perjury was common, and small annuitants squandered their resources,—that although all these pictures were drawn, and statements made, so publicly and so prominently that they could not fail to reach even the obtuse ears of a dominant ministry,—yet it was not until 1826 that the evil was abolished. A similar pressure may recall the evil. It is of no importance to argue that lotteries are forbidden, and that the morals and the minds of the people are more regarded. Lotteries have been repeatedly forbidden, but they have been invariably renewed when the coffers of the state were low; and the morals of the people are a minor point compared with the balance-sheet of the nation.

The melancholy history was occasionally enlivened by episodes, which sometimes arose from the humor, and sometimes from the sufferings of the populace. It is recorded as a fact, that, to procure the aid of the blind deity, a woman to whom a ticket had been presented caused a petition to be put up in church, in the following words:—“The prayers of the congregation are desired for the success of a person engaged in a new undertaking”; a singular contrast to others, who sought the midnight gloom of a church-yard to secure them the good fortune so eagerly craved. Romantic incidents often checkered the history. Old bureaus with secret drawers, containing the magic papers which led to an almost magic fortune, were purchased of brokers, or descended as heirlooms.

The evils in country places were more vividly impressed on the mind from the smallness of the population. In a village near town, a benefit-club for the support of aged and infirm persons existed for many years. Among the members was one who, in trying his luck, gained £3,000. The effect was feverish and fatal to the peace of the little community. The society formed to nourish the sick and clothe the needy, was converted into a lottery-club. The quiet village, which had hitherto vegetated in blessed peacefulness, rang with the sound of prizes, sixteenths, and insurances. People carried their furniture to the pawnbrokers, while others took their bedclothes in the depth of winter to the same source. The money thus procured was thrown away upon lotteries; and the prize of £3,000 was destructive to the happiness of the place.

Up to the year 1780, although these many evils were well known, insurances, and every species of gambling connected with the lottery, were legal. But the malady grew so violent, that, after much urging, a step was taken in the right direction. Insurances were declared illegal, and prohibited under very heavy penalties. So many, however, were imprisoned,—and perjury was not wanting for the sake of the penalty,—that some check was necessary. A law, therefore, was made, preventing any one from suing save the Attorney-General; and some idea may be formed of the extent of the evil from the fact, that, between 1793 and 1802, upwards of one thousand were punished with imprisonment. But the determination to insure surpassed the determination to punish. The officers of government were absolutely defied. Blood, in defence of that which the law declared illegal, was freely shed. So organized was the system, that two thousand clerks, and seven thousand five hundred persons known as “Morocco men,” with a numerous staff of armed ruffians, were attached to the insurance-offices. Committees were held three times a week; measures were invented to defeat the magistrates; money to an enormous extent was used to bribe the constabulary; while to those who refused to be bribed, a bold and insolent defiance was offered, with threats, which the officers well knew would be executed at the risk, or even the certain sacrifice, of life.

In 1805, Parliament again took cognizance of the evil. The reiterated declarations of the press, the repeated assertion of members of the senate, the universal voice of the country, coupled with the notorious fact, that crime continued to follow the system, compelled government to appoint a committee of the House to report upon it. The attendance of all who could give any information upon the subject was required, and a volume of evidence printed, which, though it must have opened the eyes, could not open the hearts, of the ministers.

Time, instead of softening or subduing the misery, had extended its ramifications into the highest, as it once had been confined to the lowest, society. The middle class—ordinarily supposed to be freest from vice—had gradually succumbed. The penniless miscreant of one day became the opulent gambler of the next; and the drawing of the lotteries might be marked by the aspect of the pawnbrokers’ shops, which overflowed with the goods of the laborer, with the ornaments of the middle class, and with the jewels of the rich. Servants went to distant places with the purloined property of their masters, pledged it, and, destroying the tickets, insured in the lottery. Manufacturers discharged those workmen who could not resist the temptation. During the drawing of the prizes less labor was done by the artisans. Housekeepers of the lower order were unable to pay their taxes; money was begged from benevolent societies; and men, pretending they were penniless, were fed and housed by the parish while embarking in these chimerical schemes. Felons, on the morning of an ignominious death, named lotteries as the first cause; and often, if a dream pointed to a particular number, crimes were committed to procure it, which led to transportation instead of fortune. Individuals presented themselves to insure, with such unequivocal marks of poverty in their appearance, that even the office-keepers refused their money; and yet, such was the indefatigable love of adventure, that many would come in at one door as fast as they were shown out at the other.

“When I have caught a great many in a room together,” said one witness, “I have found most of them poor women, and in their pockets twenty or thirty, and even sixty, duplicates on one person. Their pillows, their bolsters, their very clothes, were pledged, till they were almost naked.”

“First,” said Mr. Sheridan, “they pawned ornaments and superfluities, then their beds, the very clasps of their children’s shoes, the very clothes of the cradle. The pawnbroker grew ashamed of his profession.”

A walk near the spot where the prizes were announced painfully evinced the progress this terrible delusion had made, and the classes to which it had extended.

Hundreds of wretched persons, the refuse of society, the very dregs of the people, might be seen waiting with frightful eagerness until their fate was decided. The courtesan was there, forgetting for a time her avowed pursuit; the man who the night before had committed some great crime; the pale artisan with his attenuated wife; the girl just verging upon womanhood; the maid-servant, who had procured a holiday to watch her fortune; weary forms and haggard faces, mingling with the more robust and ruffianly aspects,—yet all bearing one peculiarity, that of intense anxiety,—marked the purlieus of the place where the lottery was drawn. The oath which shocked the ear, the act which shocked the eye, the scurrilous language of the boy ripe in mature iniquity, the scream of the child dragged from its rest, to mingle in scenes it could not comprehend, formed a pictorial group which Hogarth alone could have given to posterity, as an evidence of civilization in the nineteenth century.

But it has been said, that the mischief was not confined to the poorer classes. Persons of the first consequence entered into insurances for a great amount. Instances are not wanting, in which gentlemen of large landed property, guilty of no other extravagance, lost all their cash, sold their estates, and died in the poor-house.

The “Morocco men,” so called from the red morocco pocketbooks which they carried, were remarkable features in the lottery, half a century ago. They began their lives as pigeons, they closed them as rooks. They had lost their own fortunes in their youth, they lost those of others in their age. Generally educated, and of bland manners, a mixture of the gentleman and the debauchee, they easily penetrated into the society they sought to destroy. They were seen in the deepest alleys of Saint Giles, and were met in the fairest scenes of England. In the old hall of the country gentleman, in the mansion of the city merchant, in the butlery of the rural squire, in the homestead of the farmer, among the reapers as they worked on the hill-side, with the peasant as he rested from his daily toil, addressing all with specious promises, and telling lies like truth, was the morocco man found, treading alike the finest and the foulest scenes of society. They whispered temptation to the innocent; they hinted at fraud to the novice; they lured the youthful; they excited the aged; and no place was so pure, and no spot so degraded, but, for love of 7½ per cent., did the morocco man mark it with his pestilential presence. No valley was so lonely, but what it found some victim; no hill so remote, but what it offered some chance; and so enticing were their manners, that their presence was sought, and their appearance welcomed, with all the eagerness of avarice.

And little were they who dealt with these persons aware of the characters with whom they trafficked. Of bland behaviour, but gross habits, the nature of their influence on the unpolluted minds with which they had to deal may be judged from the fact, that some of the morocco men ended their days at Tyburn; that transportation was the doom of others; and that the pillory was the frequent occupation of many. To such men as these were the morals of the people exposed through the lottery. Nor, if the opinion of a member of the senate can be trusted, was the lottery-office keeper much better. “I know of no class of persons in the country,” said Mr. Littleton, “excepting hangmen and informers, on whom I should be less disposed to bestow one word of commendation.”

The wonder is, not that the public was tempted so much, but that it was seduced so little. Puffing, by the side of which the power of a Mechi and a Moses waxes dim, was employed to assist the contractor. Myriads of advertisements were circulated in the streets. The newspapers, under all forms and phases, contained stories of wonderful prizes. Horns were sounded; huge placards displayed; false and seductive lures held out; houses hired for the sole purpose of displaying bills; falsehoods fresh every day; and fortunes to be had for nothing. Puffs, paragraphs, and papers circulated wherever the ingenuity of man could contrive. The public thoroughfares were blazoned by day and lighted by night with advertisements.

With such a picture of crime as has been presented to the reader, he may not think the quiet satire of Mr. Parnell on the Chancellor unmerited. He said that the following epitaph ought to be placed on his grave:—

“Here lies the Right Honorable Nicholas Vansittart, once Chancellor of the Exchequer, who patronized Bible Societies, built churches, encouraged savings’ banks, and supported lotteries.”

The attention bestowed on the subject, the mass of intelligence collected, the evidence given by competent parties, produced considerable notice, and the report condemned the evil the committee had examined.

“The foundation of the lottery,” it said, “is so radically vicious, that under no system can it become an efficient source of gain, and yet be divested of the evils and calamities of which it has proved so baneful a source.

“Idleness, dissipation, and poverty are increased; sacred and confidential trusts are betrayed; domestic comfort is destroyed; madness often created; crimes subjecting the perpetrators to death are committed.

“No mode of raising money appears so burdensome, so pernicious, and so unproductive. No species of adventure is known where the chances are so great against the adventurers; none where the infatuation is more powerful, lasting, and destructive.

“In the lower classes of society, the persons engaged are, generally speaking, either immediately or ultimately tempted to their ruin; and there is scarcely any condition of life so destitute and so abandoned, that its distresses have not been aggravated by this allurement to gambling.”

Notwithstanding the strong nature of this report, the labors of the committee were fruitless. Various attempts at amelioration were made, but the evil was not finally abolished until the year 1826.

FOOTNOTES:

[4] Mr. J. B. Heath says of the early lotteries, in his valuable volume entitled “Some Account of the Grocers’ Company,”—“There is not one entry in the accounts to show that the prizes were ever paid,” and quotes various documents to prove that they were very difficult to procure. “The science of puffing,” adds this gentleman, “which in our times has attained such perfection, was unknown at that period, and in lieu of placards and advertisements, the more direct mode was adopted of personal solicitation.”

CHAPTER IX.

Wholesale Jobbing.—Insurance on Sick Men.—False Intelligence.—Uselessness of Sir John Barnard’s Act.—Origin of the Blackboard.—Opposition to Loans.—Lord Chatham’s Opinion of Jobbers.—Inviolability of English Funds.—Parisian Banking-Houses.—Proposition to pay off the National Debt.—Extravagance of the Contractors.—Lord George Gordon’s Opinion of them.—Members’ Contracts.—New System adopted.—Abraham Goldsmid.—Bankers’ Coalition broken by him.—His Munificence.—His Death.—Sensation in the City.

The following picture of wholesale jobbing, drawn from public and private documents, from correspondence, from newspapers, and from Parliamentary history, will show that gambling was equally pursued in high places as in ’Change Alley.

Letters from abroad, containing false intelligence, were forwarded to, or forged by, senators; names of importance were fraudulently used; the news was promulgated, and funds raised or lowered according to the wish of the contriver. But if the jobber was cheated in one way, he took his revenge in another. The domestics of public men were bribed by him; the secretaries of men in office were paid by him; the mistresses of ministers were accessible to him; and, it is said, even their wives were not seldom in the pay of members of the Stock Exchange. Nor did many hesitate to declare that men in office not only made profit of the news they really received, but that they promulgated false intelligence, knowing, from their position, it would be received as true, at the expense of their own character, and to the ruin of the men who trusted them.

Another practice had obtained a notoriety so bad and baleful, that it became necessary to stop its progress. Directly it was known that any great man was seriously ill, insurances on his life, at rates in proportion to his chance of recovery, were made. These bargains were reported in the papers; and the effect on an invalid who knew his health to be precarious may be imagined, when he saw in the Whitehall Evening Post, that “Lord —— might be considered in great danger, as his life could only be insured in the Alley at ninety per cent.” The custom grew so rapidly, and the evil was so serious, that the principal merchants and underwriters refused to transact business with brokers who engaged in such practices.

Of a less questionable character was the habit of insuring property in any besieged city; or the yet more common mode of paying a premium to receive a certain sum, should the city be taken by the day named in the contract. The Spanish ambassador was accused of insuring £30,000 on Minorca, during the seven years’ war, when the despatches announcing its capture were in his pocket.

The newspapers were the vehicles generally employed to spread false intelligence; and an almost invariable success attended those who made use of the press to promulgate, in bold type and inflated language, “bloody engagement,” “rumored invasion,” or “great victory,” to assist their city operations. Every class, from the maiden who jobbed her lottery-ticket, to the minister who jobbed his intelligence, was involved in the pursuit. All these bargains were for time, and continued to prove that the act by which Sir John Barnard hoped to abolish gambling was useless; and it is an anomaly in the history of our great debt, that bargains in the very funds which were raised to support the national credit are disallowed by the national legislature. It is a law which has been tried and found wanting. It does not prevent, in the smallest or slightest degree, the system it was meant to crush; and it adds to the immorality of the speculator and the risk of the broker, by allowing the former to repudiate his bargain at the expense of the latter.

Under the early loan-acts, tallies were delivered to the first contractors. When a sale was effected, the name of the purchaser was indorsed upon the tally, and from that entered into the government books, for the convenience of paying the dividends to the right person. This clumsy machinery was afterwards abolished; but though, in 1717, the transfers and dividends of the national debt were first undertaken by the Bank, it was not until 1783 that the present method of transfer was adopted.

The origin of the blackboard—that moral pillory—of the Stock Exchange occurred in 1787. “There were no less than twenty-five lame ducks,” said the Whitehall Evening Post, “who waddled out of the Alley.” Their deficiency was estimated at £250,000; and it was upon this occasion the above plan was first proposed, and a very full meeting resolved, that those who did not either pay their deficiencies or name their principals should be publicly exposed on a blackboard to be ordered for the occasion. Thus the above deficiencies—larger than had been previously known—alarmed the gentlemen of ’Change Alley, and produced that system which is yet regarded with wholesome awe.

During the administration of Mr. Pitt, in 1786, a sinking fund was again attempted; the various branches of revenue being united under the title of the Consolidated Fund. One million was annually taken from it, and placed in the hands of the Commissioners for the Redemption of the National Debt, and was applied in purchasing such funds as might be deemed expedient at the prices of the day. The interest of the debt thus redeemed, the life-annuities which fell in, or the annuities which expired, were added to the fund, the interest of which, when the principal amounted to four millions, was no longer to be applied to it, but remain at the disposal of Parliament.

The difficulties which every minister met in every new loan, were more in proportion to the power of the opposition, than to the fairness or necessity of the demand. In unpopular wars, these difficulties were doubly increased. In the American contest, the whole population demanded peace; and nothing but the obstinacy of “the best farmer and worst king,”—nothing but a corrupt Parliament, wholesale places, a dominant aristocracy, and large premiums to the moneyed interest,—could have carried Lord North through the session, enlivened by his humor, and the enmity created by the war. The loans, therefore, of this period were fiercely attacked; ’Change Alley fiercely denounced; and the plans of the government hotly contested. The mode of conducting the loans was then, as before, made conducive to the majority of the ministry, at the expense of the people. Out of 60,000 lottery-tickets, 22,000 were given to a few members, producing £44,000 profit. When the system was attacked, precedent, the bane of official people, was quoted; and because it was known that, in 1763, Mr. Fox had £100,000, Mr. Calcraft and Mr. Drummond £70,000, the Governor of the Bank £150,000 for the corporation, and £50,000 for himself, and other members similar sums, it was deemed a sufficient and an unanswerable defence. But though by such methods the minister got the votes of the House, he found it more difficult to get the money from the public after it was voted. In 1779, he was greatly troubled to procure it on reasonable terms. From bankers he went to contractors, from contractors to stock-jobbers, and from stock-jobbers he went back to the bankers, paying a much higher rate than they at first demanded. “It was but yesterday,” writes Horace Walpole, “that Lord North could tell the House he had got the money on the loan, and is happy to get it under eight per cent.” The loan of 1780 brought them again into disrepute. Half was given to members of the House of Commons; more than three millions was allotted to one person; and, without regard to the welfare of the nation, the price was determined at a rate so favorable to the contractors, that, from no cause save the low terms on which it had been taken, the scrip arose at once to eleven premium. In 1781, it was said that Lord North had made an infamous bargain in a bungling manner; and that, in 1782, he had made a bungling bargain in an infamous manner; and this was solemnly protested against as an improvident operation, a corrupt job, and a partial distribution. There cannot be a doubt that the mode of conducting these loans was detrimental to the national interest, and conducive to that of the Stock Exchange. There were three plans up to this period. The first was in the offers of private individuals, stating the sum each would advance; the second was an open subscription at the treasury; and the third a close subscription with a few. By the first, the members of Parliament were bribed; and by the third, the bankers; then the principal contractors were enriched. Their interest, and it was great, with their votes in the House, and they were many, were, therefore, at the disposal of the government. In 1783, out of a loan for £12,000,000, £7,700,000 were given to bankers. So disgraceful was the whole affair, that Lord John Cavendish was compelled to apologize for the terms on which it had been granted, because “the former minister had left the treasury without a shilling.” By attempting to please men of all parties, Lord John, as usual, pleased none. He was abused by some for dividing it among so small a number; he was rated by others for allowing so many to have a share. Mr. Smith, of the house of Smith & Payne, made a formal complaint that he had been neglected in the allotment; that his firm was the only one left out; and that, in consequence, a stigma of a very disagreeable character was attached to it. By the explanation, it appeared that another house of the same name had been accused of tempting customers from the various bankers, by giving portions of the loan to those who would secede. The meanness had been attributed to Smith, Payne, & Co., and Lord John omitted them in consequence from his list. Mr. Smith was very irate on the subject; and although his Lordship explained, as the explanation was unaccompanied by a share of the loan, it was, probably, very unacceptable to the indignant banker. Although this gentleman saw no harm in receiving a portion of the loan, other bankers had higher views. Mr. Martin, believing that, as a senator, he ought not to contract, lest it might bias his votes, conscientiously refused to accept any portion of loan or contract; and thus sacrificed his pocket to his principle.

When jobbing occurred in the senate, who can wonder at the jobbing in the funds, or at the strong feeling which such contemptible squabbling created, and which fell upon the members of the House of ’Change as fiercely as on the members of the House of Commons?

“Such gentry,” said one, “coin disaster to sink the funds without cause. If gospels mended mankind, there should have been a new sermon preached on the mount, since ’Change Alley was built, and money-changers were driven out of the temple all over Europe.” “Ten thousand lies are propagated every week, not only by both sides, but by stock-jobbers. Those grave folks, moneyed citizens, contribute exceedingly to embroil and confound history, which was not very authentic before they were spawned.”

Lord Chatham was not backward in expressing an opinion of those whom he designated “the cannibals of ’Change Alley.” “To me, my Lords,” he once said, “whether they be miserable jobbers of ’Change Alley, or the lofty Asiatic plunderers of Leadenhall Street, they are equally detestable.” The same strong feeling animated him when he was told that one of his measures had caused a decline in the stocks. “When the funds are falling, we may be sure the credit of the country is rising.”

A finer spirit—and that spirit is the principle which has pervaded the whole public transactions of England—was evinced when the same nobleman was advised to retaliate on the Dutch merchants,—who had committed several outrageous frauds on the English,—by seizing their immense property in our funds. “If the Devil himself had money there,” he replied, “it must rest secure.” To his Lordship, and to the political assertion he made, that “not a gun should be fired in Europe without England knowing why,” it was of the utmost importance that the integrity of the nation should be maintained.

During the American war, many of those in arms had property in the funds; and the provinces, as bodies corporate, had money in the same securities. It is to the credit of the revolutionists, that, though they fully expected this property would be confiscated, they persisted in their course; and it is equally to the credit of England, that their capital was as secure, and their interest as regularly paid, as if they were not in open rebellion.

Not only in loans were the people wronged and robbed,—the word is harsh, but expressive,—the contracts for the public service exhibited also the most gross and glaring favoritism. From time to time the evil was exposed; Parliament grew violent, and the public waxed wroth. Every quarter of a century, an inquiry was instituted, and the whole ended partly in some influential person being disgraced, and partly in an expression, that “the said frauds and abuses were one great occasion of the heavy debt that lies upon the nation.” A few specimens may serve to indicate the wrongs which, from time to time, have aggrandized an unpopular government, have swollen the pockets of the few, and increased the wants of the many.

The borough-monger, who for years had been in possession of a pocket borough, found his property disturbed, and his constituents tampered with, by the contractor, who, as a candidate for the honor of the forum, was marked by vice, extravagance, and folly. As a member of the senate, he assumed the purity of the patriot, complained of the absence of economy, and declared how much cheaper the public business might be accomplished. He teased the minister; he perplexed the Parliament; he puzzled the government; until, by giving him a job, the patriot was turned into a contractor, and from that hour he marked the public money as his own. If the First Lord of the Treasury were indolent, the contractor availed himself of his sloth; if ignorant, he taught him, and made the country pay for the lesson.

The very name of a contractor was odious, and their luxuries were bitter in the eyes of the people. Their abodes were like those of princes; their daughters wedded with nobles; the follies of their sons were the talk of the town; they died possessed of fortunes which kings might envy; and, as nearly all were members of Parliament, attention became pointed at men whose mansions and whose manors, bought with public money, challenged public notice.

“The minister,” remarked Mr. Fox, “said to him, ‘I will give you a contract, if you will give me a vote.’ The contractor replies, ‘Now I have given you a vote, give me a contract. I voted that we had forty-two ships when we had but six, and that the French fleet did not consist of thirty-two ships. You must not, therefore, quarrel for twopence a gallon on rum, or a farthing on a loaf of bread.’”

Lord George Gordon, shortly before his extraordinary conduct in 1780, said,—“This dunghill of contracts has given an ill air to our whole proceedings. It has got abroad, and proves very offensive to the public nostrils. Our constituents begin to smell a rat. They nose us in the lobby, and call us tailors and shoemakers, cobblers and cabbage-salters, potato forestallers, sour-krout makers, and swine contractors. The dignity, reputation, and fair fame of the Commoners is smothered and sinking in porter and salted cabbage, shoes, sour-krout, and potatoes.” Lords of trade ordered pewter inkstands by the hundred, sold them, and purchased silver ones with the money they produced; or ordered green velvet bags for official papers, and employed the velvet of which they were composed to make court dresses.

Under the Pelham administration, members received regular stipends in bank-notes, from £500 to £800 yearly, varying according to the influence or ability of the senator. “This largess I distributed,” added the person who took charge of the delicate department,—and the particulars are worth enumerating,—“in the court of requests on the day of the prorogation of Parliament. I took my stand there; and as the gentlemen passed me, in going to or returning from the House, I conveyed the money in a squeeze of the hand. Whatever person received the ministerial bounty, I entered his name in a book which was preserved in the deepest secrecy, it being never inspected by any one but the king and Mr. Pelham.” This book was afterwards demanded of Mr. Roberts, the almoner, but he resolutely refused to yield it except by the king’s express command, or to his Majesty in person. In consequence of his refusal, the king sent for him to St. James’s, where he was introduced into the closet. He was then ordered to return the book in question, with which injunction Mr. Roberts immediately complied. At the same time, taking the poker in his hand, his Majesty put it into the fire, made it red hot, and, while the ministers and Mr. Roberts stood round him, he thrust the book into the flames, where it was immediately reduced to ashes.