Various
Blackwood's Edinburgh Magazine, Volume 66, No. 410, December 1849
"In Holland," says Mr Doubleday, "the country of his birth, the Dutch king and his advisers found both a precedent to quote, and an example to follow. By its position and circumstances, this country, inconsiderable in size and population, and not naturally defensible, had been compelled to act the part, for a series of years, of a leading power in Europe; and this it had only been enabled to do, by that novel arm which a very extensive foreign trade is sure to create, and by the money drawn together by successful trading. Venice had at an earlier period played a similar part; but a series of struggles at last led the huckstering genius of the Dutch into a system at which the Venetian public had not arrived: and this was the fabrication of paper money, the erection of a bank to issue it, and the systematic borrowing of that money, and the creation of debt on the part of government, for only the interest of which taxes were demanded of the people. Here was machinery set up and at work; and, in the opinion of interested and superficial observers, working successfully. It was, accordingly, soon proposed to set up a copy of this machinery in England, and in 1694, the blow was struck which was destined to have effects so monstrous, so long continued, and so marvellous, on the fortunes of England and her people; and the establishment, since known as the Bank of England, was erected under the sanction of the government."
The worst and most dangerous feature of a permanent national debt is, that, during the earlier stages of its existence, an appearance of factitious prosperity is generated, and the nation consequently blinded to its remote but necessary results. The tendency to such a delusion is inherent in human nature. Après nous le deluge! is a sorry maxim, which has been often acted on, if not quoted by statesmen, who, like a certain notable Scottish provost, being unable to discover anything that posterity has done for them, have thought themselves entitled to deal as they pleased with posterity. The proceeds of the earlier loans enabled William to carry on his wars; and the nation, puffed up with pride, looked upon the new discovery as something far more important and valuable than the opening of another Indies. Nor did William confine himself merely to loans. Lotteries, tontines, long and short annuities, and every species of device for raising money, were patronised and urged on by the former Stadtholder, and the rage for public gambling became uncontrollable and universal. As we have just emerged from one of those periodical fits of speculation which seem epidemical in Great Britain, and which, in fact, have been so ever since the Revolution, it may be interesting to the reader to know, that the introduction of the new system was marked by precisely the same social phenomena which were observable four years ago, when the shares in every bubble railway scheme commanded a ridiculous premium. We quote from the work of Mr Francis: —
"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."
It is curious to remark that the Stock Exchange cannot be said to have had any period of minority. It leaped out at once full-armed, like Minerva from the brain of Jupiter. All the arts of bulling and bearing, of false rumours, of expresses, combinations, squeezings – all that constitute the mystery of Mammon, were known as well to the fathers of the Alley, as they are to their remote representatives. Nay, it would almost appear that the patriarchal jobber had more genius than has since been inherited. William's retinue did not consist only of mercenaries and refugees. Hovering on the skirts of his army came the sons of Israel, with beaks whetted for the prey, and appetites which never can be sated. Vixere fortes ante Agamemnona– there were earlier vultures than Nathan Rothschild. The principal negotiators of the first British loan were Jews. They assisted the Stadtholder with their counsel, and a Mephistopheles of the money-making race attached himself even to the side of Marlborough. According to Mr Francis: – "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."
It has been estimated, upon good authority, that from fifteen to twenty per cent of every loan raised in England, has, directly or indirectly, found its way to the coffers of those unconscionable Shylocks; so that it is small wonder if we hear of colossal fortunes coexisting with extreme national depreciation and distress. We might, indeed, estimate their profits at a much higher rate. Dr Charles Davenant, in his essay on the Balance of Trade, written in the earlier part of the last century, remarked – "While these immense debts remain, the necessities of the government will continue, interest must be high, and large premiums will be given. And what encouragement is there for men to think of foreign traffic (whose returns for those commodities that enrich England must bring no great profit to the private adventurers) when they can sit at home, and, without any care or hazard, get from the state, by dealing with the exchequer, fifteen, and sometimes twenty, thirty, forty, and fifty per cent? Is there any commerce abroad so constantly advantageous?" We apprehend not. Capital is defined by the economists as the accumulation of the savings of industry. Such men as Rothschild have no doubt been industrious, but not according to the ordinary acceptation of the term. Their industry is of a wholesale kind. It is confined to a resolute and systematic endeavour to avail themselves of the savings of others; and we need hardly state that, in this pursuit, they have shown themselves most eminently successful.
The remarkable change which took place in the monetary system of England, under the auspices of William, could not, of course, have been effected without the concurrence of parliament. That body had certainly no reason to charge him with neglect of their interests. The representatives of the people for the first time began to understand, that there might be certain perquisites arising from their situation as men of trust, which could be made available to them, provided they were not too scrupulous as to the requirements of the crown. The mastiff which had bayed so formidably at James and his predecessors, because none of them would deign to cajole him, became at once amenable to a sop. Mr Macaulay should have written: "The revolution of 1688 did not introduce the practice of regularly summoning parliaments; what it introduced was the practice of regularly bribing them." Mr Francis, though an apologist of King William, who, as he thinks, was compelled to act thus from imperious necessity, is not blind to this stigma on his memory. He also believes that the settled animosity between England and France, which has caused so many wars, and led to such an extravagant expenditure of blood and treasure, is mainly to be attributed to the persevering efforts of William of Orange. The following summary is of much interest: —
"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, that of five millions granted to carry on the war, only two and a half millions reach 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."
These things are elements of importance in considering the political history of the country. They explain the reason why the great bulk of the nation never cordially supported the new succession; and why, for the first time in English history, their own representative house lost caste and credit with the commons. Fifty years later, when Charles Edward penetrated into the heart of England, he met with no opposition. If the inhabitants of the counties through which he passed did not join his standard, they thought as little of making tiny active opposition to his advance; thereby exhibiting an apathy totally at variance with the high national and independent spirit which in all times has characterised the English, and to be accounted for on no other ground than their disgust with the new system which, even then, had swollen the amount of taxation to an extent seriously felt by the commonalty, and which had so corrupted parliament that redress seemed hopeless within the peaceful limits of the constitution. The proclamation issued by the prince, from Edinburgh, bore direct reference to the funded debt, and to the notorious ministerial bribery; and it must have found an echo in the hearts of many, who began to perceive that the cry of civil and religious liberty is the standard stalking-horse for every revolution, but that the result of revolutions is too commonly an imperative demand upon the people for a large augmentation of their burdens, backed too by the very demagogues who were the instigators of the violent change. In this crisis, the moneyed interest, which William had so dexterously created, saved the new dynasty – less, certainly, from patriotism, than from the fear of personal ruin.
It is a memorable fact that, from the very first, the Tory party opposed themselves strenuously to the creation and progress of the national debt. It is well that those who, in our own times, bitterly denounce the system which has landed us in such inextricable difficulties, and which has had the effect of rearing up class interests, irreconcilably opposed to each other, in once-united England, should remember that for all this legacy we are specially indebted to the Whigs. Except by Tory ministers, and in one case by Walpole, no attempt has been made to stem the progress of the current; and this consideration is doubly valuable at this moment, when it is proposed, by a vigorous effort, to make head against the monster grievance, and, by the establishment of an inviolable sinking-fund, to commence that work which liberal and juggling politicians have hitherto shamefully evaded. It is more than probable that "the moneyed interest" will throw the whole weight of their influence in opposition to any such movement; unless, indeed, they should begin already to perceive that there may be worse evils in store for them than a just liquidation of their claims. Matters have now gone so far as to be perilous, if no practicable mode of ultimate extrication can be shown. Real property cannot be taxed any higher – indeed, the landowners have claims for relief from peculiar burdens imposed upon them, which in equity can hardly be gainsaid. The property and income-tax, admittedly an impolitic impost in the time of peace, cannot remain long on its present footing. To tax professional earnings at the same rate as the profits of accumulated capital, is a manifest and gross injustice against which people are beginning to rebel. There is no choice left, except between direct taxation and a recurrence to the system which we have abandoned, of raising the greater part of our revenue by duties upon foreign imports. The former method, now openly advocated by the financial reformers, is, in our opinion, a direct step towards repudiation. Let the fundholders look to it in time, and judge for themselves what results are likely to accrue from such a policy. One thing is clear, that if no effort should be made to redeem any portion of the debt – but if, on the contrary, circumstances should arise, the probability of which is before us even now, to call for its augmentation, and for a corresponding increase of the public revenue – the financial reformers will not be slow to discover that the only interest hitherto unassailed must submit to suffer in its turn. The Whigs are now brought to such a pass, that they cannot hope to see their way to a surplus. We shall have no more of those annual remissions of duties, which for years past have been made the boast of every budget, but to which, in reality, the greater part of our present difficulties is owing. Had a sinking fund been established long ago, and rigidly maintained, and at the same time the revenue kept full, the nation would ere now have been reaping the benefit of such a policy. We should have had the satisfaction of seeing our debt annually diminishing, and the interest of it becoming less; whereas, by the wretched system of fiddling popularity which has been pursued, the debt has augmented in time of peace, the annual burdens absolutely increased, ruinous competition been fostered, and internal jealousies excited. The Whigs, who arrogate for themselves, not only now but in former times, the guardianship of the liberties of Britain, have taken especial pains to conceal the fact that they were, in reality, the authors of our funding system, and the bitterest opponents of those who early descried its remote and ruinous consequences. Their motives cannot be concealed, however it may be their interest at the present time to gloss them over. Lord Bolingbroke thus exposes their occult designs, in his "Letters on the Use of History."
"Few men, at the time (1688), looked forward enough to foresee the necessary consequences of the new constitution of the revenue that was soon afterwards formed, nor of the method of funding that immediately took place; which, absurd as they are, have continued ever since, till it is become scarce possible to alter them. Few people, I say, saw how the creation of funds, and the multiplication of taxes, would increase yearly the power of the Crown, and bring our liberties, by a natural and necessary progression, into more real though less apparent danger than they were in before the Revolution! The excessive ill husbandry practised from the very beginning of King William's reign, and which laid the foundation of all we feel and fear, was not the effect of ignorance, mistake, or what we call chance, but of design and scheme in those who had the sway at the time. I am not so uncharitable, however, as to believe that they intended to bring upon their country all the mischiefs that we who came after them experience and apprehend. No: they saw the measures they took singly and unrelatively, or relatively alone to some immediate object. The notion of attaching men to the new government, by tempting them to embark their fortunes on the same bottom, was a reason of state to some; the notion of creating a new, that is, a moneyed interest, in opposition to the landed interest, or as a balance to it, and of acquiring a superior interest in the city of London at least, by the establishment of great corporations, was a reason of party to others: and I make no doubt that the opportunity of amassing immense estates, by the management of funds, by trafficking in paper, and by all the arts of jobbing, was a reason of private interest to those who supported and improved that scheme of iniquity, if not to those who devised it. They looked no further. Nay, we who came after them, and have long tasted the bitter fruits of the corruption they planted, were far from taking such alarm at our distress and our dangers as they deserved."
In like manner wrote Swift, and Hume, and Smith; nor need we wonder at their vehemence, when we direct our attention to the rapid increase of the charge. William's legacy was £16,400,000 of debt, at an annual charge to the nation of about £1,311,000. At the death of Queen Anne, the debt amounted to fifty-four millions, and the interest to three millions, three hundred and fifty thousand – being nearly double the whole revenue raised by King James! The total amount of the annual revenue under Queen Anne, was more than five millions and a half. Under George I., singular to relate, there was no increase of the debt. At the close of the reign of George II., it amounted to about a hundred and forty millions; and, in 1793, just one hundred years after the introduction of the funding system in Britain, we find it at two hundred and fifty-two millions, with an interest approaching to ten. Twenty-two years later, that amount was more than trebled. These figures may well awaken grave consideration in the bosoms of all of us. The past is irremediable; and it would be a gross and unpardonable error to conclude, that a large portion of the sum thus raised and expended was uselessly thrown away; or that the corruption employed by the founders of the system, to secure the acquiescence of parliament, was of long continuance. On the contrary, it is undeniable that the result of many of the wars in which Britain engaged has been her commercial, territorial, and political aggrandisement; and that bribery, in a direct form, is now most happily unknown. The days have gone by since the parliamentary guests of Walpole could calculate on finding a note for £500, folded up in their dinner napkins – since great companies, applying for a charter, were compelled to purchase support – or when peace could only be obtained, as in the following instance, by means of purchased votes: – "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 was 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 a-piece." Still we cannot disguise the fact, that a vast amount of the treasure so levied, and for every shilling of which the industry of the nation was mortgaged, never reached the coffers of the state, but passed in the shape of bonuses, premiums, and exorbitant contracts, to rear up those fortunes which have been the wonder and admiration of the world. Nor is it less palpable that the fortunes so constructed could not have had existence, unless abstracted from the regular industry of the country, to the inevitable detriment of the labourer, whose condition has at all times received by far too little consideration. Add to this the spirit of public gambling, which, since the Revolution, has manifested itself periodically in this country – the sudden fever-fits which seem to possess the middle classes of the community, and, by conjuring up visions of unbounded and unbased wealth, without the necessary preliminary of labour, to extinguish their wonted prudence – and we must conclude that the funding system has been pregnant with social and moral evils which have extended to the whole community. Before we pass from this subject – which we have dwelt upon at considerable length, believing it of deep interest at the present point of our financial history – we would request the attention of our readers to the following extract from the work of Mr Francis, as condemnatory of the policy pursued by recent governments, and as tending to throw light on the ultimate designs of the Financial Reform Associations. It is quite possible that, in matters of detail, we might not agree with the writer – at least, he has given us no means of ascertaining upon what principles he would base an "efficient revision of our taxation;" but we cordially agree with him in thinking that, as we presently stand, the right arm of Great Britain is tied up, and the Bank of England, under its present restrictions, in extreme jeopardy at the first announcement of a war.
"It is one great evil of the present age, that it persists in regarding the debt as perpetual. Immediately the expenditure is exceeded by the revenue, there is a demand for the reduction of taxation. We, a commercial people, brought up at the feet of M'Culloch, with the books of national debt as a constant study, with the interest on the national debt as a constant remembrancer, persist in scoffing at any idea of decreasing the encumbrance: and when a Chancellor of the Exchequer proposes a loan of eight millions, we growl and grumble, call it charitable, trust for better times, and read the Opposition papers with renewed zest.
There is no doubt that the resources of the nation are equal to far more than is now imposed; but it can only be done by an efficient revision of our taxation, and this will never be effected till the wolf is at the door. A war which greatly increased our yearly imposts would, with the present system, crush the artisan, paralyse the middle class, and scarcely leave the landed proprietor unscathed. The convertibility of the note of the Bank of England would cease; and it would be impossible to preserve the charter of Sir Robert Peel in its entirety, while twenty-eight millions were claimable yearly in specie, and the gold of the country went abroad in subsidies.
In an earlier portion of the volume, the writer briefly advocated annuities as one mode of treating the national debt. There would in this be no breach of faith to the present public; there would be no dread of a general bankruptcy; there would be no need of loans; and, had this principle been carried out, the national debt would be yearly diminishing. In ten years, nearly two millions of terminable annuities will expire, and it behoves the government to inquire into the effect which the conversion of the interminable debt into terminable annuities would have on the money market.
It is absolutely idle for the Financial Reform Association to think of effectually lowering the taxation of the country, while twenty-eight millions are paid for interest; and it is to be feared that great evil will accompany whatever good they may achieve. That there are many offices which might be abolished; that it is a rule in England that the least worked should be best paid; that an extravagant system of barbaric grandeur exists; that the army and the navy, the pulpit and the bar, are conducted unwisely; and that great men are paid great salaries for doing nothing, – is indisputable; but it is equally so that great savings have been effected, and that greater efforts are making to economise further. There is a faith pledged to the public servant as much as to the public creditor; and, whether he be a colonel or a clerk, a man of peace or a man of war, it is impracticable, imprudent, and unjust to attempt that which would as much break faith with him, as to cease to pay the dividends on the national debt would be to break faith with the national creditor.
These things are paltry and puerile compared with that which, excepting a total revision of taxation, can alone materially meet the difficulties of England; and the gentlemen of the Reform Association are aware of this. They may cut down salaries; lower the defences of the country; abolish expensive forms and ceremonies; amalgamate a few boards of direction; reduce the civil list; and do away with all sinecures. But the evil is too vast, and the difficulties are too gigantic, to be met in so simple a manner. Nor will these gentlemen be satisfied with it while there are eight hundred millions at which to level their Quixotic spear. Repudiation was darkly alluded to at one meeting of the Association, and, though it has since been denied, it is to be feared that time only is required to ripen the attempt."
Turn we now from the national debt to its eldest offspring, the Exchange. Marvellous indeed are the scenes to which we are introduced, whether we read its history as in the time of William of Orange, enter it at the period when the South Sea bubble had reached its utmost width of distension, or tread its precincts at a more recent date, when railway speculation was at its height, and the Glenmutchkin at a noble premium. John Bunyan could not have had a glimpse of it, for he died in 1688: nevertheless his Vanity Fair is no inaccurate prototype of its doings. No stranger, indeed, may enter the secret place where its prime mysteries are enacted: if any uninitiated wight should by chance or accident set foot within that charmed circle, the alarm is given as rapidly as in Alsatia when a bailiff trespassed upon the sanctuary. With a shout of "Fourteen hundred fives!" the slogan of their clan, Jew, Gentile, and proselyte precipitate themselves upon the rash intruder. In the twinkling of an eye, his hat is battered down, and amidst kicks, cuffs, and bustling, he is ejected from the temple of Mammon. But, lingering in the outer court and vestibule, we can gain some glimpses of the interior worship; imperfect, indeed, but such as may well deter us from aspiring to form part of the congregation.
The creation and transferable character of public funds, necessarily involved the existence of a class of men who deal in such securities. That class multiplied apace, and multiplied so much that, after a time, the commissions exigible for each boná fide transaction could not afford a decent subsistence for all who were engaged in the business. People who buy into the stocks with a view to permanent investment, are not usually in a hurry to sell; and this branch of the profession, though, strictly speaking, the only legitimate one, could not be very lucrative. Gambling was soon introduced. The fluctuations in the price of the funds, which were frequent in those unsettled times, presented an irresistible temptation to buying and selling for the account – a process by means of which a small capital may be made to represent fictitiously an enormous amount of stock: no transfers being required, and in fact no sales created, the real stake being the difference between the buying and the selling prices. But, the natural fluctuations of the stocks not affording a sufficient margin for the avarice of the speculators, all sorts of deep-laid schemes were hatched to elevate or depress them unnaturally. In other words, fraud was resorted to, from a very early period, for the purpose of promoting gain. The following may serve as an example: – "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 colours, 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 paralysed with the information, Manasseh Lopez and the Jew interest bought eagerly at the reduced price." The whole thing was a lie, coined by the astute Hebrews, who then, as now, accumulated the greater part of their money in this disgraceful and infamous manner, and doubtless had the audacity even to glory in their shame. A more ingenious trick was played off in 1715, when a sham capture was made in Scotland of a carriage and six, supposed to contain the unfortunate Chevalier St George. The news, being despatched to London, instantly elevated the funds, "and the inventors of the trick laughed in their sleeves as they divided the profit." Modern jobbers will doubtless read these records with a sigh for the glory of departed times, just as a schoolboy bitterly regrets that he was not born in the days of chivalry. Universal rapidity of communication, and the power of the press, have rendered such operations on a large scale almost impossible. The electric telegraph has injured the breed of carrier pigeons, and more than half the poetry of fraudulent stock-jobbing has disappeared.