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_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.
CHAPTER I.
PAGE
_Ancient Mode of supporting Governments.—Ignorance of Political
Economy.—Mercantile Greatness.—Early Supplies.—Tulip
Mania.—Accession of William._ 1
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._ 6
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._ 12
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._ 19
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._ 25
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._ 31
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._ 39
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._ 45
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._ 54
CHAPTER X.
_Curious Forgery.—Its Discovery.—Loan of 1796.—Its Management.—French
Revolution and its Effect.—List of Subsidies to Foreign
Powers.—Removal of Business from ’Change Alley.—Erection of the
present Stock Exchange.—Loyalty Loan.—Preliminaries of Peace.—Its
Effect.—Hoax on the Stock Exchange.—War renewed.—Great Fraud on the
Jobbers.—Its Discovery.—Rights of Stock-brokers._ 62
CHAPTER XI.
_Unfounded Charge.—Joint-Stock Companies.—Speculators.—Mark
Sprot.—Sketch of the House of Baring.—Policies on the Life of
Bonaparte.—Rumors of his Death.—David Ricardo.—Forgery of Benjamin
Walsh.—Excitement of the Nation.—Increase of the National
Debt.—Sinking Fund.—Unclaimed Dividends.—Francis Baily._ 72
CHAPTER XII.
_Review of the National Debt.—Opinions.—Bolingbroke.—Financial
Reform Association.—Extravagance of Government.—Schemes for paying
off the National Debt.—Review of them.—Proposals for
Debentures._ 82
CHAPTER XIII.
_Progress of Invention.—Public Roads.—Steam.—Duke of
Bridgewater.—Canals.—Railroads.—Thomas Gray, their Pioneer.—His
Difficulties.—Proposals for the Liverpool and Manchester
Railway.—Monopoly of the Canals.—Parliamentary Inquiry.—Extraordinary
Opinions of Witnesses.—The Claims of Thomas Gray.—Value of Canal
Property._ 89
CHAPTER XIV.
_Monetary Excitement.—Approaches to the Stock Exchange.—Gold
Company.—Equitable Loan Company.—Frauds in Companies.—Loan to Foreign
States.—Poyais Bubble._ 96
CHAPTER XV.
_Loan to Guatemala.—Dispute concerning it.—Greek Loan.—Its
Mismanagement.—Asserted Jobbing.—Mr. Hume.—Dr. Bowring.—Quarterly
Review.—Proposed Tax on Transfers._ 103
CHAPTER XVI.
_Sketch of the Life of Rothschild.—Comes to England.—Introduction of
Foreign Loans.—Large Purchases.—Anecdotes Concerning Rothschild.—His
Difficulties and Annoyances.—His Death and Burial.—Last Crisis on
the Stock Exchange._ 109
CHAPTER XVII.
_Legends of the Stock Exchange.—Mr. Dunbar.—Duke of Newcastle.—French
Ambassador.—James Bolland.—Extraordinary Incident.—Fortunate
Adventure.—Morals and Manners of the Stock Exchange.—Its Constitution
and Arrangements._ 118
CHAPTER XVIII.
_Life Assurance.—Its Benefits.—Its Commencement.—Suicide of an
Insurer.—Insurance of Invalid Lives.—The Gresham.—Sketch of the West
Middlesex Delusion._ 125
APPENDIX.
_The Anatomy of Exchange Alley; or a System of Stock Jobbing. Proving
that Scandalous Trade, as it is now carried on, to be Knavish in its
Private Practice, and Treason in its Public._ 135
_Stock Tables; Dividend Tables._ 153
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 2_s._ 4_d._ 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:—
Florins.
2 Lasts of wheat 448
4 Lasts of rye 558
4 Oxen 480
3 Swine 240
12 Sheep 120
2 Hogsheads of wine 70
4 Tons of beer 32
4 Tons of butter 192
1000 Pounds of cheese 120
1 Bed 100
1 Suit of clothes 80
1 Silver beaker 60
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.