_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.”