_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.