_Wholesale Jobbing.—Insurance on Sick Men.—False
Intelligence.—Uselessness of Sir John Barnard’s Act.—Origin
of the Blackboard.—Opposition to Loans.—Lord Chatham’s
Opinion of Jobbers.—Inviolability of English Funds.—Parisian
Banking-Houses.—Proposition to pay off the National
Debt.—Extravagance of the Contractors.—Lord George Gordon’s
Opinion of them.—Members’ Contracts.—New System adopted.—Abraham
Goldsmid.—Bankers’ Coalition broken by him.—His Munificence.—His
Death.—Sensation in the City._
The following picture of wholesale jobbing, drawn from public and
private documents, from correspondence, from newspapers, and from
Parliamentary history, will show that gambling was equally pursued in
high places as in ’Change Alley.
Letters from abroad, containing false intelligence, were forwarded
to, or forged by, senators; names of importance were fraudulently
used; the news was promulgated, and funds raised or lowered according
to the wish of the contriver. But if the jobber was cheated in one
way, he took his revenge in another. The domestics of public men
were bribed by him; the secretaries of men in office were paid by
him; the mistresses of ministers were accessible to him; and, it is
said, even their wives were not seldom in the pay of members of the
Stock Exchange. Nor did many hesitate to declare that men in office
not only made profit of the news they really received, but that they
promulgated false intelligence, knowing, from their position, it
would be received as true, at the expense of their own character, and
to the ruin of the men who trusted them.
Another practice had obtained a notoriety so bad and baleful, that
it became necessary to stop its progress. Directly it was known that
any great man was seriously ill, insurances on his life, at rates
in proportion to his chance of recovery, were made. These bargains
were reported in the papers; and the effect on an invalid who knew
his health to be precarious may be imagined, when he saw in the
_Whitehall Evening Post_, that “Lord —— might be considered in great
danger, as his life could only be insured in the Alley at ninety per
cent.” The custom grew so rapidly, and the evil was so serious, that
the principal merchants and underwriters refused to transact business
with brokers who engaged in such practices.
Of a less questionable character was the habit of insuring property
in any besieged city; or the yet more common mode of paying a premium
to receive a certain sum, should the city be taken by the day named
in the contract. The Spanish ambassador was accused of insuring
£30,000 on Minorca, during the seven years’ war, when the despatches
announcing its capture were in his pocket.
The newspapers were the vehicles generally employed to spread false
intelligence; and an almost invariable success attended those who
made use of the press to promulgate, in bold type and inflated
language, “bloody engagement,” “rumored invasion,” or “great
victory,” to assist their city operations. Every class, from the
maiden who jobbed her lottery-ticket, to the minister who jobbed
his intelligence, was involved in the pursuit. All these bargains
were for time, and continued to prove that the act by which Sir John
Barnard hoped to abolish gambling was useless; and it is an anomaly
in the history of our great debt, that bargains in the very funds
which were raised to support the national credit are disallowed by
the national legislature. It is a law which has been tried and found
wanting. It does not prevent, in the smallest or slightest degree,
the system it was meant to crush; and it adds to the immorality of
the speculator and the risk of the broker, by allowing the former to
repudiate his bargain at the expense of the latter.
Under the early loan-acts, tallies were delivered to the first
contractors. When a sale was effected, the name of the purchaser was
indorsed upon the tally, and from that entered into the government
books, for the convenience of paying the dividends to the right
person. This clumsy machinery was afterwards abolished; but though,
in 1717, the transfers and dividends of the national debt were first
undertaken by the Bank, it was not until 1783 that the present method
of transfer was adopted.
The origin of the blackboard—that moral pillory—of the Stock Exchange
occurred in 1787. “There were no less than twenty-five lame ducks,”
said the _Whitehall Evening Post_, “who waddled out of the Alley.”
Their deficiency was estimated at £250,000; and it was upon this
occasion the above plan was first proposed, and a very full meeting
resolved, that those who did not either pay their deficiencies or
name their principals should be publicly exposed on a blackboard to
be ordered for the occasion. Thus the above deficiencies—larger than
had been previously known—alarmed the gentlemen of ’Change Alley, and
produced that system which is yet regarded with wholesome awe.
During the administration of Mr. Pitt, in 1786, a sinking fund
was again attempted; the various branches of revenue being united
under the title of the Consolidated Fund. One million was annually
taken from it, and placed in the hands of the Commissioners for the
Redemption of the National Debt, and was applied in purchasing such
funds as might be deemed expedient at the prices of the day. The
interest of the debt thus redeemed, the life-annuities which fell in,
or the annuities which expired, were added to the fund, the interest
of which, when the principal amounted to four millions, was no longer
to be applied to it, but remain at the disposal of Parliament.
The difficulties which every minister met in every new loan, were
more in proportion to the power of the opposition, than to the
fairness or necessity of the demand. In unpopular wars, these
difficulties were doubly increased. In the American contest, the
whole population demanded peace; and nothing but the obstinacy of
“the best farmer and worst king,”—nothing but a corrupt Parliament,
wholesale places, a dominant aristocracy, and large premiums to the
moneyed interest,—could have carried Lord North through the session,
enlivened by his humor, and the enmity created by the war. The loans,
therefore, of this period were fiercely attacked; ’Change Alley
fiercely denounced; and the plans of the government hotly contested.
The mode of conducting the loans was then, as before, made conducive
to the majority of the ministry, at the expense of the people. Out
of 60,000 lottery-tickets, 22,000 were given to a few members,
producing £44,000 profit. When the system was attacked, precedent,
the bane of official people, was quoted; and because it was known
that, in 1763, Mr. Fox had £100,000, Mr. Calcraft and Mr. Drummond
£70,000, the Governor of the Bank £150,000 for the corporation, and
£50,000 for himself, and other members similar sums, it was deemed a
sufficient and an unanswerable defence. But though by such methods
the minister got the votes of the House, he found it more difficult
to get the money from the public after it was voted. In 1779, he was
greatly troubled to procure it on reasonable terms. From bankers he
went to contractors, from contractors to stock-jobbers, and from
stock-jobbers he went back to the bankers, paying a much higher rate
than they at first demanded. “It was but yesterday,” writes Horace
Walpole, “that Lord North could tell the House he had got the money
on the loan, and is happy to get it under eight per cent.” The loan
of 1780 brought them again into disrepute. Half was given to members
of the House of Commons; more than three millions was allotted to one
person; and, without regard to the welfare of the nation, the price
was determined at a rate so favorable to the contractors, that, from
no cause save the low terms on which it had been taken, the scrip
arose at once to eleven premium. In 1781, it was said that Lord
North had made an infamous bargain in a bungling manner; and that,
in 1782, he had made a bungling bargain in an infamous manner; and
this was solemnly protested against as an improvident operation, a
corrupt job, and a partial distribution. There cannot be a doubt that
the mode of conducting these loans was detrimental to the national
interest, and conducive to that of the Stock Exchange. There were
three plans up to this period. The first was in the offers of private
individuals, stating the sum each would advance; the second was an
open subscription at the treasury; and the third a close subscription
with a few. By the first, the members of Parliament were bribed;
and by the third, the bankers; then the principal contractors were
enriched. Their interest, and it was great, with their votes in the
House, and they were many, were, therefore, at the disposal of the
government. In 1783, out of a loan for £12,000,000, £7,700,000 were
given to bankers. So disgraceful was the whole affair, that Lord
John Cavendish was compelled to apologize for the terms on which it
had been granted, because “the former minister had left the treasury
without a shilling.” By attempting to please men of all parties, Lord
John, as usual, pleased none. He was abused by some for dividing it
among so small a number; he was rated by others for allowing so many
to have a share. Mr. Smith, of the house of Smith & Payne, made a
formal complaint that he had been neglected in the allotment; that
his firm was the only one left out; and that, in consequence, a
stigma of a very disagreeable character was attached to it. By the
explanation, it appeared that another house of the same name had
been accused of tempting customers from the various bankers, by
giving portions of the loan to those who would secede. The meanness
had been attributed to Smith, Payne, & Co., and Lord John omitted
them in consequence from his list. Mr. Smith was very irate on the
subject; and although his Lordship explained, as the explanation
was unaccompanied by a share of the loan, it was, probably, very
unacceptable to the indignant banker. Although this gentleman saw no
harm in receiving a portion of the loan, other bankers had higher
views. Mr. Martin, believing that, as a senator, he ought not to
contract, lest it might bias his votes, conscientiously refused to
accept any portion of loan or contract; and thus sacrificed his
pocket to his principle.
When jobbing occurred in the senate, who can wonder at the jobbing
in the funds, or at the strong feeling which such contemptible
squabbling created, and which fell upon the members of the House of
’Change as fiercely as on the members of the House of Commons?
“Such gentry,” said one, “coin disaster to sink the funds without
cause. If gospels mended mankind, there should have been a new
sermon preached on the mount, since ’Change Alley was built, and
money-changers were driven out of the temple all over Europe.” “Ten
thousand lies are propagated every week, not only by both sides, but
by stock-jobbers. Those grave folks, moneyed citizens, contribute
exceedingly to embroil and confound history, which was not very
authentic before they were spawned.”
Lord Chatham was not backward in expressing an opinion of those whom
he designated “the cannibals of ’Change Alley.” “To me, my Lords,” he
once said, “whether they be miserable jobbers of ’Change Alley, or
the lofty Asiatic plunderers of Leadenhall Street, they are equally
detestable.” The same strong feeling animated him when he was told
that one of his measures had caused a decline in the stocks. “When
the funds are falling, we may be sure the credit of the country is
rising.”
A finer spirit—and that spirit is the principle which has pervaded
the whole public transactions of England—was evinced when the same
nobleman was advised to retaliate on the Dutch merchants,—who had
committed several outrageous frauds on the English,—by seizing their
immense property in our funds. “If the Devil himself had money
there,” he replied, “it must rest secure.” To his Lordship, and to
the political assertion he made, that “not a gun should be fired in
Europe without England knowing why,” it was of the utmost importance
that the integrity of the nation should be maintained.
During the American war, many of those in arms had property in the
funds; and the provinces, as bodies corporate, had money in the
same securities. It is to the credit of the revolutionists, that,
though they fully expected this property would be confiscated,
they persisted in their course; and it is equally to the credit of
England, that their capital was as secure, and their interest as
regularly paid, as if they were not in open rebellion.
Not only in loans were the people wronged and robbed,—the word is
harsh, but expressive,—the contracts for the public service exhibited
also the most gross and glaring favoritism. From time to time the
evil was exposed; Parliament grew violent, and the public waxed
wroth. Every quarter of a century, an inquiry was instituted, and the
whole ended partly in some influential person being disgraced, and
partly in an expression, that “the said frauds and abuses were one
great occasion of the heavy debt that lies upon the nation.” A few
specimens may serve to indicate the wrongs which, from time to time,
have aggrandized an unpopular government, have swollen the pockets of
the few, and increased the wants of the many.
The borough-monger, who for years had been in possession of a pocket
borough, found his property disturbed, and his constituents tampered
with, by the contractor, who, as a candidate for the honor of the
forum, was marked by vice, extravagance, and folly. As a member of
the senate, he assumed the purity of the patriot, complained of
the absence of economy, and declared how much cheaper the public
business might be accomplished. He teased the minister; he perplexed
the Parliament; he puzzled the government; until, by giving him a
job, the patriot was turned into a contractor, and from that hour he
marked the public money as his own. If the First Lord of the Treasury
were indolent, the contractor availed himself of his sloth; if
ignorant, he taught him, and made the country pay for the lesson.
The very name of a contractor was odious, and their luxuries were
bitter in the eyes of the people. Their abodes were like those of
princes; their daughters wedded with nobles; the follies of their
sons were the talk of the town; they died possessed of fortunes which
kings might envy; and, as nearly all were members of Parliament,
attention became pointed at men whose mansions and whose manors,
bought with public money, challenged public notice.
“The minister,” remarked Mr. Fox, “said to him, ‘I will give you a
contract, if you will give me a vote.’ The contractor replies, ‘Now
I have given you a vote, give me a contract. I voted that we had
forty-two ships when we had but six, and that the French fleet did
not consist of thirty-two ships. You must not, therefore, quarrel for
twopence a gallon on rum, or a farthing on a loaf of bread.’”
Lord George Gordon, shortly before his extraordinary conduct in 1780,
said,—“This dunghill of contracts has given an ill air to our whole
proceedings. It has got abroad, and proves very offensive to the
public nostrils. Our constituents begin to smell a rat. They nose
us in the lobby, and call us tailors and shoemakers, cobblers and
cabbage-salters, potato forestallers, sour-krout makers, and swine
contractors. The dignity, reputation, and fair fame of the Commoners
is smothered and sinking in porter and salted cabbage, shoes,
sour-krout, and potatoes.” Lords of trade ordered pewter inkstands
by the hundred, sold them, and purchased silver ones with the money
they produced; or ordered green velvet bags for official papers, and
employed the velvet of which they were composed to make court dresses.
Under the Pelham administration, members received regular stipends
in bank-notes, from £500 to £800 yearly, varying according to the
influence or ability of the senator. “This largess I distributed,”
added the person who took charge of the delicate department,—and
the particulars are worth enumerating,—“in the court of requests
on the day of the prorogation of Parliament. I took my stand there;
and as the gentlemen passed me, in going to or returning from the
House, I conveyed the money in a squeeze of the hand. Whatever
person received the ministerial bounty, I entered his name in a book
which was preserved in the deepest secrecy, it being never inspected
by any one but the king and Mr. Pelham.” This book was afterwards
demanded of Mr. Roberts, the almoner, but he resolutely refused to
yield it except by the king’s express command, or to his Majesty in
person. In consequence of his refusal, the king sent for him to St.
James’s, where he was introduced into the closet. He was then ordered
to return the book in question, with which injunction Mr. Roberts
immediately complied. At the same time, taking the poker in his hand,
his Majesty put it into the fire, made it red hot, and, while the
ministers and Mr. Roberts stood round him, he thrust the book into
the flames, where it was immediately reduced to ashes.
These evils were so manifest and manifold, that, after various
attempts to pass a measure which should be some check on government,
a bill was introduced, by which all contracts were made subject to a
species of auction, although the minister was not compelled to accept
the lowest offer.
During the debates which were held upon the subject, many other facts
were elicited, which confirm all the previous remarks, and prove
the iniquity with which the money of the country was disposed of.
One member possessed a contract producing £30,000 a year more than
the legitimate profit. Mr. Alderman Harley made £37,000 too much by
another. On a contract for remitting gold, £35,000 was paid more than
was necessary. At an earlier period it was discovered, that, out of
16,000 tuns of beer contracted and paid for, only 7,000 tuns were
delivered. The rum contract was granted at fifty per cent. above
a remunerating price. The transport service paid twenty per cent.
too much. Millions were lying for years in the hands of favorite
placemen, favorite agents, and favorite contractors, while the
country was borrowing at an exorbitant interest; and, after a careful
perusal of the evidence, there can be no doubt that the charge of
corrupting the House was true; nor was it in the nature of a member
of Parliament in the eighteenth, any more than in the nineteenth
century, to possess profitable contracts, the continuation of which
depended on war, and yet speak honestly and earnestly for peace.
The names of Abraham and Benjamin Goldsmid will recall to the memory
of many of our readers the forms and features of these magnates of
the money-market. Of singular capacity, and of equally singular
good fortune, the firm of which they were the members rose, from
comparative obscurity, to be the head and front of ’Change Alley.
Prior to 1792 they were little known,—Mr. Gurney, the eminent
bill-broker, regards them as his predecessors,—but by that year they
occupied an important position, and became successful competitors for
the national loans. They were the first members of the Stock Exchange
who competed with the bankers for the favors of the Chancellor,
and diverted from their purses those profits which were scarcely
a legitimate portion of banking business. The combination of that
interest being thus broken, the bargains for public loans became
more open; there was no confederation to limit and lower the prices;
and the ministry and country reaped the benefit in improved terms.
The house of Sir William Curtis, whose fortunes were founded in
this manner; of Dorrien and of Boldero, names which, great in their
day, have almost passed from the roll of city bankers; of Grote,
now better known as the philosophical historian of Greece; were
all competitors, three quarters of a century ago, for those loans
which the necessities of the country made so frequent. Nor were
people wanting who openly accused the entire banking interest of an
unfair confederation to realize their views. This interest was first
attacked by the boldness of Abraham and Benjamin Goldsmid; and it is
easy to imagine the feelings of the bankers when unknown men reaped
the prize which they had hitherto gathered.
The daily papers bore an almost daily testimony to their munificence.
Naturally open-handed, the poor of all creeds found kindly
benefactors. On one day, the grandeur of an entertainment to royalty
was recorded; and on the next, a few words related a visit of mercy
to a condemned cell. At one time, mansions, vieing in architectural
beauty with those of our nobility, were described; at another, some
great and gracious act of charity was recorded. Entertainments
to princes and ambassadors, reviving the glories of the Arabian
Nights, were frequent; and galleries, with works of art worthy the
magnificence of a Medici, graced their homes. They were awhile
Fortune’s chief and most especial favorites. When, in 1793, the old
aristocracy of England’s traders fell, as in 1847, and the Bank in
one day discounted £4,400,000, their losses amounted but to £50.
Prizes, under circumstances little inferior to romance, followed
their purchases of lottery-tickets; and they knew, as if by instinct,
a bill of exchange with a bad name to it.
The brothers had faced the storm of life in their earlier years.
Fortune, which crowned their efforts, proved that prosperity had no
power to divide them; and when, in the early part of the nineteenth
century, Benjamin Goldsmid destroyed himself, the survivor felt the
loss so severely, that he never recovered the shock. The death of
Benjamin caused no abatement in the benevolence of Abraham Goldsmid;
and one who knew him well has written with enthusiasm of his “general
philanthropy, his ready munificence, his friendly demeanour, his mild
and unassuming manner.”
Many anecdotes, singularly illustrative of his kindly feeling, are
still remembered. It is stated that, on one occasion, noticing a
great depression in the waiter who usually attended him where he
dined, he inquired the cause, ascertained that it was pecuniary,
gave the astonished man double the amount he required, and refused
to listen to the thanks of the recipient. Another story is extant
to the same purport. He became acquainted by accident with one of
those simple and single-minded country curates, whose poverty was the
disgrace, and whose piety was the glory, of the Church of England.
This was the man for Abraham Goldsmid at once to appreciate and
to benefit. He obtained all the necessary particulars, and in a
few weeks a letter was received, which told the curate he had been
allotted a share of a new loan. The letter was a mystery to the
country clergyman, who placed it on one side, with a confused notion
that a hoax was intended. He had not long to wait. The next day
brought a second letter, and with it comfort and consolation, in the
shape of a large sum which had been realized on the allotment. These
things are pleasant to record; and it is doubtful whether the check
gave most pleasure to the wealthy Hebrew to write, or the country
curate to receive.
In 1810, the houses of Baring and Goldsmid were contractors for the
ministerial loan of fourteen millions. But Sir Francis Baring dying,
the support of the market was left to his companion. The task was
difficult, for a formidable opposition had arisen, which required the
united energies of both houses to repress. It was the interest of
this opposition to reduce the value of scrip, and it succeeded. Day
by day it lowered; and day by day was Mr. Goldsmid’s fortune lowered
with it. He had about eight millions in his possession; and with the
depression of his fortune, his mind grew dispirited and disordered.
Another circumstance occurred at this particular moment to increase
his embarrassment. Half a million of exchequer-bills had been placed
in his hands to negotiate for the East India Company; and the latter,
fearing the result of the contest on the Stock Exchange, claimed the
amount. His friends did not rally round him, as at such a moment, and
with such a man, his friends should have done; and Abraham Goldsmid,
dreading a disgrace, which his sensitive and honorable nature
magnified a hundredfold, after entertaining a large dinner-party,
destroyed himself in the garden of his magnificent residence, in
Surrey.
This sad event created a sensation in the city, unparalleled by the
loss of any single individual. The death of the great loan-contractor
was regarded as of national importance. Expresses were sent with the
news to the king and the Prince of Wales. The funds fell three per
cent. The journals united in eulogizing the man whose death they
recorded. The jobbers of Capel Court crowded in anxious inquiry. The
merchants of the Exchange assembled before the accustomed time. The
thoroughfares resounded with rapid questions and hurried replies.
Little or no business was done; and, it is said, the great question
of peace or war never created a similar confusion. The jury recorded
their opinion, and, when the remains were carried to their home, the
procession was followed by a crowd, who, partaking of his charity
in life, thronged to honor him in death. Sobs and suppressed moans
attested the reality of their sorrow, and bore a fitting testimony to
his worth. The high-priests and elders paid every distinction which
the Mosaic ordinances allowed; but, in conformity with the commands
of the great lawgiver, they withheld from him the customary rites;
and unconsecrated ground received the remains of Abraham Goldsmid,
the Hebrew suicide.
In 1792, another sinking fund was established, of one per cent.
on the nominal capital of each loan, to which the interest on the
capital redeemed by this fund was to be added. When annuities for
lives, or for a longer term than forty-five years, were granted, the
value which would remain after forty-five years was to be estimated,
and one per cent. on that value set aside for their redemption.
This fund was to be kept separate, and applied to redeeming debts
contracted subsequent to its institution; and this, it was estimated,
would redeem every loan in forty-five years from its contraction.
£400,000 was granted in aid of the previous sinking fund; and
£200,000 annually till 1802, when the grant was rendered perpetual.
All money saved by the reduction of interest was also to be added;
but, as no savings occurred, this clause might as well have been
omitted. In 1798, however, the application of one per cent. on the
capital of the loans was deviated from, as the claims of the war were
too pressing to allow of its application.