WINE AND WISDOM.
A change was indeed inevitable, as Mr. Cavendish well knew; and to
prepare for it had been the great object of his life for some time past.
To make the most of his credit, while the credit of bankers was high,
was what he talked of to his wife as the duty of a family man; and she
fully agreed in it, as she well might, since she had brought him a
little fortune, which had long ago been lost, partly through
speculation, and partly through the extravagance which had marked the
beginning of their married life. Mrs. Cavendish had not the least
objection to getting this money back again, if it could be obtained by
her husband’s credit; and she spared no pains to lessen the family
expenses, and increase, by her influence, the disposable means of the
bank, on the understanding that, as soon as the profits should amount to
a sufficient sum, they should be applied to the purchase of an estate,
which was to be settled upon herself. Thus she would not only regain her
due, but some resource would be secured in case of the very probable
chance of a crash before all Mr. Cavendish’s objects were attained.
Economy was therefore secretly practised by both in their respective
departments, while they kept up a show of opulence; and the activity of
the gentleman in his various concerns procured him the name of Jack of
all trades. Nobody could justly say, however, that he was master of
none; for in the art of trading with other people’s money he was an
adept.
When he opened his bank, his disposable means were somewhat short of
those with which bankers generally set up business. He had, like others,
the deposits lodged by customers, which immediately amounted to a
considerable sum, as he did not disdain to receive the smallest
deposits, used no ceremony in asking for them from all the simple folks
who came in his way, and offered a larger interest than common upon
them. He had also the advantage of lodgments of money to be transmitted
to some distant place, or paid at some future time; and he could
occasionally make these payments in the paper of his bank. Again, he had
his own notes, which he circulated very extensively, without being
particularly scrupulous as to whether he should be able to answer the
demands they might bring upon him. One class of disposable means,
however, he managed to begin banking without,—and that was, capital of
his own. The little that he had, and what he had been able to borrow,
were invested in the corn, coal, and timber concern; and upon this
concern the bank wholly depended. He undersold all the corn, coal, and
timber merchants in the county, which it was less immediately ruinous to
do when prices were at the highest than either before or after; and, by
thus driving a trade, he raised money enough to meet the first return of
his notes. This nervous beginning being got over, he went on
flourishingly, getting his paper out in all directions, and always
contriving to extend his other business in proportion, by a greater or
less degree of underselling, till he began to grow so sanguine, that his
wife took upon herself the task of watching whether he kept cash enough
in the bank to meet any unexpected demand. The money thus kept in hand
yielding no interest, while every other employment of banker’s
capital,—the discounting of bills, the advancement of money in overdrawn
accounts, and the investment in government securities,—does yield
interest, bankers are naturally desirous of keeping as small a sum as
possible in this unproductive state; and never banker ventured to reduce
his cash in hand to a smaller amount than Cavendish. His wife
perpetually asked him how he was prepared for the run of a single hour
upon his bank, if such a thing should happen? to which he as often
replied by asking when he had ever pretended to be so prepared? and,
moreover, what occasion there was to be so prepared, when nobody was
dreaming of a run, and when she knew perfectly well that the best thing
he could do would be to stop payment at the very commencement of a
panic, having beforehand placed all his property out of the reach of his
creditors.
Such were his means, and such the principles of his profits;—means which
could be successfully employed, principles which could be plausibly
acted upon, only in the times of banking run mad, when, the currency
having been desperately tampered with, the door was opened to abuses of
every sort; and the imprudence of some parties encouraged the knavery of
others, to the permanent injury of every class of society in turn.
As for the expenses of the Haleham bank, they were easily met. The owner
of the house took out the rent and repairs in coals; and Enoch Pye was
paid in the same way for the necessary stationery, stamps, &c.; so that
there remained only the taxes, and the salaries of the people employed—a
part of the latter being detained as deposits. Thus Mr. Cavendish
achieved his policy of having as many incomings and as few outgoings,
except his own notes, as possible.
It is not to be supposed but that Cavendish suffered much from
apprehension of his credit being shaken, not by any circumstances which
should suggest the idea of a run to his confiding neighbours, but
through the watchfulness of other banking firms. As it is for the
interest of all banks that banking credit should be preserved, a jealous
observation is naturally exercised by the fraternity, the consciousness
of which must be extremely irksome to the unsound. The neighbourhood of
the Berkeley family was very unpleasant to the Cavendishes, though no
people could be more unsuspicious or less prying: such, at least, was
the character of the ladies; and Mr. Berkeley was, though a shrewd man,
so open in his manner, and, notwithstanding a strong tinge of
worldliness, so simple in his ways of thinking and acting, that even Mr.
Cavendish would have had no fear of him, but for the fact of his having
a son of high reputation as a man of business in a bank in London.
Cavendish could not bear to hear of Horace; and dreaded, above all
things, the occasional visits of the young man to his family. Never,
since he settled at Haleham, had he been so panic-struck, as on
learning, in the next spring, that Horace had been seen alighting at his
father’s gate from the stage-coach from London.
Horace’s sisters were little more prepared for his arrival than Mr.
Cavendish. There was some mystery in his visit, as they judged from the
shortness of the notice he gave them, from its being an unusual time of
year for him to take holiday, and from their father’s alternations of
mood. Yet it seemed as if Horace had never been so much wanted. Fanny,
especially, needed his support in her rejection of Mr. Longe, whom her
father was disposed not only to favour, but almost to force upon her. In
his gloomy moods, he told her that she little knew what she was about in
refusing such an establishment, and recurred to the old intimation, that
his daughters had better prepare themselves for a reverse of fortune.
When in high spirits, he wearied Fanny with jests on Mr. Longe’s
devotion to her, and with exhibitions of all his accomplishments; and
when prevailed upon to quit the subject, he let her see, in the midst of
all his professions about leaving perfect liberty of choice to his
children, that he meant never to forgive Mr. Longe’s final rejection.
Melea, and even Mrs. Berkeley, could do nothing but sympathise and hope:
Horace was the only one who could effectually interfere. Did he come for
this purpose? the sisters asked one another; or was it, could it be, to
interfere with some one else, who was as much less acceptable than Mr.
Longe to their father, as he was more so to themselves? Could Horace be
come, Melea wondered, to call Henry Craig to account for being at the
house so often?
It was a great relief to her to find Horace’s head so full of business
as it appeared to be. She would have complained of this, if such had
been his mood during his last visit; but now she had no objection to see
him turn from his favourite bed of hepaticas and jonquils, to answer
with animation some question of his father’s about the price of gold;
and when, for the first time in her life, she had dreaded riding with
him between the hawthorn hedges, and over the breezy downs which they
used to haunt as children, her spirits actually rose, because, at the
most interesting point of the ride, he woke out of a reverie to ask what
proportion of Cavendish’s notes in comparison with other kinds of money,
she supposed to be in the hands of the poorer sort of her acquaintance
in the town.
In fact, nothing was further from Horace’s thoughts, when he came down,
than any intervention in favour of or against either of the clergymen,
however much interest he felt in his sister’s concerns, when he became a
witness of what was passing. The reason of his journey was, that he
wished to communicate with his father on certain suspicious appearances,
which seemed to indicate that all was not going on right at Cavendish’s;
and also to give his opinion to the partners of the D—— bank as to what
steps they should take respecting some forged notes, for which payment
had lately been demanded of them. When two or three excursions to D——
had been made by the father and son, and when, on three successive days,
they had remained in the dining-room for hours after tea was announced,
the ladies began to grow extremely uneasy as to the cause of all this
consultation,—of their father’s gravity and Horace’s reveries. Horace
perceived this, and urged his father to take the whole of their little
family into his confidence, intimating the comfort that it would be to
him to be able to open his mind to his daughters when his son must leave
him, and the hardship that it was to his mother to be restrained from
speaking of that which was uppermost in her mind to those in whose
presence she lived every hour of the day. It was difficult to imagine
what could be Mr. Berkeley’s objection to confidence in this particular
instance, while it was his wont to speak openly of his affairs to all
his children alike. He made some foolish excuses,—such as asking what
girls should know about banking affairs, and how it was possible that
they should care about the matter?—excuses so foolish, that his son was
convinced that there was some other reason at the bottom of this
reserve. Whatever it was, however, it gave way at length; and Horace had
permission to tell them as much as he pleased.
“Must you go, mother?” he asked that afternoon, as Mrs. Berkeley rose to
leave the table after dinner. “We want you to help us to tell my sisters
what we have been consulting about ever since I came.”
The ladies instantly resumed their seats.
“How frightened Fanny looks!” observed her father, laughing; “and Melea
is bracing herself up, as if she expected to see a ghost. My dears, what
are you afraid of?”
“Nothing, father; but suspense has tried us a little, that is all. We
believe you would not keep bad news from us; but we have hardly known
what to think or expect for some days past.”
“Expect nothing, my dears; for nothing particular is going to happen,
that I know of; and it may do me a serious injury if you look as if you
believed there was. The bank is not going to fail; nor am I thinking of
locking up Fanny, because she will not accept Mr. Longe. Fanny shall
have her own way about that; and I will never mention the fellow to her
again.”
Fanny burst into tears; and her father, instead of showing any of his
usual irritation on this subject, drew her to him, and said he was sorry
for having teazed her so long about a shabby, boasting, artful wretch,
who deserved to be posted for a swindler.
“Father!” exclaimed Melea, who thought this judgment upon Mr. Longe as
extravagant in one direction as the former in another.
“I would not say exactly that,” interposed Horace; “but there is no
question about his being unworthy of Fanny; and I would do all I fairly
could to prevent his having her, if she liked him ever so well. As she
does not like him, there is no occasion to waste any more words upon
him.”
As Horace laid an emphasis on the last word, Melea’s heart rose to her
lips. Henry’s name was to come next, she feared. The name, however, was
avoided. Her father put his arm round her as she sat next him, saying,—
“As for you, my little Melea, we shall let you alone about such matters
for some years to come. When you are five-and-twenty, like Fanny, we may
teaze you as we have been teazing her; but what has a girl of eighteen
to do with such grave considerations as settling in life? You are too
young for cares, dear. Be free and gay for a few years, while you can;
and remember that it is only in novels that girls marry under twenty
now-a-days. Trust your best friends for wishing to make you happy, and
helping you to settle, when the right time and the right person come
together.”
Melea smiled amidst a few tears. She owned that this was very kindly
said; but she did not the less feel that it was not at all to the
purpose of her case, and that she could not depute it to anybody to
judge when was the right time, and who was the right person.
“Fanny is longing to know what has so suddenly changed your opinion of
her suitor,” observed Mrs. Berkeley, in order to give Melea time to
recover. “Unless you explain yourself, my dear, she will run away with
the notion that he has actually been swindling.”
Mr. Berkeley thought such transactions as Longe’s deserved a name very
nearly as bad as swindling. Horace, who had for particular reasons been
inquiring lately into the characters of the whole Cavendish connexion,
had learned that Longe had debts, contracted when at college, and that
he had been paying off some of them in a curious manner lately. He had
not only insisted on taking his tithe in kind, and on being paid his
other dues in the legal coin of the realm,—which he had an undoubted
right to do; but he had sold his guineas at twenty-seven shillings, and
even his dollars at six shillings; while he had paid his debts in
bank-notes;—in those of his cousin’s bank, wherever he could contrive to
pass them.
“Shabby, very shabby,” Horace pronounced this conduct, and, as far as
selling the coin went, illegal; but it was no more than many worthier
people were doing now, under the strong temptation held out by the
extraordinary condition of the currency. Those were chiefly to blame for
such frauds who had sported with the circulating medium, and brought the
whole system of exchanges into its present ticklish state.
“How came it into this state?” asked Melea. “Who began meddling with it?
We shall never understand, unless you tell us from the beginning.”
“From the very beginning, Melea? From the days when men used to exchange
wheat against bullocks, and clothing of skins against wicker huts?”
“No, no. We can imagine a state of barter; and we have read of the
different kinds of rude money in use when people first began to see the
advantage of a circulating medium;—skins in one country, shells in
another, and wedges of salt in a third: and we know that metals were
agreed upon among civilized people, as being the best material to make
money of; and that to save the trouble of perpetually examining the
pieces, they were formed and stamped, and so made to signify certain
values. And——”
“And do you suppose they always keep the same value in reality;
supposing them of the due weight and fineness?”
“No, certainly. They become of less and greater real value in proportion
to the quantity of them; in the same way as other commodities are cheap
or dear in proportion to the supply in the market. And I suppose this is
the reason why money is now so cheap,—there being a quantity of paper
money in the market in addition to the coin there was before. But then,
I cannot understand where the coin is all gone, if it be true that we
have too much money in consequence of its circulating together with
paper.”
“The coin is gone abroad, and more paper still has taken the place of
it. This is proved by two circumstances; first, that all commodities
except money have risen in price; and secondly, that we have more
foreign goods than usual in the market, notwithstanding the war.”
“To be sure, less of every thing being given in exchange for one thing
proves that there is more of that one thing to be disposed of. And the
foreign goods you speak of pour in, I suppose, in return for the gold we
send abroad.”
“Yes. A guinea buys nearly as much abroad as it bought three years ago,
while it buys much less at home,—(unless indeed it be sold in an illegal
manner.) Our guineas are therefore sent abroad, and goods come in
return.”
Fanny thought it had been also illegal to export guineas. So it was, her
father told her; but the chances of escaping detection were so great
that many braved the penalty for the sake of the speculation; and, in
fact, the greater part of the money issued by the mint was so disposed
of. He took up the newspaper of the day, and showed her an account of a
discovery that had been made on board a ship at Dover. This ship—the New
Union, of London—was found on the first search to contain four thousand
and fifty guineas; and there was every reason to believe that a much
larger sum was on board, concealed in places hollowed out for the
reception of gold. Horace told also of a ship being stopped on leaving
port, the week before, on board of which ten thousand guineas had been
found.
“What an enormous expense it must be to coin so much money in vain!”
exclaimed Fanny. “It seems as if the bankers and the government worked
in direct opposition to each other; the one issuing paper to drive out
gold; and the other supplying more money continually to depreciate the
value of that which the banks put out.”
“And in putting out paper money,” observed Melea, “we seem to throw away
the only regulator of the proportion of money to commodities. While we
have coin only, we may be pretty sure that when there is too much of it,
it will go away to buy foreign goods; and when too little, that more
will flow in from foreigners coming to buy of us: but our bankers’ notes
not being current out of England, we may be flooded with them and find
no vent.”
“And then,” observed Mrs. Berkeley, sighing, as if with some painful
recollection, “comes a lessening of the value of money; and then follow
laws to forbid the value being lessened; and next, of course, breaches
of the law——”
“A law!” exclaimed Melea. “Was there ever a law to prevent an article
which is particularly plentiful being cheap? It seems to me that the
shortest and surest way for the lawmakers is to destroy the
superabundance, and thus put cheapness out of the question.”
Horace laughed, and asked what she thought of a government that first
encouraged an unlimited issue of paper money by withdrawing the
limitations which had previously existed, and then made a solemn
declaration that the notes thus issued were and must remain, in despite
of their quantity, of the same value as the scarce metal they were
intended to represent. Melea supposed this an impossible case; a
caricature of human folly.
“Do you mean,” said she, “that if where there had been a hundred pounds
in gold to exchange against commodities, eighty of them disappeared, and
a hundred and eighty pound notes were added, those two hundred notes and
pounds were each to buy as much as when there was only one hundred? Did
the government declare this?”
“Its declaration was precisely on this principle.”
“How very absurd! It is only condemning half the money to remain over,
unused, when the commodities are all exchanged.”
“It might as well have been thrown into the fire before the exchanging
began,” observed Fanny.
“If it had been held in a common stock,” replied her brother: “but as
long as it is private property, how is it to be determined whose money
shall be destroyed?”
“Or whose to remain unused,” added Melea.
“Is it not to be supposed,” asked Horace, that the buyers and sellers
will make any kind of sly and circuitous bargain which may enable them
to suit their mutual convenience, or that the buyers will, if possible,
avoid buying, rather than submit to have half their money rendered
useless by an interference which benefits nobody?”
“The buyers and sellers will come to a quiet compromise,” observed
Fanny. “The seller will say, ‘You shall have thirty shillings’ worth of
goods for two pound notes, which will be better worth your while than
getting nothing in exchange for your second note, and better worth my
while than letting you slip as a customer, though I, in my turn, shall
get only thirty shillings’ worth for these two notes.’ And the buyer
agreeing to this, the notes will continue to circulate at the value of
fifteen shillings each.”
“In defiance of the punishments of the law,” added Mrs. Berkeley, again
sighing.
“One would think,” observed her husband, “that there are crimes and
misdemeanours enough for the law to take notice of, without treating as
such contracts which, after all, are as much overruled by the natural
laws of distribution as by the will of the contractors. It would be as
wise to pillory by the side of a sheep-stealer, a man who sells potatoes
dear after a bad season, as to fine a man for getting a little with his
depreciated money, rather than get nothing at all. Your mother could
tell you of something worse than any fine that has been inflicted for
such a factitious offence.”
“Melea gives us up, I see,” said Horace. “She can never esteem us again,
father, while we are aiding and abetting in circulating this horrible
paper money. She would make a bonfire of all the bank notes in Great
Britain as they are returned to the bankers. Would not you, Melea?”
“I do not see why I should run into such an extreme,” she replied. “If
there were no means of limiting the quantity of paper money, I might
speculate on such a bonfire; but if a moderate amount of bank notes
saves the expense of using gold and silver, I do not see why the saving
should not be made.”
“If white ware and glass answered all the purposes of gold and silver
plate,” observed Fanny, “it would be wise to set apart our gold and
silver to make watches, and other things that are better made of the
precious metals than of anything else.—What do you suppose to be the
expense of a metallic currency to this country, Horace?”
Horace believed that the expense of a gold currency was about one
million to every ten millions circulated: that is, that the 10 per cent.
profit which the metal would have brought, if employed productively, is
lost by its being used as a circulating medium. This, however, is not
the only loss to the country, the wear of coin, and its destruction by
accidents, being considerable; besides which, much less employment is
afforded by coining, than by working up gold for other purposes.
Supposing the gold currency of the country to be thirty millions, the
expense of providing it could scarcely be reckoned at less than four
millions; a sum which it is certainly desirable to save, if it can be
done by fair means.
“The metals being bought by our goods,” observed Fanny, “it seems to be
a clear loss to use them unproductively. The only question therefore
appears to be whether bank notes make a good substitute. They might, I
suppose, by good management, be made sufficiently steady in value. They
might, by common agreement, be made to signify any variety of convenient
sums. They may be much more easily carried about; a note for the largest
sum being no heavier than for the smallest. There is not the perfect
likeness of one to another that there is in coins of the same
denomination, but the nature of the promise they bear upon their faces
serves as an equivalent security. As to their durability and their
beauty, there is little to be said.”
“As to their beauty, very little,” replied Horace; “for, if a new bank
note is a pretty thing, few things are uglier than a soiled, and pasted,
and crumpled one. But, with respect to their durability, you should
remember that it signifies little in comparison with that of a medium
which is also a commodity. If a bank note is burned, the country loses
nothing. It is the misfortune of the holder, and a gain to the banker
from whose bank it was issued.”
“Like a guinea being dropped in the street, and presently picked up,”
observed Melea.—“It is not lost, but only changes hands by accident. Yet
it seems as if there must be a loss when a 100l. bank note goes up the
chimney in smoke, leaving only that below with which children may play
‘there goes the parson, and there goes the clerk.’”
“Nay,” said Horace, “consider what a bank note is. What are the
essentials of a bank note, Melea?”
“It would be strange if we did not know what a bank note was, would it
not, father, when you have been spreading them before our eyes
continually for this twelvemonth? First comes ‘I promise to pay——’”
“Never mind the words. The words in which the promise is made are not
essential.”
“A bank note is a promissory note for a definite sum; and it must be
stamped.”
“And payable on demand. Do not forget that, pray. It is this which makes
it differ from all other promissory notes.—Well, now: what is the
intrinsic value of a bank note? Its cost of production is so small as to
be scarcely calculable.”
“It is, in fact, circulating credit,” observed Melea; “which is
certainly not among the things which can be destroyed by fire.”
“It is only the representative of value which goes off in smoke,”
observed Horace. “The value remains.”
“Where? In what form?”
“That depends upon the nature of the paper currency. Before bank notes
assumed their present form,—when they were merely promissory notes,
which it occurred to bankers to discount as they would any other kind of
bills, the property of the issuers was answerable for them, like the
goods of any merchant who pays in bills; and the extent of the issue was
determined by the banker’s credit. Then came the time when all bank
notes were convertible into coin, at the pleasure of the holder; and
then the value, of which the notes were the representatives, lay in the
banker’s coffers, in the form of gold and silver money. As for the
actual value of the Bank of England notes issued since the Restriction
Act passed, you had better ask somebody else where it is deposited, and
in what form, for I cannot pretend to tell you. I only know that the
sole security the public has for ever recovering it lies in the honour
of the managers of the Bank of England.”
“What is that Restriction Act?” asked Melea. “I have heard of it till I
am weary of the very name; and I have no clear notion about it, except
that it passed in 1797.”
“Before this time,” replied her brother, “by this 9th of May, 1814,
every banker’s daughter in England ought to be familiar with the
currency romance of 1797.”
“In order to be prepared for the catastrophe,” muttered Mr. Berkeley,
who had forebodings which made the present subject not the most
agreeable in the world to him.
“First, what is the Bank of England?” asked Fanny. “It is the greatest
bank of deposit and circulation in the world, I know; but to whom does
it belong, and how did it arise?”
“It came into existence a little more than a hundred years before the
great era of its life,—the period of restriction. Government wanted
money very much in 1694, and a loan was raised, the subscribers to which
received eight per cent. interest, and 4000_l._ a-year for managing the
affair, and were presented with a charter, by which they were
constituted a banking company, with peculiar privileges.”
“No other banking company is allowed to consist of more than six
persons; this is one of their privileges, is it not?”
“Yes; it was added in 1708, and has done a vast deal of mischief; and
will do more, I am afraid, before it is abolished.[B]—The very
circumstances of the origin of the Bank of England brought it, you see,
into immediate connexion with the government under whose protection it
has remained ever since. Its charter has been renewed as often as it
expired; and has still to run till a year’s notice after the 1st of
August, 1833. The government and the Bank have helped one another in
their times of need; the Bank lending money to government, and the
government imposing the restriction we were talking of in the very
extremity of time to prevent the Bank stopping payment. It also afforded
military protection to the establishment at the time of the dreadful
riots in 1780.”
Footnote B:
Some years after the date of this conversation, _i. e._ in 1826,
permission was given for banking companies, _not within 65 miles of
London_, to consist of any number of partners.
“Well: now for the Restriction Act.”
“At that memorable time, from 1794 to 1797, the Bank had to send out
much more money than was convenient or safe. We were at war; there were
foreign loans to be raised; heavy bills were drawn from abroad on the
Treasury; and the government asked for large and still larger advances,
till the Bank had made enormous issues of notes, and was almost drained
of the coin it had promised to pay on demand. It was just at this time
that the French invasion was expected; every body was seized with a
panic, and a general rush was made to the country banks, several of
which could not answer so sudden a demand for cash, and failed. The
panic spread to London, and the Bank of England was beset on every side.
On Saturday, the 25th of February, 1797, the coffers of the Bank had
very little money in them; and there was every prospect of a terrible
run on the Monday. This was the time when government made its celebrated
interference. It issued an order, on the Sunday, that the Bank should
not pay away any cash till parliament had been consulted; and this was
the news with which the tremendous throng of claimants was met on the
Monday morning.”
“I wonder it did not cause as fierce a riot as that of 1780,” observed
Fanny. “It is such an intolerable injustice to induce people to take
promissory notes on condition of having cash whenever they please, and
then to get government to prohibit the promise being kept!”
“There would have been little use in rioting,” replied Horace. “Things
were brought to such a pass that the Bank must either fail that day, or
defer the fulfilment of its engagements; and as things were at this
pass, the restriction was perhaps the best expedient that could have
been adopted. Nobody, however, supposed that the prohibition would have
been continued to this day. Here we are, in 1814, and the Bank has not
begun to pay off its promissory notes yet.”
“Then what security is there against an inundation of promissory notes
that may never be paid?”
“None whatever, but in the honour of the Directors of the Bank of
England. There appears to be good ground for trusting in this honour;
but a better security ought, in a matter of such paramount importance,
to have been provided long ago.—But we have not spoken yet of the Act of
Restriction; only of the Order in Council.—As soon as parliament met, a
committee inquired into the affairs of the Bank, and found them in very
good condition; and parliament therefore decreed the restriction to
remain till six months after the conclusion of peace.”
“But there has been peace since that time.”
“Yes; and there will be another, very likely, before the Bank pays cash
again. It is much easier to quit cash payments than to resume them; the
temptation to an over-issue is so great when responsibility is
destroyed, and especially when moderation at the outset has propitiated
public confidence.”
“Then there was moderation at first?”
“For three years after the restriction, the issues were so moderate,
that the notes of the Bank of England were esteemed a little more
valuable than gold, and actually bore a small premium. Then there was an
over-issue, and their value fell; afterwards it rose again; and it has
since fluctuated, declining on the whole, till now.”
“And what are Bank of England notes worth now?”
“Less than they have ever been. So long ago as 1810, parliament declared
that there had been an over-issue, and recommended a return to cash
payments in two years; but four years are gone, and cash payments are
not begun, and the depreciation of the Bank notes is greater than ever.”
“That is partly owing, I suppose,” said Fanny, “to the increase of
country banks. Melea and I could count several new ones within our
recollection.”
“At the time of the restriction, there were fewer than three hundred
country banks in existence; there are now more than seven hundred.”
“And are so many wanted?”
“We shall soon see,” muttered Mr. Berkeley. “I much doubt whether there
will be two-thirds the number by this day twelvemonth.—Aye, you may well
look frightened, girls. Confidence is shaken already, I can tell you;
and even you can see what is likely to follow when banking credit is
impaired.”
“If these terrible consequences happen, father, will you attribute them
to the Bank of England being excused from paying cash?”
“That first destroyed the balance of the currency, which will have much
to do to right itself again. Formerly, the Bank and its customers were a
check upon each other, as are paper and gold, when the one is
convertible into the other. As the profits of the Bank depend on the
amount of its issues, the public is always sure of having money enough,
while affairs take their natural course.—On the other hand, the public
was as sure to make the Bank lose by an over-issue; since an over-issue
raises the price of gold, which makes people eager to have gold for
their notes, which again, of course, obliges the Bank to buy gold at a
loss to coin money to pay for their own over-issues. Now, by this
penalty being taken from over their heads, the balance of checks is
destroyed. The people are more sure than ever of having money enough;
but there is no security whatever against their having too much. Witness
the state of our currency at this hour.”
“If we could but contrive any security against over-issue,” observed
Melea, “we might do without coin (or at least gold coin) entirely: but,
as there does not appear to be any such, I suppose we must go on with a
mixed currency. What a pity such an expense cannot be saved!”
“And it is the more vexatious when one thinks of the loss by hoarding,”
observed Fanny. “No one would think of hoarding paper.”
“Certainly; if it was the only sort of money.”
“Well; many do hoard gold,—besides Mrs. Parndon. How many years will her
guineas have been lying by when she dies!—(and I do not believe she will
part with them but in death.) They might have doubled themselves by this
time, perhaps, if they had been put to use instead of being buried in
her garden, or under the floor, or among the feathers in her
feather-bed, or wherever else they may be.”
“I was going to ask,” said Horace, “how she comes to make public such an
act as hoarding: but you seem not to know the place of deposit.”
Fanny explained that not even Hester knew more than that her mother had
a stock of hoarded guineas; and she had mentioned it only to such
particular friends as the Berkeleys.
“The Cavendishes are not on the list of particular friends then, I
suppose,” observed Horace, “or there would have been an end of the
hoarding before this time. Mr. Cavendish does not approve of any
reserves of guineas within twenty miles of his bank.”
Melea was struck by her brother’s countenance and manner, whenever he
mentioned Mr. Cavendish. There was now something more conveyed by both
than the good-humoured contempt with which the whole family had been
accustomed to regard the man.
“Horace,” said she, “I never suspected you of hating any body before;
but now I do believe you hate Mr. Cavendish. I wish you would tell us
why; for I had rather think worse of him than of you.”
“Yes, dear, I will tell you why; and this was what you were to hear this
afternoon.”
Mr. Berkeley moved uneasily in his chair, and his wife stole anxious
glances at him, while Horace related that the proprietors of the D——
bank had been for some time aware that forgeries of their notes were
circulating pretty extensively; that inquiries had in consequence been
secretly made, under Horace’s direction, in order to the fraud being put
a stop to; that these inquiries had issued in the deed being brought
home to the parties.
“O, we shall have a trial and execution,” groaned Fanny.
No such thing, her brother assured her. In times when banking credit did
not, at the best, keep its ground very firmly, there was every
inducement to a bank not to shake it further by publishing the fact that
notes circulating in its name were not to be trusted. The fact of this
forgery had been kept a profound secret by the partners of the D—— bank.
“But what is the consequence to the holders of the forged notes?”
“Nothing. We pay them on demand without remark.”
“But what a loss to the bank, if the forgery is extensive!”
Mr. Berkeley observed gloomily that he had given cash payment for two
forged 5_l._ notes, and one of 10_l._ this very morning. Yet this loss
was preferable to exposing the credit of the bank to any shock; at
least, when there were the means of stopping the forged issue.
“Then you have certainly discovered the parties?”
“I saw the principal shipped for America the day I left London,” replied
Horace; “and the rest know that we have our eye upon them. The only
doubtful thing now is whether we may take their word for the amount they
have issued. Another month will show.”
“Do all your notes come back to you within a few weeks, father?” asked
Melea. “I thought they remained out for years. I am sure I have more
than one note of the D—— bank that is above a year old.”
“Yes; some are now circulating that belonged to the first issue after I
became a partner; but these have been re-issued. We reckon that most of
our notes come back within six weeks.”
“You did not surely suppose,” said Horace, “that new notes are issued
every time? Why should not the old ones be used as long as they will
last?”
“I did not know that the stamps were allowed to serve more than one
turn.”
“This is provided for by the issuers being obliged to purchase a
license, which costs 30_l._, and which must be annually renewed. The
Bank of England is the only exception to this rule; that establishment
being permitted to compound for the stamp-duties by paying so much per
million on its issues. It is on this point, (of the renewal of the
license,) that we hope to catch Cavendish. He has not renewed within the
given time.”
“But why should you?” cried Fanny, with some indignation. “What affair
is it of yours? Let the Stamp-office look to it; and let us mind our own
business, instead of meddling with our neighbour’s.”
“Besides,” added Melea, “what becomes of the banking credit which needs
to be taken such extraordinary care of just now? Shake Cavendish’s
credit, and you shake that of other banks in some degree, according to
your own doctrine.”
“If he had never meddled with our credit,” said Mr. Berkeley, “he might
have cheated the Stamp-office to his heart’s content, for anything we
should have done to prevent it. But having acted the part that he has by
us——”
Fanny and Melea looked at each other with sorrow in their faces; which
their brother observed, and quietly said,
“It is not in a spirit of retaliation that we are going to act against
Cavendish. It is necessary, for the public safety, that his bank should
be closed while there is a chance of its discharging its obligations. If
it goes on another year,—I say this in the confidence of our own family
circle,—it must break, and ruin half the people in Haleham. If Cavendish
can be so timely beset with difficulties,—which, remember, he has
brought on himself,—as to be induced to give up the bank, and confine
himself to his other businesses, it is possible that those who have
trusted him may get their dues, and that banking credit may be saved the
shock which his failure must otherwise soon bring upon it.”
“But what is the penalty?”
“A fine of 100_l._ for every act of issue after the term of license has
expired. I am now employed in discovering what Cavendish’s issues have
been since the expiration of his license. I hope we may find him liable
for just so much as may make him glad to close his bank for the sake of
a composition; and not enough to ruin him; though I fancy it would not
require a very heavy liability to do that.”
“What a hateful business to be engaged in!” exclaimed Melea.
Very disagreeable indeed, Horace admitted; but Cavendish’s offences
towards the D—— bank deserved the worst punishment they could bring upon
him. He had known of the forgeries of their notes longer than they had;
and not only had he given them no warning, but he had whispered the fact
elsewhere in every quarter where it could injure their credit just so
far as to make people shy of taking their notes, without causing an
abrupt shock, in which he might himself have been involved. He
insinuated no doubts of the stability of their house; but told several
people in confidence that forgeries of their notes were abroad, so well
executed, that it was scarcely possible to distinguish the true notes
from the false.
“How came he to know sooner than the partners themselves?” inquired
Melea: but neither father nor brother appeared to hear the question.
“May one ask about the forgers,” inquired Fanny, “who they are, and how
you dealt with them?”
“No; you may not ask,” replied her brother, smiling. “We are bound not
to tell this, even to our own families. Be satisfied in your ignorance;
for it is a very sad story, and it would give you nothing but pain to
hear it.”
The whole party sat in silence for some minutes, the girls gazing in
reverie on the green lawn over which the evening shadows were stretching
unnoticed. Both were meditating on Cavendish’s connexion with the affair
of the forgery. The absence of all answer to Melea’s question looked as
if he had something to do with the guilty parties; and yet, nothing was
more certain than that it is the interest of all bankers, and more
especially of unstable ones, to wage war against forgery wherever it may
exist.
Fanny thought it best to speak what was in her mind, declaring
beforehand that she did so out of no curiosity to know what ought to be
concealed, and without any wish for an answer, unless her brother chose
to give her one.
Horace was glad she had spoken, since he could assure her that any
banker must be as much fool as knave who had any amicable connexion with
forgers; and that, if Cavendish had been proved to have maintained any
such, he would have been treated in a very different way from that which
was now meditated against him. Fanny also was glad that she had spoken
what was in her mind. The charges against Cavendish seemed to be,
carelessness in his banking management, and shabby spite against his
rivals at D——.
“Now, promise me,” said Horace to his sisters, “that you will not fancy
that all kinds of horrible disasters are going to happen whenever you
see my father and me consulting together without taking you immediately
into our counsels. Promise me——”
He stopped short when he saw Melea’s eyes full of tears.
“My dear girl,” he continued, “I did not mean to hurt you. I did not
once think of such a thing as that either Fanny or you could be jealous,
or have vanity enough to be offended. I only meant that you were both
too easily alarmed in this case, and I should be sorry if the same thing
happened again. Do you know, you have scarcely looked me full in the
face since I came, and I am not quite sure that you can do so yet.”
Melea replied by bestowing on her brother one of her broadest and
brightest smiles, which revealed the very spirit of confidence. She had,
in turn, her complaint to make; or rather, her explanation to give. How
was it possible, she asked, for Fanny and herself to avoid speculating
and foreboding, when Horace had not answered above half the questions
they put to him, or inquired after half his former acquaintance, or
taken any interest in his old haunts, or in the four-footed or vegetable
favourites which had been cherished for his sake during his absence?
Fanny also pleaded her mother’s anxious looks and long silences during
the mornings.
“And now, what fault have you to find with me?” asked Mr. Berkeley.
“Have you counted how many times I have said ‘Pshaw’ within the last
week?”
“It would have been much easier to count how many times you have smiled,
papa,” said Melea, laughing. “But if you would only——” She stopped.
“I know what she would say,” continued Horace. “If you would only open
your mind to your daughters as far as you can feel it right to do so, it
would cause them less pain to know from yourself the worst that can ever
happen, than to infer it from your state of spirits; and, indeed, sir,
you would find great relief and comfort in it.”
“They used to complain of me for telling them sometimes that they must
prepare to provide for themselves.”
“Not for telling us so, sir. There is nothing but kindness in letting us
know as soon as possible, but—”
“But you never knew when to believe me,—is that it? Out with it, Fanny.”
“We should like to know the extent of changes, when changes take place,
if you have no objection to tell us. We could prepare ourselves so much
better then.”
“You seem to have been preparing at a vast rate lately, both of you. One
at her German and Italian, and the other at her music; and both studying
education with might and main.”
This was a subject on which Horace could never endure to dwell. He
writhed under it, even while he persuaded himself that his father was
not in earnest, and that the girls were so far like other girls as to
have their heads filled fuller with a new idea than reason could
justify. It was not enough that Melea sagely observed that the diligent
study which occupied them at present could do them no harm, whatever
fortune might be in store for them: he was not quite at his ease till
she mentioned Lewis, the East Indian boy who was expected over; and
explained how much Fanny and herself wished to contribute towards
educating him. All the family desired to keep Lewis at Haleham, and to
have him domesticated with them; and if he could be so assisted by his
cousins at home as to profit to the utmost by what he should gain at a
day-school, it would be much better for every body concerned than that
he should be sent to a boarding-school a hundred miles off. This plan
accounted for the eagerness of Fanny’s study of German; but how Lewis
was to benefit by Melea’s music was left unexplained.
This evening was the brightest of the whole spring in the eyes of Fanny
and Melea. The bank had only sustained a loss, instead of being about to
break. There was an end of Mr. Longe, and Horace hinted no intention of
quarrelling with Henry Craig. The sunset was certainly the softest of
the year; the violets had never smelled so sweet, and even Mr. Berkeley
acknowledged to the daughter on either arm that the rosary which he had
planned, and they had tended, was the most delicious retreat he had
buried himself in since the days of the green walk in his mother’s
garden, of which he spoke with fond eloquence whenever led to mention
his childhood. To Mrs. Berkeley and her son every thing did not look so
surpassingly bright this evening. From them no painful load of
apprehension had been suddenly removed; such fears as they had had
remained: but it was a May evening, mild and fragrant, and they lingered
in the shrubberies till yellow gleams from the drawing-room windows
reminded them that they were expected within.