CHAPTER II.
Just for a little time I must leave my personal history to inquire how England managed to do without me so long, and what the circumstances were which at length rendered my existence imperative.
In the days following the Norman Conquest, the Jews, whose one pursuit in life was the commerce of money, were the compulsory bankers of the country.
They were subject to much cruelty and persecution, as you may see for yourselves in your histories of the Kings of England. It is not to be denied that their demands for interest on money lent by them were most extravagant. In 1264 the rate of interest exceeded 40 per cent., and I believe that 500 Jews were slain by our London citizens because one of them would have forced a Christian to pay more than twopence for the usury of 20s.[1] for one week, which sum they were allowed by the king to take from the Oxford students.
They were ill-treated and robbed from the time they came over with the Conqueror until the reign of Edward I., who distinguished himself by robbing 15,000 Jews of their wealth, and then banishing the whole of them from the kingdom; and thus, as much sinned against as sinning, the compulsory bankers of the period departed.
There was no time to feel their loss, for immediately after their expulsion the Lombards (Longobards), or merchants of Genoa, Florence, Lucca and Venice, came over to England and established themselves in the street which still bears their name.
There was no doubt as to their purpose, for it was a well-known fact that in whatever country or town they settled they engrossed its trade and became masters of its cash, and certainly they did not intend to make an exception in favour of London.
I am not going to deny that they introduced into our midst many of the arts and skill of trade with which we in England were previously unacquainted; and it is to these Lombards or goldsmiths we owe the introduction of bills of exchange, a wonderful invention, and one which has served to connect the whole world into one, as you will see when the proper place arrives for their explanation.
These Lombards, immediately after their arrival in London, may have been seen regularly twice a day parading Lombard-street with their wares, exposing for sale the most attractive articles; and in a short time became so successful that they were able to take shops in which to carry on their business as goldsmiths.
These shops were not confined to the one street which bears their name, but were continued along the south row of Cheapside, extending from the street called Old Change into Bucklersbury, where they remained until after the Great Fire, when they removed to Lombard-street. There seems to be no street in the world where a business of one special character has been carried on so continuously as in Lombard-street. In the time of Queen Elizabeth it was the handsomest street in London. In addition to the art of the goldsmith, they added the business of money-changing, the importance of which occupation you will be able to estimate when we come to the subject of the coins of the realm.
From money-changers they became money-lenders and money-borrowers—money was the commodity in which they dealt, and 20 per cent. the modest interest they asked and obtained for their money.
Of course they gave receipts for the money lodged with them, and these circulated and were known by the name of “goldsmiths’ notes,” and were, in fact, the first kind of bank-notes issued in England.
The Lombards were a most industrious class of people, and left no stone unturned by which they could obtain wealth; and in an incredibly short time we find them not only wealthy, but powerful, and occupying a very prominent position; and you may be quite sure that under these circumstances they did not escape persecution.
Under the pretext that the goldsmiths were extortioners, Edward III. seized their property and estates. Even this seemed but slightly to affect them; for in the fifteenth century we find them advancing large sums of money for the service of the State on the security of the Customs.
In the latter days, and, indeed, up to the time of my birth, the banking was entirely in the hands of the goldsmiths, but carried on in a very rapacious spirit, as is frequently the case when unrestrained by rivals.
I dare say you have all noticed the three golden balls on the outside of pawnbrokers’ shops. Originally these were three pills, the emblem of the Medici (physician) family; but in some way they became associated with St. Dunstan, the patron saint of the goldsmiths, under the name of the three golden balls—an emblem which the Lombards have retained.
Are you curious to know how the sign has so degenerated as to be the inseparable companion of the pawnbrokers of the land? Well, listen.
Pawnbrokers’ shops, or loan banks, were established from motives of charity in the fifteenth century. Their object was to lend money to the poor upon pledges and without interest. Originally they were supported by voluntary contributions, but as these proved insufficient to pay expenses, it became necessary to charge interest for the money lent. These banks were first distinguished by the name of montes pietatis. The word mont at this period was applied to any pecuniary fund, and it is probable that pietatis was added by the promoters of the scheme, to give it an air of religion, and thus procure larger subscriptions.
Well, these banks were not only called mounts of piety, but were known also as Lombards,[2] from the name of the original bankers or money-lenders. Now you see how it is pawnbrokers bear the sign of the goldsmiths.
You who know so well where to place your money, both for interest and security, when you have any to spare, can scarcely understand the trouble and annoyance which our merchants and wealthy people experienced at having no place of security wherein they could deposit their money. At one time they sent it to the Mint in the Tower of London, which became a sort of bank, where merchants left their money when they had no need of it, and drew it out only as they wanted it; but this soon ceased to be a place of security. In 1640 Charles I., without leave asked or granted, took possession of £200,000 of the money lodged there. Great was the wrath of the merchants, who were compelled, after this unkingly act, to keep their surplus money at home, guarded by their apprentices and servants. Even here the money was not safe, for on the breaking out of the war between Charles and his Parliament, it was no uncommon occurrence for the apprentices to rob their masters and run away and join the army.
When the merchants found that neither the public authorities nor their own servants were to be trusted, they employed bankers, and these bankers were goldsmiths.
Many a tale, however, has reached me of the shifts and contrivances of people to secure their savings and surplus money—people whose experience had taught them to distrust both authorities and places, and who would not, under the new state of things, have anything to do with the bankers. One I will relate to you.
A man whose life had been one of hard work and self-denial, and who had two or three times lost his all through the untrustworthiness of the people with whom he had lodged it, determined to be their dupe no more. Money began once more to accumulate, and all things prospered with him; but no one could imagine what he did with it; as far as his household could tell, he did not deposit it with anyone outside the house, neither could they discover any place within where it was possible to stow it away. No persuasion could move the man to speak one word concerning it.
At length he died, without having time or consciousness to mention the whereabouts of his money. Search was made in all directions, but without success.
While living he had been a regular attendant at one of our City churches, and, occupying always the same corner in the old-fashioned square pew, was well known to the clergy and servants.
A few weeks after his death the pew-opener told the rector, in a frightened voice, that she could no longer keep the matter from him, for as surely as she stood there, the ghost of the man who died a week or two ago haunted the church by night and by day.
Instead of ridiculing her for her foolish fancy, the rector allowed her to tell her story quietly, seeing that she was superstitious and very nervous.
She related that several times during the past weeks, when quite alone in the church for the purpose of sweeping and dusting, she had heard a peculiar noise proceeding from the pew where the old man used to sit, and it sounded to her exactly as though he were counting out money, and she would be very glad if he would look to it and verify her statement.
Accordingly the rector and his curate accompanied the woman to the pew. At first all was quiet, but as they listened, assuredly the sound came exactly as described; they felt round about the pew, and at length discovered a movable panel near the flooring. It was the work of a moment to remove it, and there, in a good sized cavity, lay heaps of money wrapped up in paper, which last had attracted the mice, and it was their little pattering feet among the coins which had caught the woman’s ear. The man had evidently dropped in his week’s savings on Sundays, believing that it would be safer in the church than elsewhere.
It seems that after the restoration of Charles II., he being greatly in want of money, the goldsmiths lent it, demanding ten per cent. for the loan. Often, however, they obtained thirty per cent. from him, and this induced the goldsmiths to lend more and more to the king, so that really the whole revenue passed through their hands.
In 1672 a sad calamity befel the bankers, and put a check on their prodigal lending. King Charles, who owed them £1,328,526, which he had borrowed at eight per cent., utterly refused to pay either principal or interest, and he remained firm to his resolution.
The way in which bankers transacted their loans with the king, was in this manner:—As soon as the Parliament had voted to the king certain sums of money out of special taxes, the goldsmith-bankers at once supplied the king with the whole sum so voted, and were repaid in weekly payments at the Exchequer[3] as the taxes were received.
