Chronicles and characters of the stock exchange

by of the Bank of England John Francis

Charitable Corporation Fraud.—Its Discovery.—Appalling Effects and Remedy.—Marlborough’s Victories, their History, and the Loans they brought.—Augmented Importance of the Stock Exchange.—Dislike to the Members.—Increased Loans.—Difficulties in procuring them.—Statement of Sir Robert Walpole.—Gifts of Contractors to Clothiers.—First Payment of Dividends by the Bank.—South-Sea Anecdotes.

In the early part of the eighteenth century, a prospectus was issued to the commercial world and the members of ’Change Alley, in which the wants of the needy and the infamy of the pawnbrokers, the purest philanthropy and a positive five per cent., were skilfully blended. It was shown that then, as now, the poor were compelled to pay a greater interest than the rich; that thirty per cent. was constantly given by the former on a security which the usurer took care should be ample; and it was proposed that the wealthy capitalist should advance, for the benefit of the needy, a sufficient sum to enable the company to lend money at five or six per cent. The proposal proved eminently successful. A capital of £30,000 was immediately subscribed, a charter obtained, and the “Charitable Corporation,” the object of whose care was the necessitous and industrious poor, appeared to flourish. For some years the concern answered, the poor received the assistance which they required, and the company was conducted with integrity. In 1719, however, their number was enlarged; their capital increased to £600,000; an augmentation of business was looked for; cash credits were granted to gentlemen of supposed substance; and the importance of the corporation was unhappily recognized by that numerous class of persons compelled to pay in maturity for the excesses of youth. They acted also as bankers, and received deposits from persons of all classes and conditions. Its direction boasted men of rank, its proprietary men of substance, and its executive men of more capacity than character. The cashier of the company was a member of the senate; Sir Robert Sutton, a director, was one of his Majesty’s Privy Council; and Sir Archibald Grant, who took a prominent part in the affairs of the corporation, was also a member of the lower house. Every confidence was reposed in such a body, and it was regarded as a rich and prosperous society.

Under these circumstances, the surprise of the public may be conceived when it was first whispered, and then openly announced, that the cashier, with one of the chief officers, had disappeared in company. The alarm spread to the proprietors; the public participated; the poor assembled in crowds; the rich clamored for information; a meeting was called to inquire into the case, when a most pernicious, but scarcely comprehensible, piece of villany was unravelled, and a most disgraceful tissue of fraud discovered. £30,000 alone remained out of half a million. The books were falsified; money was lent to the directors on fictitious pledges; men of rank and reputation were implicated; suspicion and censure followed persons of importance. Some managers were found to have connived at scenes so disgraceful, that their character was lost for ever. Many had concerted active plans of fraud, which ended alike in their own ruin and the ruin of the corporation; while others were guilty of personally embezzling the funds of the company. Petition after petition was presented to the Commons. A bill was brought in to prevent the defaulters from leaving the kingdom; and the scorn of all England pointed at the men who, under the guise of charity, had enriched themselves. The interest which was taken in the discovery by the entire country attracted the attention of the Jacobites; and, as one of the party had fled to Rome with the spoils, the Pretender endeavoured to enlist the sympathy of the nation, through one Signor Belloni, who wrote to the committee, stating that the refugee had been seized and placed in the castle of St. Angelo. The Whig party, ever jealous of the Pretender, voted that the letter should be burned by the hangman at the Royal Exchange.

The distress occasioned by this bankruptcy was appalling, pervading nearly every class of society. Large sums had been borrowed at high interest. The small capitalist was entirely ruined; and there was scarcely a class in English life which had not its representative and its sufferer. The poor were unable to get their goods; the rich were robbed of their jewels; families accustomed to affluence were starving; delicate women, hitherto irreproachable, were compelled to exchange their persons for bread. Similar evils have been known to exist during sieges; and, in the public streets of Lisbon, women of unblemished virtue offered themselves for sale during its occupation by the French; but the writer believes there is no other parallel in commercial history.

All that the wisdom of the senate could devise was attempted to mitigate the evil. The revenge of the losers was appeased by several members being expelled the house; their fear of loss was reduced by the confiscation of the estates of the offending parties; a lottery was granted for the advantage of the sufferers; and though a dividend of nearly ten shillings was eventually paid, the fraud of the Charitable Corporation was remembered long after the evils caused by it had ceased to exist.

The next great increase of debt was through the War of Succession in Spain, to the crown of which several princes laid claim. According to the ordinary rule of inheritance, the Dauphin, by virtue of the marriage of Louis XIV. with the eldest sister of the king, should have succeeded; but as all right to the throne had been solemnly renounced on the marriage, it was supposed that the claim was vacated; and the principal powers of Europe, knowing the necessity that so great an inheritance should not descend to any state possessed of territorial importance, formed the celebrated partition treaty.

By this, France, England, and Holland agreed that Spain, the Indies, and the Netherlands should descend to the Archduke Charles, and, in return, that France should be possessed of the rich province of Lorraine. There is no doubt that governments regard treaties in proportion to the physical rather than the moral necessity to abide by them; and France, under Louis Quatorze, was no exception to the rule. A succession of cabals in Spain gave the latter the influence he required. His ambassador won the court and city; the Archbishop of Toledo was of his party, and gained the Spanish king, who, sick body and soul, priest-ridden, a prey to mental and physical agony, was, after a succession of intrigues, induced to fix his name to that will which annexed the splendid possession of the empire of Spain to the grandeur of France.

At once Louis violated the partition treaty, accepted the noble legacy for his grandson, and sent the whole court of France to accompany him to the Pyrenees, that frontier which he said in his pride had ceased to exist. When the news reached William, he was at the Hague, but instantly returned to London. Vigorous preparations were made; but he did not live to see the declaration of the war, which began in 1782, agitated Europe for thirteen years, and added so much to the great debt of which this volume treats.

England, Holland, and the Empire were opposed to France, Spain, and Bavaria; and the war thus commenced was a memorable contest. Marlborough and Peterborough, than whom England boasts none greater, made her name a word of dread for many years. The knight-errantry of Peterborough conceived schemes which only his ardent and fiery imagination could achieve. He took towns by storm, under circumstances little less than marvellous; he reduced the largest and strongest cities of Europe with a handful of soldiers; he made forced marches, shared the fatigues of his men, and took entire reinforcements prisoners. With 3,000 troops he harassed a regular army, cut off communications, and raised sieges; he forced towns with horse-soldiers, and chivalrously mortgaged his estates to pay the expenses incurred in the cause of his country.

The victories of John Churchill, Duke of Marlborough, were more important to the nation than those of the adventurous Peterborough; and if his glory was tarnished by the love of gold, yet the name of Marlborough as a captain is unsullied. The battle of Blenheim was his first great achievement in the War of Succession, and it made the people consent to pay the additional taxes imposed upon them. Innumerable trophies,—hundreds of flags and standards, tents, cannon and mortars, casks and barrels filled with the precious metals,—evinced the glory of the contest, and added to the pride of the nation. The thanks of the House were voted to the Duke; medals were struck in his honor; Addison celebrated him in poetry; but dearer far to Marlborough than medal, poetry, or thanks, was the rich manor and the noble mansion of Woodstock, voted to him by the nation. Scarcely had the people recovered from the joy occasioned by the battle of Blenheim, and from the increased taxation which ensued, than another battle—that of Ramilies—seized them with delight. Forgetful of the consequences, men talked of the old days of England,—of the ancient victories of her armies,—of the time when the great Cromwell made the English name terrible,—and, in their excitement, they magnified the grandeur, and diminished the cost. The pride of Louis was indeed humbled. He made proposals for a congress; he tampered with the Dutch; he besought the interposition of the Head of the Church; he offered to cede Spain, Milan, Naples, or Sicily; and felt bitterly the consequences of having provoked the vengeance of the island he hated. Ambition had, however, seized upon the nation; conquest only was thought of; and, remembering the glory of the past, the English people deemed themselves entitled to some privilege for the blood which was shed. They forgot that a new campaign would bring new costs; and they forgot, what their successors yet feel, that every fresh victory brought a fresh loan. Oudenarde, the third of that splendid series of victories which has made the name of Marlborough renowned in the land, was followed by Malplaquet, the glory of which was superior to its results, and the blood of which was shed to maintain the court influence of the Duke.