In the reign of George II. a new mode of raising loans was adopted. Instead of varying the interest according to the state of the money-market, the rate was fixed from three to five per cent., and the subscribers remunerated by an additional amount of stock. It was the first public announcement that the debt was perpetual; and has made the present principal two fifths more than the sum originally advanced. In the earlier history of borrowing, the government named its own terms; and as this generally afforded a profit, the loan was soon filled. If, however, the ministerial proposals were not sufficiently liberal, the executive altered the terms to the real value of money; and it is by no means an uninstructive fact, that it was found in 1748, after a close calculation, that for thirty previous years land had produced a higher interest than the funds.
Although an act had been passed by which it was declared illegal for one individual to have more than twenty lottery-tickets allowed him, it soon became notorious that the rule was flagrantly and frequently violated. Manasseh Lopez, whose dealings on the Stock Exchange entitled him to be termed a leader, had bribed the commissioners to permit an indirect violation of the law, by accepting a long list of feigned names as candidates for tickets. He was prosecuted by the Attorney-General, and sued in the Court of King’s Bench. A fine of one thousand pounds was awarded as punishment; but as he had made more than fifty times the amount, it might be regarded as a very successful speculation.
The first reduction in the interest of the national debt—from four to three per cent.—was effected in 1750, and was received with a storm of indignation similar to that which arose in 1737, on the mere attempt. Sir John Barnard, to whom every thing connected with the funds was of importance, is mentioned as having proposed it to Mr. Pelham, who brought it forward in the House of Commons. The best men in the city protested against so bold a measure, and the foes of the minister encouraged the opposition of the fundholder; his friends overwhelmed him with entreaties to withdraw the motion; and every engine which could be brought into operation by the moneyed interest was employed. Reasons which time has since repudiated, fallacies which almost repudiated themselves, evils which had no existence save in the brain of the prophet, were freely circulated. It was said that the landed gentry and the noble families of England would be ruined, and their children would become beggars; that the interest of younger sons’ portions would not enable them to associate with the cooks and coachmen of their elder brothers; and that merchants, shopkeepers, and tradesmen would be ruined. The farmers would lose their farms; families would be undone; and such a deluge of distress be brought upon all ranks, that the consequences would be fatal to that “free and happy constitution” which has been so often ruined in the brains and in the prophecies of partisans.
Its first reception was so lukewarm by the minister’s friends, and the opinions of the people so strong, that, coupled with the previous failure of a similar measure, its miscarriage was confidently calculated. “Mr. Pelham,” says the flippant chronicler of the times, “who has flung himself entirely into Sir John Barnard’s hands, has just miscarried in a scheme for the reduction of interest, by the intrigues of the three great companies and other usurers.” Horace Walpole mistook the voice of his little circle for the voice of the country. The scheme did not miscarry; and it is remarkable that this, the first reduction in the interest of the national debt, was planned in a most masterly manner, and reflected great honor upon Sir John Barnard. A loss of one per cent. upon the income of an annuitant is important, and acts prejudicially upon all with limited means. To obviate this evil, if the fundholder declined receiving his capital, the interest was reduced from 1750 to 1757 only one half per cent., 3½ being paid during that period; after 1757 it was reduced the remaining half per cent. The great resources of England have ever been regarded with wonder by foreign nations; and they looked with astonishment on the power of a people which, after a heavy war and an increased debt, enabled the state to repay its creditors or reduce its interest.
The name of Sir John Barnard, the father of the city, its honest representative for six sessions, the remodeller of the Stock Exchange, and the reducer of the interest on the national debt, occupies a prominent place in all questions connected with the funds. Born of the same persuasion as William Penn, he retained during life much of the simple honesty of the creed he originally professed; and even Sir Robert Walpole respected him, although he was constant in his opposition to bad measures, and could never be bought nor bribed. “I address myself to you, Mr. Speaker, and not to your chair,” he said, when Sir Robert Walpole, secure in a majority, withdrew the attention of the Speaker; “I will be heard; and I call that gentleman to order.” Lord Chatham gave him, half in jest and half in earnest, the proud title which was afterwards appropriated to himself, of “the great Commoner.” His pride was indomitable. The members of the Stock Exchange, who were always spoken of with great contempt by Sir John, thoroughly detested him, and greatly helped to fan the unpopularity which fell upon him when he opposed public feeling, as, with a most unbending integrity, he invariably did, if his conscience prompted. “He grew,” said Horace Walpole on one occasion, “almost as unpopular as Byng.” On commercial subjects his opinion was greatly regarded. When any remarkable feature in financial politics occurred, the town echoed with, “What does Sir John say to this? What is Sir John’s opinion?” And he had the honor of refusing the post of Chancellor of the Exchequer in 1746. It is somewhat at variance with the proud character of the man, that, from the time his statue was erected in the Royal Exchange, he never entered the building, but transacted his business in the front. The blood of Sir John Barnard yet flows in the veins of some of the best houses in the commercial world, his son having married the daughter of a gentleman known in contemporary history as “the great banker, Sir Thomas Hankey.”
CHAPTER VI.
Origin of New Loans.—Fraud of a Stock-broker.—East India Stock.—Sketch of Sampson Gideon, the great Jew Broker.—East India Company.—Restriction of its Dividends.—Liberality to its Clerks.—Important Decision.—Robbery at Jonathan’s.—Curious Calculation concerning the National Debt.
The Spanish war, and the war of the Austrian succession, was the origin of the next increase of the national debt. It was alleged that the commerce and the merchants of Great Britain were injured by the Spaniards; that the subjects of England were sent to the Spanish mines; and though one remonstrance followed another to the court of Madrid, promises were more plentiful than performances from the haughty Spaniard. The people were excited to believe that their honor was insulted; a dramatic exhibition was made at the bar of the House of Commons; and this war, partly to please the populace, partly to heal the wounded national pride, and partly to secure British subjects from the right of search in American seas, was openly declared in 1739. The heralds were attended in their progress by the chiefs of the opposition, and the Prince of Wales drank success to England at Temple Bar; but Sir Robert Walpole, as he heard the merry peal from the city steeples, muttered, “They may ring their bells now, they will wring their hands before long.”
The misfortunes with which the campaign opened justified the minister’s prophecy, and the war was violently attacked in the House; but the majority of Sir Robert was an irresistible argument, and calamity continued to mark the progress of the British arms. An armament, with 15,000 sailors, and as many soldiers, completely equipped, failed disgracefully before Carthagena. The squadrons of our admirals were dispersed. Fontenoy witnessed a signal defeat, and Tournay was taken. Scotland was entered by a Stuart, under circumstances which promised success. England was threatened with invasion; the vast armies of the English allies, paid by English money, raised by loans through the Stock Exchange, were inactive or defeated; and it was only when a more promising aspect was shed over our efforts, when the assistance of Russia would have assured a supremacy, and British fleets had intercepted the treasures of France and Spain, that the ministry, tired of a war which brought so many reverses, and alarmed at the voice of public opinion, consented to treat for peace.