Chronicles and characters of the stock exchange

by of the Bank of England John Francis

But their treaty was as disgraceful as their war. The principal cause of the latter, the right of search, was not even alluded to; no equivalent was received for forts restored to the enemy; and, for the last time in English history, the nobles of the land were given as pledges for the country’s faith. “The whole treaty,” says one historian, “is a lasting memorial of precipitate counsel and English disgrace.” It is melancholy to add, that this unhappy war added £31,333,689 to the permanent debt, took £15,080,000 in taxes, and, says a pamphleteer of the day, “increased the contemptible crew of ’Change Alley.”

The early mode of raising money was somewhat curious. When a new tax was imposed by Parliament, any person might advance any sum not less than £100. For this, a tally was given at the Exchequer, with an order for repayment of the principal, and the payment of interest. The sums thus advanced were to be paid off in regular order, as the money arising from the tax was received. But as this was generally found to be insufficient to redeem the loan, it became necessary either to prolong the term, or raise a new loan to pay off the old one.

The interest on loans during the reigns of Anne and William was very uncertain. In the reign of George II. a new principle was adopted. Instead of varying it according to the state of the money-market, the rate was generally fixed at 3 or 3½ per cent., and the necessary variation made in the sum funded. In consequence of this practice having prevailed, the principal of the debt now existing amounts to nearly two fifths more than the sum actually advanced.

As early as 1762, a stock-broker, named John Rice, met the fearful penalty so liberally awarded to crime by the civil code of the eighteenth century. A client of Rice, for whom he was accustomed to receive her dividends, was, under false pretences, induced to grant a power to sell as well as to receive the interest. As the temptation to speculate on the Stock Exchange is great, the temptation to divert property from its legitimate channel is equally so, when confidence or carelessness has granted the power. The stock-broker sold all his client’s money, employed it to meet his losses, and kept up his deception by sending her the dividends as usual. The lady, moved by doubt, or by some cogent but unknown cause, intimated to Rice her intention of visiting the city. Unable to restore the money, the conscience of Rice took the alarm, and he fled, leaving with his wife £5,000 of the misappropriated property. Ignorant of his evil deeds, and anxious to join her husband, she embarked for Holland. The weather proved rough; the vessel was driven back; and the persons sent in search of the husband apprehended the wife, who yielded the money in her possession, leaving herself entirely destitute; and it is to the credit of the directors of the South-Sea Company, that they settled a small pension on the unhappy woman.

The search continued for Rice, who was discovered in the old town of Cambray, where he had taken up his residence. The English ambassador at Paris applied for his delivery; the misguided man found that Cambray was no city of refuge for him; and the last sad penalty of the law was enacted on the body of John Rice, the stock-broker.

In February, 1674, the jobbers were taken by surprise, and a sudden fall of fourteen per cent. in India Stock occurred, owing to an unexpected war in the East. The incident is only remarkable, that from this period, marked by a fall in their stock to so large an extent, commenced the political greatness of the Company. A violent dispute had arisen between Lord Clive and the directors; but their foreign affairs assumed so serious an aspect, that the latter were forced to yield. Every vessel brought alarming tidings. The natives, unable to bear the oppressive exactions to which they were subject, arose and defied the government. The directors of the Company grew alarmed. They forgot their feuds, they remembered only their dividends, and called Clive to their rescue. But Clive refused to act so long as one Sullivan, his bitter enemy, occupied the position of chairman; and as the proprietors would have removed the whole court of directors rather than miss the services of Clive, Sullivan not only lost his chairmanship, but was within a single vote of losing his seat as director. During this exciting period, so great was the bustle, that Cornhill and Cheapside were filled with the carriages of the voters; and from this dispute, which commenced with so ominous a fall in their stock, may the territorial dignity of the East India Company be dated.

Sampson Gideon, the great Jew broker, as he was called in the city, and the founder of the house of Eardley, as he is known to genealogists, died in 1762. This name, as the financial friend of Sir Robert Walpole, the oracle and leader of ’Change Alley, and the determined opponent of Sir John Barnard, was as familiar to city circles in the last century as the names of Goldsmid and Rothschild are to the present. A shrewd, sarcastic man, possessing a rich vein of humor, the anecdotes preserved of him are, unhappily, few and far between. “Never grant a life-annuity to an old woman,” he would say; “they wither, but they never die.” And if the proposed annuitant coughed with a violent asthmatic cough on approaching the room-door, Gideon would call out, “Ay, ay, you may cough, but it sha’n’t save you six months’ purchase!”

In one of his dealings with Mr. Snow, the banker,—immortalized by Dean Swift,—the latter lent Gideon £20,000. Shortly afterwards, the “forty-five” broke out; the success of the Pretender seemed certain; and Mr. Snow, alarmed for his beloved property, addressed a piteous epistle to the Jew. A run upon his house, a stoppage, and a bankruptcy, were the least the banker’s imagination pictured; and the whole concluded with an earnest request for his money. Gideon went to the bank, procured twenty notes, sent for a phial of hartshorn, rolled the phial in the notes, and thus grotesquely Mr. Snow received the money he had lent.

The greatest hit Gideon ever made was when the’ rebel army approached London; when the king was trembling; when the prime minister was undetermined, and stocks were sold at any price. Unhesitatingly he went to Jonathan’s, bought all in the market, advanced every guinea he possessed, pledged his name and reputation for more, and held as much as the remainder of the members held together. When the Pretender retreated, and stocks rose, the Jew experienced the advantage of his foresight.

Like Guy, and most men whose minds are absorbed in one engrossing pursuit, Mr. Gideon was no great regarder of the outward man. In a humorous essay of the period, the author makes his hero say, “Neither he nor Mr. Sampson Gideon ever regarded dress.” He educated his children in the Christian faith, but said he was too old himself to change. Being desirous to know the proficiency of his son in his new creed, he asked, “Who made him?” and the boy replied, “God.” He then asked, “Who redeemed him?” to which the fitting response was given. Not knowing what else to say, he stammered out, “Who—who—who gave you that hat?” when the boy, with parrot-like precision, replied in the third person of the Trinity. The story was related with great unction at the period.