Chronicles and characters of the stock exchange

by of the Bank of England John Francis

These evils were so manifest and manifold, that, after various attempts to pass a measure which should be some check on government, a bill was introduced, by which all contracts were made subject to a species of auction, although the minister was not compelled to accept the lowest offer.

During the debates which were held upon the subject, many other facts were elicited, which confirm all the previous remarks, and prove the iniquity with which the money of the country was disposed of. One member possessed a contract producing £30,000 a year more than the legitimate profit. Mr. Alderman Harley made £37,000 too much by another. On a contract for remitting gold, £35,000 was paid more than was necessary. At an earlier period it was discovered, that, out of 16,000 tuns of beer contracted and paid for, only 7,000 tuns were delivered. The rum contract was granted at fifty per cent. above a remunerating price. The transport service paid twenty per cent. too much. Millions were lying for years in the hands of favorite placemen, favorite agents, and favorite contractors, while the country was borrowing at an exorbitant interest; and, after a careful perusal of the evidence, there can be no doubt that the charge of corrupting the House was true; nor was it in the nature of a member of Parliament in the eighteenth, any more than in the nineteenth century, to possess profitable contracts, the continuation of which depended on war, and yet speak honestly and earnestly for peace.

The names of Abraham and Benjamin Goldsmid will recall to the memory of many of our readers the forms and features of these magnates of the money-market. Of singular capacity, and of equally singular good fortune, the firm of which they were the members rose, from comparative obscurity, to be the head and front of ’Change Alley.

Prior to 1792 they were little known,—Mr. Gurney, the eminent bill-broker, regards them as his predecessors,—but by that year they occupied an important position, and became successful competitors for the national loans. They were the first members of the Stock Exchange who competed with the bankers for the favors of the Chancellor, and diverted from their purses those profits which were scarcely a legitimate portion of banking business. The combination of that interest being thus broken, the bargains for public loans became more open; there was no confederation to limit and lower the prices; and the ministry and country reaped the benefit in improved terms. The house of Sir William Curtis, whose fortunes were founded in this manner; of Dorrien and of Boldero, names which, great in their day, have almost passed from the roll of city bankers; of Grote, now better known as the philosophical historian of Greece; were all competitors, three quarters of a century ago, for those loans which the necessities of the country made so frequent. Nor were people wanting who openly accused the entire banking interest of an unfair confederation to realize their views. This interest was first attacked by the boldness of Abraham and Benjamin Goldsmid; and it is easy to imagine the feelings of the bankers when unknown men reaped the prize which they had hitherto gathered.

The daily papers bore an almost daily testimony to their munificence. Naturally open-handed, the poor of all creeds found kindly benefactors. On one day, the grandeur of an entertainment to royalty was recorded; and on the next, a few words related a visit of mercy to a condemned cell. At one time, mansions, vieing in architectural beauty with those of our nobility, were described; at another, some great and gracious act of charity was recorded. Entertainments to princes and ambassadors, reviving the glories of the Arabian Nights, were frequent; and galleries, with works of art worthy the magnificence of a Medici, graced their homes. They were awhile Fortune’s chief and most especial favorites. When, in 1793, the old aristocracy of England’s traders fell, as in 1847, and the Bank in one day discounted £4,400,000, their losses amounted but to £50. Prizes, under circumstances little inferior to romance, followed their purchases of lottery-tickets; and they knew, as if by instinct, a bill of exchange with a bad name to it.

The brothers had faced the storm of life in their earlier years. Fortune, which crowned their efforts, proved that prosperity had no power to divide them; and when, in the early part of the nineteenth century, Benjamin Goldsmid destroyed himself, the survivor felt the loss so severely, that he never recovered the shock. The death of Benjamin caused no abatement in the benevolence of Abraham Goldsmid; and one who knew him well has written with enthusiasm of his “general philanthropy, his ready munificence, his friendly demeanour, his mild and unassuming manner.”

Many anecdotes, singularly illustrative of his kindly feeling, are still remembered. It is stated that, on one occasion, noticing a great depression in the waiter who usually attended him where he dined, he inquired the cause, ascertained that it was pecuniary, gave the astonished man double the amount he required, and refused to listen to the thanks of the recipient. Another story is extant to the same purport. He became acquainted by accident with one of those simple and single-minded country curates, whose poverty was the disgrace, and whose piety was the glory, of the Church of England. This was the man for Abraham Goldsmid at once to appreciate and to benefit. He obtained all the necessary particulars, and in a few weeks a letter was received, which told the curate he had been allotted a share of a new loan. The letter was a mystery to the country clergyman, who placed it on one side, with a confused notion that a hoax was intended. He had not long to wait. The next day brought a second letter, and with it comfort and consolation, in the shape of a large sum which had been realized on the allotment. These things are pleasant to record; and it is doubtful whether the check gave most pleasure to the wealthy Hebrew to write, or the country curate to receive.

In 1810, the houses of Baring and Goldsmid were contractors for the ministerial loan of fourteen millions. But Sir Francis Baring dying, the support of the market was left to his companion. The task was difficult, for a formidable opposition had arisen, which required the united energies of both houses to repress. It was the interest of this opposition to reduce the value of scrip, and it succeeded. Day by day it lowered; and day by day was Mr. Goldsmid’s fortune lowered with it. He had about eight millions in his possession; and with the depression of his fortune, his mind grew dispirited and disordered. Another circumstance occurred at this particular moment to increase his embarrassment. Half a million of exchequer-bills had been placed in his hands to negotiate for the East India Company; and the latter, fearing the result of the contest on the Stock Exchange, claimed the amount. His friends did not rally round him, as at such a moment, and with such a man, his friends should have done; and Abraham Goldsmid, dreading a disgrace, which his sensitive and honorable nature magnified a hundredfold, after entertaining a large dinner-party, destroyed himself in the garden of his magnificent residence, in Surrey.

This sad event created a sensation in the city, unparalleled by the loss of any single individual. The death of the great loan-contractor was regarded as of national importance. Expresses were sent with the news to the king and the Prince of Wales. The funds fell three per cent. The journals united in eulogizing the man whose death they recorded. The jobbers of Capel Court crowded in anxious inquiry. The merchants of the Exchange assembled before the accustomed time. The thoroughfares resounded with rapid questions and hurried replies. Little or no business was done; and, it is said, the great question of peace or war never created a similar confusion. The jury recorded their opinion, and, when the remains were carried to their home, the procession was followed by a crowd, who, partaking of his charity in life, thronged to honor him in death. Sobs and suppressed moans attested the reality of their sorrow, and bore a fitting testimony to his worth. The high-priests and elders paid every distinction which the Mosaic ordinances allowed; but, in conformity with the commands of the great lawgiver, they withheld from him the customary rites; and unconsecrated ground received the remains of Abraham Goldsmid, the Hebrew suicide.

In 1792, another sinking fund was established, of one per cent. on the nominal capital of each loan, to which the interest on the capital redeemed by this fund was to be added. When annuities for lives, or for a longer term than forty-five years, were granted, the value which would remain after forty-five years was to be estimated, and one per cent. on that value set aside for their redemption. This fund was to be kept separate, and applied to redeeming debts contracted subsequent to its institution; and this, it was estimated, would redeem every loan in forty-five years from its contraction. £400,000 was granted in aid of the previous sinking fund; and £200,000 annually till 1802, when the grant was rendered perpetual. All money saved by the reduction of interest was also to be added; but, as no savings occurred, this clause might as well have been omitted. In 1798, however, the application of one per cent. on the capital of the loans was deviated from, as the claims of the war were too pressing to allow of its application.