Chronicles and characters of the stock exchange

by of the Bank of England John Francis

In the same year the sinking funds were united, to assist in discharging the debts then existing; and one per cent. on loans subsequent to 1802 was again appointed, to swell the amount. This fund at its commencement was limited to four millions, but this limitation was repealed; and the application of expired annuities, and of saving by the reduction of interest, was also repealed.

In the latter part of the century, a beneficial change was made in the provision for the naval expenses. Prior to this period, £4 per man per month was the allowance to meet the entire cost of the department; after this time, the expenses of the navy were supplied, like other charges, from the loans periodically raised.

Though the discontent of the English people was often roused, yet the stories which were occasionally circulated,—of forced loans in France,—of Parisian banking-houses being surrounded by soldiers,—of money-chests violated, and of moneyed men plundered,—had considerable effect in quieting them. It is probable that many of these were inventions; some of them were understood to be so; but when it is known that entire yearly incomes were often collected, and called income-tax, there are few financial follies of our neighbours which we should not be inclined to credit.

A curious proposition to pay off the national debt was very seriously made in 1798. A profound disquisition upon the evils which arose from it, and the ruin to which it was leading, was followed by an intricate array of figures, a close calculation of the population, and an analysis of their incomes. Somewhat excited by the grave beginning, the public were not a little disappointed to find that, by deducting one day’s provision per week for a certain time, and allowing compound interest on it, the great financial difficulty of the day might be overcome. The volume was privately printed, in quarto, at considerable expense; but whether it emanated from a lunatic asylum, or whether it sent the writer to one, cannot be ascertained.

It must be evident from the brief record of the war just given, that business in the funds had increased greatly. Prior to 1801, the market of ’Change Alley, in the coffee-house where the brokers met, was, as a public place, open to any who chose to make it his resort. The jobber who reckoned his transactions by hundreds of thousands was jostled by the man who was disposed, either morally or materially, to pick pockets; while the loans which had increased the national debt to 550 millions, the exchequer-bills, which were circulated as freely as the government dared, and the companies, which were augmented in proportion, formed an amount of business that, in the opinion of the principal persons, demanded a building to bear some proportion to the importance of its transactions. It was resolved, therefore, to choose a plot of ground as near the Bank as possible, and to meet the required expenses by private subscription. Whatever errors may be indigenous to the Stock Exchange, illiberality can scarcely be classed among them; and so successful were the proceedings, that, on the 18th of May, 1801, Mr. William Hammond, chairman of the committee of management, laid the first stone of the first building erected exclusively for the business of the Stock Exchange. Beneath the stone the following inscription, engraved on copper, was placed:—

“On the 18th of May, in the year 1801, and forty-one of George III., the first stone of this building, erected by private subscription, for the transaction of business in the public funds, was laid in the presence of the proprietors, and under the direction of William Hammond, William Steer, Thomas Roberts, Griffith Jones, William Grey, Isaac Hensley, Jo. Brackshaw, John Capel, and John Barnes, managers; James Peacock, architect. At this era, the first of the Union between Great Britain and Ireland, the public funded debt had accumulated in five successive reigns to £552,730,924. The inviolate faith of the British nation, and the principles of the constitution, sanction and secure the property embarked in this undertaking. May the blessing of that constitution be secured to the latest posterity!”

To secure respectability in the members, vote by ballot was adopted, and ten guineas per annum fixed on as the subscription.

The peace of 1801 was a welcome respite to all save the members of the Stock Exchange; where it was said, “There were not commissions sufficient to pay for summer excursions, nor confidence enough to make a bankrupt.” Great efforts had been made to reduce the price, which continued to ascend; although Goldsmid was said to have stood in the market and sold to any amount at the lowest price of the time. The attempt proved vain; and the endeavour to control public opinion was paid for by this house to the amount of £180,000.

It was difficult to believe, at first, that war had really ceased. There was a continued excitement until the treaty was signed; all places of public resort were thronged with inquirers; betting ran high about the articles; the chances of exchequer-bills and new lotteries were discussed; and when the truce was announced in the city, it was also announced that the preliminaries of a new loan would be arranged. Talleyrand was talked of as having employed his information and capacity in gaining large sums; foreigners generally were busy in making or marring their fortunes; and it was ascertained that, in 1803, they held upwards of eighteen millions of government securities. When it was known that the preliminaries were signed, the tumultuous joy of the nation is beyond expression; and Lloyd’s was instantly crowded. The people ran about, congratulating one another on the happy event; the different steeples displayed the union-flag by day, and at night a general illumination took place; consols rose from 59 to 66½, and there were twenty-one defaulters on the next settling day.

The loan, known as the loyalty loan, attracted much attention in the early part of the century. The period at which it was contracted was a critical one for the empire. Abroad, Prussia and the princes of the Empire had withdrawn from the confederacy against France; Austria demanded assistance; Holland was bound by fear to the French republic. Stagnation of trade, scarcity of specie, want of provisions, and discontent among the people, marked the period at home. The supplies for the year were difficult to obtain; an appeal was made to the loyalty of the nation, and that appeal was answered. Some subscribed in the hope of gain; others to curry favor; and, with all these various interests, eighteen millions were subscribed in a few days. As an additional inducement, it was promised that the capital, if claimed, should be repaid within two years after a definitive treaty of peace. The peace of Amiens came in 1802, and the holders were, therefore, entitled to demand, on the 27th of March, 1804, £100 sterling for each £100 stock, although the latter was at a heavy discount. It need hardly be added, that the claim was made; and, as money was not sufficiently plentiful, it was arranged that, for every £100 of the three per cent. loyalty loan, £100 Navy five per cent. should be given, and for the difference between the money-price of the latter and £100 sterling, the holder should receive the amount in three per cents. The whole entailed a heavy loss upon the country, and this was more to be regretted, because upwards of eight millions of this loan had been gathered by the Jews, and by two city banking-houses.