Chronicles and characters of the stock exchange

by of the Bank of England John Francis

“The finances of Great Britain,” he says, “as they were managed in former times, could never have sustained the cost of such a war for a tenth part of the time. But expense now seemed no obstacle to the government. A new engine of surpassing strength had been discovered for extracting capital out of the country; and the able statesmen who had it in their hands felt it to be not less serviceable in consolidating the internal power, than in meeting the external expenses of the new dynasty.

“When this system first began, the nation was not sensible of the important consequences to which it would lead. They thought it could only be a temporary expedient; and that, though it might, perhaps, lead to a few millions being added to the national debt, yet that would be all. Though from the first, accordingly, its progress was viewed with a jealous eye by the thinking few, it made but little impression upon the unthinking many, before the peace of Ryswick. But when the War of the Succession began, in 1702, and continued without intermission, attended by daily and increasing expenditure, for ten years, the apprehensions of a large part of the nation became excessive. At the Revolution the national debt was £661,000; by 1710 it exceeded £50,000,000.

“The wars in which William was of necessity engaged, the loans which they rendered unavoidable, and which the commercial wealth of the nation enabled it to advance, and the great increase in the expenditure of the Exchequer, all conspired to place a vast and unprecedented amount of patronage in the hands of government. This was systematically directed to buy off opposition in Parliament, and secure a majority in the constituencies. Corruption, in every possible form, from the highest to the lowest, was employed in all parts of Great Britain, especially among the urban electors, and with such success, that almost every measure of government passed without difficulty through both Houses of Parliament. The nation had shaken off the prerogatives of the crown, but they had fallen under the domination of its influence. The gold of the Exchequer was found to be more powerful than the penalties of the Star-Chamber.”

Almost every one professes to consider the debt as a drain upon the resources of the nation; as a nightmare upon the chests of the people; and as a millstone which will sink England below her proper position. Most of our political writers affect this view. All our alarmists make it their theme. Hume wrote,—“Either the nation must destroy public credit, or public credit must destroy the nation.” Sir Robert Walpole said,—“When the debt reaches 100 millions, the nation will be bankrupt.” In 1735, Lord Hervey, in his memoir of George II., remarked,—“I do not see how it would be possible for the country, on any exigence, or for the support of the most necessary war, to raise one million a year more than it now raises”; and in 1777 the third earl wrote as a note,—“What would my father have said had he seen seventeen millions raised in a year?” Lord Bolingbroke declared the debt was sinking England into the gulf of inevitable bankruptcy. Cobbett was perfectly rabid in his attacks on those whom he invariably classed as Jews and fundholders, predicted the ruin of England in half a century, and proposed, in 1832, a plan which would have ceased the interest on the national debt in twenty-seven years, and have classed England among the repudiators.

Adam Smith thought that the practice of funding had gradually weakened every state which had adopted it. Paine openly predicted the Bank and the government would perish together in a few months. Mr. Tierney said, in 1817, such a state of things could not go on. Sir James Graham proposed, in 1827, a reduction of thirty per cent. Mr. Baines thought it might be ultimately necessary to make a general contribution to extinguish a large portion of the debt; and the late Earl Grey talked in early life of “taking the bull by the horns”; although he failed to fulfil in his age the promise of his youth.

If prophecies such as these have been plentiful, the following extract, at once a picture and illustration of the period when the nation first commenced to borrow, will prove that other views are entertained by many, and that there is a large class who, however they may deprecate the great evils arising from the debt, consider that it has been beneficial to the interests of England.

“The era of the Revolution is chiefly remarkable for the new dynasty having taught the government how to raise taxes in the country, and thus brought England to take the place to which she was entitled in the scale of nations, by bringing the vast national resources to bear upon the national struggles. That which the Stuarts never could effect by appeal to honor, spirit, or patriotism, William and Anne soon accomplished by bringing into play, and enlisting on their side, different and less creditable motives. They no longer bullied the House of Commons, they bribed it; and, strange to say, it is to the entire success of the gigantic system of borrowing, expending, and corrupting, which they introduced, and which their successors so faithfully followed, that the subsequent greatness of England is mainly to be ascribed. It was the system of managing the House of Commons by loans, good places, and bribes, which provided the sinews of war, and prepared the triumphs of Blenheim and Ramilies. William tripled the revenue, and gave so much of it to the House of Commons that they cordially agreed to the tripling. He spent largely; he corrupted still more largely; he made the national interest in support of taxation more powerful than those operating to resist it. The memoirs recently come out give details of corruption so barefaced and gross, that they would exceed belief if their frequency, and the testimony to their authenticity from different quarters, did not defy disbelief.”

It is now known, that when Walpole’s ministerial supporters were invited to his ministerial dinner, each found a £500 note under his napkin.

It is one great evil of the present age, that it persists in regarding the debt as perpetual. Immediately the expenditure is exceeded by the revenue, there is a demand for the reduction of taxation. We, a commercial people, brought up at the feet of McCulloch, with the books of the national debt as a constant study, with the interest on the national debt as a constant remembrancer, persist in scoffing at any idea of decreasing the encumbrance; and when a Chancellor of the Exchequer proposes a loan of eight millions, we growl and grumble, call it charitable, trust for better times, and read the opposition papers with renewed zest.

There is no doubt that the resources of the nation are equal to far more than is now imposed; but it can only be done by an efficient revision of our taxation; and this will never be effected till the wolf is at the door. A war which greatly increased our yearly imposts would, with the present system, crush the artisan, paralyze the middle class, and scarcely leave the landed proprietor unscathed. The convertibility of the note of the Bank of England would cease; and it would be impossible to preserve the charter of Sir Robert Peel in its entirety, while twenty-eight millions were claimable yearly in specie, and the gold of the country went abroad in subsidies.