Chronicles and characters of the stock exchange

by of the Bank of England John Francis

It is not to be wondered at that this willingness to lend found a corresponding willingness to borrow. It was not alone the South American states that came into the market; nor was it only republican dictators who were anxious to borrow. Denmark accepted £3,000,000, Portugal took £1,500,000, and Russia £3,500,000.

From this period up to 1825, loans to foreign places—foreign powers they cannot be called—were very frequent. Brazil borrowed £3,686,200 in 1824, and in 1825 two millions more. Buenos Ayres followed the good example, received one million, and then omitted to pay the dividend; while Mexico took £6,400,000. The emancipation of this country from the yoke of Spain was a fair specimen of the liberal principles of the Liberals of this period. Augustin Iturbide matured a plan to emancipate Mexico; and, having expelled the Spaniards, established a regency, nominated by himself, formed of his own creatures, and controlled by his own will. The army was with him, the usurpation of the throne followed, and the dictator was proclaimed emperor. The crown was made hereditary, his sons were to be princes, a million and a half of dollars were settled on him, and all the accessories of royalty were established.

A million and a half of dollars were more easily voted than procured. Money was scarce, and the new emperor exacted it with severity. The people grew disgusted; the opposition saw its time; disaffection spread to the troops; and Iturbide tendered his resignation to the senate he had formed. It need scarcely be added, that the dividends were as difficult to get from Mexico as they were from Peru.

But the Greek loan was the most extraordinary feature of the period; and with it is concluded the present rapid sketch of the bubbles of 1825.

The history of its mismanagement is one of those strange records of which the writer has seen so many during his search into the by-ways of financial history. It must be in the memory of many, that, for some years previous to 1824, the arm of the Greek was lifted in resolute, though almost hopeless, resistance against the Ottoman. When the intelligence reached England, that the nation whose tongue was classic, whose statuary was regarded with despairing wonder, whose records formed one of the finest pages of history, was, after centuries of subjugation, striving to obtain freedom, a genuine enthusiasm pervaded English society. The antique grandeur of Greece was remembered; the ancient glory of her people brought to mind; names which had roused the enthusiasm of schoolboys were repeated; the clime which had produced the great men of a great age was in every man’s thought; dreams of renewed glory were in every man’s brain; and on every man’s tongue, and in every man’s heart, were the virtues of that past world revived. Of this feeling the subtle Greek availed himself, and negotiations were entered into to procure a loan. The proposal was favorably received by the Stock Exchange. In 1824, two agents of the Greek government, or deputies, as they were popularly called, arrived in London; and loans to the amount of £1,602,000 were raised for the service of Greece. This sum was not placed uncontrolled in the power of the deputies, the sanction of Mr. Edward Ellice, Mr. Joseph Hume, and another, being necessary to its appropriation. After much hesitation, 50,000 sovereigns were despatched to aid the cause; but when they arrived, the government of that unhappy country refused to give any pledge as to their worthy employment. The emissaries declined to part with their treasure without; and, to the alarm of the Greeks, they saw this large amount sailing from their shore. Any pledge would now have been given; and the English emissaries were followed with protestations and promises, which meant nothing but an earnest desire for the gold. Scarcely had the ill-fated vessel returned, ere the yellow fever attacked the crew. Helpless and dying, they reached the Asiatic coast; and their money was taken by the Greek government with an avidity which did not affect disguise.

Mismanagement marked the progress of the cause in Europe as in Asia. Two excellent Swedish vessels were offered for £47,000. Time was success, and, instead of purchasing vessels ready for action, contracts were made with America for two frigates at £160,000. A cavalry officer was appointed to superintend the naval department, and in two months and a half five steamboats were to be placed at the disposal of Lord Cochrane. “Within a few weeks,” said Mr. Ellice, rather more pompously than to the purpose, “Lord Cochrane will be at Constantinople, and burn the Turkish vessels at that port. Cochrane will suffice for admiral and general. He will clear Greece of the Turk.” “Give yourselves no further concern about the matter,” said Sir Francis Burdett, speaking as familiarly of war as of reform; “your country shall be saved.” But though Sir Francis Burdett and Mr. Ellice said it, the country was not saved. After spending £155,000 on two frigates, £50,000 more were required to finish them. This was not forthcoming, and the vessels were seized. All seemed anarchy and confusion. Schemes of the most extravagant character were propounded. Three very important towns were to be besieged and carried by one thousand men. A free press was to shed light and lustre around. Improvements which were impracticable, and a constitution which could not be carried, were promised.

During this unhappy period, the news of cities burned to the ground, and forts stormed, of besieged places sacked after months of heroic resistance, aroused the public; and a storm of indignation was poured upon projectors, deputies, and proprietors. The flagrant enormities of the management were exposed, the military projects discussed, the financial artifices denounced; and attention was pointed, through the report of the committee, at two, whose voices, loud in the cause of Greece, were said to be louder in their own. Joseph Hume, a member of the senate, and John Bowring, a linguist and a scholar, were on the committee. Reports which touched the honor of both were in free circulation. Political feeling, perhaps, prompted many of the remarks; and the public press asserted that to which no honorable man could submit. Mr. Merle, at a public meeting, said “he had been told that certain portions of the Greek loan had been appropriated to Mr. Hume; that those bonds had not been taken up; and that they had afterwards been sold at a great loss to the Greek government.”

“Mr. Hume,” wrote a daily paper, “has been publicly accused of fraud and hypocrisy, in throwing upon the Greek nation the loss which attended a speculation of his own, while acting in the assumed character of a friend to the cause.”

It was proved that one million had been wasted in commissions and military preparations, in Stock Exchange transactions and Stock Exchange jobbing. The Greek deputies received allowances larger than those paid to the diplomatic agents from great courts. Mr. Hume, in his ardor for Greece, had £10,000 assigned him of the first loan. The price fell sixteen per cent., and his ardor was said to have fallen in proportion. Alarmed at a loss so great, the senator endeavoured to release himself from the burden; but when he applied to the deputies and contractors, he was met with the reply, that, had the stock risen, he would not have returned the gain. The argument was sound, but the head is obtuse when the purse is endangered; and Mr. Hume—clear-headed generally—could not see the fairness of the position. After some correspondence, the deputies agreed to take it off Mr. Hume’s hands, at thirteen instead of sixteen per cent. discount; thereby saving Mr. Hume £300 out of the loss of £1,600 which he first feared. In time, the Greek cause grew prosperous, the stock rose to par, and Mr. Hume, with a singular power of perception compared with his previous notions, claimed the £1,300 which he had lost. The surprise of the deputies may be imagined, and they must have had curious ideas of the way in which the friends of Greece wished to serve her. Mr. Hume, however, was powerful; Mr. Hume was a senator; and to Mr. Hume was accorded a privilege for which others might have looked in vain. But a further question arose. Mr. Hume, remarkable for the closeness of his calculations, discovered that £54 was due for interest. This he applied for, and this was granted.

The defence of Mr. Hume was comprised in the assertion, that, some of his actions having been misinterpreted, because he was a proprietor of stock, he had determined to part with it. The deputies offered to save the friend of the cause so great a loss; and Mr. Hume thought the conclusion at which they had arrived a sound one. After some correspondence, they agreed to take his stock at thirteen per cent. discount, the market price of sixteen per cent. being but nominal. Mr. Hume wished to be relieved entirely; but this the deputies declined. Shortly after, Mr. Hume was informed that these gentlemen would pay him the sum he was deficient; and as he considered this as fair, and not as a favor, he also considered he was entitled to the interest. “The worst that any one can say of me,” concluded Mr. Hume, “is, that I may have evinced an OVER-ANXIETY TO AVOID A PECUNIARY LOSS.” Mr. Hume probably remembers his over-anxiety to the present day.