The Earliest National Debt.—History of Tontines.—Of the Money Interest, its Origin, Extravagance, and Folly.—Royal Exchange.—First Irredeemable Debt.—Tricks of the Brokers.—Jobbing in East India Stock.—False Reports.—Importance of the English Funds.—Picture of the Alley.—Systematic Jobbing of Sir Henry Furnese, Medina, and Marlborough.—Thomas Guy, a Dealer in the Alley.
The creation of a national debt has been attributed to the Dutch, but is really due to the Venetians. The immediate treasury of the Doge was exhausted; money was necessary; and the most eminent citizens of that great republic were called upon to redeem the credit of their country. A Chamber of Loans was established, the contributors were made creditors, four per cent. was allowed as interest, and she,
“Who once held the gorgeous East in fee,
And was the safeguard of the West,”
resumed her credit, and increased her power.
So fruitful a source of wealth was not allowed to fall into desuetude. The Florentine republic, experiencing a deficiency in her revenue, established a mount, allowed five per cent. interest, and, says Sir William Blackstone, these laid the foundation of our national debt. The Dutch were not long following the example. When the great persecution occurred, which forced the Spanish Jew—the aristocracy of the chosen race—from the place of his nativity, he brought with him to Holland the craft and the cunning of the people. He taught the Dutch to create an artificial wealth; and the people of that republic, by its aid, maintained an attitude of independence, which rendered them so long the envy and the hatred of the proud states which surrounded their territory. Their industry increased with the claims upon them. They cultivated their country with renewed perseverance; they brought the spices of the rich and barbarous East to the shores of the cultivated and the civilized West; they opened new sources of profit; their merchant-vessels covered the waters; their navy was the boast of Europe; their army was the scourge of the great Louis in the height of his pride and power. The markets of Holland evinced a full activity; the towns of Holland increased in importance; and the capital of Holland became the centre of European money transactions, partly in consequence of the great bigotry which banished the Jew from Spain.
When, therefore, the chief of that small yet powerful republic was called to sit upon an English throne, he brought with him many of those whose brains had contrived and whose cunning had contributed to produce these great changes; and from his reign, whatever evils may have arisen from a reckless waste of money, there commenced that principle which, for a century and a half, has operated on the fortunes of all Europe,—which proclaimed that, under every form and phase of circumstance, in the darkest hour of gloom as in the proudest moment of grandeur, the inviolable faith of England should be preserved towards the public creditor. Up to this period, the only national debt on which interest was acknowledged was that sum which had been seized on in the Exchequer; and even these dividends were irregularly paid. Many debts had been incurred by our earlier kings, but all the promises and pledges which had been given for their redemption were broken directly the money was gained; and it remained, we repeat, for William, whatever his errors may have been, to establish the principle, that faith to the public creditor must be inviolate.
The reign of William was productive of all modes and methods of borrowing. Short and long annuities, annuities for lives, tontines, and lotteries, alike occupied his attention. The former are still in existence, the two latter have fallen to decay. The lotteries have been expunged from the statute-book, and their evils will be fully developed at a fitting period; while to the brain of a Neapolitan, and the city of Paris, William was indebted for the knowledge of the tontine. Lorenzo Tonti, in the middle of the seventeenth century, with the hope of making the people of France forget their discontents in the excitement of gambling, suggested to Cardinal Mazarin the idea of annuities, with the benefit to the survivors of those incomes which fell by death. The idea was approved by the Cardinal and allowed by the court. Parliament, however, refused to register the decree, and the scheme failed. Tonti again endeavoured to establish a society on this plan, and to build by its means a bridge over the Seine; but the unfortunate inventor christened it Tontine, and not a man in Paris would trust his money to a project with an Italian title. A complete enthusiast, he allowed Paris no rest on his favorite theme, and proposed to raise money for the benefit of the clergy in the same way. The Assembly reported on the scheme, and the report contained all that could flatter the projector’s vanity, but refused a permission to act on it; and again it was abandoned. The idea, however, which could not be carried out for the people, which was refused for the benefit of the city, and not allowed for the clergy, was claimed as a right for the crown; and in 1689, Louis XIV. created the first tontine to meet his great expenses. From this period they became frequent; and William was too determined to humble the pride of his rival, not to avail himself of this among other modes of raising funds.[1]
The moneyed interest—a title familiar to the reader of the present day—was unknown until 1692. It was then arrogated by those who saw the great advantage of entering into transactions in the funds for the aid of government. The title claimed by them in pride was employed by others in derision: and the purse-proud importance of men grown suddenly rich was a common source of ridicule.
Wealth rapidly acquired has been invariably detrimental to the manners and the morals of the nation, and in 1692 the rule was as absolute as now. The moneyed interest, intoxicated by the possession of wealth which their wildest dreams had never imagined, and incensed by the cold contempt with which the landed interest treated them, endeavoured to rival the latter in that magnificence which was one characteristic of the landed families. Their carriages were radiant with gold; their persons were radiant with gems; they married the poorer branches of the nobility; they eagerly purchased the princely mansions of the old aristocracy. The brush of Sir Godfrey Kneller, and the chisel of Caius Cibber, were employed in perpetuating their features. Their wealth was rarely grudged to humble the pride of a Howard or a Cavendish; and the money gained by the father was spent by the son in acquiring a distinction at the expense of decency. They were seized upon by the satirist and the dramatist as a new object of ridicule; and under various forms they have become a stage property. The term which they had chosen to distinguish them became a word of contempt; and the moneyed class was at once the envy and the laugh of the town. Nor was it until that interest became a great and most important one, that the term assumed its right meaning, or that the moneyed contended with the landed interest on a more than equal footing. The former have always clung to the house of Brunswick; the latter have often used their exertions against it. In time, however, the moneyed became a landed interest, and vied in taste as well as magnificence with the proudest of England’s old nobility. Among these was Sir Robert Clayton, director of the Bank, whose banqueting-room was wainscoted with cedar, whose villa was the boast of the Surrey hills, whose entertainments imitated those of kings, whose judicious munificence made him the pride of that great city to the representation of which he was called by acclamation. But there were other and less reputable directors of the great Bank; and a pamphlet, published shortly afterwards, drew public attention to acts which either prove that morality in one commercial age is immorality in the next, or that some of the governors of the corporation were wofully deficient in the organ of conscientiousness.