The History of England, from the Accession of James II — Volume 4

The natural effect of this state of things was that a crowd of projectors, ingenious and absurd, honest and knavish, employed themselves in devising new schemes for the employment of redundant capital. It was about the year 1688 that the word stockjobber was first heard in London. In the short space of four years a crowd of companies, every one of which confidently held out to subscribers the hope of immense gains, sprang into existence; the Insurance Company, the Paper Company, the Lutestring Company, the Pearl Fishery Company, the Glass Bottle Company, the Alum Company, the Blythe Coal Company, the Swordblade Company. There was a Tapestry Company which would soon furnish pretty hangings for all the parlours of the middle class and for all the bedchambers of the higher. There was a Copper Company which proposed to explore the mines of England, and held out a hope that they would prove not less valuable than those of Potosi. There was a Diving Company which undertook to bring up precious effects from shipwrecked vessels, and which announced that it had laid in a stock of wonderful machines resembling complete suits of armour. In front of the helmet was a huge glass eye like that of a cyclop; and out of the crest went a pipe through which the air was to be admitted. The whole process was exhibited on the Thames. Fine gentlemen and fine ladies were invited to the show, were hospitably regaled, and were delighted by seeing the divers in their panoply descend into the river and return laden with old iron, and ship's tackle. There was a Greenland Fishing Company which could not fail to drive the Dutch whalers and herring busses out of the Northern Ocean. There was a Tanning Company which promised to furnish leather superior to the best that was brought from Turkey or Russia. There was a society which undertook the office of giving gentlemen a liberal education on low terms, and which assumed the sounding name of the Royal Academies Company. In a pompous advertisement it was announced that the directors of the Royal Academies Company had engaged the best masters in every branch of knowledge, and were about to issue twenty thousand tickets at twenty shillings each. There was to be a lottery; two thousand prizes were to be drawn; and the fortunate holders of the prizes were to be taught, at the charge of the Company, Latin, Greek, Hebrew, French, Spanish, conic sections, trigonometry, heraldry, japanning, fortification, bookkeeping and the art of playing the theorbo. Some of these companies took large mansions and printed their advertisements in gilded letters. Others, less ostentatious, were content with ink, and met at coffeehouses in the neighbourhood of the Royal Exchange. Jonathan's and Garraway's were in a constant ferment with brokers, buyers, sellers, meetings of directors, meetings of proprietors. Time bargains soon came into fashion. Extensive combinations were formed, and monstrous fables were circulated, for the purpose of raising or depressing the price of shares. Our country witnessed for the first time those phenomena with which a long experience has made us familiar. A mania of which the symptoms were essentially the same with those of the mania of 1720, of the mania of 1825, of the mania of 1845, seized the public mind. An impatience to be rich, a contempt for those slow but sure gains which are the proper reward of industry, patience and thrift, spread through society. The spirit of the cogging dicers of Whitefriars took possession of the grave Senators of the City, Wardens of Trades, Deputies, Aldermen. It was much easier and much more lucrative to put forth a lying prospectus announcing a new stock, to persuade ignorant people that the dividends could not fall short of twenty per cent., and to part with five thousand pounds of this imaginary wealth for ten thousand solid guineas, than to load a ship with a well chosen cargo for Virginia or the Levant. Every day some new bubble was puffed into existence, rose buoyant, shone bright, burst, and was forgotten. 368

The new form which covetousness had taken furnished the comic poets and satirists with an excellent subject; nor was that subject the less welcome to them because some of the most unscrupulous and most successful of the new race of gamesters were men in sad coloured clothes and lank hair, men who called cards the Devil's books, men who thought it a sin and a scandal to win or lose twopence over a backgammon board. It was in the last drama of Shadwell that the hypocrisy and knavery of these speculators was, for the first time, exposed to public ridicule. He died in November 1692, just before his Stockjobbers came on the stage; and the epilogue was spoken by an actor dressed in deep mourning. The best scene is that in which four or five stern Nonconformists, clad in the full Puritan costume, after discussing the prospects of the Mousetrap Company and the Fleakilling Company, examine the question whether the godly may lawfully hold stock in a Company for bringing over Chinese ropedancers. "Considerable men have shares," says one austere person in cropped hair and bands; "but verily I question whether it be lawful or not." These doubts are removed by a stout old Roundhead colonel who had fought at Marston Moor, and who reminds his weaker brother that the saints need not themselves see the ropedancing, and that, in all probability, there will be no ropedancing to see. "The thing," he says, "is like to take; the shares will sell well; and then we shall not care whether the dancers come over or no." It is important to observe that this scene was exhibited and applauded before one farthing of the national debt had been contracted. So ill informed were the numerous writers who, at a later period, ascribed to the national debt the existence of stockjobbing and of all the immoralities connected with stockjobbing. The truth is that society had, in the natural course of its growth, reached a point at which it was inevitable that there should be stockjobbing whether there were a national debt or not, and inevitable also that, if there were a long and costly war, there should be a national debt.

How indeed was it possible that a debt should not have been contracted, when one party was impelled by the strongest motives to borrow, and another was impelled by equally strong motives to lend? A moment had arrived at which the government found it impossible, without exciting the most formidable discontents, to raise by taxation the supplies necessary to defend the liberty and independence of the nation; and, at that very moment, numerous capitalists were looking round them in vain for some good mode of investing their savings, and, for want of such a mode, were keeping their wealth locked up, or were lavishing it on absurd projects. Riches sufficient to equip a navy which would sweep the German Ocean and the Atlantic of French privateers, riches sufficient to maintain an army which might retake Namur and avenge the disaster of Steinkirk, were lying idle, or were passing away from the owners into the hands of sharpers. A statesman might well think that some part of the wealth which was daily buried or squandered might, with advantage to the proprietor, to the taxpayer and to the State, be attracted into the Treasury. Why meet the extraordinary charge of a year of war by seizing the chairs, the tables, the beds of hardworking families, by compelling one country gentleman to cut down his trees before they were ready for the axe, another to let the cottages on his land fall to ruin, a third to take away his hopeful son from the University, when Change Alley was swarming with people who did not know what to do with their money and who were pressing every body to borrow it?

It was often asserted at a later period by Tories, who hated the national debt most of all things, and who hated Burnet most of all men, that Burnet was the person who first advised the government to contract a national debt. But this assertion is proved by no trustworthy evidence, and seems to be disproved by the Bishop's silence. Of all men he was the least likely to conceal the fact that an important fiscal revolution had been his work. Nor was the Board of Treasury at that time one which much needed, or was likely much to regard, the counsels of a divine. At that Board sate Godolphin the most prudent and experienced, and Montague the most daring and inventive of financiers. Neither of these eminent men could be ignorant that it had long been the practice of the neighbouring states to spread over many years of peace the excessive taxation which was made necessary by one year of war. In Italy this practice had existed through many generations. France had, during the war which began in 1672 and ended in 1679, borrowed not less than thirty millions of our money. Sir William Temple, in his interesting work on the Batavian federation, had told his countrymen that, when he was ambassador at the Hague, the single province of Holland, then ruled by the frugal and prudent De Witt, owed about five millions sterling, for which interest at four per cent. was always ready to the day, and that when any part of the principal was paid off the public creditor received his money with tears, well knowing that he could find no other investment equally secure. The wonder is not that England should have at length imitated the example both of her enemies and of her allies, but that the fourth year of her arduous and exhausting struggle against Lewis should have been drawing to a close before she resorted to an expedient so obvious.

On the fifteenth of December 1692 the House of Commons resolved itself into a Committee of Ways and Means. Somers took the chair. Montague proposed to raise a million by way of loan; the proposition was approved; and it was ordered that a bill should be brought in. The details of the scheme were much discussed and modified; but the principle appears to have been popular with all parties. The moneyed men were glad to have a good opportunity of investing what they had hoarded. The landed men, hard pressed by the load of taxation, were ready to consent to any thing for the sake of present ease. No member ventured to divide the House. On the twentieth of January the bill was read a third time, carried up to the Lords by Somers, and passed by them without any amendment. 369

By this memorable law new duties were imposed on beer and other liquors. These duties were to be kept in the Exchequer separate from all other receipts, and were to form a fund on the credit of which a million was to be raised by life annuities. As the annuitants dropped off, their annuities were to be divided among the survivors, till the number of survivors was reduced to seven. After that time, whatever fell in was to go to the public. It was therefore certain that the eighteenth century would be far advanced before the debt would be finally extinguished. The rate of interest was to be ten per cent. till the year 1700, and after that year seven per cent. The advantages offered to the public creditor by this scheme may seem great, but were not more than sufficient to compensate him for the risk which he ran. It was not impossible that there might be a counterrevolution; and it was certain that, if there were a counterrevolution, those who had lent money to William would lose both interest and principal.

Such was the origin of that debt which has since become the greatest prodigy that ever perplexed the sagacity and confounded the pride of statesmen and philosophers. At every stage in the growth of that debt the nation has set up the same cry of anguish and despair. At every stage in the growth of that debt it has been seriously asserted by wise men that bankruptcy and ruin were at hand. Yet still the debt went on growing; and still bankruptcy and ruin were as remote as ever. When the great contest with Lewis the Fourteenth was finally terminated by the Peace of Utrecht, the nation owed about fifty millions; and that debt was considered, not merely by the rude multitude, not merely by foxhunting squires and coffeehouse orators, but by acute and profound thinkers, as an incumbrance which would permanently cripple the body politic; Nevertheless trade flourished; wealth increased; the nation became richer and richer. Then came the war of the Austrian Succession; and the debt rose to eighty millions. Pamphleteers, historians and orators pronounced that now, at all events, our case was desperate. Yet the signs of increasing prosperity, signs which could neither be counterfeited nor concealed, ought to have satisfied observant and reflecting men that a debt of eighty millions was less to the England which was governed by Pelham than a debt of fifty millions had been to the England which was governed by Oxford. Soon war again broke forth; and, under the energetic and prodigal administration of the first William Pitt, the debt rapidly swelled to a hundred and forty millions. As soon as the first intoxication of victory was over, men of theory and men of business almost unanimously pronounced that the fatal day had now really arrived. The only statesman, indeed, active or speculative, who did not share in the general delusion was Edmund Burke. David Hume, undoubtedly one of the most profound political economists of his time, declared that our madness had exceeded the madness of the Crusaders. Richard Coeur de Lion and Saint Lewis had not gone in the face of arithmetical demonstration. It was impossible to prove by figures that the road to Paradise did not lie through the Holy Land; but it was possible to prove by figures that the road to national ruin was through the national debt. It was idle, however, now to talk about the road; we had done with the road; we had reached the goal; all was over; all the revenues of the island north of Trent and west of Reading were mortgaged. Better for us to have been conquered by Prussia or Austria than to be saddled with the interest of a hundred and forty millions. 370 And yet this great philosopher—for such he was—had only to open his eyes, and to see improvement all around him, cities increasing, cultivation extending, marts too small for the crowd of buyers and sellers, harbours insufficient to contain the shipping, artificial rivers joining the chief inland seats of industry to the chief seaports, streets better lighted, houses better furnished, richer wares exposed to sale in statelier shops, swifter carriages rolling along smoother roads. He had, indeed, only to compare the Edinburgh of his boyhood with the Edinburgh of his old age. His prediction remains to posterity, a memorable instance of the weakness from which the strongest minds are not exempt. Adam Smith saw a little and but a little further. He admitted that, immense as the burden was, the nation did actually sustain it and thrive under it in a way which nobody could have foreseen. But he warned his countrymen not to repeat so hazardous an experiment. The limit had been reached. Even a small increase might be fatal. 371 Not less gloomy was the view which George Grenville, a minister eminently diligent and practical, took of our financial situation. The nation must, he conceived, sink under a debt of a hundred and forty millions, unless a portion of the load were borne by the American colonies. The attempt to lay a portion of the load on the American colonies produced another war. That war left us with an additional hundred millions of debt, and without the colonies whose help had been represented as indispensable. Again England was given over; and again the strange patient persisted in becoming stronger and more blooming in spite of all the diagnostics and prognostics of State physicians. As she had been visibly more prosperous with a debt of a hundred and forty millions than with a debt of fifty millions, so she, as visibly more prosperous with a debt of two hundred and forty millions than with a debt of a hundred and forty millions. Soon however the wars which sprang from the French Revolution, and which far exceeded in cost any that the world had ever seen, tasked the powers of public credit to the utmost. When the world was again at rest the funded debt of England amounted to eight hundred millions. If the most enlightened man had been told, in 1792, that, in 1815, the interest on eight hundred millions would be duly paid to the day at the Bank, he would have been as hard of belief as if he had been told that the government would be in possession of the lamp of Aladdin or of the purse of Fortunatus. It was in truth a gigantic, a fabulous debt; and we can hardly wonder that the cry of despair should have been louder than ever. But again that cry was found to have been as unreasonable as ever. After a few years of exhaustion, England recovered herself. Yet, like Addison's valetudinarian, who continued to whimper that he was dying of consumption till he became so fat that he was shamed into silence, she went on complaining that she was sunk in poverty till her wealth showed itself by tokens which made her complaints ridiculous. The beggared, the bankrupt society not only proved able to meet all its obligations, but, while meeting those obligations, grew richer and richer so fast that the growth could almost be discerned by the eye. In every county, we saw wastes recently turned into gardens; in every city, we saw new streets, and squares, and markets, more brilliant lamps, more abundant supplies of water; in the suburbs of every great seat of industry, we saw villas multiplying fast, each embosomed in its gay little paradise of lilacs and roses. While shallow politicians were repeating that the energies of the people were borne down by the weight of the public burdens, the first journey was performed by steam on a railway. Soon the island was intersected by railways. A sum exceeding the whole amount of the national debt at the end of the American war was, in a few years, voluntarily expended by this ruined people in viaducts, tunnels, embankments, bridges, stations, engines. Meanwhile taxation was almost constantly becoming lighter and lighter; yet still the Exchequer was full. It may be now affirmed without fear of contradiction that we find it as easy to pay the interest of eight hundred millions as our ancestors found it, a century ago, to pay the interest of eighty millions.

It can hardly be doubted that there must have been some great fallacy in the notions of those who uttered and of those who believed that long succession of confident predictions, so signally falsified by a long succession of indisputable facts. To point out that fallacy is the office rather of the political economist than of the historian. Here it is sufficient to say that the prophets of evil were under a double delusion. They erroneously imagined that there was an exact analogy between the case of an individual who is in debt to another individual and the case of a society which is in debt to a part of itself; and this analogy led them into endless mistakes about the effect of the system of funding. They were under an error not less serious touching the resources of the country. They made no allowance for the effect produced by the incessant progress of every experimental science, and by the incessant efforts of every man to get on in life. They saw that the debt grew; and they forgot that other things grew as well as the debt.

A long experience justifies us in believing that England may, in the twentieth century, be better able to bear a debt of sixteen hundred millions than she is at the present time to bear her present load. But be this as it may, those who so confidently predicted that she must sink, first under a debt of fifty millions, then under a debt of eighty millions then under a debt of a hundred and forty millions, then under a debt of two hundred and forty millions, and lastly under a debt of eight hundred millions, were beyond all doubt under a twofold mistake. They greatly overrated the pressure of the burden; they greatly underrated the strength by which the burden was to be borne.

It may be desirable to add a few words touching the way in which the system of funding has affected the interests of the great commonwealth of nations. If it be true that whatever gives to intelligence an advantage over brute force and to honesty an advantage over dishonesty has a tendency to promote the happiness and virtue of our race, it can scarcely be denied that, in the largest view, the effect of this system has been salutary. For it is manifest that all credit depends on two things, on the power of a debtor to pay debts, and on his inclination to pay them. The power of a society to pay debts is proportioned to the progress which that society has made in industry, in commerce, and in all the arts and sciences which flourish under the benignant influence of freedom and of equal law. The inclination of a society to pay debts is proportioned to the degree in which that society respects the obligations of plighted faith. Of the strength which consists in extent of territory and in number of fighting men, a rude despot who knows no law but his own childish fancies and headstrong passions, or a convention of socialists which proclaims all property to be robbery, may have more than falls to the lot of the best and wisest government. But the strength which is derived from the confidence of capitalists such a despot, such a convention, never can possess. That strength,—and it is a strength which has decided the event of more than one great conflict,—flies, by the law of its nature, from barbarism and fraud, from tyranny and anarchy, to follow civilisation and virtue, liberty and order.

While the bill which first created the funded debt of England was passing, with general approbation, through the regular stages, the two Houses discussed, for the first time, the great question of Parliamentary Reform.

It is to be observed that the object of the reformers of that generation was merely to make the representative body a more faithful interpreter of the sense of the constituent body. It seems scarcely to have occurred to any of them that the constituent body might be an unfaithful interpreter of the sense of the nation. It is true that those deformities in the structure of the constituent body, which, at length, in our own days, raised an irresistible storm of public indignation, were far less numerous and far less offensive in the seventeenth century than they had become in the nineteenth. Most of the boroughs which were disfranchised in 1832 were, if not positively, yet relatively, much more important places in the reign of William the Third than in the reign of William the Fourth. Of the populous and wealthy manufacturing towns, seaports and watering places, to which the franchise was given in the reign of William the Fourth, some were, in the reign of William the Third, small hamlets, where a few ploughmen or fishermen lived under thatched roofs; some were fields covered with harvests, or moors abandoned to grouse; With the exception of Leeds and Manchester, there was not, at the time of the Revolution, a single town of five thousand inhabitants which did not send two representatives to the House of Commons. Even then, however, there was no want of startling anomalies. Looe, East and West, which contained not half the population or half the wealth of the smallest of the hundred parishes of London, returned as many members as London. 372 Old Sarum, a deserted ruin which the traveller feared to enter at night lest he should find robbers lurking there, had as much weight in the legislature as Devonshire or Yorkshire. 373 Some eminent individuals of both parties, Clarendon, for example, among the Tories, and Pollexfen among the Whigs, condemned this system. Yet both parties were, for very different reasons, unwilling to alter it. It was protected by the prejudices of one faction and by the interests of the other. Nothing could be more repugnant to the genius of Toryism than the thought of destroying at a blow institutions which had stood through ages, for the purpose of building something more symmetrical out of the ruins. The Whigs, on the other hand, could not but know that they were much more likely to lose than to gain by a change in this part of our polity. It would indeed be a great mistake to imagine that a law transferring political power from small to large constituent bodies would have operated in 1692 as it operated in 1832.

In 1832 the effect of the transfer was to increase the power of the town population. In 1692 the effect would have been to make the power of the rural population irresistible. Of the one hundred and forty-two members taken away in 1832 from small boroughs more than half were given to large and flourishing towns. But in 1692 there was hardly one large and flourishing town which had not already as many members as it could, with any show of reason, claim. Almost all therefore that was taken from the small boroughs must have been given to the counties; and there can be no doubt that whatever tended to raise the counties and to depress the towns must on the whole have tended to raise the Tories and to depress the Whigs. From the commencement of our civil troubles the towns had been on the side of freedom and progress, the country gentlemen and the country clergymen on the side of authority and prescription. If therefore a reform bill, disfranchising small constituent bodies and giving additional members to large constituent bodies, had become law soon after the Revolution, there can be little doubt that a decided majority of the House of Commons would have consisted of rustic baronets and squires, high Churchmen, high Tories, and half Jacobites. With such a House of Commons it is almost certain that there would have been a persecution of the Dissenters; it is not easy to understand how there could have been an union with Scotland; and it is not improbable that there would have been a restoration of the Stuarts. Those parts of our constitution therefore which, in recent times, politicians of the liberal school have generally considered as blemishes, were, five generations ago, regarded with complacency by the men who were most zealous for civil and religious freedom.

But, while Whigs and Tories agreed in wishing to maintain the existing rights of election, both Whigs and Tories were forced to admit that the relation between the elector and the representative was not what it ought to be. Before the civil wars the House of Commons had enjoyed the fullest confidence of the nation. A House of Commons, distrusted, despised, hated by the Commons, was a thing unknown. The very words would, to Sir Peter Wentworth or Sir Edward Coke, have sounded like a contradiction in terms. But by degrees a change took place. The Parliament elected in 1661, during that fit of joy and fondness which followed the return of the royal family, represented, not the deliberate sense, but the momentary caprice of the nation. Many of the members were men who, a few months earlier or a few months later, would have had no chance of obtaining seats, men of broken fortunes and of dissolute habits, men whose only claim to public confidence was the ferocious hatred which they bore to rebels and Puritans. The people, as soon as they had become sober, saw with dismay to what an assembly they had, during their intoxication, confided the care of their property, their liberty and their religion. And the choice, made in a moment of frantic enthusiasm, might prove to be a choice for life. As the law then stood, it depended entirely on the King's pleasure whether, during his reign, the electors should have an opportunity of repairing their error. Eighteen years passed away. A new generation grew up. To the fervid loyalty with which Charles had been welcomed back to Dover succeeded discontent and disaffection. The general cry was that the kingdom was misgoverned, degraded, given up as a prey to worthless men and more worthless women, that our navy had been found unequal to a contest with Holland, that our independence had been bartered for the gold of France, that our consciences were in danger of being again subjected to the yoke of Rome. The people had become Roundheads; but the body which alone was authorised to speak in the name of the people was still a body of Cavaliers. It is true that the King occasionally found even that House of Commons unmanageable. From the first it had contained not a few true Englishmen; others had been introduced into it as vacancies were made by death; and even the majority, courtly as it was, could not but feel some sympathy with the nation. A country party grew up and became formidable. But that party constantly found its exertions frustrated by systematic corruption. That some members of the legislature received direct bribes was with good reason suspected, but could not be proved. That the patronage of the Crown was employed on an extensive scale for the purpose of influencing votes was matter of notoriety. A large proportion of those who gave away the public money in supplies received part of that money back in salaries; and thus was formed a mercenary band on which the Court might, in almost any extremity, confidently rely.

The servility of this Parliament had left a deep impression on the public mind. It was the general opinion that England ought to be protected against all risk of being ever again represented, during a long course of years, by men who had forfeited her confidence, and who were retained by a fee to vote against her wishes and interests. The subject was mentioned in the Convention; and some members wished to deal with it while the throne was still vacant. The cry for reform had ever since been becoming more and more importunate. The people, heavily pressed by taxes, were naturally disposed to regard those who lived on the taxes with little favour. The war, it was generally acknowledged, was just and necessary; and war could not be carried on without large expenditure. But the larger the expenditure which was required for the defence of the nation, the more important it was that nothing should be squandered. The immense gains of official men moved envy and indignation. Here a gentleman was paid to do nothing. There many gentlemen were paid to do what would be better done by one. The coach, the liveries, the lace cravat and diamond buckles of the placeman were naturally seen with an evil eye by those who rose up early and lay down late in order to furnish him with the means of indulging in splendour and luxury. Such abuses it was the especial business of a House of Commons to correct. What then had the existing House of Commons done in the way of correction? Absolutely nothing. In 1690, indeed, while the Civil List was settling, some sharp speeches had been made. In 1691, when the Ways and Means were under consideration, a resolution had been passed so absurdly framed that it had proved utterly abortive. The nuisance continued, and would continue while it was a source of profit to those whose duty was to abate it. Who could expect faithful and vigilant stewardship from stewards who had a direct interest in encouraging the waste which they were employed to check? The House swarmed with placemen of all kinds, Lords of the Treasury, Lords of the Admiralty, Commissioners of Customs, Commissioners of Excise, Commissioners of Prizes, Tellers, Auditors, Receivers, Paymasters, Officers of the Mint, Officers of the household, Colonels of regiments, Captains of men of war, Governors of forts. We send up to Westminster, it was said, one of our neighbours, an independent gentleman, in the full confidence that his feelings and interests are in perfect accordance with ours. We look to him to relieve us from every burden except those burdens without which the public service cannot be carried on, and which therefore, galling as they are, we patiently and resolutely bear. But before he has been a session in Parliament we learn that he is a Clerk of the Green Cloth or a Yeoman of the Removing Wardrobe, with a comfortable salary. Nay, we sometimes learn that he has obtained one of those places in the Exchequer of which the emoluments rise and fall with the taxes which we pay. It would be strange indeed if our interests were safe in the keeping of a man whose gains consist in a percentage on our losses. The evil would be greatly diminished if we had frequent opportunities of considering whether the powers of our agent ought to be renewed or revoked. But, as the law stands, it is not impossible that he may hold those powers twenty or thirty years. While he lives, and while either the King or the Queen lives, it is not likely that we shall ever again exercise our elective franchise, unless there should be a dispute between the Court and the Parliament. The more profuse and obsequious a Parliament is, the less likely it is to give offence to the Court. The worse our representatives, therefore, the longer we are likely to be cursed with them.