The History of England, from the Accession of James the Second - Volume 4, Thomas Babington Macaulay [early readers .txt] 📗

speculations, and was then covering the ground round the Seven Dials with buildings. He was probably the best adviser that could have been consulted about the details of a lottery. Yet there were not wanting persons who thought it hardly decent in the Treasury to call in the aid of a gambler by profession.513

By the lottery loan, as it was called, one million was obtained. But another million was wanted to bring the estimated revenue for the year 1694 up to a level with the estimated expenditure. The ingenious and enterprising Montague had a plan ready, a plan to which, except under the pressure of extreme pecuniary difficulties, he might not easily have induced the Commons to assent, but which, to his large and vigorous mind, appeared to have advantages, both commercial and political, more important than the immediate relief to the finances. He succeeded, not only in supplying the wants of the State for twelve months, but in creating a great institution, which, after the lapse of more than a century and a half, continues to flourish, and which he lived to see the stronghold, through all vicissitudes, of the Whig party, and the bulwark, in dangerous times, of the Protestant succession.

In the reign of William old men were still living who could remember the days when there was not a single banking house in the city of London. So late as the time of the Restoration every trader had his own strong box in his own house, and, when an acceptance was presented to him, told down the crowns and Caroluses on his own counter. But the increase of wealth had produced its natural effect, the subdivision of labour. Before the end of the reign of Charles the Second, a new mode of paying and receiving money had come into fashion among the merchants of the capital. A class of agents arose, whose office was to keep the cash of the commercial houses. This new branch of business naturally fell into the hands of the goldsmiths, who were accustomed to traffic largely in the precious metals, and who had vaults in which great masses of bullion could lie secure from fire and from robbers. It was at the shops of the goldsmiths of Lombard Street that all the payments in coin were made. Other traders gave and received nothing but paper.

This great change did not take place without much opposition and clamour. Oldfashioned merchants complained bitterly that a class of men who, thirty years before, had confined themselves to their proper functions, and had made a fair profit by embossing silver bowls and chargers, by setting jewels for fine ladies, and by selling pistoles and dollars to gentlemen setting out for the Continent, had become the treasurers, and were fast becoming the masters, of the whole City. These usurers, it was said, played at hazard with what had been earned by the industry and hoarded by the thrift of other men. If the dice turned up well, the knave who kept the cash became an alderman; if they turned up ill, the dupe who furnished the cash became a bankrupt. On the other side the conveniences of the modern practice were set forth in animated language. The new system, it was said, saved both labour and money. Two clerks, seated in one counting house, did what, under the old system, must have been done by twenty clerks in twenty different establishments. A goldsmith's note might be transferred ten times in a morning; and thus a hundred guineas, locked in his safe close to the Exchange, did what would formerly have required a thousand guineas, dispersed through many tills, some on Ludgate Hill, some in Austin Friars, and some in Tower Street.514

Gradually even those who had been loudest in murmuring against the innovation gave way and conformed to the prevailing usage. The last person who held out, strange to say, was Sir Dudley North. When, in 1680, after residing many years abroad, he returned to London, nothing astonished or displeased him more than the practice of making payments by drawing bills on bankers. He found that he could not go on Change without being followed round the piazza by goldsmiths, who, with low bows, begged to have the honour of serving him. He lost his temper when his friends asked where he kept his cash. "Where should I keep it," he asked, "but in my own house?" With difficulty he was induced to put his money into the hands of one of the Lombard Street men, as they were called. Unhappily, the Lombard Street man broke, and some of his customers suffered severely. Dudley North lost only fifty pounds; but this loss confirmed him in his dislike of the whole mystery of banking. It was in vain, however, that he exhorted his fellow citizens to return to the good old practice, and not to expose themselves to utter ruin in order to spare themselves a little trouble. He stood alone against the whole community. The advantages of the modern system were felt every hour of every day in every part of London; and people were no more disposed to relinquish those advantages for fear of calamities which occurred at long intervals than to refrain from building houses for fear of fires, or from building ships for fear of hurricanes. It is a curious circumstance that a man who, as a theorist, was distinguished from all the merchants of his time by the largeness of his views and by his superiority to vulgar prejudices, should, in practice, have been distinguished from all the merchants of his time by the obstinacy with which he adhered to an ancient mode of doing business, long after the dullest and most ignorant plodders had abandoned that mode for one better suited to a great commercial society.515

No sooner had banking become a separate and important trade, than men began to discuss with earnestness the question whether it would be expedient to erect a national bank. The general opinion seems to have been decidedly in favour of a national bank; nor can we wonder at this; for few were then aware that trade is in general carried on to much more advantage by individuals than by great societies; and banking really is one of those few trades which can be carried on to as much advantage by a great society as by an individual. Two public banks had long been renowned throughout Europe, the Bank of Saint George at Genoa, and the Bank of Amsterdam. The immense wealth which was in the keeping of those establishments, the confidence which they inspired, the prosperity which they had created, their stability, tried by panics, by wars, by revolutions, and found proof against all, were favourite topics. The bank of Saint George had nearly completed its third century. It had begun to receive deposits and to make loans before Columbus had crossed the Atlantic, before Gama had turned the Cape, when a Christian Emperor was reigning at Constantinople, when a Mahomedan Sultan was reigning at Granada, when Florence was a Republic, when Holland obeyed a hereditary Prince. All these things had been changed. New continents and new oceans had been discovered. The Turk was at Constantinople; the Castilian was at Granada; Florence had its hereditary Prince; Holland was a Republic; but the Bank of Saint George was still receiving deposits and making loans. The Bank of Amsterdam was little more than eighty years old; but its solvency had stood severe tests. Even in the terrible crisis of 1672, when the whole Delta of the Rhine was overrun by the French armies, when the white flags were seen from the top of the Stadthouse, there was one place where, amidst the general consternation and confusion, tranquillity and order were still to be found; and that place was the Bank. Why should not the Bank of London be as great and as durable as the Banks of Genoa and of Amsterdam? Before the end of the reign of Charles the Second several plans were proposed, examined, attacked and defended. Some pamphleteers maintained that a national bank ought to be under the direction of the King. Others thought that the management ought to be entrusted to the Lord Mayor, Aldermen and Common Council of the capital.516 After the Revolution the subject was discussed with an animation before unknown. For, under the influence of liberty, the breed of political projectors multiplied exceedingly. A crowd of plans, some of which resemble the fancies of a child or the dreams of a man in a fever, were pressed on the government. Preeminently conspicuous among the political mountebanks, whose busy faces were seen every day in the lobby of the House of Commons, were John Briscoe and Hugh Chamberlayne, two projectors worthy to have been members of that Academy which Gulliver found at Lagado. These men affirmed that the one cure for every distemper of the State was a Land Bank. A Land Bank would work for England miracles such as had never been wrought for Israel, miracles exceeding the heaps of quails and the daily shower of manna. There would be no taxes; and yet the Exchequer would be full to overflowing. There would be no poor rates; for there would be no poor. The income of every landowner would be doubled. The profits of every merchant would be increased. In short, the island would, to use Briscoe's words, be the paradise of the world. The only losers would be the moneyed men, those worst enemies of the nation, who had done more injury to the gentry and yeomanry than an invading army from France would have had the heart to do.517

These blessed effects the Land Bank was to produce simply by issuing enormous quantities of notes on landed security. The doctrine of the projectors was that every person who had real property ought to have, besides that property, paper money to the full value of that property. Thus, if his estate was worth two thousand pounds, he ought to have his estate and two thousand pounds in paper money.518 Both Briscoe and Chamberlayne treated with the greatest contempt the notion that there could be an overissue of paper as long as there was, for every ten pound note, a piece of land in the country worth ten pounds. Nobody, they said, would accuse a goldsmith of overissuing as long as his vaults contained guineas and crowns to the full value of all the notes which bore his signature. Indeed no goldsmith had in his vaults guineas and crowns to the full value of all his paper. And was not a square mile of rich land in Taunton Dean at least as well entitled to be called wealth as a bag of gold or silver? The projectors could not deny that many people had a prejudice in favour of the precious metals, and that therefore, if the Land Bank were bound to cash its notes, it would very soon stop payment. This difficulty they got over by proposing that the notes should be inconvertible, and that every body should be forced to take them.

The speculations of Chamberlayne on the subject of the currency may possibly find admirers even in our own time. But to his other errors he added an error which began and ended with him. He was fool enough to take it for granted, in all his reasonings, that the value of an estate varied directly as the duration. He maintained that if the annual income derived from a manor were a thousand pounds, a grant of that manor for twenty years must be worth twenty thousand pounds, and a grant for a hundred years worth a hundred thousand pounds. If, therefore, the lord of such a manor would pledge it for a hundred years to the Land Bank, the Land Bank might, on that security, instantly issue notes