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

Thus ended, more happily than William had a right to expect, one of the most dangerous contests in which he ever engaged with his Parliament. At the Dutch Embassy the rising and going down of this tempest had been watched with intense interest; and the opinion there seems to have been that the King had on the whole lost neither power nor popularity by his conduct. 502

Another question, which excited scarcely less angry feeling in Parliament and in the country, was, about the same time, under consideration. On the sixth of December, a Whig member of the House of Commons obtained leave to bring in a bill for the Naturalisation of Foreign Protestants. Plausible arguments in favour of such a bill were not wanting. Great numbers of people, eminently industrious and intelligent, firmly attached to our faith, and deadly enemies of our deadly enemies, were at that time without a country. Among the Huguenots who had fled from the tyranny of the French King were many persons of great fame in war, in letters, in arts and in sciences; and even the humblest refugees were intellectually and morally above the average of the common people of any kingdom in Europe. With French Protestants who had been driven into exile by the edicts of Lewis were now mingled German Protestants who had been driven into exile by his arms. Vienna, Berlin, Basle, Hamburg, Amsterdam, London, swarmed with honest laborious men who had once been thriving burghers of Heidelberg or Mannheim, or who had cultivated vineyards along the banks of the Neckar and the Rhine. A statesman might well think that it would be at once generous and politic to invite to the English shores and to incorporate with the English people emigrants so unfortunate and so respectable. Their ingenuity and their diligence could not fail to enrich any land which should afford them an asylum; nor could it be doubted that they would manfully defend the country of their adoption against him whose cruelty had driven them from the country of their birth.

The first two readings passed without a division. But, on the motion that the bill should be committed, there was a debate in which the right of free speech was most liberally used by the opponents of the government. It was idle, they said, to talk about the poor Huguenots or the poor Palatines. The bill was evidently meant for the benefit, not of French Protestants or German Protestants, but of Dutchmen, who would be Protestants, Papists or Pagans for a guilder a head, and who would, no doubt, be as ready to sign the Declaration against Transubstantiation in England as to trample on the Cross in Japan. They would come over in multitudes. They would swarm in every public office. They would collect the customs, and gauge the beer barrels. Our Navigation Laws would be virtually repealed. Every merchant ship that cleared out from the Thames or the Severn would be manned by Zealanders and Hollanders and Frieslanders. To our own sailors would be left the hard and perilous service of the royal navy. For Hans, after filling the pockets of his huge trunk hose with our money by assuming the character of a native, would, as soon as a pressgang appeared, lay claim to the privileges of an alien. The intruders would soon rule every corporation. They would elbow our own Aldermen off the Royal Exchange. They would buy the hereditary woods and halls of our country gentlemen. Already one of the most noisome of the plagues of Egypt was among us. Frogs had made their appearance even in the royal chambers. Nobody could go to Saint James's without being disgusted by hearing the reptiles of the Batavian marshes croaking all round him; and if this bill should pass, the whole country would be as much infested by the loathsome brood as the palace already was.

The orator who indulged himself most freely in this sort of rhetoric was Sir John Knight, member for Bristol, a coarseminded and spiteful Jacobite, who, if he had been an honest man, would have been a nonjuror. Two years before, when Mayor of Bristol, he had acquired a discreditable notoriety by treating with gross disrespect a commission sealed with the great seal of the Sovereigns to whom he had repeatedly sworn allegiance, and by setting on the rabble of his city to hoot and pelt the Judges. 503 He now concluded a savage invective by desiring that the Serjeant at Arms would open the doors, in order that the odious roll of parchment, which was nothing less than a surrender of the birthright of the English people, might be treated with proper contumely. "Let us first," he said, "kick the bill out of the House; and then let us kick the foreigners out of the kingdom."

On a division the motion for committing the bill was carried by a hundred and sixty-three votes to a hundred and twenty-eight. 504 But the minority was zealous and pertinacious; and the majority speedily began to waver. Knight's speech, retouched and made more offensive, soon appeared in print without a license. Tens of thousands of copies were circulated by the post, or dropped in the streets; and such was the strength of national prejudice that too many persons read this ribaldry with assent and admiration. But, when a copy was produced in the House, there was such an outbreak of indignation and disgust, as cowed even the impudent and savage nature of the orator. Finding himself in imminent danger of being expelled and sent to prison, he apologized, and disclaimed all knowledge of the paper which purported to be a report of what he had said. He escaped with impunity; but his speech was voted false, scandalous and seditious, and was burned by the hangman in Palace Yard. The bill which had caused all this ferment was prudently suffered to drop. 505

Meanwhile the Commons were busied with financial questions of grave importance. The estimates for the year 1694 were enormous. The King proposed to add to the regular army, already the greatest regular army that England had ever supported, four regiments of dragoons, eight of horse, and twenty-five of infantry. The whole number of men, officers included, would thus be increased to about ninety-four thousand. 506 Cromwell, while holding down three reluctant kingdoms, and making vigorous war on Spain in Europe and America, had never had two thirds of the military force which William now thought necessary. The great body of the Tories, headed by three Whig chiefs, Harley, Foley and Howe, opposed any augmentation. The great body of the Whigs, headed by Montague and Wharton, would have granted all that was asked. After many long discussions, and probably many close divisions, in the Committee of Supply, the King obtained the greater part of what he demanded. The House allowed him four new regiments of dragoons, six of horse, and fifteen of infantry. The whole number of troops voted for the year amounted to eighty-three thousand, the charge to more than two millions and a half, including about two hundred thousand pounds for the ordnance. 507

The naval estimates passed much more rapidly; for Whigs and Tories agreed in thinking that the maritime ascendency of England ought to be maintained at any cost. Five hundred thousand pounds were voted for paying the arrears due to seamen, and two millions for the expenses of the year 1694. 508

The Commons then proceeded to consider the Ways and Means. The land tax was renewed at four shillings in the pound; and by this simple but powerful machinery about two millions were raised with certainty and despatch. 509 A poll tax was imposed. 510 Stamp duties had long been among the fiscal resources of Holland and France, and had existed here during part of the reign of Charles the Second, but had been suffered to expire. They were now revived; and they have ever since formed an important part of the revenue of the State. 511 The hackney coaches of the capital were taxed, and were placed under the government of commissioners, in spite of the resistance of the wives of the coachmen, who assembled round Westminster Hall and mobbed the members. 512 But, notwithstanding all these expedients, there was still a large deficiency; and it was again necessary to borrow. A new duty on salt and some other imposts of less importance were set apart to form a fund for a loan. On the security of this fund a million was to be raised by a lottery, but a lottery which had scarcely any thing but the name in common with the lotteries of a later period. The sum to be contributed was divided into a hundred thousand shares of ten pounds each. The interest on each share was to be twenty shillings annually, or, in other words, ten per cent., during sixteen years. But ten per cent. for sixteen years was not a bait which was likely to attract lenders. An additional lure was therefore held out to capitalists. On one fortieth of the shares much higher interest was to be paid than on the other thirty-nine fortieths. Which of the shares should be prizes was to be determined by lot. The arrangements for the drawing of the tickets were made by an adventurer of the name of Neale, who, after squandering away two fortunes, had been glad to become groom porter at the palace. His duties were to call the odds when the Court played at hazard, to provide cards and dice, and to decide any dispute which might arise on the bowling green or at the gaming table. He was eminently skilled in the business of this not very exalted post, and had made such sums by raffles that he was able to engage in very costly 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 for a hundred thousand pounds. On this subject Chamberlayne was proof to ridicule, to argument, even to arithmetical demonstration. He was reminded that the fee simple of land would not sell for more than twenty years' purchase. To say, therefore, that a term of a hundred years was worth five times as much as a term of twenty years, was to say that a term of a hundred years was worth five times the fee simple; in other words, that a hundred was five times infinity. Those who reasoned thus were refuted by being told that they were usurers; and it should seem that a large number of country gentlemen thought the refutation complete. 519

In December 1693 Chamberlayne laid his plan, in all its naked absurdity, before the Commons, and petitioned to be heard. He confidently undertook to raise eight thousand pounds on every freehold estate of a hundred and fifty pounds a year which should be brought, as he expressed it, into his Land Bank, and this without dispossessing the freeholder. 520 All the squires in the House must have known that the fee simple of such an estate would hardly fetch three thousand pounds in the market. That less than the fee simple of such an estate could, by any device, be made to produce eight thousand pounds, would, it might have been thought, have seemed incredible to the most illiterate foxhunter that could be found on the benches. Distress, however, and animosity had made the landed gentlemen credulous. They insisted on referring Chamberlayne's plan to a committee; and the committee reported that the plan was practicable, and would tend to the benefit of the nation. 521 But by this time the united force of demonstration and derision had begun to produce an effect even on the most ignorant rustics in the House. The report lay unnoticed on the table; and the country was saved from a calamity compared with which the defeat of Landen and the loss of the Smyrna fleet would have been blessings.

All the projectors of this busy time, however, were not so absurd as Chamberlayne. One among them, William Paterson, was an ingenious, though not always a judicious, speculator. Of his early life little is known except that he was a native of Scotland, and that he had been in the West Indies. In what character he had visited the West Indies was a matter about which his contemporaries differed. His friends said that he had been a missionary; his enemies that he had been a buccaneer. He seems to have been gifted by nature with fertile invention, an ardent temperament and great powers of persuasion, and to have acquired somewhere in the course of his vagrant life a perfect knowledge of accounts.

This man submitted to the government, in 1691, a plan of a national bank; and his plan was favourably received both by statesmen and by merchants. But years passed away; and nothing was done, till, in the spring of 1694, it became absolutely necessary to find some new mode of defraying the charges of the war. Then at length the scheme devised by the poor and obscure Scottish adventurer was taken up in earnest by Montague. With Montague was closely allied Michael Godfrey, the brother of that Sir Edmondsbury Godfrey whose sad and mysterious death had, fifteen years before, produced a terrible outbreak of popular feeling. Michael was one of the ablest, most upright and most opulent of the merchant princes of London. He was, as might have been expected from his near connection with the martyr of the Protestant faith, a zealous Whig. Some of his writings are still extant, and prove him to have had a strong and clear mind.

By these two distinguished men Paterson's scheme was fathered. Montague undertook to manage the House of Commons, Godfrey to manage the City. An approving vote was obtained from the Committee of Ways and Means; and a bill, the title of which gave occasion to many sarcasms, was laid on the table. It was indeed not easy to guess that a bill, which purported only to impose a new duty on tonnage for the benefit of such persons as should advance money towards carrying on the war, was really a bill creating the greatest commercial institution that the world had ever seen.