Love Me Little, Love Me Long Part 37

"No, only clever ones. This is book-learning. It is the sort of wisdom you and I have outgrown these forty years. Why, at his age I was choke-full of maxims. They are good things to read; but act proverbs, and into the Gazette you go. My faith in any general position has melted away with the snow of my seventy winters."

"What, then, if it was established that all adders bite, would you refuse to believe his adder would bite you, sir?"

"d.i.c.k, if a single adder bit me, it would go farther to convince me that the next adder would bite me too than if fifty young Buffons told me all adders bite."

The senile youth was disconcerted for a single moment. He hesitated.

The keys that the old man had himself said would unlock his judgment lay beside him on the table. He could not help glancing slyly at them, but he would not use them before their turn. His mind was methodical.

His will was strong in all things. He put his hand in his side-pocket, and drew out a quant.i.ty of papers neatly arranged, tied, and indorsed.

The old men instantly bestowed a more watchful sort of attention on him.

"This, gentlemen, is a list of the joint-stock companies created last year. What do you suppose is their number?"

"Fifty, I'll be bound, Mr. Richard."

"More than that, Skinner. Say eighty."

"Two hundred and forty-three, gentlemen. Of these some were stillborn, but the majority hold the market. The capital proposed to be subscribed on the sum total is two hundred and forty-eight millions."

"Pheugh! Skinner!"

"The amount actually paid at present (chiefly in bank-notes) is stated at 43,062,608 pounds, and the balance due at the end of the year on this set of ventures will be 204,937,392 pounds or thereabouts. The projects of _this year_ have not been collected, but they are on a similar scale. Full a third of the general sum total is destined to foreign countries, either in loans or to work mines, etc., the return for which is uncertain and future. All these must come to nothing, and ruin the shareholders that way, or else must sooner or later be paid in specie, since no foreign nation can use our paper, but must sell it to the Bank of England. We stand, then, pledged to burst like a bladder, or to _export_ in a few months thrice as much specie as we possess. To sum up, if the country could be sold to-morrow, with every brick that stands upon it, the proceeds would not meet the engagements into which these joint-stock companies have inveigled her in the course of twenty months. Viewed then, in gross, under the test, not of poetry and prospectus, but of arithmetic, the whole thing is a bubble."

"A bubble?" uttered both the seniors in one breath, and almost in a scream.

"But I am ready to test it in detail. Let us take three main features--the share-market, the foreign loans, and the inflated circulation caused by the provincial banks. Why do the public run after shares? Is it in the exercise of a healthy judgment? No; a cunning bait has been laid for human weakness. Transferable shares valued at 100 pounds can be secured and paid for by small instalments of 5 pounds or less. If, then, his 100 pound shares rise to 130 pounds each, the adventurer can sell at a nominal profit of 30 per cent, but a real profit of 600 per cent on his actual investment. This intoxicates rich and poor alike. It enables the small capitalist to operate on the scale that belongs, in healthy times, to the large capitalist; a beggar can now gamble like a prince; his farthings are accepted as counters for sovereigns; but this is a distinct feature of all the more gigantic bubbles recorded. Here, too, you see, is illusory credit on a vast scale, with its sure consequence, inflated and fict.i.tious values; another bit of soap that goes to every bubble in history. Now for the Transatlantic loans. I submit them to a simple test. Judge nations like individuals. If you knew nothing of a man but that he had set up a new shop, would you lend him money? Then why lend money to new republics of whom you know nothing but that, born yesterday, they may die to-morrow, and that they are exhausted by recent wars, and that, where responsibility is divided, conscience is always subdivided?"

"Well said, Richard, well said."

"If a stranger offered you thirty per cent, would you lend him your money?"

"No; for I should know he didn't mean to pay."

"Well, these foreign negotiators offer nominally five per cent, but, looking at the price of the stock, thirty, forty, and even fifty per cent. Yet they are not so liberal as they appear; they could afford ninety per cent. You understand me, gentlemen. Would you lend to a man that came to you under an alias like a Newgate thief? Cast your eye over this prospectus. It is the Poyais loan. There is no such place as Poyais."

"Good heavens!"

"It is a loan to an anonymous swamp by the Mosquito River. But Mosquito suggests a bite. So the vagabonds that brought the proposal over put their heads together as they crossed the Atlantic, and christened the place Poyais; and now fools that are not fools enough to lend sixpence to Zahara, are going to lend 200,000 pounds to rushes and reeds."

"Why, Richard, what are you talking about? 'The air is soft and balmy; the climate fructifying; the soil is spontaneous'--what does that mean? mum! mum! 'The water runs over sands of gold.' Why, it is a description of Paradise. And, now I think of it, is not all this taken from John Milton?"

"Very likely. It is written by thieves."

"It seems there are tortoise-sh.e.l.l, diamonds, pearls--"

"In the prospectus, but not in the mora.s.s. It is a good, straightforward mora.s.s, with no pretensions but to great damp. But don't be alarmed, gentlemen, our countrymen's money will not be swamped there. It will all be sponged up in Threadneedle Street by the poetic swindlers whose names, or aliases, you hold in your hand. The Greek, Mexican, and Brazilian loans may be translated from Prospectish into English thus: At a date when every sovereign will be worth five to us in sustaining shriveling paper and collapsing credit, we are going to chuck a million sovereigns into the h.e.l.lespont, five million sovereigns into the Gulf of Mexico, and two millions into the Pacific Ocean. Against the loans to the old monarchies there is only this objection, that they are unreasonable; will drain out gold when gold will be life-blood; which brings me, by connection, to my third item--the provincial circulation. Pray, gentlemen, do you remember the year 1793?"

For some minutes past a dead silence and a deep, absorbed attention had received the young man's words; but that quiet question was like a great stone descending suddenly on a silent stream. Such a noise, agitation, and flutter. The old banker and his clerk both began to speak at once.

"Don't we?"

"Oh, Lord, Mr. Richard, don't talk of 1793."

"What do you know about 1793? You weren't born."

"Oh, Mr. Richard, such a to-do, sir! 1800 firms in the Gazette.

Seventy banks stopped."

"Nearer a hundred, Mr. Skinner. Seventy-one stopped in the provinces, and a score in London."

"Why, sir, Mr. Richard knows everything, whether he was born or not."

"No, he doesn't, you old goose; he doesn't know how you and I sat looking at one another, and pretending to fumble, and counting out slowly, waiting sick at heart for the sack of guineas that was to come down by coach. If it had not come we should not have broken, but we should have suspended payment for twenty-four hours, and I was young enough then to have cut my throat in the interval."

"But it came, sir--it came, and you cried, 'Keep the bank open till midnight!' and when the blackguards heard that, and saw the sackful of gold, they crept away; they were afraid of offending us. n.o.body came anigh us next day. Banks smashed all round us like gla.s.s bottles, but Hardie & Co. stood, and shall stand for ever and ever. Amen."

"Who showed the white feather, Mr. Skinner? Who came creeping and sniveling, and took my hand under the counter, and pressed it to give me courage, and then was absurd enough to make apologies, as if sympathy was as common as dirt? Give me your hand directly, you old--Hallo!"

"G.o.d bless you, sir! G.o.d bless you! It is all right, sir. The bank is safe for another fifty years. We have got Master Richard, and he has got a head. O Gemini, what a head he has got, and the other day playing marbles!"

"Yes, and we are interrupting him with our nonsense. Go on, Richard."

Richard had secretly but fully appreciated the folly of the interruption. His was a great mind, and moved in a sort of pecuniary ether high above the little weaknesses my reader has observed in Hardie senior and old Skinner. Being, however, equally above the other little infirmities of fretfulness and fussiness, he waited calmly and proceeded coolly.

"What was the cause of the distress in 1793?"

"Ah! that was the puzzle--wasn't it, Skinner? We were never so prosperous as that year. The distress came over us like a thunder-storm all in a moment. n.o.body knows the exact cause."

"I beg your pardon, sir, it is as well known as any point of history whatever. Some years of prosperity had created a sp.a.w.n of country banks, most of them resting on no basis; these had inflated the circulation with their paper. A panic and a collapse of this fict.i.tious currency was as inevitable as the fall of a stone forced against nature into the air."

"There _were_ a great many petty banks, Richard, and, of course, plenty of bad paper. I believe you are right. The causes of things were not studied in those days as they are now."

"All that we know now, sir, is to be found in books written long before 1793."

"Books! books!"

"Yes, sir; a book is not dead paper except to sleepy minds. A book is a man giving you his best thoughts in his very best words. It is only the shallow reader that can't learn life from genuine books. I'll back him who studies them against the man who skims his fellow-creatures, and vice versa. A single page of Adam Smith, studied, understood, and acted on by the statesmen of your day, would have averted the panic of 1793. I have the paragraph in my note-book. He was a great man, sir; oblige me, Mr. Skinner."

"Certainly, sir, certainly. 'Should the circulation of paper exceed the value of the gold and silver of which it supplies the place, many people would immediately perceive they had more of this paper than was necessary for transacting their business at home; and, as they could not send it abroad, bank paper only pa.s.sing current where it is issued, there would be a run upon the banks to the extent of this superfluous paper.'"

Richard Hardie resumed. "We were never so overrun with rotten banks as now. Shoemakers, cheesemongers, grocers, write up 'Bank' over one of their windows, and deal their rotten paper by the foolscap ream. The issue of their larger notes is colossal, and renders a panic inevitable soon or late; but, to make it doubly sure, they have been allowed to utter 1 pound and 2 pound notes. They have done it, and on a frightful scale. Then, to make it trebly sure, the just balance between paper and specie is disturbed in the other scale as well as by foreign loans to be paid in gold. In 1793 the candle was left unsnufled, but we have lighted it at both ends and put it down to roast. Before the year ends, every sovereign in the banks of this country may be called on to cash 30 pounds of paper--bank-paper, share-paper, foolscap-paper, waste-paper. In 1793, a small excess of paper over specie had the power to cause a panic and break some ninety banks; but our excess of paper is far larger, and with that fatal error we have combined foreign loans and three hundred bubble companies. Here, then, meet three bubbles, each of which, unaided, secures a panic. Events revolve, gentlemen, and reappear at intervals.

The great French bubble of 1719 is here to-day with the addition of two English tom-fooleries, foreign loans and 1 pound notes. Mr. Law was a great financier. Mr. Law was the first banker and the greatest.

All mortal bankers are his pupils, though they don't know it. Mr. Law was not a fool; his critics are. Mr. Law did not commit one error out of six that are attributed to him by those who judge him without reading, far less studying, his written works. He was too sound and sober a banker to admit small notes. They were excluded from his system. He found France on the eve of bankruptcy; in fact, the state had committed acts of virtual bankruptcy. He saved her with his bank.

"Then came his two errors, one remedial, the other fatal. No. 1, he created a paper company and blew it up to a bubble. When the shares had reached the skies, they began to come down, like stones, by an inevitable law. No. 2, to save them from their coming fate, he propped them with his bank. Overrating the power of governments, and underrating Nature's, he married the Mississippi shares (at forty times their value) to his banknotes by edict. What was the consequence? The bank paper, sound in itself, became rotten by marriage. Nothing could save the share-paper. The bank paper, making common cause with it, shared its fate. Had John Law let his two tubs each stand on its own bottom, the shares would have gone back to what they came from--nothing; the bank, based as it was on specie, backed stoutly by the government, and respected by the people for great national services, would have weathered the storm and lasted to this day. But he tied his rickety child to his healthy child, and flung them into a stormy sea, and told them to swim together: they sank together. Now observe, sir, the fatal error that ruined the great financier in 1720 is this day proposed to us. We are to connect our bank with bubble companies by the double tie of loans and liability.

John Law was sore tempted. The Mississippi Company was his own child as well as the bank. Love of that popularity he had drunk so deeply, egotism, and parental partiality, combined to obscure that great man's judgment. But, with us, folly stands naked on one side, bubbles in hand--common sense and printed experience on the other. These six specimen bubbles here are not _our_ children. Let me see whose they are, aliases excepted."

"Very good, young gentleman, very good. Now it is my turn. I have got a word or two to say on the other side. The journals, which are so seldom agreed, are all of one mind about these glorious times. Account for that!"