CHAPTER VII.

Crisis of 1772.—Indian Adventurers, their Ostentation, their Character.—Failure of Douglas, Heron, & Co.—Neale, Fordyce, & Co.—Sketch of Mr. Fordyce.—His Success in the Alley.—Alarm of his Partners.—His Artifice.—His Failure.—General Bankruptcy.—Liberality of a Nabob.—Reply of a Quaker.—Witticism of John Wilkes.—War of American Independence.—Artifices of Ministers.—Anecdote of Mr. Atkinson.—Value of Life on the Stock Exchange.—Longevity of a Stock-broker.

The crisis of 1772 has been entirely overlooked by those who have bestowed their thoughts upon such subjects. It had its origin in a variety of circumstances; but the exciting cause was the failure of the bank of Douglas, Heron, & Co., established in 1769. It was the period when the success of adventurers in our Indian empire had contributed to the wealth of England. Immense sums were accumulated in a few months. Large purchases of land were made at high prices. All the early and late symptoms of speculation were apparent. The vast fortunes brought home were ostentatiously displayed. A contempt for the slow gains of trade, a feverish excitement, and an ungovernable impatience to be rich, marked the period. The nabobs were not disposed to hide their wealth under a bushel. They built magnificent mansions, and mistook ostentation for taste. They raised the prices of all articles of consumption; they were bowed to before their faces, and dreaded behind their backs. Dark deeds were told of them; and the shrewd peasantry shuddered as the massive carriage rolled by, which held the man whose wealth had been obtained at the expense of his humanity. The ephemeral literature of the day is filled with the popular opinion of the character; and the nabob is commonly represented as a man with a bad liver and black heart. Scott, with his exquisite conception of the ludicrous, makes one of his characters define a nabob as “one who comes frae foreign parts, with mair siller than his pouches can hold: as yellow as oranges, and maun hae a’ thing his ain gate.”

For thirty years the public was filled with impressions of their wealth and crimes; and so late as twenty years ago, Lord Clive was described to the writer as keeping memorials of his guilt in a box beneath his bed, and as having destroyed himself because his past enormities were too great for his conscience to bear. The drama, the story, and the poem, were colored with their eccentricities; while newspapers occasionally recorded facts which marked that, in some at least, a fine generosity was mixed with their grossness.

The effect, however, of these things was to make money plentiful; to raise a spirit of emulation, and a thirst for gold. In addition to this, the banking-house of Douglas, Heron, & Co. circulated its paper with a freedom which had an effect upon the population of Scotland remembered to the present day. Discounts for a time were plentiful. Bills presented by farmers, and accepted by ploughmen, were readily cashed. As is usual in these cases, the dashing character attained by the bank attracted those who should have known better; and many, who boasted of their foresight, paid for their presumption.

In 1771, the result of reckless trading was apparent; and Douglas, Heron, & Co. failed. The shock was felt throughout the empire. The Royal Bank of Scotland tottered to its base; the banking-houses of England shook with a well-grounded fear; and the great corporation of the Bank of England was beset on all sides for assistance, but from none more vehemently than from Mr. Fordyce, of the house of Neale, Fordyce, & Co.,—a firm which, from its position, the importance assumed by its partners, and the known success of some of its speculations, was generally supposed to be beyond suspicion. The career of the man who thus craved assistance was somewhat out of the ordinary way of his craft, and may, perhaps, prove interesting, as the sketch of an adventurer in whose power it lay to make or mar the fortunes intrusted to him; and also as a specimen of the mode in which the Stock Exchange is sometimes resorted to by bankers with the balances of their customers.

Bred a hosier at Aberdeen, Alexander Fordyce found the North too confined for any extensive operations, and, repairing to London as the only place worthy his genius, obtained employment as clerk to a city banking-house. Here he displayed great facility for figures, with great attention to business, and rose to the post of junior partner in the firm of Roffey, Neale, & James. Scarcely was he thus established, ere he began to speculate in the Alley, and generally with marked good fortune.

“The Devil tempts young sinners with success”;—

and Mr. Fordyce, thinking his luck would be perpetual, ventured for sums which involved his own character and his partners’ fortune. The game was with him; the funds were constantly on the rise; and, fortunate as daring, he was enabled to purchase a large estate, to support a grand appearance, to surpass nabobs in extravagance, andparvenusin folly. He marked the “marble with his name” upon a church which he ostentatiously built. His ambition vied with his extravagance, and his extravagance kept pace with his ambition. The Aberdeen hosier spent thousands in attempting to become a senator, and openly avowed his hope ofdying a peer. He married a woman of title; made a fine settlement on her Ladyship; purchased estates in Scotland at a fancy value; built a hospital; and founded charities in the place of which he hoped to become the representative. But a change came over his fortunes. Some political events first shook him. A sensible blow was given to his career by the affair of Falkland Island;[2]and he had recourse to his partners’ private funds to supply his deficiencies. Like many, who are tempted to appropriate the property of others, he trusted to replace it by some lucky stroke of good fortune, and redoubled his speculations on the Stock Exchange. Reports reached his partners, who grew alarmed. They had witnessed and partaken of his good fortune, and they had rejoiced in the far ken which had obtained the services of so clever a person; but when they saw that the chances were going against him, they remonstrated with all the energy of men whose fortunes hang on the success of their remonstrances. A cool and insolent contempt for their opinion, coupled with the remark, that he was quite disposed to leave them to manage a concern to which they were utterly incompetent, startled them; and when, with a cunning which provided for every thing, an enormous amount of bank-notes, which Fordyce had borrowed for the purpose, was shown them, their faith in his genius returned with the possession of the magic paper; and it is doubtful whether the plausibility of his manner or the rustle of the notes decided them.

But ill-fortune continued to pursue Mr. Fordyce. His combinations were as fine, his plans as skilful, as ever. His mind was as perceptive as when he first began; but unexpected facts upset his theories, and the price of the funds would not yield to his combinations. Every one said he deserved to win; but he still continued to lose. Speculation succeeded speculation; and it is remarkable, that, with all his great and continued losses, he retained to the last hour a cool and calm self-possession. After availing himself of every possible resource, his partners were surprised by his absenting himself from the banking-house. This, with other causes, occasioned an immediate stoppage, and a bankruptcy which spread far and wide. But Mr. Fordyce was not absent long. He returned at the risk of his life; the public feeling being so violent that it was necessary to guard him from the populace while he detailed a tissue of unsurpassed fraud and folly. He manfully took the blame upon himself, and exonerated his partners from all, save an undeserved confidence.

It need hardly be added, that the assistance earnestly begged by Mr. Fordyce of the Bank of England was refused. Whatever impression might be entertained by others of his house, the corporation to which he applied was equally aware of his speculative propensities, as of the sphere in which he indulged them; and they refused assistance, upon a well-founded principle, to the man who employed his customers’ capital and his own energies in incessant speculations on the Stock Exchange. Fordyce, however, only advanced the crash. The Scotch bankers were the cause; and the Bank of England saw the necessity of stopping the dangerousgame commenced by the Bank of Ayr. The failures continued in the commercial world. He broke half the people in town. Glyn and Halifax were gazetted as bankrupts;[3]Drummonds were only saved by General Smith, a nabob,—the original of Foot’s Sir Matthew Mite,—supporting their house with £150,000. Two gentlemen, ruined by the extravagance of the city banker, shot themselves. Throughout London the panic, equal to any thing of a later date, but of shorter duration, spread with the velocity of wildfire, and part of the press attributed to the Bank the merit of supporting the credit of the city, while part assert that it caused the panic. The first families were in tears; nor is the consternation surprising, when it is known that bills to the amount of four millions were in circulation, with the name of Fordyce attached to them.

The attempts of the speculating banker to procure assistance were earnest and incessant. Among those to whom Mr. Fordyce went was a shrewd Quaker. “Friend Fordyce,” was the reply of the latter, “I have known many men ruined by two dice, but I will not be ruined by Four-dice.”

In 1774, the number of Hebrew brokers was limited to twelve; and the privilege was always purchased by a liberal gratuity to the Lord Mayor. During this year, the mayoralty of Wilks, one of the privileged being at the point of death, Wilks, with characteristic boldness, openly calculated on the advantage to be attained, and was very particular in his inquiries after the sick man. The rumor, that Wilks had openly expressed a wish for the death of the Hebrew, was spread by the wags of ’Change Alley, and the son of the broker sought his Lordship to reproach him with his cupidity. “My dear fellow,” replied Wilks, with the readiness peculiar to him, “you are greatly in error. I would sooner have seen all the Jew brokers dead than your father.”

“It is the nature of colonies, as of children, at a certain period in their history, to cease to be dependent upon their parents. By judicious counsel and control they may be retained, but they must eventually separate; and, with the one as with the other, the future influence of the parent depends upon that parent’s behaviour during the nonage of the child.” Such was the opinion of William Pitt, first Earl of Chatham; and it is to be lamented that the behaviour of England to her American children was not likely to be remembered with kindness, when the tie was violently broken. The story of that disastrous war, when men of the same ancestry and the same habits were arrayed in hostility, when they who spake the same tongue spake it only in unkindness, is pitiable and humiliating. From the time when the inhabitants of Boston refused to be taxed, to the signing of the treaty with the young republic on terms of equality, the measures adopted were as severe as they were injudicious; and to the obstinacy of George III. may be traced the cause and the continuation ofthe contest, and the increase of the national debt. The first blow was struck at Boston. On the evening of December 16th, 1773, a number of citizens, disguised as Mohawk Indians, boarded the vessels containing the tea which they would not allow to be taxed, and discharged it into the water, while other cargoes were not only refused a landing, but were sent back with contempt.

When the news reached London, various restraining measures were passed. The place which had witnessed the outrage was declared closed for all exports and imports; and though the bold stand of the provincials astonished the mother country, it was supposed to be but temporary. It was soon found, however, that Boston was not alone; other provinces joined; and British America called a general congress. Magazines were formed; ammunition was provided; plans were drawn up for the defence of the country; and a large body enrolled, termed minute-men, engaged to turn out at a minute’s notice. Every contingency was prepared for; and an aspect called rebellious by the mother country was boldly presented. The first blood was shed at Lexington, where British soldiers fled before American militia. Emboldened by success, they reduced two forts, took Montreal, and attempted Quebec. Nor was England idle in the struggle. An addition to the land and sea force was voted; loans were raised; reinforcements were ordered to Boston; and the military ardor which had seized the Americans found fuel on which to expend itself.

With fire-arms formed by themselves; with weapons wrought from the plough; with artillery so clumsily fashioned that it burst more often than it discharged; with men who had only the determination to die free rather than live bond,—the American generals beat the veteran troops of England. Her forts were taken, her forces surrounded, her armies destroyed, and her officers made prisoners. The principal powers of Europe looked with delight upon a struggle between the soldiers of the mother country and the raw recruits of the colony; between discipline on the one side and patriotism on the other; on the entire power of England baffled by men from the pen and from the plough, from the shop and from the counting-house. The loans of this disastrous period were most unpopular. The increased taxation which followed was drawn with the utmost difficulty from the pockets of the people.

Political misfortunes and military disasters made the subjugation of America chimerical. Earl Cornwallis surrendered himself and his army as prisoners of war; and when the contest was extended to Europe,—when England stood alone against Holland, France, Spain, and America,—when our navy was defeated,—when the English coast and harbors were insulted, our West India Islands ravaged, and our trade swept away,—the discontents of the country increased, and the debates in the House grew violent and acrimonious. “You sheathe your sword, not in its scabbard, but in the bowels of your countrymen,” said one; and on some unhappy boast of driving the Americans into the sea,—“I might as well,” said Lord Chatham, “think of driving them with my crutch.” The people grumbled at defeat following defeat, at trade crippled, at taxes augmented, and debts enlarged.

Loan succeeded loan; a cry arose about the corruption of contracts; and the feeling of discontent increased so strongly, that the stubborn obstinacy of the king, who said he would sooner lose his right arm than his colonies, was compelled to yield to a unanimous resolution of the Commons, that the House would consider as enemies all those who advised the continuance of the war. Had any other monarch sat upon the throne, the large accumulation of debt would, probably, have been avoided; and England would now be spared the painful task of looking back upon “a nation convulsed by faction; a throne assailed by the fiercest invective; a House of Commons hated and despised; a rival legislature sitting beyond the Atlantic; English blood shed by English bayonets; our armies capitulating; our conquests wrested from us; our enemies hastening to take vengeance upon us for past humiliations; and our flag scarcely able to maintain itself in our own seas.”

Such was the aspect of public affairs during a war which cost thirty-two millions in taxes, and added one hundred and four millions to the national debt.

In 1778, when a loan was proposed, the usual number of applications was delivered from the bankers, merchants, and members of the Stock Exchange. To their surprise the answers were not received so soon as usual; and, as political events were threatening, the applicants grew anxious. The funds fell greatly; and, when the replies came, it was found that the whole of this unfortunate loan was fixed upon them. Had the funds risen, the members and the minister’s friends would have had a good portion; but, as the scrip was sure to be at a discount of three per cent., the whole was divided among those who were either without interest or were opposed to the government. In 1781, on a new loan being proposed, the same houses applied; but as the scrip went to a premium, it was divided with due regard to senatorial interests; and many who had lost on the last loan had no opportunity of retrieving on the present.

Prior to the allotment, one firm was waited on by a stranger, and told, that, if they would add his name to their list, they would be favorably considered. The house declined the proposal, and sent in a tender for two millions; when, to their surprise, they received, with an allotment of £560,000, an intimation that the odd £60,000 was for the gentleman who had waited on them, and of whom they knew nothing.

£240,000 was nominally given to another house; but of this £200,000 was for members whose votes were desirable. Mr. Dent, the head of the house of Child, and a senator, received £500,000, being two thirds of his tender; while Drummonds and other bankers, not members, received only tenths and sixteenths of the sums they requested. Some applicants, without Parliamentary interest, though as good as any in the city, were totally neglected, while “to a number of mendicants,” said Mr. Fox, “obscure persons, and nominal people, were given large amounts.”

The mendicants and obscure people, thus politely alluded to by the great gambler, were the Treasury and Bank clerks, to whom a portion of the loan was usually presented as a compliment for their services.

It is curious to notice the increase of applications for the loans so constantly required. Thus, in 1778 only 240 persons applied; in 1779 thenumber increased to 600; in 1780, to 1,100; and in 1781 it reached 1,600.

In 1785, Mr. Atkinson, said to be an adventurer from the North, was a great speculator. That he acted with judgment may be gathered from the fact of his dying possessed of half a million. A curious, but not a parsimonious man, he occasionally performed eccentric actions. During one of the pauses in a dinner conversation, he suddenly turned to a lady by whom he sat, and said, “If you, madam, will trust me with £1,000 for three years, I will employ it advantageously.” The character of the speaker was known; the offer so frankly made was as frankly accepted; and in three years, to the very day, Mr. Atkinson waited on the lady with £10,000, to which amount the sagacity of the citizen had increased the sum intrusted to him.

It is probable, although the fact is difficult of attainment, that the lives of the members of the Stock Exchange are, at the present day, less valuable than the ordinary average of human life. The constant thought, the change from hope to fear, the nights broken by expresses, the days excited by changes, must necessarily produce an unfavorable effect upon the frame. Instances, however, of great longevity are not wanting; and one John Riva, who, after an active life in ’Change Alley, had retired to Venice, died there at the patriarchal age of one hundred and eighteen.

FOOTNOTES:[2]“The stocks have got wind of this secret,” said Horace Walpole, “and their heart is fallen into their breeches, where the heart of the stocks is apt to lie.”[3]Sir Thomas Halifax had not a high reputation for liberality. During a severe winter, when requested to join his neighbours in a subscription for the poor, and told that “he who giveth to the poor lendeth to the Lord,” he replied, “He did not lend on such slight security”; and it is curious, that, when he afterwards applied to a rich neighbour for assistance, a similar reply, couched in similar language, was given to his application.

[2]“The stocks have got wind of this secret,” said Horace Walpole, “and their heart is fallen into their breeches, where the heart of the stocks is apt to lie.”

[3]Sir Thomas Halifax had not a high reputation for liberality. During a severe winter, when requested to join his neighbours in a subscription for the poor, and told that “he who giveth to the poor lendeth to the Lord,” he replied, “He did not lend on such slight security”; and it is curious, that, when he afterwards applied to a rich neighbour for assistance, a similar reply, couched in similar language, was given to his application.

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