Daniel Defoe
The Villainy of Stock-Jobbers Detected
The old East India stock, by the arts of these unaccountable people, has within 10 years or thereabouts, without any material difference in the intrinsick value, been sold from 300 l. per cent to 37 l. per cent; from thence with fluxes and re fluxes, as frequent as the tide, it has been up at 150 l. per cent again ; during all which differences, it would puzzle a very good artist to prove, that their real stock (if they have any), set loss and gain together, can have varied above io per cent upon the whole ; nor can any reasons for the rise and fall of it be shewn, but the politick management of the stock-jobbing brokers ; whereby, according to the number of buyers and sellers, which ’tis also in their power to make and manage at will, the price shall dance attendance on their designs, and fall as they please, without any regard to the intrinsick worth of stock.
The New Company, the Bank of England, the Exchequer, the whole nation, as has been lately well observed by the author of “The Freeholder’s Plea against Stock jobbing Elections of Parliament Men”, is, or is in a fair way to be subjected to the same management.
I cannot however forbear to blame the Bank of England, for publishing at such a juncture as this, their willingness to allow an interest on their sealed notes ; which seems too plain to discover their fears of the party, and is a downright begging of credit. I shall ask leave here to tell a short story, something allusive to this, and which will explain what I mean. Whether the reader please to take it for a parable or a history, “tis all one to me, and will serve my turn as well one way as another.
A certain tradesman in London had borrowed a thousand pounds of a scrivener at 6 per cent interest, and had kept it in his hands some time; but losses coming upon him, and particularly one which strook his foundation, he began to apprehend that if it came to the ears of that creditor, the scrivener, he would call in his money, and at that juncture such a demand would entirely ruin him.
To go to the scrivener and give him a bribe, to promise the continuing the money, though he knew that sort of people willing enough to take money, yet he thought it looked like lessening himself, and would injure his reputation, and possibly only serve to make that certain, which yet was but doubtful, and put him upon calling for the money sooner than otherwise; upon which he resolved on a quite contrary method.
He goes to the scrivener, and tells him he had borrowed such a sum of money on him, and paid him interest for it ; but he found the interest of money run high, and “twas a hard thing for a tradesman to pay it, that “twas but working for other folks; for he found trade was dull, and he gave long credit and the like, and therefore in short, he desired him to take in the money again, for he was uneasy to be so deeply in debt.
The scrivener asked him when he would pay it, he told him that afternoon, if he would send the bond to his house, he had ordered his man to tell up the money.
The scrivener told him, it was hard to put the money on them without warning, and would be a loss to his client to oblige him to take it in before he was provided to put it out again; that if he had called it in, he would ha” given him three months” time to pay it in, and so much notice he expected.
“Aye, but”, says the tradesman, “that will be a loss to me too, for I must keep it by me, or else it may not be ready at the time.” But, “Pray Sir”, said the scrivener, “keep the money, trade may mend ; a man that has a thousand pound by him, meets with opportunities that he did not think on.”
The tradesman finding his design take, answers coldly “No”, and so they parted; at next meeting, the scrivener still pressing him to keep the money, he tells him : “Look ye Sir, you desire me to keep this money ; if your client will abate me 1 per cent of interest, I’ll keep it longer. ” The scrivener agrees, and the tradesman answered his end, whereas had he gone and offered him 1 per cent more for interest or continuance, ’tis ten to one but they had called for their money.
I leave anybody to apply this story to the Bank of England, offering double interest at a time, when a storm threatened them; they indeed are the best judges of their own affairs, but if they had stood their ground boldly without it, I am of opinion with submission, their credit had stood clearer.
The credit of the Bank of England does not immediately consist in the reality of their foundation. Sir, sure it does originally depend upon the goodness of their bottom, but the more immediate credit of their proceeding depends upon the currency of their bills, and the currency of their bills depends upon their immediate pay; the Bank has no advantage of the meanest goldsmith as to their current bills, for no longer than their payments continue punctual and free, no longer will any man take their bills, or give them credit for money.
All the credit which remains to the Bank after their payment comes to stop, if ever such time shall be, is thateople have a satisfaction ; that at long run their principle is sate, and their bottom will pay their debts. This is the credit of their stock, but the credit of their cash ends, if ever they baulk but one bill.
To ask the world to stay for their money and take interest, is to weaken the credit of their cash, and transfer themselves to the credit of their stock, which nobody doubts to be good.
I know therefore nothing the Bank could have done more to injure the credit of their running cash, than to make such a proposal of interest upon their bills, which formerly they publickly refused.
On the whole matter, Whether we consider the injury to the publick credit by the villainy of stock-jobbers,
The exposing the essentials of the nation’s prosperity, to the management of mercenary brokers and parties; who upon every occasion they are pleased to take, when such as they think fit to approve of, are not chosen Lord Mayors or Parliament men, shall take the liberty to shew their resentments by affronting the government, ruining banks and goldsmiths, and sinking the stocks of all the companies in the town.
Or, the powerful influence they have by their money on the current cash of the nation.
Whether any of these things are considered, I leave it to the wise heads of the nation, now concerned to reflect and examine, whether it be consistent with the safety of the English nation, with the honour of the English government, or with the nature of the English trade, to suffer such a sort of people to go on unprescribed and unlimited, or indeed unpunished.
What safety can we have at home, while our peace is at the mercy of such men, and “tis in their power to job the nation into feuds among ourselves, and to declare a new sort of civil war among us when they please?
Nay, the war they manage is carried on with worse weapons than swords and musquets ; bombs may fire our towns, and troops overrun and plunder us. But these people can ruin man silently, undermine and impoverish by a sort of impenetrable artifice, like poison that works at a distance, can wheedle men to ruin themselves, and fiddle them out of their money, by the strange and unheard-of engines of interests, discounts, transfers, tallies, debentures, shares, projects, and the devil and all of figures and hard names. They can draw up their armies and levy troops, set stock against stock, company against company, alderman against alderman; and the poor passive tradesmen, like the peasant in Flanders, are plundered by both sides, and hardly know who hurts them.
What will become of the honour of the English nation, if the principal affairs relating to the credit both of the publick and private funds is dependent upon such vile people, who care not who they ruin, nor who they advance, though one be the nation’s friends, and the other its enemies, and exposed to their particular resentments ?
He is a worthy patriot, and fitly qualified for a representative, who would join his strength to overthrow the credit of the City, and ruin trade only to shew his private resentment for not being chosen as he thought fit to expect.
Lastly, what condition must the trade of England be soon reduced to, when banks and paper credit, which must be owned to be a material part of its subsistance, are become so precarious as to be liable to a general interruption from the breath of mercenary, malicious and revengeful men?
First published 1701
