"Mr. Skinner, oblige me by showing Mr. Meredith a little of your specie--a few anti-bubble pills, eh! Mr. Meredith."
Omnes. "Ha! ha! ha!"
Presently a shout from Meredith: "Boys, he has got it here by the bushel. All new sovereigns. Don"t any of ye be a linen-draper, if you have got a chance to be a banker. How much is there here, Mr.
Richard?"
"We must consult the books to ascertain that, sir."
"Must you? Then just turn your head away, Mr. Richard, and I"ll put in a claw."
Omnes. "Haw! haw! ho!"
Richard Hardie resumed. "My precautions seem extravagant to you now, but in a few months you will remember this conversation, and it will lead to business." The rest of the evening he talked of anything, everything, except banking. He was not the man to dilute an impression.
Hardie junior was so confident in his reading and his reasonings that he looked every day into the journals for the signs of a general collapse of paper and credit; instead of which, public confidence seemed to increase, not diminish, and the paper balloon, as he called it, dilated, not shrank; and this went on for months. His gold lay a dead and useless stock, while paper was breeding paper on every side of him. He suffered his share of those mortifications which every man must look to endure who takes a course of his own, and stems a human current. He sat somber and perplexed in his bank parlor, doing nothing; his clerks mended pens in the office. The national calamity so confidently predicted, and now so eagerly sighed for, came not.
In other words, Richard Hardie was a sagacious calculator, but not a prophet; no man is till afterward, and then nine out of ten are. At last he despaired of the national calamity ever coming at all. So then, one dark November day, an event happened that proved him a shrewd calculator of probabilities in the gross, and showed that the records, of the past, "studied" instead of "skimmed," may in some degree counterbalance youth and its narrow experience. Owing to the foreign loans, there were a great many bills out against this country.
Some heavy ones were presented, and seven millions in gold taken out of the Bank of England and sent abroad. This would have trickled back by degrees; but the suddenness and magnitude of the drain alarmed the bank directors for the safety of the bank, subject as it was by Mr.
Peel"s bill to a vast demand for gold.
Up to this period, though they had ama.s.sed specie themselves, they had rather fed the paper fever in the country at large, but now they began to take a wide and serious view of the grave contingencies around them. They contracted their money operations, refused in two cases to discount corn, and, in a word, put the screw on as judiciously as they could. But time was up. Public confidence had reached its culminating point. The sudden caution of the bank could not be hidden; it awoke prudence, and prudence after imprudence drew terror at its heels.
There was a tremendous run upon the country banks. The smaller ones "smashed all around like gla.s.s bottles," as in 1793; the larger ones made gigantic and prolonged efforts to stand, and generally fell at last.
Many, whose books showed a.s.sets 40s. in the pound, suspended payment; for in a violent panic the bank creditors can all draw their balances in a few hours or days, but the poor bank cannot put a similar screw on its debtors. Thus no establishment was safe. Honor and solvency bent before the storm, and were ranked with rottenness; and, as at the same time the market price of securities sank with frightful rapidity, scarcely any amount of invested capital was safe in the unequal conflict.
Exchequer bills went down to 60s. discount, and the funds rose and fell like waves in a storm.
London bankers were called out of church to answer dispatches from their country correspondents.
The Mint worked day and night, and coined a hundred and fifty thousand sovereigns per diem for the Bank of England; but this large supply went but a little way, since that firm had in reality to cash nearly all the country notes that were cashed.
Post-chaises and four stood like hackney-coaches in Lombard Street, and every now and then went rattling off at a gallop into the country with their golden freight. In London, at the end of a single week, not an old sovereign was to be seen, so fiercely was the old coinage swept into the provinces, so active were the Mint and the smashers; these last drove a roaring trade; for paper now was all suspected, and anything that looked like gold was taken recklessly in exchange.
Soon the storm burst on the London banks. A firm known to possess half a million in undeniable securities could not cash them fast enough to meet the checks drawn on their counter, and fell. Next day, a house whose very name was a rock suspended for four days. An hour or two later two more went hopelessly to destruction. The panic rose to madness. Confidence had no longer a clue, nor names a distinction. A man"s enemies collected three or four vagabonds round his door, and in another hour there was a run upon him, that never ceased till he was emptied or broken. At last, as, in the ancient battles, armies rested on their arms to watch a duel in which both sides were represented, the whole town watched a run upon the great house of Pole, Thornton & Co. The Bank of England, from public motives, spiced of course with private interest, had determined to support Pole, Thornton & Co., and so perhaps stem the general fury, for all things have their turning-point. Three hundred thousand pounds were advanced to Pole & Co., who with this aid and their own resources battled through the week, but on Sat.u.r.day night were drained so low that their fate once more depended on the Bank of England. Another large sum was advanced them. They went on; but, ere the next week ended, they succ.u.mbed, and universal panic gained the day.
Climax of all, the Bank of England notes lost the confidence of the public, and a frightful run was made on it. The struggle had been prepared for, and was gigantic on both sides. Here the great hall of the bank, full of panic-stricken citizens jostling one another to get gold for the notes of the bank; there, foreign nations sending over ingots and coin to the bank, and the Mint working night and day, Sunday and week-day, to turn them into sovereigns to meet the run.
Sovereigns or else half-sovereigns were promptly delivered on demand.
No hesitation or sign of weakness peeped out; but under this bold and prudent surface, dismay, sickness of heart, and the dread of a great humiliation. At last, one dismal evening, this establishment, which at the beginning of the panic had twenty millions specie, left off with about five hundred thousand pounds in coin, and a similar amount in bullion. A large freight of gold was on the seas, coming to their aid, and due, but not arrived; the wind was high; and in a few hours the people would be howling round their doors again. They sent a hasty message to the government, and implored them to suspend, by order in council, the operation of Mr. Peel"s bill for a few days. A plump negative from Mr. Canning.
Then, being driven to expedients, they bethought them of a chest of 1 pound notes that they had luckily omitted to burn.
Another message to the government, "May we use these?"
"As a temporary expedient, yes."
The one-pound notes were whirling all over the country before daybreak, and, marvelous anomaly, which took Richard Hardie by surprise, they oiled the waves, the panic abated from that hour. The holders of country notes took the 1 pound B. E. notes as cash with avidity. The very sight of them piled on a counter stopped a run in more than one city.
The demand for gold at the Bank of England continued, but less fiercely; and as the ingots still came tumbling in, and the Mint hailed sovereigns on them, their stock of specie rose as the demand declined, and they came out of their fiercest battle with honor. But, ere the tide turned, things in general came to a pa.s.s scarcely known in the history of civilized nations. Ladies and gentlemen took heirlooms to the p.a.w.nbrokers", and swept their tills of the last coin.
Not only was wild speculation, hitherto so universal and ardent, snuffed out like a candle, but investment ceased and commerce came to a stand-still. Bank stock, East India stock, and, some days, consols themselves, did not go down; they went out, were blotted from the book of business. No man would give them gratis; no man would take them on any other terms. The brokers closed their books; there were no buyers nor sellers. Trade was coming to the same pa.s.s, except the retail business in eatables; and an observant statesman and economist, that watched the phenomenon, p.r.o.nounced that in forty-eight hours more all dealings would have ceased between man and man, or returned to the rude and primitive form of barter, or direct exchange of men"s several commodities, labor included.
Finally, things crept into their places; shades of distinction were drawn between good securities and bad. Shares were forfeited, companies dissolved, bladders punctured, balloons flattened, bubbles burst, and thousands of families ruined--thousands of people beggared--and the nation itself, its paper fever reduced by a severe bleeding, lay sick, panting, exhausted, and discouraged for a year or two to await the eternal cycle--torpor, prudence, health, plethora, blood-letting; torpor, prudence, health, plethora, bloodletting, etc., etc., etc., etc., _in secula seculorum._
The journals pitched into "speculation."
Three banks lay in the dust in the town of ----, and Hardie & Son stood looking calmly down upon the ruins.
Richard Hardie had carried out his double-headed plan.
There was no run upon him--could not be one in the course of nature, his balances were so low, and his notes were all at home. He created artificially a run of a very different kind. He dined the same party of tradesmen--all but one, who could not come, being at supper after Polonius his fashion. After dinner he showed the packets still sealed, and six more unsealed. "Here, gentlemen, is our whole issue." There was a huge wood fire in the old-fashioned room. He threw a packet of notes into it. A most respectable grocer yelled and lost color: victim of his senses, he thought sacred money was here destroyed, and his host a well-bred, and oh! how plausible, maniac. The others derided him, and packet after packet fed the flames. When two only were left, containing about five thousand pounds between them, Hardie junior made a proposal that they should advertise in their shop windows to receive Hardie"s five-pound notes as five guineas in payment for their goods.
Observing a natural hesitation, he explained that they would by this means, crush their compet.i.tors, and could easily clap a price on their goods to cover the odd shillings. The bargain was soon struck. Mr.
Richard was a great man. All his guests felt in their secret souls and pockets--excuse the tautology--that some day or other they should want to borrow money of him. Besides, "crush their compet.i.tors!"
Next day Mr. Richard loosed his hand and let a flock of his own bank-notes fly (they were asked for earnestly every day). Some soon found their way to the shops in question. The next day still more took wing and buzzed about the shops. Presently other tradesmen, finding people rushed to the shops in question, began to bid against them for Hardie"s notes, a result the long-headed youth had expected; and said notes went up to ten shillings premium. Too calm and cold to be betrayed into deserting his principles, he confined the issue within the bounds he had prescribed, and when they were all out seldom saw one of them again. By this means he actually lowered the Bank of England notes in public estimation, and set his own high above them in the town of ----. Deposits came in. Confidence unparalleled took the place of fear so far as he was concerned, and he was left free to work the other part of his plan.
To the amazement and mystification of old Skinner, he laid out ten thousand pounds in Exchequer bills, and followed this up by other large purchases of paper, paper, nothing but paper.
Hardie senior was nervous.
"Are you true to your own theory, Richard?"
The youth explained to him that blind confidence always ends in blind distrust, and then all paper becomes depreciated alike, but good paper is sure to recover. "Sixty-two shillings discount, sir, is a ridiculous decline of Exchequer bills. We are at peace, and elastic, and the government is strong. My other purchases all rest upon certain information, carefully and laboriously ama.s.sed while the world was so busy blowing bubbles. I am now buying paper that is unjustly depreciated in Panic, i.e., in the second act of that mania of which Bubble is the first act." He added: "When the herd buy, the price rises; when they sell, it falls. To buy with them and sell with them is therefore to buy dear and sell cheap. My game--and it is a game that reduces speculation to a certainty--is threefold:
"First, never, at any price or under any temptation, buy anything that is not as good as gold.
"Secondly, buy that sound article when the herd sells it.
"Thirdly, sell it when the herd buys it."
"Richard," said the old man, "I see what it is--you are a genius."
"No."
"It is no use your denying it, Richard."
"Common sense, sir, common sense."
"Yes, but common sense carried to such a height as you do is genius."
"Well, sir, then I own to the genius of common sense."
"I admire you, Richard--I am proud of you; but the bank has stood one hundred and forty years, and never a genius in it;" the old man sighed.
Hardie senior, having relieved his mind of this vague misgiving, never returned to it--probably never felt it again. It was one of those strange flashes that cross a mind as a meteor the sky.
The old gentleman, having little to do, talked more than heretofore, and, like fathers, talked about his son, and, unlike sons, cried him up at his own expense. The world is not very incredulous; above all, it never disbelieves a man who calls himself a fool. Having then gained the public ear by the artifice of self-depreciation, he poured into it the praises of Hardie junior. He went about telling how he, an old man, was all but bubbled till this young Daniel came down and foretold all. Thus paternal garrulity combined for once with a man"s own ability to place Richard Hardie on the pinnacle of provincial grandeur.
A few years more and Hardie senior died. (His old clerk, Skinner, followed him a month later.)