chester,1 and Jamaica alone took almost as much of our manufactures as all our plantations together had done in the beginning of the century.2

§ 181. Commercial Events of the Seventeenth Century.

This is not a history of Commerce, and, therefore, any mention of commercial facts must here be brief. But the seventeenth and eighteenth centuries are so marked by commercial progress, and are so crowded with important mercantile events, that we must pause to notice a few of the most remarkable of them. Among these we may place the humble origin of that marvellous system of banking, which is at once the basis and the apex of the modern mercantile fabric. Banking first seems to have assumed the importance of a regular business in England early in the seventeenth or late in the sixteenth century. It was carried on especially by goldsmiths, who often advanced money to the sovereign upon the security of taxes or personal credit. A pamphlet of 1676, called The Mystery of the Newfashioned Goldsmiths or Bankers Discovered, shows how banking and money-lending had become a regular business, and gives the year 1645 as about the time when commercial men began regularly to put their cash in the hands of goldsmiths. It also states that "the greatest of them (ie., of the goldsmiths) were enabled to supply Cromwell with money in advance upon the revenues, as his occasions required, at great advantage to themselves." Similarly the famous goldsmith, George Heriot, had frequently obliged James I. It is well known how the London goldsmiths advanced Charles II. as much as £1,300,000, at 8 to 10 per cent. interest, upon the security of the taxes; and how (in 1672) he suddenly refused to repay the principal, saying they must be content 1 Young, Northern Tour, iii. 194.

2 Burke, Works, i. 278.

"I have treated the strictly commercial facts in another volume, British Commerce and Colonies, from Elizabeth to Victoria.

• See my article on Goldsmiths' notes in Palgrave's Dictionary of Political Economy.

Cf. the excellent note (B) to Sir Walter Scott's Fortunes of Nigel.

with the interest, and closed the exchequer, thus causing a serious commercial panic.1

The unsatisfactory method of obtaining loans from goldsmiths and other private persons was partly the cause of William Paterson's project 2 of founding what is now known as the Bank of England (1694). Paterson offered to provide the Government of William III. with £1,200,000, to be repaid by taxation on beer or other liquors, and by rates on shipping, while those who subscribed this money were incorporated into a regular company, which was to receive 8 per cent. interest, and also £4000 a year for management.3 Thus the matter of loans was first placed upon a proper basis, while the Bank thus formed, and supported by Government credit, took at once a leading position in English commerce. The loan just mentioned was the beginning of a regular National Debt, which may be briefly defined as the system of contracting loans upon the security of the supplies or upon Government credit, and of paying them off gradually in succeeding generations.5

The Restoration of the Currency was another event of historical importance. It was due to Montague, the Chancellor of the Exchequer. Although, as we saw, Elizabeth had reformed the standard of the coinage, yet, up to the time of Charles II., silver money was made by simply cutting the metal with shears, and shaping and stamping it with a hammer. It was thus quite easy to clip or shear the coins again without being detected, and then pass them off to an unsuspecting person for their full amount. So the coins became smaller and smaller, and people often found, on presenting them at a bank or elsewhere, that they were only worth half their nominal value. At first, under

1 Cunningham, Growth of Industry, ii. 223.

2 Cf. Paterson's own Account of Transactions in relation to the Bank of England, 1695; and Craik, British Commerce, ii. 124; also (for Paterson) Macaulay, History, ch. xxiv.

3 Craik, u. 8., ii. 125; Anderson, Chron. Comm., ii. 604; also Rogers, First Nine Years of the Bank of England, should be referred to.

Strictly speaking, the money stolen by Charles II. from the goldsmiths was the first debt, but it was not included till later. Cunningham, Growth of Industry, ii. 223.

• Cf. Cunningham, u. 8., ii. 403; Rogers, Econ. Interp., 449.

Charles II., it was thought sufficient to issue new coins with a ribbed or "milled" edge, but the only result of this was that the good coin was melted or exported, and (as is always the case) the inferior money remained at home. It was then seen, by Montague and Sir Isaac Newton (the Master of the Mint), that the only way was to call in the old coinage, and issue an entirely new and true milled currency. The expenses of this recoinage, which cost some two and a half millions, were defrayed by a tax on window-panes.1

§ 182. Other Important Commercial Events. Among the important commercial events of this period, one ought certainly to include the Darien Scheme and the Union of England and Scotland, although these belong more fitly to a history of Commerce than of Industry. The Darien Scheme was a project originated by William Paterson, the founder of the Bank of England, who proposed to colonise the Isthmus of Darien, and use it as "the key of the Indies and door of the world" for commerce.2 English capitalists, however, would not support his scheme, and it was denounced by the English Parliament. Nevertheless, a company was formed in Scotland, called "The Scottish African and Indian Company," a charter was given it by the Scotch Parliament in 1695, and a capital of £900,000 was ultimately raised, £400,000 coming from Scotland, then a very poor country, and the rest from English and Dutch merchants. The hostility of the East India Company, the Levant Company, and of the Dutch in general, however, never ceased, and it was owing to their influence that, when the ill-fated colony at last set out for Darien in July 1698, the settlers were left quite unaided against the attacks of the Spaniards, who claimed the monopoly of South American trade. In fact, Spanish attacks and the climate, so utterly unsuited for European colonists, sealed the fate of the expedition, and few who went out ever returned. This failure had the most serious

1 Rogers, Econ. Interp., p. 200; Craik, British Commerce, ii. 127. 2 For an account of this Company see Burton's History of Scotland, ch. viii., and Macaulay's History of England, ch. xxiv.

effect in impoverishing the Scotch, who could then ill afford the loss, but there is little doubt that it greatly helped to bring about the subsequent Act of Union 1 between England and Scotland, in which William Paterson was largely concerned (1707). The Union proved of considerable benefit to Scotland, as by it trade between the two countries became free, English ports and colonies were thrown open to the Scotch, and Scotland found a large market for woollen and linen goods and cattle in England.

The woollen cloth trade had now assumed such proportions as to make it worth while to attempt to help it forward still more by a commercial treaty. This treaty is important mainly because at the time it was regarded as a monument of economic wisdom.2 The date of the Methuen Treaty is 1703, and it was arranged by John Methuen between England and Portugal. It was agreed that British woollen goods should be admitted into Portugal and her colonies, provided that at all times Portuguese wines were admitted into England at two-thirds of the duty (whatever it might be) levied on French wines. The result was a considerable increase of trade with Portugal, but an even greater decrease of trade with France,3 while the wine-drinking of our upper classes took a very different direction, for port, which had hitherto been almost unknown in England, became the typical drink of the English gentleman, and more port was sent to the United Kingdom than to all the rest of Europe together. It was not till the time of the commercial treaty of 1860 with France that the heavy duties on light French wines were reduced, and with them the duties on French manufactures.5 Till then, as Gladstone said in his speech on the subject in 1862, "it was almost thought a matter of duty to regard Frenchmen as traditional enemies," not only in politics, but in commerce. This French treaty was only one among the many and great services of Cobden to the commerce of his country.

1 Craik, British Commerce, ii. 183; Cunningham, Growth of Industry, ii. 411.

2 Craik, British Commerce, ii. 165.

4 Bourne, Romance of Trade, 135.

3 Ib., ii. 166.

5 The Methuen Treaty itself lasted till 1831. Craik, u. s., ii. 165.

6 Morley, Life of Cobden, ch, xxvii.

It is noticeable that in this period commerce takes an entirely modern tone. We have seen this in the case of banking, of national finance, and of commercial policy. We now notice it also in the growth of speculation; for the eighteenth century is distinguished by its mania for commercial gambling. It is the era in which the modern company promoter makes his first appearance. Many companies were started, far too numerous to mention here, their promotion being due partly no doubt to the fact that those who had hoarded their money during the previous wars were, in the early part of the eighteenth century, anxious to make profitable use of it. Of these new companies the most famous was the South Sea Company, formed in 1711 to trade with South America, but afterwards partaking more of the nature of a financial company. The directors anticipated enormous profits, and offered to advance the Government £7,500,000 to pay off part of the National Debt.1 Every one knows the story of their collapse (1721), and the ruin it brought upon thousands of worthy but credulous shareholders. But though the most famous, it was by no means the only, or even the first, project of its kind; 2 for this was a time when all the accumulated capital of the country seemed to run riot in hopes of gaining profits. Hundreds of smaller companies were started every day, and an unhealthy excitement prevailed.3 One company, with a capital of £3,000,000, was started "for insuring to all masters and mistresses the losses they may sustain by servants"; another "for making salt-water fresh "; a third for "planting mulberry trees and breeding silk-worms in Chelsea Park." One in particular was designed for importing "a number of large jackasses from Spain in order to propagate a larger kind of mule in England," as if, remarks a later writer with some severity, there were not already jackasses enough in London alone.*

All this mania for investing capital, however, shows how

1 Cf. Craik, British Commerce, ii. 190, and Anderson, Chron. Commerce, ii. 614.

2 Cf. Defoe's Essay on Projects (1697), especially pp. 11 to 13.

3 Cf. Craik and Anderson, u. 8.

Ib., also Bourne, Romance of Trade, 316.