Cato's Letter No. 92

Against the Petition of the South-Sea Company, for a Remittance of Two Millions of their Debt to the Publick.

John Trenchard (Saturday, September 1, 1722)

SIR, It has been justly observed of corporations, or political combinations of men, that they have bodies, but no souls, nor consequently consciences. What calls this observation to my mind, is an Address to his Majesty from the South-Sea Company, which I have lately seen in print, most modestly requesting, that in this great profusion of money, general affluence, and overflowing of trade, the nation will give them two millions: and the reasons which they give for it are, 1st, that they want the money; next, that they have agreed with the Bank; and 3dly, that they will do what without doubt is the interest of all their members, except directors and brokers, to do; that is, they will consent that a considerable part of their stock shall be turned into annuities (and they had been the wiser if they had said all, for then no more of it could have been lost by management): And to wind up their whole oratory, they add a fourth reason, which is, the benefit that the publick has received already by their interest being reducible in a few years to four per cent, which reduction was part of their original bargain that was purchased for the seven millions, of which five have been remitted already, and now it is to be a consideration for remitting the other two.

I can never give myself leave to believe (whatever may be furnished by others) that any person (employed by his Majesty) in the present great exigencies of the kingdom, the almost universal poverty in the country, the want of trading stocks and credit in cities, and in great as well as little towns, the prodigious load of debt under which the nation groans, and the general uneasiness conspicuous in the faces, and too observable in the discourses, of people of all sects and denominations; I say, I cannot think that, under such circumstances of publick affairs, any minister can countenance so wild a proposition, as wantonly to desire us to give away two millions of the nationís money, only to bind a bargain between two stock-jobbing societies; which could not be obtained from a late assembly, who I presume will not be disobliged if I say no more of them.

I must therefore believe, if any person in power has been concerned in this negotiation, that he has effectually taken care of the publick, and has comprehended its interest in the agreement; and I am the rather induced to believe this, because of an expression in the address itself, to wit, that the company will be ready to do any thing for the publick service, &c. with a caution notwithstanding, that it be consistent with the security of their present fund: I hope that this sentence has an allusion to some project intended to be proposed to buy off the two millions, and that they design to offer to sink one hundred thousand pounds per annum of their annuities, which is the interest of two millions: And this will answer all honest purposes, will indemnify the publick, ease them of the difficulty of raising so great a sum, and lessen the income of particular members, not above six or seven shillings per cent yearly.

It is impossible to suspect that those gentlemen, who for some years together opposed wild schemes and wilder expences in carrying them on, and who (if they are to be believed themselves) rather chose to throw up their then advantages and expectations, than comply with such gallantries, should at last lose the merit of so much virtue, by wantonly and unnecessarily discharging one company from their contract, only to prevent another from performing theirs, and this at two millions loss to their country: Sure England is not in a condition to discharge all reckonings at home and amongst foreign states too; if so, every man ought to bring in his bill, and then we shall all be upon the square.

On the contrary, I persuade myself that the gentlemen, whose deserts have now set them at the helm, have, during their retirement from business, observed the miscarriages of their predecessors, design to avoid the rocks upon which the others have split, and consequently have put on steady resolutions to extricate the kingdom out of its present calamities; and, possessed with this opinion, I am determined (as I believe many others are) to give them my hearty assistance to attain those good ends, and to forget past errors if new ones do not rub up our memories: I neither envy their preferments, nor I believe shall court them; but shall ever esteem my services to be overpaid, if I can contribute to save my country.

We all know what a noble project has been lately authorized; what ends were designed to be, and have been, served by it; how many thousands were directly ruined by it, and how many more by the fatal consequences which have ensued: but all the arts of the projectors could never have succeeded, if many well-meaning people had not been drawn in to consent to this iniquity, by the prospect of seeing the publick debts put in a method of being paid off; which they thought would atone for many evils that were foreseen by wise men, who yet did not foresee the hundredth part of the mischief which has since happened; and after we had suffered more than words can express, the greatest part of the consideration which drew us into these sufferings has been remitted, I will not say by any of those, but, to those, who brought all our misfortunes upon us; and now the poor remainder is modestly called for; and, if obtained, the wretched people, and, amongst the rest, all who vigorously opposed this vile project, must bear the loss, and the contrivers of the wickedness must carry off the plunder.

Sure such a proceeding sounds very odd, and ought to be supported by obvious reasons! It is a very singular sort of generosity, to punish the innocent, in order to reward the guilty; to fine or tax those who did their utmost to oppose the progress of publick mischiefs, to repair the losses of those who, through guilt, covetousness, or folly, contributed to it. In great publick calamities there must be many sufferers, and some who do not deserve to be so; yet I never heard that they called for reprisals upon their countrymen. Provinces are laid waste, cities and towns burnt, in war, and ships taken by pirates; and yet no bills brought in, or demands made, upon the publick: In pestilential distempers, families are shut up in their houses, and whole cities within their walls, where thousands die for want of food or proper necessaries, and those who are left alive are mostly undone; and yet no nations think themselves obliged to make good their losses: In such cases every one must bear his own misfortunes, even when they come from the hand of God, and he himself does not contribute to them; and all that wise states can do, is to take care of the whole, relieve particulars as far as is consistent with the publick safety, and leave the rest to providence.

But, besides the shrewd reasons which are in print, and are above repeated, let us hear what others are offered to load the publick with this loss. First, we are told that the peopleís representatives have drawn the subscribers into it; and therefore the people are bound in conscience to repair them: A very notable way of arguing indeed! and which, if carried to its extent, would provide admirably well for the security of nations. Suppose the States of any country should make a foolish law, or engage it in a foolish war, by which a third part of the people are undone, must the rest make them amends, who perhaps are half undone themselves? The Pensioner Parliament, in King Charles IIís time, were chosen by the people to act for the common benefit of the kingdom, and they betrayed their principals, and took money from the court to act against it; and was that a good reason for the next Parliament to give a sanction to all the mischief that their predecessors did, or to pray for it? Sure the last Parliament were as much the representatives of the South-Sea Company as of the rest of the kingdom, and acted as agreeably to their inclinations and their desires, or else their acknowledgments were much misplaced.

They tell us, that the publick is better able to bear the loss than private men; which certainly is not true at present; for the publick is much poorer than most private men in England, if regard be had to their occasions and their debts: But if it were so, are they therefore to take the ill bargains of all private men to themselves, and protect them in their good ones? Must every man who has suffered by playing the fool, or playing the knave, call upon the nation for reprisals? But supposing only innocent and unwary people (as all the members of the present South-Sea Company undoubtedly are) ought to be objects of publick compassion; who shall make recompence to the millions of others who have suffered in their estates, by the universal confusion occasioned by this worthy project? Who shall repair the many bankrupts, the many creditors who have lost their debts, the many young ladies who have lost their fortunes, the mechanicks and shopkeepers who have lost their business, spent their stocks, and yet have run in debt to subsist their families; and the gentlemen, merchants, and farmers, who can get little for their commodities and products of their estates, farms, and trades? And must all these contribute at last, out of what remains, to repair the misfortunes of those who brought all these evils upon them?

But because I would avoid giving offence to tender ears, by seeming to take too much part with the inconsiderable interests of men who are vulgarly called the mob, I shall represent the case of persons who much better deserve some peopleís consideration; I mean brokers, stock-jobbers, dealers in funds, and such who, for many years together, have supported the government, by making twice or thrice the advantage of their money that they could do any where else. Who shall repair the losses of the contractors for stock or subscriptions, or of those who lent them money at five, ten, and twenty per cent per mensem, and cannot be paid again? Who pay the many sums lost in the hands of goldsmiths, and by their pretended subscriptions of effects without the ownerís consent? Who the losses of those who bought in the East-India Company and Bank at two or three hundred per cent all occasioned by this worthy project; or of those who bought in this Company at eight or nine hundred, and sold at one or two? Who those who bought, or were hindered from selling out of the stocks of all companies by that honest and serviceable bargain to the publick made between the Bank and the South-Sea? Who shall pay the losses in the bubbles, some of which were established or countenanced by Parliament, and others by patents, all which have equal right to put in their claims? And lastly, who shall make satisfaction to the whole kingdom, who must be reduced by such means to an incapacity of paying its debts, and consequently of defending itself? I have heard of no project yet for lessening the public expences, or of the courtiers lessening their own stated incomes, or occasional gains.

And what, after all, are the particular merits of these gentlemen to whom so much favor is to be shewn; and who will receive the benefit of it? Those who remain of the original company have no pretence to it; and at present their capital, with the addition which they have received by the division of the fictitious stock, is more valuable than at first; I believe much more so: Those who have bought in since the fall, have as little pretence to be considered, because they knew the terms upon which they bought: Such as have raised fortunes by dabbling in the publick, ought not to complain if they have lost by one project what they got by another; and those who have great or plentiful offices in other respects, must be very immodest if they expect to repair their follies out of the estates of those who are more necessitous than themselves. So that the few that can hope for relief are the poor and helpless, who were trepanned by the rest to buy in at a great price, and could not sell out again before the fall; and I dare appeal to all mankind, whether such could get relief, if their interests were separated from their oppressors: If it be so, we have reason to sing Te Deum, for the world is finely mended; but till I can find some other instances of this tender regard to mercy and innocence, I must beg leave to suppose, that there is already, or is to be, some other consideration for the remitting these two millions, if ever they are remitted.

There is another reason left behind, and a shrewd one it is; namely, that we must support publick credit, by enabling the Bank to support the South-Sea, and in consequence enabling them both to sell their stocks for twice as much as they are worth (and so leave a new loss upon other people, who with equal reason must be again repaired); for it is certain, that all or most of the company-stocks fell at present above their real value. Now, with all due submission to the gentlemen of the Alley, it seems to me to be a very odd way of supporting credit, to render the publick incapable of paying its debts: But it is no new thing amongst some sort of people, to endeavour to support credit by the means which destroy all credit. My head has been ever so ill turned, as to think that nations must preserve the opinion of their integrity by the same rules and maxims that private men find necessary; that is, always by selling good merchandise, and not stuffing their bales and casks with counterfeit wares, and covering them at top with those which look well. But we have heard of those times when moonshine and shadows have sold for silver and gold, for lands and tenements; and the wisdom of states has been employed to keep up the imaginary, fraudulent value of this sort of airy merchandise; when thousands and thousands of unwary people have been undone by such purchases, new projects have been formed and countenanced by authority to do as many more: I mean, this has been lately done in France, whose example should not be followed by any who design not to introduce the government of France.

All wise and honest governments ought to protect their innocent, industrious, and unguarded, subjects, against the snares of cheats and frauds of pickpockets; and not combine with such wretches, and be perpetually forming schemes to ruin multitudes for the enriching a few, and to prostitute their power, and their publick honour, to patronize and establish combinations of oppression; and when one sort of it can be supported no longer, to set their wits to work to find out another. It puts me in mind of a story told of Dr. Barebone, who had once drawn an eminent merchant into a building project at Mile-End, whereby he lost many thousand pounds; and when he complained of it, the doctor promised to make him reparation, by letting him share in another which he had just begun at the farther end of Westminster, whereby he lost as much more; and when his Bubble, justly provoked, drew his sword upon the doctor, and bid him draw too, he, like a true stoick, with great calmness, and wholly unconcerned, asked, whither he would be drawn; for that he had drawn him from one end of the town to the other already? Whatever has been done in neighbouring countries, I am persuaded we are in no danger of any such attempts here.

And now having, as I conceive, fully answered the pretences of the South-Sea Company for getting the two millions remitted to them, which pretences they are pleased to call reasons; I shall offer them one of my own why they should not desire it, for that they will be losers upon the whole by it. As I remember, the price of their stock rather decreased than increased upon the remitting the five millions; and it is fallen now upon the expectation of having the rest remitted: and the reason is obvious; for nothing can keep up the credit of publick or private men, but an opinion that they are able to pay their debts, and are willing to do so; and no man in his wits will believe either, if he do not see them endeavour to pay off their old debts, and avoid all occasions of contracting new ones. When a man owes more than he can pay, he must compound with his creditors, lie in gaol, or run away, unless he has privilege; and then they have nothing left to do, for the most part, but to shake their ears, rail, and run away too. People must be very weak not to know, if ever a question should arise, whether a nation will be undone, or undo a small part of it? which it will choose; and therefore every wise man, whose fortune lies in publick securities, will think himself concerned to make the payment of them practicable, and therefore will consider whether it is not his interest to lose a small part of his income, to secure the whole; and every man would consider this over and over, if he did not design at all adventures to save one, and leave the storm to fall upon others: And how well all hitherto have succeeded in this honest intention, we have had as many instances as we have had publick calamities, and lately a very pregnant one, when every man designed to sell, and no one could do so but managers and brokers.

T I am, &c.

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