Mystery of the Funding System.

sold with the utmost facility. The Jobber's profit is generally per cent. or 2s. 6d. per £100, for which he transacts both a sale and a purchase.

A bargain, being agreed on, is carried into execution at the Transferoffice, at the Bank or the South Sea House. For this purpose the seller makes out a note, in writing, which contains the name and description of the seller and purchaser, and the sum and description of the stock to be transferred. He delivers this to the clerk, who has his station under the initial of his name, and then fills up a receipt, a printed form of which, with blanks, is obtained at the office. The clerk, meanwhile, examines the seller's account, and if he find him possessed of the stock proposed to be sold he makes out the transfer. This is signed in the book by the seller, who delivers the receipt to the clerk; and, upon the purchaser's signing his acceptance in the book, the clerk signs the receipt as witness. It is then delivered to the purchaser on payment of the money, and thus the job is completed.

The business is generally transacted by brokers, who derive their authority from their employers by powers of attorney. Forms of these are obtained at the respective offices. Some authorize the broker to sell, others to accept a purchase, and others to receive the dividends. Some comprehend all these objects, and the two last are generally united. Powers of attorney authorising to sell must be deposited in the proper office for examination one day before selling. A stockholder, acting personally after granting a letter of attorney, revokes it by implication.

The person in whose name the stock is invested, when the books are shut, previous to the payment of the dividends, receives the dividend for the half year preceding; and, therefore, a purchaser, during the currency of the half year, has the benefit of the interest on the stock he buys, from the last term of payment to the day of transfer. The price of stock, therefore, rises gradually from term to term; and, when the dividend is paid, undergoes a fall equal thereto.

The dividends on the different stocks being payable at different terms, it is in the power of the stockholders, to invest their property in such a manner as to draw their income quarterly.

The trade of stock-jobbing is founded on the variation of the price of stock, which it, doubtless, in some degree, tends to support. It consists in buying or selling stock, according to the views entertained by those who engage in this speculation of the probability of the value rising or falling.

This business is partly conducted by persons who have property in the funds. But a practice also prevails among those who have no such pro

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perty, of contracting for the sale of stock on a future day at a price now agreed on. For example; A agrees to sell B £10,000 of 3 per cent. stock, to be transferred in twenty days, for £6000. A has, in fact, no such stock; but if the price on the day appointed for the transfer be only 58, he may purchase as much as will enable him to fulfil his bargain for £5800, and thus gain £200 by the transaction: on the other hand, if the price of that stock should rise to 62, he will lose £200. The business is generally settled without any actual purchase of stock or transfer, by A paying to B or receiving from him the difference between the price of stock on the day of settlement and the price agreed on.

This species of gambling, which amounts to nothing else than a wager concerning the price of stock, is not sanctioned by law; yet it is carried on to a great extent; and as neither party can be compelled, by law, to implicate these bargains, their sense of honour and the disgrace attending a breach of contract, are the principles by which the business is supported. In the slang of the Stock-Exchange the buyer is called a Bull and the seller a Bear, and the person who refuses to pay his loss is called a Lame Duck; and the names of the defaulters are exhibited in the hall of the Stock-Exchange, where they dare not appear afterwards.

The most usual times for which bargains of this sort are made are the first transfer days in February, May, August, and November. These are called rescontre, or settling days. Sometimes, instead of paying the difference on the rescontre day, the settlement is deferred to a future day on such terms as the parties agree on. This is called a continuation.

All the business, however, which is done in the stocks for time is not of a gambling nature. In a place of so extensive commerce as London, opulent merchants who possess property in the funds and are unwilling to part with it, have frequently occasion to raise money for a short time. Their resource, in this case, is to sell for money and to buy for a future time; and although the money raised in this manner costs more than the market-rate of interest, it affords an important accommodation.

The following is a statement of the highest and the lowest prices of the stocks since 1720.

V.-Catastrophe of the Funding System.

The natural and inevitable tendency of debt, either in individuals or nations, is bankruptcy. This result was foretold by HUME seventy years ago, and in his Essay on Public Credit he so justly and truly describes the catastrophe of the Funding System, that we shall insert his observations before introducing our own.

"Suppose," says he, "the public once fairly brought to that condition to which it is hastening with such amazing rapidity; suppose the land to be taxed eighteen or nineteen shillings in the pound, for it can never bear the whole twenty; suppose all the excises and customs screwed up to the utmost they can bear without entirely losing its commerce and industry; and suppose that all those funds are mortgaged to perpetuity, and that the invention and wit of all our projectors, can find no new imposition, which may serve as the foundation of a new loan; and let us consider the necessary consequences of this situation. Though the imperfect state of political knowledge, and the narrow capacities of men make it difficult to tell the effects which will result from any untried measure, the seeds of ruin are here scattered with such profusion as not to escape the eye of the most careless observer.

"In this unnatural state of society, the only persons who possess any revenue beyond the immediate effects of their industry, are the Stockholders, who draw almost all the rent of the land and houses, besides the produce of all the customs and the excise. These are men who have no connexions with the state, who can draw their revenue in any part of the globe in which they choose to reside, who will naturally bury themselves in the capital or in the great cities, and who will sink into the lethargy

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of a stupid and pampered luxury, without spirit, ambition, or enjoyment. Adieu to ALL Ideas of nobiliTY, GENTRY, AND FAMILY. The stocks can be transferred in an instant; and, being in such a fluctuating state, will seldom be transmitted, during three generations, from father to son. Or were they to remain ever so long in one family, they convey no hereditary authority or credit to the possessor; and, by this means, the several ranks of men, which form a kind of independent magistracy in a state instituted by the hand of Nature, are entirely lost; and every man in authority derives his influence from the commission alone of the sovereign. No expedient remains for preventing or suppressing insurrections but mercenary armies: no expedient at all remains for resisting tyranny: elections are swayed by bribery and corruption alone: and the MIDDLE POWER between the king and the people being removed, a GRIEVOUS DESPOTISM must infallibly prevail. The landholders, despised for their POVERTY and hated for their OPPRESSIONS, will be utterly unable to make any opposition to it.

"Though a resolution should be formed by the Legislature never to impose any tax which hurts commerce and discourages industry, it will be impossible for men, in subjects of such extreme delicacy, to reason so justly as never to be mistaken, or amidst difficulties so urgent never to be seduced from their resolution. The continual fluctuations in commerce require continual alteration in the nature of the taxes, which exposes the Legislature every moment to the danger of both wilful and involuntary error. And any great blow given to trade, whether by injudicious taxes or by other accidents, throws the whole system of government into confusion.

"But what expedient can the public now employ, even supposing trade to continue in the most flourishing condition in order to support its foreign wars and enterprises, and to defend its own Honour and inteREST or those of its allies? I do not ask how the public is to exert such a prodi gious power as it has maintained during our late wars; where we have so much exceeded not only our own natural strength, but even that of the greatest empires. This extravagance is the abuse complained of as the source of all the dangers to which we are at present exposed. But since we must still suppose great commerce and opulence to remain, even after every fund is mortgaged, these riches must be defended by proportional power; and WHENCE is the public to derive the revenue which supports it? It must plainly be from the CONTINUAL TAXATION OF THE ANNUITIES, or, which is the same thing, from mortgaging ANEW on every

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exigency, a certain part of their annuities; and thus making them contribute to their own defence and that of the nation."-Essays, vol. i. p. 376.

This is like a prophecy at any rate. Hume foresaw in the progress of the debt the transfer of the lands from the ancient proprietors,-the extinction of all generous feelings,-the growth of a class having no connexion with the state, yet devouring the whole produce of its rent and taxes,—the establishment of despotism from the decay of public spirit, the inability of the country to support foreign war, even in defence of its own honour and interest,—and, lastly, after the exhaustion of every source of revenue, the necessity of taxing the public annuities for their own defence and security, in other words, a compulsory reduction of the Debt...

When ministers have once begun to tax the annuities, they will possess an inexhaustible resource for domestic profusion and foreign war. Nothing will be so easy as gradually to raise their exactions upon the annuitants; it is merely retaining the money in their own hands instead of paying it to the fundholder. Thus the Debt, instead of being an incumbrance, will be real treasure, to which they can resort on all occasions. The first step will be the most delicate, and require great caution and infinite hypocrisy in the execution. First, probably, a tax of 1 per cent, or, even, a per cent. will be proposed, accompanied with deep expressions of regret and dire lamentations on the imperious necessity that had compelled them to have recourse to such a painful alternative. Having got the handle to the axe, they will proceed with a slow but sure step, screwing up the fundtax like the income-tax, till, at length, it equal in amount the dividends, or, in a word, expunged the Debt.

Such a knavish procedure would, doubtless, raise a great outcry; many would exclaim against the violation of public faith, and of the injustice of sacrificing a part to the whole; but ministers will easily find excuses. .They would first eat up all their former declarations on the great advantages of national faith, and would expatiate on the great advantages of national bankruptcy. They would plead the alteration in the currency as one pretext for their injustice; they would urge the great law of self preser vation, which forbids either individuals or nations to bind themselves to their own destruction; they would enlarge on the impolicy and unreasonableness of adhering to engagements that would destroy the sources of productive industry, and, ultimately, entail ruin on all classes, even the annuitants themselves; lastly, they would plead the example of other states, of their "magnanimous and august allies," all of whom had been