“What, Mr Penny, do you think of the return to gold?”
Eugene remembered how he had answered the Earl when he had asked the same question, and he knew how most people in the City still felt, but he also reckoned, if he had judged his man correctly, that another answer was now required.
“I am in favour of the gold standard, sir,” he said.
“Ye are?” For once he had surprised the Scot. “And why, may I ask, would that be?”
“Because, sir,” Penny boldly replied, “I do not trust the Bank of England.”
“Well.” Even Forsyth, for a moment, was speechless. Penny kept a straight face. He had been right. “It is not often,” Forsyth finally confessed, “that a young man can be found in the City with such views.” Eugene had hit. Even the Bank of England, to Forsyth, was a weak and broken vessel. For a moment or two the older man sat thoughtfully, before recovering himself sufficiently to take another pinch of snuff. “So,” he returned to the attack, “you care for Mary? You must admit though, she’s no beauty.”
Mary Forsyth had a slim figure, and a head which some might have thought a little large. Her brown hair was parted in the middle, and she had a somewhat studious look. There was nothing fashionable or coquettish about her. Her beauty lay in her kindly nature and her high intelligence. Eugene sincerely loved her.
“I beg to differ, sir.”
Sniff. A pause. “So then,” Forsyth blandly remarked, “it’s her money you’re after, I dare say.” He watched Penny, almost amiably.
Eugene considered. Though not known as a rich man like some of the bankers, there was no doubt that Forsyth had a very solid fortune, and Mary was his only child. To pretend he had no interest in this fact would be absurd and disingenuous. He took stock of his man. “I should never seek to marry a woman,” he began carefully, “whom I did not love and respect, sir. As to her fortune,” he continued, “it’s not so much money I look for. But I desire to marry into a family,” he paused for just an instant, “that is sound.”
“Sound, do you say?”
“Yes, sir.”
“Sound? I am sound, sir. You may be sure of that. I am very sound indeed!”
Penny inclined his head and said nothing. Forsyth also paused and took a pinch of snuff.
“You are young, Mr Penny. You must get established. And, of course, Mary may get a better offer. But if not, in a few years, we’ll look at you again.” He nodded, apparently with general approval. “In the meantime, you may call to see Mary. . .” Here, a huge and definitive sniff “. . . from time to time.”
Lucy passed the place nearly every day, but she always looked away in case the sight of it brought her bad luck. It was the one place the family had to avoid.
The workhouse was the dread of every poor family, and the parish workhouse of St Pancras was as bad as they came. Lying in the angle between two dingy thoroughfares, it had long ago been a gentleman’s residence. But there was nothing gentlemanly about it now. Nearby stood a broken-down old stocks and a cage once used for prisoners. Its filthy yard was strewn with refuse. They had been obliged to enlarge the old house some years back, for into it were crammed God knows how many poor souls, filling every hole and cranny, making it a sort of rabbit warren of the destitute.
In theory, the parish workhouses were to help the poor. Those unable to fend for themselves were to be housed, the children apprenticed to trades, the adults given work to do. In practice it was different. People had been complaining for centuries about the parish poor: to pay taxes for a fine new church was bad enough, but at least you had something to show for it; whereas when you spent money on the needy, they only seemed to ask for more. In practice, therefore, parishes spent as little as they could. Supervision was perfunctory. Most of these places filled with the sick – and poor folk who came there healthy seldom stayed so for long.
Soon after her father died, Lucy had nervously whispered to her mother: “Could we have to go to the workhouse?”
“Of course not,” her mother had lied. “But we must both work.”
Her mother had found work in a little factory nearby that made cotton dresses. But the hours there were very long, and the owner would not allow little Horatio in there. So each morning accompanied by her brother, Lucy would walk past the workhouse on the way to her new job in Tottenham Court Road.
Whatever he might think about the general state of the world, the furniture business had been good to Zachary Carpenter. “I can sell as many davenports and chairs as I can make,” he would confess. He had taken extra space and employed ten journeymen now and an extra apprentice. His total workforce was twice this number, but the others were neither journeymen nor apprentices: they were little children.
“Their small hands, when properly trained, can make for very neat finishing work,” Carpenter would explain. He did not know of anyone in his line who did not use them. As for whether it was right, that social reformer would say: “They ought to be in schools. But until there are schools, I at least keep them from starving.” Or from the workhouse.
Carpenter, like most masters, did not employ children under seven, but he had made an exception for Horatio. Since the tiny boy was eager to help, he gave him a little broom and let him sweep up the wood-shavings for which, from time to time, he would reward him with a farthing.
It took both Lucy and her mother to replace even the majority of Will Dogget’s wages. He had usually brought home between twenty and thirty shillings a week. His widow earned ten shillings, Lucy five. The picture was the same all over England: woman was paid about half a man’s wage; a child, something over a sixth. These were the economics of avoiding the workhouse.
In the Easter of 1825, Eugene Penny took the advice of Mr Hamish Forsyth and reduced all his investments to cash and safe government stocks. If he’s right and I don’t follow his advice, he’ll never forgive me, he reasoned; whereas if I do, and he’s wrong, it puts me in a slightly stronger position with him.
Whether the dour Scot was correct it was hard as yet to say. The foreign loan boom continued. “We’ve never made such profits!” Meredith declared. But as Penny looked at some of the wilder excesses of the stock market he had to confess it was over-valued. In the commodity market, too, people were borrowing money to buy anything. “Copper, timber, coffee – they can’t all go up for ever.” But spring and summer passed and still the boom went on.
Penny had attained some seniority in the firm now. Since the affair with the old Earl of St James, Meredith had entrusted him with a number of tasks needing discretion and he was used to confiding in him about the bank’s business.
“We’ve followed Baring’s and Rothschild’s,” Meredith said. The two leaders in the foreign loans market had utterly shunned the stock speculation. “Our own positions are pretty sound. But what I do fear,” he admitted, “is a general decline. It’s very hard for a small bank like ours to protect against that.” He shrugged. “It all depends on who goes down.”
The danger to Meredith’s Bank which Eugene had originally surmised was endemic to all such small operations. If some of those who owed Meredith money went under, he could be in peril. “But the real danger,” he went on, “is not so specific. It isn’t a bad investment or a shaky loan – it’s nothing you can even predict. It’s loss of confidence. That’s what can kill us.”
“I’ve never really seen that happen,” Eugene confessed.
“Pray,” said Meredith, “that you never do.”
Eugene saw Mary every week. There was no doubt, they felt, that they would marry; but how soon was another matter. Eugene’s salary had increased considerably; his position looked secure, but he had not yet reached a standing that would satisfy Mr Hamish Forsyth.
The trouble began in the autumn. “Batten down the hatches, Penny,” Meredith announced. “I think we’re in for a storm. The word is,” he explained, “that the Bank of England is tightening up.”
By October there were murmurs. By November there were cries. The markets beg
an to falter, then to fall. “This can’t go on!” Meredith declared. “The Bank must loosen up or everyone’s going to panic.”
Early in December, the Bank of England did conclude that it had gone too far and, started granting credit. It was too late.
On Wednesday 7 December it was confirmed that Pole’s, a private bank closely linked with no less than thirty-eight provincial county banks, had been bailed out over the weekend by the Bank. On Thursday the 8th, a big Yorkshire bank called Wentworth’s suddenly went under. Over the next few days, gentlemen all over England were rushing to their local banks to take out their money. News came back to London with the stage-coaches from every county town. “Gold. They all want gold!”
That weekend, Pole’s stopped all payments. By Monday 16 December, in consequence, three dozen country banks had collapsed.
Fog had spread over the city before dawn that Monday. It made everything so quiet. At times, it almost seemed to Penny that the world might have come to an end as they waited in that yellow-lighted counting-house for someone to come and tell them it was all over.
The morning passed uneventfully. There was no trading to be done. From time to time one of the clerks would be sent out for news, vanishing into the oblivion and returning with reports: “The Exchange is full of people demanding money!” “Williams’s in Mincing Lane is besieged. Don’t know if they can hold out …”
Meredith’s own preparations had been thorough. During the last week he had seen almost all the bank’s major clients. “I think I’ve squared them all,” he told Eugene. “But if the panic really takes hold. . .” He shrugged. The fog, he suspected, was actually a help. “People will have to seek us out. They won’t just think of us as they pass in the street.” He had also laid in as much gold coin as he could. “Twenty thousand in sovereigns,” he announced. Though Penny noticed that when he remarked, “That should do it”, Meredith had muttered: “It’ll have to.”
Only a few people came to withdraw money in the morning. At noon, miraculously, a merchant came in and deposited a thousand pounds. “Took it out of Williams’s,” he explained. “Safer with you.” While news came of more banks in difficulty in the afternoon, the panic had still not spread to Meredith’s.
Just before closing time, a stout, elderly country gentleman, wrapped in a brown greatcoat, appeared in the misty doorway and asked, in some doubt, “Is this Meredith’s?” Being assured that it was, he advanced to the counter. “The name’s Grimsdyke,” he said. “From Cumberland. I’d like to make a withdrawal.”
“By God,” Meredith murmured, “that old gentleman was one of my first depositors! I’d almost forgotten what he looks like. He must have travelled all night.”
“Certainly, sir,” said the clerk obligingly. “How much?”
“Twenty thousand pounds.”
There was really no need to take out so much, Meredith had calmly assured him, the bank was perfectly sound. But the old gentleman had not come all the way from the north of England to change his mind now. He took it all, and made the clerks carry it to his carriage. When the door was closed Meredith called Eugene over. “Strike a balance, Mr Penny,” he said quietly, “and bring it to me in the parlour.”
“We can’t get through another day,” Meredith concluded as he and Eugene looked over the books. “These three” – he pointed to the names that had troubled Penny several years before – “all owe us too much, and any of them could go under. I truly don’t know if we’re solvent or not. As for withdrawals: I can get hold of another five thousand in cash, but some time tomorrow that will probably be gone and we’ll have to close our doors.”
“Would the Bank of England tide us over?”
“They’ve yet to show willing. We’re too small for them to bother about, anyway.” They were both silent.
“There’s the Earl of St James,” Eugene said at last.
“I can’t.” Meredith winced. “He’s done so much for me already. Besides, he already told me he’ll never bail me out.” He sighed. “I can’t go to him, Penny.”
“Let me go then,” said Eugene.
“Trust the old devil to be out of London,” Eugene muttered, as the coach bowled along that evening. The earl had gone down to Brighton. Accordingly Penny had hired a post-chaise and set out on the turnpike for the seaside resort, fifty miles away to the south. “At least,” he chuckled grimly, “it gets me out of the fog.” With luck, he estimated, he might get there before the earl had retired to bed. The only thing that embarrassed him a little was that he had had no time to change his clothes, and the person with whom the earl was staying in Brighton happened to be the king.
It was after ten o’clock when Eugene, after much explanation to doormen, lackeys and persons of importance, found himself alone in a gorgeously decorated ante-room with the Earl of St James. Although the old man had clearly drunk a number of glasses of champagne, it was remarkable how suddenly his eyes had become hard as Eugene explained his reason for being there.
“I said I wouldn’t bail him out. He knows that.”
“He does, my lord. I begged him to let me come.”
“You?” St James stared at him. “You’re one of his clerks, and you come to see me? Here?”
“Mr Meredith entrusts me with business.”
“You’ve certainly got a nerve,” St James said, without rancour.
“A steady nerve is all the bank needs,” Penny said quickly. “If you’d just tide us over.”
The old man paused. Then, suddenly, he turned his eyes fully on Penny, and they were as sharp as those of any bookmaker at the races. “Is the bank solvent?”
“Yes, my lord.” He looked him straight in the eye. He said it with total conviction although he knew it was a lie. But he was doing it for Meredith.
“I’ll lend him ten thousand at 10 per cent,” St James said abruptly. “I’ll come to London tomorrow. Will that do?”
Eugene Penny took the mail coach before dawn and was in the City by mid-morning. The fog had cleared. The streets were busy. When he told Meredith the news, the banker was so overcome he could only shake his hand. But, as soon as he found his voice, he had to explain. “I’m afraid though, it’s probably too late . . . We’ve two thousand left. Money’s been leaving at a thousand an hour. By noon, it’ll be over. I’ve tried everywhere but I can’t get another penny. I can’t just close the doors until late afternoon when St James’s money comes, because if I do that, there’ll be a real run that not even his ten thousand could stop. We need four hours at least, Penny. What the devil can I do?”
And it was then that Eugene had his most brilliant idea. “You’ve two thousand left? Take it round to the Bank at once! In a handcart,” he cried. “This is what to do!”
Half an hour later, the little crowd waiting to be paid in the counting-house was addressed by a now cool-as-cucumber Meredith. “Gentlemen, our apologies. We asked the Bank for sovereigns and they have sent us only change. But we have plenty of it. You shall all be paid. A little patience, please.”
The two clerks at the counter started slowly paying out in shillings, in sixpences, but mostly in pennies. By the time the small coins were carefully counted out, the money was flowing out at only three hundred pounds an hour – but it never ceased. The earl himself arrived just before closing with ten thousand in gold, to find all but the most panic-stricken depositors starting to drift away out of sheer boredom. From that day, for many years after, the City would say of Meredith’s: “They pay; but you only get pennies there.”
The great banking crisis of 1825 did not end on that Tuesday. On Wednesday, for many – though happily not for Meredith’s – it was worse. By Thursday the Bank of England, dropping all its severity, and backed in the cabinet by the iron Duke of Wellington himself, was bailing out every financial house in sight.
On Friday, the Bank of England ran out of bullion, too. In the evening it was saved by an infusion of gold gathered by the only man in England, or indeed the world, who could have done it: Nathan
Rothschild. Rothschild was king of the City.
The winter Lucy was eight had been hard for the family. Her mother had been troubled by a hacking cough, though she had managed to get to work each day, but little Horatio had been more worrying. They had noticed that the boy’s legs were getting weaker. By the turn of the year, he sometimes had to stay at home while Lucy went to work for Carpenter. By the spring, he did seem to be better but sometimes, as she led him by the hand, Lucy would see that he was crying silently.
One warm summer evening, when all the family was feeling better, Lucy was surprised to see the burly form of Silas Dogget tramping up the street to their door. Uninvited, he entered the house, sat himself at the kitchen table and gruffly announced: “I need help. Got a proposition.”
“Never!” Lucy’s mother cried, as soon as she heard what it was.
“I’d pay you twenty-five shillings a week,” he continued. “Keep you out of the workhouse.”
“We aren’t in the workhouse.”
Silas said nothing for a moment. “You’re a fool like your husband,” he observed.
“Leave us alone! Take yourself off!” her mother shouted now, in a real rage.
Silas shrugged and slowly got up. As he paused in the doorway his eyes rested upon Lucy. “Your boy’s a weakling, but the girl looks strong. Maybe in a year or two she won’t be as proud as you.” He rested his heavy hand on Lucy’s shoulder. “Just you remember your Uncle Silas, girl,” he said in his deep voice. “I’ll be waiting.”
Lucy and Horatio had come back from their work at Carpenter’s one September afternoon, not expecting that their mother would have returned, when they heard a strange sound coming from the room where they all slept. Opening the door, they saw their mother lying on the bed. Her face was very pale and she was making a hoarse sound. As they approached her, though she turned to look at them, she seemed to be gasping for breath. Hustling her brother out of the room, Lucy ran to fetch a neighbour and waited anxiously while the woman helped her mother until the fit was past.
London Page 111