London - Edward Rutherfurd [494]
Eugene did not want to seem to be pushing himself too aggressively, but he confessed that, if he could prove his ability, he hoped to rise.
“Quite right,” said Meredith obligingly. “It’ll all depend upon how useful you can make yourself, you know. All of us here” – he grinned at the old man in the wing chair – “are free to rise – or fall.”
He went on to ask a number of questions to determine what Eugene knew about the rules of finance, which thanks to his godfather’s coaching, Eugene was able to answer. They had just come to the end of their interview when the old man suddenly spoke.
“What does he think about free trade?” he demanded.
The question was so abrupt that Eugene was almost startled. But Meredith only smiled. “Lord St James would like to know your view on free trade,” he said.
Thank God, thought Eugene, thank God indeed for Fleming. Because of him he knew who the old man was and also what he must say. “I agree with the Whigs, my lord, that free trade in principle must be for the betterment of mankind, but until it is reciprocated by our trading rivals, English merchants may need some protection here and there.” This was, of course, exactly the view of the Whigs’ merchant and city supporters: they were all for free trade – as long as it suited them.
“That was all right, St James,” Meredith laughed. But it seemed the earl meant to have a little more sport. Fixing Eugene with his sharp old eye, just as if he had been a horse he was thinking of betting on, he rapped out: “So what about the gold standard, young man, eh? What do you think of that?”
Once again, Eugene silently blessed his godfather. If there was one subject in the year 1819 that could be calculated to raise tempers in the city and in Parliament, it was the great question of gold.
Traditionally, when banknotes were issued, they represented gold bullion for which they could always be exchanged. This limited the number of notes in circulation and kept the currency sound. But early in the conflict with revolutionary France, the English government, through the Bank, had to borrow so much money – and therefore issue so many promissory notes – that the amount of money circulating in the London market swelled enormously. Indeed, by the end of the Napoleonic Wars, about 90 per cent of government income went in paying interest. In these circumstances there was simply not enough bullion to back all the banknotes needed; and so the Bank of England had been allowed to print money that was no longer, strictly, backed by gold.
These banknotes were still sound. They had the Bank’s massive credibility, and the government’s ability to raise money through taxes, behind them. But to many solid Tories in the country, the whole thing seemed like a trick.
“If it’s not gold it’s not real,” they complained. “And besides,” the sharper of them pointed out, “if there’s no gold behind the currency, how can we trust these fellows not to print money whenever it suits them?” If this insulted the integrity of the Chancellor of the Exchequer and the governors of the Bank of England, they couldn’t care less. In the summer of 1819 they had got their way. Parliament had declared that over the next few years it would return to gold. But there was one difficulty.
“Gold is sound, my lord,” Eugene now said carefully. “But I think the sudden return to it is dangerous. The Bank will have to reduce the amount of currency in circulation to match it to the limited bullion. That means that with less money about prices will fall. All businesses will be hurt. Worse, with all this money being sucked out of the market, our merchants, already in trouble, will find it impossible to get credit to tide them over. The whole system could collapse.”
This was precisely the view of the City. It had been urged repeatedly upon Parliament by Rothschild and other great bankers. The collapse they