CH5 Public Credit and the Public Sphere

CH5

Public Credit and the Public Sphere

Introduction

A profound crisis disrupted the English Financial Revolution in 1710. Public credit was in a tailspin, with government bonds trading at a heavy discount, forcing the Treasury to borrow on increasingly unfa­vorable terms.¹ The rapidly deteriorating trust in public credit jeopar­dized the sustainability of the still developing Financial Revolution and thus the stability of the fiscal-military state. The crisis—called by con­temporaries the “Loss of the City,—was particularly disturbing because it revealed the extent to which public credit was no longer an exclusive affair between the Crown and a small number of wealthy financiers. It was now subject to the fickle judgment of the public.² Since public debt instruments were now actively traded, the status of the national debt was dictated by an amorphous publics decentralized judgment of the prospects of a disembodied and depersonalized state administration. The recognition that an intractable public opinion now dictated pub­lic credit was deeply unsettling to traditional elites.³ While John Locke and others had earlier argued that it was possible for people to derive well-informed opinions that could accurately guide them in a world of uncertainty, the consensus among philosophers was that the collective opinion of the multitude was never accurate and therefore should not be trusted. Locke wrote, “there cannot be a more dangerous thing to rely on, nor more likely to mislead, one; since there is so much more Falshood and Errour amongst Men, than Truth and Knowledge.”⁴

The power of public opinion to dictate public credit was seen as a threat to the traditional political economic authority. That an anonymous public was able to influence England s political and geopolitical options, including its ability to wage war and thus its capacity to defend its bor­ders and its cherished liberties, was deeply unsettling.⁵ To the govern­ing elite, decisions about politics, war, and the succession were the sole responsibility of people properly educated and experienced in political affairs.⁶ Yet, despite their shared discomfort with the political influence of the public, both Whigs and Tories soon realized that the fickleness and instability of public opinion could be wielded as a political weapon. Both parties consequently used the public sphere to manipulate pub­lic opinion for their own ends. The incumbent ministry tried to shape public opinion of England’s political, economic, and military adminis­tration in order to shore up public credit, while the opposition sought to undermine public opinion in order to sink public credit and thus force a ministerial shift. As such, public opinion, the public sphere, and public credit became intricately linked as the financial innovations introduced as part of the Glorious and Financial Revolutions became permanent fixtures of English society.⁷

In exploring the politically inflected discourse on credit sparked by the 1710 crisis, I seek to address historian Mark Knights’s grievance that the early eighteenth-century “link between opinion, credit, and partisan politics remains under-explored.”⁸ Not only were numerous prominent writers, such as Daniel Defoe, Jonathan Swift, and Joseph Addison, paid to produce texts intended to shape the publics opinion about the state of credit, but the ways in which these writers conceived and theorized credit were deeply influenced by their party-political agendas. By con­trolling the language by which the public gained financial literacy, these writers tried to frame peoples basic understanding of what credit was and how it worked and, in that way, to ensure that people would invest in ways that inadvertently supported their part/s interest. In this chap­ter I argue that ideas about credit, which came to influence the economic discourse for the rest of the century, cannot be properly understood in isolation from the party-political wrangling of 1710.

The Political and Geopolitical Context of the 1710 Credit Crisis

The unprecedented spending associated with the War of Spanish Suc­cession (1701-1714) was primarily responsible for generating the 1710 credit crisis. But it was the intensity of the party wars between Whigs and Tories that elevated the crisis to a national emergency. The war, pitting England, the Dutch Republic, Austria, and Portugal against France and Spain, was largely a continuation of the Nine Years’ War. The main strategic aim of the Alliance was to check France’s expansion by making sure that Louis XIVs grandson, the Duke of Anjou, was prevented from laying claim to the now vacant Spanish throne. Instead, the Alliance supported Emperor Leopold Is son, Charles of Austria, as the new Spanish king. If France gained control over Spain it would then be able to take advantage of the entire Spanish empire, making France the most powerful nation both in Europe and the Americas. The Dutch and the English already had developed a strong imperial presence, and had even greater aspirations, making them unwilling to stand idly by while the French pursued their aim of universal monarchy.

England’s success in this war made it the “military Wunderkind of the age” and signaled its emergence as a world power.⁹ For the first time, England was able to mobilize a military that could rival any other European nation, in size and firepower, both on land and at sea. Dur­ing the war, England had on average ninety-three thousand men in the army and forty-three thousand men in the navy, compared to around twenty thousand in the army and navy respectively during the second Anglo-Dutch war in the 1660s.¹⁰ Also contributing to England’s suc­cess was the legendary command of John Churchill, Duke of Marlbor­ough (1650-1722), who skillfully managed the British redcoats and Jack Tars.¹¹ Success, however, did not come cheaply. Maintaining armies at war in both Flanders and Spain, as well as on the oceans, was enor­mously expensive. In addition to the sheer increase in enlisted men, new types of firepower and fortifications introduced during the seven­teenth-century military revolution added greatly to the basic expendi­tures of waging war.¹²

The expansion of England’s armed forces would not have been pos­sible without the Financial Revolution.¹³ While the Stuart monarchs had developed a permanent Crown debt, the establishment of a per­petual public debt with the tontine and lottery loans and the forma­tion of the Bank of England in the 1690s enabled the government to borrow on a greater scale and at a lower interest than ever before.¹⁴ Hie debt was also considered more secure now that the government had substantially improved its system of revenue collection. In addition to the further development and use of both indirect (excise and customs) and direct (land and hearth) taxes, the government had also put an end to the notoriously inefficient system of tax farming.¹⁵ A relatively efficient corps of civil servants was now in charge of the collection of taxes.¹⁶ Collectively, these fiscal reforms enabled the Treasury to raise more money faster and the state to carry a much greater debt burden, contributing substantially to England’s financial flexibility.¹⁷

In the political realm, the already sharp hostility between Whigs and Tories intensified. The two parties had originated during the Exclusion Crisis of the 1670s over the issue of whether a Catholic monarch, in this case Duke of York, should be allowed to succeed to the throne. The two-party system emerged in an even more prominent role when Par­liaments authority was enhanced as a result of the financial settlement of the Glorious Revolution and the passing of the Triennial Act in 1694. Debates on controversial issues like religion, foreign policy, military strategy, and public finance were increasingly staged within this binary opposition, the vehemence of which occasionally conjured up fears of another civil war.¹⁸ While the electorate decided on the composition of the House of Commons, the monarch selected the ministry. Since the ministry had to work closely with the Commons, which now controlled the fiscal machinery, the monarch’s choice was circumscribed by politi­cal pragmatism. The Whigs were generally better organized than the Tories. The so-called Whig Junto successfully coordinated and man­aged the party so that even though the Tories won four out of five elec­tions during Anne’s reign, the Whigs maintained significant influence.¹⁹ In general, Anne tried to select political moderates for her ministry to ensure that the party conflict did not cripple the political administra­tion. This led to her selection of Sir Sidney Godolphin (1645-1712) as Lord Treasurer in 1702, who together with Marlborough successfully governed the country for the next eight years.²⁰ While both of them started out as moderate Tories, they soon became allied with the Whig Junto, as they found the Whigs more supportive of the war effort.

The debate on public credit was mostly conducted along party lines. Although actually composed of numerous layers of complex ideologi­cal conflict, the Whig-Tory opposition generally mapped well onto the divide between the landed and moneyed interests.²¹ While the Tory landed interest included some traditionalists who advocated a mostly agrarian-based civic republican society, free from a standing army, national debt, and moneyed men, most of the landed men had by this time become favorably inclined towards commercially oriented agri­culture, wide-reaching domestic markets, and active colonial expan­sion.²² Moreover, they were increasingly accepting of the new financial configuration or at least certain parts of it.²³ As long as a Tory-friendly alternative to the Whig Bank of England was implemented and the recent increases in the land tax used to service the states deficits were rolled back, the landed interest seemed to have transcended its aversion to elaborate financial schemes.²⁴ The landed interest had been trying for some time to establish a land bank, but the failure of John Asgills and Nicholas Barbons project in 1695 had forced them to look for other solu­tions compatible with their political and economic interests. They now concentrated on establishing a joint-stock company with the capacity to lend to the government on the same scale as the Bank of England and the East India Company, hoping that such large-scale lending would earn the Tories greater leverage over public policy.²⁵

The moneyed interest was comprised mostly of merchants, bank­ers, and financiers. Often viewed as arrivistes or parvenus, Whig mer­chants and financiers often had landed roots. While they could not rival the accumulated wealth of landed men, their rapid commercial gains and the liquidity of their wealth was nevertheless intimidating to traditional elites. The moneyed interests were in general supportive of commercial and financial undertakings. Some preferred particular types of commerce, for example, domestic industry over the reexport trade, while others valorized trade over finance, in particular specu­lation and stockjobbing. Most were pleased with recent political and financial transformations and viewed the Glorious Revolution and the formation of the Bank of England as conducive to their aims. Predict­ably, they were also supportive of the shift from a heavy reliance on the hearth tax to the land tax to finance the wars. Because of the lucrative lending opportunities the war provided, many of the moneyed men believed that it was worthwhile to continue fighting until the French were definitively defeated and English merchants were in a position to take over the bulk of French colonial commerce.²⁶

For much of the War of Spanish Succession, the Godolphin- Marlborough ministry enjoyed great military and political success. It transformed what had initially been a defensive military strategy into one in which Britain scored a number of decisive victories that significantly changed the European balance of power. This accomplishment was made even more impressive by the fact that it was achieved without bankrupt­ing the nation. In fact, the ministry harnessed the nations resources in a way that left state finances in better shape than they had been during the previous war and, more importantly, in better shape than those of its enemy.²⁷ By 1709, however, England’s string of military successes were replaced by a failed peace at The Hague and a bloody battle at Malpla- quet, and the escalating expenses of the war had pushed the nascent fiscal apparatus to its limits. With spending averaging £7 million per year, the total public debt had skyrocketed from £14 million to £36 million dur­ing the course of the war.²⁸ Short-term military departmental debts had begun to spiral out of control, with the navy, army, ordnance, and trans­portation debentures—most of which were short-term loans unsecured by specific revenue flows—trading at an alarming discount.²⁹ The larg­est component, the navy bonds, traded at a 35 percent discount in 1710 and the army and transport debentures reached a 40 percent discount in the beginning of 1711, signaling the publics eroding confidence in the governments capacity to adequately service its debts.³⁰ In addition, Exchequer Bills, considered the most secure financial instruments at the time, with liquidity almost as high as coin itself, had also begun to drop below par. To darken the economic horizon further, there was a general disruption in European financial markets and a string of failed insurance companies that centered on London.³¹

Also contributing to the political crisis of the ministry in 1710 was the Sacheverell affair. The Reverend Dr. Henry Sacheverell (d. 1724)，a High Church clergyman, used the pulpit to question the legitimacy of the political order established by the Glorious Revolution. His sermons were attended by large crowds and printed versions sold more than one hundred thousand copies, igniting an intense public debate about the present division of power between Parliament and the Crown. To discredit the Tory attacks, the Whigs decided to impeach Sacheverell before the House of Lords. But instead of gaining public support, the trial generated widespread support for Sacheverell and the Tory cause.³² In the rioting that followed, angry mobs attacked dissenters’ meeting­houses, as well as the Bank of England, which constituted a powerful symbol of the new political order.³³ The sermons, trial, riots, and sur­rounding debates generated an adverse political climate for the minis­try, at the same time that it galvanized the Tory party.

Further political controversy was stirred up by the ministry’s failure to secure an honorable peace with France. The Tories blamed the Whigs for intentionally making excessive demands on the French in order to ensure that the war was prolonged and that the moneyed interest could continue benefiting from lending to the government. The landed inter­est was understandably troubled, considering that taxes on their land paid for much of the war and thus also served to enrich the bondhold­ers.³⁴ The political and financial climate in England during the summer of 1710 pointed towards a serious crisis for the ministry.

The political turmoil reached a crescendo in June of 1710, when the queen dismissed the Earl of Sunderland, Marlborough s son-in- law, from the office of secretary of state and replaced him with a Tory. Sensing that even more radical changes were underway, the Whigs embarked on a campaign to convince the queen that an overhaul of the ministry would have disastrous consequences, in particular for pub­lic credit. The prominent merchant and director of the Bank of Eng­land, Sir Gilbert Heathcote (1652-1733), who staunchly supported the Whig battle cry of “No Peace without Spain,” wielded his political clout to help the Godolphin ministry weather the storm. On the day after Sunderland s dismissal, Heathcote paid the queen a visit to obtain an assurance that no further political changes were pending. The resulting commitment by the queen was of course nothing more than a stalling tactic to keep the channels of credit from the Bank open, if only until the more radical changes were unveiled. In addition, her former advi­sor and confidant, Sarah Churchill (1660-1744), the Duchess of Marl­borough, sent the queen a warning of the financial implications of a ministerial change: “I may tell your Majesty what I have lately heard for the honour of my Lord Treasurer [Godolphin] from all the considerable men in the city, which is, that if he should be removed, they would not lend a farthing of money.”³⁵ The queen had now been duly warned that any further political reforms would occasion a “Loss of the City•”

The final undoing of Godolphin came in August. When the Bank was asked by the military pay offices to discount a number of bills of exchange — normally a routine line of short-term credit that the Bank provided to the Treasury — the Bank declined on the basis that it could not afford to take on such risks in the midst of political instability and sinking credit. Heathcote told Godolphin that the Bank now needed an assurance in writing from the queen that no further ministerial changes were forthcoming. This move turned out to be a serious miscalculation and on August 8, 1710, the queen dismissed Godolphin. Two days later she announced Robrt Harley as the new Chancellor of the Exchequer, effectively making him the new first minister.³⁶

England was now in a state of political and financial crisis. What would the consequences of this ministerial change be on domestic poli­tics and how would this alter England’s approach to the war? How would financial markets react to the turbulence? Would a ministry favoring the landed interests honor the governments outstanding debts to the commercial and moneyed interests? Worst of all, the Whigs warned, would an impoverished English military have to capitulate to its long­time enemy and face a French invasion with its resulting absolutism and papal tyranny? While all of these concerns were foisted on Harley from the very beginning of his tenure, the most immediate challenge he faced was to find a way to shore up public credit. Tlie future of Har­leys ministry, the stability of the fiscal-military state, the continuity of the financial apparatus, and indeed the security of England relied on a rapid solution to the crisis of public credit.

Harley promptly went to work to raise enough funds to keep credit afloat and the armed forces at war. Contrary to the advice from some of the more radical Tories who tried to convince him to rely solely on money from the landed interests, he wisely did not give up on court­ing the Whig moneyed interest. Although the Bank of England did not grant him all the funds he requested on the terms he had hoped for, the fact that they were willing to extend any loans at all sent impor­tant signals that the established channels of government finance were still open.³⁷ Encouraged by their success in managing the reaction to the ministerial change, the new ministry and the queen launched the next phase of their political agenda and dissolved the Whig-dominated Parliament at the end of September; a new election was called for Octo­ber. This brought about a sell-off of government bonds and stocks in the Bank of England and East India Company, causing prices to fall and nervous foreign investors to withdraw funds and smuggle specie abroad, noticeably reducing the circulation of coin in England. While the ministry and the queen repeatedly tried to reassure the city that they were committed to political and religious moderation, and that they would do everything in their power to uphold public credit, fears that the ministry would default on — or use a sponge to wipe out — the entire national debt kept on escalated, thus contributing to the severity of the financial crisis.

Public Opinion, Public Sphere, and Public Credit

The crisis of 1710 sparked a vigorous debate about the nature of credit and the most appropriate way to restore it to its former glory. It was clear to all observers that the transformation of public credit during the Financial Revolution had significantly altered the composition of both creditors and debtors. Hie institutionalization and bureaucratization of the state, combined with the increased transferability of government bonds, generated an increasingly anonymous and detached relationship between the two poles of the credit relationship. Since the state no longer raised money on the personal reputation of the monarch and his con­nections to specific goldsmith bankers, tax-farmers, landed men, and wealthy merchants, but rather on the investing publics opinion of the effectiveness of the states management of the fiscal apparatus, the state-as-public-debtor became more abstract and disembodied.³⁸ At the same time, lending to the government no longer locked creditors into a long­term personal relationship with the state. The increased transferability of government securities and the resulting market in these instruments enabled government creditors to unload their financial assets whenever their opinion of the investment changed.³⁹ Public credit thus came to depend on how public opinion perceived the states current capacity to service the interest payments and its imaginary ability to repay the debt in some distant, theoretical future.⁴⁰ In this new culture of credit, public opinion became the arbiter of public credit, dictating everything from England's imperial campaigns, fiscal administration, and legisla­tive decisions to the choice of ministers.⁴¹

The number of people who translated public opinion into a rising or falling credit by trading bonds was rapidly expanding, reaching approx­imately eleven thousand in 1710 and close to forty thousand a decade later.⁴² The vast majority of these investors held only a small number of bonds and the practice of joint, multiple, and corporate holdings of securities was rare.⁴³ This made it unlikely that any person or body had the capacity to consistently exert influence over financial markets.⁴⁴ The majority of the investors were metropolitan British merchants, along with significant numbers of French, Dutch, Huguenot, and Jewish investors. Women also played a major role: alongside wealthy mer­chants, peers, gentry, civil servants, and professional men, rich wid­ows were counted among the major proprietors of financial assets.⁴⁵ The middling sorts came into contact with the new financial instru­ments as well, attracted by the mounting spirit of investment, specula­tion, and gambling.⁴⁶ Even people of more modest means invested in financial markets by buying a share — one-tenth or one-twentieth — of a £10 lottery loan ticket. Opportunities to invest in these securities were plentiful, as the government issued more than half a million £10 tickets and thirty thousand £100 tickets between 1711 and 1714, sold partly in well-frequented pubs.⁴⁷ With aspirations of winning the grand prize, thousands of investors showed up at Guildhall for the public drawings, turning these events into major public spectacles, which William Hog­arth would later satirize in his painting The Lottery (1724).

The investing public thus constituted a remarkably large and diverse body of people.⁴⁸ And, these investors channeled the opinion of an even wider non-investing public. Since the issues pertaining to public credit were deeply intertwined with other major issues of the day — party politics, foreign policy, the succession, and religious controversy — the opinion of the investing public was formed within a much broader public sphere, informing many tens, if not hundreds, of thousands of people. This public significantly overlapped with the parliamentary electorate — consisting of an estimated three hundred thousand men at this point—but arguably represented a broader and more diverse politi­cal force.⁴⁹

The fact that public opinion was based on the beliefs and sentiments of such a decentered and fragmented public made it almost impossible to control. Propagandists nevertheless tried to access this public and influence its thinking by flooding the public sphere with their writings.⁵⁰ In so doing, they took advantage of an already vibrant print culture that had developed as a result of increasing literacy rates, a burgeoning commerce in cheap print, frequent electioneering, an expansion in the number of public petitions, and the lapse of the Licensing Act in 1695.⁵¹ Hiis flourishing print culture was particularly useful to political chal­lengers, who were now able to orchestrate elaborate campaigns against incumbents.⁵² However, the reigning ministry, although often forced to defend itself against its critics, also used the public sphere to try to shape public opinion.

Experimenting with different mediums and messages, and widely disseminating their publications, propaganda writers primarily tar­geted people operating in urban public spaces like pleasure gardens, the Royal Exchange, Exchange Alley, alehouses, and coffeehouses. Pro­viding access to people of most social groups, political leanings, eco­nomic standing, and religious convictions, London’s approximately five hundred coffeehouses played a particularly important role as spaces in which public opinion was formed. And, since much of the trade in stocks and bonds was carried out in coffeehouses located in Exchange Alley, in particular Jonathan’s and Garraways, changes in public opin­ion informed by coffeehouse conversations often translated immedi­ately into rising or falling credit. The spatial and conceptual proximity between Exchange Alley and the coffeehouse thus ensured that the public sphere and the new system of public credit mutually conditioned each other during the Financial Revolution.⁵³ Hence, the public sphere not only promoted a more democratic political discourse, as the phi­losopher Jurgen Habermas famously proposed, it also contributed to the democratization of public credit.⁵⁴

Yet, it should be noted that the public sphere informing decisions regarding public credit at the turn of the eighteenth century differed in important ways from that theorized by Habermas.⁵⁵ The seventeenth- century English version of the public sphere was not exclusively a space for rational public criticism of the state. Instead, the ministry was try­ing to shape public opinion as much as was the opposition, making the public sphere a forum for debate between multiple oppositional forces and the state, rather than solely an avenue for criticism of the state.⁵⁶ Furthermore, the conversation about public credit was not exclusively based on rational critical arguments, in which equal individuals recog­nized “the better argument.”⁵⁷ Instead, since the debate was designed to sway the public’s sentiment, imagination, or expectations, rational arguments were not always preferred. Instead, propaganda writers used multiple types of arguments, rhetoric, and evidence, the epistemic con­tent of which occasionally promoted rational discourse, while often­times relying instead on satire, humor, distraction, and obfuscation.⁵⁸

The fact that these debates were conducted in multiple types of media, including newsprint, pamphlets, broadsides, and ballads, raises the question of whether it might be more accurate to think in terms of multiple separate and partially overlapping public spheres, rather than one larger public sphere.59 The Whig historian lohn Gldmixon, for example, argued in l714 that the content and audience of different forms of propaganda yielded radically different reactions. “Parnphlets work slowly,” he Wrote, “and the Operation of one Pamphlet is often spoil’d by that of another,” while the “Crying and Singing” of the balladeers “warms the Minds of the Rabble, who are more capable of Action than Speculation.”60 Although all spaces for public discussion were not open to every person and all publications were not intended for every audience, the fact that pamphlets, newspapers, and ballads tended to share the same general concerns meant that even disjointed social groups were exposed to largely the same set of ideas and arguments. Since similar conversations were carried 0n in many different spheres, it therefore seems plausible to think in terms of one diverse, yet uniñed, public sphere. In fact, it was this heterogeneity and amor» phousness ofthe public sphere that intrigued and threatened contempGraries. To them, the public exercised a palpable political force, yet it was impossible to pinpoint its exact social location. Hence, by trying to disaggregate the public sphere and pin down its specific location there is a risk of losing the very quality that linked public opinion to the views of the multitude and thus made it such an enigmatic and intimidating social phenomenon to those who tried to manage it.

The fluidity, elasticity, and open-endedness of opinion allowed for the simultaneous presence of different, often conflicting, public opin~ ions. 'lhat is, contrary to the singularity and coherence that Habermas argues public opinion developed later in the eighteenth century, public opinion did not denote a general agreement at this point, but rather represented a multiplicity of opinions, ranging from different nuances of the same general idea to diametrically opposing views.61 "Ihe very fact that public opinion was not ñrrnly grounded in reason or a careful empirical assessment meant that it also had the capacity to change suddenly and with little warning, In the midst of this general fear ofthe precariousness of opinion, Whig and Tory writers sought to exploit this ñckleness to further their respective political agendas.

Propaganda and the Shaping of Public Opinion

Party politics informed every facet of the debate on credit. As Mark Knights points out, partisanship “ensured that everything political could be seen in two ways-the same words, phrases, people, and events were routinely represented differently according to party allegiance.”62 The challenge for propagandists was therefore to construct a convincing theory, or narrative, that enabled people to comprehend the world from a particular point of View. As Knights notes, the “political struggle was thus a competition between and over rival representations and truth-claims.”63 In the realm of finance, the challenge was to shape people’s economic literacy and their understanding ofthe present financial crisis, partly so that they would invest in ways that promoted the party cause. 'Iliat is, both Whig and Tory writers oifered theories and analyses aimed at improving financial conditions, at the same time that they sought to promote their party’s political interests.

The Whig position on public credit was most clearly articulated by the prolific propagandist Benjamin Hoadly (1676-1761).64 Writing at the time of Godolphins dismissal, he warned ofthe multiple disasters that a ministerial and parliamentary rearrangement would bring about. Adopting the voice of a Tory who recognized the damages his party was inflicting on the nation, in his Thoughts of an Honest Tory (1710) Hoadly warned against the sinister aims of Tory politicians. His fictitious persona claimed he had always supported the Tories and Worked for a Tory majority, but that now he was “quite sick at the review ofthe Methods our Friends have used to gain this happy Prospect.”65 Warning that a continuation of party conflict was jeopardizing the status of pub~ lic credit at a particularly inopportune moment, he queried ominously:

Is this a time for such a Total Alternation [in the ministry], as must shake the confidence of Friends, and inspire the Enemy with Hopes? Is this the Season for an entire change of Hands, when Publiek Credit must be sunk into nothing, before the rest of Europe can have time to know whom they are to depend upon, and the people at home Whom they are to trust? 66

A political rearrangement would completely undermine public credit and would thus force England to accept an inglorious peace with France and a return of the Pretender-lames II’s son )ames Francis Stuartwho had already made an attempt to invade England in 1708. And, if the present party hostilities were not quickly brought under control, noth~ ing prevented that “the field of Election should become a ßeld ofBattle.”67

The potentially disastrous consequence of an implosion of public credit continued to be Hoadly’s main theme in Fears and Sentiments

of all True Britains; With Respect to National Credit, Interest and Reli­gion (1710). Instead of using the rhetorical technique of impersonat­ing his opponents, he now pretended to tone down the partisan tenor by defending the interests of all Englishmen, another common literary device. In exploring the nature of credit and its importance to England's power and prosperity, he sought to form a better understanding of how credit crises occured and what could be done to prevent them in the future. Like many of his contemporaries, Hoadly located the essence of credit in trust. He argued that one of the most essential components of trust is the borrower’s reputation for prudence, which can only be built up over time. “Publick Credit,” he wrote, is “like Private Reputation; obtained by a Series of good Conduct made up of a multitude of good Actions.”⁶⁸ The splendid reputation that Godolphin had built up over the years thus constituted an indispensable asset to the state. But now that he had been dismissed, trust had to be rebuilt from scratch.

Hoadly highlighted that the past was not the only component that dictated trust. Expectations of the future and imaginations of the unknown were at least as important in deciding the status of credit. This is exactly what made credit such an enigmatic and unpredictable phenomenon. Since expectations and the imagination could never be firmly grounded in certainty or controlled by authority, Hoadly noted that a certain anxiety inevitably accompanied credit. Credit’s capacity to transfer the implications of an event through space and time and to generate real implications of an imagined event meant that the mere suspicion of an unfavorable future or distant event had the capacity to become a serious threat to credit in the present. For Hoadly, the current prospects of a dissolution of Parliament exemplified how such “an ugly fear” of the future might cause public credit to sink in the present.⁶⁹

Because of its sensitivity to speculations about the future, credit was particularly vulnerable to the ongoing party strife. Hoadly con­sequently lambasted the Tories for jeopardizing public credit by cease­lessly scheming for their own political advantage. He accused them of opportunistically putting their own fortunes ahead of the national interest. He called for a greater sense of mutual responsibility among the feuding political actors in order to stabilize credit and thus secure the continuity of the political order created by the Glorious Revolution. While political parties should be allowed to freely squabble over most things, they should resolve to treat public credit as a national concern, transcending the pettiness of party politicking.⁷⁰ The Tories ought to realize, he wrote, that a fall in public credit would severely damage England’s national security. A falling credit would not only weaken the nation in itself, it would also worsen England’s relative position as Eng­land's loss of credit would be Frances gain. He wrote, “as the first rais­ing our Credit to such a pitch, was the Entire ruine of the French Kings Credit; so the Death of ours must necessarily give a New Life to hisP¹ The only reasonable solution to the present problem, therefore, was to invite Godolphin back to once again manage public credit.

Hoadly ended his pamphlet by reminding the Tory landed interest that in the event that the October elections granted them a parliamen­tary majority, they ought to prudently manage the national debt. He suggested that they should refrain from mismanaging or defaulting on the national debt, ultimately in order to protect their own wealth. Because if the government were to default on its debt and thus erase the property of the moneyed interest, there should never be any surety in the minds of the landed interest that the government would not, at some point, seize their lands and estates as well. In that circumstance, he asked, “What can be secure? What can be a Title_y or a Right? Or, what can become of Property?”⁷² In Hoadly s mind, even though finan­cial wealth was grounded in immaterial and abstract future-oriented notions—like trust, confidence, and opinion—it nevertheless carried the same legitimacy as the most real and concrete forms of property. Consequently, Hoadly argued, if financial property were violated it would constitute a full-on attack on the long-celebrated English ideals of property and liberty, and would thus undermine the very foundation of society.⁷³

Hoadly s Whig intervention was quickly challenged by the Tories. The new Lord Treasurer Robert Harley assembled an impressive propa­ganda team, including Simon Clement (1654-1730), Abel Boyer (1667- 1729)，Jonathan Swift (1667-1745), and Daniel Defoe (1660-1731).⁷⁴ Once in control of the ministry, Harley and the Tories were intent on managing expectations and imaginations in a manner that kept public credit afloat. With the help of these writers, Harley sought to establish a uniquely Tory understanding of the nascent culture of credit. Writ­ten under the direct supervision of Harley himself, Clements Faults on Both Sides: Or, An Essay upon the Original Cause, Progress, and Misch- evious Consequences of the Factions in this Nation (1710) commented

on recent English political history through the lens of the Whig-Tory divide.⁷⁵ His historical analysis culminated in a discussion of the con­temporary challenges facing England, including a point-by-point refu­tation of Hoadly.

Clement had much to say on the issue of credit, offering the Tories both a different analysis of the financial crisis and a different way of assessing the imaginary component of credit. First, he criticized the directors of the Bank of England for interfering with the queens choice of ministers and thus acquiescing to becoming an instrument of party. While his criticism of the Whig Bank was harshly worded, he took great pains to flatter and praise individual directors of the Bank, most likely to avoid jeopardizing Harleys continued relationship with them. Clement also addressed the threat of a “Loss of the City,” or that “this change of the Ministers will fall the Stocks, Foreigners will draw their Money out of our publick Funds, and both publick and private Credit will be ruin’d.”⁷⁶ To Clement, these scenarios were mere fabrications and empty speculations designed to “frighten ignorant and unthinking People.”⁷⁷ He nevertheless spent a great deal of effort trying to dispel the fears of such a loss.

On the issue of falling securities prices, Clement offered a different interpretation of how public opinion influences credit. While Hoadly argued that expectations and imagination formed by the public were unavoidable and integral to the determination of securities prices, Clement claimed that the only true measure of a stock s value was its intrinsic worth, which was determined by the size of the company s capital stock, the performance of its managers, and its recent profits and losses. Similarly, the price of government bonds ought to be dic­tated by the revenues of the state, the character of the fiscal managers, and the recent history of the debt. The key ingredients in the forma­tion of trust, according to Clement, were thus transparency, managers with reputations for integrity and propriety, and financial instruments backed by impeccable security. Apart from making the manipulation of credit a capital offense, he highlighted the very same ingredients of trust that earlier writers, discussed in Chapter 3，had posited.

If stock or bond prices would increase beyond that which the fun­damentals dictated, it could only be attributed to an increase in what Clement called “imaginary wealth!⁷⁷⁸ By portraying the value generated by a favorable public opinion as fictitious, unreal, or imaginary, Clement

dismissed the publics newfound capacity to dictate credit as largely irrelevant and irrational. That is, public opinion was not the expression of the general populations careful assessment, but rather a confused, uninformed, and unfounded sense that must be acknowledged as such. Moreover, he blamed the most recent run-up of the “imaginary value” on the sordid dealings of the stockjobbers, a group that had long been vilified for their contributions to the destabilization of credit.⁷⁹ He con­sequently regarded the fall in stock and bond prices after the ousting of Godolphin as an inconsequential adjustment in the publics imagina­tion or opinion, unworthy of serious attention.

The difference between Hoadly，s and Clements understandings of credit captures an important tension between the Whig proponents of the new financial system and the more conservative landed Tory tra­dition. For Clement, the intrinsic value is the “true” value, while the “imaginary value” is based on unsubstantiated beliefs and conjectures. Hie latter is seen as dangerously precarious in that it is liable to specula­tion, rumors, manipulations, and lies. Every investor knew and tacitly accepted that credit was inherently risky and uncertain. However, as Locke and others had already explored, it was nevertheless possible to form a sound opinion that a person could trust.⁸⁰ The key was for every person to remain informed of the relevant conditions and only trust the most skilled witnesses.⁸¹ But this was hardly the case in reality, Clement and the Tories insisted. In practice, most people based their opinion on what the multitude believed, which meant that opinion did not approx­imate true knowledge and therefore did not serve as a reliable guide for action. Clement thus viewed the abstract and immaterial component of financial assets with much greater suspicion than Hoadly. The Tories were consequently much more comfortable, at least for the moment, with real existing assets, like land and merchandise, serving as security for financial assets. Hoadly, on the other hand, while also recogniz­ing the precariousness of public opinion, did not ascribe any particular normative qualities to opinion and expectations, viewing them instead as natural and unavoidable features of all credit instruments.

Lurking beneath the surface of this debate about expectations and opinion was a deeper controversy over political and economic author­ity. Was society still under the rational, skillful, and just leadership of the landed elites or had the commercial and moneyed interests acquired a greater political influence through the public debt? Even worse, was it possible that no one was really in clear control of the economy and that it was now dictated by an amorphous and anarchic public opinion? The commonplace concern among the landed interest that the expansion of public credit would introduce rampant speculation and corruption had now been augmented by the fear that important political and economic decisions were dictated by people who did not even understand what the impact of their actions would be on England’s political and geopo­litical future.

Clements intervention generated a series of Whig responses, includ­ing Joseph Trapps Most Faults on One Side (1710), an anonymous authors Faults in the Fault-Finder (1710) and A Supplement to Faults in the Fault-Finder (1711)，and a series of articles by Arthur Maynwar- ing (1668-1712) in the Whig newspaper The Medley. To address these, Clement wrote a rejoinder titled A Vindication of the Faults on Both Sides (1710), in which he further explored the issue of public credit He once again revealed his discomfort with credit’s dependency on expec­tations, opinion, and imagination. To combat this inherent fickleness, he reiterated the importance of good securities backing debt instru­ments and transparent bookkeeping so that security prices accurately reflected existing conditions.⁸² In addition to his discussion of the importance of prudence and probity in issuing debt instruments, he restated his views on the distinction between intrinsic and imaginary value. He advised that “People ought never to value them [stocks] by the Rates they may go at in Exchange-Alfy, but to inform themselves truly of the certain Sum that has been paid into the Stock, and of the Divi­dend that is constantly made, together with the probable Success of the Management.”⁸³ Clement thus suggested that the best way to manage the imaginary component was to devalue its importance so that people would simply ignore it. People should look at the empirical facts, not follow the confusion generated by rumors, propaganda, and lies.

Sensing that a massive propaganda campaign would be necessary for his ministry to sway public opinion, Harley employed the prolific writer Abel Boyer to write for his cause.⁸⁴ Boyer had collaborated with Harley in the past, but it was only in the autumn of 1710 that Harley invited him to o伍dally produce propaganda in his service. In An Essay towards the History of the Last Ministry and Parliament (1710), Boyer laid out a series of arguments designed to influence the publics opinion of Harleys stewardship of the government and thus their assessment of public credit. In building his case, Boyer explored the centrality of credit to the modern state and economy. Without credit, he argued, only a fraction of desired commercial transactions would be carried out and the state would find itself unable to fulfill its most basic responsi­bilities. As such, “Credit is become the very Heart and Soul of all Trade and Commerce, either private or publick，⁵ In fact, public credit had become so important, he argued, that any activity that threatened to undermine it should be considered high treason.

In order to pinpoint its essential workings, Boyer sketched a rudi­mentary definition of credit. He claimed that credit is “The Opinion or Confidence we have in another s Ability, Honour, and Punctuality to Dis­charge or Pay a Debt”⁸⁶ Public credit, by extension, is “the same Opinion or Confidence, with respect to the State or Government, founded on the Experience of its Ability, Honesty, and Punctuality.”⁸⁷ Boyer recognized that a mix of reputation and expectation dictated the status of credit. However, uncomfortable with the role played by public opinion as the arbiter of credit, he tried, like Clement, to make credit more stable by grounding it in something less precarious and ephemeral. Similar to many of the seventeenth-century political economic writers, Boyer proposed that if the managers of public credit were men of impeccable honor and character, as well as sufficient means, their ingrained moral virtues might stabilize public opinion and therefore infuse credit with a greater sense of surety and constancy. This argument was pleasing to the landed interest, who believed that their pedigree and socializa­tion made them uniquely suited and equipped for political authority. Because, according to Boyer, such men had England s long-term inter­est in mind, they would not succumb to the same temptations as the profit-thirsty moneyed classes, which meant that the financial system would be placed on a firmer footing.

Boyer moreover refuted Hoadly s claim that the elimination of Godol­phin had caused credit to collapse. He developed an argument to show that public credit never depends on one person alone and that the dis­missal of Godolphin in favor of Harley could not have been the cause of credit’s collapse.⁸⁸ Does the publics confidence, he asked, reside in the state administration, or with the specific individuals in charge of man­aging the fiscal apparatus? On the most basic level, he argued, opinion about the state’s capacity to service its debt should be dictated by the wealth of the nation and Parliament’s ability and willingness to channel

this wealth towards the public debt. This suggested to Boyer that public credit depends firstly on Parliament, as this body was responsible for the requisitioning of funds to service the debt, and secondarily on the queen, as she was responsible for selecting “Able, Honest, and Faithful Officers in the Government of the Treasury and Exchequer.，，⁸⁹ No par­ticular public official was therefore responsible for public credit, which meant that credit ought not to sink as a result of a ministerial change.

Boyer was trying to come to grips with the depersonalization of pub­lic credit created by the disembodiment of the state and the increased transferability of government bonds. He challenged the Whig position, earlier articulated by Hoadly, that since public credit is “like Private Reputation,^ and since Godolphin had already established himself as having an impeccable integrity, he should be allowed to continue serv­ing as Lord Treasurer.⁹⁰ Instead of recognizing that the monarch no longer was the main symbol and guarantor of the states credibility and that public credit consequently had become depersonalized, Hoadly claimed that the Lord Treasurer had replaced the monarch as the per­sonal guarantor of the states credit. Boyer, on the other hand, argued that the traditional notion of public credit as lodged in the monarch’s— or any other public persons—reputation no longer captured the realities of public credit. The state administrators’ honor, probity, and respect­ability were still of utmost importance to the formation of trust, but it did not matter who specifically served in these positions of power. For the public to be able to trust, public credit had to be managed by men of virtue. Virtue was thus not removed from the concept of credit, but it was powerfully depersonalized.

Even though Boyer showed that public credit does not rely on any particular person, the fact that the price of government securities had indeed fallen in the immediate aftermath of Godolphins dismissal required Boyer to provide an alternative explanation. He argued that part of the reason was that Godolphin had run up such a staggering debt, making people doubt whether it could be adequately serviced. He also suggested that the Exchequer had mismanaged the collection of taxes, that England’s foreign trade was overburdened by excessive duties, and that a negligent colonial administration had squandered lucrative trading opportunities. However, the primary reason for the fall in public credit was the precariousness and fickleness inherent in public opinion. He remarked that even though the fiscal apparatus

Public Credit and the Public Sphere 181

Was impeccably organized and the new Treasury oflîcers were indeed honest, able, and punctual, what mattered most was “the Opinion or Confidence, we have that they are really Honest, Able, and Punctual.”91 This led Boyer to conclude that “the Excellency of Credit rests on a slippery Bottom, I mean, OPINION; which being Nice, Tender, and easily Affected and Byass’d, so Credit either rises or falls with it.”92 Boyer here echoes Charles Davenant’s famous reflection on the irrationality of public opinion and the threat to political stability that it constituted. Boyer, however, believed that this was just a momentary instability and that once Harley and his administration were given a chance to prove themselves, public opinion would turn in their favor and credit would soon rise again. rIhat is, as long as people focused on the soundness of the security of ñnancial assets and the integrity of the managers, public opinion did not have to be destabilizing.

rlhe writer who would end up playing the most active and arguably most effective role in Harley’s propaganda machinery was Daniel Defoe.93 Defoe had previously written for Harley when he was a member of the Godolphin ministry, but when Harley was dismissed from the ministry in 1708, Defoe stayed on and continued Working for him until the fall ofthe Whig Iunto was imminent. On Iuly 17, 1710, Defoe wrote to Harley asking him to renew his patronage. He proclaimed that “It would be a Double honour to Me to have my Gratitude Mixt with the Service of My Country.”94 Harley Was naturally delighted to add such a prolific pen to his cause. After a couple of months of guarded or tepid support, Defoe’s triweekly Review ofthe State of the British Nation took on an increasingly Harleyian bias, and after another few months Defoe began producing pamphlets in explicit support of Harley’s ideas and policies.

In August of 1710, the same month in which Queen Anne replaced Godolphin with Harley, Defoe published An Essay upon Publiek Credit, one of the period’s most intriguing reflections on credit.95 While the central aim of this essay was to show, similar to Boyer, that public credit was never lodged in one person alone, the most fascinating feature of this pamphlet was Defoes recognition of the difficulties of grasping the essence of credit.96 He announced at the outset:

I am to speak of what all People are busie about, but not one in Forty understands: Every Man has a Concern in it, few know what it is, nor is it easy to define or describe it. If a Man goes about to explain it by Words, he rather struggles to lose himself in the Wood, than bring oth­ers out of it. It is best described by it self; ⁵tis like the Wind that blows where it lists, we hear the sound thereof, but hardly know whence it come, or whither it goes.⁹⁷

For Defoe, credit was a deeply mysterious phenomenon, the ontology of which could not be determined analytically. While credit is clearly recog­nizable when it makes its appearance, it is near impossible to completely articulate exactly where it comes from and how it can exist. Defoe con­tinued in the same spirit, “Like the Soul in the Body, it acts all Substance, yet is it self Immaterial; it gives Motion, yet it self cannot be said to Exist; it creates Forms, yet has it self no Form； it is neither Quantity or Quality; it has no Whereness, or Whenness, Scite, or Habit，⁸ Defoe offered a simi­larly ambivalent reflection on credit in his Review. He wrote:

Credit, seems to have a distinct Essence (if nothing can be said to exist) from all the Phaenomena in Nature: it is in it self the lightest and most volatile Body in the World, moveable beyond the Swiftness of Lightning; the greatest Alchymist could never fix its Mercury, or find out its Quality; it is neither a Soul or a Body; it is neither visible or invisible;... A perfect free Agent acting by Wheels and Springs absolutely undiscovered.⁹⁹

Given these qualities, Defoe resorted to a more pragmatic understand­ing based on the ways that credit had functioned in practice.

Defoe explored the roots of the English credit system, tracing it back to the scarcity of money that resulted from the rapid expansion of world commerce in the sixteenth century. Because the world supply of gold and silver was relatively fixed, when trade steadily increased there came a point when all desired transactions could no longer be undertaken. To address this problem, merchants allowed buyers to take possession of goods in return for a promise of repayment in the future. Despite the obvious risks involved, merchants were willing to extend this favor as long as they could be convinced of the buyers “Integrity and Ability for Payment.^5,100 According to Defoe, this was the first appearance of credit and it possessed all its mysterious qualities right from the start. He writes:

CREDIT is a Consequence, not a Cause; the Effect of a Substance, not a Substance; ’tis the Sun-shine, not the Sun; the quickning SOMETHING,

Call it what you will, that gives Life to Trade, gives Being to the Branches, and Moisture to the Root; ’tis the Oil of the Wheel, the Marrow in the Bones, the Blood in the Veins, and the Spirits in the Heart of all the Negoce, Trade, Cash, and Commerce in the World.¹⁰¹

Here he combined discourses of metaphysics, natural philosophy, mechanics, and medicine, and even invited readers to provide their own metaphors for this “quickning SOMETHING, Call it what you will!' While this confusing mix of metaphors highlighted the essential, but mysterious, role of credit in society, he did not pretend to contribute towards a more precise definition.¹⁰² Defoes primary aim here was to establish that even though the phenomenon of credit escapes human intelligibility, it was nevertheless absolutely essential to modern society and should therefore be protected at all cost.

Having established that credit is capable of generating great benefits to a modern commercial society, Defoe proceeded to investigate the con­ditions under which credit thrives. The most essential feature required for credit to flourish was “universal Probity.”¹⁰³ For Defoe, credit grows steadily as long as people commit themselves to “fair and upright Deal­ing, punctual Compliance, honourable Performance of Contracts and Covenants.”¹⁰⁴ All the ingenuity in the world cannot conjure up credit in the absence of such probity, and all the money in the world will not raise credit in the absence of honesty and punctuality. Moreover, where there is probity and justice, all other barriers to establishing trust and credit are superseded. He exemplified this by asking, “How do we Trade among the Turks, and Trust the Mahometans, one of whose Doc­trines, in the Alchoran, is, not to keep Faith with Christians?”¹⁰⁵ Defoe answered that “They have obtain’d it by a just, punctual, and honour­able Practice in Trade, and you Credit them without Scruple; nay, rather than a Christian.”¹⁰⁶ In singling out probity as the universal and exclu­sive criterion for trust and credit, Defoe reiterated the point that public credit was not tied to any specific minister, but could be raised by any able and prudent person. After all, he insisted, if an Englishman can trust a prudent Muslim, it should not be that difficult for him to trust one of his own, so long as he exhibited proper virtues and character. Hence, similar to Boyer, Defoe believed that if people of honor, pro­bity, and character were put in charge of the Treasury and Exchequer, the precariousness of public opinion would be reduced and so would the instability of credit. For Defoe, Godolphin provided an excellent example of the kind of person it would take to stabilize public credit.

Defoe also commented on what he saw as an absurd Whig threat: that the investing public would refuse to purchase government bonds because of loyalty to the former ministry. To predict this outcome was, to Defoe, the same as saying that “Nature will cease [and] Men of Money will abstain from being Men loving to get Money.”¹⁰⁷ Defoe shared this sentiment with Clement, who argued that the investing public, regard­less of political conviction, would always purchase government bonds as long as they were backed by good security and offered an adequate rate of return. For him, the marketplace was largely impervious to political ideology.

It is possible to reconcile Defoes and Clements views that people did not trade against their economic interests with the claim made by sociologist Bruce Carruthers that both Whigs and Tories were observed trading in ways that supported their respective party’s politi­cal agenda.¹⁰⁸ Since each party s propaganda machinery encouraged investors to internalize a certain set of ideas about the present political situation and particular expectations about the future, the investors⁵ outlook and expectations would be such that their individual economic interest would coincide with the party's overarching aim. Successful propaganda for the Whigs, for example, therefore meant that inves­tors were convinced that it was in their financial interest to sell bonds after the dismissal of Godolphin and thus further sink public credit, while the opposite was the case for the Tories. As such, many investors entered Exchange Alley to transact stocks and bonds primarily to aug­ment their own wealth, while inadvertently ending up contributing to the political interest of the party they supported. This, of course, does not rule out that there were some who intentionally compromised their economic interest to promote political ends in the market for stocks and bonds.

Defoe tried hard to convince his audience that party strife or reli­gious disagreement would not keep investors from buying bonds issued by the government, as long as Parliament secured its loans with a sta­ble revenue flow and prudence and probity informed the management of the public debt. What did matter, however, was that it was clearly conveyed to the public that the states fiscal administration was indeed managed properly. For this purpose, it was important that the recording

of the conditions of the public debt was accurate and transparent.¹⁰⁹ As Simon Schaffer has shown, since Defoe believed that “Social life should be reported the way nature was，，，he advocated marshalling modern empirical methods in the world of finance so that it would appear intel­ligible and predictable to investors.¹¹⁰ If merchants and government offi­cials kept meticulous accounts of their finances and allowed them to be witnessed firsthand by the public, the credibility and trustworthiness of credit instruments could increase and there would be less room for public opinion and imagination to run amok. The focus on firsthand observation as the key to the formation of sound opinion, articulated by Locke and others, continued to constitute one of the cornerstones of credit. The Tories thus tried to ground public opinion in the same prin­ciples as private opinion. People should ignore secondhand accounts and propaganda, and instead personally gather as much information as possible on which they would base their own views. Only then would credit rest on a solid foundation. Clearly, Harleys writers were trying to convince the public to dismiss the fact that the government bonds were trading at a discount, attributing this to the confused assessment of public opinion, rather than any underlying weakness in the govern­ment or its ministers.

Defoes treatment of credit was far from universally admired. In the Whig periodical The Medley, Arthur Maynwaring put forth a bit­ing critique of Defoes ideas, the vehemence of which may have been enhanced by Defoes recent betrayal of the Whigs.¹¹¹ Maynwaring ridi­culed Defoes pronouncements that he would clear up the conceptual issues surrounding credit and suggested that he instead led his readers into a maze of obfuscations. He sardonically stated, “what a Scholar he is, where he speaks of something that is neither Quantity or Qual­ity _y has no Whereness or, Whenness, Scite or Habit. There’s Philosophy for you, Sir.”¹¹² He then provided a point-by-point satirical commen­tary on Defoes essay, concluding that Defoe failed so miserably in his arguments that he actually ended up undermining his support of Harley. Maynwaring criticized Defoe’s exaggerated claim that all of the responsibility for public credit rests exclusively on Parliament and the queen, thus removing all the blame from the ministers themselves and making it largely irrelevant who served in this capacity. This con­stituted, in Maynwarings mind, a strikingly lukewarm endorsement of Harley.

A month later, Maynwaring continued his attack on the Tory claim that credit depends on no particular person, using many of the same arguments previously employed by Hoadly. The absurdity of this prop­osition had become manifest during the autumn, he claimed, when the Exchequer Bills dropped below par as an immediate consequence of the ministerial change. These securities had previously been impecca­bly managed by people of solid reputation, but now that these managers were removed, the resulting anxiety led the public to shift their wealth elsewhere. Maynwaring concluded, “Interest being the most impatient, as well as the most timorous thing in nature，，，uncertainty, regardless of cause, will always make money change location.¹¹³ Maynwaring also addressed Clement’s critique of “imaginary value,” suggesting that it was ridiculous to claim that something was worth less than its price. He dismissed this notion as a complete misunderstanding of the very nature of credit, which enables expectations and the imagination to generate values greater than that which is immediately present.

Unfazed by Maynwarings criticism, Defoe continued to defend the Tory position, now with even more elaborate imagery. In a series of articles in the Review during the autumn of 1710, Defoe famously revived the figure of Lady Credit, which he had introduced a few years earlier.¹¹⁴ He described Lady Credit as the younger sister of money, who has the capacity to take moneys place in trade, as long as “her Sister constantly and punctually relieves her.”¹¹⁵ Using a set of gendered ste­reotypes, he portrayed Lady Credit as temperamental, coy, fickle, over- emotional, prone to hysteria, but also beautiful, charming, and capable of great wonders.

Part of Lady Credit’s volatility and irrationality stemmed from her faulty empirical assessment of the world. Instead of observing and recording events and phenomena in a rational manner, she filtered her impressions through her imagination. As Pocock observes, “not only were the data on which opinion was formed at least partly imaginary, but even those well founded in concrete reality figured to the imagina­tion …as features of a mobile . .. universe in which every object was potentially a source of either profits or loss, a subject of both hope and fear.”¹¹⁶ Whether she would interpret something as a sign of hope or a cause for fear was impossible to gauge for the outside world, leading to a great deal of uncertainty and indeterminacy. It was thus impossible to predict and control her mood swings. If she had once been badly treated by a suitor, she would always take a long time to return. Or, as Defoe put it, recovering lost credit “is almost as Difficult as to restore

Virginity, or to make a W____ re an Honest Woman.”¹¹⁷ Not even kings

or Parliaments could force or bribe her to make an appearance. The best way to ensure that she came around was to pretend that she was not wanted. However, once she arrived she had to be constantly attended to with flattery and praise.

Despite her tendency towards inconstancy and fickleness, when Lady Credit flourished she was capable of bringing great fortunes, which she happily spread throughout society.¹¹⁸ In an article published on August 8，1710, the day of Godolphin s dismissal, Defoe recalled how Lady Credit had been exuberantly happy during the last decade under the guidance of Godolphin. He described how she “was always Smiling and Pleased, Gay and in Humour—Her walk was daily between the Bank and the Exchequer, and between the Exchange and the Treasury; she went always UnveiFd, dress’d like a Bride; innumerable were her Atten­dants, and a general Joy shew’d itself upon the Faces of all People, when they saw her.”¹¹⁹ But now, with the intensification of Whig-Tory hostil­ity, her temper had worsened and it was generally feared that she would experience one of her dreaded epileptic seizures.¹²⁰ Unfortunately, her fate was far worse than just the falling sickness.

Here Defoe departed slightly from the established Tory position. Contrary to Clement’s and Boyers, as well as his own efforts to remove the focus from Godolphins personal role in the flourishing of public credit, he acknowledged the Whig claim that public credit had benefited greatly from Godolphins reputation and skill In the very next issue of the Review, Defoe explained how with the dismissal of Godolphin, Lady Credit lost her “best Friend, that ever she had in this Nation; a Friend that had restor’d her Languishing Condition many a time, when she was at Deaths Door.，，¹²¹ Defoe further described how she “is deeply sensible of the Loss, she is almost inconsolable for the Disaster, and how it will go with her.”¹²² Everywhere people mourned the impeding death of Lady Credit. In his imaginary account, Defoe visited the Bank of England, Exchange Alley, and the Exchequer and found the same des­perately somber mood. The only people to express a certain joy at the news of the Lady parting from her best friend were the Tories, who had been responsible for engineering the ministerial shift. But even they felt a mounting uneasiness about what they had done and started to worry about the consequences of their actions. Defoe offered the Tories little solace, telling them: “if she did die, they had Murther’d her.”¹²³

Defoe added to the insult by claiming that the Tories had no one in their camp who could save her. This statement took on an added significance in light of the queens announcement on that very same day—August 10, 1710—that Harley would become the new Chancellor of the Exchequer. Defoe’s lack of public support of Harley is puzzling. If indeed Defoe was already on Harleys payroll, it is surprising that Defoe was so critical of the Tory position and Harley himself. In particular since Defoe wrote in a letter to Harley, “It is with a Satisfaction …I can Not Express, That I See you Thus Establish’d Again •.. Providence Sir Seems to Cast me back Upon you (I write that with Joy).”¹²⁴ It is conceiv­able that Harley wanted to keep his patronage of Defoe still secret or perhaps Defoe did not want to appear unrealistically partisan and thus jeopardize his reputation. Two weeks later, however, Defoe started to sound more approving of recent changes. While he still paid tribute to Godolphin—“I could be content to spend a whole Page in his Praise”一 his message and tone were now more supportive of Harley.¹²⁵ Neverthe­less, Defoes defense of Harley remained lukewarm throughout 1710. This, however, would change the following year when Defoe became the most vociferous champion of Harleys proposed financial panacea.

In closing, public credit constituted one of the primary battle grounds between Whigs and Tories. Yet, there were nevertheless a number of principles that both sides shared. As Pocock points out, “An anatomy of the great debate as between landed’ and ‘monied’ interest, conducted by the journalists and publicists of Anne’s reign, reveals that there were no pure dogmas or simple antitheses, and few assumptions that were not shared, and employed to differing purposes, by the writers on either side.，，¹²⁶ The landed elites were still anxious about the weakening of the traditional political and moral order in which power and authority originated from property in land. For them, organizing society around land ensured that nature’s scarcity reigned in the potential excesses of commerce and finance and that the moral virtues exhibited by the landed men increased the likelihood of a stable polity. Yet, they increas­ingly acknowledged that trade and mobile property had the capacity to contribute substantially and favorably to the political and economic order, as well as provide a solid security for public credit. In particular, after the failure of the land bank venture in 1695, their notion of credit increasingly came to approximate that of the moneyed interest. Both groupings agreed that public credit was based most fundamentally on reputation for prudence and probity, solid revenue flows earmarked for the service of loans, transparent reporting, and favorable expectations of the future. While the Tory landed interest had earlier favored existing assets like land and merchandise as securities backing financial assets, the Tories were now more open to backing credit with expectations of future profits, even though public opinion would then play a more prominent role. While the Tories approached the Whig position on the issue of what kind of asset is most appropriate as security, the Whigs would soon become increasingly uncomfortable with public opinion. Both sides thus agreed that the influence of an unpredictable public had turned public credit into a dangerous source of instability. The fact that an amorphous and not-quite-real public opinion made credit into a fickle, precarious, and, most importantly, uncontrollable force was perceived as a major threat to the prosperity and security of England.

The Evolution of Harley’s Panacea

While the debate about credit raged on, Harley struggled to ensure that Hoadly, Maynwaring, and the rest of his detractors’ writings did not go unanswered. He was able to keep credit afloat, if only through tem­porary measures, by appealing to the Bank of England for short-term loans. Harley knew that these loans served as mere palliatives and that he would soon have to pursue more radical solutions. In October of 1710, he began exchanging ideas with two members of the controversial Sword Blade Bank—John Blunt (d. 1733) and Sir George Caswall (d. 1742)—about an ambitious scheme that would engraft the entire unse­cured national debt into the capital stock of a new joint-stock trading company. The shares of this company would be exchanged for the out­standing government bonds, on account of the prospective dividend and capital gains generated by the company’s trade. Blunt argued in a letter to Harley that this conversion would eliminate the burden of the national debt and, in so doing, wipe off “entirely that unjust reproach which ill men so industriously spread of the danger of the public funds and credit, but also must encourage all persons to lend their money the more freely.”¹²⁷ This was a brilliantly clever proposal, according to Cas­wall, who wrote to Harley that it would “promote the retrieving publick

credit and give great honour to those in the Administration who shall appear zealous for its execution.”¹²⁸ It was not the first time that such a financial technique had been used. In 1697, the Bank of England engrafted some £800,000 of depreciated short-term government bonds. These bonds were incorporated into the capital stock of the Bank by offering its holders stocks in the Bank in return. The Bank carried out another such engraftment in 1709，when it expanded its capital stock and exchanged shares for £1,775,028 of discounted Exchequer Bills.¹²⁹ The Sword Blade Bank also engaged in a similar scheme in 1702, when it took in £200,000 of discounted army debentures in exchange for shares in the company.¹³⁰

With the help of Blunt and Caswall, Harley now had the basic out­line of what he hoped would become a swift and convenient solu­tion to the nations most pressing challenge. During the course of the autumn of 1710, he convinced the queen of the necessity of restoring public credit and the importance of relieving the unfunded portion of the debt. In November, during her first address to the newly elected Tory-dominated Parliament, the queen highlighted this problem and impelled the members to act quickly to find a feasible solution.¹³¹ She proclaimed “that the Navy, and other offices, are burdened with heavy debts, which so far affect the public service that I must earnestly desire you to find some way to answer these demands and to prevent the like for time to come.”¹³² Finding a solution to the ailing public credit had now been elevated to the highest national priority. Harley had to figure out where the new company would obtain the revenues that would ser­vice the reconstruction of the unfunded debt. He still had some think­ing to do before he could announce his panacea.

After months of teetering on the brink of disaster, the ailing trust and confidence in financial markets finally took a turn for the better in December of 1710. Ironically, it was the announcement of Spain’s victory over England at Brihuega that provided the long-sought medi­cament. This military defeat calmed financial markets because it put an end, at least for the moment, to the Whig strategy of “No Peace without Spain” and thus eliminated a serious cause of friction between the directors of the Bank of England and Harley. After the defeat, a more convivial relationship emerged, facilitating the stabilization of the Exchequer Bills and the renewal of the Banks discounting of foreign bills of exchange. A further sign of credits recovery came in

March of 1711, when a Bank-organized lottery loan was oversubscribed on the first day. The lottery loan’s offer of a two and a half percent­age point higher interest rate than recently issued government bonds was apparently enough to sway the public. The proceeds of £1.5 million were used to alleviate the most pressing claims on the military depart­ments, ensuring that the armed forces were able to properly prepare for the summer campaigns. Considering the desperate condition of public credit that had prevailed just a couple of months earlier, the success of the lottery loan was a significant display of vigor and perhaps a sign that public opinion had shifted in Harleys favor.

Everyone was not convinced that the recovery of credit was real. Defoe remained only cautiously optimistic and once again employed the allegory of Lady Credit to voice his concerns. Writing in the Review in February of 1711，he describes how in a recent dream he came across “POOR CREDIT! sunk and dejected, sighing and walking alone; I met her t other Day in the Fields, I hardly knew her, she was so lean, so pale; look’d so sickly, so faint, and was so meanly dress’d.”¹³³ She had told him that she was contemplating leaving England to go to France where she was hoping to encounter a more conducive atmosphere. She was resentful of the treatment she had received in England, in particular considering all the great gifts she had bestowed on this nation and its people. She complained that “now my Face is Threatened to be wash’d with a Spunge; for which of all my Bounties have I deserv’d these Things?”¹³⁴ What frightened her most was that financial property rights may no longer be safe in England. Echoing Hoadly，s earlier argument, Defoe suggested that a default on the national debt would constitute a massive violation of private property, which would undoubtedly lead to a complete societal breakdown. Defoe tried as best as he could to assure Lady Credit that the present Parliament, ministry, and queen understood the situation well and that all forms of property would be secure as long as the Pretender was not invited back to impose a rule of absolutist tyranny.

The attempt to convince the public that a return of the Pretender would put public credit at great risk soon became a bipartisan concern. Defoe was joined by the leading Whig periodical, The Spectator, in try­ing to ensure that a newly elected Tory majority would not listen to the party’s Jacobite elements and hatch a plan for the restoration of the Pretender to the throne. On March 3,1711, Joseph Addison (1672-1719) offered an account of a recent dream, in which he had encountered Lady Credit at the Bank of England.¹³⁵ She was pictured as a ^abeautiful Virgin, seated on a Throne of Gold,” with the halls around her “covered with such Acts of Parliament as had been made for the Establishment of Publick Funds.”¹³⁶ She frequently looked at these acts to reassure herself that her health and safety were protected. However, as soon as the news of even the least threatening event reached her, she turned nervous and fidgety. Attributing a similar set of gender stereotypes to Lady Credit as Defoe had done previously, Addison described her as emotionally unstable and easily prone to hysteria. At a moments notice, “she would fall away from the most florid Complexion, and the most healthful State of Body, and wither into a Skeleton.”¹³⁷ Addison recalled the dra­matic event when the doors of the great hall flew open and in walked a threatening group of ghosts, the most hideous and frightening being the Pretender. To the great despair of Lady Credit, he had “a Sword in his right Hand, which ... he often brandished at the Act of Settlement; and a Citizen, who stood by me, whisper’d in my Ear, that he saw a Spunge in his left Hand.”¹³⁸ This ghostly display was too much for the Lady’s delicate disposition, causing her to faint promptly.

Jonathan Swift, writing under Harleys patronage, dismissed any concerns about a second Stuart Restoration and instead proclaimed that Lady Credit was in remarkably good condition.¹³⁹ While the mar­ket in private stocks might be in a sickly state, he argued in The Exam­iner that public credit was perfectly fine: “By the narrowness of their Thoughts, one would imagine they conceiv’d the World to be no wider than Exchange Alley. ’Tis probable they may have such a sickly Dame among them, and，tis well if she has no worse Diseases, considering what Hands she passes through. But the National Credit is of another Complexion; of sound Health, and an even Temper, her life and Exis­tence being a Quintessence drawn from the Vitals of the whole King- dom.”¹⁴⁰ Swift argued that the success of the lottery loan had restored public confidence in credit and that even the most vociferous oppo­nents had started to change their opinion. He observed that “we find these Mony-Politicians, after all their Noise, to be of the same Opinion, by the Court they paid Her, when she lately appear’d to them in the form of a Lottery!^ym

In addition to credits portrayal as a lady, opinion was ascribed a similar set of gendered traits. Sir Richard Steele (d. 1729), Addisons

which is thus managed by the breath of Opinion, deluded by Errour, fired by Self-Conceit, and given up to be trained in all the courses of Vanity, ‘till Scorn or Poverty come upon us.”¹⁴⁷ This frank criticism of England’s political authority quickly drew the attention of the guards, who violently brought the man into custody. But, it was already too late. The comments had already unleashed a powerful force that brought the Palace of Vanity to an apocalyptic end. As numerous harpies, including Broken Credit, Poverty, Infamy, and Shame, entered the building, Van­ity and her entourage were forced to flee. Once they disappeared from sight, the palace slowly descended towards the ground and eventually made contact with earth. Steele was not sure that everyone in the palace was aware of this return to basic grounded principles, but he woke up from his dream before he could find out.

Steele depicted Popular Opinion as a dangerous and deceptive force that twisted the minds of the multitude and facilitated the Tory minis­try s bubbling and corruption of the nation. He illustrated the dynamic of what happens when political propaganda writers successfully infil­trate public opinion. Once the propaganda was absorbed by public opinion, more and more people were swayed, even without informing themselves about the underlying merits of the claims. As such, public opinion became a force for delusion, irrational speculation, and cor­ruption. Referring to Harleys successful propaganda machinery, Steele claimed that public opinion had of late been systematically manipu­lated to undermine reason and honesty in politics, as well as to raise the credit of a fundamentally corrupt ministry. Hence, while Hoadly had defended public opinion when it was in favor of the Whigs, now that it had turned in favor of the Tories, Whig supporters such as Addison and Steele harshly criticized it. The only solution, in Steeles mind，was to silence the charismatic rhetoric of Popular Opinion and reintroduce the quintessentially English virtue of honest Plain-dealing. This was the only way that the power of Popular Opinion, delusion of Errour, and the corruption in the Palace of Vanity could be banished.

Through their allegorizations of Lady Credit and Popular Opinion’ Defoe, Addison, and Steele highlighted the imaginary and insubstantial character of credit and opinion. They portrayed credit and opinion as fictitious phenomena, but with real political and economic power. Since credit, opinion, and fiction operated on the same epistemic plane some­where between reality and the imaginary, these writers found fictional portrayals of social, political, and economic forces particularly useful in their attempts to shape credit. It was not a coincidence that Defoe and Swift, two of the period’s greatest fiction writers, were employed as propagandists to mold public opinion.¹⁴⁸

Conclusion

England’s governing elites recognized the importance of finding a solu­tion to the ongoing crisis of public credit. Some commentators blamed the Godolphin ministry for having abused the nascent system of public credit, while others claimed that it was Harleys inexperience and lack of reputation that had caused the “Loss of the City.” Harleys support­ers tried to defuse the intense criticism from the Whigs by shifting the blame for the instability of public credit to the inherent precariousness of public opinion. Lacking in reasoned judgment and careful empiri­cism, public opinion was dangerously fickle and mutable, posing a seri­ous threat to the prosperity and safety of both the state and the nation.¹⁴⁹ Harleys advocates, however, argued that as long as the fiscal apparatus was under the sound stewardship of virtuous, prudent, and principled men, that bookkeeping was impeccable and transparent, and financial securities were adequately backed, public opinion would eventually form a positive judgment of credit and thus enable its many benefits.

While the recently improved conditions of credit served as a sign of the publics growing acceptance of Harley, the ever-present specter of the Pretender led both Defoe and Addison to hoist a warning flag. To Harley, the focus on the Pretender was a most welcome, or perhaps even scripted, distraction. Since neither Defoes Review nor Addisons and Steeles Spectator focused on Harley as a burden on public credit, Har­ley had now gained some valuable room to maneuver. This breathing room, combined with the success of the lottery loan, suggested to Har­ley that the time was now ripe for him to go public with his financial panacea. The formal announcement was delayed, however, by an unfor­tunate incident in which Harley was stabbed by Marquis de Guiscard, a French adventurer and spy. The wounds inflicted by the assailants penknife would ordinarily not have been life-threatening, but because Harleys underlying health was poor, he experienced some serious complications. During his recovery, his supporters took advantage of the favorable public sentiment and published a series of uncontested propaganda pamphlets.¹⁵⁰ Defoe, for example, provided his thus far strongest endorsement of Harley in A Spectators Address to the Whigs, on the Occasion of the Stabbing Mr. Harley (1711). He claimed that recent developments had revealed clearly to all that Harley had not only saved the nation from the Whig Juntos mismanagement, but that he alone had the capacity to mediate successfully between extremes in party politics and church affairs. To Defoe, Harley also deserved praise for his vigorous prosecution of the war against the Great Enemy, as well as for how “His Management restores Credit, confirms past Funds, raises New, banishes the Peoples Jealousies about the Spunge; raises Money in spight of Pretences of being Exhausted.”^m Given these accomplish­ments, only Jacobites, papists, and supporters of French tyranny could oppose Harley. This propaganda campaign was extraordinarily suc­cessful, paving the way for Harley to return to the political scene stron­ger than ever. The timing was now perfect for his grand announcement. On May 2，he presented to the House of Commons his plan for the resolution of the nation’s public credit crisis: the South Sea Company.