Speeches on Questions of Public Policy by Richard Cobden

Richard Cobden
Cobden, Richard
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James E. Thorold Rogers, ed.
First Pub. Date
London: T. Fisher Unwin
Pub. Date
Collected speeches, 1841-1864. First published as a collection in 1870. 3rd edition. Includes biographical "Appreciations" by Goldwin Smith and J. E. Thorold Rogers.
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Volume II


[The Austrian Government had in the autumn of 1849 advertised in the London papers for subscriptions to a loan of 71,000,000 florins (7,100,000l.). The loan was rendered necessary in consequence of the condition in which the Austrian finances had been placed by the Hungarian revolt, and the measures adopted to put it down. Mr. Cobden called public attention to the facts, and at a meeting at the London Tavern made the following Speech on this resolution:—'That the Government of Austria, having proposed to raise a loan in foreign countries, capitalists and men of business are thereby invited to investigate the financial position of the said Government, and the probability of its repaying the loan thus proposed to be contracted; and that it is the opinion of this meeting that no valid security is tendered, or can be offered, in the present state of the Austrian Government, which would justify prudent men in taking any part of the said loan.']


It has been my privilege to address my fellow-countrymen probably as often, and in as great a variety of places, as any man now living; but I will say, with unfeigned confidence, that there never was an occasion when I stood before my countrymen on more solid and firm grounds of justice, of humanity, and of sound political economy, than I do at this moment. Objections have been taken to the course I have pursued in this matter, on the ground that I am not adhering to sound principles of political economy. I suppose it was thought that this was the most vulnerable point on which one who had said so much on the subject of Free Trade could be assailed. I will begin, then, with that which the enemy considers his strong ground of attack; and I say, that as I have gone through the length and breadth of this country, with Adam Smith in my hand, to advocate the principles of Free Trade, so I can stand here, supported by the same great authority, to denounce—not merely for its inherent waste of national wealth, not only because it anticipates income and consumes capital, but also on the ground of injustice to posterity, in entailing upon the heirs of this generation a debt which it has no right to call upon them to pay—the loans we have this day met to consider. But, whilst I come here to denounce as unjust, to expose as wasteful, and to demonstrate to be impolitic, the system of lending money for the purposes for which Austria comes to borrow, I confine myself to this. I do not purpose to recommend that we should go to Parliament for a law to prohibit men from lending money, if it be their wish to do so. All I say is, that I come here to try, in a humble way, to do that which I have done for Free Trade—to popularise to the people of this country, and of the Continent, those arguments with which Adam Smith, David Hume, Ricardo, and every man who has written on this subject, have demonstrated the funding system to be injurious to mankind, and unjust in principle. I come here to try to show to our fellow-countrymen, that they will act upon a wrong principle, and do injury to society, by lending the proceeds of their hard and industrious labour to the Austrian Government, to be expended in that bottomless gulf of waste—armies and standing armaments. I come here to show the impolicy, on general principles, of taking such a course. But in this particular instance I am not going to confine myself to the general principle. I appeal to every individual who thinks of lending money to the Austrian Government, to pause before he does so; because he is going to intrust his money to a Power that has thrice committed an act of bankruptcy. [An observation was here made by an individual which led to cries of 'Turn him out,' and some confusion ensued.] Mr. Cobden proceeded:—Turn nobody out. If he be a man who has subscribed to this loan, he can only have paid ten per cent. as a deposit, and, if you will only keep him here, before I have done I will satisfy him that it will be for his interest to forfeit the deposit. I will satisfy him that it will be to his interest to forfeit his ten per cent. and to pay no more.


But to resume. I say that the Austrian Government has three times committed acts of bankruptcy, under circumstances of great and scandalous injustice, for, while personal interests—Imperial interests—have been well taken care of, the general public—the subscribers to the loans—have been basely sacrificed. Now, what has been the progress of Austrian finance since the great war? When the Austrian Government come to us to borrow money, the least they can do is, through their agents, Messrs. Hope and Co., to give us a bonâ fide, detailed, and candid debtor and creditor statement of their accounts; but we have no such statement from that Government. In the absence of such a detailed and official statement, then, we are bound to have recourse to the best private authorities we can find. I will take a work of standard reputation, which was published in 1840, under the title of 'Austria and its Future,' a work well known to be from the pen of Baron Andrian, who, last year, ably filled the office of Ambassador from the Central German Power to the British Court, and a work of standard authority on such matters. After a precisely detailed statement of all the various shuffling manœuvres—borrowing, loaning, lotteries, and every possible device—with which the Austrian Government had been mystifying its finance for twenty-five years—from 1815 to 1840—the author sums up by saying that, from 1815 down to 1840, a period of profound peace, the Austrian Government has doubled its debt in nominal value, but quadrupled its debt in real amount, and has increased the interest for which it is liable tenfold. The same work was republished, in 1846, by the same author, with an additional volume; and the author tells us that, at that time, not one word had been said to disprove his statements respecting Austrian finance. He adds, that since the period when his book was first published, 8,000,000l. more have been added to the national debt of Austria; and it therefore comes to this—that from 1815 to 1847 the Austrian Government, during a period of profound peace, without a foreign war on its hands during the whole of that time, has gone on, every year, spending more than its income, and constantly adding to the amount of its national debt. Then, in 1848, whilst Austria had from 300,000 to 400,000men under arms—the produce of all this wasteful expenditure—came that revolutionary epidemic, which passed over the Continent, and the Government of Austria fell like a house of cards, notwithstanding the bayonets by which it was supported, and, from that time to this, the Austrian empire has been in a state of complete anarchy and disorder. Vienna, Pesth, Venice, Milan, Prague—every capital of the empire but Inspruck—have been bombarded by the forces of the Austrian Government, or have been in a state of siege; we have seen the Bank suspending specie payments, the Government prohibiting the exportation of the precious metals, to prevent the foreign creditor from being honestly paid his due; and during all this anarchy and confusion, both political and financial, the Austrian Government has expended, at least, double the amount of its annual income. I should be afraid to state what I have heard persons of good authority say is the amount of the floating debt, now standing over, in the Austrian empire; but I am within the mark when I say, that there is at least 20,000,000l. sterling held over in Austria as the result of the last eighteen months' social, political, and financial anarchy. And it is to enable the Austrian Government to redeem a part of that enormous floating debt that they now have the audacity—for I cannot call it by any other name—to come before the people of Western Europe, and ask the honest Dutchman, the industrious Englishman, the painstaking, saving Swiss, or Frenchman—they do not care who it is—out of their hard earnings, to lend them money—that is, to throw it into a bottomless pit of waste and extravagance.


Now, I ask you, if an individual has committed acts of bankruptcy three times, is he not very likely to commit such an act again, if it answers his purpose? Well, the Austrian Government has every motive to declare itself bankrupt again, because it is utterly impossible that, in any other way, they can recover from their financial embarrassment. They never can pay their debt. They may now borrow 7,000,000l. sterling, as a means of paying off a fraction of the debt they have already incurred, and that 7,000,000l. they are asking for on rather humiliating terms; but I warn all men, whether in this country or abroad, that this is only the beginning of borrowing, on the part of the Austrian Government. If their finances are to be retrieved by borrowing, this is but a drop in the ocean to what they must borrow afterwards; and you must bear in mind, that they who lend their money first will be swamped and sacrificed to those who lend afterwards, and with whom the Government will have to submit to harder bargains. When I state these facts, I do not mention them for the information of Messrs. Hope and Co., or any other large banking company, in London, Amsterdam, Antwerp, or Vienna. I perfectly understand, though not a farthing of this Austrian loan should be repaid—though the Government shall never redeem a farthing of it—that it may still be a very profitable thing to those agents and bankers, who raise the money through their connections and customers. I hold in my hand the advertisement put forth by the Austrian Government in our papers, and this is my justification for coming here to-day. We have not met to talk over Austrian finances and affairs, to uncover their sore places, and to tell all these hard truths, without having been invited to it. Here is an advertisement, put into our papers, at the expense, I suppose, of the Austrian Government, inviting everybody to subscribe to the loan. The advertisers are so accommodating, that, in order that nobody may be excluded, they say that bonds will be issued for sums as low as 100 florins, or 10l. It is said that the pith of a lady's letter is to be found in the postscript, and I entreat the attention of all persons, whether here, in Holland, or in Germany—(for I am not merely speaking to a few of my countrymen in this room, but what I say will be read in Holland, in Germany, and in France)—to the last line of this advertisement. It runs thus:—'Any subscriber to a higher amount than 25,000 florins, that is, 2,500l., or any person who collects subscriptions to an amount surpassing that sum, will receive a commission of ¼ per cent. on the amount of the payments made.' Now, I ask you, if any shopkeeper or huckster in London put an advertisement outside his window,—'Anybody who brings a customer to my shop, who may purchase 5s worth of potatoes or vegetables, shall have a commission of 2d. on that amount,' would you not pass by on the other side, and take especial care to have no dealings at his shop? Would you not naturally say to yourselves, 'If that man sold a good article, if he was true to his word in his dealings, if he never cheated anybody, if he had not committed foul acts of bankruptcy, or, probably, of robbery, he would not be under the necessity of offering bribes to obtain customers?'


I wish you, and those small capitalists who are invited to put their 10l. into this raffle, where there are no prizes, to bear in mind, that we do not think that our meeting will convert any of those bankers, or agents, or brokers, whether in Amsterdam or Vienna, who have been called on to find out unwary people, and get them to subscribe their 25,000 florins. We never expected to convert them, or to meet them on this platform. We expect that all those organs of the press, which are under the influence of these parties,—and they are not a few,—we expect that they will not meet what I now say by argument, but they will do what they are bid to do and to say, and will abuse me well. [Here a person exclaimed that 'there were 10,000 people outside, who wanted to get in.'] Mr. Cobden continued:—I am glad to hear that there are so many assembled outside, but they must be content with reading in the newspapers to-morrow what we are now saying. It is to those small capitalists, of whom I was speaking,—the unwary, the incautious, and the uninformed class,—that I wish to speak the voice of warning; and, if they will listen to me, I will give them the opportunity of testing the opinion of the great capitalists, with respect to this loan. Messrs. Hope and Co., of Amsterdam, the agents for the loan, have offered it on such terms as, if carried out, would pay 5l. 14s. per cent. interest. Now, I would advise some canny Dutchman to go to the counting-house of Messrs. Hope and Co., and say this to them,—'You have offered to me to take part in a loan, by which I shall get 5l. 14s. interest per cent.; that is, nearly twice as much interest as we get in Amsterdam, in an ordinary way; I should be content with 4 per cent. interest, if it were secure; I propose to take 1,000l. of your loan; and I will be content to receive 4 per cent. interest and give you the remaining 1l. 14s., if you will endorse my bond, as a guarantee for the payment.' No, no; the firm are not likely to be caught in that way, you may depend upon it. I was talking the other day to a gentleman in Lombard-street—one of the most experienced, sagacious, and able men in that quarter, which is not renowned for gullible people—and I asked him for his opinion upon this loan. Bear in mind, he is a man more consulted by the Government, and Committees of the House of Commons, on such matters, than any one else on the east of Temple-bar. He replied, 'I do not believe that 200,000l. will be raised in all Lombard-street, and certainly not one shilling's worth will be taken to hold.' No, the capitalists will not take it to hold. If they subscribe, they will take the scrip at 10 per cent. deposit, in the hope of transferring it, at a premium, to some one, who will lose his money, not being so well informed of the valueless character of the security. It is on that class that the loss will fall. I knew myself, many years ago, when resident in the City, a man who worked as a porter, on weekly wages—his family and himself being reduced to that state that they had no other earthly dependence—and yet, that man had Spanish bonds, to the nominal amount of more than 2,000l. in his pocket, which he had purchased when in better circumstances. They were not worth more than waste paper; but I never heard that the great houses that contracted that loan were ruined by it. No, it passed through their hands, and came into the hands of poor men, like this porter, who had no experience and knowledge in such matters; and it is to protect such poor men that I now utter the voice of warning.


Now, I ask, when it is known that every word I say is strictly within moderation, and the bounds of truth,—when there is not a man in Lombard-street but would endorse every word I utter as to the valueless character of this loan,—is it not something hateful, humiliating, and disgusting, that we have leading organs of the press which lend their influence, not to throw a shield over the unwary and innocent, but to serve the purpose of those who have cunning and ability to protect themselves? They do not come out—that is why I blame them—in their leading articles, and tell the people, with the authority of their own pen, that Austria is trustworthy—that this loan is a good investment. No; they do not do anything of the kind; but they do their work in the best way they can,—by inuendo, by indirect influence, and by trying all they can to traduce the men who come forward and tell the truth in this matter. When I take up a public question of this sort, and find, instead of my arguments being refuted, that I am personally attacked, I consider it the triumph of my cause. But the fact is, that these are not the only parties that look with disfavour on this meeting to-day. I have no hesitation in saying that there is not a Government in Europe that is not frowning upon this meeting. It is not merely Austria that disapproves of the meeting. I do not believe that our Government likes it. I say so much, because I see that the organs of the press, especially under the influence of the Government, and one, in particular, established as the advocate, par excellence, of the sound principles of political economy, enounced by Adam Smith, are forward in condemning this meeting. I consider this as the germ of a great movement, which will lay bare the pretensions of every Government that comes before the world for a loan; and will show the bankrupt state—if it be bankrupt—of the exchequer of their country; and will hold up to execration the objects for which men attempt to obtain such loans.


I consider this almost as much a Russian as an Austrian loan. I do not separate the two countries. You remember when I spoke before, in this place, strongly on the subject of the Russian finances. I come here now to repeat every word I then uttered. I claim no great merit for myself in presuming to understand more properly the state of Russian finances than many others. It is from accident that I have had opportunities—and few men, probably not six men in England, have had my opportunities—of investigating and ascertaining, upon the best and safest authority, on the spot, where alone you can properly understand the matter, what actually is the state of the resources of Russia; and I say, again, that the Russian Government, in the matter of finance, is nothing more nor less than a gigantic imposture. There are men in Western Europe who know what I say to be true, and yet lend themselves to spread an opposite delusion. You have seen in the newspapers, that the Government of Russia have taken 2,000,000l. of this Austrian loan, and that the Russian Government was going to subscribe to the Pope's loan, and going to lend the Archduke of Tuscany a round sum. This is systematically done. These paragraphs are put into the papers by men employed by that cunning Government, to throw dust in the eyes of people. That Government last year spent more than its income, and this year its deficit is enormous. Russia has not paid the expenses of the Hungarian campaign; it has made forced contributions, taking the taxes in advance, in the territories through which the troops moved, and has given Treasury receipts; and at this moment the Russian Government has no alternative but to increase its paper money, and begin an act of bankruptcy again, or to come to Western Europe for a loan. When she comes here, let her well understand that we will be here also.


It is not on mere economical grounds, or on grounds of self-interest alone, that I oppose these loans; I come here to oppose the very principle on which they are founded. What is this money wanted for? Austria, with her barbarous consort, has been engaged in a cruel and remorseless war; and the Austrian Government comes now, and stretches forth its bloodstained hand to honest Dutchmen and Englishmen, and asks them to furnish the price of the devastation which has been committed. For there is little difference whether the money subscribed to this loan be furnished a little before or after. The money has been raised for the war by forced contributions and compulsory loans, for which Treasury receipts have been given, in the confident expectation that this loan would be raised to pay them off. I consider that this is on principle most unjust and indefensible. Happily, by the ordinance of Divine Providence, war is in its nature self-destroying; and if a country engaged in hostilities were left to itself, war must have a speedy termination. But this system of foreign loans for warlike purposes, by which England, Holland, Germany, and France are invited to pay for the arms, clothing, and food of the belligerents, is a system calculated almost to perpetuate the horrors of war; and they who lend money for these purposes are destitute of any one excuse, by which men try to justify to their own consciences the resort to the sword. They cannot plead patriotism, self-defence, or even anger, or the lust of military glory. No; but they sit down coolly to calculate the chances to themselves of profit or loss, in a game in which the lives of human beings are at stake. They have not even the pleasure—the savage and brutal gratification, which ancient and pagan people had, when they paid for a seat in the amphitheatre, to witness the bloody combats of gladiators in the arena.


I wish, in conclusion, that it should be borne in mind by capitalists everywhere, that these are times when it behoves them to remember that property has its duties as well as its rights: I exhort the friends of peace, and advocates of disarmament, throughout the civilised world, to exert themselves to spread a sounder morality on this question of war loans, and to impress upon the capitalists of the world, that they who forget their duties are running the risk of endangering their rights.

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