This is not the first time in British history that the financial sector, having created a bubble and having survived its bust at cost to the British public, then through further sheer rapacity acted as a drag on the economic growth needed for recovery.
Between 1720 and 1723 John Trenchard and Thomas Gordon published Cato's Letters. This is No 4. Sound familiar?
"SIR, All men are now taught, by miserable experience, that the project of the South-Sea, through the hard-hearted knavery of some, who have been in the direction of it, and through the folly or rather distraction of the people, has not answered the good and wise ends designed by the Parliament; but instead of that, has ruined thousands of innocent and well-meaning people, to glut harpies and publick robbers with millions:
Unhappy fate of poor England, worthy of a better! For this, trade has been neglected: For this, industry discouraged: For this, credit undone; and all, that stock-jobbers might make fortunes, and small sharpers grow mighty men.
Every one, therefore, seems to agree, that something is necessary to be done, in a legal way, to restore, once more, our publick credit. But it is hoped, we are far from consenting, that any thing ought to be done to repair the losses, occasioned by folly and covetousness, out of the estates of those, who always foresaw, who always opposed this mighty mischief; much less at the further expence of the honour and trade of the nation.
To set this matter in a due light, it is necessary to enquire what is meant by the publick credit of the nation.
First, credit may be said to run high, when the commodities of a nation find a ready vent, and are sold at a good price; and when dealers may be safely trusted with them, upon reasonable assurance of being paid.
Secondly, when lands and houses find ready purchasers; and when money is to be borrowed at low interest, in order to carry on trade and manufacture, at such rates, as may enable us to undersell our neighbours.
Thirdly, when people think it safe and advantageous to venture large stocks in trade and dealing, and do not lock up their money in chests, or hide it under-ground. And,
Fourthly, when notes, mortgages, and publick and private security will pass for money, or easily procure money, by selling for as much silver or gold as they are security for; which can never happen, but upon a presumption that the same money may be had for them again.
In all these cases, ’tis abundantly the interest of a nation, to promote credit and mutual confidence; and the only possible way effectually to do this, is to maintain publick honour and honesty; to provide ready remedies for private injustice and oppression; to protect the innocent and helpless from being destroyed by fraud and rapine.
But national credit can never be supported by lending money without security, or drawing in other people to do so; by raising stocks and commodities by artifice and fraud, to unnatural and imaginary values; and consequently, delivering up helpless women and orphans, with the ignorant and unwary, but industrious subject, to be devoured by pick-pockets and stock-jobbers; a sort of vermin that are bred and nourished in the corruption of the state.
This is a method, which, instead of preserving publick credit, destroys all property; turns the stock and wealth of a nation out of its proper channels; and, instead of nourishing the body-politick, produces only ulcers, eruptions, and often epidemical plague-sores: It starves the poor, destroys manufactures, ruins our navigation, and raises insurrections, &c.
The first loss is always the least; one half of the nation is ruined already; I hope we may learn wit from our misfortunes, and save the other half: In order to this, we may expect, that no new projects will be countenanced or received, which have any tendency to prejudice trade, or which cause monopolies, or set up exclusive companies; and that no privileges or advantages be granted, for which ready money might be got.
Some people have the assurance to publish it, for example, that a certain set of stock-jobbers, whose faith and modesty are now well known and felt, expect, among other gifts from the publick, that the island of St. Christophers should be given them, as a further expedient to get more wealth to themselves, and leave the nation none. Now, St. Christophers is worth three hundred thousand pounds sterling, and will yield so much: So that to present them with this island, would be just making them a present of three hundred thousand pounds; a sum almost sufficient to make the fortune of an under–South-Sea clerk; but such a sum as this poor nation cannot at present spare.
I hope, therefore, that it will no longer be impudently alledged, that by parting with such gifts, we lose nothing; since that alone is worth nothing, for which nothing can be got. But the case is otherwise here; and from the nature of our publick gaming, and the spirit of the worthy sharpers who direct it, I dare pronounce before-hand, that every scheme which they themselves propose, to make their bubble and their roguery thrive again, will still be built upon the farther expence, upon the farther loss and misery of these unhappy nations.
If our money be gone, thank God, our eyes are left: Sharpened by experience and adversities we can see through disguises, and will be no more amused with moon-shine.
The nation and Parliament have been abused, and they will undoubtedly be revenged; they will not be put off with dark juggling, with knavish projects, to stifle resentments, and divert due vengeance: There is no attending to any new schemes, till the publick robbers are punished, with whom there can never be any accommodation.
To begin then, in the first place, with the criminals, will shew that we are in earnest champions for honesty, for trade, for the nation, all oppressed by money-leaches. All other remedies will be mountebank remedies: It would be madness to concert new schemes, liable to new abuses, without first doing justice to the abusers of the old; impunity for past crimes is a warrant to commit more, especially when they are gainful.
Such mighty mischiefs as these men have done, will be but meanly atoned for by such infamous lives, unless their estates be also confiscated; and even these, great as they are, will repair but part of our misfortunes. But what we can have of them, let us have; their necks and their money.
To begin with any other project, they will take for a confession, that there is a design to save them; and to what that must be owing, we all know: What farther evils it may produce, may even surpass our fears, though already terribly great; but a method of justice presently entered upon, and impartially carried through, will give us patience under our burdens, banish all our fears, give credit to the publick proceedings, and restore hope to the almost despairing people."