AUTHORITY IN PECUNIARY AFFAIRS.
OUR own belief is that there are many persons, hundreds of persons here in London, who are like Dr. Clutter- buck's friends,—that is, who will invest large sums of money upon the faith of representations which, as they understand them, cannot possibly be true. Dr. Clutterbuck, a respected clergyman of the Church of England, and Inspector under the Local Government Board, has been committed for trial on a charge, or rather, many charges, of having obtained sums amounting in the aggregate to many thousands, by false
representations that he could invest the money for his friends at rates of interest varying from 10 to 20 per cent., upon British Government security. We have no intention, and, indeed, no power of discussing his guilt or innocence, for he has practically reserved his defence ; but we may, we presume, make some remarks upon the degree of judgment revealed by the witnesses in their sworn testimony. They are not on their trial, they are acquitted by the accused of lying, and they tell stories which substantially are identical, and are, we venture to say, as extraordinary as were ever told in a Court of Justice. They are all educated men, one being a doctor, one an archi- tect, and three clergymen, and are all persons of repute ; and they all accuse themselves of lending Dr Clutterbuck thousands of pounds upon his representation that the British Government was raising a secret loan from its own officials in order to " float " a Local Government loan without Messrs. Rothschild's intervention, and that it was prepared to pay from 10 to 20 per cent. for temporary accommodation. One of them, Mr. Hodgson, even produces the following letter :—
" Local Government Board, Whitehall, February 1st, 1S91.
" [PRIVATE AND CONFIDENTIAL.] " DEAR SIR,-I understand from your brother that, as is only right, you wish to have in writing an account of the nature of the investment. This I gladly submit as far as I am permitted to disclose it. It is as follows. The guarantee is that of the Government, and the period of the payment is (roughly) about thirteen years from the present date. It originated, as no doubt you have heard, in the desire to consolidate the enormous local indebtedness of the country by the creation of a stock called Local Loans without the payment (immediate) of com- mission and discount on the whole amount. These terms were, I understand, rejected by the great houses, and the Exchequer (in the slang of the Stock Exchange) refused to salt Capel Court.' It was therefore resolved to do without them, and by the payment of a phenomenal interest for a limited time, on what was a very small sum compared to the large total, to float the loan at once. This sum was raised amongst the Government Departments, and to certain officials, myself among them, certain sums were assigned with the power of obtaining the money from any source they might think proper, on the understanding that they should submit the names of friends whom they wished to join. This, of course, has been done in every case, and a list of such is kept at my office in town, together with a statement of the amount invested, &c. We are, however, pledged to observe the strictest secrecy in the matter ourselves, and to require a similar pledge from each depositor. In haste, sincerely yours, J. C. CLUTTERBIICK."
The letter may not be Dr. Clutterbuck's ; that is for a Court to decide ; but Mr. Hodgson certainly thought it was, and on the strength of it, as he alleges, advanced certain moneys.
Just think of that One has heard of Asiatics, and even Neapolitans, who lent cash under the belief that they would receive 100 per cent. per annum ; and only a few months ago, hundreds of Parisians deposited thousands of pounds with a " banker " who promised 20 per cent., but they did not expect Government security. These gentlemen say they did. With considerable sums in their possession, with a habit of dealing with bankers—they all paid by cheque—with the City articles before their eyes, with presumably some knowledge of such
things as Consols and Local Government loans, and there- fore with a general idea that the Treasury could raise any amount it wanted, even if it were hundreds of millions, at 3 per cent., they still believed that the British Government
would pay 10 per cent., or in one instance 20 per cent., for temporary loans of a few thousand pounds. That, we should say, " beats the record" in the annals of pecuniary credulity.
The story would be incredible, or even absurd, but that it is related by the sufferers themselves, with every appearance of sincerity, and with Dr. Clutterbuck's compliments to some of them on the kindliness and good faith with which their evidence had been given.
We should say, and say very briefly, that such an exhibition of human folly was inexplicable, and indicated some unknown variety of lunacy, but that we have within the last thirty years recorded and discussed cases quite as remarkable for the amazing depth of credulity they revealed. We have seen a heavy loan raised on the faith of the Tichborne claim. We have seen a man borrow thousands upon the faith of his own statements that he was kin to great nobles and heir to vast estates, though just for the present left without a shilling. We have seen a great Peer and man of business, manager of scores of charitable undertakings, borrow his own rents of his own steward, who had just collected them, at 5 per cent. And we have seen young millionaires by the score get out of pecuniary scrapes which need not have cost them 6 per cent., by paying 60, on the faith of representations quite as wild as those which
Dr. Clutterbuck is alleged to have made, and which are only peculiar because, if he made them, he brought in the name of the British Government. That is the one thing wonderful in the story, which, true or false, has in all other particulars been told a hundred times. The truth is, that there is a small order of men and a large order of women who will believe anything about money, who have no conception whatever of the relation between security and interest, who, when cash is concerned, have no fears, and no knowledge, and no power of using their intelligence, but who simply bow their heads in meek submission to any authority they trust. They have only to be assured in their own minds that it is trustworthy—that is, disinterested—and they cease to be capable of thinking for themselves at all.
It seems preposterous, and yet—and yet—are there any among us who are entirely free from the same credulity in other directions P The most intelligent among us are all pro- foundly ignorant upon some subject or another, and upon that subject we trust somebody else, who, if it were worth his while, could gull us as no pigeon ever was gulled. Half of us, if ignorant, say, of astronomy, would believe any statement what- ever that the authority we trusted on astronomy might make, even if he affirmed that the sun was advancing towards us at a pace which must in ten years destroy the world. Whole nations have been deceived by geographical statements in themselves palpably absurd, but made, as they thought, by travellers or men of special knowledge, and worthy, from their characters, of belief. Whole classes, often including most intelligent indi- viduals, are taken in every year by statements about medicine, and even about surgery, which ten minutes of careful thought would show to be preposterous. They were statesmen who believed in the Sinking Fund dogma as originally propounded —that is, in the power of farmers to get more hay out of a field than there is grass in it—and in the domain of political economy there is not an absurdity which has not had some defender who upon every other subject was of the first class of acute and reasoning thinkers, and who, merely because he was trusted personally, has found hundreds of disciples. Men, in truth, trust authority every day upon all manner of subjects in spite of the evidence of their own senses—and are often wise in so trusting—and there is no reason to be surprised if they occasionally trust it even about money. We all are surprised because we assume that about money everybody knows some- thing ; but we underrate both human ignorance and the depths to which human humility can reach. There are men, usually rich men, all over the world who literally know nothing about money, and are only kept from ruin by careful supervision ; and there are men in England, probably many, who, if Mr. Gladstone or Mr. Goschen said distinctly that the day of paying interest for money had passed away, would incontinently begin maintaining their families out of capital. They would know that neither speaker had any interested motive, and they would therefore, and for that reason only, believe them implicitly.
Of course many other motives beside humility—we are disgracing a fine word, but what other is there P—enter into pecuniary credulity, but we are convinced that one of the principal is a genuine self-distrust. It is said that nobody believes a rogue unless he promises gain, and that the secret motive of pecuniary credulity is always greed ; but that is by no means universally true. Men constantly face quite needless Losses in reliance on authority, so constantly that "wrecking the market" is a well-known and profitable trade, practised, for instance, as regards mining shares to a bewildering extent. A panic is quite as often produced by authority as a " boom," the ignorant pitching away their property for no reason what- ever, except that So-and-So is alarmed, or that "the market" evidently expects that general ruin is at hand. Everybody is surprised when his friends do such things, but there is no sound reason for astonishment. There is nothing in the pos- session of money, or the wish for money, to make men wise ; and those who are not wise and know it, must trust authority about money which may guide them correctly. All Kings, they say, do it except the King of Italy, and so do a large majority of those who are born rich. They trust agents and lawyers implicitly—usually with good consequences— but just for the same reason that Dr. Clutterbuck's friends trusted to his advice. They thought him sure to be honest, and did not care to look one inch beyond that elementary fact. It is character which the majority trust, not statements which a large proportion of them know they are incompetent to weigh. They think they know a good man from a bad man, and once satisfied that John Smith is good, they are capable of believing on his authority that sunbeams can be extracted from cucumbers, or a hundred per cent. obtained for money lent to the British Government. Women do this every week, because they do not know, and because they trust entirely ; and there is no reason, as, indeed, we see in the Clutterbuck case, why there should not be men with the same disqualifications for pecuniary success. One hardly, it is true, expects in men the ignorance which could imagine the British Government borrowing secretly or at 10 per cent. ; but still, it evidently exists, and is fostered by two ideas now almost traditionary,— one, that every Government, our own included, is always being driven to small financial expedients ; and another, that it is always being robbed by great financiers, who " float " loans with fabulous profit to themselves. The story attributed to Dr. Clutterbuck might have been true of some transaction in Constantinople, and why not therefore, reason the perfectly ignorant, of London also P A most respectable man, himself in high Government employ, vouches for its perfect accuracy !
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