Representing Public Credit

Credible commitment, fiction, and the rise of the financial subject

Natalie Roxburgh

• Publisher: Taylor & Francis
• Year: 2015
• Print ISBN: 9780367597245
• eBook ISBN: 9781317294870
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Public credit was controversial in seventeenth- and eighteenth-century England. It entailed new ways of thinking about the individual in relation to the State and was for many reasons a site of cultural negotiation and debate. At the same time, it required commitment from participants in order to function. Some of the debates relating to public credit, whose success was tied up in the way it was represented, find their way into contemporary fiction – in particular the eighteenth-century novel.

This book reads eighteenth-century fiction alongside works of political economy in order to offer a new perspective on credible commitment and the rise of a credit economy facilitated by public credit. Works by authors such as Daniel Defoe, Samuel Richardson, and Frances Burney are explored alongside lesser-known fictional texts, including some early it-narratives and novels of sensibility, to give a fully rounded view of the perception of public credit within England and its wider cultural and social implications. Strategies for representing public credit, the book argues, can be seen as contributing to the development of the English novel, a type of fiction whose emphasis on the individual can also be read as helping to produce a certain type of person, the modern financial subject.

This interdisciplinary book draws from economic history and literary/cultural studies in order to make connections between the development of finance and an important facet of modern Western culture, the novel.

1 Historical contexts for the “economic model”

This book is about a development of empire, from the inside outwards. It is, however, admittedly problematic to study literature’s relationship to emergent financial capitalism without also examining the global forces at play in the seventeenth and eighteenth centuries, especially with regard to Europe’s gradual process of accruing colonial territories, its trading in human slaves, and its many experiments with banking and other financial schemes that served both domestic and international trade. This book focuses on England despite the need to acknowledge that doing so means that this study will have to leave out an account of greater Europe as well as the developing world of global trade. There are two reasons for such a focus. The first is historical: What took place in the last decades of the seventeenth century was somewhat of an anomaly, when England’s “economy diverged from the European pattern,” in part owing to the new way the State began to use finance and to develop financial engineering in order to handle its revenues.¹ The second reason is discursive: Because of the way public credit was structured, there is a strong tie to particularly English problems and discussions. The world of fiction that I will be examining in the chapters to follow engages with these particular issues and their social implications.

In the first decades of the eighteenth century, contemporaries often found themselves at a loss to describe or define public credit, let alone to defend it. Jonathan Swift refers to it in The Examiner as “such a Complication of Knavery and Couzenage, such a Mystery of Iniquity, and such an unintelligible Jargon of Terms … as were never known in any other Age or Country of the World.”² Swift’s insistence that public credit is unintelligible, coupled with strong political disapproval, has to do with a notion that “the Wealth of the Nation, that used to be reckoned by the Value of Land, is now computed by the Rise and Fall of Stocks.”³ In the same year, Daniel Defoe writes in a pro-government pamphlet titled An Essay upon Publick Credit that public credit is “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.”⁴ From both of these perspectives, which differ very much in their political orientations but which are both by authors who would also go on to write fiction, public credit seems abstruse and unintelligible. It is discussed as a set of practices that potentially operate too much like stock-jobbing,⁵ which was a pejorative term used to describe those who play the markets, seen by most Georgians as a form of immoral gambling and not enough like a permanent solution to a nation’s financial problems.⁶

In this sense, commitment was very much a problem in the early eighteenth century.

By the middle to late eighteenth century, a more systematic approach to the management of national wealth was taken up by writers we now call political economists, in works such as Sir James Steuart’s An Inquiry into the Principles of Political Oeconomy (1767) and Adam Smith’s The Wealth of Nations (1776). In these, public credit is one component of political economy, subject to description and analysis like other natural mechanisms studied by the emergent social and natural sciences, a mode of thinking that would also be made more prevalent by the physiocrats in France. These works treat the State’s management of its wealth like the household, the oikos from which the term ‘economics’ derives, supposing that private credit and public credit work much in the same way.⁷ This comes, in part, from a seventeenth-century patriarchalist tradition in which the family was seen as analogous to the State.⁸ Clearly, something happened between the beginning of the century when Defoe and Swift were writing and the second half of the century when Steuart and Smith were writing. In the early eighteenth century, there was no consensus that public credit was an intrinsic part of the State’s functioning, one that could or should implicate all individuals. Indeed, as one notes through Swift’s statement, it was seen as quite onerous to those with inherited property in land. By the end of the century, each individual would come to be seen as a representative of public credit with an investment in the State.⁹ The State is no longer conceptualized as that which belongs to the Crown but rather as an aggregate of individuals, an abstraction that nonetheless functions.

What this book explores is a transition whereby people stopped thinking in terms of tangible interpersonal trust and started to think in terms of abstractions – imagining such entities as the nation, the State, the public, the Bank of England, and so on. Through discussions and debates in the seventeenth and early eighteenth centuries, one observes that a society in which people see themselves participating in an economy of mutual benefit was not yet in place as a shared fiction. Taylor’s “economic model,” articulated in Modern Social Imaginaries (2003) and A Secular Age (2007), reflects a period when economics and politics are seen as separate from one another.¹⁰ For Taylor, the economy – an objectified reality usually summarized by Smith’s metaphor of the “invisible hand” – is one of the forms of social self-understanding crucial to modernity.¹¹

Twentieth- and twenty-first-century commentators, speaking from the perspective of the present in which the concept of economics is no longer something to be questioned, tend to emphasize eighteenth-century thought that describes people as mutually benefiting each other by acting out of their interests, summarized most famously in Bernard de Mandeville’s “private vices, public benefits” in The Fable of the Bees: or, Private Vices Publick Benefits (1705/14). In his preface, Mandeville promises to “shew that those very Vices of every Particular Person by skilful Management were made subservient to the Grandeur and worldly Happiness of the whole.” While it certainly resonates with modern readers insofar as ‘human nature’ defined in these terms is seen as a key basis for modern society, such a description that imagines self-interest as good for the whole of society was both new and controversial in the early eighteenth century.¹² Examining early eighteenth-century texts prompts one to consider what parts of the homo economicus are natural. In this regard, modern commentators often inquire about the conditions under which a human can be seen as “rational individual, who, led by narrowly egotistical motives, sets out to maximize his benefit.”¹³ Seeing the world in this way was important for credible commitment ‘from below,’ and it is also pertinent to contemporary discussions surrounding a key public creditor, the Bank of England. I am, therefore, using the “economic model” in order to convey what was different in the past for the purpose of showing how radical public credit actually was in its time but also how it developed out of particular English historical contexts.

In this chapter, I will be painting with broad strokes for the reason that a fairly wide variety of developments in the seventeenth century find their way into the discourses of the following century. In what follows, I identify five distinct but overlapping historical contexts for the development of an economy of mutual benefit:

1 the emergence of economically constructed property in relation to new theories of the State;

2 the ascendancy of individual interest as a new organizing principle;

3 the development of credit money as a contract between the individual and the State;

4 questions of credible commitment with regard to the Bank of England; and

5 the functions of public opinion and disinterestedness in garnering support for public credit.

Discussing these historical contexts together suggests that, sometime in the seventeenth century, there was the beginning of a structural transfer of power from the absolute authority of the monarch to a system that did not require the older hierarchy in order to function. This is part of what Taylor refers to when he discusses a transition to a “horizontal society” and what Michael McKeon refers to in terms of the devolution of absolutism.¹⁴ Public credit both required this transformation of power and also radically exacerbated it. Examining these various historical contexts together provides a map of what was so controversial about public credit in the early decades of the eighteenth century and why credible commitment was still an ongoing problem.¹⁵

Economically constituted property and the fiction of the modern state

The separation of economics and politics, key to Taylor’s notion of the “economic model,” can be said to have begun in the seventeenth century. Historians note a shift whereby property, once provided politically by monarchs and lords, gradually became valued and constituted in economic terms. In his Merchants and Revolution (2003), Robert Brenner discusses a process by which “politically constituted property” waned with the emergence of “economically constituted property.” The merchant class, whose right to trade internationally was legally sanctioned by monopolies protected by the Crown, brought a new form of wealth into the realm whose value was determined by various forms of credit, such as bills of exchange. The Crown had allowed merchants to buy cheap and sell dear by protecting sanctioned monopolies, creating a precarious alliance between merchants and the Crown because the monarch created and maintained these monopolies in exchange for political and financial support, and the financial gradually became more important than the political.¹⁶ Through legal changes, property became something that was protected within the law as an impersonal institution rather than constituted by the king and his agents.

This newer form of wealth had an effect on the landed classes. Landholders

could refrain from depending on the monarchy to provide alternative opportunities for income through offices and other perquisites. The upshot was that … English landlords ceased to require forms of state, of political community, either local or national, that had as one of their central functions the economic support of the members of the dominant class by means of the maintenance of politically constituted forms of private property.¹⁷

In other words, protected by the legal system, English landholders began to depend on a market rather than State power for their land and livelihood. By the end of the seventeenth century, this also meant that the English State had a higher level of taxation and more advanced forms of bureaucratic administration than other places in Europe, but this did not proceed unproblematically, of course.¹⁸

If one follows Brenner’s particularly Marxian account, one way of reading the English Civil War is as a power struggle resulting from the more recent prevalence of economically constituted property. The causes of the Civil War, which took place between 1642 and 1651, are debated by historians, although a general consensus seems to be that its grounds were simultaneously economic, political, and religious. Monarchical power had declined under James I, who was seen as recklessly advocating absolutist doctrine, or the divine right of kings, often at the expense of his constituents.¹⁹ This was viewed by many as a betrayal of the legal framework that had been in place since the Magna Carta, which marked the beginning of constitutional law. Charles I, like James before him, shared an absolutist bent and even dismissed parliament when its interests conflicted with his own. Eventually, this meant that he “pinn[ed] himself into a financial corner” and was then forced to raise taxes agains...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• Acknowledgments
• Introduction
• 1 Historical contexts for “the economic model”
• PART I Framing credible commitment through fiction
• PART II Framing fiction through credible commitment
• Conclusion
• Bibliography
• Index