‘People of Betica, I perceive that your imagination is weaker than it was a day or two ago; try to bring it up to the strength of mine: I will place before you every morning a bill, which will be the source of wealth for you: you will see only four words,4 but they will be of the highest significance, as they will settle the portions of your wives, the fortunes of your children, and the number of your domestics.'
‘People of Betica, I counselled you to imagine, but you have not done so: well then, I now command you to imagine.... I understand that some of you are odious enough to keep your gold and silver. For the silver, let it go: but the gold…the gold…Ah! That stirs my anger!…I swear, by my sacred windbags, that if you do not bring it to me, I will inflict dire punishment upon you ... Do you think it is to keep these wretched metals that I ask them from you? A proof of my good faith is, that when you brought me them some days ago, I gave you back at once one half.’
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Montesquieu
Montesquieu
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In The Persian Letters, Montesquieu satirizes many aspects of the society of the day. The exert aboves refers to the incredible episode of French history where a Scotsman, John Law, gained unprecedented control over the French economy and nearly brought about its ruin. Montesquieu mocks Law for the way that he tried to replace gold with paper money but in many ways Law was a remarkable man. He had a gift for analyzing complex issues of economics and elaborating them in simple terms. He was a self styled financial Copernicus, aiming to turn the economic world upside down by insisting that money wasn't valuable as it was made from silver, but silver was valuable as people choose to use it for money. He was disinterested in the material used to coin money, far more concerned with its actual function, in his own words:"Money is not the value for which Goods are exchanged, but the Value by which they are exchanged: The use of Money is to buy Goods"
Crucially, he was the son of an Edinburgh goldsmith and realized the significance of paper credit but his schemes went far further than the lending of his father's firm. He wanted to convert the whole economy to running on paper money that was produced by a national bank. First he had tried to convince the Scottish Parliament of the scheme but to no avail. He was outlawed from England as he had killed a man in due,l so he hawked his plans around the whole of Europe whilst he earned a extremely handsome living from gambling. After rejections in Holland, Austria and various states in Italy, he incredibly managed to persuade the French Regent, the Duke d'Orléans that he could revive the moribund French economy.
Initially, Law was astonishingly successful. His Banque Générale Privée, the first bank to ever issue promissory notes in France had more powers than the Bank of England, not only could it issue notes, but it also had branches all over the country. Coins could be deposited in Paris and orders sent to issue notes in Marseilles or vice versa for almost no charge. The next year, Law acquired a controlling interest in the Mississippi Company that had a monopoly on trade with France's North American colonies. his new venture began to accumulate other trading concessions. It absorbed the Compagnie des Indes Orientales, Compagnie de Chine and other rivals to form the Compagnie Perpetuelle des Indes (1719) with a monopoly of commerce on all the seas. Not only was it monopolizing foreign trade, it also assumed state functions when it took over the Royal Mint and the French Tax farms.
The Banque Générale Privée had become major commercial success, so much that the Regent wanted to turn it into a state run enterprise and wound up the private company leaving its shareholders with substantial profits. Law still controlled the Banque Royal, issuing notes with the King's seal of approval. As well as controlling these two great institutions, Law also acted in a personal capacity to raise the price of shares by offering to buy shares in the future at high price. His position was a stock jobber's dream as he controlled future injections of credit into the market.. He offered deals that looked ridiculous but his influence was so great that it was easy to stock job the prices upwards.
In 1719, he announced that the Compagnie des Indes Orientales was to engraft the whole of the French National Debt and only charge the governmente 3% interest. It was an absurdly ambitious plan but Law was certainly no fool, he realized that there was no point simply creating huge amounts of credit to inflate a bubble. He had to shake up the French economy too so there would be real growth too. He planned an ambitious programme of public works centred on canals, bridges and roads. He wished to consolidate all taxes into a single levy on property and remarkably for aristocratic France, no exemptions for privilege. In conjunction he envisioned a national network of almshouses for the poor and that clergy should give their uncultivated land to peasants. He wanted to free the grain market of restraints and reduce tolls and tariffs. His seventeenth century shock therapy was designed to sweep away the restrictions of feudalism and convert France into a nation of traders. Law's plan for France was as revolutionary as any hatched by Danton, Robespierre or Napoleon.
As the share price of the Compagnie des Indes Orientales soared, Law became the talk of Europe and thousands flocked to Paris to share in the gains. Many went home dreaming of similar schemes, the South Sea Company proposed to launch a similar operation to purchase nearly the whole of Britain's national debt. Their great rival, the Bank of England countered with a similar offer so Parliament had two proposals for engrafting £31.6 million pounds of public debt. Both schemes were based around the idea of of creating £31.6 million worth of new shares, and then boosting their price so that they could swap the shares for debt and make a profit.
The Bank of England had a particular incentive for a massive expansion. . Under its charter, note issue was only restricted by the amount of its capital. The economist H.D. Macleod later questioned the sense of this arrangement.;
"If for every debt the Government incurs an equal amount of money is to be created, why, here we have the philosopher's stone at once. What is the long sought Eldorado compared to this? Even there the gold required to be picked up and fashioned into coin."
Undoubtedly, if the South Sea Company were to win, they would have used their influence to usurp the Bank's position. Why sail the South Seas for gold to coin into money, when it could be created by the movement of pen upon paper? The stakes were high and a bidding war started to see who could provide the government with the highest sweetener for the deal. The South Sea Company had originally proposed a one off payment to the government of £3.5 million, the Bank countered by upping the ante by two million, the Company responded by matching that and adding another two million to make an offer of £7.5 million.
The South Sea Company also outbid the bank in bribery. The company's cashier Robert Knight began selling shares from an issue that was yet to occur to people who had no money to pay for them. He simply entered the names of MPs into a green book along with number of shares and an agreed price. All the recepients of this benevolence had to do was wait until the price had risen, then sell them back to the company and receive the increase as profit. Unsurpisingly, they won Parliament around to their plans and equally unsurpisingly the price of their stock started to rise.
The bill's path through Parliament was rapid. It was first read on March 23rd and passed for the third time by 172 to 55 votes on April 2nd. It was left to the Lords to point out the flaws in the scheme. Lord North and Grey articulated familiar fears about perfidious stock jobbers diverting the 'the genius of the people' from honest labour. Lord Cowper termed the scheme a Trojan horse that was not fit for purpose as the company's profits would add to the national debt. The Duke of Wharton aired concerns that its power "might endanger the liberties of the nation".
There were few other voices of opposition but Knight had many Lords registered in his green book and the bill passed by 83 votes to 17. When the King, who was the Governor of the South Sea Company, signed the act on the 7th April, the stock had nearly trebled in just three months. The company argued that the unsold stock had trebled in valued too, so the initial £31.6 million worth of shares was now worth around one hundred million. Accordingly, they proposed to swap 100 shares for every £375 of government debt. Initially most holders were not impressed by the offer, but Blunt had another cunning move to shift the market. He offered to sell shares to allcomers on very easy credit terms even before debt holders had a chance to exchange. Knight's trick worked a treat within a week the price had risen to £495, the offer to bond holders began to look generous and large amounts of them began to accept .
As the South Sea Bubble rose, across the channel, the Mississippi bubble was about to burst. Law had underestimated his ability to control the price of stock. He believed that he could take it to where he needed it to be then steady it. Instead, it vastly overshot and stock holders had to decide whether they shared Law's vision of brave new world or make a quick killing. Early in 1720, the Prince de Conti, demanded payment for his notes and sent three wagons to collect his silver and gold. The Regent persuaded him to re-invest a considerable proportion; others less connected with the future of France were getting into gold and getting it into England. As his system collapsed around him, the great liberal reformer called for draconian actions. He talked the Regent into declaring a law against carrying more than five hundred livres in silver, worse still informers were allowed hefty share of the hoards. Law tried more and more desperate measure to avert disaster but to no avail.
At the end of the fiasco, the bank had been merged with the company so in effect people were borrowing from the same institution that created it in order to purchase its shares. Millions of French were confused by the events. Later at the end of the century, Sir Steuart Denham succinctly summarized the whole sorry episode
"As long as the credit of this bank subsisted, it appeared to the French to be perfectly solid. The
bubble no sooner burst, than the whole nation was thrown into astonishment and consternation. Nobody could conceive from whence the credit had sprung; what had created such mountains of wealth in so short a time; and by what witchcraft and fascination it had. been made to appear in an instant"
Like Law, Blunt had achieved his aims but couldn't control what happened next, speculative fever was out of hand and more money was flowing in from France. The South Sea was not the only company on the stock market thats value was increasing rapidly. Joint stocks became fashionable, popular at the time were packs of playing cards, each depicting a different bubble with an appropriate verse underneath. One of the most notorious bubbles was "Puckle's Machine Company, "for discharging round and square cannon-balls and bullets, and making a total revolution in the art of war.
Its pretensions were summed up on the eight of spades:
A rare invention to destroy the crowd
Of fools at home, instead of fools abroad.
Fear not, my friends, this terrible machine,
They're only wounded who have shares therein.
The nine of hearts was a caricature of the English Copper and Brass Company, with the following verse:
The headlong fool that wants to be a swopper
Of gold and silver coin for English copper,
May, in Change Alley, prove himself an ass,
And give rich metal for adulterate brass.
A hand bill was even circulated "For carrying-on an undertaking of great advantage but no-one to know what it is!!" that was probably satire but it was difficult to tell. More seriously, the total money proposed for all of the bubble projects was more than £300 million, more than the value of all the land in England and far more than the amount of cash circulating. As joint stocks mimicked the South Sea Company, private banks mimicked the Sword Blade. They issued promissory notes, lent them to customers to buy stock that instantly produced enough profit to cover the cost of the loan. As long as they were willing to do this then bubble swould keep rising, as long as the bubble kept rising the illusion of profit maintained. It was stockjobbers economy, the South Sea and other bubbles had become pyramid schemes that constantly needed new buyers of stock.
The South Sea Company saw the other bubbles as rivals for funds and pulled in a few favours to dampen them. On June 9th, Parliament passed the Royal Exchange and London Assurance Corporation Act, ever after known as the Bubble Act that required all joint stock companies to have a Royal Charter. It also required that companies stick rigidly to their declared purposes, a ruling that was not rigidly applied to the Company that was meant to be trading in the South Seas. The immediate impact was to suppress rival bubbles to the South Sea and its shares leapt even higher to £890 in early June.
On the 15th June another tranche of shares was issued with a staggering 80% of the issue reserved for exclusive customers. The list contained the entire board of the East India Company, half the House of Lords, over half the House of Commons, numerous foreign dignitaries and many members of the royal family. King George who was believe to be subscribing under a disguised name honoured Blunt as a Baronet for his "extraordinary services in raising public credit to a height not known before". Over the summer there were no official sales but in the cafes of exchange alley the price was slowly slipping from its peak of over one thousand pounds.. The Company had little funds to attempt further manipulations and payment was due on stock bought on credit. Stock holders could not pay for their shares other than by selling them and the smart money was moving abroad to Amsterdam and Hamburg. Charles Stanhope, Secretary to the Treasury and one of the first names in the green Book, collected Sword Blade notes totally almost a quarter of million pounds, there were even rumours that Blunt and other company directors had sold out.
In September, the Sword Blade Bank was having difficulty honouring payments on its notes and a run started on the nineteenth and customers were slowly paid in small change. This only served to unease nerves, the panic was contagious and customers of other private bank began to demand cahs for their notes. The run even hit the Bank of England who resorted to the tactic of planting employees in the queues who were paid in sixpences that they returned through the back door. The Sword Blade collapsed on the 24th other banks followed although the Bank of England managed to stay solvent. Once there was no more credit available, the share price of the South Sea Company utterly collapsed.
Speaking of the collapse of credit in the House of Commons, Thomas Broderick M.P.declared ” They have stretched credit so far beyond what it would bear, that specie proves insufficient to support it. Their most considerable men have drawn out, securing themselves by the losses of the deluded, thoughtless numbers, whose understandings have been overruled by avarice and the hopes of making mountains out of molehills. Thousands of families will be reduced to beggary ... A great many goldsmiths have already run off, and more will daily. I question whether one-third, nay one-fourth, of them can stand it. From the beginning, I founded my judgement of the whole affair upon the questionable maxim, that ten millions (which is more than our running cash) could not circulate two hundred millions, beyond which our paper credit extended."
In the boom there had been credit for every kind of silliness, suddenly there was none for essential trade, houses were left half built, ships empty and livestock strnaded. There was also an immense political scandal. The King had been the Governor of the bank, hundreds of MPs had been in Knight's green book, and nearly the whole political elite were culpable. Nearly all were saved as Knight took responsibility for the dubious methods used to obtain the support of politicians but refused to name them. In a tit for tat deal, officaldom turned a blind eye as he fled to the Antwerp.
Although a resolution was proposed in parliament that bankers be tied up in sacks filled with snakes and hurled into the Thames, the Government had enough problems without embarassing recriminations. Robert Walpole who had became Chancellor of Exchequer divided the stock of the South Sea Company between the Bank of England and the East India Company and created a sinking fund to repay debt. He also arranged that no single institution would ever again hold the whole of the national debt. The Bank of England continued to hold some debt but its main role was an agent that brokered sales meaning that The British Government would enjoy a far wider base of creditors.
trust Charles II anywhere near one so whilst he reigned the questioned remained academic. They trusted his brother and successor James II even less and their sentiment was shared by many of their countrymen who welcomed an invasion by William of Orange, the stadtholder of the Netherlands.
A Scottish Entrepreneur William Paterson had been persuading many businessmen that pooling resources, both cash and goodwill, into one big bank would be the best way to lend to the King. If they bonded together, it would give them more security from default and they could create an enterprise that would dwarf the existing London goldsmiths. aftera few years wrangling, his application was succesful, so in 1694, the Whig Chancellor Charles Montague chartered a privately owned Bank of England as a joint stock corporation. The Bank was to raise the sum of £1,200,000 but although the subscription quickly sold out it only ever raised £750, 000. It still however forwarded the full amount of £1, 200, 000 to the Government. It was operating in the exact same manner as Goldsmiths but on a larger scale. As long as customers trusted the Bank, it could create the short fall of £470, 000 simply by printing the notes. One of its biographers succinctly explained the operations of the bank
could sell their stock on London's burgeoning stock market. In the 1690s, there were over one hundred joint stock companies whose shares were traded in Exchange Alley, close to Lombard Street. These were informal places where anyone with any interest in buying and selling shares could meet colleagues, do business and hear the latest news. Despite its evident popularity, the stock trade had developed a rather unsavoury reputation, the term ‘stockjobber’was used largely ‘pejoratively in the seventeenth century. Samuel Johnson's dictionary defined a stock-jobber as "a low wretch who makes money by buying and selling shares in the funds." Daniel Defoe wrote an essay titled, "The Villainy of Stock Jobbers Detected." Even a Government commision expressed disaproval when they said that stockjobbers sold worthless stock to "ignorant men, drawn in by the reputation, falsely raised and artfully spread, concerning the thriving state of their stock".
stock had been resold, the debt could be cleared. Yet the goldsmiths' business was under threat by the new bank so they tried to save their necks by tring a few tricks of their own.. Initially, they had attempted to undermine it by refusing to accept its notes but the non-cooperation had little effect, the bank could not be ignored. So, they changed tack and stockpiled notes and at an opportune moment when they knew cash supplies would be in short supply, they tried to cash them all at once. The predatory run failed as the Bank simply ignored those it suspected of mischief but paid paid favoured customers.
more tallies to goldsmiths and the price of existing tallies had slumped. The Bank knew that many of the tally holders of debt would agree to swap it for a chance to be part of a corporation that had influence in government and as many of them were goldsmiths it could bring rivals on board. So in a deal that seemed to suit everyone, the Bank agreed to engraft the government debt into its corporation by offering to exchane freshly created bank stock for tallies. The Government however had one condition, the bank had to pay not the current market price but the original price that was less than 80%
were not actually legal tender, they were not fully backed by the Government. The Bank was on the way to becoming an integral part of the British establishment. It provided financial services to Government departments, it organized pay and provision for foreign wars, lent to allies and would even finance the union between England and Scotland in 1707. Jonathan Swift claimed that the whole purpose of the debt was to "fasten wealthy people to the New Government".
also repeated the actions of the banks directors, they purchased debt privately and sold it on at profit to their own company and also offered credit to others who wished to purchase. It was a subtle metho of robbing their own company. The Sword Blade Company had stockjobbing down to a fine art. Daniel Defoe noted its strength in Exchange Alley, where it had the nickname "the City's pawnbroker" and poignantly predicted that "these men men with a mass of money, which they command of other people's as well as their own, will in time ruin the jobbing trade".
In 1710, a general election returned a new government that had inherited the debts that had accumulated over the previous twenty years. During the war with France, the Royal Navy had paid its sailors with tickets instead of money on the promise that they would be redeemed at some point in the future. As this moment was long in arriving, sailors were frequently reduced to selling these tickets for half their face value. In this manner, Parliament had accumulated nine million pounds worth of debt that it could not account for by taxes or other means. The new government was not well disposed towards the Bank of England. Instead, it incorporated a new company that was controlled by the Sword Blade syndicate. It was known as The South Sea Company but contrary to its grandoise name, it conducted almost no trade in the South Seas. It did however manage to engraft nine million pounds of government debt into its own stock. It may have only sent a solitary ship to South America to trade every year but it held more Government debt than the Bank of England. Nine years later it was to embark upon an even bolder project that would make its name ever notorious.
another, and felt sure all the time that they represented gold in his safes. The notes would pass from one hand to another for a long time before they came back to him to be accepted by himself as so much gold. And as they never never all came back in on the same day, and there was always a mass of them floating round, he found that here too he need keep only a percentage in his till of the gold they represented, and could lend out the rest at interest. Here was a second Golconda for him. He had not only discovered the mystery of banking but invented paper money. He had found the philosopher’s stone." 
century most London merchants deposited their surplus cash in the Royal Mint then located at the Tower of London. Yet in the year of 1640, a series of events trundled into motion that would revolutionize every aspect of life in England including finance. Firstly, Charles I, desperately short of money due to his disputes with Parliament, seized the Mint and stole £200, 000 of deposits. The King turned thief sent commerce into a panic. Many merchants could not pay their debts and those that still had cash began to look for alternative security arrangements. They refused to trust the King with a penny and kept their money at their homes or their shops but then suffered a spate of robberies by apprentices absconding to join Parliament's army.
Two years after Charles had raised the Mint, he fled London and declared war on Parliament that controlled the capital and the Royal Mint. There was a shortage of bullion and a Parliament inexperienced in these matters struck coins that were often mixed in weight. Uneven coins were a perenial problem of the age as many had been clipped by owners keen to keep tiny shavings of gold before they passed the coin on. These variations meant that goldsmiths originally kept customers deposits of coin separate and would have returned the customer the exact same coins with a receipt that could only be cashed by the original depositer. As there were allegations that goldsmiths engaged in clipping, a new fashion developed where goldsmiths weighed money when collected, then pooled it and guaranteed to redeem all deposits in good coin.
They had not only convinced private merchants of the benefits of their new fashion. When Parliament had won the war and Cromwell assumed the title of Lord Protector, he went to leading goldsmiths like Edward Backwell to provide him with funds. After Cromwell's demise and the was monarchy restored, Charles II found they bore no grudges or political prejuduices and contracted similar deals. The new style of doing business had become engrained and royal patronage entrenched it further. However, canny eyes began to notice that the goldsmiths sums did not add up and began to question the sanity of a custom that effectively amounted to large amounts of people all pretending that goldsmiths had vast amounts of gold in vaults when clearly it was not the case. The strange operations of the goldsmith bankers must have been difficult to fathom, merchants may have used them reluctantly but each person who accepted a promissory note implicitly encouraged others to follow suit. Every time anyone did accept, the issuing goldsmith had effectively gained another customer. The logic became self reinforcing, every exchange with notes helped to swell their number but this snowball factor only exasperated the situation and the goldsmiths' critics who had calculated exactly how precarious the enterprise had become. The author of "The mystery of the new fashioned goldsmiths or bankers" was one who expected that the the public would see through the shenanighans and the goldsmiths would soon receive their comeuppance. He asked : “I suppose people will suddenly come to their wits, and begin to examine why a Goldsmith-banker should be better Security than another man, or fitter to be trusted for ten times more than he is worth”.jpg)
examine the security of goldsmiths . In 1667, a large Dutch fleet sailed up the Thames, firing upon the fort at Sheerness, burning English ships and the town of Chatham. Londoners were terrified and those who held goldsmiths notes instantly stopped pretending that the goldsmiths vaults were full of gold and ran to the bank. Samuel Pepys recorded on June 13th 1667 that his clerk "hath been at the banker's, and hath got £500 out of Backewell's hands of his own money; but they are so called upon that they will be all broke, hundreds coming to them for money". After the emergency was over (September 25th), Pepys discussed the success of bankers with his friend Lord Privy-Seale who "did mightily wonder at the reason of the growth of the credit of banquiers, since it is so ordinary a thing for citizens to break, out of knavery". Pepys agrees that it is remarkable but mentions that "to the honour of this City, that I have not heard of one citizen of London broke in all this war, this plague, this fire, and this coming up of the enemy among us"
goldsmiths were complete fraudsters, it was plain as day that their excess issues of notes promised the same money to more than one customer at the same time. Pepys seems to take a more consolidated and practical view. This new fashioned goldsmithing was a peculiar practice but it oiled the wheels of trade at a time when silver and gold were still in short supply. There were clear social benefits to trade with promissory notes instead of gold. It was after all far simpler for a goldsmith to write out a promissory note than for an explorer to discover a new country and wrench gold from beneath the ground. Ultimately, the moral case is answered by the fact that customers went freely to the goldsmiths and after a while must have had some idea how the goldsmiths operated. After all, the term "running cash" implies that money was being juggled. Old fashioned goldsmiths may have sat over the gold under lock and key but the new fashion was to attempt the difficult task of investing it and making available at the same time. These new fashioned goldsmiths did not charge for services and some began to pay out interest on notes, which suggests that customers knew the risks but accepted the deal on offer. The public may have been confused about the precise operations but the fact that they ran to the goldsmiths so quickly when there was panic shows they knew they were playing a game of musical chairs with their finances.
done by to regulate the Goldsmiths beyond his belief that the King did not actually have to pay his debts. In 1672, he conveniently remembered that the interest he was being charged was above the limit permitted by his own usury laws. He ordered the Exchequer to stop loan repayments on debts of over a million pounds. It left some of London’s most prominent goldsmiths bankrupt, major lenders like Edward Backwell were owed hundreds of thousand of pounds. As the King could not pay the goldsmiths, the goldsmiths cound not pay their customers and thousands more were ruined by the crash. The moment of doom appeared to have arrived, a commentator at the time confidently predicted: "I believe it certain that the trade of the bankers is totally destroyed by this accident, for no man will ever hereafter run the like hazards when he shall consider upon what contingency he puts moneys into goldsmiths hands"
terming himself "The Father of the Marshalsea" as a ruse to encourage handouts. His son too is incarcerated in the debtors' prison until a gentleman by the name of Arthur Clenman takes an interest in the family and pays his debt. Fortunes rise further when Clenman helps the Dorrits to recover an inheritance and secure Wiliam Dorrit's release but fall again after Clenman's bank fails and he falls into debt and into the Marshalsea.
Iceland, and our own banks, the terrible trail of sadness caused by bad debt seems all too plausible." Dickens biographer, Robert Douglas-Fairhurst goes further to say that all Dickens's "novels offer us glimpses of a world we think we have lost - a period of swirling fog and flickering gaslamps. But the closer we get to this world, the more we start to recognise: the scramble for credit, financial scandal, panic"
shillings, half-pence. You know what they are?” Paul is not satisfied "Oh yes, I know what they are,' don't mean that, Papa. I mean what's money after all?" then adding "I mean, Papa, what can it do?” Dombey Senior, a successful businesman, believes money can do almost anything but it dawns on his son that all their money couldn't save his dying mother. The limitations of money appear more famously in A Christmas Carol, where Scrooge learns that there are still values that cannot be bought and sold. Initially too mean to burn his own coal, he eventually discovers that money means nothing compared to the heart warming sight of the Cratchits enjoying their Christmas 
together. In David Copperfield, Mr Micawber informs us of a blunt reality "if a man had twenty pounds a year, and spent nineteen pounds nineteen shillings and sixpence, he would be happy; but that a shilling spent the other way would make him wretched". Dickens's father had drummed this lesson into his son as it was never a habit that he could never manage to acquire. Like Micawber and William Dorrit, John Dickens ended up in a Debtors prison for the want of £40 and 10 shillings. When he left for the Marshalsea his parting words warned to not expect him back anytime soon. The son later recalled that "I really believed at the time that they had broken my heart." Luckily through inherited wealth, the Dickens family fortunes soon rose but their ups and downs had given the young Charles his unique view of both sides of London life.
Little Dorrit truly appreciates Clenman's gesture and repays with love by not abandoning him in his hour of need but her father wants him paid off in cold hard cash. Money is even used as metaphor for the fidelity of friendship when Little Dorrit declares her best friend Maggy as "as trustworthy as the Bank of England". Maggy is one of the poor of Bleeding Heart Yard, who are permanently in arrears to their landlord. Pancks, the rent collector, a man who quite readily admits that he lives for his work of getting blood out of a stone, has no patience for bleeding hearts. He is always the voice of harsh common sense, but there is an irony in many of his words that suggests Dickens understood the conundrum that is credit. When the residents of bleeding heart yard offer to vouch for each others' debts he dismisses it as "A person, who can’t pay, gets another person who can’t pay, to guarantee that he can pay." 
matter carefully but actually has only accumulated hearsay that has circulated until it had appeared to be solid. The truth is that Mr Merdle, the man of the age, cannot pay his debts any more than the tenants Pancks collects from but his bank prospers as long as an illusion can be maintained that he can. His reputation grows by recommendation and reference even though "nobody knew with the least precision what Mr Merdle's business was, except that it was to coin money". Everyone wants his association and is willing to forward him credit in both their admiration and their money. A newly wealthy William Dorrit is more than happy to not only invest his fortune but also marry his daughter into the Merdle family, Pancks places his meagre savings and fatefully Arthur Clenman follows suit with not only his money but his business partner's too. 
The votes of confidence merely encourages Mr Merdle to take more risks until disaster hits his bank and it is revealed that he "was simply the greatest Forger and the greatest Thief that ever cheated the gallows".
