5
THE WORK OF THE STOCK EXCHANGE
over, the sums borrowed in this way were comparatively small,
and could be made only for short periods, owing to the limited
resources of private money-lenders.
The Increasing Expensiveness of Government.—However
crude dependence of governmental finance upon personal
borrowing by the sovereign may seem today, it sufficed fairly
well for the relatively small needs of sixteenth and seventeenth
century governments. In those distant periods populations
were smaller than at present, the standard of living was almost
inconceivably lower, and the contemporary warfare with blunderbusses,
swords, and sailing ships vastly cheaper. Many a
modern city requires vastly more financial accommodation than
did the whole kingdom of Elizabeth. Nevertheless, the expenses
of government were through this period steadily increasing,
owing to such diverse factors as the Spanish discoveries
of gold in America, the frequent and expensive amours
of a Charles or a Louis, and the semireligious, semipolitical
wars in the low countries and elsewhere. Financial stringency
helped to expel the last Stuart king from England in 1688,
and to dampen the warlike ardor of his successor, William III.
During the reign of the latter, however, a financial policy
was adopted with profound consequences for society. Interestbearing
negotiable certificates acknowledging the public indebtedness
were issued by the State, and sold to the recently created
class of English investors who were earnestly seeking a safe
way of investing their savings. In contrast to the private
money-lending institutions of the day, such investors possessed
a vastly larger aggregate of investable funds, and in addition
they generally preferred to make long-term rather than shortterm
loans—so much so, in fact, that the principal portion of
both the British and French funded national debts came subsequently
to be issued in securities without a maturity date.
Modern Government Expenditure.—Since about 1700,
when this new and practical means of obtaining larger funds
