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Securities Operations A Guide to Trade and Position
Management 1st Edition Michael Simmons Digital Instant
Download
Author(s): Michael Simmons
ISBN(s): 0471497584
Edition: 1
File Details: PDF, 165.93 MB
Year: 2002
Language: english
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Library of Congress Catabging-in-PublieationData

Simmons, Michael.
Securities operations / Michael Simmons.
p. cm. --(wiley finance series)
Includes index.
ISBN 0-471-49758-4 (a&. paper)
1. Securities industry. I. Title. 11. Series.

HG4521 .S574 2001

332.63’2’0684~21
2001055777

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To A1 I
‘The Author of Securities Operations, occasionally refers to well-known organisations
within the financial community in order to illustrate the context of typical trading sce-
narios. The scenarios created, and the relationships and transactions referred to, are for
illustrative purposes only and have no factual basis.’
Foreword xv

Intraduction xvii

Acknowledgements xxi

I Essential Trading and Settlement Concepts

1.1 Introduction
1.2 Terminology
1.3 Differences in Terminology
1.4 Differences in the Exchange of GoodslSecurities and Cash
1.5 Methods of Exchanging Securities and Cash
1.6 Remaining in Control
1.7 Recording Details of Individual Trades
1.8 Summary

2 The Securities Marketplace 9

2.1 Introduction 9
2.2 Securities 10
2.3 Participants 16
2.4 Regulators 27
2.5 Custodians 27
2.6 Other Participants in the Securities Marketplace 29
2.7 Globalisation 29
2.8 Summary 31

ringing Securities to the Marketplace 33

3.1 Introduction 33
3.2 Methods of Issuing Securities 33
3.3 Bond Issues via Syndication 35
3.4 Equity Issues via TPO and Public Offer for Sale 40
3.5 Post the Launch of Securities 44
3.6 Settlement of Trades in the Secondary Market 44
3.7 Further Issues of Equity 44
3.8 Summary 45
 ...
Vlll Contents

Structure of a Securities Trading 47

4.1 Introduction 47
4.2 The Group of Companies 47
4.3 Companies within a Group 48
4.4 Divisions within a Company 49
4.5 Departments within Divisions 49
4.6 Departments Independent of Divisions 64

5 Transaction Types 71
5.1 Introduction 71
5.2 Securities Transaction Types 71
5.3 Cash Transaction Types 80
5.4 Overview of Transaction v p e s 86
5.5 Automation 87
5.6 Summary 88

6 Security Forms 89
6.1 Introduction 89
6.2 Registered Securities 89
6.3 Bearer Securities 91
6.4 Methods of Transfer of Registered and Bearer Securities 93
6.5 Registered and Bearer Securities: Similarities and Differences 99
6.6 Summary 99

7 Security Types 101

7.1 Introduction 101
7.2 Equities 101
7.3 Bonds 103
7.4 Grouping of Securities 110
7.5 Derivatives 111
7.6 Summary 111

Trade Cash Value Calculation 113

8.1 Introduction 113
8.2 Gross Cash Value Calculation 114
8.3 Additional Trade Amounts 116
8.4 Net Settlement Value 126
8.5 Summary 127

Static Data 129

9.1 Introduction 129
9.2 Trading Companies 130
9.3 Counterparties 130
9.4 Trading Books 134
9.5 Currencies 135
9.6 Securities 135
 Contents ix

9.7 Security Groups 137

9.8 Timing of Static Data Set-Up 139
9.9 Sources of Static Data 140
9.10 Management of Static Data 142
9.11 Summary 144

de Lifecycle and Straight rough Processing 145

10.1 The Trade Lifecycle 145
10.2 Straight Through Processing 145
10.3 Summary 147

11 Trade Execution and Capture 149

11.1 Introduction 149
11.2 Orders From Institutional Clients 150
11.3 Trade Execution 151
11.4 Trade Capture (Front Office) 152
11.5 Trade Capture (Settlement System) 162
11.6 Summary 163

12 Trade Enrichment 165

12.1 Introduction 165
12.2 Trade Enrichment Components 166
12.3 Determining Factors in Trade Enrichment 167
12.4 Static Data Defaulting 170
12.5 Failure to Apply Static Data Defaults 172
12.6 Enrichment of Counterparty Custodian Details 172
12.7 Summary 174

13 Trade Validatioii 175

13.1 Introduction 3.75
13.2 Straight Through Processing 176
13.3 Fundamental Risks 177
13.4 Basic Trade Validation 177
13.5 Additional Trade Validation 179
13.6 Methods of Trade Validation 181
13.7 Sununary 184

14 Trade Agreement 185

14.I Introduction 185
14.2 Reducing the STO’s Risk 186
14.3 Trade Agreement Methods 187
14.4 Outgoing Trade Confirmations 188
14.5 Incoming Trade Confirmations 194
14.6 Trade Matching with STOs 195
14.7 Trade Affirmation with Institutional Investors 198
14.8 Summary 201
X Contents

15 Transaction Reporting 203

15.1 Introduction 203
15.2 Purpose of Transaction Reporting 204
15.3 Transaction Reporting Methods 204
15.4 Transaction Components 205
15.5 Actions Following Detection 206
15.6 Summary 206

16 Settlement Instructions 207

16.1 Introduction 207
16.2 Risks Associated with settlement Instructions 208
16.3 Main Settlement Instruction Types 21 1
16.4 Content of Settlement Instructions 212
16.5 Methods of Transmitting Settlement Instructions 213
16.6 Format of Settlement Instructions 215
16.7 Deadlines for the Receipt of Settlement Instructions by Custodians 217
16.8 Automatic Generation and Transmission of Settlement Instructions 218
16.9 Settlement Instruction Validation 218
16.10 Manually Generated Settlement Instructions 219
16.11 Safe Custody Related Settlement Instructions 219
16.12 Settlement Instructions Issued under Power of Attorney 220
16.13 Maintaining a Link between a Trade and its Settlement Instruction 222
16.14 Summary 223

of the Custodian 225

17.1 Introduction 225
17.2 Services Provided by Custodians 225
17.3 ’Ifrpes of Custodian 227
17.4 Risks Associated with the Custodian’s Role 232
17.5 Custodian Selection 232
17.6 Settlement Instruction Related Services 233
17.7 Securities and Cash Holdings Related Services 235
17.8 Comparison of Custodian Services 238
17.9 Summary 239

re-Value Date Settlement Instruction Statuses 24 1

18.1 Introduction 241
18.2 Trade Matching and Settlement Instruction Matching 242
18.3 Settlement Instruction Statuses (Pre-Value Date) 242
18.4 Investigation and Resolution of Unmatched and Advisory Statuses 247
18.5 Settlement Instruction Matching Tolerances 250
18.6 The STO’s Risk 250
18.7 Methods of Communicating Statuses from Custodians 25 1
18.8 Updating the STO’s Books and Records 25 1
18.9 Summary 252
 Contents xi

19 Settlement Failure 253

19.1 Introduction 253
19.2 Buyers’ and Sellers’ Focus 254
19.3 Causes of Settlement Failure 254
19.4 Impact of Settlement Failure 255
19.5 Methods of Communicating Statuses from Custodians 257
19.6 Prevention of Settlement Failure 258
19.7 Enforcing Trade Settlement 259
19.8 Summary 260

261
20.1 Introduction 26 1
20.2 Enabling Trade Settlement 261
20.3 Trade SettIement Methods 267
20.4 Types of Trade Settlement 267
20.5 Settlement Netting 270
20.6 Settlement Tolerance 271
20.7 Settlement Processing at the Custodian 27 1
20.8 Result of Trade Settlement at the Custodian 272
20.9 Summary 274

ecting Trade Settlement Internally 275

21.1 Introduction 275
21.2 Pre-Settlement Trade Record 277
2 1.3 Post-Settlement Trade Record 279
21.4 What Timely and Accurate Reflection Enables 283
21.5 Achieving Timely and Accurate Reflection 283
21.6 Update Failure 286
21.7 Settlement Instructions Issued under Power of Attorney 286
21.8 Settlement Write-off 287
21.9 Unsettling a Settled Trade Internally 287
21.10 Summary 288

22 Position and Trade Related Operations 289

23 Funding 291
23.1 Introduction 291
23.2 Funding Choices 292
23.3 Do Nothing 293
23.4 Borrow (and Lend) Cash Unsecured 295
23.5 Borrow Cash via Rep0 297
23.6 Currency Movement Deadlines 309
23.7 Funding Projection 310
23.8 Collateral Management at Custodians 313
23.9 Internal Funding Allocation 313
xii Contents

23.10 Updating Internal Books and Records 314

23.1 1 Automation 315
23.12 Summasy 315

es Lending and Borrowing 317

24.1 Introduction 317
24.2 Principles of Securities Lending 318
24.3 Principles of Securities Borrowing 318
24.4 Methods of Lending and Borrowing Securities 320
24.5 Updating Internal Books and Records 326
24.6 Summary 326

25 Safe Custody 327

25.1 Introduction 327
25.2 Basic Safe Custody Services 328
25.3 Safe Custody Legal Agreements 329
25.4 Safekeeping Clients’ Securities and Cash 329
25.5 Safe Custody Holdings at External Custodians 330
25.6 Safe Custody Books and Records 331
25.7 Updating Holdings as a Result of Corporate Actions 331
25.8 Valuing Clients’ Securities Holdings 332
25.9 Statements of Securities and Cash Balances 332
25.10 Safe Custody Movement Types 332
25.11 Authenticating Instructions Received from Clients 338
25.12 Advanced Safe Custody Services 338
25.13 Service Charges 339
25.14 Summary 339

341
26.1 Introduction 34 1
26.2 Benefits 342
26.3 Reorganisations 358
26.4 Multifaceted Actions 360
26.5 General (Relevant to All Corporate Actions) 362
26.6 Summary 364

27 Reconciliation 365
27.1 Introduction 365
27.2 Overview of Reconciliation 366
27.3 Reconciliation Terminology 371
27.4 Types of Reconciliation 372
27.5 Methods of Reconciliation 379
27.6 Frequency of Reconciliation 380
27.7 External Movements Affecting Positions 381
27.8 Manual Versus Automated Reconciliation 382
 Contents xiii

27.9 Independence of the Reconciliation Function 382

27.10 Benefits Derived from Reconciliation 382
27.11 Summary 383

28 Accounting 385
28.1 Introduction 385
28.2 Generic Accounting Principles 386
28.3 Accounting for Securities Trades and Positions 387
28.4 Accounting Entry Lifecycle (1) 389
28.5 Accounting Entry Lifecycle (2) 397
28.6 Marking to Market 402
28.7 P&L Calculation Conventions 404
28.8 Realised P&L 406
28.9 Unredlised P&L 407
28.10 Automation of Accounting Entries 407
28.11 Summary 407

29 Objectives and Initiatives 409

29.1 Trade Processing Related Objectives 409
29.2 Initiatives in Pursuit of Trade Processing Objectives 414
29.3 Corporate Actions Related Objectives 427
29.4 Initiatives in Pursuit of Corporate Actions Objectives 429
29.5 Workflow 432
29.6 Outsourcing 433
29.7 Summary 433

Glossary of Terns 435

Recommended Reading 455

Index 457
This Page Intentionally Left Blank
A career in securities operations has long required years of apprenticeship training. This
less visible, but critical segment of the global capital markets, has been characterizedby its
own culture, lexicon and ideosyncracies. Securities operations professionals have typically
spent years developing an understanding of individual product operations, a variety of
systems and processing environments, and a multitude of laws and regulations. For those
who are close to this profession, including myself, the challenges and complexities have
increased significantly over the past few years.
For all of capital markets, but particularly the securities operations component of the
overall process, this past decade has been one of significant change. Capital flows and their
associated transaction volumes have increased substantially, particularly cross-border,
demanding innovative processing solutions. The financial engineering creativity of the
industry has produced a steady stream of new products with their attendant back office
demands. The industry has also witnessed a surge of consolidation resulting in the creation
of very large financial institutions with unique global operations issues. Many of these
consolidated firms also reflect the convergence of banking, capital markets, insurance and
related financial services businesses creating a new class of senior operations managers.
This consolidation has also affected the infrastructure of securities processing, resulting
in the simultaneous increase in trade execution venues with the creation of Alternative
Trading Systems and Electronic Communications Networks, as well as the reduction in
the overall number of traditional exchanges and depositories. Finally, the ascendancy of
internet technologies offers operations managers and analysts oppo nities to reconfigure
processes in ways not imagined until recently.
For securities operations professionals these changes have raised the bar of competency
€or success. In addition to the requisite industry experience, the discipline now requires
broad analysis and management skills in areas such as overall process architecture, tech-
nology deployment, outsourcing, management accounting, standards development and
international business. Competency today requires an understanding of both the larger
picture of global securities operations as well as one’s specific area of interest OK respon-
sibility.
Mick Simmons has assisted the profession in gaining this understanding with the pub-
lication of this valuable book. He has provided a clearly written text on the securities
industry and trading operations that will be useful for both the novice and experienced
reader. The book ensures a foundation understanding of the securities trade lifecycle from
which the reader can move on to deeper, more specialized topics. He has amplified the
xvi Foreword
text with a number of relevant examples, and demonstrates throughout the book his own
practical experience. I believe this book will be an important addition to the industry’s
reference library.
Bill Irving
Partner, Global Capital Markets
PWC Consulting
To many people, the inner workings of the securities industry are regarded as a mystery
that only a limited number understand. The degree of complication regarding securities
trading or trading related activities can be very high and difficult to comprehend.
That which follows the act of trading, generally termed operational activities, may seem
initially to be as mysterious as trading. However, such activities are in reality a series of
logical steps, most of which are relevant and comparable to any company trading in any
goods.
Whilst training people on the topic of securities operations, it became very apparent
that little material exists as a means of gaining an understanding of the essential concepts
and the connectivity between the operational activities; the logical result of continued
requests for recommended reading is represented within these pages.
This book is aimed at a number of different types of reader:

0 those who are new to the securities industry;

D those who have had some involvement with securities operations and who seek a
broader understanding;
0 those who have worked in specific areas of securities operations and who seek a deeper
knowledge of how prior actions affect their role and how their actions affect others
subsequently.

The content of the book should be relevant to those who fall into the second and
third categories above, whether the reader has gained experience within a securities
trading organisation (such as traders, salespeople, trade support personnel, static data
personnel, reconciliation staff, compliance officers, credit controllers and accountants)
has associations with securities trading organisations (such as securities issuers, custodian
organisations and registrars), or supplies services to the securities industry (such as static
data vendors, software engineers and management consultants).
This book is written primarily from the perspective of a securities trading organisation
(STO); at a very high level, I would define such an organisation as:
0 being active in a number of securities markets,
0 buying and selling securities for its own account (rather than as an agent acting on
behalf of another investor), and
0 needing to borrow cash in order to fund its inventory of securities
xviii Introduction
although the majority of the content of the book is directly relevant to many organisations
that operate in a different capacity within the securities industry.

UCTURE OF THE
The objective of this book is to de-mystify the subject of securities operations by breaking
the subject into logical components, explaining the issues relating to each Component and
at the same time conveying the accumulated effect and the overall picture.
The book is structured into three main areas: the first nine chapters provide an essential
foundation regarding securities and the characters within the marketplace; between chap-
ters 10 and 21, the trade lifecycle is described in its component parts, and from chapter 22
position management resulting from trading activity is described.
My intention is to express the general operational processes as typically managed within
a securities trading organisation, whilst:
6 conveying the necessary internal controls
0 highlighting the risks and how to mitigate them
6 suggesting ways of maximising opportunity and minimising costs
from an operational standpoint.
As the industry becomes increasingly automated, both within an organisation a d
between that organisation and the parties with which the organisation must communi-
cate, understanding of the start-to-end operational processes and the underlying reasons
for tasks to be performed is likely to diminish.
An observation drawn from my years within the operations areas of different organi-
sations is that the industry needs many more people who understand the bigger picture,
can visualise the impact of an operational action and put in place measures that provide
benefits to the organisation concerned.
Rather than cover the practices within specific locations around the globe, I have
attempted to convey concepts that will be applicable to the majority of locations. The
intention is for the reader to apply these concepts in any location, as each o f the major
points covered within the book is typically practised within each market, but there is
every possibility that each market has its own nuances in dealing with a particular point.
I have in general attempted to gradually accumulate the reader’s knowledge by descrjb-
ing the various components of a topic, conceptually and by giving examples, and by
making forward reference to later topics, and backward reference to earlier topics. My
objective has been to enable the reader to gain a complete overview of securities opera-
tions, subsequently enabling communication with other people on any and all of the topics
covered.
Due to the accumulation effect within the book, the chapters (particularly in the second
half of the book) make numerous references to points covered within prior chapters;
consequently, it is recommended that the book is read chapter-by-chapter, rather than
reading chapters in isolation.
At times, the text may touch on certain topics (e.g. legal and regulatory) to a superficial
level, as they are deemed to fall outside of the main focus and coverage of the book.
Words and terms explained within the Glossaly of Terms are highlighted in italics
within the main text.
 Introduction xix
I have written this book entirely independently and not for or on behalf of my employer;
consequently, all views expressed within this book axe my own and do not necessarily
reflect the views of my employer.
In a number of places within the text Industry Anecdotes, gathered from a variety
of sources, are related in order to emphasise the risks involved and the importance of
exercising certain trading and operational controls.
Although every effort has been made to remove errors from the text, any that remain
belong to me! However, I would welcome the chance to correct any errors or ommissions.
If the reader has any observations on the style or content of the book, I would appreciate
being informed of such comments by e-mail to [email protected].
NIichael Sirnrnons
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who called themselves patriots? Lord Coke, the oracle of the law,
quoted the case of Hall, in the reign of Henry the Eighth, and called
it the ancient usage of Parliament. Selden and Maynard held the
same doctrine. Who would dare to affirm, that those were not the
greatest constitutional lawyers? What was set against them but two
or three pamphlets (meaning those written by Dowdeswell and
Meredith), ingenious, indeed, but were they of weight to be opposed
to Coke, Selden, and Maynard? Sir William Meredith was unlucky in
addressing his censure to Conway, who was in reality what Sir
William wished or affected to be, a most conscientious man.
Conway’s virtue was firm, and not to be shaken by interest or
caprice. He persisted in uniform integrity, supported the Court when
he thought it in the right, but disdained its temptations. He
sometimes fluctuated and refined too minutely; but if he yielded to
his scruples, they never were infused by a glimpse of self-advantage.
Sir William was not long after this gained to the Court by a White
Stick; and though he again relinquished it, as he said, on principle,
he lost more on the side of judgment than he recovered on that of
conscience; and left it more doubtful whether he was an upright
than a very unsettled man. In an age wherein honesty could boast
few genuine martyrs, Conway was certainly the most distinguished.
He never ceased to attest his attachment to virtue, at the risk of a
most precarious fortune; and he had one merit that added to the
beauty of his character, and in which he was singular, that he never
mixed party or faction with his line of conduct. The Duke of
Richmond, Sir George Saville, and Lord John Cavendish, were,
undoubtedly, of as unblemished virtue as Conway; but they had all
three independent fortunes, and had no opportunities of making
equal sacrifices. All three, too, were devoted to their party, and from
that point of honour, which did little to their judgment, remained
inflexibly attached to that poor creature, Lord Rockingham. The
debate, whence I have digressed, lasted till three in the morning,
when Lord North’s amendment was carried but by 224 to 180—a
threatening diminution to the Administration, who saw their majority
on the first day of the session sunk from 116 to 44.
 If the Duke of Grafton was alarmed before, his panic was
augmented by this decrease of forces. He again declared to the King
he would resign, yet still desired his friends to keep the secret.
The next day Mr. Conway related to me two extraordinary
conversations that he had had,—the first with the Duke himself, the
other with his secretary, Stonhewer. Conway had again tried to
encourage the Duke to be firm and surmount his dejection; bidding
him beware that there were no Treasury secrets that might
endanger him. The Duke broke out, said he was determined to
resign immediately, for—he was betrayed. “There is no man, Mr.
Conway,” continued he, “on whom I can depend but you.” Conway
was amazed. “No,” continued the Duke, “there is no dependence on
connections. I am betrayed by my own confidential secretary,
Bradshaw. I will go to Lord North, and press him to accept directly.”
Farther, he would not open himself. From the Duke, Conway went to
Stonhewer. The latter was a modest man of perfect integrity,
45
invariably attached to Grafton from his childhood. He having
approved the Duke’s intention of resigning, it was probably from
being but too well acquainted with his patron’s unfitness for the first
post in the State, or from having silently observed how dangerous it
was for the Duke to remain in so responsible an employment,
surrounded by traitors. Stonhewer told Conway that the Bedfords
had taken little or no pains to persuade the Duke to retain his power.
They had made him believe, through Bradshaw, through whom the
negotiation passed, that the Attorney-General was more averse to
take the Seals than the Duke found him—and Stonhewer owned that
he thought Bradshaw a villain. The King, he said, had used the Duke
ill, and was not disinclined to his resigning. Mr. Conway had had the
same suspicion.
The truth, I believe, of this plot and these intrigues, was this.
The King, worn out by Grafton’s negligence, and impracticability, had
wished to get rid of him. It was known afterwards, that Bradshaw
was secretly the tool of the King and Lord Bute, and had probably
engaged Rigby to facilitate his Majesty’s plan of suffering the Duke
to resign,—which, however, he was so unjust as to resent for a long
time after. Rigby, Lord Gower, and Lord Weymouth, all feared that
the Duke’s irrational conduct would involve them in his fall, and Lord
Gower particularly hoped, by betraying him, to stand nearer to the
chief post. Thus they dissuaded his resignation so faintly as rather to
encourage it. The rich reversion obtained by Bradshaw, by or for his
treachery, confirmed his share in the transaction. The Duke and
Duchess of Bedford were far from being counsel to the resignation;
in truth it was entirely concealed from them. That the Duke should
not communicate it to them, was most extraordinary. That Lord
Gower did not, confirmed his share in the plot. Of all the set, Rigby’s
part was the most dark. His concealing the Duke of Grafton’s
intention from the Duke of Bedford, was unjustifiable: yet he could
not trust the Duchess with it, as her ambition was infinitely gratified
by having her niece, the Duchess of Grafton, wife to the Prime
Minister; and as her attachment to Rigby was cooled, she would not
have bent to his secret views. Thus they did not hear a syllable of
Grafton’s purpose till the very last day, and then Bedford vehemently
urged him not to resign: but it was too late. Yet, if Grafton had
opened half an eye, he soon closed it, continuing his intimacy with
46
Lord Gower and Rigby, and his confidence even to Bradshaw. Had
not the Duke himself dropped his suspicions to Conway, and had
they not been confirmed by the immaculate honesty of Stonhewer, I
should almost doubt the fact, though treachery was so notoriously
the characteristic of the Bedford faction.
The secret, though in so many hands, was not less well kept
from the public, than it had been from the Duke and Duchess of
Bedford; for though Grafton resigned on the evening of the 27th, it
was not known till very late on the 30th, when Lord North was
declared the successor.
Such was the conclusion of the Duke of Grafton’s Administration,
which had lasted two years, and when he was but thirty-four years
of age. His fall was universally ascribed to his pusillanimity; but
whether betrayed by his fears or his friends, he had certainly been
the chief author of his own disgrace. His haughtiness, indolence,
reserve, and improvidence, had conjured up the storm; but his
obstinacy and fickleness always relaying each other, and always mal
à propos, were the radical causes of all the numerous absurdities
that discoloured his conduct and exposed him to deserved
reproaches; nor had he a depth of understanding to counterbalance
the defects of his temper. The power of the Crown and the weakness
of the Opposition, would have maintained him in his post, though he
was unfit for it, as immediately appeared by the Court’s recovering
its ascendant the moment the Duke retired; for though Lord North
had far better parts, yet his indolence proved as great as Grafton’s;
but having as much good humour as the Duke wanted, it was plain
that the Parliament were willing to be slaves, provided they could be
treated with decency. Grafton had quitted the King’s service, when
Prince, disgusted with Lord Bute: had been captivated by Lord
Chatham, yet came into place without him; then quitted for him,
Lord Rockingham and the Whigs. He then declared against a place
of business; then gave himself up to Lord Chatham, and was made
his first Lord of the Treasury; grew as violently partial to Mr. Conway,
yet was with difficulty persuaded to stay in place even with him—
then would act with nobody but him: as abruptly and lightly
consented to let him retire to make way for the Bedfords; and after
a life of early decorum, dipped with every indecency into the most
public and abject attachment to a common courtezan, gave himself
47
up to Lord Bute’s influence: rushed into an alliance with the
Bedford’s, whom he hated, against his interest; and at last permitted
them to betray him, not without suspecting, but without resenting it.
The detail of his conduct was as weak and preposterous as the
great lines of it. His intrusion of Lutterell, his neglecting to call the
Parliament before the petitions spread, his wasting his time at
Euston and Newmarket though the tempest raged, his disgusting the
Chancellor, and when he had disgusted him, not turning him out
before the Parliament met, but leaving him to avail himself of the
merit of martyrdom by being turned out for his speech and vote;
and then turning him out when it was both too late and too soon,
because no successor had been prepared in time; these wild and
inconsistent steps plunged him into difficulties which yet he might
have surmounted, if his inconstancy had been art, his rashness
courage, or his obstinacy firmness.
He was the fourth Prime Minister in seven years who fell by his
own fault. Lord Bute was seized with a panic and ran away from his
own victory. Grenville was undone by his insolence, by joining in the
insult on the Princess, and by his persecution of Lord Bute and
Mackenzie. Lord Rockingham’s incapacity overturned him; and now
the Duke of Grafton, by a complication of passions and defect of
system, destroyed a power that it had depended on himself to make
as permanent as he could desire. It was pretended that his secret
reason was the preference given by the Queen to Lord Waldegrave
for her Master of Horse over the Duke’s friend, Lord Jersey. The
Duke had not asked it for him, but was capable of resenting its not
being offered, and as capable of being influenced by that little
48
reason as by any of eminent magnitude. He did not quit without
signalizing his retreat by two pensions that were loudly censured.
One was to his tool, the traitor Bradshaw, the reversion of Auditor of
the Plantations, worth 1500l. a-year. The other a pension on Ireland
of 1000l. for Dyson stamped with a royal breach of promise; the
King having permitted the Duke of Northumberland to pass the regal
word that no more pensions for a term of years should be granted
49
on Ireland but on extraordinary occasions. Dyson’s merits were not
of that noisy kind that would bear to be detailed, and yet now
ranked with those of Prince Ferdinand and Sir Edward Hawke, whose
names had been cited by the Attorney-General as proper precedents
for his Majesty’s munificence.
 CHAPTER III.
State of Parties at Lord North’s Accession to the post of First
Minister.—Victory of the Court Party.—Character of Lord
North.—The other Ministers.—Debate in the House of
Lords on the State of the Nation.—Quarrel between the
Speaker and Sir William Meredith.—Debate in the Lords.—
Lord Chatham attacks the Influence of the Court.—Repeal
of American Duties.—Bold Conduct of the City Authorities.
—Remonstrance Presented to the King.—Debate on the
Civil List.—Lord Chatham attacks the Duke of Grafton.—
Indirect Censure on the City Remonstrance in the House
of Commons.—Loyal Address carried.

1770.

Nothing could be more distressful than the situation into which

the Duke of Grafton had brought the King, and in which he
abandoned him. Whether it was owing to disgust, or whether men
had conceived that the Duke could not maintain himself, the majority
had suddenly dwindled away to an alarming degree, nor was any
time given to prepare for the change. The 31st was appointed for
going again into the committee on the state of the nation, the very
business on which the failure of numbers had disclosed itself. A new
arrangement without new strength was not encouraging. Lord North
had neither connections with the nobility, nor popularity with the
country, yet he undertook the government in a manly style, and was
appointed First Lord of the Treasury on the 29th, with only one day
to intervene before it would be decided whether he would stand or
fall. Could he depend on men whom he had not time to canvass?
Was it not probable that the most venal would hang off till they
should see to which side the scale would incline? Yet Lord North
plunged boldly into the danger at once. A more critical day had
seldom dawned. If the Court should be beaten, the King would be at
the mercy of the Opposition, or driven to have recourse to the Lords
—possibly to the sword. All the resolutions on the Middlesex election
would be rescinded, the Parliament dissolved, or the contest reduced
to the sole question of prerogative. Yet in the short interval allowed,
Lord North, Lord Sandwich, Rigby, and that faction on one side, the
Scotch and the Butists on the other hand, had been so active, and
had acted so differently from what the Duke of Grafton had done,
that at past twelve at night the Court proved victorious by a majority
of forty; small in truth, but greater by fifteen or twenty than was
50
expected by the most sanguine, the numbers being 226 to 186.
The question in effect was, that a person eligible by law cannot by
expulsion be rendered incapable of being rechosen, unless by act of
parliament. The courtiers moved that the chairman should leave the
chair, and carried it. Lord North, with great frankness and spirit, laid
open his own situation, which, he said, he had not sought, but
would not refuse; nor would he timidly shrink from his post. He was
rudely treated by Colonel Barré, who already softened towards the
Duke of Grafton, to whom he attributed weight and dignity, but
expressing contempt for the new Premier, as a man of no
consequence. The latter replied not only with spirit but good-
humour, and evidently had the advantage, though it was obvious
how much weight the personal presence of a First Minister in the
House of Commons carried with it. George Grenville amazed
everybody by a bitter complaint of libels and libellers hired by the
Court; and this at a season when, deserve what it might, the Court
undoubtedly laboured under an unparalleled load of abuse. Colonel
Lutterell, on the other hand, affirmed that he had traced a most
flagrant libel home to a near relation of that gentleman, who, he
believed, was also privy to it. He had forced the printer to divulge
 51
the writer, one Lloyd, who had confessed on his knees, with tears,
that Lord Temple had forced him to practise that office. Lutterell
added that he had taxed Lord Temple with it by letter, who had not
deigned to make an answer. Captain Walsingham said he had gone
to Lord Temple on the same errand, who had declared on his honour
he was not concerned in it. Grenville flamed, and called for a
committee to inquire into libels. He was answered finely by Sir
Gilbert Elliot, who now, contrary to his custom of late, took a warm
part. He had been much neglected by Grafton, though the
confidential agent of the King and Lord Bute; and never
distinguished himself, though none more able, but on cases of
emergency, and when the Court ventured or chose to make its mind
more known than by the Minister. Elliot told Grenville that, had he
not entered into factious combinations, he knew Grenville would
have been entreated to save his country. That Grenville was not
pardoned and again received into favour, proved how much more
the King and his mother were swayed by their passions than by their
52
interest.
Frederic Lord North, eldest son of the Earl of Guilford, was now
in the thirty-eighth year of his age. Nothing could be more coarse or
clumsy or ungracious than his outside. Two large prominent eyes
that rolled about to no purpose (for he was utterly short-sighted), a
wide mouth, thick lips, and inflated visage, gave him the air of a
blind trumpeter. A deep untuneable voice, which, instead of
modulating, he enforced with unnecessary pomp, a total neglect of
53
his person, and ignorance of every civil attention, disgusted all
who judge by appearance, or withhold their approbation till it is
courted. But within that rude casket were enclosed many useful
talents. He had much wit, good-humour, strong natural sense,
assurance, and promptness, both of conception and elocution. His
ambition had seemed to aspire to the height, yet he was not very
ambitious. He was thought interested, yet was not avaricious. What
he did, he did without a mask, and was not delicate in choosing his
54
means. He had lent himself readily to all the violences of Mr.
Grenville against Wilkes, had seized the moment of advancement by
accepting the post of Chancellor of the Exchequer (after a very short
opposition) when the Court wanted a person to oppose to the same
Mr. Grenville; and with equal alacrity had served under the Duke of
Grafton. When the first post became vacant by the Duke’s strange
retreat, no man so ready to place himself in the gap as Lord North.
It was in truth worth his ambition, though he should rule but a day,
to attain the rank of Prime Minister. He had knowledge, and though
fond of his amusement, seemed to have all necessary activity till he
reached the summit. Yet that industry ceased when it became most
requisite. He had neither system, nor principles, nor shame; sought
neither the favour of the Crown or of the people, but enjoyed the
good luck of fortune with a gluttonous epicurism that was equally
55
careless of glory and disgrace. His indolence prevented his forming
any plan. His indifference made him leap from one extreme to
another; and his insensibility to reproach reconciled him to any
contradiction. He proved as indolent as the Duke of Grafton, but his
temper being as good as the Duke’s was bad, he was less hurt at
capital disgraces than the Duke had been at trifling difficulties. Lord
North’s conduct in the American war displayed all these features. He
engaged in it against his opinion, and yet without reluctance. He
managed it without foresight or address, and was neither ashamed
when it miscarried, nor dispirited when the Crown itself became
endangered by the additional war with France. His good humour
could not be good nature, for at the beginning of the war he stuck at
no cruelty, but laughed at barbarities with which all Europe rung. It
could not be good sense, for in the progress he blushed at none of
the mischiefs he had occasioned, at none of the reproaches he had
incurred. Like the Duke of Grafton, he was always affecting a
56
disposition to retire, yet never did. Unlike the Duke, who secured
no emoluments to himself, Lord North engrossed whatever fell in his
57
way, and sometimes was bribed by the Crown to promote Acts,
against which he pretended his conscience recoiled—but it never
was delicate when profit was in the opposite scale. If he had
ambition, it was of very mean complexion, for he stooped to be but
a nominal Prime Minister, and suffered the King’s private junto to
enjoy the whole credit of favour, while, between submission and
laziness, Lord North himself was seldom the author of the measures
in which he bore the principal part. This passive and inglorious
tractability, and his being connected with no faction, made him
welcome to the King: his having no predominant fault or vice
recommended him to the nation, and his good humour and wit to
everybody but to the few whom his want of good breeding and
attention offended. One singularity came out in his character, which
was, that no man was more ready for extremes under the
administration of others, no man more temperate than Lord North
during his own:—in effect, he was a man whom few hated, fewer
could esteem. As a Minister he had no foresight, no consistence, no
firmness, no spirit. He miscarried in all he undertook in America, was
more improvident than unfortunate, less unfortunate than he
deserved to be. If he was free from vices, he was as void of virtues;
and it is a paltry eulogium of a Prime Minister of a great country, yet
the best that can be allotted to Lord North, that, though his country
was ruined under his administration, he preserved his good humour,
and neither felt for his country nor for himself. Yet it is true, too, that
he was the least odious of the Ministers with whom he acted; and
though servile in obedience to a Prince who meant so ill, there was
reason to think that Lord North neither stimulated, nor was more
than the passive instrument of the black designs of the Court.
The other chief Ministers were, Lord Dartmouth, Lord Suffolk,
Lord Gower, Lord Weymouth, Lord Sandwich, Lord Rochford, and
afterwards Lord George Germaine, besides two, who, though not
ostensible Ministers, had more weight with the King than Lord North
himself. Of those, Lord Dartmouth only stayed long enough to
prostitute his character and authenticate his hypocrisy. The
Chancellor, Bathurst, was too poor a creature to have any weight;
and Lord Rochford, though more employed, had still less claim to
sense, and none at all to knowledge. Lord Suffolk’s soul was
harrowed by ambition, and as he had not parts to gratify it, he
sought the despotism of the Crown as means of gratifying his own
pride. Lord Gower, Lord Weymouth, and Lord Sandwich, all had
parts, and never used them to any good or creditable purpose. The
first had spirit enough to attempt any crime; the other two, though
notorious cowards, were equally fitted to serve a prosperous Court;
and Sandwich had a predilection to guilt if he could couple it with
artifice and treachery. Lord George Germaine was proud, haughty,
and desperate. Success by any means was necessary to restore his
credit; and a Court that was capable of adopting him, was sure he
would not boggle at anything to maintain himself. Lord Mansfield
was by birth, education, principle, cowardice, and revenge for the
public odium, a bigot to tyranny. He would have sacrificed the
universe, and everything but his personal safety, to overturn the
constitution and freedom of England. But in the blindness of that
rage, and from not daring to open the attempt where the danger to
himself would have been imminent, he was the author of the liberty
of America, and the instrument of Providence to bless a whole
continent, whose destruction he sought to involve with that of his
country. Jenkinson had, and deserved, no marked character; he was
the tool of the King and Lord Mansfield, and had just parts enough
to make his servility inexcusable. Wedderburne, Sir Gilbert Elliot, and
Dyson were also much implicated in the following counsels; but the
two latter died early in the American war. Thurlow, Rigby, and Ellis
bore their part in kindling that fatal flame—but I am anticipating
what did not appear till three or four years later—though it was both
necessary to specify the chief incendiaries of the ensuing calamities,
and to account for Lord North’s escaping capital hatred for seeming
to bear so capital a part in so criminal a scene; but as not one of the
set I have recapitulated had recommended himself to the favour of
the public, Lord North, by his good humour, easily drew most good
will to himself, and did not, like most of the rest, push it from him by
insolence and avowed profligacy. Many events intervened, before the
grand scene opened, and those I must now detail.
From Lord North’s entrance into power, the Court found all their
facilities of governing by corruption and influence return. Every
question was carried in both Houses by more than sufficient
majorities: and though the Ministers were teazed within, and the
King from without, Lord Chatham was always baffled in the Lords,
Dowdeswell, Burke, and Grenville in the Commons; nor could Wilkes
in the City keep up more than an ineffectual flame. I will
recapitulate, as briefly as I can, the chief events and debates of the
following period.
Lord North was no sooner set at the head of affairs, than he
solicited General Conway’s support. The latter professed great
regard for him, but declared he would not sit in council with Lord
Gower and Lord Sandwich, now the Duke of Grafton, to whom alone
he had been obliged, was retired. Conway, accordingly, with the
King’s consent, returned no more to the Cabinet Council. The Privy
Seal was given to Lord North’s uncle, the Earl of Halifax. Charles Fox
58
and Charles Townshend, of Hunningham, were made
Commissioners, the first of the Admiralty, the second of the
59
Treasury. Ellis succeeded James Grenville as Vice-Treasurer of
Ireland; but Lord Howe and Lord Cornwallis resigned their places,
having, as they said, had no obligations but to Lord Chatham and
the Duke of Grafton. Dr. Blackstone was made a judge, and Sir
60
Gilbert Elliot succeeded Lord Howe as Treasurer of the Navy.
On the 2nd of February, the Lords went into the state of the
nation, on a question like Dowdeswell’s, and sat till two in the
morning, an hour scarce ever known in that House. The Duke of
Richmond principally shone, and said he concluded the Duke of
Grafton had resigned from being conscious of the badness of the
cause. Grafton denied the supposition; said, nobody did or ever
should know the cause of his resignation—and then entered into the
most vehement protestation of eternal attachment to his friends the
Bedfords. Lord Shelburne and Lord Sandwich had a warm
altercation; but the most disagreeable part of the day fell on the late
Chancellor, Camden. Grafton, Gower, and Weymouth declared, on
their honours, that he had never objected to the legality of what had
been done on the Middlesex election; and the Duke affirmed that he
had not suspected Lord Camden’s doubts till the month of August
last. All Lord Camden could say was, that he had never been
positively consulted on it, and had not thought himself obliged to
give any opinion when not called upon; yet it appeared in the debate
from Lord Chatham, that Lord Camden had declared the illegality to
him before August—a proceeding not quite justifiable in a Chancellor,
who is styled keeper of the King’s conscience, to be silent to the
Ministers on so important a step, and to condemn their measures to
the chief of their opponents. The motion was rejected by 96 to 47,
and then the majority voted, that for the House of Lords to interfere
in a resolution of the House of Commons in a matter of election
would be unconstitutional, and tend to a breach between the two
Houses. Two warm protests were signed on that occasion by the
Lords in opposition, declaring they would never rest till the nation
61
should obtain satisfaction on the Middlesex election.
On voting the land tax, Burke complained of the new grants of
pensions and reversions, and of the hardship of levying three
shillings in the pound for such purposes. Lord North defended them
by the precedent of Lord Camden’s pension. Dowdeswell named
Dyson and Bradshaw as enjoying monstrous and exorbitant grants,
and gave notice they should be inquired into. James Townshend, the
Sheriff, declared that as the county of Middlesex was not fairly
represented, he would not pay the land tax. Lord North answered
calmly, that the law would decide whether he should pay it or not.
The declaration, though intended for example, was not followed: but
the Commons House of Assembly of South Carolina, voted 1500l. to
the Supporters of the Bill of Rights.
On the 12th, Lord Chatham moved for a resolution that the
capacity of a person to be elected did not depend finally on a
determination of the House of Commons. This was supported by
Lord Camden, but denied by Lord Mansfield, and evaded by the
previous question.
Dowdeswell the same day aimed a destructive blow at the
62
prerogative, but one too wholesome to meet with success. It was
to take away votes at elections for Members of Parliament from all
under-officers of the revenue, as of the excise, customs, &c. The
motion was popular and constitutional; but the old artillery of the
Court, the Tories, were played against the proposal, and it was
rejected by 263 against 188. Dowdeswell and Grenville pledged
themselves to promote such a bill, should they ever be Ministers
again. Lord North told them they certainly did not think themselves
63
likely to become so, when they supported such a measure.
On the report from the committee on the state of the nation, a
great quarrel happened between the new Speaker and Sir William
Meredith, who were ancient enemies. Grenville had insisted on a
right of separating two questions, which being contested, Meredith
appealed to the Speaker. Sir Fletcher, a novice in the orders of the
House, made an artful but false distinction; at the same time
complaining of the hardship of being pressed for decision in the
dawn of his office. Sir William said he had meant nothing uncandid;
but Norton, hot and unguarded, said, “he now saw he must never
expect candour from that gentleman.” Those words caused such an
uproar for twenty minutes that nobody could be heard, most crying
out to have the words taken down. Conway and others tried to
moderate; but Barré inflamed the heat, and Dowdeswell moved that
the Speaker’s behaviour had been an infringement of the liberty of
debate, and a violation of the rules of the House. The Speaker was
enraged, and perceiving that so violent a motion would be rejected
with indignation, he insisted on putting the question on himself,
which was thrown out without a division. The whole discussion
lasted between four and five hours, protracted by the Speaker’s
fault, who would make no concession, and who desired the House to
64
take notice that he had made no apology to Meredith.
A motion of Grenville for an account of the disbursements on the
Civil List for the year 1769 was rejected by 262 to 165. Many
reflections were thrown out on the new grants to Sir Fletcher
Norton, Dyson, and Bradshaw; but as the majority was again risen
to ninety-seven, the Court paid no regard to complaints. Lord North
65
had flung himself into the hands of Lord Bute’s junto, and had
even taken for his own private secretary one Robinson, steward to
66
Sir James Lowther —not without giving offence to the Bedfords,
who had meant to govern North themselves.
But if Lord North established his credit at Court by recurring to
the patronage of the Favourite, it did but serve to revive jealousies
of Lord Bute and the Princess; a strong instance of which broke
forth. Sir Edward Hawke had declared for an addition of four
thousand seamen, then retracted that opinion, but said, if he should
67
remain in the Admiralty, he should the next year be for adding five
thousand men. On this declaration of so renowned an Admiral, Lord
Craven and Lord Abingdon moved for two thousand seamen more.
The Duke of Richmond supported their motion with great abilities,
knowledge, and matter, and pointed out the encroachments and
dangers from France and Spain in Corsica and the East Indies, and
from the formidable Spanish fleet that seemed to threaten Jamaica,
warning the Ministers that they should be answerable for refusing
more seamen, if any mischief should arise. Still they refused them,
but with much confusion and little argument. Lord Chatham went
farther, in his best manner and with most inflammatory matter,
perceiving how little he could hope either from the King or
Parliament. He pronounced that since the King’s accession there had
been no original Minister (a forced expression for no independent
Minister) in this country; that there was a secret influence (which he
described so as to point at the Princess, not at Lord Bute) which
governed and impeded everything, and was greater than the King.
He drew a flattering yet artfully ridiculous picture of the King’s
gracious facility in granting everything in his closet, while in Council
or in Parliament it was defeated by the faction of the secret
influence. He himself, he said, had been duped and deceived by it;
and though it was a hard thing to say of himself, confessed he had
been a fool and a changeling. The Duke of Grafton, mistaking Lord
Chatham, asked whether the King or himself had been pointed at by
the Earl, and spoke with warmth, dignity, and grace. He declared
Lord Chatham had forced him into Administration, as he had many
letters to prove; but the happiest day of his life had been that of his
resignation. For the words dropped by Lord Chatham, they were the
68
effects of a distempered mind brooding over its own discontents.
This last expression hurt Lord Chatham deeply: he repeated it over
and over, and said he had drawers full of papers to prove that he
had always had sufficient vigour of mind to avoid the snares laid for
him. He would neither retract, he said, nor explain away the words
he had uttered; but returned the Duke’s attack with severe
reflections on his Grace’s falsehood and deviations. The Ministers did
not dare to take notice of what had been thrown out against the
Princess, but rejected the motion by 70 to 38. The Duke of
Richmond hinted that in the late war the Emperor of Morocco had
offered to embark fifty thousand men on board Admiral Saunders’s
fleet, and invade Spain. Lord Rockingham, the Duke of Richmond,
and the Cavendishes, who had kept aloof from Lord Chatham, were
so charmed with his attack on the Princess, that they visited him
publicly. It was more surprising that the Duke of Grafton supported
the new Administration with more parts and spirit than he had done
his own; and in that and the following winter recovered much of the
esteem that he had lost when in power, though without having
recourse to that usual restorative of character, opposition.
On the 5th of March the House of Commons went upon the
consideration of America. Lord North proposed to repeal all the late
duties, but that on tea. Mr. Conway advised the repeal of that also,
most men believing that a partial repeal would produce no content.
Grenville agreed in condemning, as the Rockingham party did too, a
partial repeal; but, too obstinate to consent to any repeal, went
away without voting, and the motion passed. Lord North produced
letters showing that the association for not taking our goods was in
a great measure broken through, as the Colonies found they could
not do without them. In fact, they continued secretly to send
commissioners hither for goods while they appeared most vehement
against letting them be imported—the true reason why our
merchants did not, as having no cause, complain of the decay of
69
that trade.
 To find the petitions slighted, and to have driven away the Prime
Minister without shaking the Administration, was a mortifying
disappointment to the Opposition; and which, though they affected
great contempt for the leaders of the Court party, gave no shining
idea of their own abilities employed in vain to overturn them. The
next expedient to which the opponents had recourse, did as little
honour to their invention, being nothing more than a renewal of
petitions under the title of a remonstrance; and which, being only a
variation of terms, not of means, produced, like other such
remedies, no more effect than the dose to which it was a
succedaneum. The Liverymen of London, indignant at the King’s
making no answer to their petition, had, with the assistance of the
Common Council, and by the countenance (if not by the instigation)
of Beckford, the Lord Mayor, obtained a Common Hall,
notwithstanding the opposition of almost all the Aldermen. At that
Hall it was determined to present a remonstrance to his Majesty on
his not having deigned to take any notice of their petition; and the
Sheriffs attended him to know when he would be waited upon with
the remonstrance. The King replied, “As the case is entirely new, I
will take time to consider of it, and will transmit an answer to you by
one of my principal Secretaries of State.” In two days Lord
Weymouth wrote to the Sheriffs to know how their message was
authenticated, and what the nature had been of the assembly in
which it was drawn up. The Sheriffs went the next morning with a
verbal message, and insisted on being admitted to an audience to
deliver it. Alderman Townshend told the King he came by direction of
the Livery in Common Hall assembled. The King replied, “I will
consider of the answer you have given me.” From the temper both
of the City and the Court, it was fortunate that no mischief arose.
The boldness of the former was met by the contempt of the latter.
The Remembrancer being denied admittance into the closet with the
Sheriffs, he asked Lord Bolingbroke, the Lord of the Bedchamber in
waiting, whether it was not usual to admit the person possessed of
the office he held? Bolingbroke replied, “I do not know: I never saw
you here before, and hope never to see you here again.”
 Sir Robert Ladbroke proposed to the Court of Aldermen to
declare that the remonstrance was no act of that court or of the
Corporation of London; but the Lord Mayor refused to put the
question without consulting the books of the City; and many
reflections were thrown on the courtly Aldermen for attempting to
govern the City contrary to its own sense. Sixteen of the Aldermen,
however, protested against the remonstrance, which, by the King’s
allowance, was carried to him on the 14th of March by the Lord
Mayor and Sheriffs. An immense mob accompanied them, but
committed no indecorum, except hissing as they passed Carlton
House, the residence of the Princess Dowager. The King received
them sitting on the throne. The Common Serjeant began to read the
remonstrance, but being inclined to the Court, was so frightened
70
that he could not proceed, and Sir James Hodges was forced to
read it. The King, with great composure, and without expressing
anger, scorn, or fear, read his answer, which, though condemning
the address, was uncommonly condescending, and in a style of
71
appeal to his people. It had been debated whether they should be
admitted to kiss the King’s hand. Lord Hertford, the Chamberlain,
was ordered to tell the Lord Mayor, that if they desired to kiss his
Majesty’s hand, he would grant it. Beckford said, “I desire of all
things to kiss my Sovereign’s hand,” which they all did. In the
relation of that ceremony given the next day in the Public Advertiser,
it was described in this bitter manner:—the King instantly turned
round to his courtiers and burst out a-laughing—Nero fiddled while
Rome was burning. Two papers, still more indecent, called The
Whisperer and The Parliamentary Spy, were published weekly
against the King, the Princess, and the Parliament.
During the above transaction, Mr. Dowdeswell moved for the
accounts of the Civil List, expressing the different Administrations
under which the debts had been contracted. Lord North objected;
72
but Lord Mount Stewart, desiring his father’s share might be
specified, it was accorded, as were the rest, though, till his
application, they had been refused, notwithstanding Grenville and
Dowdeswell, both of whom had been Chancellors of the Exchequer,
and the former First Lord of the Treasury, too, had begged to have
their accounts particularized. Grenville justly observed, that that
deference to Lord Mount Stewart’s request, proved his father’s actual
influence, and consequently Lord North’s servility to him.
Lord Rockingham made the same demand of accounts in the
House of Lords, but down to that very year. The former were
granted as in the other House; the latter part was refused. Lord
Chatham said, Sir Robert Walpole, on whom he made great
encomiums, once asking the payment of but 113,000l. gave in the
vouchers: now, 500,000l. had been asked without any account
delivered, which had been refused even till now, though the debt
had been paid. Growing more inflammatory, he drew a picture of the
late King, who, he said, was true, faithful, and sincere, and who,
when he disliked a man, always let him perceive it—a portrait
intended as a satirical contrast to the character of the reigning
monarch. On the Duke of Grafton he was still more bitter, whom he
repeatedly called Novice, and whom, he said, he had never meant
for First Minister; the Duke had thrust himself into the function,
removing Lord Camden and Lord Shelburne; but that, when the
latter was dismissed, could he have crawled out, he himself would
have gone to the King, and insisted that the Duke should be
dismissed too. The Duke answered with firmness and sense; said he
knew Lord Chatham had wished him to hold his power only under
himself, and had meant him for a cypher, regnante Cæsare. The
debate continued chiefly between these two; but Lord Chatham
adding, that Lord Camden had been removed for his vote in
Parliament, Lord Marchmont insisted on the words being taken
down. At first Lord Chatham was disconcerted, but soon avowed the
words; and they were taken down, though his violence was so great
that he was with difficulty compelled to sit down. Lord Sandwich,
alarmed, moved to adjourn; but the Duke of Richmond insisting that
Lord Chatham, being accused, had a right to vindicate himself, and
the latter declaring that he would not retract his words, Lord
Marchmont grew frightened, and moved that nothing had fallen in
that or any former debate that could justify the assertion of Lord
Camden having been dismissed for his vote. This modification was
seized by the majority, who finding Lord Chatham inflexible, did not
dare to push him to extremities, but meanly and timidly voted those
words, though the Opposition would not agree to them. In the
course of the debate, Lord Temple said Lord Mount Stewart had
done himself immortal honour by desiring to have his father’s
accounts produced; and that they would, he supposed, vindicate
Lord Bute himself from many calumnies. It was doubted whether
this was flattery, or art to draw forth the accounts, that matter might
be found in them for impeachment. Of all the party, Lord Shelburne
was most warm, agreeable to his maxim, that the King was timid
and must be frightened. I think it was in that debate (which was a
very heterogeneous one) that Lord Mansfield, being called upon for
his opinion on Lutterell’s case in the Middlesex election, declared his
opinion should go to the grave with him, having never told it but to
one of the Royal Family; and being afterwards asked to which of
them, he named the Duke of Cumberland—a conduct and
confidence so absurd and weak, that no wonder he was long
afterwards taunted both with his reserve, and with his choice of such
a bosom-friend.
The great difficulty was to determine what part the King should
take on the remonstrance. It reflected much on him—more on the
House of Commons; and, in the opinion of some lawyers, amounted
at least to a misdemeanour. The first idea was, that the King should
lay it before both Houses with complaint; but in the meantime, Sir
Thomas Clavering, a rich northern baronet, no otherways
considerable, moved the House of Commons to address the King to
lay the remonstrance and his answer before the House, the former
being, as he concluded by the latter, very offensive. Beckford, the
two Sheriffs, and Alderman Trecothick warmly avowed their share in
the remonstrance. Harley attacked Beckford as the disturber of the
City’s peace; and a warm altercation between them ensued. The
Opposition, particularly Wedderburne, urged that to censure any
73
petition or remonstrance, unless it was high treason, was a direct
violation of the Bill of Rights. Lord North was very zealous, especially
in defence of that wretch, his ancestor, the Lord Keeper, for which he
was well ridiculed by Burke, who begged the House to stop, and
reminded them how often he had warned them to go no farther,
involving themselves more and more by every step they took.
Conway answered Wedderburne with uncommon applause,
condemning the remonstrance, but recommending moderation.
Grenville fluctuated strangely, neither condemning or countenancing
the remonstrance, but dissuading punishment. Could they, he asked,
punish all concerned in it, or could they punish partially? Even Lord
John Cavendish spoke for temper, and owned the remonstrance had
gone too far. The address was voted by 271 against 108. The
Ministers no doubt had instigated that motion as less obnoxious than
a direct complaint from the Throne would have been, and as
wearing the appearance of independence from the person who
made the motion: but the gentleman’s independence was a little
sullied by the command of Languard Fort being four days after
conferred on his brother, Colonel Clavering, a meritorious officer, to
whom it had been promised, but which made the connection of the
74
elder with the Court observed.
Such was the dangerous and disgraceful situation into which the
unconstitutional intrusion of Lutterell had drawn the Court. They did
not dare to punish the indignation they had provoked, lest worse
consequences should ensue: nor did their triumph in maintaining
Lutterell in his seat, compensate for the timidity they betrayed in
bearing so insolent a remonstrance, which was one of the
humiliating effects that had flowed from their original illegality in the
75
prosecution of Wilkes, —a speaking lesson to Princes and Ministers
not to stretch the strings of prerogative! The whole reign of George
the Third was a standing sermon of the same kind; and the
mortifications I have been recounting were but slight bruises
compared to the wounds he afterwards received by not contenting
himself with temperate power and established obedience.
 The remonstrance and answer being delivered to the House, Sir
76
Thomas Clavering and Sir Edward Blackett moved a resolution,
that to deny the validity of proceedings in Parliament was
unwarrantable, and tended to disturb the peace of the kingdom. The
Opposition objected to the question, as the House of Commons,
being the party accused, ought not to judge in their own cause; and
the previous question was moved. The day passed temperately,
except that Beckford and Harley gave one another the lie. The
courtiers were moderate, and the Rockingham party decent, which
kept the Lord Mayor and Sheriffs within bounds. Dunning made a
great figure against the Court; but the resolution passed, the
previous question being rejected by 284 to 127.
The next day the same Baronets moved a loyal address to the
King. The debate turned on the infringement of the Bill of Rights, by
questioning petitions in Parliament. Lord John Cavendish,
Wedderburne, and Sir Joseph Mawbey, acknowledged the
remonstrance to be improper, but defended the right of
remonstrating; and Lord John proposed a less fulsome address. Mr.
Ridley, and Sir Matthew Ridley, his son, declared, they said, in the
names of the country gentlemen, whose silence avowed them, that
they had gone thus far with the Administration, but would go no
farther if punishment was thought of: yet Rigby talked highly for
severe proceedings, and reviled the Livery and the Opposition.
Beckford, not at all content with these last for supporting him no
better, yet vaunted his own firmness and ridiculed the merchants
who had addressed the last year, calling them contractors and
remittancers; and scoffing at the courtiers in plain terms for serving
for such scanty pay, in comparison of contractors who made 5000l.
or 6000l. a year. Lord North himself, he said, had not above 2000l. a
year. Lord North offered to the Cavendishes to omit the most
exceptionable parts of the address; but as they would not close with
77
him, it was voted by 284 to 94. The Lords, on the 22nd having had
a conference with the Commons, concurred in the address. Lord
Chatham was confined by the gout. Lord Shelburne alone avowed
the language of the remonstrance. Lord Denbigh and Lord Pomfret
were, on the other hand, as gross in flattery to the King. Lord
North’s moderation, concurring with the opinion of many lawyers,
that the remonstrance was no misdemeanour, prevented any farther
views of punishment on that subject.
 CHAPTER IV.
Bills introduced by Mr. Herbert and Mr. Grenville.—
Conversation on Secret Influence.—Remarks.—City Dinner
to the Opposition.—Curious Phrase employed by Lord
Chatham.—Termination of Wilkes’s Imprisonment.—Riot at
Boston.—Debate on the Prorogation of the Irish
Parliament.—Lord Chatham moves a Censure on Ministers.
—Observations on the State of Parties.—Publication of
Burke’s Thoughts on the Present Discontents.—Criticism of
it.—Influence of Lord Bute.—Character of the Pelham
Administration.—New Party.—Their Aristocratic Tendencies.
—Diminution of the Privileges of Peers and Commoners
with regard to their Creditors.—Desultory Discussions on
American Affairs, and the Middlesex Election.

1770.

These debates were tedious and unentertaining, and willingly I

abridge them: totally omitted they could not be; they were the
constituent ingredients of an inglorious reign, in which many of the
most solemn questions that compose or touch the essence of our
constitution were agitated—questions that will live in our law-books,
when omitted in polished histories written for entertainment. These
pages, therefore, will serve for a clue to writers on the laws, though
they may not be so fortunate as to please the idle. I shall slightly
mention some other bills that were discussed about the same time.
 78
Mr. Herbert, a near relation of the Earl of Pembroke, and a
young man of great fortune and good principles, proposed a bill to
declare that expulsion did not imply incapacitation unless for certain
crimes infamous by law. Doubts were started on what those crimes
were. The House was strongly inclined to the bill: the Ministers
pretended not to discountenance it—but the Jesuits of the Treasury,
Dyson and Jenkinson, undermined it indirectly: the latter went so far
as to engraft a clause on that bill calculated to secure the rights of
freeholders, which would have made it an instrument of tyranny, and
would have made expulsion or imprisonment total incapacity. Lord
North affected to be struck by and to approve that juggle; but Lord
Beauchamp, General Conway, and even the smooth courtier Lord
Barrington, resisting, and the latter declaring that it was necessary
to quiet the minds of the people, Lord North gave it up. The Cabal
however clogged the bill with so many subtleties and contradictions,
79
that Mr. Herbert abandoned it with indignation, and it was lost.
Mr. George Grenville was more successful with a bill that the
profligacy of the times loudly demanded, and which even that
profligacy could not defeat. It was to take the trials of contested
elections from the judicatory of the House, and vest them in a
smaller number of examiners to be chosen by ballot. Important as
the nature of elections is, and sacred as the property of legal votes,
of the right of counties and boroughs to choose their
representatives, and of the elected to his seat, yet all was
overlooked, and petitions were heard and decided solely by favour or
party. Nor was this accidental, but constant and universal. Grenville’s
bill was generally liked. Rigby and Dyson opposed it, and at last Lord
North, who endeavoured to put it off for two months; but he was
80
defeated by 185 to 133. The resistance of the House to the power
of the Administration on those two bills, proved, with some instances
I have mentioned, that that House of Commons was not implicitly
servile on all occasions like the last. Grenville’s bill passed on the 2nd
of April, but not without a remarkable conversation rather than a
debate on political creeds and secret influence. Grenville and
Dowdeswell declared they had been under none when they were in
place. Samuel Martin desired the House to take notice of that
declaration. It was evidence, he said, that Lord Bute was falsely
accused; and that such rumours were raised to excite the mob
against him on his return from abroad. Colonel Barré said the two
gentlemen had only declared they had not been influenced
themselves: but Lord Chatham had solemnly affirmed to the Lords
that even in six weeks his schemes had been controlled; and it was
evident where the secret influence lay, when Martin and Jenkinson,
the servants of the Princess of Wales, and when Dyson and Sir
Gilbert Elliot, were so much consulted. That was the cabinet that
81
governed the Cabinet. Lord North declared that he would be
nominal no longer than he was real Minister. There wanted no better
proof of the secret influence than that Lord Bute had the credit to
maintain Oswald, Elliot, Dyson, and Jenkinson, or some of them, in
the Treasury through every Administration subsequent to his own, by
which he might be master of all the secrets of that important board
which influences the whole Government,—at least they were agents
whom he had recommended to the King; and if the Earl himself did
not preserve the same degree of credit with his Majesty, the King
acted on the plan in which he had been initiated, and had cunning
enough, as most Princes have, to employ and trust those only who
were disposed to sacrifice the interest of the country to the partial
and selfish views of the Crown; views to which his Majesty so
steadily adhered on every opportunity which presented itself, that,
not having sense enough to discover how much the glory and power
of the King is augmented by the flourishing state of the country he
governs, he not only preferred his personal influence to that of
England, but risked, exposed, and lost a most important portion of
his dominions by endeavouring to submit that mighty portion to a
more immediate dependence on the royal will. Mystery, insincerity,
and duplicity were the engines of his reign. They sometimes
procured success to his purposes, oftener subjected him to grievous
insults and mortifications, and never obtained his object without
forfeiting some share of his character, and exposing his dignity to
affronts and reproach from his subjects, and his authority to
contempt from foreign nations. He seemed to have derived from his
relations the Stuarts, all their perseverance in crooked and ill-judged
policy without profiting by their experience, or recollecting that his
branch had owed the Crown to the attempts made by the former
Princes at extending the prerogative beyond the bounds set to it by
the constitution. Nor does a sovereign, imbued with such fatal
ambition, ever want a Jefferies or a Mansfield, or such less
ostensible tools as the Dysons and Jenkinsons, who for present
emolument are ready to gibbet themselves to immortal infamy by
seconding the infatuation of their masters.
Beckford, the Lord Mayor, gave a great dinner to the lords and
gentlemen of the Opposition: a cavalcade of the Livery fetched and
escorted the company from the Thatched House Tavern in St.
James’s Street; and at night many houses were illuminated, and a
few had their windows broken for not being lighted. Lord Chatham
had, by earnest entreaties, engaged Lord Granby to carry him to the
Mansion House in his chariot, but was prevented by the gout from
joining in the procession, which his pressing a popular general to
head, did not seem calculated to promote tranquillity. In fact, no
efforts were spared to keep up the spirit. The freeholders of
Westminster met and voted a remonstrance, which, omitting the
most exceptionable parts of that from the City, was immediately
presented to the King. Another was voted by the freeholders of
Middlesex; but no answer was given by his Majesty to either.
A few of the Opposition, who acted with decency and
impartiality, condemned the violences of their party. Sir William
Meredith complained of the letters of Junius, of The Whisperer, and
of The Parliamentary Spy. Thurlow, the new Solicitor-General, in the
room of Dunning, said a prosecution was commenced against the
first. General Howard again complained of The Whisperer; and a
conference being desired with the Lords, it was voted an infamous
and seditious paper.
 Lord Chatham, who seemed to imbibe faction from
disappointment, desired the Lords might be summoned for after the
holidays, as he intended to propose a bill to endeavour to repair the
mischief done by the iniquitous decision of the House of Commons
on the Middlesex election; nor was he less intent on raising
jealousies of the designs of France. He pronounced, in the month of
March, that by that very day on which he was speaking, the French
had somewhere struck a hostile stroke. This asseveration making
great noise, alarmed the merchants, who sent a deputation to him,
to inquire where the blow was struck. He denied having said so; and
some who were present, declared they had not heard him say it.
This was merely negative and personal to themselves, for, in
general, his audience were positive as to the words; and it was not
less remarkable, that a year afterwards, when the seizure of
Falkland’s Island by the Spaniards became public, Lord Chatham’s
partisans affirmed that he had made such a declaration, but had
accused Spain, not France, of having committed hostilities. He did
not even spare the King, but accused him of duplicity. The Duke of
Grafton defended the royal accused. The King soon afterwards asked
General Conway if he ever saw the Duke, and where he lived?
Conway said he knew nothing of him: “Nor I,” said his Majesty; “he
has not come near me these six weeks; nay, when I heard of his
defending me against Lord Chatham, I wrote a letter of thanks to
the Duke; he not only did not answer my letter, but has taken no
notice of it since.”
On the 17th of April ended the imprisonment of Wilkes, and he
was discharged from the King’s Bench, whence he retired privately
into the country, affecting to decline the congratulations of his fellow
citizens. The next night many houses of the lower rank were
illuminated, but without any tumult. The Court had taken care to
prevent any disturbance, by stationing numbers of constables, and
by holding the Guards and Light Horse in readiness. Beckford had
affected like solicitude, giving out orders for peaceable behaviour,
but on pretence of the Easter holidays; while his own house in Soho
Square was decorated with the word Liberty, in ample capitals.
Wilkes, now entering again on the scene, published an address of
thanks to the county of Middlesex, and another to the ward of
Farringdon. In those and former addresses, he had the assurance to
talk of protecting our religious as well as civil liberties. When Lord
Sandwich informed against the “Essay on Woman,” he too talked
religion. It was impossible to decide which was the more impudent,
the persecutor or the martyr! The release of Wilkes was celebrated
at Lynn, Norwich, Swaffham, Bristol, and a few other towns, but not
universally. At the end of the month, he was sworn in Alderman of
Farringdon ward. The solid retribution was the work of the Society of
the Bill of Rights. They paid or compromised a great part of his
debts, disbursing seven thousand pounds for him.
Zeal for his cause reigned almost as strongly in the city of
Westminster. Having lost one of their members by the death of Lord
Sandys, whose son, one of their representatives, succeeded to his
father’s title, they elected Sir Robert Barnard, a knight of
Huntingdonshire, known to them only as an enemy to Lord
82
Sandwich, in his own county, and by having presented its
remonstrance to the King. The Court did not dare to set up a
counter candidate, though seated in the heart of Westminster,
amidst their own and the tradesmen of the nobility.
Samuel, Lord Sandys, died by a hurt from an overturn. He had
formerly been the head of the republican party, and a leader against
Sir Robert Walpole, on whose fall, he was made Chancellor of the
Exchequer, a promotion that cost him his character, both as a patriot
and a man of business. He was soon removed for his incapacity, and
made a peer; and, at different times, filled other posts, as Chief
Justice in Eyre and Speaker of the House of Lords; but never
83
recovered any weight, and at last was laid aside with a pension.
At the end of the month arrived a very alarming account from
Boston. Some young apprentices had, incited to it, as it seemed,
insulted the soldiers quartered there. After repeated provocations,
the tumult increasing, some of the soldiers fired, and killed four of
the lads, and apprehended some others. In an instant the sedition
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