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Reign of George I page 21

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So far as the French government was concerned, the scheme of Law answered very well, for it contrived to throw fifteen millions of debt from its own shoulders to those of Law; but the public had to pay for it. Before the end of 1720 the bubble had burst - several arbitrary decrees of the government had in vain been issued to bolster it up, and Law flew for his life out of the kingdom. Unfortunately, the contagion of speculation originating in Law's French experiment had taken deep hold in this country before this explosion occurred. In 1711, Harley, being at his wit's end to maintain the public credit, established a fund to provide for the national debt, which amounted to ten millions of pounds. To defray the interest he made permanent the duties on wine, vinegar, and tobacco, &c. To induce the purchase of the government stock, he gave to the shareholders the exclusive privilege of trading to the Spanish settlements in South America, and procured them an act of parliament and a royal charter, under the name of the South Sea Company. The idea, hollow and groundless as it was, seized on the imagination of the most staid and experienced traders. All the dreams of boundless gold which haunted the heads of the followers of Drake and Raleigh were revived. The mania spread through the nation, and was industriously encouraged by the partisans of Harley. But this stupendous dream of wealth was based on the promises of ministers, who at the peace of Utrecht were to secure from the government of Spain this right to trade to its colonies. The right was never granted by that haughty and jealous power, further than for the settlement of some few factories, and the sending of one small ship annually of less than five hundred tons. This, and the shameful Assiento, or privilege of supplying those colonies with African slaves, were the sole advantages obtained, and these were soon disturbed by the war with Spain, which broke out under Alberoni. The South Sea Company, however, from its general resources, remained a flourishing corporation, and was deemed the rival of the Bank of England.

It was at the close of 1719, when George I. returned from Hanover, that this company, inspired by the apparent success of Law's project in France, proposed to ministers to consolidate all the funds into one. It was strange that both ministers and merchants could be deluded by the hope of enriching themselves by a share of the trade with the Spanish South American provinces, when Spain herself, in full enjoyment of them, was sunk into indigence and weakness, and presented the most determined resistance to the unfettered intercourse of any other nation with them. Yet Sir John Blunt, a leading director of the South Sea Company, persuaded the ministers that by granting the company power to deal with the public funds, and especially to buy up the unredeemable annuities which had been granted in the last two reigns, chiefly on terms of ninety-nine years, and which now amounted to about eight hundred thousand pounds a year, they could, in twenty-six years, pay off the entire national debt. But to enable them to do this, they must be empowered to reduce all the different public securities to one aggregate fund in their hands, to convert both redeemable and unredeemable debts into stock by such arrangements as they could make with the holders, and to have certain commercial privileges invested in them. Ministers accepted the proposals with great alacrity. Aislabie introduced the scheme to parliament in the month of February of the present year, declaring that, if it was accepted by the house, the prosperity of the nation would be amazingly enhanced, and all its debts liquidated in a very few years. Craggs seconded the proposal in most sanguine terms, expressing his conviction that every member of the house must be ready to adopt so advantageous an offer. Ministers had already closed with the proposals of the company, and they were themselves greatly disconcerted by the suggestion of Mr. Thomas Broderick, the member for Stock- bridge, who expressed his entire accordance with ministers, but thought that the nation should endeavour to obtain the best terms for itself by opening the competition of every other company or association of men as well as that in question. Ministers were confounded by this proposal, and Aislabie endeavoured to get out of it by declaring that to do this would be like putting the nation up to auction, and that such things should be done with spirit. But Jekyll interposed, saying it was this spirit which had ruined the nation, and it was now requisite to consider seriously what was best for the public. A violent debate ensued, in which Walpole eloquently recommended open competition, and was sharply replied to by Lechmere. Walpole rejoined as warmly, and Lechmere was about to return to the charge, for the house was in committee, but the noise was become awful. The chairman called out, "Hear your member!" but nearly the whole house cried out, " We have heard him long enough!" The question was carried in favour of competition; and then the Bank of England, which before had coolly declined to enter into the proposals, suddenly appeared in a new temper, and made liberal offers for the privilege of thus farming the public debts. But the South Sea Company was not to be outdone; it offered seven millions and a half, and the Bank gave way in despair. The chancellor of the exchequer proposed that the rival companies should share the advantages of this scheme between them; but Sir John Blunt, making use of Solomon's words, said, "No, sir, we will never divide the child." The Scripture- quoting knight and his company retained the whole engagement. Walpole, however, continued to oppose the South Sea Bill in the commons, declaring that the terms were too extravagant ever to be fulfilled; that the experiment could result in nothing but a fearful increase of the costs of stockjobbing, and final confusion and ruin. He insisted that, before the proposals of the company were accepted, the rise of their stock should be limited, and every means taken to prevent the fever of infatuation that would ensue from the promise of dividends out of funds which could never be realised. He proposed for this purpose the introduction of a clause, fixing the number of years' purchase to be granted to the annuitants of the South Sea Company; but to this it was objected that it was the interest of the company to take up the annuities; and, as the annuitants had the power of coming in or not, as they pleased, the company would, of course, offer advantageous terms, and, therefore, the whole affair might be safely left to private adjustment.. Aislabie added that the South Sea Company would not submit to be controlled in an undertaking they were to pay so dear for.

On the 2nd of April the South Sea Bill was passed by a division of one hundred and seventy-two against fifty-five, and two days afterwards it passed the lords, but with a minority of only seventeen. Such was the estimation of this bill by the peers, although lord Cowper, in the debate, described it as resembling the project of the Trojan horse - ushered in with great pomp and acclamation, but contrived for treachery and destruction. Such, too, was the infatuation of stock-holders, that, although Cowper had declared that "the main public intention of the bill, the re-purchase of annuities, would meet with insuperable difficulties," no sooner was the bill carried than numbers of these annuitants hurried to the South Sea House to dispose of their claims before they had received any offer, or knew what terms would be allowed them. When the offer was made of eight years and a half s purchase, it was much less than the excited annuitants had calculated on; but still, within six days, nearly two-thirds of the whole number had accepted it. When the royal assent was given to the bill, the funds rose immediately from one hundred to above three hundred.

The king, as we have said, set out for Hanover on the 14th of June, and Walpole, now become one of the ministry, retired to his seat at Hampton. But he was not long there before he was disturbed by the reports of the mania already raging to such an extent as to justify his worst prognostics.

The South Sea Company had immediately on the passing of the bill proposed a subscription of one million, and this was so eagerly seized on that, instead of one, two millions were subscribed. To stimulate this already too feverish spirit in the public, the company adopted the most false and unjustifiable means. They had eight millions and a half to pay over to government as a douceur for granting them the management of the funds; and, therefore, to bring this in rapidly, they propagated the most lying rumours. It was industriously circulated that lord Stanhope had received overtures at Paris to exchange Gibraltar and Port Mahon for invaluable gold lands in Peru! The South Sea trade was vaunted as a source of boundless wealth in itself. In August the stocks had risen from the one hundred and thirty of the last winter to one thousand! Men sold houses and land to become shareholders; merchants of eminence neglected their affairs and crippled their resources to reap imaginary profits. The company flattered the delusion to the utmost. They opened a third, and even a fourth subscription, larger than the former, and passed a resolution that from next Christmas their yearly dividend should not be less than fifty per cent.! In labouring to increase the public delusion they seem to have caught the contagion themselves, for they began to act, not like men who were blowing a bubble which they knew must speedily burst, but like persons who had mounted permanently into the very highest seat of prosperous power. They assumed the most arrogant and overbearing manner, even towards men of the highest station and influence. "We have made them kings," said a member of parliament, "and they deal with everybody as such."

The spirit of gambling thus set going by government itself, soon surpassed all bounds, and burst forth in a thousand shapes. It was well known that the king, his mistresses, his courtiers, his son and heir-apparent, were all dabbling

busily in the muddy waters of this huge pool of trickery and corruption. A thousand other schemes were invented and made public to draw in fresh gudgeons, and the prince of Wales allowed his name to stand as governor of a Welsh Copper Company. Walpole and the speaker of the house of commons earnestly entreated him to withdraw it, or that "The Prince of Wales' Bubble" would be cried in 'Change Alley, and he would be attacked in parliament. It was not, however, till the company was threatened with prosecution and exposed to loss that his royal highness withdrew his name, with a profit of forty thousand pounds.

The prince's example, however, had been extensively followed by the aristocracy. All sorts of bubble schemes were announced, with nobles as their patrons. The duke of Chandos headed one, the earl of Westmoreland another. 'Change Alley now became the facsimile of the Rue Quincampoix; like it, the throng of purchasers of stock in these different companies became so great, that it was occupied with tables out of doors as well as within, at which busy clerks were taking the orders of the speculators. All ranks and classes rushed thither - dukes, lords, country squires, bishops, clergy, both established and dissenting were mixed up with stockjobbers and brokers in eager traffic. Ladies of all ranks mingled in the throng, struggling through the press and straining their voices to be heard amid the hubbub. No foreigner, says lord Mahon, could then have charged the English with taciturnity. There, and all over the kingdom, were advertised and hawked about the following and other schemes: - "Wrecks to be fished for on the Irish coast; insurances of horses and other cattle (two millions); insurances of losses by servants; to make salt water fresh; for building of hospitals for bastard children; for building of ships against pirates; for making of oil from sun-flower seeds; for improving of malt liquors; for recovering of seamen's wages; for extracting of silver from lead; for the transmuting of quicksilver into a malleable and fine metal; for making of iron with pitcoal; for importing a number of large jackasses from Spain; for trading in human hair; for fatting of hogs; for a wheel for perpetual motion; and finally, for an undertaking which shall in due time be revealed." Such was the height to which the mania had now risen, that one thousand shares of two guineas each were subscribed in the first morning for this nameless project, with which the wag of a projector decamped in the afternoon; as it would seem, rather unnecessarily, for the strength of the delusion might probably have extended to the pocketing of many thousands. A prospectus which was circulated in ridicule of these mad schemes - namely, "For the invention of melting down sawdust and chips, and casting them into clean deal boards without cracks or flaws" - appears not a whit more extravagant than the rest, and would no doubt have obtained subscriptions, if seriously attempted. The railway mania of our own time leaves us little room to laugh at our ancestors on this occasion.

The South Sea Company, with a folly of which extreme greed only is capable, endeavoured to put down these rival bubbles, and obtained an order from the lords justices and writs of scire facias against several of these new bubbles. It was like raising a wind to blow away the bubbles, forgetting that their own was a bubble too, and would go with them. The moment that the people began to distrust one they distrusted all. The panic became as great as the mania had been. The South Sea stock dropped in less than a month from one thousand to below six hundred. There was a simultaneous rush to sell out, and the shares must have sunk instantly to nihil, but for the gigantic exertions of the company to raise money and buy in. The relief, however, was but temporary. The bankers and pawnbrokers who had advanced money on scrip broke and fled; merchants, goldsmiths, and speculators rushed away after them. Walpole was summoned in haste from Haughton, to devise some means of staying the panic. He endeavoured to get the Bank of England to circulate three millions of South Sea bonds for a year; but the bank, seeing that the case was desperate, declined it. That was decisive, and to make the ruin complete in all its parts, at that moment came the news that Law, the author of the scheme, was flying for his life from France, and the whole of his dupes in that country were reduced to beggary. If the whole country had not been bewitched by the passion for enormous gains, the symptoms which had been exhibiting themselves for some time in France, would have prepared them for the catastrophe. Probably many about the court did observe these symptoms, for, as we shall find, they took care to save themselves - Walpole amongst the number, who, though he saw through the farce, availed himself of it to make a large profit, so long as speculation was safe. But beyond the few exceptions, one vast ruin fell on the public. The rage and despair of the swarming dupes were indescribable. They heaped execrations not only on the South Sea Company, but on ministers, the king, his mistresses, and the royal family, who had all been deep in the affair, and who had taken good care of themselves. Walpole, as we have said, had benefited greatly; but then he had never approved of nor applauded the scheme. It was said that lords Stanhope and Townshend, and the dukes of Roxburgh and Argyll, were almost the only nobles or ministers who "had not been in the stocks!" Sunderland was a heavy loser; the duke of Portland and lords Lonsdale and Irwin were so reduced as to solicit West Indian governments. The principal people who had gained were the king and his ugly and fat and lean mistresses, who had made enormous gains by the vilest means, and sent them off to Hanover to be there invested. George and these female harpies were still in that country, but his majesty was entreated by ministers to hasten over to England to support by his presence the necessary measures for rescuing the nation from its distress. He accordingly landed at Margate on the 9th of November, soon after which the South Sea stock fell to one hundred and thirty-five.

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