the utter extinction of public confidence in their proceedings, the
directors summoned a general court of the whole corporation, to meet in
Merchant Tailors' Hall, on the 8th of September. By nine o'clock in the
morning, the room was filled to suffocation; Cheapside was blocked up
by a crowd unable to gain admittance, and the greatest excitement
prevailed. The directors and their friends mustered in great numbers.
Sir John Fellowes, the sub-governor, was called to the chair. He
acquainted the assembly with the cause of their meeting, read to them
the several resolutions of the court of directors, and gave them an
account of their proceedings; of the taking in the redeemable and
unredeemable funds, and of the subscriptions in money. Mr. Secretary
Craggs then made a short speech, wherein he commended the conduct of the
directors, and urged that nothing could more effectually contribute to
the bringing this scheme to perfection than union among themselves. He
concluded with a motion for thanking the court of directors for their
prudent and skilful management, and for desiring them to proceed in such
manner as they should think most proper for the interest and advantage
of the corporation. Mr. Hungerford, who had rendered himself very
conspicuous in the House of Commons for his zeal in behalf of the South
Sea Company, and who was shrewdly suspected to have been a considerable
gainer by knowing the right time to sell out, was very magniloquent on
this occasion. He said that he had seen the rise and fall, the decay
and resurrection of many communities of this nature, but that, in his
opinion, none had ever performed such wonderful things in so short a
time as the South Sea Company. They had done more than the crown, the
pulpit, or the bench could do. They had reconciled all parties in one
common interest; they had laid asleep, if not wholly extinguished, all
the domestic jars and animosities of the nation. By the rise of their
stock, monied men had vastly increased their fortunes; country-gentlemen
had seen the value of their lands doubled and trebled in their hands.
They had at the same time done good to the Church, not a few of the
reverend clergy having got great sums by the project. In short, they
had enriched the whole nation, and he hoped they had not forgotten
themselves. There was some hissing at the latter part of this speech,
which for the extravagance of its eulogy was not far removed from
satire; but the directors and their friends, and all the winners in
the room, applauded vehemently. The Duke of Portland spoke in a
similar strain, and expressed his great wonder why anybody should be
dissatisfied: of course, he was a winner by his speculations, and in
a condition similar to that of the fat alderman in Joe Miller's Jests,
who, whenever he had eaten a good dinner, folded his hands upon his
paunch, and expressed his doubts whether there could be a hungry man in
the world.
Several resolutions were passed at this meeting, but they had no effect
upon the public. Upon the very same evening the stock fell to six
hundred and forty, and on the morrow to five hundred and forty. Day
after day it continued to fall, until it was as low as four hundred.
In a letter dated September 13th, from Mr. Broderick, M.P. to Lord
Chancellor Middleton, and published in Coxo's Walpole, the former
says,--"Various are the conjectures why the South Sea directors have
suffered the cloud to break so early. I made no doubt but they would do
so when they found it to their advantage. They have stretched credit
so far beyond what it would bear, that specie proves insufficient
to support it. Their most considerable men have drawn out, securing
themselves by the losses of the deluded, thoughtless numbers, whose
understandings have been overruled by avarice and the hope of making
mountains out of mole-hills. Thousands of families will be reduced
to beggary. The consternation is inexpressible--the rage beyond
description, and the case altogether so desperate that I do not see any
plan or scheme so much as thought of for averting the blow, so that I
cannot pretend to guess what is next to be done." Ten days afterwards,
the stock still falling, he writes,--"The Company have yet come to no
determination, for they are in such a wood that they know not which way
to turn. By several gentlemen lately come to town, I perceive the very
name of a South-Sea-man grows abominable in every country. A great many
goldsmiths are already run off, and more will daily. I question
whether one-third, nay, one-fourth, of them can stand it. From the
very beginning, I founded my judgment of the whole affair upon the
unquestionable maxim, that ten millions (which is more than our running
cash) could not circulate two hundred millions, beyond which our paper
credit extended. That, therefore, whenever that should become doubtful,
be the cause what it would, our noble state machine must inevitably fall
to the ground."
On the 12th of September, at the earnest solicitation of Mr. Secretary
Craggs, several conferences were held between the directors of the South
Sea and the directors of the Bank. A report which was circulated,
that the latter had agreed to circulate six millions of the South Sea
Company's bonds, caused the stock to rise to six hundred and seventy;
but in the afternoon, as soon as the report was known to be groundless,
the stock fell again to five hundred and eighty; the next day to five
hundred and seventy, and so gradually to four hundred. [Gay (the poet),
in that disastrous year, had a present from young Craggs of some South
Sea stock, and once supposed himself to be master of twenty thousand
pounds. His friends persuaded him to sell his share, but he dreamed of
dignity and splendour, and could not bear to obstruct his own fortune.
He was then importuned to sell as much as would purchase a hundred a
year for life, "which," says Fenton, "will make you sure of a clean
shirt and a shoulder of mutton every day." This counsel was rejected;
the profit and principal were lost, and Gay sunk under the calamity so
low that his life became in danger.--Johnson's Lives of the Poets.]
The ministry were seriously alarmed at the aspect of affairs. The
directors could not appear in the streets without being insulted;
dangerous riots were every moment apprehended. Despatches were sent off
to the King at Hanover, praying his immediate return. Mr. Walpole, who
was staying at his country-seat, was sent for, that he might employ his
known influence with the directors of the Bank of England to induce them
to accept the proposal made by the South Sea Company for circulating a
number of their bonds.
The Bank was very unwilling to mix itself up with the affairs of the
Company; it dreaded being involved in calamities which it could not
relieve, and received all overtures with visible reluctance. But the
universal voice of the nation called upon it to come to the rescue.
Every person of note in commercial politics was called in to advise in
the emergency. A rough draft of a contract drawn up by Mr. Walpole was
ultimately adopted as the basis of further negotiations, and the public
alarm abated a little.
On the following day, the 20th of September, a general court of
the South Sea Company was held at Merchant Tailors' Hall, in which
resolutions were carried, empowering the directors to agree with the
Bank of England, or any other persons, to circulate the Company's
bonds, or make any other agreement with the Bank which they should think
proper. One of the speakers, a Mr. Pulteney, said it was most surprising
to see the extraordinary panic which had seized upon the people. Men
were running to and fro in alarm and terror, their imaginations filled
with some great calamity, the form and dimensions of which nobody knew.
"Black it stood as night--
Fierce as ten furies--terrible as hell."
At a general court of the Bank of England held two days afterwards, the
governor informed them of the several meetings that had been held on the
affairs of the South Sea Company, adding that the directors had not yet
thought fit to come to any decision upon the matter. A resolution was
then proposed, and carried without a dissentient voice, empowering the
directors to agree with those of the South Sea to circulate their bonds,
to what sum, and upon what terms, and for what time, they might think
proper.
Thus both parties were at liberty to act as they might judge best for
the public interest. Books were opened at the Bank for a subscription of
three millions for the support of public credit, on the usual terms of
15 pounds per cent. deposit, per cent. premium, and 5 pounds per cent.
interest. So great was the concourse of people in the early part of
the morning, all eagerly bringing their money, that it was thought the
subscription would be filled that day; but before noon, the tide
turned. In spite of all that could be done to prevent it, the South Sea
Company's stock fell rapidly. Their bonds were in such discredit, that a
run commenced upon the most eminent goldsmiths and bankers, some of whom
having lent out great sums upon South Sea stock were obliged to shut up
their shops and abscond. The Sword-blade Company, who had hitherto been
the chief cashiers of the South Sea Company, stopped payment. This being
looked upon as but the beginning of evil, occasioned a great run upon
the Bank, who were now obliged to pay out money much faster than they
had received it upon the subscription in the morning. The day succeeding
was a holiday (the 29th of September), and the Bank had a little
breathing time. They bore up against the storm; but their former rivals,
the South Sea Company, were wrecked upon it. Their stock fell to one
hundred and fifty, and gradually, after various fluctuations, to one
hundred and thirty-five.
The Bank, finding they were not able to restore public confidence, and
stem the tide of ruin, without running the risk of being swept away with
those they intended to save, declined to carry out the agreement into
which they had partially entered. They were under no obligation whatever
to continue; for the so called Bank contract was nothing more than the
rough draught of an agreement, in which blanks had been left for
several important particulars, and which contained no penalty for their
secession. "And thus," to use the words of the Parliamentary History,
"were seen, in the space of eight months, the rise, progress, and fall
of that mighty fabric, which, being wound up by mysterious springs to a
wonderful height, had fixed the eyes and expectations of all Europe,
but whose foundation, being fraud, illusion, credulity, and infatuation,
fell to the ground as soon as the artful management of its directors was
discovered."
In the hey-day of its blood, during the progress of this dangerous
delusion, the manners of the nation became sensibly corrupted. The
Parliamentary inquiry, set on foot to discover the delinquents,
disclosed scenes of infamy, disgraceful alike to the morals of the
offenders and the intellects of the people among whom they had arisen.
It is a deeply interesting study to investigate all the evils that were
the result. Nations, like individuals, cannot become desperate gamblers
with impunity. Punishment is sure to overtake them sooner or later. A
celebrated writer [Smollett.] is quite wrong, when he says, "that such
an era as this is the most unfavourable for a historian; that no reader
of sentiment and imagination can be entertained or interested by a
detail of transactions such as these, which admit of no warmth, no
colouring, no embellishment; a detail of which only serves to exhibit
an inanimate picture of tasteless vice and mean degeneracy." On the
contrary, and Smollett might have discovered it, if he had been in the
humour--the subject is capable of inspiring as much interest as even a
novelist can desire. Is there no warmth in the despair of a plundered
people?--no life and animation in the picture which might be drawn of
the woes of hundreds of impoverished and ruined families? of the
wealthy of yesterday become the beggars of to-day? of the powerful
and influential changed into exiles and outcasts, and the voice of
self-reproach and imprecation resounding from every corner of the land?
Is it a dull or uninstructive picture to see a whole people shaking
suddenly off the trammels of reason, and running wild after a golden
vision, refusing obstinately to believe that it is not real, till, like
a deluded hind running after an ignis fatuus, they are plunged into a
quagmire? But in this false spirit has history too often been written.
The intrigues of unworthy courtiers to gain the favour of still more
unworthy kings; or the records of murderous battles and sieges have
been dilated on, and told over and over again, with all the eloquence
of style and all the charms of fancy; while the circumstances which have
most deeply affected the morals and welfare of the people, have been
passed over with but slight notice as dry and dull, and capable of
neither warmth nor colouring.
During the progress of this famous bubble, England presented a singular
spectacle. The public mind was in a state of unwholesome fermentation.
Men were no longer satisfied with the slow but sure profits of cautious
industry. The hope of boundless wealth for the morrow made them
heedless and extravagant for to-day. A luxury, till then unheard-of, was
introduced, bringing in its train a corresponding laxity of morals. The
overbearing insolence of ignorant men, who had arisen to sudden wealth
by successful gambling, made men of true gentility of mind and manners,
blush that gold should have power to raise the unworthy in the scale of
society. The haughtiness of some of these "cyphering cits," as they were
termed by Sir Richard Steele, was remembered against them in the day
of their adversity. In the Parliamentary inquiry, many of the directors
suffered more for their insolence than for their peculation. One of
them, who, in the full-blown pride of an ignorant rich man, had said
that he would feed his horse upon gold, was reduced almost to bread and
water for himself; every haughty look, every overbearing speech, was set
down, and repaid them a hundredfold in poverty and humiliation.
The state of matters all over the country was so alarming, that George
I shortened his intended stay in Hanover, and returned in all haste to
England. He arrived on the 11th of November, and Parliament was summoned
to meet on the 8th of December. In the mean time, public meetings were
held in every considerable town of the empire, at which petitions were
adopted, praying the vengeance of the Legislature upon the South Sea
directors, who, by their fraudulent practices, had brought the nation to
the brink of ruin. Nobody seemed to imagine that the nation itself was
as culpable as the South Sea Company. Nobody blamed the credulity and
avarice of the people,--the degrading lust of gain, which had swallowed
up every nobler quality in the national character, or the infatuation
which had made the multitude run their heads with such frantic eagerness
into the net held out for them by scheming projectors. These things were
never mentioned. The people were a simple, honest, hard-working people,
ruined by a gang of robbers, who were to be hanged, drawn, and quartered
without mercy.
This was the almost unanimous feeling of the country. The two Houses of
Parliament were not more reasonable. Before the guilt of the South
Sea directors was known, punishment was the only cry. The King, in his
speech from the throne, expressed his hope that they would remember that
all their prudence, temper, and resolution were necessary to find out
and apply the proper remedy for their misfortunes. In the debate on the
answer to the address, several speakers indulged in the most violent
invectives against the directors of the South Sea project. The Lord
Molesworth was particularly vehement. "It had been said by some, that
there was no law to punish the directors of the South Sea Company, who
were justly looked upon as the authors of the present misfortunes of
the state. In his opinion they ought, upon this occasion, to follow the
example of the ancient Romans, who, having no law against parricide,
because their legislators supposed no son could be so unnaturally wicked
as to embrue his hands in his father's blood, made a law to punish this
heinous crime as soon as it was committed. They adjudged the guilty
wretch to be sown in a sack, and thrown alive into the Tyber. He looked
upon the contrivers and executors of the villanous South Sea scheme as
the parricides of their country, and should be satisfied to see them
tied in like manner in sacks, and thrown into the Thames." Other members
spoke with as much want of temper and discretion. Mr. Walpole was more
moderate. He recommended that their first care should be to restore
public credit. "If the city of London were on fire, all wise men would
aid in extinguishing the flames, and preventing the spread of the
conflagration before they inquired after the incendiaries. Public credit
had received a dangerous wound, and lay bleeding, and they ought to
apply a speedy remedy to it. It was time enough to punish the assassin
afterwards." On the 9th of December an address, in answer to his
Majesty's speech, was agreed upon, after an amendment, which was
carried without a division, that words should be added expressive of the
determination of the House not only to seek a remedy for the national
distresses, but to punish the authors of them.
The inquiry proceeded rapidly. The directors were ordered to lay before
the House a full account of all their proceedings. Resolutions were
passed to the effect that the calamity was mainly owing to the vile
arts of stockjobbers, and that nothing could tend more to the
re-establishment of public credit than a law to prevent this infamous
practice. Mr. Walpole then rose, and said, that "as he had previously
hinted, he had spent some time upon a scheme for restoring public
credit, but that, the execution of it depending upon a position which
had been laid down as fundamental, he thought it proper, before he
opened out his scheme, to be informed whether he might rely upon
that foundation. It was, whether the subscription of public debts and
encumbrances, money subscriptions, and other contracts, made with the
South Sea Company should remain in the present state?" This question
occasioned an animated debate. It was finally agreed, by a majority of
259 against 117, that all these contracts should remain in their present
state, unless altered for the relief of the proprietors by a general
court of the South Sea Company, or set aside by due course of law. On
the following day Mr. Walpole laid before a committee of the whole
House his scheme for the restoration of public credit, which was, in
substance, to ingraft nine millions of South Sea stock into the Bank
of England, and the same sum into the East India Company, upon certain
conditions. The plan was favourably received by the House. After some
few objections, it was ordered that proposals should be received from
the two great corporations. They were both unwilling to lend their aid,
and the plan met with a warm but fruitless opposition at the general
courts summoned for the purpose of deliberating upon it. They, however,
ultimately agreed upon the terms on which they would consent to
circulate the South Sea bonds, and their report, being presented to
the committee, a bill was brought in, under the superintendence of Mr.
Walpole, and safely carried through both Houses of Parliament.
A bill was at the same time brought in, for restraining the South Sea
directors, governor, sub-governor, treasurer, cashier, and clerks from
leaving the kingdom for a twelvemonth, and for discovering their estates
and effects, and preventing them from transporting or alienating the
same. All the most influential members of the House supported the bill.
Mr. Shippen, seeing Mr. Secretary Craggs in his place, and believing
the injurious rumours that were afloat of that minister's conduct in the
South Sea business, determined to touch him to the quick. He said, he
was glad to see a British House of Commons resuming its pristine vigour
and spirit, and acting with so much unanimity for the public good.
It was necessary to secure the persons and estates of the South Sea
directors and their officers; "but," he added, looking fixedly at Mr.
Craggs as he spoke, "there were other men in high station, whom, in
time, he would not be afraid to name, who were no less guilty than
the directors." Mr. Craggs arose in great wrath, and said, that if the
innuendo were directed against him, he was ready to give satisfaction to
any man who questioned him, either in the House or out of it. Loud cries
of order immediately arose on every side. In the midst of the uproar
Lord Molesworth got up, and expressed his wonder at the boldness of Mr.
Craggs in challenging the whole House of Commons. He, Lord Molesworth,
though somewhat old, past sixty, would answer Mr. Craggs whatever he
had to say in the House, and he trusted there were plenty of young men
beside him, who would not be afraid to look Mr. Craggs in the face, out
of the House. The cries of order again resounded from every side; the
members arose simultaneously; everybody seemed to be vociferating at
once. The Speaker in vain called order. The confusion lasted several
minutes, during which Lord Molesworth and Mr. Craggs were almost the
only members who kept their seats. At last the call for Mr. Craggs
became so violent that he thought proper to submit to the universal
feeling of the House, and explain his unparliamentary expression. He
said, that by giving satisfaction to the impugners of his conduct in
that House, he did not mean that he would fight, but that he would
explain his conduct. Here the matter ended, and the House proceeded to
debate in what manner they should conduct their inquiry into the affairs
of the South Sea Company, whether in a grand or a select committee.
Ultimately, a Secret Committee of thirteen was appointed, with power to
send for persons, papers, and records.
The Lords were as zealous and as hasty as the Commons. The Bishop
of Rochester said the scheme had been like a pestilence. The Duke of
Wharton said the House ought to show no respect of persons; that, for
his part, he would give up the dearest friend he had, if he had been
engaged in the project. The nation had been plundered in a most shameful
and flagrant manner, and he would go as far as anybody in the punishment
of the offenders. Lord Stanhope said, that every farthing possessed
by the criminals, whether directors or not directors, ought to be
confiscated, to make good the public losses.
During all this time the public excitement was extreme. We learn, front
Coxe's Walpole, that the very name of a South Sea director was thought
to be synonymous with every species of fraud and villany. Petitions
from counties, cities, and boroughs, in all parts of the kingdom, were
presented, crying for the justice due to an injured nation and the
punishment of the villanous peculators. Those moderate men, who would
not go to extreme lengths, even in the punishment of the guilty, were
accused of being accomplices, were exposed to repeated insults and
virulent invectives, and devoted, both in anonymous letters and public
writings, to the speedy vengeance of an injured people. The accusations
against Mr. Aislabie, Chancellor of the Exchequer, and Mr. Craggs,
another member of the ministry, were so loud, that the House of Lords
resolved to proceed at once into the investigation concerning them. It
was ordered, on the 21st of January, that all brokers concerned in the
South Sea scheme should lay before the House an account of the stock
or subscriptions bought or sold by them for any of the officers of the
Treasury or Exchequer, or in trust for any of them, since Michaelmas
1719. When this account was delivered, it appeared that large quantities
of stock had been transferred to the use of Mr. Aislabie. Five of the
South Sea directors, including Mr. Edward Gibbon, the grandfather of the
celebrated historian, were ordered into the custody of the black rod.
Upon a motion made by Earl Stanhope, it was unanimously resolved,
that the taking in or giving credit for stock without a valuable
consideration actually paid or sufficiently secured; or the purchasing
stock by any director or agent of the South Sea Company, for the use
or benefit of any member of the administration, or any member of either
House of Parliament, during such time as the South Sea Bill was yet
pending in Parliament, was a notorious and dangerous corruption. Another
resolution was passed a few days afterwards, to the effect that several
of the directors and officers of the Company having, in a clandestine
manner, sold their own stock to the Company, had been guilty of a
notorious fraud and breach of trust, and had thereby mainly caused the
unhappy turn of affairs that had so much affected public credit.
Mr. Aislabie resigned his office as Chancellor of the Exchequer, and
absented himself from Parliament until the formal inquiry into his
individual guilt was brought under the consideration of the Legislature.