intrusted with all the dangerous secrets of the dishonest directors,
packed up his books and documents, and made his escape from the country.
He embarked in disguise, in a small boat on the river, and proceeding
to a vessel hired for the purpose, was safely conveyed to Calais. The
Committee of Secrecy informed the House of the circumstance, when it was
resolved unanimously that two addresses should be presented to the King;
the first praying that he would issue a proclamation, offering a reward
for the apprehension of Knight; and the second, that he would give
immediate orders to stop the ports, and to take effectual care of the
coasts, to prevent the said Knight, or any other officers of the South
Sea Company, from escaping out of the kingdom. The ink was hardly
dry upon these addresses before they were carried to the King by Mr.
Methuen, deputed by the House for that purpose. The same evening a royal
proclamation was issued, offering a reward of two thousand pounds for
the apprehension of Knight. The Commons ordered the doors of the House
to be locked, and the keys to be placed upon the table. General Ross,
one of the members of the Committee of Secrecy, acquainted them that
they had already discovered a train of the deepest villany and fraud
that Hell had ever contrived to ruin a nation, which in due time they
would lay before the House. In the mean time, in order to a further
discovery, the Committee thought it highly necessary to secure the
persons of some of the directors and principal South Sea officers, and
to seize their papers. A motion to this effect having been made, was
carried unanimously. Sir Robert Chaplin, Sir Theodore Janssen, Mr.
Sawbridge, and Mr. F. Eyles, members of the House, and directors of the
South Sea Company, were summoned to appear in their places, and answer
for their corrupt practices. Sir Theodore Janssen and Mr. Sawbridge
answered to their names, and endeavoured to exculpate themselves. The
House heard them patiently, and then ordered them to withdraw. A motion
was then made, and carried nemine contradicente, that they had been
guilty of a notorious breach of trust--had occasioned much loss to great
numbers of his Majesty's subjects, and had highly prejudiced the public
credit. It was then ordered that, for their offence, they should be
expelled the House, and taken into the custody of the sergeant-at-arms.
Sir Robert Chaplin and Mr. Eyles, attending in their places four days
afterwards, were also expelled the House. It was resolved at the same
time to address the King, to give directions to his ministers at foreign
courts to make application for Knight, that he might be delivered up
to the English authorities, in ease he took refuge in any of their
dominions. The King at once agreed, and messengers were despatched to
all parts of the Continent the same night.
Among the directors taken into custody, was Sir John Blunt, the man whom
popular opinion has generally accused of having been the original author
and father of the scheme. This man, we are informed by Pope, in his
epistle to Allen, Lord Bathurst, was a dissenter, of a most religious
deportment, and professed to be a great believer. He constantly
declaimed against the luxury and corruption of the age, the partiality
of parliaments, and the misery of party spirit. He was particularly
eloquent against avarice in great and noble persons. He was originally
a scrivener, and afterwards became, not only a director, but the most
active manager of the South Sea Company. Whether it was during his
career in this capacity that he first began to declaim against the
avarice of the great, we are not informed. He certainly must have seen
enough of it to justify his severest anathema; but if the preacher had
himself been free from the vice he condemned, his declamations would
have had a better effect. He was brought up in custody to the bar of the
House of Lords, and underwent a long examination. He refused to answer
several important questions. He said he had been examined already by
a committee of the House of Commons, and as he did not remember his
answers, and might contradict himself, he refused to answer before
another tribunal. This declaration, in itself an indirect proof of
guilt, occasioned some commotion in the House. He was again asked
peremptorily whether he had ever sold any portion of the stock to
any member of the administration, or any member of either House of
Parliament, to facilitate the passing of the hill. He again declined to
answer. He was anxious, he said, to treat the House with all possible
respect, but he thought it hard to be compelled to accuse himself. After
several ineffectual attempts to refresh his memory, he was directed to
withdraw. A violent discussion ensued between the friends and opponents
of the ministry. It was asserted that the administration were no
strangers to the convenient taciturnity of Sir John Blunt. The Duke
of Wharton made a reflection upon the Earl Stanhope, which the latter
warmly resented. He spoke under great excitement, and with such
vehemence as to cause a sudden determination of blood to the head. He
felt himself so ill that he was obliged to leave the House and retire
to his chamber. He was cupped immediately, and also let blood on the
following morning, but with slight relief. The fatal result was not
anticipated. Towards evening he became drowsy, and turning himself on
his face, expired. The sudden death of this statesman caused great grief
to the nation. George I was exceedingly affected, and shut himself up
for some hours in his closet, inconsolable for his loss.
Knight, the treasurer of the company, was apprehended at Tirlemont, near
Liege, by one of the secretaries of Mr. Leathes, the British resident
at Brussels, and lodged in the citadel of Antwerp. Repeated applications
were made to the court of Austria to deliver him up, but in vain. Knight
threw himself upon the protection of the states of Brabant, and demanded
to be tried in that country. It was a privilege granted to the states
of Brabant by one of the articles of the Joyeuse Entree, that every
criminal apprehended in that country should be tried in that country.
The states insisted on their privilege, and refused to deliver Knight to
the British authorities. The latter did not cease their solicitations;
but in the mean time, Knight escaped from the citadel.
On the 16th of February the Committee of Secrecy made their first report
to the House. They stated that their inquiry had been attended with
numerous difficulties and embarrassments; every one they had examined
had endeavoured, as far as in him lay, to defeat the ends of justice. In
some of the books produced before them, false and fictitious entries had
been made; in others, there were entries of money, with blanks for the
name of the stockholders. There were frequent erasures and alterations,
and in some of the books leaves were torn out. They also found that some
books of great importance had been destroyed altogether, and that
some had been taken away or secreted. At the very entrance into their
inquiry, they had observed that the matters referred to them were of
great variety and extent. Many persons had been intrusted with various
parts in the execution of the law, and under colour thereof had acted
in an unwarrantable manner, in disposing of the properties of many
thousands of persons, amounting to many millions of money. They
discovered that, before the South Sea Act was passed, there was an entry
in the Company's books of the sum of 1,259,325 pounds, upon account of
stock stated to have been sold to the amount of 574,500 pounds. This
stock was all fictitious, and had been disposed of with a view to
promote the passing of the bill. It was noted as sold at various days,
and at various prices, from 150 to 325 per cent. Being surprised to see
so large an account disposed of, at a time when the Company were
not empowered to increase their capital, the committee determined
to investigate most carefully the whole transaction. The governor,
sub-governor, and several directors were brought before them, and
examined rigidly. They found that, at the time these entries were made,
the Company was not in possession of such a quantity of stock, having
in their own right only a small quantity, not exceeding thirty thousand
pounds at the utmost. Pursuing the inquiry, they found that this amount
of stock, was to be esteemed as taken in or holden by the Company, for
the benefit of the pretended purchasers, although no mutual agreement
was made for its delivery or acceptance at any certain time. No money
was paid down, nor any deposit or security whatever given to the Company
by the supposed purchasers; so that if the stock had fallen, as might
have been expected, had the act not passed, they would have sustained no
loss. If, on the contrary, the price of stock advanced (as it actually
did by the success of the scheme), the difference by the advanced price
was to be made good to them. Accordingly, after the passing of the act,
the account of stock was made up and adjusted with Mr. Knight, and the
pretended purchasers were paid the difference out of the Company's cash.
This fictitious stock, which had been chiefly at the disposal of Sir
John Blunt, Mr. Gibbon, and Mr. Knight, was distributed among several
members of the government and their connexions, by way of bribe, to
facilitate the passing of the bill. To the Earl of Sunderland was
assigned 50,000 pounds of this stock; to the Duchess of Kendal 10,000
pounds; to the Countess of Platen 10,000 pounds; to her two nieces
10,000 pounds; to Mr. Secretary Craggs 30,000 pounds; to Mr. Charles
Stanhope (one of the Secretaries of the Treasury) 10,000 pounds; to the
Swordblade Company 50,000 pounds. It also appeared that Mr. Stanhope
had received the enormous sum of 250,000 pounds as the difference in the
price of some stock, through the hands of Turner, Caswall, and Co., but
that his name had been partly erased from their books, and altered to
Stangape. Aislabie, the Chancellor of the Exchequer, had made profits
still more abominable. He had an account with the same firm, who were
also South Sea directors, to the amount of 794,451 pounds. He had,
besides, advised the Company to make their second subscription one
million and a half, instead of a million, by their own authority, and
without any warrant. The third subscription had been conducted in a
manner as disgraceful. Mr. Aislabie's name was down for 70,000 pounds;
Mr. Craggs, senior, for 659,000 pounds; the Earl of Sunderland's for
160,000 pounds; and Mr. Stanhope for 47,000 pounds. This report was
succeeded by six others, less important. At the end of the last, the
committee declared that the absence of Knight, who had been principally
intrusted, prevented them from carrying on their inquiries.
The first report was ordered to be printed, and taken into consideration
on the next day but one succeeding. After a very angry and animated
debate, a series of resolutions were agreed to, condemnatory of the
conduct of the directors, of the members of the Parliament and of the
administration concerned with them; and declaring that they ought, each
and all, to make satisfaction out of their own estates for the injury
they had done the public. Their practices were declared to be corrupt,
infamous, and dangerous; and a bill was ordered to be brought in for the
relief of the unhappy sufferers.
Mr. Charles Stanhope was the first person brought to account for his
share in these transactions. He urged in his defence that, for some
years past, he had lodged all the money he was possessed of in Mr.
Knight's hands, and whatever stock Mr. Knight had taken in for him, he
had paid a valuable consideration for it. As to the stock that had been
bought for him by Turner, Caswall, and Co. he knew nothing about it.
Whatever had been done in that matter was done without his authority,
and he could not be responsible for it. Turner and Co. took the latter
charge upon themselves, but it was notorious to every unbiased and
unprejudiced person that Mr. Stanhope was a gainer of the 250,000 pounds
which lay in the hands of that firm to his credit. He was, however,
acquitted by a majority of three only. The greatest exertions were made
to screen him. Lord Stanhope, the son of the Earl of Chesterfield, went
round to the wavering members, using all the eloquence he was possessed
of to induce them either to vote for the acquittal or to absent
themselves from the house. Many weak-headed country-gentlemen were led
astray by his persuasions, and the result was as already stated. The
acquittal caused the greatest discontent throughout the country. Mobs
of a menacing character assembled in different parts of London; fears
of riots were generally entertained, especially as the examination of
a still greater delinquent was expected by many to have a similar
termination. Mr. Aislabie, whose high office and deep responsibilities
should have kept him honest, even had native principle been
insufficient, was very justly regarded as perhaps the greatest criminal
of all. His case was entered into on the day succeeding the acquittal of
Mr. Starthope. Great excitement prevailed, and the lobbies and avenues
of the house were beset by crowds, impatient to know the result. The
debate lasted the whole day. Mr. Aislabie found few friends: his guilt
was so apparent and so heinous that nobody had courage to stand up in
his favour. It was finally resolved, without a dissentient voice, that
Mr. Aislabie had encouraged and promoted the destructive execution of
the South Sea scheme with a view to his own exorbitant profit, and had
combined with the directors in their pernicious practices to the ruin
of the public trade and credit of the kingdom: that he should for
his offences be ignominiously expelled from the House of Commons, and
committed a close prisoner to the Tower of London; that he should be
restrained from going out of the kingdom for a whole year, or till the
end of the next session of Parliament; and that he should make out a
correct account of all his estate, in order that it might be applied to
the relief of those who had suffered by his malpractices.
This verdict caused the greatest joy. Though it was delivered at
half-past twelve at night, it soon spread over the city. Several persons
illuminated their houses in token of their joy. On the following day,
when Mr. Aislabie was conveyed to the Tower, the mob assembled on
Tower-hill with the intention of hooting and pelting him. Not succeeding
in this, they kindled a large bonfire, and danced around it in the
exuberance of their delight. Several bonfires were made in other places;
London presented the appearance of a holiday, and people congratulated
one another as if they had just escaped from some great calamity. The
rage upon the acquittal of Mr. Stanhope had grown to such a height that
none could tell where it would have ended, had Mr. Aislabie met with the
like indulgence.
To increase the public satisfaction, Sir George Caswall, of the firm of
Turner, Caswall, & Co. was expelled the House on the following day, and
ordered to refund the sum of 250,000 pounds.
That part of the report of the Committee of Secrecy which related to the
Earl of Sunderland was next taken into consideration. Every effort was
made to clear his Lordship from the imputation. As the case against him
rested chiefly on the evidence extorted from Sir John Blunt, great
pains were taken to make it appear that Sir John's word was not to be
believed, especially in a matter affecting the honour of a peer and
privy councillor. All the friends of the ministry rallied around the
Earl, it being generally reported that a verdict of guilty against him
would bring a Tory ministry into power. He was eventually acquitted,
by a majority of 233 against 172; but the country was convinced of his
guilt. The greatest indignation was everywhere expressed, and menacing
mobs again assembled in London. Happily no disturbances took place.
This was the day on which Mr. Craggs, the elder, expired. The morrow had
been appointed for the consideration of his case. It was very generally
believed that he had poisoned himself. It appeared, however, that grief
for the loss of his son, one of the Secretaries of the Treasury, who had
died five weeks previously of the small-pox, preyed much on his mind.
For this son, dearly beloved, he had been amassing vast heaps of riches:
he had been getting money, but not honestly; and he for whose sake he
had bartered his honour and sullied his fame, was now no more. The
dread of further exposure increased his trouble of mind, and ultimately
brought on an apoplectic fit, in which he expired. He left a fortune of
a million and a half, which was afterwards confiscated for the
benefit of the sufferers by the unhappy delusion he had been so mainly
instrumental in raising.
One by one the case of every director of the Company was taken into
consideration. A sum amounting to two millions and fourteen thousand
pounds was confiscated from their estates towards repairing the mischief
they had done, each man being allowed a certain residue, in proportion
to his conduct and circumstances, with which he might begin the world
anew. Sir John Blunt was only allowed 5,000 pounds out of his fortune
of upwards of 183,000 pounds; Sir John Fellows was allowed 10,000
pounds out of 243,000 pounds; Sir Theodore Janssen, 50,000 pounds out of
243,000 pounds; Mr. Edward Gibbon, 10,000 pounds out of 106,000 pounds.;
Sir John Lambert, 5000 pounds out of 72,000 pounds. Others, less deeply
involved, were treated with greater liberality. Gibbon, the historian,
whose grandfather was the Mr. Edward Gibbon so severely mulcted, has
given, in the Memoirs of his Life and Writings, an interesting account
of the proceedings in Parliament at this time. He owns that he is not an
unprejudiced witness; but, as all the writers from which it is possible
to extract any notice of the proceedings of these disastrous years,
were prejudiced on the other side, the statements of the great historian
become of additional value. If only on the principle of audi alteram
partem, his opinion is entitled to consideration. "In the year 1716," he
says, "my grandfather was elected one of the directors of the South Sea
Company, and his books exhibited the proof that before his acceptance
of that fatal office, he had acquired an independent fortune of 60,000
pounds. But his fortune was overwhelmed in the shipwreck of the year
twenty, and the labours of thirty years were blasted in a single day. Of
the use or abuse of the South Sea scheme, of the guilt or innocence of
my grandfather and his brother directors, I am neither a competent nor
a disinterested judge. Yet the equity of modern times must condemn the
violent and arbitrary proceedings, which would have disgraced the cause
of justice, and rendered injustice still more odious. No sooner had
the nation awakened from its golden dream, than a popular, and even a
Parliamentary clamour, demanded its victims; but it was acknowledged on
all sides, that the directors, however guilty, could not be touched by
any known laws of the land. The intemperate notions of Lord Molesworth
were not literally acted on; but a bill of pains and penalties was
introduced--a retro-active statute, to punish the offences which did not
exist at the time they were committed. The Legislature restrained the
persons of the directors, imposed an exorbitant security for their
appearance, and marked their character with a previous note of ignominy.
They were compelled to deliver, upon oath, the strict value of their
estates, and were disabled from making any transfer or alienation of any
part of their property. Against a bill of pains and penalties, it is
the common right of every subject to be heard by his counsel at the bar.
They prayed to be heard. Their prayer was refused, and their oppressors,
who required no evidence, would listen to no defence. It had been at
first proposed, that one eighth of their respective estates should be
allowed for the future support of the directors; but it was speciously
urged, that in the various shades of opulence and guilt, such a
proportion would be too light for many, and for some might possibly
be too heavy. The character and conduct of each man were separately
weighed; but, instead of the calm solemnity of a judicial inquiry, the
fortune and honour of thirty-three Englishmen were made the topics of
hasty conversation, the sport of a lawless majority; and the basest
member of the committee, by a malicious word, or a silent vote, might
indulge his general spleen or personal animosity. Injury was aggravated
by insult, and insult was embittered by pleasantry. Allowances of 20
pounds or 1 shilling were facetiously moved. A vague report that a
director had formerly been concerned in another project, by which some
unknown persons had lost their money, was admitted as a proof of his
actual guilt. One man was ruined because he had dropped a foolish
speech, that his horses should feed upon gold; another, because he was
grown so proud, that one day, at the Treasury, he had refused a civil
answer to persons much above him. All were condemned, absent and
unheard, in arbitrary fines and forfeitures, which swept away the
greatest part of their substance. Such bold oppression can scarcely
be shielded by the omnipotence of Parliament. My grandfather could not
expect to be treated with more lenity than his companions. His Tory
principles and connexions rendered him obnoxious to the ruling powers.
His name was reported in a suspicious secret. His well-known abilities
could not plead the excuse of ignorance or error. In the first
proceedings against the South Sea directors, Mr. Gibbon was one of the
first taken into custody, and in the final sentence the measure of
his fine proclaimed him eminently guilty. The total estimate, which he
delivered on oath to the House of Commons, amounted to 106,543 pounds
5 shillings 6 pence, exclusive of antecedent settlements. Two different
allowances of 15,000 pounds and of 10,000 pounds were moved for Mr.
Gibbon; but, on the question being put, it was carried without a
division for the smaller sum. On these ruins, with the skill and credit
of which Parliament had not been able to despoil him, my grandfather,
at a mature age, erected the edifice of a new fortune. The labours of
sixteen years were amply rewarded; and I have reason to believe that the
second structure was not much inferior to the first."
The next consideration of the Legislature, after the punishment of the
directors, was to restore public credit. The scheme of Walpole had been
found insufficient, and had fallen into disrepute. A computation was
made of the whole capital stock of the South Sea Company at the end of
the year 1720. It was found to amount to thirty-seven millions eight
hundred thousand pounds, of which the stock allotted to all the
proprietors only amounted to twenty-four millions five hundred thousand
pounds. The remainder of thirteen millions three hundred thousand pounds
belonged to the Company in their corporate capacity, and was the profit
they had made by the national delusion. Upwards of eight millions of
this were taken from the Company, and divided among the proprietors and
subscribers generally, making a dividend of about 33 pounds 6 shillings
8 pence per cent. This was a great relief. It was further ordered, that
such persons as had borrowed money from the South Sea Company upon stock
actually transferred and pledged at the time of borrowing to or for the
use of the Company, should be free from all demands, upon payment of ten
per cent. of the sums so borrowed. They had lent about eleven millions
in this manner, at a time when prices were unnaturally raised; and they
now received back one million one hundred thousand, when prices had sunk
to their ordinary level.
But it was a long time before public credit was thoroughly restored.
Enterprise, like Icarus, had soared too high, and melted the wax of
her wings; like Icarus, she had fallen into a sea, and learned, while
floundering in its waves, that her proper element was the solid ground.
She has never since attempted so high a flight.
In times of great commercial prosperity there has been a tendency to
over-speculation on several occasions since then. The success of
one project generally produces others of a similar kind. Popular
imitativeness will always, in a trading nation, seize hold of such
successes, and drag a community too anxious for profits into an abyss
from which extrication is difficult. Bubble companies, of a kind similar
to those engendered by the South Sea project, lived their little day
in the famous year of the panic, 1825. On that occasion, as in 1720,
knavery gathered a rich harvest from cupidity, but both suffered when
the day of reckoning came. The schemes of the year 1836 threatened, at
one time, results as disastrous; but they were happily averted before
it was too late. The South Sea project thus remains, and, it is to be
hoped, always will remain, the greatest example in British history, of
the infatuation of the people for commercial gambling. From the bitter
experience of that period, posterity may learn how dangerous it is to
let speculation riot unrestrained, and to hope for enormous profits from
inadequate causes. Degrading as were the circumstances, there is wisdom
to be gained from the lesson which they teach.
THE TULIPOMANIA.
Quis furor o cives!--Lucan.