people were crowding in thousands to the Rue Quincampoix, and ruining
themselves with frantic eagerness, that the South-Sea directors laid
before parliament their famous plan for paying off the national debt.
Visions of boundless wealth floated before the fascinated eyes of the
people in the two most celebrated countries of Europe. The English
commenced their career of extravagance somewhat later than the French; but
as soon as the delirium seized them, they were determined not to be
outdone. Upon the 22d of January, 1720, the House of Commons resolved
itself into a committee of the whole house, to take into consideration
that part of the king's speech at the opening of the session which related
to the public debts, and the proposal of the South-Sea Company towards the
redemption and sinking of the same. The proposal set forth at great
length, and under several heads, the debts of the state, amounting to
30,981,712l., which the company were anxious to take upon themselves, upon
consideration of five per cent per annum, secured to them until Midsummer
1727; after which time, the whole was to become redeemable at the pleasure
of the legislature, and the interest to be reduced to four per cent. The
proposal was received with great favour; but the Bank of England had many
friends in the House of Commons, who were desirous that that body should
share in the advantages that were likely to accrue. On behalf of this
corporation it was represented, that they had performed great and eminent
services to the state in the most difficult times, and deserved, at least,
that if any advantage was to be made by public bargains of this nature,
they should be preferred before a company that had never done any thing
for the nation. The further consideration of the matter was accordingly
postponed for five days. In the mean time, a plan was drawn up by the
governors of the bank. The South-Sea Company, afraid that the bank might
offer still more advantageous terms to the government than themselves,
reconsidered their former proposal, and made some alterations in it, which
they hoped would render it more acceptable. The principal change was a
stipulation that the government might redeem these debts at the expiration
of four years, instead of seven, as at first suggested. The bank resolved
not to be outbidden in this singular auction, and the governors also
reconsidered their first proposal, and sent in a new one.
Thus, each corporation having made two proposals, the house began to
deliberate. Mr. Robert Walpole was the chief speaker in favour of the
bank, and Mr. Aislabie, the Chancellor of the Exchequer, the principal
advocate on behalf of the South-Sea Company. It was resolved, on the 2d of
February, that the proposals of the latter were most advantageous to the
country. They were accordingly received, and leave was given to bring in a
bill to that effect.
Exchange Alley was in a fever of excitement. The company's stock, which
had been at a hundred and thirty the previous day, gradually rose to three
hundred, and continued to rise with the most astonishing rapidity during
the whole time that the bill in its several stages was under discussion.
Mr. Walpole was almost the only statesman in the House who spoke out
boldly against it. He warned them, in eloquent and solemn language, of the
evils that would ensue. It countenanced, he said, "the dangerous practice
of stock-jobbing, and would divert the genius of the nation from trade and
industry. It would hold out a dangerous lure to decoy the unwary to their
ruin, by making them part with the earnings of their labour for a prospect
of imaginary wealth. The great principle of the project was an evil of
first-rate magnitude; it was to raise artificially the value of the stock,
by exciting and keeping up a general infatuation, and by promising
dividends out of funds which could never be adequate to the purpose." In a
prophetic spirit he added, that if the plan succeeded, the directors would
become masters of the government, form a new and absolute aristocracy in
the kingdom, and control the resolutions of the legislature. If it failed,
which he was convinced it would, the result would bring general discontent
and ruin upon the country. Such would be the delusion, that when the evil
day came, as come it would, the people would start up, as from a dream,
and ask themselves if these things could have been true. All his eloquence
was in vain. He was looked upon as a false prophet, or compared to the
hoarse raven, croaking omens of evil. His friends, however, compared him
to Cassandra, predicting evils which would only be believed when they came
home to men's hearths, and stared them in the face at their own boards.
Although, in former times, the house had listened with the utmost
attention to every word that fell from his lips, the benches became
deserted when it was known that he would speak on the South-Sea question.
[Illustration: SIR ROBERT WALPOLE]
The bill was two months in its progress through the House of Commons.
During this time every exertion was made by the directors and their
friends, and more especially by the chairman, the noted Sir John Blunt, to
raise the price of the stock. The most extravagant rumours were in
circulation. Treaties between England and Spain were spoken of, whereby
the latter was to grant a free trade to all her colonies; and the rich
produce of the mines of Potosi-la-Paz was to be brought to England until
silver should become almost as plentiful as iron. For cotton and woollen
goods, with which we could supply them in abundance, the dwellers in
Mexico were to empty their golden mines. The company of merchants trading
to the South Seas would be the richest the world ever saw, and every
hundred pounds invested in it would produce hundreds per annum to the
stockholder. At last the stock was raised by these means to near four
hundred; but, after fluctuating a good deal, settled at three hundred and
thirty, at which price it remained when the bill passed the Commons by a
majority of 172 against 55.
In the House of Lords the bill was hurried through all its stages with
unexampled rapidity. On the 4th of April it was read a first time; on the
5th, it was read a second time; on the 6th, it was committed; and on the
7th, was read a third time and passed.
Several peers spoke warmly against the scheme; but their warnings fell
upon dull, cold ears. A speculating frenzy had seized them as well as the
plebeians. Lord North and Grey said the bill was unjust in its nature, and
might prove fatal in its consequences, being calculated to enrich the few
and impoverish the many. The Duke of Wharton followed; but, as he only
retailed at second-hand the arguments so eloquently stated by Walpole in
the Lower House, he was not listened to with even the same attention that
had been bestowed upon Lord North and Grey. Earl Cowper followed on the
same side, and compared the bill to the famous horse of the siege of Troy.
Like that, it was ushered in and received with great pomp and acclamations
of joy, but bore within it treachery and destruction. The Earl of
Sunderland endeavoured to answer all objections; and on the question being
put, there appeared only seventeen peers against, and eighty-three in
favour of the project. The very same day on which it passed the Lords, it
received the royal assent, and became the law of the land.
It seemed at that time as if the whole nation had turned stockjobbers.
Exchange Alley was every day blocked up by crowds, and Cornhill was
impassable for the number of carriages. Every body came to purchase stock.
"Every fool aspired to be a knave." In the words of a ballad published at
the time, and sung about the streets,[16]
"Then stars and garters did appear
Among the meaner rabble;
To buy and sell, to see and hear
The Jews and Gentiles squabble.
The greatest ladies thither came,
And plied in chariots daily,
Or pawned their jewels for a sum
To venture in the Alley."
[16] _A South-Sea Ballad; or, Merry Remarks upon Exchange-Alley
Bubbles. To a new Tune called "The Grand Elixir; or, the
Philosopher's Stone discovered."_
The inordinate thirst of gain that had afflicted all ranks of society was
not to be slaked even in the South Sea. Other schemes, of the most
extravagant kind, were started. The share-lists were speedily filled up,
and an enormous traffic carried on in shares, while, of course, every
means were resorted to to raise them to an artificial value in the market.
[Illustration: CORNHILL, 1720.]
Contrary to all expectation, South-Sea stock fell when the bill received
the royal assent. On the 7th of April the shares were quoted at three
hundred and ten, and on the following day at two hundred and ninety.
Already the directors had tasted the profits of their scheme, and it was
not likely that they should quietly allow the stock to find its natural
level without an effort to raise it. Immediately their busy emissaries
were set to work. Every person interested in the success of the project
endeavoured to draw a knot of listeners around him, to whom he expatiated
on the treasures of the South American seas. Exchange Alley was crowded
with attentive groups. One rumour alone, asserted with the utmost
confidence, had an immediate effect upon the stock. It was said that Earl
Stanhope had received overtures in France from the Spanish government to
exchange Gibraltar and Port Mahon for some places on the coast of Peru,
for the security and enlargement of the trade in the South Seas. Instead
of one annual ship trading to those ports, and allowing the king of Spain
twenty-five per cent out of the profits, the company might build and
charter as many ships as they pleased, and pay no per centage whatever to
any foreign potentate.
"Visions of ingots danced before their eyes,"
and stock rose rapidly. On the 12th of April, five days after the bill had
become law, the directors opened their books for a subscription of a
million, at the rate of 300l. for every 100l. capital. Such was the
concourse of persons of all ranks, that this first subscription was found
to amount to above two millions of original stock. It was to be paid at
five payments, of 60l. each for every 100l. In a few days the stock
advanced to three hundred and forty, and the subscriptions were sold for
double the price of the first payment. To raise the stock still higher, it
was declared, in a general court of directors, on the 21st of April, that
the midsummer dividend should be ten per cent, and that all subscriptions
should be entitled to the same. These resolutions answering the end
designed, the directors, to improve the infatuation of the monied men,
opened their books for a second subscription of a million, at four hundred
per cent. Such was the frantic eagerness of people of every class to
speculate in these funds, that in the course of a few hours no less than a
million and a half was subscribed at that rate.
In the mean time, innumerable joint-stock companies started up every
where. They soon received the name of Bubbles, the most appropriate that
imagination could devise. The populace are often most happy in the
nicknames they employ. None could be more apt than that of Bubbles. Some
of them lasted for a week or a fortnight, and were no more heard of, while
others could not even live out that short span of existence. Every evening
produced new schemes, and every morning new projects. The highest of the
aristocracy were as eager in this hot pursuit of gain as the most plodding
jobber in Cornhill. The Prince of Wales became governor of one company,
and is said to have cleared 40,000l. by his speculations.[17] The Duke of
Bridgewater started a scheme for the improvement of London and
Westminster, and the Duke of Chandos another. There were nearly a hundred
different projects, each more extravagant and deceptive than the other, To
use the words of the _Political State_, they were "set on foot and
promoted by crafty knaves, then pursued by multitudes of covetous fools,
and at last appeared to be, in effect, what their vulgar appellation
denoted them to be--bubbles and mere cheats." It was computed that near
one million and a half sterling was won and lost by these unwarrantable
practices, to the impoverishment of many a fool, and the enriching of many
a rogue.
[17] Coxe's _Walpole_, Correspondence between Mr. Secretary
Craggs and Earl Stanhope.
Some of these schemes were plausible enough, and, had they been undertaken
at a time when the public mind was unexcited, might have been pursued with
advantage to all concerned. But they were established merely with the view
of raising the shares in the market. The projectors took the first
opportunity of a rise to sell out, and next morning the scheme was at an
end. Maitland, in his _History of London_, gravely informs us, that one of
the projects which received great encouragement, was for the establishment
of a company "to make deal boards out of saw-dust." This is no doubt
intended as a joke; but there is abundance of evidence to shew that dozens
of schemes, hardly a whit more reasonable, lived their little day, ruining
hundreds ere they fell. One of them was for a wheel for perpetual
motion--capital one million; another was "for encouraging the breed of
horses in England, and improving of glebe and church lands, and repairing
and rebuilding parsonage and vicarage houses." Why the clergy, who were so
mainly interested in the latter clause, should have taken so much interest
in the first, is only to be explained on the supposition that the scheme
was projected by a knot of the fox-hunting parsons, once so common in
England. The shares of this company were rapidly subscribed for. But the
most absurd and preposterous of all, and which shewed, more completely
than any other, the utter madness of the people, was one started by an
unknown adventurer, entitled "_A company for carrying on an undertaking of
great advantage, but nobody to know what it is_." Were not the fact stated
by scores of credible witnesses, it would be impossible to believe that
any person could have been duped by such a project. The man of genius who
essayed this bold and successful inroad upon public credulity, merely
stated in his prospectus that the required capital was half a million, in
five thousand shares of 100l. each, deposit 2l. per share. Each
subscriber, paying his deposit, would be entitled to 100l. per annum per
share. How this immense profit was to be obtained, he did not condescend
to inform them at that time, but promised that in a month full particulars
should be duly announced, and a call made for the remaining 98l. of the
subscription. Next morning, at nine o'clock, this great man opened an
office in Cornhill. Crowds of people beset his door, and when he shut up
at three o'clock, he found that no less than one thousand shares had been
subscribed for, and the deposits paid. He was thus, in five hours, the
winner of 2000l. He was philosopher enough to be contented with his
venture, and set off the same evening for the Continent. He was never
heard of again.
Well might Swift exclaim, comparing Change Alley to a gulf in the South
Sea:
"Subscribers here by thousands float,
And jostle one another down,
Each paddling in his leaky boat,
And here they fish for gold and drown.
Now buried in the depths below,
Now mounted up to heaven again,
They reel and stagger to and fro,
At their wit's end, like drunken men.
Meantime, secure on Garraway cliffs,
A savage race, by shipwrecks fed,
Lie waiting for the foundered skiffs,
And strip the bodies of the dead."
Another fraud that was very successful was that of the "Globe _Permits_,"
as they were called. They were nothing more than square pieces of
playing-cards, on which was the impression of a seal, in wax, bearing the
sign of the Globe Tavern, in the neighbourhood of Exchange Alley, with the
inscription of "Sail-Cloth Permits." The possessors enjoyed no other
advantage from them than permission to subscribe at some future time to a
new sail-cloth manufactory, projected by one who was then known to be a
man of fortune, but who was afterwards involved in the peculation and
punishment of the South-Sea directors. These permits sold for as much as
sixty guineas in the Alley.
Persons of distinction, of both sexes, were deeply engaged in all these
bubbles; those of the male sex going to taverns and coffee-houses to meet
their brokers, and the ladies resorting for the same purpose to the shops
of milliners and haberdashers. But it did not follow that all these people
believed in the feasibility of the schemes to which they subscribed; it
was enough for their purpose that their shares would, by stock-jobbing
arts, be soon raised to a premium, when they got rid of them with all
expedition to the really credulous. So great was the confusion of the
crowd in the alley, that shares in the same bubble were known to have been
sold at the same instant ten per cent higher at one end of the alley than
at the other. Sensible men beheld the extraordinary infatuation of the
people with sorrow and alarm. There were some both in and out of
parliament who foresaw clearly the ruin that was impending. Mr. Walpole
did not cease his gloomy forebodings. His fears were shared by all the
thinking few, and impressed most forcibly upon the government. On the 11th
of June, the day the parliament rose, the king published a proclamation,
declaring that all these unlawful projects should be deemed public
nuisances, and prosecuted accordingly, and forbidding any broker, under a
penalty of five hundred pounds, from buying or selling any shares in them.
Notwithstanding this proclamation, roguish speculators still carried them
on, and the deluded people still encouraged them. On the 12th of July, an
order of the Lords Justices assembled in privy council was published,
dismissing all the petitions that had been presented for patents and
charters, and dissolving all the bubble companies. The following copy of
their lordships' order, containing a list of all these nefarious projects,
will not be deemed uninteresting at the present time, when, at periodic
intervals, there is but too much tendency in the public mind to indulge in
similar practices:
"At the Council Chamber, Whitehall, the 12th day of July, 1720.
Present, their Excellencies the Lords Justices in Council.
"Their Excellencies the Lords Justices, in council, taking into
consideration the many inconveniences arising to the public from several
projects set on foot for raising of joint-stock for various purposes, and
that a great many of his majesty's subjects have been drawn in to part
with their money on pretence of assurances that their petitions for
patents and charters to enable them to carry on the same would be granted:
to prevent such impositions, their excellencies this day ordered the said
several petitions, together with such reports from the Board of Trade, and
from his majesty's attorney and solicitor-general, as had been obtained
thereon, to be laid before them; and after mature consideration thereof,
were pleased, by advice of his majesty's privy council, to order that the
said petitions be dismissed, which are as follow:
"1. Petition of several persons, praying letters patent for carrying on a
fishing trade by the name of the Grand Fishery of Great Britain.
"2. Petition of the Company of the Royal Fishery of England, praying
letters patent for such further powers as will effectually contribute to
carry on the said fishery.
"3. Petition of George James, on behalf of himself and divers persons of
distinction concerned in a national fishery, praying letters patent of
incorporation, to enable them to carry on the same.
"4. Petition of several merchants, traders, and others, whose names are
thereunto subscribed, praying to be incorporated for reviving and carrying
on a whale fishery to Greenland and elsewhere.
"5. Petition of Sir John Lambert and others thereto subscribing, on behalf
of themselves and a great number of merchants, praying to be incorporated
for carrying on a Greenland trade, and particularly a whale fishery in
Davis's Straits.
"6. Another petition for a Greenland trade.
"7. Petition of several merchants, gentlemen, and citizens, praying to be
incorporated for buying and building of ships to let or freight.
"8. Petition of Samuel Antrim and others, praying for letters patent for
sowing hemp and flax.
"9. Petition of several merchants, masters of ships, sail-makers, and
manufacturers of sail-cloth, praying a charter of incorporation, to enable
them to carry on and promote the said manufactory by a joint-stock.
"10. Petition of Thomas Boyd and several hundred merchants, owners and
masters of ships, sail-makers, weavers, and other traders, praying a
charter of incorporation, empowering them to borrow money for purchasing
lands, in order to the manufacturing sail-cloth and fine holland.
"11. Petition on behalf of several persons interested in a patent granted
by the late King William and Queen Mary for the making of linen and
sail-cloth, praying that no charter may be granted to any persons
whatsoever for making sail-cloth, but that the privilege now enjoyed by
them may be confirmed, and likewise an additional power to carry on the
cotton and cotton-silk manufactures.
"12. Petition of several citizens, merchants, and traders in London, and
others, subscribers to a British stock for a general insurance from fire
in any part of England, praying to be incorporated for carrying on the
said undertaking.
"13. Petition of several of his majesty's loyal subjects of the city of
London and other parts of Great Britain, praying to be incorporated for
carrying on a general insurance from losses by fire within the kingdom of
England.
"14. Petition of Thomas Surges and others his majesty's subjects thereto
subscribing, in behalf of themselves and others, subscribers to a fund of
1,200,000l. for carrying on a trade to his majesty's German dominions,
praying to be incorporated by the name of the Harburg Company.
"15. Petition of Edward Jones, a dealer in timber, on behalf of himself
and others, praying to be incorporated for the importation of timber from
Germany.
"16. Petition of several merchants of London, praying a charter of
incorporation for carrying on a salt-work.
"17. Petition of Captain Macphedris of London, merchant, on behalf of
himself and several merchants, clothiers, hatters, dyers, and other
traders, praying a charter of incorporation empowering them to raise a
sufficient sum of money to purchase lands for planting and rearing a wood
called madder, for the use of dyers.
"18. Petition of Joseph Galendo of London, snuff-maker, praying a patent
for his invention to prepare and cure Virginia tobacco for snuff in
Virginia, and making it into the same in all his majesty's dominions."
LIST OF BUBBLES.
The following Bubble-Companies were by the same order declared to be
illegal, and abolished accordingly:
1. For the importation of Swedish iron.
2. For supplying London with sea-coal. Capital, three millions.
3. For building and rebuilding houses throughout all England Capital,
three millions.
4. For making of muslin.
5. For carrying on and improving the British alum-works.
6. For effectually settling the island of Blanco and Sal Tartagus.
7. For supplying the town of Deal with fresh water.
8. For the importation of Flanders lace.
9. For improvement of lands in Great Britain. Capital, four millions.
10. For encouraging the breed of horses in England, and improving of glebe
and church lands, and for repairing and rebuilding parsonage and vicarage
houses.
11. For making of iron and steel in Great Britain,
12. For improving the land in the county of Flint. Capital, one million.
13. For purchasing lands to build on. Capital, two millions.
14. For trading in hair.
15. For erecting salt-works in Holy Island. Capital, two millions.
16. For buying and selling estates, and lending money on mortgage.
17. For carrying on an undertaking of great advantage; but nobody to know
what it is.
18. For paving the streets of London. Capital, two millions.
19. For furnishing funerals to any part of Great Britain.
20. For buying and selling lands and lending money at interest. Capital,
five millions.
21. For carrying on the royal fishery of Great Britain. Capital, ten
millions.
22. For assuring of seamen's wages.
23. For erecting loan-offices for the assistance and encouragement of the
industrious. Capital, two millions.
24. For purchasing and improving leaseable lands. Capital, four millions.
25. For importing pitch and tar, and other naval stores, from North
Britain and America.
26. For the clothing, felt, and pantile trade.
27. For purchasing and improving a manor and royalty in Essex.
28. For insuring of horses. Capital, two millions.
29. For exporting the woollen manufacture, and importing copper, brass,
and iron. Capital, four millions.
30. For a grand dispensary. Capital, three millions.
31. For erecting mills and purchasing lead-mines. Capital, two millions.
32. For improving the art of making soap.
33. For a settlement on the island of Santa Cruz.
34. For sinking pits and smelting lead ore in Derbyshire.
35. For making glass bottles and other glass.
36. For a wheel for perpetual motion. Capital, one million.
37. For improving of gardens.
38. For insuring and increasing children's fortunes.
39. For entering and loading goods at the Custom-house, and for
negotiating business for merchants.
40. For carrying on a woollen manufacture in the North of England.
41. For importing walnut-trees from Virginia, Capital, two millions.
42. For making Manchester stuffs of thread and cotton.
43. For making Joppa and Castile soap.
44. For improving the wrought-iron and steel manufactures of this kingdom.
Capital four millions.
45. For dealing in lace, hollands, cambrics, lawns, &c. Capital, two
millions.
46. For trading in and improving certain commodities of the produce of
this kingdom, &c. Capital three millions.
47. For supplying the London markets with cattle.
48. For making looking-glasses, coach-glasses, &c. Capital, two millions.
49. For working the tin and lead mines in Cornwall and Derbyshire.
50. For making rape-oil.