1719-1727.
The South Sea Bubble -- Nation Catches the Fever of Speculation
-- Strong Temptation for the Company -- Pricking of the Bubble
-- Narrow Escape of the Adventurers -- Knight and his
Expedition -- Anxiety as to their Fate -- Certainty of their
Loss -- Burnet's Scheme to Cripple the French -- It Forces them
Westward into Rupert's Land.
The cause of the Governor's recall lay in the existence of a crisis
which promised a happy issue. It arose through the venality of some of
the Company's directors, who were victims of the South Sea fever.
[Sidenote: South Sea Company.]
The South Sea Company, whose extraordinary success gave rise to a
thousand joint stock enterprises equally unsound and fatuous, owed its
origin to Harley, Earl of Oxford, in 1711, who in return for the
acceptance of a government debt of £10,000,000 granted to a number of
merchants a monopoly of the trade to the South Seas.
At that time the most extravagant ideas prevailed concerning the
riches of South America. "If," it was said, "the Hudson's Bay Company
can make vast moneys out of the frozen North, what can be done with
lands flowing with milk and honey?" The South Sea Adventurers
carefully fostered all the current notions, spreading likewise the
belief that Spain was ready to admit them to a share of its South
American commerce.
In 1717 this Company advanced to the English Government five more
millions sterling, at an interest of six per cent. Their shares rose
daily. Even the outbreak of war with Spain, which destroyed all hope
in the minds of sensible persons of any share in the Spanish traffic,
did not lessen the Company's popularity. In Paris, John Law's
Mississippi Bubble burst, ruining thousands, but, far from being
alarmed at this catastrophe, it was universally believed that Law's
scheme was sound, but had been wrecked through unwise methods. In May,
1720, the South Sea Company proposed to take upon themselves the
entire national debt of upwards of £30,000,000 upon a guarantee of
five per cent. per annum for seven and one-half years, at the end of
which period the debt might be redeemed if the Government chose, or
the interest reduced to four per cent. The nation was dazzled;
Parliament accepted the offer; and the Company's stock rose steadily
to 330 on April 7, falling to 290 on the following day.
[Sidenote: A fever of speculation.]
This day in April witnessed a change in methods on the part of the
South Sea directors. Until then the scheme had been honestly promoted;
but the prospect of enormous wealth was too near to be permitted to
escape. It became thenceforward, until the crash, the prime object of
the directors, at no matter what cost or scruple, to maintain the
fictitious value of the shares. By May 28, £100 shares were quoted at
550; three days later they had reached 890. The whole nation caught
the fever; the steadiest merchants turned gamblers. Hardly a day
passed without a new swindling concern being started as a joint stock
company.
Meanwhile several of the Hudson's Bay Merchants-Adventurers looked on
with envious eyes. The desire was great to embark in so tempting a
scheme, and the opportunity to cast inflated shares on the market
almost too great to withstand.
But for many weeks the temptation was resisted. At last, at a meeting
early in August, the chief director came before a general court of the
Adventurers with a scheme by which each partner could either retire
with a moderate fortune or remain an active participant, and reap the
benefit of an infusion of public capital.
The scheme was simplicity itself, to modern notions; but that it was
not so regarded by some of the Adventurers themselves may be gathered
from the following passage from a letter of Mrs. Mary Butterfield, one
of the owners of the Company's stock.
"I cannot tell you how it is to be done, for that passes my wit; but
in short, the value of our interests is to be trebled without our
paying a farthing; and then to be trebled again if the business is to
the publick taste, and we are told it cannot fail to be."
[Sidenote: Plan to reorganize the Company.]
It was late in August before the scheme was detailed. It was explained
that the Company's assets in quick and dead stock and lands were
£94,500. With this as a basis, it was proposed to enlarge the stock to
the sum of £378,000, dividing this into 3,780 shares of £100 each.
Before this could be carried out, however, the existing stock, being
but £31,500, or 315 shares, was to be made and reckoned 945 shares of
£100 value each. By such means a result of £94,500 actual capital
would appear. A majority of partners favoured the scheme, and the
proposal was carried amidst the greatest enthusiasm. Its purpose was
to unload the stock at an inflated figure, far even in excess of that
actually named by its promoters. Had it succeeded and the flotation
been carried out, it would have doubtless administered a death-blow to
the Company as then organized, and would probably have involved the
revocation of its charter in view of what was soon to occur. But the
plan met with a sudden arrest by an event which then happened, and
which in beggaring multitudes altered the whole disposition of the
public with regard to joint stock enterprises.
A general impression had gained ground that the South Sea Company's
stock had attained high-water mark, and so many holders rushed to
realize that the price fell, on June 3rd, to 640. The directors were
not yet ready for their _coup_. Agents were despatched by them to buy
up and support the market, and the result was that by nightfall of
that day the quoted price was £750. By means of this and similarly
unscrupulous devices, the shares were sent, early in August, to 1,000.
This was the long-awaited opportunity. Many of the directors sold out;
a general anxiety began to prevail and the shares began to drop. In
view of this change in affairs, the Hudson's Bay Company's meeting for
September 3rd was deferred. On the 12th, South Sea shares were selling
at 400, and the decline continued. The country was thrown into the
greatest excitement, and by the time December had arrived, Parliament
had been hastily summoned to consider the calamity.
With what happened subsequently, to the authors and participators in
this celebrated joint stock swindle, it is not my present purpose to
deal, except to say that the Hudson's Bay Company was saved in the
nick of time from sharing the fate of its neighbour and rival. A
meeting on the 23rd of December was held, at which it was resolved
that the "said subscription be vacated; and that the Company's seal be
taken off from the said instrument."
Nevertheless one permanent result remained. The capital had been
trebled, and it was now further resolved that each subscriber should
have £30 of stock "for each £10 by him paid in." This trebled, the
total capital stood, at the beginning of 1721, at £94,500.
The Company had had a narrow escape. To what extent its shares would
have been inflated may be conjectured; but it is certain that it could
not have avoided being swept into the vortex and sharing the same fate
which overtook so many of its commercial contemporaries. Its enemies
were on the watch, and they would have proved relentless. The
revocation of its charter would have accomplished its final downfall.
Already the Company was being assailed because it had not complied
with one of the provisions named in that instrument: that of making
search for a north-west passage.
It was not, however, to quiet these reproaches, so persistently
levelled at it, that a year before the bursting of the South Sea
Bubble an expedition was actually set on foot to accomplish the
long-deferred exploration.
Knight, the Company's aged Governor at York Factory, had long listened
to the tales of the Indians concerning the copper mines to the north;
and resolved, on his return to England, to bring the matter before the
Company. This he did, but it was by no means an easy matter to induce
the Adventurers to consent to the expense of further exploration.
Nevertheless Knight's insistence prevailed, more especially as,
besides the profitable results to be obtained through such a voyage,
he was careful to point out that the Company were expected by their
charter to undertake such an expedition.
[Sidenote: Expedition to explore the north-west passage.]
In 1719 the Company, therefore, fitted out two ships for the purpose
of discovery north of Churchill. One of these, called the _Albany_, a
frigate, was commanded by George Barlow, whom we have already seen as
Deputy-Governor at Albany in 1704, when the French failed to capture
that post. The other, named the _Discovery_, a sloop, under David
Vaughan. But the command of the expedition itself was entrusted to
Knight, who was a man of great experience in the Company's service,
who had been for many years Governor of different Factories in the
Bay, and who had made the first settlement at Churchill River.
Nevertheless, in spite of the experience Knight possessed of the
Company's business, and its methods of trade with the Indians, there
was nothing to lead any one to suppose him especially adapted for the
present enterprise, having nothing to direct him but the slender and
imperfect accounts which he, in common with many other of the
Company's servants had received from the Indians, who, as we have
seen, were at that time little known and less understood.
But these disadvantages, added to his advanced years, he being then
nearly eighty, by no means deterred his bold spirit. Indeed, so
confident was he of success and of the material advantages which would
accrue from his impending discoveries, that he caused to be made, and
carried with him, several large iron-bound chests, wherein to bestow
the gold dust and other treasures which he "fondly flattered himself
were to be found in those parts."
The first paragraph of the Company's instructions to Knight on this
occasion was as follows:--
4th June, 1719.
TO CAPTAIN JAMES KNIGHT.
SIR,--From the experience we have had of your abilities in the
management of our affairs, we have, upon your application to
us, fitted out the _Albany_ frigate, Captain George Barlow, and
the _Discovery_, Captain David Vaughan, Commander, upon a
discovery to the northward; and to that end have given you
power and authority to act and do all things relating to the
said voyage, navigation of the said ship and sloop only
excepted; and have given orders and instructions to our said
Commanders for that purpose. You are, with the first
opportunity of wind and weather, to depart from Gravesend on
your intended voyage, and by God's permission to find out the
Straits of Anian, and to discover gold and other valuable
commodities to the northward.
Knight departed from Gravesend on board the _Albany_, and proceeded on
his voyage. The ships not returning to England that year no uneasiness
was felt, as it was judged they had wintered in the Bay. Besides, both
were known to have on board a plentiful stock of provisions, a house
in frame, together with the requisite tools and implements, and a
large assortment of trading goods. Little anxiety was therefore
entertained concerning their safety for fifteen months. But when New
Year's Day, 1721, arrived, and neither ship nor sloop had been heard
from, the Company became alarmed for their welfare.
By the ship sailing to Churchill in June they sent orders for a sloop
then in the Bay, called the _Whalebone_, John Scroggs, master, to go
in search of the missing explorers. But the _Whalebone_ was cruising
about in the north of the Bay at the time, on the Esquimaux trade, and
returned to Churchill at so advanced a season of the year as to defer
the execution of the Company's wishes until the following summer.
[Sidenote: Anxiety as to the fate of the expedition.]
The north-west coast was little known in those days, so it is not
singular that Scroggs, on board the little _Whalebone_, finding
himself encompassed by dangerous shoals and rocks, should return to
Prince of Wales' Fort little the wiser regarding the fate of the two
ships. He saw amongst the Esquimaux, it is true, European clothing and
articles, as in a later day Rae and McClintock found souvenirs of the
Franklin tragedy; but these might have been come by in trade, or even
as the result of an accident. None could affirm that a shipwreck or
other total calamity had overtaken Knight and his companions.
Many years elapsed without anything to shed light on the fate of this
expedition. At first, the strong belief which had so long prevailed
in Europe of a north-west passage by way of this Bay, caused many to
conjecture that the explorers had found that passage and had gone
through it into the South Sea. But before the voyages of Middleton,
Ellis, Bean, Christopher and Jobington had weakened this belief it was
known that Knight, Barlow and the crews of the two ships had been
lost. Proofs of their fate were found in the year 1767, as will appear
in a later chapter of this work.
An important circumstance now transpired which was not without effect
upon the Company's trade; and which, for a time, gave the Adventurers
great uneasiness.
In 1727 Burnett had been appointed to the Governorship of New York.
Finding that the French in Canada were in possession of all the Indian
fur-trade of the north and west, which was not in the Hudson's Bay
Company's hands, and that the New Englanders and Iroquois were
trafficking with the Iroquois, he determined to take a bold step with
a view to crippling the French.
[Sidenote: Attempt of New England to secure the fur-trade.]
It had long been understood that the chief support of New France was
in the fur commerce; and upon enquiry it was found that the traders,
of Quebec and Montreal, were chiefly supplied with European
merchandise for barter from the New York merchants, from whom they
procured it upon much easier terms than it could possibly be got from
France. With this knowledge, the Governor resolved to foster the
fur-trade of his colony by inducing direct transactions with the
Indians. He procured an Act in the Assembly of the colony, prohibiting
the trade in merchandise from New York. The colonial merchants were,
not unnaturally, up in arms against such a measure; but Burnett, bent
upon carrying his point, had their appeal to King George set aside and
the Act confirmed by that monarch.
[Illustration: CONTEMPORARY FRENCH MAP OF THE BAY AND VICINITY.]
By this measure, trade at once sprang up with the Western Indians,
since the French had no goods to offer them in any way to their liking
at a reasonable price. Intercourse and familiarity ensued moreover in
consequence; a fortified trading post was built at Oswego, which not
only drew away trade from the French, at Michilimackinac and St.
Marie, but from Albany and Moose as well.
[Sidenote: Boundaries between French and English territory.]
It has been observed that the ancient boundaries of Canada or New
France were circumscribed by the Treaty of Utrecht, and that it is
difficult to determine precisely the new boundaries assigned to it.
The general interpretation adopted by the British geographers, as the
country gradually became better known from that time up to the final
cession of Canada, was that the boundary ran along the high lands
separating the waters that discharged into the St. Lawrence from those
that discharge into Hudson's Bay to the sources of the Nepigon River,
and thence along the northerly division of the same range of high
lands dividing the waters flowing direct to Hudson's Bay, from those
flowing into Lake Winnipeg, and crossing the Nelson, or (as it was
then known) the Bourbon River, about midway between the said Lake and
Bay, thence passing to the west and north by the sources of Churchill
River; no westerly boundary being anywhere assigned to Canada. This
and other measures could have but one result: to make the French
traders and the Government of New France perceive that their only hope
to avert famine and bankruptcy lay in penetrating farther and farther
into the west, in an effort to reach remote tribes, ignorant of true
values and unspoilt by a fierce and ungenerous rivalry.
It seems fitting to reserve the next chapter for a consideration of
who and what the tribes were at this time inhabiting the territories
granted by its charter to the Great Company; together with their
numbers, their modes of life and relations with the factories.