Old and New London Part 77

The success of Law's Mississippi scheme, in 1720, roused the South Sea directory to emulation. They proposed to liquidate the public debt by reducing the various funds into one. January 22, 1720, a committee met on the subject. The South Sea Company offered to melt every kind of stock into a single security. The debt amounted to 30,981,712 at five per cent. for seven years, and afterwards at four per cent, for which they would Pay 3,500,000. The Government approved of the scheme, but the Bank of England opposed it, and offered 5,000,000 for the privilege. The South Sea shareholders were not to be outdone, and ultimately increased their terms to 7,500,000. In the end they remained the sole bidders; though some idea prevailed of sharing the advantage between the two companies, till Sir John Blunt exclaimed, "No, sirs, we'll never divide the child!" The preference thus given excited a positive frenzy in town and country. On the 2nd of June their stock rose to 890; it quickly reached 1,000, and several of the princ.i.p.al managers were dubbed baronets for their "great services." Mysterious rumours of vast treasures to be acquired in the South Seas got abroad, and 50 per cent. was boldly promised.

"The scheme," says Smollett, "was first projected by Sir John Blount, who had been bred a scrivener, and was possessed of all the cunning, plausibility, and boldness requisite for such an undertaking. He communicated his plan to Mr. Aislabie, the Chancellor of the Exchequer, and a Secretary of State. He answered every objection, and the project was adopted."

Sir Robert Walpole alone opposed the bill in the House, and with clear-sighted sense (though the stock had risen from 130 to 300 in one day) denounced "the dangerous practice of stock-jobbing, and the general infatuation, which must," he said, "end in general ruin." Rumours of free trade with Spain pushed the shares up to 400, and the bill pa.s.sed the Commons by a majority of 172 against 55. In the other House, 17 peers were against it, and 83 for it. Then the madness fairly began.

Stars and garters mingled with squabbling Jews, and great ladies p.a.w.ned their jewels in order to gamble in the Alley. The shares sinking a little, they were revived by lying rumours that Gibraltar and Port Mahon were going to be exchanged for Peruvian sea-ports, so that the Company would be allowed to send out whole fleets of ships.

Government, at last alarmed, began too late to act. On July 18 the King published a proclamation denouncing eighteen pet.i.tions for letters patent and eighty-six bubble companies, of which the following are samples:--

For sinking pits and smelting lead ore in Derbyshire.

For making gla.s.s bottles and other gla.s.s.

For a wheel for perpetual motion. Capital 1,000,000.

For improving of gardens.

For insuring and increasing children's fortunes.

For entering and loading goods at the Custom House; and for negotiating business for merchants.

For carrying on a woollen manufacture in the North of England.

For importing walnut-trees from Virginia. Capital 2,000,000.

For making Manchester stuffs of thread and cotton.

For making Joppa and Castile soap.

For improving the wrought iron and steel manufactures of this kingdom.

Capital 4,000,000.

For dealing in lace, Hollands, cambrics, lawns, &c. Capital 2,000,000.

For trading in and improving certain commodities of the produce of this kingdom, &c. Capital 3,000,000.

For supplying the London markets with cattle.

For making looking-gla.s.ses, coach-gla.s.ses, &c. Capital 2,000,000.

For taking up ballast.

For buying and fitting out ships to suppress pirates.

For the importation of timber from Wales. Capital 2,000,000.

For rock-salt.

For the trans.m.u.tation of quicksilver into a malleable, fine metal.

One of the most famous bubbles was "Puckle's Machine Company," for discharging round and square cannon-b.a.l.l.s and bullets, and making a total revolution in the art of war. "But the most absurd and preposterous of all," says Charles Mackay, in his "History of the Delusion," "and which showed more completely than any other the utter madness of the people, was one started by an unknown adventurer, ent.i.tled, _'A Company for carrying on an undertaking of great advantage, but n.o.body 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 500,000, in 5,000 shares of 100 each, deposit 2 per share. Each subscriber paying his deposit would be ent.i.tled to 100 per annum per share. How this immense profit was to be obtained he did not condescend to inform them at the time, but promised that in a month full particulars should be duly announced, and a call made for the remaining 98 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 1,000 shares had been subscribed for, and the deposits paid. He was thus in five hours the winner of 2,000. 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."

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.

During the infatuation (says Smollett), luxury, vice, and profligacy increased to a shocking degree; the adventurers, intoxicated by their imaginary wealth, pampered themselves with the rarest dainties and the most costly wines. They purchased the most sumptuous furniture, equipage, and apparel, though with no taste or discernment. Their criminal pa.s.sions were indulged to a scandalous excess, and their discourse evinced the most disgusting pride, insolence, and ostentation.

They affected to scoff at religion and morality, and even to set Heaven at defiance.

A journalist of the time writes: "Our South Sea equipages increase daily; the City ladies buy South Sea jewels, hire South Sea maids, take new country South Sea houses; the gentlemen set up South Sea coaches, and buy South Sea estates. They neither examine the situation, the nature or quality of the soil, or price of the purchase, only the annual rent and t.i.tle; for the rest, they take all by the lump, and pay forty or fifty years' purchase!"

By the end of May, the whole stock had risen to 550. It then, in four days, made a tremendous leap, and rose to 890. It was now thought impossible that it could rise higher, and many prudent persons sold out to make sure of their spoil. Many of these were n.o.blemen about to accompany the king to Hanover. The buyers were so few on June 3rd, that stock fell at once, like a plummet, from 890 to 640. The directors ordering their agents to still buy, confidence was restored, and the stock rose to 750. By August, the stock culminated at 1,000 per cent., or, as Dr. Mackay observes, "the bubble was then full blown."

The reaction soon commenced. Many government annuitants complained of the directors' partiality in making out the subscription lists. It was soon reported that Sir John Blunt, the chairman, and several directors had sold out. The stock fell all through August, and on September 2nd was quoted at 700 only. Things grew alarming. The directors, to restore confidence, summoned a meeting of the corporation at Merchant Taylors'

Hall. Cheapside was blocked by the crowd. Mr. Secretary Craggs urged the necessity of union; and Mr. Hungerford said the Company had done more for the nation than Crown, pulpit, and bench. It had enriched the whole nation. The Duke of Portland gravely expressed his wonder that any one could be dissatisfied. But the public were not to be gulled; that same evening the stock fell to 640, and the next day to 540. It soon got so low as 400. The ebb tide was running fast. "Thousands of families,"

wrote Mr. Broderick to Lord Chancellor Middleton, "will be reduced to beggary. The consternation is inexpressible, the rage beyond description." The Bank was pressed to circulate the South Sea bonds, but as the panic increased they fought off. Several goldsmiths and bankers fled. The Sword Blade Company, the chief cashiers of the South Sea Company, stopped payment. King George returned in haste from Hanover, and Parliament was summoned to meet in December.

[Ill.u.s.tration: THE OLD SOUTH SEA HOUSE (_see page 538_). _From a Print of the Period._]

In the first debate the enemies of the South Sea Company were most violent. Lord Molesworth said he should be satisfied to see the contrivers of the scheme tied in sacks and thrown into the Thames.

Honest Shippen, whom even Walpole could not bribe, looking fiercely in Mr. Secretary Craggs' face, said "there were other men in high station who were no less guilty than the directors." Mr. Craggs, rising in wrath, declared he was ready to give satisfaction to any one in the House, or out of it, and this unparliamentary language he had afterwards to explain away. Ultimately a second committee was appointed, with power to send for persons, papers, and records. The directors were ordered to lay before the house a full account of all their proceedings, and were forbidden to leave the kingdom for a twelvemonth.

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 then brought in, under the superintendence of Mr. Walpole, and safely carried through both Houses of Parliament.

In the House of Lords, Lord Stanhope said that every farthing possessed by the criminals, whether directors or not, ought to be confiscated, to make good the public losses.

[Ill.u.s.tration: LONDON STONE. (_See page 544._)]

The wrath of the House of Commons soon fell quick and terrible as lightning on two members of the Ministry, Craggs, and Mr. Aislabie, Chancellor of the Exchequer. It was ordered, on the 21st of January, that all South Sea brokers should lay before the House a full account of all stock bought or sold by them to any officers of the Treasury or Exchequer since Michaelmas, 1719. Aislabie instantly resigned his office, and absented himself from Parliament, and five of the South Sea directors (including Mr. Gibbon, the grandfather of the historian) were ordered into the custody of the Black Rod.

The next excitement was the flight of Knight, the treasurer of the Company, with all his books and implicating doc.u.ments, and a reward of 2,000 was offered for his apprehension. The same night the Commons ordered the doors of the House to be locked, and the keys laid on the table.

General Ross, one of the members of the Select Committee, then informed the House that there had been already discovered a plot of the deepest villany and fraud that h.e.l.l had ever contrived to ruin a nation. Four directors, members of the House--_i.e._, Sir Robert Chaplin, Sir Theodore Janssen, Mr. Sawbridge, and Mr. F. Eyles--were expelled the House, and taken into the custody of the Serjeant-at-Arms. Sir John Blunt, another director, was also taken into custody. This man, mentioned by Pope in his "Epistle to Lord Bathurst," had been a scrivener, famed for his religious observances and his horror of avarice. He was examined at the bar of the House of Lords, but refused to criminate himself. The Duke of Wharton, vexed at this prudent silence of the criminal, accused Earl Stanhope of encouraging this taciturnity of the witness. The Earl became so excited in his return speech, that it brought on an apoplectic fit, of which he died the next day, to the great grief of his royal master, George I. The Committee of Secrecy stated that in some of the books produced before them, false and fict.i.tious entries had been made; in others there were entries of money, with blanks for the names of the stockholders. There were frequent erasures and alterations, and in some of the books leaves had been torn out. They also found that some books of great importance had been destroyed altogether, and that some had been taken away or secreted.

They discovered, moreover, that before the South Sea Act was pa.s.sed there was an entry in the Company's books of the sum of 1,259,325 upon account of stock stated to have been sold to the amount of 574,500.

This stock was all fict.i.tious, and had been disposed of with a view to promote the pa.s.sing of the bill. It was noted as sold on various days, and at various prices, from 150 to 325 per cent.

Being surprised to see so large an amount 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 were not in possession of such a quant.i.ty of stock, having in their own right only a small quant.i.ty, not exceeding 30,000 at the utmost. They further discovered that this amount of stock was to be esteemed as taken 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 pa.s.sed, 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 by them. Accordingly, after the pa.s.sing 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 fict.i.tious stock, which had chiefly been at the disposal of Sir John Blunt, Mr.

Gibbon, and Mr. Knight, was distributed among several members of the Government and their connections, by way of bribe, to facilitate the pa.s.sing of the bill. To the Earl of Sunderland was a.s.signed 50,000 of this stock; to the d.u.c.h.ess of Kendal, 10,000; to the Countess of Platen, 10,000; to her two nieces, 10,000; to Mr. Secretary Craggs, 30,000; to Mr. Charles Stanhope (one of the Secretaries of the Treasury), 10,000; to the Sword Blade Company, 50,000. It also appeared that Mr. Stanhope had received the enormous sum of 250,000, 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.

The punishment fell heavy on the chief offenders, who, after all, had only shared in the general l.u.s.t for gold. Mr. Charles Stanhope, a great gainer, managed to escape by the influence of the Chesterfield family, and the mob threatened vengeance. Aislabie, who had made some 800,000, was expelled the House, sent to the Tower, and compelled to devote his estate to the relief of the sufferers. Sir George Caswall was expelled the House, and ordered to refund 250,000. The day he went to the Tower, the mob lit bonfires and danced round them for joy. When by a general whip of the Whigs the Earl of Sunderland was acquitted, the mob grew menacing again. That same day the elder Craggs died of apoplexy. The report was that he had poisoned himself, but excitement and the death of a son, one of the secretaries of the Treasury, were the real causes. His enormous fortune of a million and a half was scattered among the sufferers. Eventually the directors were fined 2,014,000, each man being allowed a small modic.u.m of his fortune. Sir John Blunt was only allowed 5,000 out of his fortune of 183,000; Sir John Fellows was allowed 10,000 out of 243,000; Sir Theodore Janssen, 50,000 out of 243,000; Sir John Lambert, 5,000 out of 72,000. One director, named Gregsley, was treated with especial severity, because he was reported to have once declared he would feed his carriage-horses off gold; another, because years before he had been mixed up with some harmless but unsuccessful speculation. According to Gibbon the historian, it was the Tory directors who were stripped the most unmercifully.

"The next consideration of the Legislature," says Charles Mackay, "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 37,800,000, of which the stock allotted to all the proprietors only reached 24,500,000. The remainder of 13,300,000 belonged to the Company in their corporate capacity, and was the profit they had made by the national delusion. Upwards of 8,000,000 of this was taken from the Company, and divided among the proprietors and subscribers generally, making a dividend of about 33 6s. 8d. 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 11,000,000 in this manner, at a time when prices were unnaturally raised; and they now received back 1,100,000, when prices had sunk to their ordinary level."

A volume (says another writer) might be collected of anecdotes connected with this fatal speculation. A tradesman at Bath, who had invested his only remaining fortune in this stock, finding it had fallen from 1,000 to 900, left Bath with an intention to sell out; on his arrival in London it had fallen to 250. He thought the price too low, sanguinely hoped that it would re-ascend, still deferred his purpose, and lost his all.

The Duke of Chandos had embarked 300,000 in this project; the Duke of Newcastle strongly advised his selling the whole, or at least a part, with as little delay as possible; but this salutary advice he delayed to take, confidently antic.i.p.ating the gain of at least half a million, and through rejecting his friend's counsel, he lost the whole. Some were, however, more fortunate. The guardians of Sir Gregory Page Turner, then a minor, had purchased stock for him very low, and sold it out when it had reached its maximum, to the amount of 200,000. With this large sum Sir Gregory built a fine mansion at Blackheath, and purchased 300 acres of land for a park. Two maiden sisters, whose stock had acc.u.mulated to 90,000, sold out when the South Sea stock was at 790. The broker whom they employed advised them to re-invest in navy bills, which were at the time at a discount of twenty-five per cent.; they took his advice, and two years afterwards received their money at par.

Even the poets did not escape. Gay (says Dr. Johnson, in his "Lives of the Poets") had a present from young Craggs of some South Sea stock, and once supposed himself to be the master of 20,000. His friends, especially Arbuthnot, 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," said Fenton, "will make you sure of a clean shirt and a shoulder of mutton every day." This counsel was rejected; the profit and princ.i.p.al were both lost, and Gay sunk so low under the calamity that his life for a time became in danger.

Pope, always eager for money, was also dabbling in the scheme, but it is uncertain whether he made money or lost by it. Lady Mary Wortley Montague was a loser. When Sir Isaac Newton was asked when the bubble would break, he said, with all his calculations he had never learned to calculate the madness of the people.

Prior declared, "I am lost in the South Sea. The roaring of the waves and the madness of the people are justly put together. It is all wilder than St. Anthony's dream, and the bagatelle is more solid than anything that has been endeavoured here this year."

In the full heat of it, the d.u.c.h.ess of Ormond wrote to Swift: "The king adopts the South Sea, and calls it his beloved child; though perhaps, you may say, if he loves it no better than his son, it may not be saying much; but he loves it as much as he loves the d.u.c.h.ess of Kendal, and that is saying a good deal. I wish it may thrive, for some of my friends are deep in it. I wish you were too."

Swift, cold and stern, escaped the madness, and even denounced in the following verses the insanity that had seized the times:--

"There is a gulf where thousands fell, Here all the bold adventurers came; A narrow sound, though deep as h.e.l.l-- Change Alley is the dreadful name.

"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."

Budgell, Pope's barking enemy, destroyed himself after his losses in this South Sea scheme, and a well-known man of the day called "Tom of Ten Thousand" lost his reason.

Charles Lamb, in his "Elia," has described the South Sea House in his own delightful way. "Reader," says the poet clerk, "in thy pa.s.sage from the Bank--where thou hast been receiving thy half-yearly dividends (supposing thou art a lean annuitant like myself)--to the 'Flower Pot,'

to secure a place for Dalston, or Shacklewell, or some other shy suburban retreat northerly--didst thou never observe a melancholy-looking, handsome brick and stone edifice, to the left, where Threadneedle Street abuts upon Bishopsgate? I dare say thou hast often admired its magnificent portals, ever gaping wide, and disclosing to view a grave court, with cloisters and pillars, with few or no traces of goers-in or comers-out--a desolation something like Balclutha's.[11] This was once a house of trade--a centre of busy interests. The throng of merchants was here--the quick pulse of gain--and here some forms of business are still kept up, though the soul has long since fled. Here are still to be seen stately porticoes; imposing staircases; offices roomy as the state apartments in palaces--deserted, or thinly peopled with a few straggling clerks; the still more sacred interiors of court and committee rooms, with venerable faces of beadles, door-keepers; directors seated in form on solemn days (to proclaim a dead dividend), at long worm-eaten tables, that have been mahogany, with tarnished gilt-leather coverings, supporting ma.s.sy silver inkstands, long since dry; the oaken wainscots hung with pictures of deceased governors and sub-governors, of Queen Anne, and the two first monarchs of the Brunswick dynasty; huge charts, which subsequent discoveries have antiquated; dusty maps of Mexico, dim as dreams; and soundings of the Bay of Panama! The long pa.s.sages hung with buckets, appended, in idle row to walls, whose substance might defy any, short of the last conflagration; with vast ranges of cellarage under all, where dollars and pieces-of-eight once lay, 'an unsunned heap,' for Mammon to have solaced his solitary heart withal--long since dissipated, or scattered into air at the blast of the breaking of that famous Bubble.