The Humbugs of the World Part 17

Some of them may perhaps have proceeded as real business concerns. Some have stopped and disappeared as soon as the managers could get a handsome sum of money into their pockets for stock.

What the result will be, in the present case, I don't know. The New York and Rangoon Petroleum Company, when I last knew about it, "still lived."

They had--or said they had--bought some land. I have not heard of their receiving any oil raised from their own wells. They have sent off a monstrous quant.i.ty of circulars, prospectuses and advertis.e.m.e.nts. They caused a portrait and biography of the Honorable A. Bee to be printed in a very respectable periodical, and paid five hundred dollars for it.

They had themselves systematically puffed up to the seventh heaven in a long series of articles in another periodical, and paid the owner of it $2,000 or so _in stock_. They talk very big about a dividend. But although they have received a great deal of money, and paid out a great deal, I do not know of their paying their stockholders any yet. If they should, it would not prove much. For it is sometimes considered "a good dodge" to declare and pay a large dividend before any real profits have been earned; as this is calculated to enhance the price of shares, and to make them "go off like hot cakes."

I shall not make any "moral" about this story. It teaches its own. It is a very mild statement of what was done to establish an actual specimen,--and far from being of the worst description--of a great part of the Petroleum Company enterprises of the day.

It is whispered that somehow or other the trustees and officers of the New York and Rangoon do not own so much stock of their company as they did, having managed to have their stock sold to subscribers as if it were company stock. If this is so, those gentlemen have made their reward sure; and Mr. Peter Rolleum, having the cash in hand for that very liberal allotment of stock which he gave himself for his trouble in getting up the New York and Rangoon Petroleum Company, is very likely half or a quarter as rich as he says.

CHAPTER XXV.

THE TULIPOMANIA.

Alboni, the singer, had an exquisitely sweet voice, but was a very big fat woman. Somebody accordingly remarked that she was an elephant that had swallowed a nightingale. About as incongruous is the idea of a nation of damp, foggy, fat, full-figured, broad-sterned, gin-drinking, tobacco-smoking Dutchmen in Holland, going crazy over a flower. But they did so, for three or four years together. Their craze is known in history as the Tulipomania, because it was a mania about tulips.

Just a word about the Dutchmen first.

These stout old fellows were not only hardy navigators, keen discoverers, ingenious engineers, laborious workmen, able financiers, shrewd and rich merchants, enthusiastic patriots and tremendous fighters, but they were eminently distinguished (as they still are to a considerable extent) by a love of elegant literature, poetry, painting, music and other fine arts, including horticulture. It was a Fleming that invented painting in oils. Before him, white of egg was used, or gum-water, or some such imperfect material, for spreading the color.

Erasmus, one of the most learned, ready-minded, acute, graceful and witty scholars that ever lived, was a Dutchman. All Holland and Flanders, in days when they were richer, and stronger compared with the rest of the world than they are now, were full of singing societies and musical societies and poetry making societies. The universities of Leyden and Utrecht and Louvain are of highly an ancient European fame.

And as for flowers, and bulbs in particular, Holland is a princ.i.p.al home and market of them now, more than two hundred years after the time I am going to tell of.

Tulips grow wild in Southern Russia, the Crimea and Asia Minor, as potatoes do in Peru. The first tulip in Christian Europe was raised in Augsburg, in the garden of a flower-loving lawyer, one Counsellor Herwart, in the year 1559, thirteen years after Luther died. This tulip bulb was sent to Herwart from Constantinople. For about eighty years after this the flower continually increased in repute and became more and more known and cultivated, until the fantastic eagerness of the demand for fine ones and the great prices that they brought, resulted in a real mania like that about the morus multicaulis, or the petroleum mania of to-day, but much more intense. It began in the year 1635, and went out with an explosion in the year 1837.

This tulip business is, I believe, the only speculative excitement in history whose subject-matter did not even claim to have any real value.

Petroleum is worth some shillings a gallon for actual use for many purposes. Stocks always claim to represent some real trade or business.

The morus multicaulis was to be as permanent a source of wealth as corn, and was expected to produce the well known mercantile substance of silk.

But n.o.body ever pretended that tulips could be eaten, or manufactured, or consumed in any way of practical usefulness. They have not one single quality of the kind termed useful. They have nothing desirable except the beauty of a peculiarly short-lived blossom. You can do absolutely nothing with them except to look at them. A speculation in them is exactly as reasonable as one in b.u.t.terflies would be.

In the course of about one year, 1634-5, the tulip frenzy, after having increased for fifteen or twenty years with considerable speed, came to a climax, and poisoned the whole Dutch nation. Prices had at the end of this short period risen from high to extravagant, and from extravagant to insane. High and low, counts, burgomasters, merchants, shop-keepers, servants, shoe-blacks, all were buying and selling tulips like mad. In order to make the commodity of the day accessible to all, a new weight was invented, called a perit, so small that there were about eight thousand of them in one pound avoirdupois, and a single tulip root weighing from half an ounce to an ounce, would contain from 200 to 400 of these perits. Thus, anybody unable to buy a whole tulip, could buy a perit or two, and have what the lawyers call an "undivided interest" in a root. This way of owning shows how utterly unreal was the pretended value. For imagine a small owner attempting to take his own perits and put them in his pocket. He would make a little hole in the tulip-root, would probably kill it, and would certainly obtain a little bit of utterly worthless pulp for himself, and no value at all. There was a whole code of business regulations made to meet the peculiar needs of the tulip business, besides, and in every town were to be found "tulip-notaries," to conduct the legal part of the business, take acknowledgments of deeds, note protests, &c.

To say that the tulips were worth their weight in gold would be a very small story. It would not be a very great exaggeration to say that they were worth their size in diamonds. The most valuable species of all was named "Semper Augustus," and a bulb of it which weighed 200 perits, or less than half an ounce avoirdupois, was thought cheap at 5,500 florins.

A florin may be called about 40 cents; so that the little brown root was worth $2,200, or 220 gold eagles, which would weigh, by a rough estimate, eight pounds four ounces, or 132 ounces avoirdupois. Thus this half ounce Semper Augustus was worth--I mean he would bring--two hundred and sixty-four times his weight in gold!

There were many cases where people invested whole fortunes equal to $40,000 or $50,000 in collections of forty or fifty tulip roots. Once there happened to be only two Semper Augustuses in all Holland, one in Haarlem and one in Amsterdam. The Haarlem one was sold for twelve acres of building lots, and the Amsterdam one for a sum equal to $1,840,00, together with a new carriage, span of grey horses and double harness, complete.

Here is the list of merchandise and estimated prices given for one root of the Viceroy tulip. It is interesting as showing what real merchandise was worth in those days by a cash standard, aside from its exhibition of tremendous speculative bedlamism:

160 bushels wheat $179,20 320 bushels rye 223,20 Four fat oxen 192,00 Eight fat hogs 96,00 Twelve fat sheep 48,00 Two hogsheads wine 28,00 Four tuns beer 12,80 Two tuns b.u.t.ter 76,80 1000 lbs. cheese 48,00 A bed all complete 40,00 One suit clothes 32,00 A silver drinking cup 24,00 --------- Total exactly $1,000,00

In 1636, regular tulip exchanges were established in the nine Dutch towns where the largest tulip business was done, and while the gambling was at its intensest, the matter was managed exactly as stock gambling is managed in Wall street to-day. You went out into "the street" without owning a tulip or a perit of a tulip in the world, and met another fellow with just as many tulips as yourself. You talk and "banter" with him, and finally (we will suppose) you "sell short" ten Semper Augustuses, "seller three," for $2,000 each, in all $20,000. This means in ordinary English, that without having any tulips (i. e., short,) you promise to deliver the ten roots as above in three days from date. Now when the three days are up, if Semper Augustuses are worth in the market only $1,500, you could, if this were a real transaction, buy ten of them for $15,000, and deliver them to the other gambler for $20,000, thus winning from him the difference of $5,000. But if the roots have risen and are worth $2,500 each, then if the transactions were real you would have to pay $25,000 for the ten roots and could only get $20,000 from the other gambler, and he, turning round and selling them at the market price, would win from you this difference of $5,000. But in fact the transaction was not real, it was a stock gambling one; neither party owned tulips or meant to, or expected the other to; and the whole was a pure game of chance or skill, to see which should win and which should lose that $5,000 at the end of three days. When the time came, the affair was settled, still without any tulips, by the loser paying the difference to the winner, exactly as one loses what the other wins at a game of poker or faro. Of course if you can set afloat a smart lie after making your bargain, such as will send prices up or down as your profit requires, you make money by it, just as stock gamblers do every day in New York, London, Paris, and other Christian commercial cities.

While this monstrous Dutch gambling fury lasted, money was plenty, everybody felt rich and Holland was in a whiz of windy delight. After about three years of fool's paradise, people began to reflect that the shuttlec.o.c.k could not be knocked about in the air forever, and that when it came down somebody would be hurt. So first one and then another began quietly to sell out and quit the game, without buying in again. This cautious infection quickly spread like a pestilence, as it always does in such cases, and became a perfect panic or fright. All at once, as it were, rich people all over Holland found themselves with nothing in the world except a pocket full or a garden-bed full of flower roots that n.o.body would buy and that were not good to eat, and would not have made more than one tureen of soup if they were.

Of course this state of things caused innumerable bankruptcies, quarrels, and refusals to complete bargains, everywhere. The government and the courts were appealed to, but with Dutch good sense they refused to enforce gambling transactions, and though the cure was very severe because very sudden, they preferred to let "the bottom drop out" of the whole affair at once. So it did. Almost everybody was either ruined or impoverished. The very few who had kept any or all of their gains by selling out in season, remained so far rich. And the vast actual business interests of Holland received a damaging check, from which it took many years to recover.

There were some curious incidents in the course of the tulipomania. They have been told before, but they are worth telling again, as the poet says, "To point the moral or adorn the tale."

A sailor brought to a rich Dutch merchant news of the safe arrival of a very valuable cargo from the Levant. The old hunks rewarded the mariner for his good tidings with one red herring for breakfast. Now Ben Bolt (if that was his name--perhaps as he was a Dutchman it was something like Benje Boltje) was very fond of onions, and spying one on the counter as he went out of the store, he slipped it into his pocket, and strolling back to the wharf, sat down to an odoriferous breakfast of onions and herring. He munched away without finding anything unusual in the flavor, until just as he was through, down came Mr. Merchant, tearing along like a madman at the head of an excited procession of clerks, and flying upon the luckless son of Neptune, demanded what he had carried off besides his herring?

"An onion that I found on the counter."

"Where is it? Give it back instantly!"

"Just ate it up with my herring, mynheer."

Wretched merchant! In a fury of useless grief he apprised the sailor that his sacrilegious back teeth had demolished a Semper Augustus valuable enough, explained the unhappy old fellow, to have feasted the Prince of Orange and the Stadtholder's whole court. "Thieves!" he cried out--"Seize the rascal!" So they did seize him, and he was actually tried, condemned and imprisoned for some months, all of which however did not bring back the tulip root. It is a question after all in my mind, whether that sailor was really as green as he pretended, and whether he did not know very well what he was taking. It would have been just like a reckless seaman's trick to eat up the old miser's twelve hundred dollar root, to teach him not to give such stingy gifts next time.

An English traveller, very fond of botany, was one day in the conservatory of a rich Dutchman, when he saw a strange bulb lying on a shelf. With that extreme coolness and selfishness which too many travellers have exercised, what does he do but take out his penknife and carefully dissect it, peeling off the outer coats, and quartering the innermost part, making all the time a great many wise observations on the phenomena of the strange new root. In came the Dutchman all at once, and seeing what was going on, he asked the Englishman, with rage in his eyes, but with a low bow and that sort of restrained formal civility which sometimes covers the most furious anger, if he knew what he was about?

"Peeling a very curious onion," answered Mr. Traveller, as calmly as if one had a perfect right to destroy other people's property to gratify his own curiosity.

"One hundred thousand devils!" burst out the Dutchman, expressing the extent of his anger by the number of evil spirits he invoked--"It is an Admiral van der Eyck!"

"Indeed?" remarked the scientific traveller, "thank you. Are there a good many of these admirals in your country?" and he drew forth his note book to write down the little fact.

"Death and the devil!" swore the enraged Dutchman again--"come before the Syndic and you shall find out all about it!" So he collared the astounded onion-peeler, and despite all he could say, dragged him straightway before the magistrate, where his scientific zeal suffered a dreadful quencher in the shape of an affidavit that the "onion" was worth four thousand florins--about $1600--and in the immediate judgment of the Court, which "considered" that the prisoner be forthwith clapt into jail until he should give security for the amount. He had to do so accordingly, and doubtless all his life retained a distaste for Dutchmen and Dutch onions.

These stories about such monstrous valuations of flower roots recall to my mind another anecdote which I shall tell, not because it has anything to do with tulips, but because it is about a Dutchman, and shows in striking contrast an equally low valuation of human life. It is this.

Once, in time of peace, an English and a Dutch Admiral met at sea, each in his flag ship, and for some reason or other exchanged complimentary salutes. By accident, one of the Englishman's guns was shotted and misdirected, and killed one of the Dutch crew. On hearing the fact the Englishman at once manned a boat and went to apologize, to inquire about the poor fellow's family and to send them some money, provide for the funeral, etc., etc., as a kind hearted man would naturally do. But the Dutch commander, on meeting him at the quarter-deck, and learning his errand, at once put all his kindly intentions completely one side, saying in imperfect English:

"It'sh no matter, it'sh no matter--_dere's blaanty more Tutchmen in Holland_!"

CHAPTER XXVI.

JOHN BULL'S GREAT MONEY HUMBUG.--THE SOUTH SEA BUBBLE IN 1720.

The "South Sea Bubble" is one of the most startling lessons which history gives us of the ease with which the most monstrous, and absurd, and wicked humbugs can be crammed down the throat of poor human nature.

It ought also to be a useful warning of the folly of mere "speculation,"

as compared with real "business undertakings." The history of the South Sea Bubble has been told, before, but it is too prominent a case to be entirely pa.s.sed over. It occupied a period of about eight months, from February 1, 1720, to the end of the following September. It was an unreasonable expansion of the value of the stock of the "South Sea Company." This Company was formed in 1711; its stock was at first about $30,000,000, subscribed by the public and handed over by the corporators to Government to meet certain troublesome public debts. In return, Government guaranteed the stockholders a dividend of six per cent., and gave the Company sundry permanent important duties and a monopoly of all trade to the South Pacific, or "South Sea." This matter went on with fair success as a money enterprise, until the birth of the "Bubble,"

which was as follows:--In the end of January, 1720, probably in consequence of catching infection from "Law's Mississippi Scheme" in France, the South Sea Company and the Bank of England made competing propositions to the English Government, to repeat the original South Sea Company financiering plan on a larger scale. The proposition of the Company, which was accepted by Government, was: to a.s.sume as before the whole public debt, now amounting to over one hundred and fifty millions of dollars; and to be guaranteed at first a five per cent. dividend, and afterward a four per cent. one, to the stockholders by Government. For this privilege, the Company agreed to pay outright a bonus of more than seventeen million dollars. This plan is said to have been originated and princ.i.p.ally carried through by Sir John Blunt, one of the Company's directors. Parliament adopted it after two months' discussion--the Bubble having, however, been swelling monstrously all the time.

It must be remembered that the wonderful profits expected from the Company were to come from their monopoly of the South Sea trade.

Tremendous stories were told by Blunt and his friends, who can hardly have believed more than one half of their own talk, about a free trade with all the Spanish Pacific colonies, the importation of silver and gold from Peru and Mexico in return for dry goods, etc., etc.; all which fine things were going to produce two or three times the amount of the Company's stock every year. When the bill authorizing the arrangement pa.s.sed, South Sea stock had already reached a price of four hundred per cent. The bill was stoutly opposed in Parliament by Mr.--afterwards Sir--Robert Walpole, and a few others but in vain. Under the operation of the beautiful stories of the speculative Blunt and his friends, South Sea stock, after a short lull in April, began to rise again, and the bubble swelled and swelled to a size so monstrous, and with colors so gay, that it filled the whole horizon of poor foolish John Bull:--perfectly turned his bull-headed brain, and made him for the time absolutely crazy. The directors opened books on April 12th for 5,000,000 new stock, charging, however, 300 for each share of 100, or three hundred per cent. to begin with. Double the amount was subscribed in a few days; that is, John Bull subscribed thirty million dollars for ten millions of stock, where only five millions were to be had. In a few days more, these subscribers were selling at double what they paid. April 21st, a ten per cent. dividend was voted for midsummer.

In a day or two, another five million subscription was opened at four hundred per cent. to begin with. The whole, and half as much more, was taken in a few hours. In the end of May, South Sea stock was worth five hundred to one. On the 28th, it was five hundred and fifty. In four days more, for some reason or other, it jumped up to eight hundred and ninety. The speculating Blunt kept all this time blowing and blowing at his bubble. All summer, he and his friends blew and blew; and all summer the bubble swelled and floated, and shone; and high and low, men and women, lords and ladies, clergymen, princesses and d.u.c.h.esses, merchants, gamblers, tradesmen, dressmakers, footmen, bought and sold. In the beginning of August, South Sea stock stood at one thousand per cent! It was really worth about twenty-five per cent. The crowding in Exchange Alley, the Wall street of the day, was tremendous. So noisy, and unmanageable and excited was this mob of greedy fools, that the very same stock was sometimes selling ten per cent. higher at one end of the Alley than at the other.

The growth of this monstrous, noxious bubble hatched out a mult.i.tude of young c.o.c.katrices. Not only was the stock of the India Company, the Bank of England, and other sound concerns, much increased in price by sympathy with this fury of speculation, but a great number of utterly ridiculous schemes and barefaced swindles were advertised and successfully imposed on the public. Any piece of paper purporting to be stock could be sold for money. Not the least thought of investigating the solvency of advertisers seems to have occurred to anybody. Nor was any rank free from the poison. Almost a hundred projects were before the public at once, some of them incredibly brazen humbugs. There were schemes for a wheel for perpetual motion--capital, $5,000,000; for trading in hair (for wigs), in those days "a big thing;" for furnishing funerals to any part of Britain; for "improving the art of making soap;"

for importing walnut-trees from Virginia--capital, $10,000,000; for insuring against losses by servants--capital, $15,000,000; for making quicksilver malleable; "Puckle's Machine Company," for discharging cannon-b.a.l.l.s and bullets, both round and square, and so on. One colossal genius in humbugging actually advertised in these words: "A company for carrying on an undertaking of great advantage, but n.o.body to know what it is." The capital he called for was $2,500,000, in shares of $500 each; deposit on subscribing, $10 per share. Each subscriber was promised $500 per share per annum, and full particulars were to be given in a month, when the rest of the subscription was to be paid. This great financier, having put forth his prospectus, opened his office in Cornhill next morning at nine o'clock. Crowds pressed upon him. At three P. M., John Bull had paid this immense humbug $10,000, being deposits on a thousand shares subscribed for. That night, the financier--a shrewd man!--modestly retired to an unknown place upon the Continent, and was never heard of again. Another humbug almost as preposterous, was that of the "Globe Permits." These were square pieces of playing-cards with a seal on them, having the picture of the Globe Tavern, and with the words, "Sailcloth Permits." What they "permitted" was a subscription at some future period to a sailcloth-factory, projected by a certain capitalist. These "permits" sold at one time for $300 each.

But the more sensible members of Government soon exerted their influence against these lesser and more palpable humbugs. Some accounts say that the South Sea Company itself grew jealous, for it was reckoned that these "side-shows" called for a total amount of $1,500,000,000, and itself took legal means against them. At any rate, an "order in council"

was published, peremptorily dismissing and dissolving them all.