was accepted, neither the one nor the other could foresee that the stocks would rise to their present price. If they had remained as they were, the public would have had a far greater share of the advantage accruing from the scheme; and if the stocks keep up to the price they had been raised to, which was not unlikely, it is but reasonable that the South Sea Company should enjoy the profits procured to it by the wise management and industry of its Directors, which will enable it both to make large dividends among its members and thereby to compass the ends intended by this scheme.' The Bill was read a third time on April 6, and on the following day received the Royal Assent.

At the risk of being accused of prophesying after the event, it must be said that it is impossible to understand how any body of men of average intelligence could conceivably have believed that either corporation could have successfully carried out their proposals without injuring the proprietors of the public debts. Parliament was willing to accept from the South Sea Company the sum of £7,000,000, and showed itself reluctant to hear those who urged that the privileges accorded were not worth a tithe of this amount. The South Sea Company was not a highly endowed philanthropic society: it was a body of merchants trading for profit. How, the House of Commons might surely have asked itself, was the profit to be obtained; how, indeed, was a very heavy loss to be avoided? The Company had (i) exclusive advantages of the trade to the South Sea, but, at best, this was not worth £200,000 a year, and even this was precarious, being dependent upon the continuance of peaceful relations with Spain; (ii) an allowance for the charge of management, pro1 Political State of Great Britain, XIX., 420-423.

portioned to the augmentation of their capital stock; (iii) the difference of receiving five per cent. for the money invested in purchasing the public debts, while the usual rate of interest was four per cent.

These were the ostensible sources of profit; but there was another-the possibility of an increase of wealth which would accrue from a rise in the price of capital stock. Indeed, it was upon this last, and upon this only, that the success of the scheme depended. Only by creating a demand for the stock could the Company fulfil its engagements. Is it any wonder that the Directors took every opportunity to promote a spirit of speculation? It was the obvious course for them to pursue, and, naturally enough, therefore, the course they took. To make matters worse, the public at this moment happened to be in a gambling vein, and anything was good enough with which to flog a willing horse-imaginary advantages, imaginary acquisitionshints of hidden treasure-the declaration of dividends which could never be earned.

CHAPTER III

The 'Boom' in the Stock of the South Sea

A

Company

APRIL-JULY, 1720

1

S soon as it became known that the South Sea Company was making proposals to Parliament, the public began to interest itself in the stock. Much anxiety was evinced as to the particulars of the scheme, and every rumour had its effect upon the market. At this time, a contemporary writer noted, the stockjobbers in Exchange Alley were in perpetual hurry, being tossed about between hopes and fears, upon the different accounts they received almost every minute from their agents and friends in Westminster.' Presently every one seemed convinced that the deal would come off, and, jumping to the conclusion that it would be a good thing for the Corporation, wanted to have a finger in this presumably profitable pie. The spirit of stock-jobbing is rising to a higher degree than ever,' Edward Harley wrote from London to Lord Oxford, February 2, 1720. They that cannot turn themselves to do this will find very little to do here, and can only be speculators of other men's cheats and follies. There has been in former ages something like our Exchange

1 Political State of Great Britain, XIX., 336.

Alley. When this humour became prevalent, some of our greatest patriots thought a retirement to a country farm both a safe and wise retreat.'1

It

As soon as Parliament gave the preference over the Bank to the South Sea Company, the price of its stock went up by leaps and bounds. From 126 it rose to 400. South Sea is all the rage and fashion; the ladies sell their jewels to buy, and happy are they that are in,' Mrs. Windham wrote to Ashe Windham. has fell a little, some say till the Bill is passed, others, foreigners do not come in: last post says it sells in Holland for 400 .. but the first dealers were the greatest gainers.' Probably these first dealers were content to take their profit, and thus brought down the price : certainly the stock declined to 330, at which figure it remained through March.

Stock-jobbing was now the principal subject of conversation. I find,' Edward Harley, junior, wrote to his aunt, Abigail Harley, on February 25, 'that there are few in London that mind anything but the rising and falling of the stocks, upon which all the news and talk of the town turns, so that unless I bring South Sea, African Bank, cent. per cent., par, etc., and such stuff into my letter I shall neither be fashionable nor fill it up. It is said, Duke of Chandos has £30,000 in the

1 Portland MSS., V., 591.

2 Ashe Windham (1672-1749) and his brothers, William, M.P. for Sudbury, 1722–1727, and Aldburgh, 1729-1749, and James, who held a post in the Salt Office, were the sons of William Windham of Felbrigg, in Norfolk, by his wife Katherine, daughter of Sir Joseph Ashe, of Twickenham. Ashe Windham was the father of the statesman, William Windham, who inherited the family estates.

8 Ketton MSS., 200.

James Brydges, first Duke of Chandos (1673–1744), who built the great house at Canons, near Edgware.