The South Sea Bubble

PREFACE

HOUGH two centuries have passed since it was inaugurated, the story of the rise and fall of the South Sea Company has not hitherto been told in detail. Yet in all contemporary memoirs it bulks even more largely than the rebellion of '15, and it certainly had consequences more far-reaching. It has, further, its human interest, insomuch as it is one of the most amazing instances of credulity, exhibited at one and the same time in all classes of society, in the history of the nation. There have, of course, been many other cases before and since, but none parallel with this. In 1825 there was a great promotion of industrial companies, the shares of which rose to prices that bore no relation to value; and, later, there was the railway mania, with George Hudson as the leading spirit, when speculation was so madly indulged in, that, in the year 1847, the depreciation in the shares of the ten principal companies was calculated to be not less than £78,000,000. In recent times, too, there have been booms,' followed by the inevitable slump,' and many who gambled in the rubber market must rue the day when they took a hand in a game of the principles of which they were ignorant.

The story of the South Sea Company is simply the old, old story of Captain Rook and Mr. Pigeon. Founded by Robert Harley (who was created Earl of Oxford) in 1711, nine years later it took over the National Debt

on terms hopelessly disadvantageous to itself. Yet the scheme was so vast that its drawbacks were overlooked by many; and those who, ignorant of financial matters, invested in it could at least plead in mitigation of their folly that it was sanctioned by Government. Its £100 stock stood in January, 1720, at a little above par; in August, as the result of the manipulations of unscrupulous Directors, it was quoted at over £1,000; in December it had fallen to £125. A few acute speculators made fortunes, and among these was Robert Walpole, who bought at a low price and sold at the top of the market, netting many tens of thousands of pounds. Persons in all ranks of society were left penniless. The Duke of Portland had to sue for the Governorship of a distant colony, and held himself fortunate when his request was granted; Samuel Chandler, the Nonconformist divine, had to retrieve his fortunes by opening a bookseller's shop in the Poultry. Thousands of humble homes were ruined.

If it had been the folly and ignorance of the public that had brought about the disaster, it would have been bad enough; but, as a matter of fact, it was far worse. There had been bribery, there had been corruption, there had been robbery as well as jobbery. The reputations of many leading men in the financial and political worlds were destroyed. One Minister committed suicide; the Chancellor of the Exchequer and other members of the House of Commons were found guilty, expelled from Parliament, committed to the Tower, and their estates confiscated. The Prime Minister was arraigned. He was, indeed, acquitted, but only by 61 votes, and, since no statesman with any sense of decency, whom 172 members of the House of Commons openly declared they believed guilty of fraud, could even in an early

decade of the eighteenth century contrive decently to hold office, he had shortly to resign. He never again took a prominent part in the affairs of the nation. The King himself was reviled for his support of the Company, of which he was the Governor; and when it became known that the influence of his favourites at Court had been bought by illegal gifts of stock by which they might profit and could not lose, the indignation was so deep that if the Pretender had, as Atterbury wished, landed again in England, it is not beyond the bounds of possibility that the Stuart dynasty might have been restored.

The sources of information concerning the rise and fall of the South Sea Company are numerous. The principal authorities are the various Acts of Parliament relating to the Company, the Journals of the Houses of Parliament, the Reports of the Committee of Secrecy appointed by the House of Commons to investigate the proceedings of that corporation, the Political State of Great Britain,' Tindal's continuation of Rapin's' History of England,' the 'Parliamentary History of England,' contemporary pamphlets by Defoe and others, and Coxe's Memoirs of Sir Robert Walpole.' Interesting side-lights are to be found in the Wentworth and Suffolk Papers, the Journal to Stella,' the Diary of Mary Lady Cowper, the correspondence of Swift and Pope, and in the numerous volumes issued by the Historical MSS. Commission (especially the Bath, Buckinghamshire, Carlisle, Clements, Fortescue, Ketton, Onslow, Portland, and Stuart MSS.). Information may also be gleaned from Macpherson's 'Annals of Commerce,' Stanhope's History of England,' and Wright's Caricature History of the Georges.' Brief accounts will be found in the anonymous pamphlet (which is largely a reprint of

passages from Macpherson's 'Annals of Commerce '), 'The South Sea Bubble and the numerous fraudulent projects to which it gave rise in 1720 historically detailed as a beacon to the unwary against modern schemes equally visionary and nefarious' (1825), and in Charles Mackay's 'Memoirs of Extraordinary Popular Delusions' (1841). The Bubble' playing-cards (a pack of which is preserved in the Print Department of the British Museum) must not be overlooked; while some idea of the trend of public feeling may be discerned in the contemporary prints, the best known of which was drawn by Hogarth.

I am indebted to the Controller of His Majesty's Stationery Office for permission to make quotations from various volumes of the reports of the Historical Manuscripts Commission.

LEWIS MELVILLE.

CHAP.