EFFECTS OF THE SOUTH-SEA SCHEME.

While the king was involved at Hanover in a labyrinth of negotiations, the South-Sea scheme produced a kind of national delirium in his English dominions. Blunt, the projector, had taken the hint of his plan from the famous Mississippi scheme formed by Law, which in the preceding year had raised such a ferment in France, and entailed rain upon many thousand families of that kingdom. In the scheme of Law there was something substantial. An exclusive trade to Louisiana promised some advantage; though the design was defeated by the frantic eagerness of the people. Law himself became the dupe of the regent, who transferred the burden of fifteen hundred millions of the king’s debts to the shoulders of the subjects, while the projector was sacrificed as the scape-goat of the political iniquity. The South-Sea scheme promised no commercial advantage of any consequence. It was buoyed up by nothing but the folly and rapaciousness of individuals, which became so blind and extravagant, that Blunt, with moderate talents, was able to impose upon the whole nation, and make tools of the other directors, to serve his own purposes and those of a few associates. When this projector found that the South-Sea stock did not rise according to his expectation upon the bill’s being passed, he circulated a report that Gibraltar and Port-Mahon would be exchanged for some places in Teru; by which means the English trade to the South-Sea would be protected and enlarged. This rumour, diffused by his emissaries, acted like a contagion. In five days the directors opened their books for a subscription of one million, at the rate of three hundred pounds for every hundred pounds capital. Persons of all ranks crowded to the house in such a manner that the first subscription exceeded two millions of original stock. In a few days this stock advanced to three hundred and forty pounds; and the subscriptions were sold for double the price of the first payment. Without entering into a detail of the proceedings, or explaining the scandalous arts that were practised to enhance the value of the stock, and decoy the unwary, we shall only observe, that by the promise of prodigious dividends and other infamous arts, the stock was raised to one thousand; and the whole nation infected with the spirit of stock-jobbing to an astonishing degree. All distinction of party, religion, sex, character, and circumstances, were swallowed up in this universal concern, or in some such pecuniary project. Exchange-Alley was filled with a strange concourse of statesmen and clergymen, churchmen and dissenters, whigs and tories, physicians, lawyers, tradesmen, and even with multitudes of females. All other professions and employments were utterly neglected; and the people’s attention wholly engrossed by this and other chimerical schemes, which were known by the denomination of bubbles. New companies started up every day under the countenance of the prime nobility. The prince of Wales was constituted governor of the Welsh copper company; the duke of Chandos appeared at the head of the York-buildings company; the duke of Bridgewater formed a third, for building houses in London and Westminster. About an hundred such schemes were projected and put in execution, to the ruin of many thousands. The sums proposed to be raised by these expedients amounted to three hundred millions sterling, which exceeded the value of all the lands in England. The nation was so intoxicated with the spirit of adventure, that people became a prey to the grossest delusion. An obscure projector, pretending to have formed a very advantageous scheme, which, however, he did not explain, published proposals for a subscription, in which he promised that in one month the particulars of his project should be disclosed. In the meantime he declared that every person paying two guineas should be entitled to a subscription for one hundred pounds, which would produce that sum yearly. In one forenoon this adventurer received a thousand of these subscriptions; and in the evening set out for another kingdom. The king, before his departure, had issued a proclamation against these unlawful projects; the lords-justices afterwards dismissed all the petitions that had been presented for charters and patents; and the prince of Wales renounced the company of which he had been elected governor. The South-Sea scheme raised such a flood of eager avidity and extravagant hope, that the majority of the directors were swept along with it, even contrary to their own sense and inclination; but Blunt and his accomplices still directed the stream.

The infatuation prevailed till the eighth day of September, when the stock began to fall. Then did some of the adventurers awake from their delirium. The number of the sellers daily increased. On the twenty-ninth day of the month the stock had sunk to one hundred and fifty; several eminent goldsmiths and bankers, who had lent great sums upon it, were obliged to stop payment and abscond. The ebb of this portentous tide was so violent, that it bore down everything in its way; and an infinite number of families were overwhelmed with ruin. Public credit sustained a terrible shock; the nation was thrown into a dangerous ferment; and nothing was heard but the ravings of grief, disappointment, and despair. Some principal members of the ministry were deeply concerned in these fradulent transactions; when they saw the price of stock sinking daily, they employed all their influence with the bank to support the credit of the South-Sea company. That corporation agreed, though with reluctance, to subscribe into the stock of the South-Sea company, valued at four hundred per cent., three millions five hundred thousand pounds, which the company was to repay to the bank on Lady-day and Michaelmas of the ensuing year. This transaction was managed by Mr. Robert Walpole, who, with his own hand, wrote the minute of agreement, afterwards known by the name of the bank contract. Books were opened at the bank to take in a subscription for the support of public credit; and considerable sums of money were brought in. By this expedient the stock was raised at first, and those who contrived it seized the opportunity to realize. But the bankruptcy of goldsmiths and the sword-blade company, from the fall of South-Sea stock, occasioned such a run upon the bank, that the money was paid away faster than it could be received from the subscription. Then the South-Sea stock sunk again; and the directors of the bank, finding themselves in danger of being involved in that company’s ruin, renounced the agreement; which indeed they were under no obligation to perform, for it was drawn up in such a manner as to be no more than the rough draft of a subsequent agreement, without due form, penalty, or clause of obligation. All expedients having failed, and the clamours of the people daily increasing, expresses were despatched to Hanover, representing the state of the nation, and pressing the king to return. He accordingly shortened his intended stay in Germany, and arrived in England on the eleventh day of November.