THE SOUTH SEA BUBBLE (1720).
I.
The Proposals: The Second Scheme of the South Sea Company.
Source.—The Schemes of the South Sea Company and the Bank of England as Propos'd to the Parliament for the Reducing of the National Debts. London, 1720.
To the Honourable the Commons of Great Britain in Parliament Assembled.
The Corporation of the Governors and Company of Merchants, Trading to the South Seas and other Parts of America, and for Encouraging the Fishery, having on the 27th January last presented their Humble Proposal to this Honourable House, for Enlarging the Capital Stock of the said Company, by taking thereinto the several Annuities and Publick Debts therein Mentioned, on the Terms and Conditions in the said Proposal also Mentioned, in which Proposal such Advantages were offer'd to the Publick, as the said Corporation did humbly hope would have been to the entire Satisfaction of this Honourable House, and most conducive to the certain Discharging and Paying off the whole Debt of the Nation, and to which Proposal they humbly crave Leave to refer. But the Governors and Company of the Bank of England having the same day also delivered a Proposal to this Honourable House, for enlarging their Capital Stock, by taking in the same Annuities and Debts on the Terms and Conditions in their Proposal also mentioned.
This Corporation therefore further, to manifest their Zeal and Earnest desire to Contribute their utmost to the reducing and paying off the Publick Debts, crave leave to offer the following Explanations and Amendments to their said Proposal.
I. As to the sixth Article of their said former Proposal, wherein they have humbly desir'd to be Allowed for Charges of Management, for their to be increased Capital, so much as it now costs the Government for the Charges of Paying, Assigning and Accounting for the said Debts, or such Proportion thereof, as the Sum which shall be taken in by the Company, shall bear to the whole of those Debts.
They now offer by way of Explanation of that Article, that the Allowances therein Mentioned, are not to exceed a Proportion to the Allowance they now have by Act of Parliament on their present Capital for that purpose.
II. That whereas, in their seventh Article of their said Proposal it is Mentioned that the Annuities for the Company's present, and to be increased Capital, be continued at the Rates therein Mentioned till Midsummer, 1727. And that from and after that time their then Annuity on their whole Capital, shall be actually reduced to £4 per Cent. per Ann. and likewise be from thenceforth redeemable by Parliament.
They do humbly offer that if this Honourable House do think it more for the Interest of the Publick, that in lieu of the said seventh Article, all the Sums to be taken into the Company's Capital, in pursuance of their proposal, shall be redeemable by Parliament, from and after Midsummer 1724, in Sums not less than £500,000 at a time they do consent thereto.
III. And whereas by the tenth Article of their said former Proposal, they offer'd for the Liberty of Increasing their Capital Stock, as is therein aforesaid; that they would give and pay into his Majesty's Exchequer, for the Service of the Publick, the sum of £3,500,000.
They now humbly Offer, that over and above the said £3,500,000, They will farther give and pay into his Majesty's Exchequer, for the use of the Publick, by four Equal Quarterly Payments on the days Mention'd in their said former Proposal, £500,000 more certain, and also upon all the said Annuities for certain Terms of Years which this Company shall take into their Capital Stock, before the first day of March, 1721, after the rate of four Year and half purchase, by four Quarterly Payments which if all the said Annuities be taken into the said Company, will amount to the Sum of £3,567,503 or thereabouts, to which being added the said £3,500,000 and the said further Sum of £500,000 will amount in the whole to the Sum of £7,567,500 or thereabouts.
IV. That whereas in the eleventh Article of their former Proposal, they did submit that so much as shall arise by the sinking Fund before Midsummer 1727 may from and after paying Off such Part of the Publick Debts, as may be Redeemed within that time, and which shall not be taken into this Company, be applied at the end of every Year towards paying off, in even One Hundred Thousand Pounds, that part of the Company's Capital, which carries £5 per Cent. per Ann.
They do humbly offer in lieu thereof, that if this Honourable House think fit to make their to be Increased Capital, Redeemable at Midsummer 1724, That the said sinking Fund may till that time be applied half Yearly, to the paying off that part of the Company's which is to carry £5 per Cent. per Ann.
V. As to the twelfth Article of this Company's former Proposal, Relating to the Circulating of £1,000,000 in Exchequer Bills Gratis, and likewise pay the Interest for that Million, so as no other Exchequer Bills be issued than what shall be Circulated by the Credit of the Exchequer, without the aid of Subscription or Contract.
VI. And Lastly, that this Honourable House may be fully satisfied of the sincere Intentions of this Company to use their best Endeavours to take in all the said Annuities for ninety-nine, and ninety-six Years, which amount to £667,705 8s. 1d. per Ann. This Company do further Humbly offer to give and pay into his Majesty's Exchequer, for the Service of the Publick, by four Equal Quarterly Payments, one Years Purchase upon all such of those Annuities as shall happen not to come into the Company's Capital within the time aforesaid.
And whereas this Company is very Sensible, that the Prosperity of the Nation doth greatly depend upon the discharging the Publick Debts (a Motive which Induced them to make the first Propositions of this Publick and beneficial nature) They do Humbly submit these Explanations and Amendments to this Honourable House, flattering themselves that Readiness and Cheerfulness that Ingaged them so much earlier than any other Society, to endeavour to reduce that great Debt under which this Nation is Oppressed, will Intitle them to the favour and preference of this House, since they are willing and do hereby declare they are ready to undertake this great work upon whatever Terms may be offered by any other Company.
By Order of the General Court.
John Fellows, Sub-Governour.
Charles Joye, Dep. Governour.
Feb. 1, 1719
II.
The Bubble Burst.
Source.—The Case of the Borrowers on the South Sea Loans Stated. Pp. 1-7. London, 1721.
Since the Parliament has thought it of service to the Publick, that the unhappy sufferers by the South Sea should have Relief: and are at present considering how to give it them: I am persuaded, no one will think it either improper or unreasonable, that the case of the Borrowers on the Loans (who in my opinion are the most unhappy of them all) should be truly stated and made publick.
For my part, I will endeavour it, as far as I am able, with Justice to the Company who are their Creditors, and with no more Compassion to these unfortunate People, than their Circumstances honestly deserve: And I have this Satisfaction in what I undertake, that as I believe it is not the Intent of the Members of either of the Honourable Houses to administer Relief with Partiality, or to neglect any set of Men who really want it, should I so far succeed, as to show that these Borrowers do, I can't but hope that they will be esteemed at least worthy their Care and Protection.
To what purpose these Loans were opened by the late Directors, I need not mention: Every one knows, that without them they could never have perfected their Scheme, as they used to term their Villainy. It was not enough for them to have raised their Stock to such a Price, as to have been only able to have discharged their Agreement with the Government; they had larger Views, they were to satisfy their own Avarice, and could not therefore give too great an imaginary Value to their Stock. These Managers (unhappily for us) set out with the good opinion of Mankind: they were esteemed too wise to be deceived themselves, and too honest to deceive their Friends. Thus qualified for Mischief, they soon began it: they soon intoxicated the Brains of all they talked with, gave them wild Notions of the rising Value of their Stock, and persuaded them at any rate to put themselves in Fortune's way: Having with great Art and Industry gained a Credit to their Stock, they immediately upon it took in the first Subscriptions; but these Subscriptions having drawn a great Quantity of Money into their hands, they apprehended the rising Spirit of the Stock might soon be checked for want of Money, and their Project by it injured: For even then the Species of our Nation was not infinite, it was therefore necessary to contrive some Means to carry on quick Circulations of it: and the Means contrived was to issue Money on these Loans. The Success they had we all remember; the Price increased prodigiously, and, if I am not mistaken, above £100 per Cent. in a Day. And indeed this Success was very probable: for these Loans served two Ends at once of the greatest moment to their Schemes: While they furnished the unhappy Borrowers with Money to purchase Stock with, they gave fresh Credit to the Stock, and raised the Price: For when the Directors, who must be supposed to know what they were doing, had put so great a confidence in their Stock, as to lend such Sums upon the Security of that alone, others might with good reason take courage, and trust it too. And their Cunning upon this occasion was very extraordinary, for they were not contented with the Credit they gave to their Stock by this Act, which was a tacit Declaration that they knew it to be intrinsically worth as much or more than what they ventured to lend on it; but they were diligent in private Companies to confirm Men in such Opinion of it, by a constant Ridicule of the Bank for their pitiful and cautious Loan of £100 per Cent. To this Step are greatly owing all our Misfortunes: The most Prudent now began to blame themselves for the most unjust Suspicions they had entertain'd of so good a Project. A Man of moderate Fortune now seem'd poor by the Vast Riches all about him had so suddenly acquired. All grew impatient and uneasy, who were not in this Stock, the Managers were idolised, and only they were happy, who had Directors for their Friends. The Merchant, who thro' a long Diligence and great Variety of Hazard had gained a small Estate, grew mad to see so many idle Fellows enrich themselves within a day or two. The honest Country Gentleman, who by good Management and wise economy had been an Age in paying off a Mortgage, or saving a few small Portions for his younger Children, could not bear the big Discourse and Insults of this New Race. Both laid aside their Prudence, and at last became unhappy Converts to South Sea: Both were persuaded now to use their Diligence, and recover that time their Disbelief had lost them. The one despised his Trade, and sold his Effects, at any rate, to try his Fortune: The other mortgaged what he could, or sold it for a little stock or Third Subscription: And now both are undone, both Beggars. I should think Cases of such Distress as these could not be reflected on without even Humanity itself becoming painful; and yet, whether it proceeds from such Cases being frequent and daily seen, or from an Hardness of Heart, which Providence for a Judgment has suffered to fall on us, I know not; but such Cases are scarce pitied by us: Every one still pursues his own Interest, and seems to grudge the Expense even of a few Shillings, to save thousands from Destruction.