From 1702 to 1713 there was war between England and Holland on the one side, and France and Spain on the other. By the treaty of Utrecht, which again brought peace, the English received the concession for the exclusive supply of negro slaves to the Spanish colonies for thirty years. This Assiento contract was given to the Great South Sea Company, which resulted from one of those joint-stock manias, now epidemic in France, England, and even Holland.

The Company was projected by the Earl of Oxford in 1711, and, like the Mississippi scheme in France, was intended to assist the Government, which was virtually bankrupt. As yet there was no funded national debt, but large sums were owing to the army and navy, which had been provisionally settled by debentures, that could be discounted only at a serious loss to the owners. Down to the establishment of the Bank of England in 1693 no public loan existed, but this was commenced by borrowing the capital of that institution. At the peace of Ryswick, in 1697, the public debt amounted to twenty millions, but by the time the South Sea Company was started the arrears of pay made it half as much again. Part of the great scheme was to advance this amount on security of English customs duties amounting to £600,000 per annum, and a monopoly of the Spanish trade in the Indies as far as the Assiento contract would permit.

Whether the whole affair was a fraud from the commencement is doubtful; there were certainly misrepresentations in the prospectus, either wilful or possibly in good faith. Spain was to allow free trade to England in four ports on the Pacific, and three vessels besides slavers were to go to the isthmus every year—concessions never promised nor intended by Philip the Fifth. The slave trade was a fact, and according to the statements it would give fabulous profits.

MAP OF TERRA FIRMA.
(From Gottfried's "Reisen.")

Visions of boundless wealth now floated before the eyes of the English people, and they at once began to rival the French in their madness, as they had in their colonisation. The English Government was ready to make every possible concession because it wanted to be rid of the incubus of thirty millions, and therefore did nothing to check the Company. As the stock was issued it was at once bought up, and then sold again at a considerable advance. Everybody expected to make fortunes, therefore they must get shares at any price. Rumours of peace with Spain, and great concessions that would bring all the riches of Peru and Mexico into their coffers, roused them still more. Gold would soon be as plentiful as copper, and silver as iron. The shareholders would be the richest people the world ever saw, and every share would give dividends of hundreds per cent. per annum. The bill making the Government concessions was passed in April, 1720, when the stock was quoted at £310 for a hundred pound share. Strange to say, it then began to fall, but the projectors put forth a rumour that England was about to exchange Gibraltar for a port in Peru, and confidence was restored at once. So great was the increased demand that another million was issued at £300 per £100 share, and these were so much run after that the fortunate owners were at once offered double what they had paid. Then another million was offered at £400, and in a few hours applications were received for a million and a half.

People were so eager to invest their money that they swallowed almost any bait thrown to them. Hundreds of bubble companies hovered on the outskirts of the parent, among them one for settling the barren islands of Blanco and Sal Tortugas, another to colonise Santa Cruz, and a third to fit out vessels for the suppression of piracy. But perhaps the most absurd was "a company for carrying on an undertaking of great advantage, but nobody to know what it is."

Near their highest point the South Sea Shares were sold at £890, but so many wanted to sell at that price that they soon fell to £640. This put the directors again upon their mettle, and they set to work with fresh rumours and pushed them up to £1,000, from which they suddenly went down, with a few fluctuations, until utterly worthless. The treasurer of the Company ran away to France when the blow fell, but the directors were arrested and their estates ultimately confiscated. Thousands of people were ruined, and the public credit received a blow from which it took many years to recover.

Meanwhile the South Sea Company had not been altogether idle. Besides the slave vessels they were entitled to send one ship annually to the Carthagena and Porto Bello fairs, this being called the Navio de permisso. It was not to be larger than five hundred tons, yet the Company picked out the biggest they could find and filled it with goods, to the exclusion of food and water, which were carried in small store vessels that waited outside the harbour. This caused a great deal of dissatisfaction, as the English brought so much that they could under-sell the Spanish merchants in their own market. In 1715 the Bedford, nominally of six hundred tons, was seized at Carthagena on the ground that her burden was excessive. By the Spanish measurements the cargo was said to have amounted to 2,117½ tons, and the excess was confiscated and ordered to be sold. However, the English protested, at the same time passing over some valuable presents to the authorities, with the result that a remeasurement was ordered, which made the amount only 460 tons.

In 1716 the Spaniards took Campeachy and sixty English logwood vessels, which occasioned another war. The English claimed that they had an undoubted right to cut logwood at that place, and that former kings had always maintained them in this. For a long time they had quietly possessed a part of Yucatan, uninhabited by Spaniards, and they claimed not only the privilege of wood-cutting, but of settlement as well. Probably the little notice taken of their attack on the Darien colony made the Spanish authorities think England ready to bear any insult, but they soon found out their mistake. War was declared in 1718, and all the property of the South Sea Company, including debts, was confiscated, the whole amounting to £850,000. This would have been a great blow to the Company had it been genuine, but as we have seen, its mercantile transactions were secondary considerations.