To the games of faro, hazard, macao, doodle-doo and rouge-et-noir, at this time, more than to horse-racing, may be ascribed the ruin of many London merchants who once possessed fortunes and prosperous business. Thousands upon thousands were thus ruined in the vicinity of St. James; but this was not confined to youths of fortune only, but to decent and respectable merchants, who were engulfed in its vortex.
Of the “South Sea Bubble,” a writer in the Eclectic Magazine for May, 1885, says: “If not the earliest, at least the most remarkable instance of this national spirit of gambling displayed itself in the last century, and was the infatuation which led all classes to commit themselves to the alluring prospects held out to them by the South Sea Company. The public creditor was offered six per cent. interest, and a participation in the profits of a new trading company, incorporated under the style of ‘The Governor and Company of Merchants of Great Britain trading to the South Seas and other parts of America.’ But, whatever chances of success this company might have had, were soon dispersed by the breaking out of the war with Spain, in 1718, which rendered it necessary for the concoctors of the scheme to circulate the most exaggerated reports, falsify their books, bribe members of the government, and resort to every fraudulent means, for the purpose of propping up their tottering creation. Wonderful discoveries of valuable resources were trumped up, and, by the mystery which they contrived to throw around the whole concern, people’s curiosity was excited, and a general, but vague impression got abroad that one of the South Sea Company’s bonds was talismanic, and there was no reckoning the amount of profit it would bring to the fortunate possessor. The smallest result expected from the enterprise was that in twenty-six years it would pay off the entire amount of the National debt.
“How it was to be done no one knew, or cared to inquire, it was sufficient to know that it was to be done. Trade and business of all kinds was suspended, every pursuit and calling neglected, and the interest of the whole nation absorbed by this enchanting dream. Money was realized in every way, and at every sacrifice and risk, to be made available in the purchase of South Sea stock, which rose in price with the demand from £150 to £325. Fresh speculators came pouring in, and the price went up to £1,000. This was at the latter end of July, but alas, a whisper went forth that there was something wrong with the South Sea Company. The chairman, Sir John Blunt, and some of the directors had sold their shares. There was a screw loose somewhere, and on the 2nd of September it was quoted at £700. An attempt to allay the panic was made by the directors, who called a meeting on the 8th, at Merchant Tailors’ Hall, but in the evening it fell to £640, and next day stood at £540. The fever had been succeeded by a shivering fit, and it was rapidly running down to zero. In this emergency, the king, who was at Hanover, was sent for, and Sir Robert Walpole called in, when the case was desperate. He endeavored to persuade the Bank of England to circulate the company’s bonds, but in vain. The stock fell to £135, and the bubble burst. The duration of this public delirium, as Smallett[Smallett] has truly called it, may be estimated when we state that the bill enabling the company to raise the subscription received the royal assent on the 7th of April, 1720, with the stock at £150; that the price subsequently ran up to £1,000; and that, on the 27th day of September it had again sunk to £150, and the delusion was over, and the nation in a state of panic, with public credit shaken to its center. Investigations were now made into the conduct of the managers of this marvelous fraud. A bill was first passed through parliament to prevent the escape of the directors from the kingdom, and then a Committee of Secrecy appointed to examine into their accounts. It then came out that the books had been destroyed, or concealed, entries erased and altered, and accounts falsified; that the king’s mistress, even, the Duchess of Kendal, had received stock to the amount of £10,000; another favorite, the Countess of Platen, £10,000; Mr. Aislabie, Chancellor of the Exchequer, £70,000; Mr. Graggs, father of the Secretary of State, £659,000; the Duke of Sutherland, £160,000; Mr. Graggs, Jr., £30,000; and Mr. Charles Stanhope, Secretary of the Treasury, two amounts, one of £10,000, and another of £47,000. The manner in which these worthies, who were in the secret, could anticipate and influence the markets, is obvious. Poor Gay had received an allotment of stock from Mr. Secretary Graggs which was at one time worth £20,000, but he clung fast to the bubble, refused to sell at that price, and waited till it was worthless, when he found himself hugging the shadow of a fortune. The amount of the company’s stock, at the time of the inquiry, was found to be £37,800,000, of which £24,500,000 belonged to individual proprietors. As some compensation to these rash and ruined speculators, the estates of the directors were confiscated. Sir George Caswell was expelled from the House of Commons, and made to disgorge £250,000; Aislabie, the Chancellor of the Exchequer, was expelled, and committed to the Tower; Sir John Blunt, the chairman, was stripped of all but £5,000, and the excitement and popular resentment was so intense that it is marvelous that they escaped with their lives.
“The South Sea frenzy was not sufficient to engross the gambling spirit that it had generated, simultaneously there oozed up a crowd of smaller bubbles, of which Malcom counted 156. The titles to some of them were sufficient to illustrate the madness which had seized upon the nation. There were companies for carrying on the undertaking business and furnishing funerals, capital £1,200,000 at the ‘Fleece Tavern’ (ominous sign,) Cornhill; for discounting pensions, 2,000 shares at the Globe Tavern; for preventing and suppressing thieves, and insuring all persons’ goods from the same (?), capital £2,000,000, at Cooper’s; for making Joppa and Castile soap, at the Castile Tavern; for sweeping the streets, for maintaining bastard children; for improving gardens and raising fruit trees, at Carraway’s, for insuring horses against natural death, accident or theft, at the Brown Tavern, Smithfield, another at Robin’s, of the same nature, capital £2,000,000; for introducing the breed of asses; an insurance company against the thefts of servants, 3,000 shares of £1,000 each, at the Devil Tavern; for perpetual motion, by means of a wheel moving by force of its own weight, capital £1,000,000 at the Ship Tavern,” etc., etc. The Prince of Wales became governor of a Welsh Copper Company. The Duke of Chandos was Chairman of the York Building Company, and of another Company for building houses in London and Westminster.
“Many of these speculators were jealously prosecuted by the South Sea Company, but they all succeeded, in a greater or less degree, in spreading the general panic. The amount of capital proposed to be raised by these countless schemes was three hundred million sterling—exceeding the value of all the lands in England. The most amusing instance of the blind credulity of the public was in the success which attended one wary projector, who, well knowing the value of mystery, published the following proposal:
“‘This day, the 28th inst., at Sam’s Coffee-house, behind the Royal Exchange, at three in the afternoon, a book will be opened for entering into a joint co-partnership for carrying on a thing that will turn to the advantage of all concerned.’
“The particulars of this notable scheme were not to be revealed for a month, and, ‘in the meantime’ says Smallet[Smallet], he declared that every person paying two guineas should be entitled to a subscription of one hundred pounds, which would produce that sum yearly.’ In the forenoon, the adventurer received a thousand of these subscriptions, and, in the evening, set out for another kingdom.
“Some curious satires on these several schemes are preserved in the British Museum, in the shape of a book of playing-cards. Thus, one is a caricature of York-buildings, with the following lines beneath it:
‘You that are blessed with wealth by your Creator,
And want to drown you money in Thames water,