The bill passed the Commons and went up to the House of Lords. To the credit of the Peers it has to be said that they received it more doubtfully, and were slower to admit the certainty of its blessings than the members of the representative chamber had been. Lord North and Gray condemned it as not only making way for, but {191} actually countenancing and authorizing "the fraudulent and pernicious practice of stock-jobbing." The Duke of Wharton declared that "the artificial and prodigious rise of the South Sea stock was a dangerous bait, which might decoy many unwary people to their ruin, and allure them, by a false prospect of gain, to part with what they had got by their labor and industry to purchase imaginary riches." Lord Cowper said that the bill, "like the Trojan horse, was ushered in and received with great pomp and acclamations of joy, but was contrived for treachery and destruction." Lord Sunderland, however, spoke warmly in favor of the bill, and contended that "they who countenanced the scheme of the South Sea Company had nothing in their view but the easing the nation of part of that heavy load of debt it labored under;" and argued that the scheme would enable the directors of the Company at once to pay off the debt, and to secure large dividends to their share-holders. The Lords decided on admitting the South Sea Company's Trojan horse. Eighty-three votes were in favor of the bill, and only seventeen against it. The bill was read a third time on April 7th, and received the Royal assent on June 11th. The King's speech, delivered that day at the close of the session, declared that "the good foundation you have prepared this session for the payment of the national debts, and the discharge of a great part of them without the least violation of the public faith, will, I hope, strengthen more and more the union I desire to see among all my subjects, and make our friendship yet more valuable to all foreign Powers."
The immediate result of the Parliamentary authority thus given to what was purely a bubble scheme was to bring upon the Legislature a perfect deluge of petitions from all manner of projectors. Patents and monopolies were sought for the carrying on of fisheries in Greenland and various other regions; for the growth, manufacture and sale of hemp, flax, and cotton; for the making of sail-cloth; for a general insurance against fire; for the {192} planting and rearing of madder to be used by dyers; for the preparing and curing of Virginia tobacco for snuff, and making it into the same within all his Majesty's dominions. Schemes such as these were comparatively reasonable; but there were others of a different kind. Petitions were gravely submitted to Parliament praying for patents to be granted to the projectors of enterprises for trading in hair; for the universal supply of funerals to all parts of Great Britain; for insuring and increasing children's fortunes; for insuring masters and mistresses against losses from the carelessness or misconduct of servants; for insuring against thefts and robberies; for extracting silver from lead; for the transmutation of silver into malleable fine metal; for buying and fitting out ships to suppress pirates; for a wheel for perpetual motion, and—with which project, perhaps, we may close our list of specimens—"for carrying on an undertaking of great advantage, but nobody to know what it is." Of course some of these projects were mere vulgar swindles. Even in that season of marvellous projection it is not to be supposed that the inventors of the last-mentioned scheme had any serious belief in its efficacy. The author of the project for the perpetual-motion wheel was, we take it, a sincere personage and enthusiast. His scheme has been coming up again and again before the world since his time; and we have known good men who would have staked all they held dear in life upon the possibility of its realization. But the would-be patentee of the undertaking of great advantage, nobody to know what it is, was a man of a different order. He understood human nature in certain of its moods. He knew that there are men and women who can be got to believe in anything which holds out the promise of quick and easy gain. If he found a few dozen greedy and selfish fools to help his project with a little money, that would, no doubt, be the full attainment of his ends. Probably he was successful. The very boldness of his avowal of secrecy would have a charm for many. One day would be enough for him—the {193} the day when he sent in his demand for a patent. The bare demand would bring him dupes.
[Sidenote: 1720—The bubble bursts]
The first great blow struck at the South Sea Company came from the South Sea Company itself. Several bubble companies began to imitate the financial system which the more favored institution had set up. The South Sea Company put in motion certain legal proceedings against some of the offenders. The South Sea Company had the support and countenance of the high legal authorities, and found no difficulty in obtaining injunctions against the other associations, directing them not to go beyond the strict legal privileges secured to them by their charters of incorporation. Among the undertakings thus admonished were the English Copper Company and the Welsh Copper and Lead Company. His Royal Highness the Prince of Wales happened to be a governor of the English Copper Company, and the Lords-justices were polite enough to send the Prince a message expressing the great regret they felt at having to declare illegal an enterprise with which he was connected. The Prince, not to be outdone in politeness, received the admonition, we are told, "very graciously," and sent on his part a message to the Company requesting them to accept his resignation, and to elect some one else a governor in his place. The proceedings which the South Sea Company had set on foot against their audacious rivals and imitators had, however, the inconvenient effect of directing too much of public attention to the principles upon which they conducted their own business. Confidence began to waver, to be shaken, to give way altogether; and when people ask whether a speculation is a bubble, the bubble, if it is one, is already burst.
The whole basis of Law's system, and of the South Sea Company's schemes as well, was the principle that the prosperity of a nation is increased in proportion to the quantity of money in circulation; and that as no State can have gold enough for all its commercial transactions, paper-money may be issued to an unlimited extent, and {194} its full value maintained without its being convertible at pleasure into hard cash. This supposed principle has been proved again and again to be a mere fallacy and paradox; but it always finds enthusiastic believers who have plausible arguments in its support. It appears, indeed, to have a singular fascination for some persons in all times and communities. It might seem an obvious truism that under no possible conditions can people in general be got to give as much for a promise to pay as for a certain and instant payment; and yet this truism would have to be proved a falsehood in order to establish a basis for such a project as that of Law. Even were the basis to be established, the project would then have to be worked fairly and honestly out, which was not done either in the case of the Mississippi Company or of the South Sea Company. If each had been founded on a true financial principle, each was worked in a false and fraudulent way. At its best the South Sea Company in its later development would have been a bubble. Worked as it actually was, it proved to be a swindle. A committee of secrecy was appointed by the House of Commons to inquire into the condition of the Company. The committee found that false and fictitious entries had been made in the Company's books; that leaves had been torn out; that some books had been destroyed altogether, and that others had been carried off and secreted. The vulgar arts of the card-sharper and the thimble-rigger had been prodigally employed to avert detection and ruin by the directors of a Company which was promoted and protected by ministers of State and by the favorites of the King.
[Sidenote: 1720—Houghton]
Some idea of the wide-spread nature of the disaster which was inflicted by the wreck of the Company may be formed from a rapid glance at some of the petitions for redress and relief which were presented to the House of Commons. We find among them petitions from the counties of Hertford, Dorset, Essex, Buckingham, Derby; the cities of Bristol, Exeter, Lincoln; the boroughs of Oakhampton, Amersham, Bedford, Chipping Wycombe, {195} Abingdon, Sudbury, East Retford, Evesham, Newark-upon-Trent, Newbury, and many other places. We have purposely omitted to take account of any of the London communities. The wildest excitement prevailed; and it is characteristic of the time to note that the national calamity—for it was no less—aroused fresh hopes in the minds of the Jacobites. Such a calamity, such a scandal, it was thought, could not but bring shame and ruin upon the Whig ministers, and through them discredit on the Sovereign and the Court. It was believed, it was hoped, that Sunderland would be found to be implicated in the swindle. Why should not such a crisis, such a humiliation to the Whigs, be the occasion of a new and a more successful attempt on the part of the Jacobites? The King was again in Hanover. He was summoned home in hot haste. On December 8, 1720, the two Houses of Parliament were assembled to hear the reading of the Royal speech proroguing the session; and in the speech the King was made to express his concern "for the unhappy turn of affairs which has so much affected the public credit at home," and to recommend most earnestly to the House of Commons "that you consider of the most effectual and speedy methods to restore the national credit, and fix it upon a lasting foundation." "You will, I doubt not," the speech went on to say, "be assisted in so commendable and necessary a work by every man that loves his country." A week or so before the Royal speech was read, on November 30, 1720, Charles Edward, eldest son of James Stuart, was born at Rome. The undaunted mettle of Atterbury came into fresh and vigorous activity with the birth of the Stuart heir, and the apparently imminent ruin of the Whig ministers.
Robert Walpole had been spending some time peacefully at his country place, Houghton, in Norfolk. Hunting, bull-baiting, and drinking were the principal amusements with which Walpole entertained his guests there. Sometimes the guests were persons of royal rank (Walpole once entertained the Grand Duke of Tuscany); {196} sometimes the throng of his visitors and his neighbors to the hunting-field could only be compared, says a letter written at the time, to an army in its march. Walpole never lost sight, however, of what was going on in the metropolis. He used to send a trusty Norfolk man as his express-messenger to run all the way on foot from Houghton to London, and carry letters for him to confidential friends, and bring him back the answers. When he found how badly things were going in London on the bursting of the South Sea bubble, he hastened up to town. His presence was sadly needed there. It is not without interest to think of James Stuart in Rome, and Walpole in Houghton, both keeping their eyes fixed on the gradual exposure of the South Sea swindle, and both alike hoping to find their account in the national calamity. All the advantage was with the statesman and not with the Prince. The English people of all opinions and creeds were tolerably well assured that if any one could help them out of the difficulty Walpole could; and it required the faith of the most devoted Jacobite to make any man of business believe that the return of the exiled Stuarts could do much to keep off national bankruptcy. Walpole had waited long. His time was now come at last.
[Sidenote: 1720—The Craggses]
Walpole had kept his head cool during the days when the Company was soaring to the skies; he kept his head equally cool when it came down with a crash. "He had never," he said in the House of Commons, "approved of the South Sea scheme, and was sensible it had done a great deal of mischief; but, since it could not be undone, he thought it the duty of all good men to give their helping hand towards retrieving it; and with this view he had already bestowed some thoughts on a proposal to restore public credit, which at the proper time he would submit to the wisdom of the House." Walpole had made money by the South Sea scheme. The sound knowledge of the principles of finance, which enabled him to see that the enterprise thus conducted could not pay, in the end {197} enabled him also to see that it could pay up to a certain point; and when that point had been reached he quietly sold out and saved his gains. The King's mistresses and their relatives also made good profit out of the transactions. The Prince of Wales was a gainer by some of the season's speculations. But when the crash came, the ruin was wide-spread; it amounted to the proportions of a national calamity. The ruling classes raged and stormed against the vile conspirators who had disappointed them in their expectations of coining money out of cobwebs. The Lords and Commons held inquiries, passed resolutions, demanded impeachments. It was soon made manifest beyond all doubt that members of the Government had been scandalously implicated in the worst parts of the fraudulent speculations. Mr. Aislabie, the Chancellor of the Exchequer, was only too clearly shown to be one of the leading delinquents. Mr. Craggs, the father, Postmaster-general, and James Craggs, the son, Secretary of State, were likewise involved. Both were remarkable men. The father had begun life as a common barber, and partly by capacity and partly by the thrift that follows fawning, had made his way up in the world until he reached the height from which he was suddenly and so ignominiously to fall. It was hardly worth the trouble thus to toil and push and climb, only to tumble down with such shame and ruin. Craggs the father had had great transfers of South Sea stock made to him for which he never paid. Craggs the son, the Secretary of State, had acted as the go-between in the transactions of the Company with the King's mistresses, whereby the influence of these ladies was purchased for a handsome consideration. Charles Stanhope, one of the Secretaries to the Treasury and cousin of the Minister, was shown to have received large value in the stock of the Company for which he never paid. The most ghastly ruin fell on some of these men. Craggs the younger died suddenly on the very day when the report incriminating him was read in the House of Commons. Craggs the father poisoned himself a few {198} days afterwards. Pope wrote an epitaph on the son, in which he described him as—