"New banks were started; merchants plunged recklessly into the vortex of speculation. Then came the news of the surrender of General Lee, and the end of the war in America. The bubble burst, even before it was fully inflated, and the business prosperity of Bombay collapsed. The certificates of shares in companies and banks were not worth the paper on which they were written. Even the Bank of Bombay, believed to be as solid as the 'Old Lady' of Threadneedle Street, had to suspend, and the commercial distress was frightful.
"But it left its lesson behind it; and since that time Bombay has patiently and painfully regained its former solid prosperity. It has recovered what it lost, and is now steadily increasing in population and wealth."
"I never heard of the South Sea Bubble of which you speak," said Louis.
"That is not strange, as it was an affair of one hundred and eighty-one years ago," replied Lord Tremlyn. "I have not time now to describe it in full. The floating debt of England at that time was £10,000,000; and the Earl of Oxford concocted a scheme to pay it off, and formed a company of merchants for that purpose. The riches of the South Sea Islands, including South America, were most extravagantly estimated at that time, and the monopoly of the trade was secured by the company formed. The 'South Sea Company' was bolstered up by the pledge of the duties on the imports from these far-off regions, and the shares sold like wild-fire, increasing in price in the most extraordinary manner. Shares at a par of £100 were quoted at £550 in May, and £890 in June.
"The failure of the Mississippi Scheme, projected in France by John Law to develop the resources of the American State of Louisiana, alarmed the shareholders; but the managers declared that they had avoided the errors of Law in their finances, and the enterprise still prospered. A mania for stock-gambling spread over England, and the people seemed to have lost their wits. The most tremendous excitement prevailed. The crisis came, and it was realized that the scheme was a fraudulent one. Some of the biggest operators sold out their stock, and a panic ensued. Consternation came upon the bubble capitalists, and financial ruin stared them and their dupes full in the face.
"The country was stirred to its very foundations. Parliament was called together, and the books of the company were examined. The 'Bubble' had burst, as it did in Bombay. The private property of the directors was confiscated. The ruin brought about by this enterprise, rightly called a 'Bubble,' was beyond calculation; but it taught its lesson, as such affairs always do."
"We are approaching the harbor," said Mrs. Woolridge, who was not much interested in the South Sea Scheme, though her husband and Louis listened to the explanation very attentively.
"We are, madam. You see to the northward of us two peninsulas. The one the more distant has two hills on it. The first is Malabar Hill, and the other Cumballa Hill. This is the aristocratic quarter of Bombay. The huge bungalows of the rich merchants and higher government officials are here. The scenery, natural and artificial, is very fine, and Asiatic magnificence prevails there. That will be one of our first rides. You observe near the point of the peninsula some towers, like pagodas, which will give you your first impression of the temples of India."
Opera-glasses were then in demand, and were brought to bear on the towers.
"They are in the village of Walkeshwar. The peninsula now quite near is Colaba. Indian names are very much mixed in regard to their spelling. The c and the k are about interchangeable, and you can use either one of them. Hence this point is often written Kolaba, and the hill yonder Kumballa. The southern part of this neck of land is the native quarter. You will visit all these localities, and it is not worth while to describe them minutely."