The South Sea Company continued to maintain its pre-eminent position, and the value of its shares continued to rise until, in August, a £100 share was worth £1,000.
At last it brought about its own ruin in a way little anticipated. In an evil hour the directors commenced proceedings against the unlicensed, and therefore illegal, companies which had interfered with the great company's more legitimate business. The result was disastrous. One fraud after another was exposed. The nation suddenly recovered its senses. A panic arose as bubble after bubble burst. By the end of September, South Sea stock had fallen from £1,000 to £150, and at last, after an abortive effort to obtain assistance from the Bank of England, this biggest bubble of all collapsed, bringing thousands to beggary. Even the Bank of England itself experienced difficulty in maintaining its credit during the panic, and was compelled once more to resort to stratagem. Payments were made in silver, and chiefly to persons who were in league with the bank, and who no sooner received their money than they brought it back. The money had of course to be re-counted, and by this means time was gained, and time at such a crisis, and to such an institution, meant literally money. On Michaelmas-day the Bank according to the custom prevailing was closed, and when it opened again, the public alarm had subsided.[49]
Thomas Guy and his hospital.
A few—a very few—of those who had speculated in South Sea stock kept their heads, and got out before the bubble burst. Among these was Thomas Guy, the founder of Guy's Hospital, at that time carrying on business as a bookseller at the corner of Lombard Street and Cornhill—the "lucky corner." He made a large fortune by buying stock at a low price and selling before the crash came, and right good use did he make of his money, for at his death he endowed the hospital called by his name with a sum exceeding £200,000.
Parliamentary enquiry, Jan., 1721.
As is not unusual in such cases, there was a universal endeavour to fasten the guilt upon others than the rash speculators themselves. An outcry was raised, not only against the directors of the company, but also against the ministry. Nothing would suffice but a Parliamentary enquiry into the affairs of the company. This was granted, and early in the following year the Lords commenced an open investigation, whilst the Commons appointed a committee of secrecy. The Lords had scarcely entered upon their investigation before it was discovered that the secretary of the company had made his escape to the continent. Thereupon the Commons gave orders for all ports to be watched in order to prevent the directors of the company following his example. Any director holding office under Government was dismissed. Two members of the House, who were also directors, were expelled the House and taken into custody. These were Jacob Sawbridge, the grandfather of Alderman John Sawbridge, of whom we shall hear more later on, and Sir Theodore Janssen, the father of Stephen Theodore Janssen who, after serving the City in Parliament and in the Mayoralty chair, became the City's Chamberlain. Other directors were also taken into custody and their papers seized.
The Sword-blade Company.
Jacob Sawbridge was a member of the firm of Turner, Caswall and Company, commonly known as the Sword-blade Company, carrying on business as goldsmiths in Birchin Lane. Sir George Caswall, one of the partners, was member for Leominster, and was serving as Sheriff the year of the South Sea Bubble. His firm had acted as cashiers of the South Sea Company, and like many similar firms of goldsmiths, had advanced large sums upon the company's stock. The committee of secrecy appointed by the House of Commons soon discovered that Sir George had been guilty of tampering with the firm's books in order to shield Charles Stanhope. For this he was expelled the House and committed to the Tower, whilst his firm was made to surrender its illgotten gains to the extent of a quarter of a million sterling.[50]
Parliament and the South Sea Company.
All the directors were forced to send in inventories of their respective estates to the Parliamentary Committee. These were confiscated for the benefit of their dupes, their owners being allowed some small portion of their former wealth to keep them from starvation. Peculation and dishonesty were not confined to the city. Peers of the realm and cabinet ministers were charged with receiving large bribes either in money or stock. The Earl of Sunderland, first commissioner of the Treasury, was reported by the committee of investigation to have received £50,000 stock without any consideration whatsoever, and although the House of Commons refused to find him guilty,[51] the Earl felt compelled to give up his post. Craggs, who was Secretary of State, and Aislabie, the Chancellor of the Exchequer, not to mention others, were convicted by the House of receiving similar bribes.[52] Craggs died of an attack of small-pox, pending the enquiry, but he left a large estate, and this was confiscated for the relief of sufferers. Aislabie was expelled the House, and committed to the Tower. Among the directors who were thus made to feel the heavy hand of Parliament was Edward Gibbon, grandfather of the great historian of the "Decline and Fall of the Roman Empire." Out of an estate of £60,000, Parliament allowed him to retain no more than £10,000. That the action of Parliament towards the directors was afterwards condemned by the historian as arbitrary and unjust, and only to be excused by the most imperious necessity, need not therefore cause surprise.[53]