Some of these schemes were plausible enough, and, had they been undertaken at a time when the public mind was unexcited, might have been pursued with advantage to all concerned. But they were established merely with a view of raising the shares in the market. The projectors took the first opportunity of a rise to sell out, and next morning the scheme was at an end. Maitland, in his History of London, gravely informs us that one of the projects which received great encouragement was for the establishment of a company "to make deal boards out of sawdust." This is, no doubt, intended as a joke; but there is abundance of evidence to show that dozens of schemes, hardly a whit more reasonable, lived their little day, ruining hundreds ere they fell. One of them was for a wheel for perpetual motion—capital one million; another was "for encouraging the breed of horses in England, and improving of glebe and church lands, and repairing and rebuilding parsonage and vicarage houses." Why the clergy, who were so mainly interested in the latter clause, should have taken so much interest in the first, is only to be explained on the supposition that the scheme was projected by a knot of the fox-hunting parsons, once so common in England. The shares of this company were rapidly subscribed for.
But the most absurd and preposterous of all, and which showed, more completely than any other, the utter madness of the people, was one started by an unknown adventurer, entitled "A Company for carrying on an Undertaking of Great Advantage, but Nobody to know What It Is." Were not the facts stated by scores of credible witnesses, it would be impossible to believe that any person could have been duped by such a project. The man of genius who essayed this bold and successful inroad upon public credulity merely stated in his prospectus that the required capital was half a million, in five thousand shares of one hundred pounds each, deposit two pounds per share. Each subscriber paying his deposit would be entitled to one hundred pounds per annum per share. How this immense profit was to be obtained he did not condescend to inform them at that time, but promised that in a month full particulars should be duly announced, and a call made for the remaining ninety-eight pounds of the subscription. Next morning, at nine o'clock, this great man opened an office in Cornhill. Crowds of people beset his door, and when he shut up, at three o'clock, he found that no less than one thousand shares had been subscribed for and the deposits paid. He was thus, in five hours, the winner of two thousand pounds. He was philosopher enough to be contented with his venture, and set off the same evening for the Continent. He was never heard of again.
It is time, however, to return to the great South Sea gulf, that swallowed the fortunes of so many thousands of the avaricious and the credulous. On May 29th the stock had risen as high as 500, and about two-thirds of the government annuitants had exchanged the securities of the state for those of the South Sea Company. During the whole of the month of May the stock continued to rise, and on the 28th it was quoted at 550. In four days after this it took a prodigious leap, rising suddenly from 550 to 890. It was now the general opinion that the stock could rise no higher, and many persons took that opportunity of selling out, with a view of realizing their profits. Many noblemen and persons in the train of the King, and about to accompany him to Hanover, were also anxious to sell out. So many sellers and so few buyers appeared in the alley on June 3d that the stock fell at once from 890 to 640. The directors were alarmed and gave their agents orders to buy. Their efforts succeeded. Toward evening confidence was restored, and the stock advanced to 750. It continued at this price with some slight fluctuation, until the company closed its books on June 22d.
It would be needless and uninteresting to detail the various arts employed by the directors to keep up the price of stock. It will be sufficient to state that it finally rose to 1000 per cent. It was quoted at this price in the commencement of August. The bubble was then full-blown and began to quiver and shake preparatory to its bursting.
Many of the government annuitants expressed dissatisfaction against the directors. They accused them of partiality in making out the lists for shares in each subscription. Further uneasiness was occasioned by its being generally known that Sir John Blunt, the chairman, and some others had sold out. During the whole of the month of August the stock fell, and on September 2d it was quoted at 700 only.
Day after day it continued to fall, until it was as low as 400. In a letter dated September 13th, from Mr. Broderick, M.P., to Lord Chancellor Middleton, and published in Coxe's Walpole, the former says: "Various are the conjectures why the South Sea directors have suffered the cloud to break so early. I made no doubt but they would do so when they found it to their advantage. They have stretched credit so far beyond what it would bear that specie proves insufficient to support it. Their most considerable men have drawn out, securing themselves by the losses of the deluded, thoughtless numbers, whose understandings have been overruled by avarice and the hope of making mountains out of mole-hills. Thousands of families will be reduced to beggary. The consternation is inexpressible—the rage beyond description, and the case altogether so desperate that I do not see any plan or scheme so much as thought of for averting the blow; so that I cannot pretend to guess what is next to be done." Ten days afterward, the stock still falling, he writes: "The company have yet come to no determination, for they are in such a wood that they know not which way to turn. By several gentlemen lately come to town, I perceive the very name of a South Sea man grown abominable in every country. A great many goldsmiths are already run off, and more will; daily I question whether one-third, nay, one-fourth, of them can stand it."
At a general court of the Bank of England, held soon afterward, the governor informed them of the several meetings that had been held on the affairs of the South Sea Company, adding that the directors had not yet thought fit to come to any decision upon the matter. A resolution was then proposed, and carried without a dissentient voice, empowering the directors to agree with those of the South Sea to circulate their bonds to what sum and upon what terms and for what time they might think proper. Thus both parties were at liberty to act as they might judge best for the public interest.
Books were opened at the bank for subscription of three millions for the support of public credit, on the usual terms of 15 pounds per cent. deposit, 3 pounds per cent. premium, and 5 pounds per cent. interest. So great was the concourse of people in the early part of the morning, all eagerly bringing their money, that it was thought the subscription would be filled that day; but before noon the tide turned. In spite of all that could be done to prevent it, the South Sea Company's stock fell rapidly. Its bonds were in such discredit that a run commenced upon the most eminent goldsmiths and bankers, some of whom, having lent out great sums upon South Sea stock, were obliged to shut up their shops and abscond. The Sword-blade Company, which had hitherto been the chief casher of the South Sea Company, stopped payment. This, being looked upon as but the beginning of evil, occasioned a great run upon the bank, which was now obliged to pay out money much faster than it had received it upon the subscription in the morning. The day succeeding was a holiday (September 29th), and the bank had a little breathing-time. It bore up against the storm; but its former rival, the South Sea Company, was wrecked upon it. Its stock fell to 150, and gradually, after various fluctuations, to 135.
The bank, finding it was not able to restore public confidence and stem the tide of ruin, without running the risk of being swept away, with those it intended to save, declined to carry out the agreement into which it had partially entered. "And thus," to use the words of the Parliamentary History, "were seen, in the space of eight months, the rise, progress, and fall of that mighty fabric, which, being wound up by mysterious springs to a wonderful height, had fixed the eyes and expectations of all Europe, but whose foundations, being fraud, illusion, credulity, and infatuation, fell to the ground as soon as the artful management of its directors was discovered."