On the 2d of June, South Sea stock rose to 890. On the 15th, many persons who accompanied the king on his foreign journey, sold their stock, which suddenly fell; but the directors promising larger dividends, it got up higher than ever. On the 18th they opened books for a third subscription of four millions more stock, at 1000l. for each 100l., and before the end of the month it had advanced to 1100l., between which and 1000l. it fluctuated throughout the month of July. On the 3d of August they proposed to receive subscriptions for all the unsubscribed annuities, and opened books for the purpose during the ensuing week, upon terms which greatly dissatisfied the annuitants, who, confiding in the honour of the directors, had left their orders at the South Sea House, without any previous contract, not doubting but they should be allowed the same terms with the first subscribers. Finding, to their great surprise and disappointment, that, by the directors’ arrangements, they were only to have about half what they expected, many repaired to the South Sea House to get their orders returned; but these being withheld, their incessant applications and reflections greatly affected the stock, insomuch that, on the 22d of the month, at the opening of the books, it fell to 820. The directors then came to the desperate resolution of ordering the books to be shut; and on the 24th they caused others to be opened for a fourth money subscription for another million of their stock, at 1000l. for each 100l., payable by five instalments within two years: this million was subscribed in less than three hours, and bore a premium the same afternoon of 40 per cent. On the 26th the stock, instead of advancing, fell below 830. The directors then thought fit to lend their proprietors 4,000l. upon every 1000l. stock, for six months, at 4 per cent.; but the annuitants becoming very clamorous and uneasy, the directors resolved that 30 per cent. in money should be the half-year’s dividend due at the next Christmas, and that from thence, for twelve years, not less than 50 per cent. in money should be the yearly dividend on their stock. Though this resolution raised the stock to about 800 for the opening of the books, it soon sunk again.
On the 8th of September, the stock fell to 640, on the 9th to 550, and by the 19th it came to 400. On the 23d the Bank of England agreed with the South Sea company to circulate their bonds, &c. and to take their stock at 400 per cent., in lieu of 3,775,000l., which the company was to pay them. When the books were opened at the Bank for taking in a subscription for supporting the public credit, the concourse was at first so great, that it was judged the whole subscription, which was intended for 3,000,000l., would have been filled that day. But the fall of South Sea stock, and the discredit of the company’s bonds, occasioned a run upon the most eminent goldsmiths and bankers, some of whom, having lent great sums upon the stock and other public securities, were obliged to shut up their shops. The Sword-blade company also, who had been hitherto the chief cash-keepers of the South Sea company, being almost drawn of their ready money, were forced to stop payment. All this occasioned a great run upon the Bank. On the 30th South Sea stock fell to 150, and then to 86.
“It is very surprising,” says Maitland, “that this wicked scheme, of French extraction, should have met with encouragement here, seeing that the Mississippi scheme had just before nearly ruined that nation. It is still more surprising, that the people of divers other countries, notwithstanding the direful effects of this destructive scheme before their eyes, yet, as it were, tainted with our frenzy, began to court their destruction, by setting on foot the like projects: which gives room to suspect,” says Maitland, “that those destructive and fatal transactions were rather the result of an epidemical distemper, than that of choice; seeing that the wisest and best of men were the greatest sufferers; many of the nobility, and persons of the greatest distinction, were undone, and obliged to walk on foot; while others, who the year before could hardly purchase a dinner, were exalted in their coaches and fine equipages, and possessed of enormous estates. Such a scene of misery appeared among traders, that it was almost unfashionable not to be a bankrupt: and the dire catastrophe was attended with such a number of self-murders, as no age can parallel.”
Hooke, the historian of Rome, was a severe sufferer by the South Sea bubble. He thus addresses lord Oxford, in a letter dated the 17th of October 1722: “I cannot be said at present to be in any form of life, but rather to live extempore. The late epidemical (South Sea) distemper seized me: I endeavoured to be rich, imagined for a while that I was, and am in some measure happy to find myself at this instant but just worth nothing. If your lordship, or any of your numerous friends, have need of a servant, with the bare qualifications of being able to read and write, and to be honest, I shall gladly undertake any employments your lordship shall not think me unworthy of.”
In 1720, soon after the bursting of the South Sea bubble, a gentleman called late in the evening at the banking-house of Messrs. Hankey and Co. He was in a coach, but refused to get out, and desired that one of the partners of the house would come to him. Having ascertained that it was really one of the principals, and not a clerk, who appeared, he put into his hands a parcel, very carefully sealed up, and desired that it might be laid on one side till he should call again, which would be in the course of a few days. A few days passed away—a few weeks, a few months, but the stranger never returned. At the end of the second or third year, the partners agreed to open this mysterious parcel, in the presence of each other. They found it to contain 30,000l., with a letter, stating that it was obtained by the South Sea speculation, and directing that it should be vested in the hands of three trustees, whose names were mentioned, and the interest appropriated to the relief of the poor, which was accordingly done.
It has been calculated, that the rise on the original South-sea stock of ten millions, and the subsequent advance of the company’s four subscriptions, inflated their capital to nearly three hundred millions. This unnatural procedure raised bank stock from 100l. to 260l. India, from 100l. to 405l. African, from 100l. to 200l. York-buildings’ shares, from 10l. to 305l. Lustring, from 5l. 2s. 6d. to 105l. English copper, from 5l. to 105l. Welch copper, from 4l. 2s. 6d. to 95l. The Royal Exchange Assurance, from 5l. 5s. to 250l. The London Assurance, from 5l. to 175l., to the great injury of the various purchasers at such prices.
The South Sea scheme terminated in the sudden downfall of the directors, whose estates were confiscated by parliament, and the proceeds applied to the relief of many thousands of families, who had been wholly ruined by the speculation. These dupes of overweening folly and misplaced confidence, were further benefited by a remission in their favour of the national claims on certain of the South Sea company’s real assets. The extent of these donations to the sufferers amounted to 40l. per cent. upon the stock standing in their names.