Memoirs of Extraordinary Popular Delusions Volume 1 Part 3

The bill was two months in its progress through the House of Commons.

During this time every exertion was made by the directors and their friends, and more especially by the Chairman, the noted Sir John Blunt, to raise the price of the stock. The most extravagant rumours were in circulation. Treaties between England and Spain were spoken of, whereby the latter was to grant a free trade to all her colonies; and the rich produce of the mines of Potosi-la-Paz was to be brought to England until silver should become almost as plentiful as iron. For cotton and woollen goods, with which we could supply them in abundance, the dwellers in Mexico were to empty their golden mines. The company of merchants trading to the South Seas would be the richest the world ever saw, and every hundred pounds invested in it would produce hundreds per annum to the stockholder. At last the stock was raised by these means to near four hundred; but, after fluctuating a good deal, settled at three hundred and thirty, at which price it remained when the bill pa.s.sed the Commons by a majority of 172 against 55.

In the House of Lords the bill was hurried through all its stages with unexampled rapidity. On the 4th of April it was read a first time; on the 5th, it was read a second time; on the 6th, it was committed; and on the 7th, was read a third time, and pa.s.sed.

Several peers spoke warmly against the scheme; but their warnings fell upon dull, cold ears. A speculating frenzy had seized them as well as the plebeians. Lord North and Grey said the bill was unjust in its nature, and might prove fatal in its consequences, being calculated to enrich the few and impoverish the many. The Duke of Wharton followed; but, as he only retailed at second-hand the arguments so eloquently stated by Walpole in the Lower House, he was not listened to with even the same attention that had been bestowed upon Lord North and Grey. Earl Cowper followed on the same side, and compared the bill to the famous horse of the siege of Troy. Like that, it was ushered in and received with great pomp and acclamations of joy, but bore within it treachery and destruction. The Earl of Sunderland endeavoured to answer all objections; and, on the question being put, there appeared only seventeen peers against, and eighty-three in favour of the project.

The very same day on which it pa.s.sed the Lords, it received the Royal a.s.sent, and became the law of the land.

It seemed at that time as if the whole nation had turned stockjobbers.

Exchange Alley was every day blocked up by crowds, and Cornhill was impa.s.sable for the number of carriages. Everybody came to purchase stock. "Every fool aspired to be a knave." In the words of a ballad, published at the time, and sung about the streets, ["A South Sea Ballad; or, Merry Remarks upon Exchange Alley Bubbles. To a new tune, called 'The Grand Elixir; or, the Philosopher's Stone Discovered.'"]

Then stars and garters did appear Among the meaner rabble; To buy and sell, to see and hear, The Jews and Gentiles squabble.

The greatest ladies thither came, And plied in chariots daily, Or p.a.w.ned their jewels for a sum To venture in the Alley.

The inordinate thirst of gain that had afflicted all ranks of society, was not to be slaked even in the South Sea. Other schemes, of the most extravagant kind, were started. The share-lists were speedily filled up, and an enormous traffic carried on in shares, while, of course, every means were resorted to, to raise them to an artificial value in the market.

Contrary to all expectation, South Sea stock fell when the bill received the Royal a.s.sent. On the 7th of April the shares were quoted at three hundred and ten, and on the following day, at two hundred and ninety.

Already the directors had tasted the profits of their scheme, and it was not likely that they should quietly allow the stock to find its natural level, without an effort to raise it. Immediately their busy emissaries were set to work. Every person interested in the success of the project endeavoured to draw a knot of listeners around him, to whom he expatiated on the treasures of the South American seas. Exchange Alley was crowded with attentive groups. One rumour alone, a.s.serted with the utmost confidence, had an immediate effect upon the stock. It was said, that Earl Stanhope had received overtures in France from the Spanish Government to exchange Gibraltar and Port Mahon for some places on the coast of Peru, for the security and enlargement of the trade in the South Seas. Instead of one annual s.h.i.+p trading to those ports, and allowing the King of Spain twenty-five per cent. out of the profits, the Company might build and charter as many s.h.i.+ps as they pleased, and pay no per centage whatever to any foreign potentate.

Visions of ingots danced before their eyes, and stock rose rapidly.

On the 12th of April, five days after the bill had become law, the directors opened their books for a subscription of a million, at the rate of 300 pounds for every 100 pounds capital. Such was the concourse of persons, of all ranks, that this first subscription was found to amount to above two millions of original stock. It was to be paid at five payments, of 60 pounds each for every 100 pounds. In a few days the stock advanced to three hundred and forty, and the subscriptions were sold for double the price of the first payment. To raise the stock still higher, it was declared, in a general court of directors, on the 21st of April, that the midsummer dividend should be ten per cent., and that all subscriptions should be ent.i.tled to the same. These resolutions answering the end designed, the directors, to improve the infatuation of the monied men, opened their books for a second subscription of a million, at four hundred per cent. Such was the frantic eagerness of people of every cla.s.s to speculate in these funds, that in the course of a few hours no less than a million and a half was subscribed at that rate.

In the mean time, innumerable joint-stock companies started up everywhere. They soon received the name of Bubbles, the most appropriate that imagination could devise. The populace are often most happy in the nicknames they employ. None could be more apt than that of Bubbles. Some of them lasted for a week, or a fortnight, and were no more heard of, while others could not even live out that short span of existence.

Every evening produced new schemes, and every morning new projects. The highest of the aristocracy were as eager in this hot pursuit of gain as the most plodding jobber in Cornhill. The Prince of Wales became governor of one company, and is said to have cleared 40,000 pounds by his speculations. [c.o.xe's Walpole, Correspondence between Mr. Secretary Craggs and Earl Stanhope.] The Duke of Bridgewater started a scheme for the improvement of London and Westminster, and the Duke of Chandos another. There were nearly a hundred different projects, each more extravagant and deceptive than the other. To use the words of the "Political State," they were "set on foot and promoted by crafty knaves, then pursued by mult.i.tudes of covetous fools, and at last appeared to be, in effect, what their vulgar appellation denoted them to be--bubbles and mere cheats." It was computed that near one million and a half sterling was won and lost by these unwarrantable practices, to the impoverishment of many a fool, and the enriching of many a rogue.

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 the 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 saw-dust." This is, no doubt, intended as a joke; but there is abundance of evidence to show that dozens of schemes hardly a whir 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 foxhunting 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, ent.i.tled "company for carrying on an undertaking of great advantage, but n.o.body to know what it is." Were not the fact 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 100 pounds each, deposit 2 pounds per share. Each subscriber, paying his deposit, would be ent.i.tled to 100 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 98 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 2,000 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.

Well might Swift exclaim, comparing Change Alley to a gulf in the South Sea,--

Subscribers here by thousands float, And jostle one another down, Each paddling in his leaky boat, And here they fish for gold, and drown.

Now buried in the depths below, Now mounted up to heaven again, They reel and stagger to and fro, At their wit's end, like drunken men

Meantime, secure on Garraway cliffs, A savage race, by s.h.i.+pwrecks fed, Lie waiting for the foundered skiffs, And strip the bodies of the dead.

Another fraud that was very successful, was that of the "Globe Permits,"

as they were called. They were nothing more than square pieces of playing cards, on which was the impression of a seal, in wax, bearing the sign of the Globe Tavern, in the neighbourhood of Exchange Alley, with the inscription of "Sail Cloth Permits." The possessors enjoyed no other advantage from them than permission to subscribe, at some future time, to a new sail-cloth manufactory, projected by one who was then known to be a man of fortune, but who was afterwards involved in the peculation and punishment of the South Sea directors. These permits sold for as much as sixty guineas in the Alley.

Persons of distinction, of both s.e.xes, were deeply engaged in all these bubbles, those of the male s.e.x going to taverns and coffee-houses to meet their brokers, and the ladies resorting for the same purpose to the shops of milliners and haberdashers. But it did not follow that all these people believed in the feasibility of the schemes to which they subscribed; it was enough for their purpose that their shares would, by stock-jobbing arts, be soon raised to a premium, when they got rid of them with all expedition to the really credulous. So great was the confusion of the crowd in the alley, that shares in the same bubble were known to have been sold at the same instant ten per cent. higher at one end of the alley than at the other. Sensible men beheld the extraordinary infatuation of the people with sorrow and alarm. There were some, both in and out of Parliament, who foresaw clearly the ruin that was impending. Mr. Walpole did not cease his gloomy forebodings.

His fears were shared by all the thinking few, and impressed most forcibly upon the government. On the 11th of June, the day the Parliament rose, the King published a proclamation, declaring that all these unlawful projects should be deemed public nuisances, and prosecuted accordingly, and forbidding any broker, under a penalty of five hundred pounds, from buying or selling any shares in them.

Notwithstanding this proclamation, roguish speculators still carried them on, and the deluded people still encouraged them. On the 12th of July, an order of the Lords Justices a.s.sembled in privy council was published, dismissing all the pet.i.tions that had been presented for patents and charters, and dissolving all the bubble companies. The following copy of their lords.h.i.+ps' order, containing a list of all these nefarious projects, will not be deemed uninteresting at the present day, when there is but too much tendency in the public mind to indulge in similar practices:--

"At the Council Chamber, Whitehall, the 12th day of July, 1720. Present, their Excellencies the Lords Justices in Council.

"Their Excellencies, the Lords Justices in council, taking into consideration the many inconveniences arising to the public from several projects set on foot for raising of joint stock for various purposes, and that a great many of his Majesty's subjects have been drawn in to part with their money on pretence of a.s.surances that their pet.i.tions for patents and charters, to enable them to carry on the same, would be granted: to prevent such impositions, their Excellencies, this day, ordered the said several pet.i.tions, together with such reports from the Board of Trade, and from his Majesty's Attorney and Solicitor General, as had been obtained thereon, to be laid before them, and after mature consideration thereof, were pleased, by advice of his Majesty's Privy Council, to order that the said pet.i.tions be dismissed, which are as follow:--

"1. Pet.i.tion of several persons, praying letters patent for carrying on a fis.h.i.+ng trade, by the name of the Grand Fishery of Great Britain.

"2. Pet.i.tion of the Company of the Royal Fishery of England, praying letters patent for such further powers as will effectually contribute to carry on the said fishery.

"3. Pet.i.tion of George James, on behalf of himself and divers persons of distinction concerned in a national fishery; praying letters patent of incorporation to enable them to carry on the same.

"4. Pet.i.tion of several merchants, traders, and others, whose names are thereunto subscribed, praying to be incorporated for reviving and carrying on a whale fishery to Greenland and elsewhere.

"5. Pet.i.tion of Sir John Lambert, and others thereto subscribing, on behalf of themselves and a great number of merchants, praying to be incorporated for carrying on a Greenland trade, and particularly a whale fishery in Davis's Straits.

"6. Another pet.i.tion for a Greenland trade.

"7. Pet.i.tion of several merchants, gentlemen, and citizens, praying to be incorporated, for buying and building of s.h.i.+ps to let or freight.

"8. Pet.i.tion of Samuel Antrim and others, praying for letters patent for sowing hemp and flax.

"9. Pet.i.tion of several merchants, masters of s.h.i.+ps, sail-makers, and manufacturers of sail-cloth, praying a charter of incorporation, to enable them to carry on and promote the said manufactory by a joint stock.

"10. Pet.i.tion of Thomas Boyd, and several hundred merchants, owners and masters of s.h.i.+ps, sailmakers, weavers, and other traders, praying a charter of incorporation, empowering them to borrow money for purchasing lands, in order to the manufacturing sail-cloth and fine Holland.

"11. Pet.i.tion on behalf of several persons interested in a patent granted by the late King William and Queen Mary, for the making of linen and sail-cloth, praying that no charter may be granted to any persons whatsoever for making sail-cloth, but that the privilege now enjoyed by them may be confirmed, and likewise an additional power to carry on the cotton and cotton-silk manufactures.

"12. Pet.i.tion of several citizens, merchants, and traders in London, and others, subscribers to a British stock, for a general insurance from fire in any part of England, praying to be incorporated for carrying on the said undertaking.

"13. Pet.i.tion of several of his Majesty's loyal subjects of the city of London, and other parts of Great Britain, praying to be incorporated, for carrying on a general insurance from losses by fire within the kingdom of England.

"14. Pet.i.tion of Thomas Burges, and others his Majesty's subjects thereto subscribing, in behalf of themselves and others, subscribers to a fund of 1,200,000 pounds, for carrying on a trade to his Majesty's German dominions, praying to be incorporated, by the name of the Harburg Company.

"15. Pet.i.tion of Edward Jones, a dealer in timber, on behalf of himself and others, praying to be incorporated for the importation of timber from Germany.

"16. Pet.i.tion of several merchants of London, praying a charter of incorporation for carrying on a salt-work.

"17. Pet.i.tion of Captain Macphedris, of London, merchant, on behalf of himself and several merchants, clothiers, hatters, dyers, and other traders, praying a charter of incorporation, empowering them to raise a sufficient sum of money to purchase lands for planting and rearing a wood called madder, for the use of dyers.

"18. Pet.i.tion of Joseph Galendo, of London, snuff-maker, praying a patent for his invention to prepare and cure Virginia tobacco for snuff in Virginia, and making it into the same in all his Majesty's dominions."

LIST OF BUBBLES.

The following Bubble Companies were by the same order declared to be illegal, and abolished accordingly:--

1. For the importation of Swedish iron.

2. For supplying London with sea-coal. Capital, three millions.

3. For building and rebuilding houses throughout all England. Capital, three millions.

4. For making of muslin.