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It may be necessary to mention that the projector actually received, in one forenoon, deposits for one thousand shares, that is, he received two thousand guineas; but it cannot be necessary to add, that in the afternoon he moved off, and neither the guineas nor the projector were ever heard of more,
It was probably on this occasion that one of those deriders, whom I have just alluded to, amused himself with putting out an advertisement in one of the weekly prints (two or three sheets of the newspaper were then generally dedicated to the advertising of these projects), and the advertisement was to apprize the public “ that at a certain place, on Tuesday next, books would be opened for a subscription of two millions, for the invention of melting down saw-dust and chips, and casting them into clean deal boards without cracks or knots."-Anderson, 103.
There was one difference between the South Sea scheme and the Mississippi scheme in France, which cannot but have been already observed by my hearers. In England there was po national bank connected with the project; the Bank of England stood aloof; there was no attempt to banish the precious metals from the currency of the country; the wealth of many individuals was left to rest, if they chose it, on paper and delusion, but it was not intended to enrich the country by the mere substitution of paper for gold and silver: an important difference this, which resolves the whole of our South Sea bubble into a mere specimen of folly or fraud on the one part, and ignorance or ridiculous gambling on the other.
When it began to be seen that there neither were, as I have mentioned, nor could be, any profits arising from the South Sea trade, or arising from any other source, sufficient to justify the rise of the stock, or to enable the company to pay the dividends which they had promised, their stock fell rapidly, notwithstanding every effort that could be made in its support; and all the silly people who had awaked from their dreams had no alternative but to vent their rage on their deceivers, and to call aloud for vengeance on the boundless ambition and avarice, as they called it, not of themselves, but of the directors and others, their agents and accomplices, the rogues, the parricides (l quote the words made use of in a
variety of different petitions to parliament), the traitorous, perfidious, &c. &c., betrayers, plunderers, robbers of their country, the monsters of pride and covetousness, the cannibals of 'Change Alley, who lick up the blood of the nation, &c. &c.
Now these are complimentary terms very natural for those to use who find themselves ruined by their own credulity; but as the law cannot well attempt to protect good people from the consequences of their own folly, it was not found possible, by any regular process of legal punishment, to pursue with due pains and penalties these nefarious contrivers of what, in the language of the committee of the House of Commons, was called “a train of the deepest villany and fraud hell (that is, I suppose, the Stock Exchange) ever contrived to ruin a nation.”
A scene therefore followed, not very creditable to a great and civilized nation. The houses of parliament showed, no doubt, that they were not partners in these swindling transactions; but they showed, at the same time, a great disregard to all the niceties that should be observed in the administration of penal justice. They made the directors bring in an account of their property and estates, talked over the different proportions of guilt that belonged to each individual, and then, in a loose and summary way, fined them at their pleasure, dedicating almost the whole of the two millions private property which they possessed to the assistance of the sufferers.
“Instead of the calm solemnity of a judicial inquiry,” says Mr. Gibbon, whose grandfather was a director, “ the fortune and honour of thirty-three Englishmen were made the topic of hasty conversation and the sport of a lawless majority.”
As an obvious and general remark, it must be mentioned that these popular tempests of vindictive justice should always be most carefully watched and resisted by intelligent men. But I must also remark, that there seems, on this occasion, no notice to have been taken of the guilt of a particular description of persons, who might little suspect their own criminality, I mean a part of the members of the House of Commons themselves, more particularly the gay, thoughtless sons of peers or opulent commoners, who had under
taken to be legislators before they had made themselves men of business; who had given their votes, no doubt, for schemes of finance of the nature of which they probably knew nothing, and were contented to know nothing; and who had failed in their clear and bounden duty, the duty of being the honest, the laborious, and, I must add, the well-informed protectors of the public. The scheme would never have taken place, if the House of Commons had been properly intelligent, if it had been even intelligent enough to admit of being enlightened, but it was not. Sir Robert Walpole reasoned in vain.
I quit this subject by repeating briefly that Anderson's account is worth considering, but that a very good note by Stuart, in his Political Economy, must by no means be omitted. The narrative of Coxe, in his first volume, which is collected from every different source of information, will be the most intelligible and complete exhibition of the whole to the general reader; but the letters of Mr. Broderick must be read, as containing the sentiments of a person living at the time, a member of the house, and making his observations on all that was passing within and without doors.
The Parliamentary History of Cobbett is very full on this occasion; all the regular documents are preserved and given; but there is so much technical language used, that they will be often tedious, and at the same time very difficult to comprehend. They must be read in conjunction with Stuart and Coxe, and indeed there is a good narrative furnished along with these debates, borrowed from Tindal; but the great misfortune is, that the speeches of Sir Robert Walpole are not come down to us, or at least not properly given. The most instructive portion of the whole would have been found in the speeches and reasonings that took place whilst the scheme was in agitation; while Sir Robert was remonstrating, for instance, against the acceptance of the proposals of the South Sea Company; a general description only can be found of what was probably a most reasonable speech, highly creditable to him as a statesman. The introductory speech or the Chancellor of the Exchequer would have been also very instructive; and again, the debates that ensued when the bubble burst, and the house was proceeding to punish the directors, and was endeavouring to rescue the nation from its calamities. But on these most important occasions the debates are all either more or less deficient, and the assistance that is afforded by the private letters produced by Coxe is quite trifling
The first report of the proceedings of the South Sea Company may be looked at. The result of the whole is contained in ten of the resolutions of the House of Commons, and will give some idea of the swindling practices that took place. The remaining documents soon become little more than an inquiry into the particular guilt of individuals, and to us, at this distance of time, lose their interest; but what minutes remain of the proceedings in the house are worthy of observation. The last two-thirds of Mr. Aislabie's second defence before the lords contains a curious account of the whole affair; and, whether Mr. Aislabie was or was not as reasonable as he pretends, gives a very just description of at least the follies of others.
The manner in which the concerns of all parties were adjusted may be best understood from Anderson; and, in the first place, from the report of the address of the house itself, drawn up by Sir Robert.
Much loss must have been suffered by those who last entered into the scheme, and much dissatisfaction was expressed. All parties were made very properly to abide by the consequences of their folly. The seven millions, indeed, which the nation was to receive from the South Sea Company was at length necessarily remitted, but the nation found its original engagements converted into new engagements of a more advantageous nature; and though the scheme was in every respect wretchedly managed, some advantage was derived from it, and the public creditors no longer received an interest disproportioned to the interest at which money could at the time be borrowed.
Tue great French work of Fourbonnois is the most regular treatise on the system of Law. Here will be found all the history of the system, and all the violent and unjust measures that were adopted to support it; but the detail is difficult to understand, and after passing many hours over it, more than I can expect others to do, I can only advise you, in the first place, to study well the chapters of Stuart.
The treatise which Law addressed to the parliament of Scotland is short, and may be met with; it explains his objections to the use of the precious metals, and the manner in which he would have converted the whole fee-simple of the land into circulating medium. Scotland and every other country was, he conceived, suffering from the want of circulating medium, which was all that he thought was necessary to its prosperity. Commissioners were therefore to be appointed to issue paper money on land security, &c.
There is a certain portion of truth in Law's notions, sufficient to deceive him, as it had deceived many others; for while money flows into a country by the fabrication of paper money, the effect is beneficial; it is beneficial while the money continues to flow, no longer; for every man during this interval receives a full return for any effort in industry that he can make; the quantity of circulating medium has been increasing, while he was making this effort, and he therefore receives more than he would otherwise have done.
But the moment the tide stops, this high remunerating price stops also; and every opposite consequence arises; and stop it must, if artificially produced.
The whole subject is very well explained by Hume in his Essay on Money.