Thus ended, in France, the famous Mississippi scheme; so ruinous to the fortune of individuals, but ultimately beneficial to the state, which it relieved from an excessive load of debt, though it threw the finances, for a time, into the utmost disorder. Its effects, however, were not confined to that kingdom. Many foreigners had adventured in the French funds, and the contagion of stock-jobbing infected other nations. Holland received a slight shock; but its violence was more peculiarly reserved for England, where it appeared in a variety of forms, and exhausted all its fury. The South-Sea scheme, evidently borrowed from that of Law, first excited the avidity of the nation. But it will be necessary, before I enter upon that subject, to give some account of the nature of the stocks, and the rise of the South-Sea company. Nothing, my dear Philip, is so much talked of in London, or so little understood, as the national debt, the public funds, and the stocks: I shall, therefore, endeavour to give you a general idea of them. The national debt is the residue of those immense sums which government has, in times of exigency, been obliged to raise, by way of voluntary loan, for the public service, beyond what the annual revenue of the crown could supply, and which the state has not hitherto found it convenient to pay off. The public funds consist of certain ideal aggregations, or masses of the money thus deposited in the hands of government, together with the general produce of the taxes appropriated by parliament to pay the interest of that money; and the surplus of these taxes, which have always been more than sufficient to answer the charge upon them, composes what is called the sinking fund, as it was originally intended to be applied toward the reduction, or sinking of the national debt. The stocks are the whole of this public and funded debt; which being divided into an infinity of portions or shares bearing a known interest, but different in the different funds, may be readily transferred from one person to another, and converted into cash for the purposes of business or plea sure, sure, and which rise or fall according to the plenty or scarcity of money in the nation, or the opinion the proprietors have of the security of public credit. Such is the present state of the stocks; which are subject to little fluctuation, except in times of national danger or calamity. For as the public creditors have long given up all expectation of ever receiving their capital from government, the stocks are not much affected by great national prosperity, unless when attended with a sudden or extraordinary influx of money. A strong probability, amounting to a speculative certainty, that the interest of the national debt will continue to be regularly paid without any farther reduction, must raise the stocks nearly as high as they can go; and this is the common effect of peace and tranquillity. Formerly, however, the case was otherwise. The loans were chiefly made by corporations, or great companies of merchants; who, beside the stipulated interest, were indulged with certain commercial advantages. To one of those companies was granted, in 1711, the monopoly of a projected trade to the Spanish settlements on the South-Sea, an entire freedom to visit which, it was supposed, England would obtain either from the house of Austria or that of Bourbon, in consequence of the prodigious successes of the war. At the peace of Utrecht, no such freedom was obtained. But the assiento, or contract for supplying the Spanish colonies with negroes, conveyed to Great-Britain by the commercial treaty with Philip V. as well as the singular privilege of sending annually to the fair of Porto-Bello a ship of five hundred tons burden, laden with European commodities, was vested exclusively in the SOUTH-SEA COMPANY. By virtue of this contract, British factories were established at Carthagena, Panama, Vera Cruz, Buenos Ayres, and other Spanish settlements: and the company was farther permitted to freight, in the ports of the South-Sea, vessels of four hundred tons burden, in order to convey its negroes to all the towns on the coasts of Mexico and Peru; to equip them as it pleased; to nominate the commanders of them, and to bring back the produc produce of its sales, in gold or silver, without being subject to any duty of import or export'. Nor was this all. The agents of the British SouthSea company, under cover of the importation which they were authorised to make by the ship sent annually to Porto-Bello, poured in their commodities on the Spanish colonies, without limitation or reserve. Instead of a vessel of five hundred tons burden, as stipulated by the treaty, they usually employed one of a thousand tons, exclusive of water and provisions: she was accompanied by three or four smaller vessels, which supplied her wants; and, mooring in some neighbouring creek, furnished her clandestinely with fresh bales of goods, in order to replace such as had been previously sold3. By these various advantages, the profits of the SouthSea company became excessively great, and the public supposed them yet greater than they really were. Encouraged by such favourable circumstances, and by the general spirit of avaricious enterprize, sir John Blount, one of the directors, who had been bred a scrivener, was tempted to project, in 1719, the infamous SOUTH-SEA SCHEME. Under pretence of enabling government to pay off the national debt, by lowering the interest, and reducing all the funds into one, he proposed that the SouthSea company should become the sole public creditor. A scheme so plausible and so advantageous to the state, was readily adopted by the ministry, and soon received the sanction of an act of parliament. The purport of this act was, that the South-Sea company should be authorised to buy up, from the several proprietors, all the funded debts of the crown, which then bore an interest of five per cent. and that, after the expiration of six years, the interest should be reduced to four per cent. and the capital be redeemable by parlia 7. Anderon's Hist. of Commerce, vol. ii. 8. Id. ib. See also Robertson's list. of America, book viii. ment. ment. But as the directors could not be supposed possessed of money sufficient for so great an undertaking, they were empowered to raise it by different means; and particularly by opening books of subscription, and granting annuities to such public creditors as should think proper to exchange the security of the crown for that of the South-Sea Company, with the emoluments which might result from their commerce1o. While this affair was in agitation, the stock of the South-Sea company rose from one hundred and thirty, or thirty pounds on the hundred above its primary value, to near four hundred pounds, or four times the price paid by the first subscribers; and in order to raise it still higher, Blount, the projector of the scheme, circulated a report, on the passing of the bill, that Gibraltar and Minorca would be exchanged for some places in Peru, by the cession of which the British trade to the South-Sea would be much enlarged. In consequence of this rumour, which operated like contagion, by exciting hopes of prodigious dividends, the subscription-books were no sooner opened, than persons of all ranks and conditions, as well as all ages and sexes, crowded to the South-Sea house, eager to become proprietors of the stock. The first purchases were, in a few weeks, sold for double the money paid for them; and the delusion, or rather the infatuation was carried so far, that stock sold, at last, for ten times its original price. New projectors started up every day, to avail themselves of the avarice and credulity of the nation; and the Welch copper company, the York building company, and many others, were formed. 9. See the printed act. 10. These emoluments, as we have already seen, were very great; yet so intelligent a writer as Dr. Smollett has said, "That in the scheme of Law there was something substantial: an exclusive trade to Louisiana promis. ed some advantage; but the South-Sea scheme promised no commercial advan‐ tage of any consequence." (Hist. of Eng. vol. x.) So liable are men of the greatest talents to be the dupes of ignorance or prejudice! No interested project was now so absurd, as not to meet with encouragement, during the public delirium; but the South-Sea scheme continued to be the great object of attraction. At length, however, to use the phrase of the times, the bubble began to burst. It was discovered, that such as were thought to be in the secret, had disposed of all their stock, while the tide was at its height. An universal alarm was spread. Every one wanted to sell, and nobody to buy, except at a very reduced price. The South-Sea stock fell as rapidly as it had risen, and to the lowest ebb; so that, in a little time, nothing was to be seen of this bewitching scheme, but the direful effects of its violence-the wreck of private fortunes, and the bankruptcy of merchants and trading companies! nor any thing to be heard but the ravings of disappointed ambition; the execrations of beggared avarice; the pathetic wailings of innocent credulity, the grief of unexpected poverty, or the frantic howlings of despair!The timely interposition and steady wisdom of parliament only could have prevented a general bankruptcy. A committee of the house of commons was chosen by ballot, to examine all the books, papers, and proceedings relative to the execution of the South-Sea act; and this committee discovered, that before any subscription could be made, a fictitious stock of five hundred and seventy-four thousand pounds had been disposed of by the directors in order to facilitate the passing of the bill. Mr. Aislabie, chanA. D. 1721. cellor of the exchequer, who had shared largely in the stock, was expelled the house of commons, and committed to the tower, for having promoted the destructive execution of " the South-Sea scheme, with a view to his own exorbitant profit; and having combined with the directors in their pernicious practices, to the ruin of public credit." Mr. secretary Craggs, and his father, also great delinquents, died before they underwent the censure of the house; but the commons DECEMBER. resolved |