other matters, fell far short of the Ministerial promises and of the public expectation. Instead of a free trade, or any approach to a free trade, with the American colonies, the Court of Madrid granted only, besides the shameful Asiento for negro slaves, the privilege of settling some factories, and sending one annual ship; and even this single ship was not unrestricted it was to be under 500 tons burthen, and a considerable share of its profits to revert to the King of Spain. This shadow of a trade was bestowed by the British Government on the South Sea Company, but it was very soon disturbed. Their first annual ship, the Royal Prince, did not sail till 1717; and next year broke out the war with Spain; when, as I have already had occasion to relate, Alberoni, in defiance of the treaty, seized all the British goods and vessels in the Spanish ports. Still, however, the South Sea Company continued, from its other resources, a flourishing and wealthy corporation : its funds were high, its influence considerable, and it was considered on every occasion the rival and competitor of the Bank of England.

At the close of 1719, when the King returned from Hanover, this aspiring Company availed itself of the wish of Ministers to lessen the public debts by consolidating all the funds into one. Sir John Blunt, once a scrivener, and then a leading South Sea Director, laid before Stanhope, as chief Minister, a proposal for this object. He was referred by Stanhope to Sunderland, as First Lord of the Treasury, and to Aislabie, as Chancellor of the Exchequer. Several conferences ensued with the latter; several alterations were made in the scheme; and it was at length so far adjusted to the satisfaction of Ministers, that the subject was recommended to Parliament in the King's Speech.* The great object was to buy up and diminish the burthen of the irredeemable Annuities granted in the two last reigns, for the term,

*

* Our best authorities for this negotiation, and the subsequent debate in the House of Commons, are, Mr. Brodrick's Letter to Lord Midleton, Jan. 24. 1720; and Mr. Aislabie's Second Speech before the House of Lords, July, 1721. The latter seems to be overlooked by Coxe. Both, however, require to be read with much suspicion; Aislabie being then on his defence, and Brodrick a violent partisan on the other side.

mostly, of 99 years, and amounting at this time to nearly 800,000l. a year. But when the question came on in the House of Commons, a wish was expressed by Mr. Brodrick and many more, that every other company should be at liberty to make offers. This, exclaims the Chancellor of the Exchequer, was like setting the nation to auction; and the only point on which all parties concurred was one which experience has proved to be totally wrong. "I quite agreed with Ministers," says Mr. Brodrick," that till the national debt was discharged, or at "least in a fair way of being so, we were not to expect "to make the figure we formerly had! Nay, further, I I said, till this was done, we could not, properly speaking, call ourselves a nation!" At length, after some violent wrangling between Lechmere and Walpole *, the House divided, and the question of competition was carried by a very large majority.

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New proposals were accordingly sent in, both from the South Sea Company and the Bank of England. According to Aislabie, this was a sudden resolution of the Bank, "who before had shown great backwardness in undertaking any thing to reduce the public debts, and had "treated this scheme with much contempt."† Be this as it may, the two bodies now displayed the utmost eagerness to outbid one another, each seeming almost ready to ruin itself, so that it could but disappoint its rival. They both went on enhancing their terms, until at length the South Sea Company rose to the enormous offer of seven millions and a half, which was accepted. Yet the benefit of this competition to the public was any thing but real; for such high terms almost of necessity drew the South Sea Directors into rash means for improving their rash bargain, into daring speculation, and into final ruin.

The last proposals of the Bank had been little less extravagant. It is urged by Aislabie, in his defence next

*There seems to have been great uproar. When Lechmere attempted to speak a second time in Committee, the Opposition rose from their places; and on the Chairman exclaiming, "Hear your Member," they answered, "We have heard him long enough! Brodrick to Lord Midleton, Jan. 24. 1720.

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† Second Speech, July, 1721. See also Sinclair's Public Revenue, part ii. p. 104.

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year before the Peers, "I will be bold to say, my Lords, "and the gentlemen of the Bank, I believe, will own, "that if they had carried the scheme upon their last proposals, they could not have succeeded; and I will show your Lordships, from what they have done since, that they would have acted in the same manner as the South "Sea Company." Even at the time Aislabie had some glimmerings of the future danger, and proposed to Sir John Blunt that the two Corporations should undertake the compact jointly, and therefore with double resources. But Sir John, who was, or pretended to be, a most austere Puritan, and who brought forward Scripture on all occasions, immediately quoted Solomon's judgment, and added, "No, Sir, we will never divide the child!"

Thus then the South Sea Bill proceeded through the House of Commons without any further competition from the Bank.* An attempt was made to introduce a clause fixing how many years' purchase should be granted to the annuitants by the South Sea Company. To this it was objected, that as it was the interest of the Company to take in the annuities, and as the annuitants had the power of coming in or not as they pleased, there was no doubt that the Company would offer advantageous terms, and that therefore the affair might safely be left to private adjustment. "Nor," says Aislabie, "would the "South Sea Company submit to be controlled in an undertaking they were to pay so dear for." On these grounds was the clause rejected, though only by a majority of four. But these grounds, though specious and indeed well-founded, were not the only ones, and we shall see hereafter that several persons in Government had probably other reasons as weighty, though not quite so honourable, for supporting the Directors.

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The South Sea Bill finally passed the Commons by a division of 172 against 55. In the Lords, on

*I must observe, that the observations ascribed to Walpole by Coxe (vol. i. p. 130.) seem to have been drawn up on Coxe's own ideas of probability. He makes Walpole point out "the ruin and "misery which then prevailed in France from similar measures." Now this is quite an anachronism: the speech of Walpole was delivered Feb. 1. 1720; and at that time the system of Law was still in its glory.

the 4th of April, the minority was only 17, notwithstanding an able speech from Lord Cowper, who compared the project to the Trojan horse, ushered in with great pomp and acclamation, but contrived for treachery and destruction. But like every other statesman at this time, he did not foresee the real point or extent of danger; and nothing could be more erroneous than his prediction, that "the main public intention "of this Bill, the repurchase of annuities, would meet "with insuperable difficulties." Such, on the contrary, was the rising rage for speculation, that on the passing of the Bill very many of the annuitants hastened to carry their orders to the South Sea House, before they even received any offer, or knew what terms would be allowed them!-ready to yield a fixed and certain income for even the smallest share in vast but visionary schemes!

The offer which was made to them on the 29th of May (eight years and a quarter's purchase) was much less favourable than they had hoped; yet nevertheless, six days afterwards, it is computed that nearly two thirds of the whole number of annuitants had already agreed.*

In fact, it seems clear, that during this time, and throughout the summer, the whole nation, with extremely few exceptions, looked upon the South Sea Scheme as promising and prosperous. Its funds rapidly rose from 130 to above 300. Walpole, although one of its opponents, readily, as we have seen, joined the Ministry at this period under very mortifying circumstances, which he would certainly not have done, had he foreseen the impending crash, and the necessity that would arise for his high financial talents. Lord Townshend concurred in the same view. Atterbury thought it a great blow to Jacobitism. He charitably hints to James, in his letters, that some attempt from the Duke of Ormond might "disorder our finances, and throw us into a good deal of confusion." But if the advice of this minister of peace and good will towards men cannot be

taken in this respect, he then anticipates that "the "grand money schemes will settle and fix themselves “in such a manner that it will not be easy to shake "them."* Such being the feeling, not merely of the Ministerial party, but of most of their opponents, it seems scarcely just to cast the blame of the general delusion on the Ministers alone, and to speak of them as deaf to warning and precipitate to ruin.

The example of these vast schemes for public wealth was set us from Paris. John Law, a Scotch adventurer had some years before been allowed to establish a public bank in that city; and his project succeeding, he engrafted another upon it of an "Indian Company," to have the sole privilege of trade with the Mississippi. The rage for this speculation soon became general: it rose to its greatest height about December, 1719; and the "actions," or shares, of the new Company sold for more than twenty times their original value. The Rue Quincampoix, the chief scene of this traffic, was thronged from daybreak by a busy and expecting crowd, which disregarded the hours of meals, and seemed to feel no hunger or thirst but that of gold, nor could they be dispersed until a bell at night gave them the signal to withdraw. The smallest room in that street was let for exorbitant sums; the clerks were unable to register the growing multitude of claimants; and it is even said that a little hunchback in the street gained no less than 50,000 francs by allowing eager speculators to use his hump for their desk.† Law, the projector of this System, as it was called, at once became the greatest subject in Europe. "I have seen him come to Court," says Voltaire, "followed humbly by Dukes, by Marshals, and by Bishops;" and even Dubois, the Prime Minister, and Orleans, the Regent, might be said to tremble at his nod. Arrogance and presumption, the usual faults of upstarts, daily grew upon him: he said publicly, before some English, that there was but one great kingdom in Europe, and one great town, and that was France and Paris. And at

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* Letters to James and to General Dillon, May 6. 1720. See Appendix.

† Mém. de la Régence, tom. iv. p. 53. ed. 1749.

Lord Stair to Secretary Craggs, Sept. 9. 1719.