THE SOUTH SEA BUBBLE
(A.D. 1720) CHARLES KNIGHT
THE great event of the sixth year of the reign of George I. was the exciting affair of the South Sea. scheme—an event _ upon which, after the lapse of a hundred and see scheme forty years, we may still look with greater interest than upon the treaties and the wars of which it is said, with some truth, that they are to us as the “mere bubblings up of the general putrid fermentation of the then political world.”
In the infant days of the National Debt the. great terror of statesmen was its increase and duration. At the accession of Queen Anne, the debt amounted to sixteen millions: at her death it had reached fifty-two millions. In 1711, there was a floating debt of about ten millions. Harley, then Lord Treasurer, proposed to create a fund for that sum; and to secure the payment of interest, by making certain duties of customs permanent Capitalists who held debentures were to become shareholders in a company incorporated for the purpose of carrying on a monopoly of trade to the Spanish coasts of South America; making the new fund a part of their capital stock.
Thus was established the South Sea Company. When the Peace of Utrecht was complete, Spain refused to permit any approach to the free trade which would have made such a commercial company of value. One ship only was allowed to be sent annually. A few factories were established, and the one ship sailed in 1717. Alberoni broke the treaty, and seized the British goods. But the company had other means for the employment of capital; and many opulent persons were among its shareholders and directors.
At the opening of the Parliament in November, 1719, the King said to the Commons:
“I must desire you to turn your thoughts to all proper means for lessening the debts of the nation.” In January, 1720, a proposal was read to the House of Commons from the South Sea Company, in which it was set forth that if certain public debts and annuities were made part of the capital stock of the Company, it would greatly contribute to that most desirable end adverted to in his Majesty’s speech. Before that speech was delivered, Sir John Blunt, a South Sea director, had been in communication with the ministers, who gave a favorable ear to his projects. There was an annual charge upon the revenue of eight hundred thousand pounds, for irredeemable annuities granted in the reigns of William and Anne. To buy up these annuities was the advantageous point in the proposal of the Company. The House of Commons agreed in the necessity of reducing the public debts. “Till this was done,” said Mr. Brodrick, who moved that other Companies should be allowed to compete, “we could not, properly speaking; call ourselves a nation.”