vol II date / index
St Timothy, disciple of St. Paul. St. Babylas, A.D. 250. St. Suranus, 7th century. St. Macedonius. St. Cadoc, of Wales.
1721. On the 24th of January in this year, the two houses of parliament ordered several of the directors of the South Sea company into the custody of the usher of the black rod and serjeant at arms: this was in consequence of a parliamentary inquiry into the company's affairs, which had been so managed as to involve persons of all ranks throughout the kingdom in a scene of distress unparalleled by any similar circumstance in English annals.
SOUTH SEA BUBBLE.
In 1711, the ninth year of queen Anne's reign, a charter of incorporation was granted to a company trading to the South Seas; and the South Sea company's affairs appeared so prosperous, that, in 1718, king George I. being chosen governor, and a bill enabling him to accept the office having passed both houses, on the 3d of February, his majesty in person attended the house of lords, and gave the royal assent to the act. A brief history of the company's subsequent progress is interesting at any time, and more especially at a period when excess of speculation may endanger private happiness, and disturb the public welfare.On the 27th of January, 1719, the South Sea company proposed a scheme to parliament for paying off the national debt, by taking into its funds all the debt which the nation had incurred before the year 1716, whether redeemable or irredeemable, amounting in the whole to the sum of 31,664,551l. 1s. 1-1/4d. For this the company undertook to pay to the use of the public the sum of 4,156,306l.; besides four years and a half's purchase for all the annuities that should be subscribed into its fund, and which, if all subscribed, would have amounted to the sum of 3,567,501l.; amounting, with the above-mentioned sum, to 7,723,809l.: in case all the annuities were not subscribed, the company agreed to pay one per cent. for such unsubscribed annuities.
To this arrangement parliament acceded, and an act was passed to ratify this contract, and containing full powers to the company accordingly. In March following South Sea stock rose from 130 to 300, gradually advanced to 400, declined to 330, and on the 7th of April was at 340. This so encouraged the directors, that on the 12th they opened books at the South Sea house for taking in a subscription for a portion of their stock to the amount of 2,250,000l. every 100l. of which they offered at 300l.: it was immediately subscribed for at that price, to be paid for by nine instalments within twelve months. On the 21st, a general court of the company resolved, that the Midsummer dividend should be 10 per cent., and that the aforesaid subscription, and all other additions to their capital before that time, should be entitled to the said dividend. This gave so favourable a view to the speculation, that on the 28th the directors opened a second subscription for another million of stock, which was presently taken at 400l. for every 100l., and the subscribers had three years allowed them for payment. On the 20th of May, South Sea stock rose to 550. So amazing a price created a general infatuation. Even the more prudent, who had laughed at the folly and madness of others, were seized with the mania; they borrowed, mortgaged, and sold, to raise all the money they could, in order to hold the favourite stock; while a few quietly sold out and enriched themselves. Prodigious numbers of people resorted daily from all parts of the kingdom to 'Change-alley, where the assembled speculators, by their excessive noise and hurry, seemed like so many madmen just escaped from cells and chains. All thoughts of commerce were laid aside for the buy and selling of estates, and traffic in South Sea stock. Some, who had effected sales at high premiums, were willing to lay out the money on real property, which consequently advanced beyond its actual value: cautious land-owners justly concluded that this was the time to get money without risk, and there fore sold their property; shortly afterwards they had an opportunity of purchasing more, at less than half the price they had obtained for their own.
On the 2d of June, South Sea stock rose to 890. On the 15th, many persons who accompanied the king on his foreign journey, sold their stock, which suddenly fell; but the directors promising larger dividends, it got up higher than ever. On the 18th they opened books for a third subscription of four millions more stock, at 1000l. for each 100l., and before the end of the month it had advanced to 1100l., between which and 1000l. it fluctuated throughout the month of July. On the 3d of August they proposed to receive subscriptions for all the unsubscribed annuities, and opened books for the purpose during the ensuing week, upon terms which greatly dissatisfied the annuitants, who, confiding in the honour of the directors, had left their orders at the South Sea House, without any previous contract, not doubting but they should be allowed the same terms with the first subscribers. Finding, to their great surprise and disappointment, that, by the directors' arrangements, they were only to have about half what they expected, many repaired to the South Sea House to get their orders returned; but these being withheld, their incessant applications and reflections greatly affected the stock, insomuch that, on the 22d of the month, at the opening of the books, it fell to 820. The directors then came to the desperate resolution of ordering the books to be shut; and on the 24th they caused others to be opened for a fourth money subscription for another million of their stock, at 1000l. for each 100l., payable by five instalments within two years: this million was subscribed in less than three hours, and bore a premium the same afternoon of 40 per cent. On the 26th the stock, instead of advancing, fell below 830. The directors then thought fit to lend their proprietors 4,000l. upon every 1000l. stock, for six months, at 4 per cent.; but the annuitants becoming very clamorous and uneasy, the directors resolved that 30 per cent. in money should be the half-year's dividend due at the next Christmas, and that from thence, for twelve years, not less than 50 per cent. in money should be the yearly dividend on their stock. Though this resolution raised the stock to about 800 for the opening of the books, it soon sunk again.
On the 8th of September, the stock fell to 640, on the 9th to 550, and by the 19th it came to 400. On the 23d the Bank of England agreed with the South Sea company to circulate their bonds, &c. and to take their stock at 400 per cent., in lieu of 3,775,000l., which the company was to pay them. When the books were opened at the Bank for taking in a subscription for supporting the public credit, the concourse was at first so great, that it was judged the whole subscription, which was intended for 3,000,000l., would have been filled that day. But the fall of South Sea stock, and the discredit of the company's bonds, occasioned a run upon the most eminent goldsmiths and bankers, some of whom, having lent great sums upon the stock and other public securities, were obliged to shut up their shops. The Sword-blade company also, who had been hitherto the chief cash-keepers of the South Sea company, being almost drawn of their ready money, were forced to stop payment. All this occasioned a great run upon the Bank. On the 30th South Sea stock fell to 150, and then to 86.
"It is very surprising," says Maitland, "that this wicked scheme, of French Extraction, should have met with encouragement here, seeing that the Mississippi scheme had just before nearly ruined that nation. It is still more surprising, that the people of divers other countries, notwithstanding the direful effects of this destructive scheme before their eyes, yet, as it were, tainted with our frenzy, began to court their destruction, by setting on foot the like projects: which gives room to suspect," says Maitland, "that those destructive and fatal transactions were rather the result of an epidemical distemper, than that of choice; seeing that the wisest and best of men were the greatest sufferers; many of the nobility, and persons of the greatest distinction, were undone, and obliged to walk on foot; while others, who the year before could hardly purchase a dinner, were exalted in their coaches and fine equipages, and possessed of enormous estates. Such a scene of misery appeared among traders, that it was almost unfashionable not to be a bankrupt: and the dire catastrophe was attended with such a number of self-murders, as no age can parallel."
Hooke, the historian of Rome, was a severe sufferer by the South Sea bubble. He thus addresses lord Oxford, in a letter dated the 17th of October 1722: "I cannot be said at present to be in any form of life, but rather to live extempore. The late epidemical (South Sea) distemper seized me: I endeavoured to be rich, imagined for a while that I was, and am in some measure happy to find myself at this instant but just worth nothing. If your lordship, or any of your numerous friends, have need of a servant, with the bare qualifications of being able to read and write, and to be honest, I shall gladly undertake any employments your lordship shall not think me unworthy of."
In 1720, soon after the bursting of the South Sea bubble, a gentleman called late in the evening at the banking-house of Messrs. Hankey and Co. He was in a coach, but refused to get out, and desired that one of the partners of the house would come to him. Having ascertained that it was really one of the principals, and not a clerk, who appeared, he put into his hands a parcel, very carefully sealed up, and desired that it might be laid on one side till he should call again, which would be in the course of a few days. A few days passed away—a few weeks, a few months, but the stranger never returned. At the end of the second or third year, the partners agreed to open this mysterious parcel, in the presence of each other. They found it to contain 30,000l., with a letter, stating that it was obtained by the South Sea speculation, and directing that it should be vested in the hands of three trustees, whose names were mentioned, and the interest apportioned to the relief of the poor, which was accordingly done.
It has been calculated, that the rise on the original South-sea stock of ten millions, and the subsequent advance of the company's four subscriptions, inflated their capital to nearly three hundred millions. This unnatural procedure raised bank stock from 100l. to 260l. India, from 100l. to 405l. African, from 100l. to 200l. York-buildings' shares, from 10l. to 305l. Lustring, from 5l. 2s. 6d. to 105l. English copper, from 5l. to 105l. Welch copper, from 4l. 2s. 6d. to 95l. The Royal Assurance, from 5l. to 175l., to the great injury of the various purchasers at such prices.
The South Sea scheme terminated in the sudden downfal of the directors, whose estates were confiscated by parlia ment, and the proceeds applied to the relief of many thousands of families, who had been wholly ruined by the speculation. These dupes of overweening folly and misplaced confidence, were further benefited by a remission in their favour of the national claims on certain of the South Sea company's real assets. The extent of these donations to the sufferers amounted to 40l. per cent. upon the stock standing in their names.
One consequence of the prosperous appearance that the South Sea scheme bore, till within a short period before its failure, was a variety of equally promising and delusive projects. These were denominated bubbles. Alarmed at the destructive issue of the master-bubble, government issued the following manifesto: "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-stocks 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 assurances that their petitions, for patents and charters to enable them to carry on the same, would be granted: to prevent such impositions, their excellencies ordered the said several petitions, 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 petitions be dismissed." The applications thus rejected prayed patents for various fisheries, for building ships to let or freight, for raising hemp, flax, and madder, for making of sail-cloth, for fire-assurances, for salt-works, for the making of snuff in Virginia, &.
In defence of this salutary order, the herd of projectors, with an audacity that passed on the credulous for well-grounded confidence, continued their nefarious traffic. Proclamations from the king, and even acts of parliament, were utterly disregarded; and companies which had been established by charter increased the evil, by imitating the South Sea company's fatal management, and taking in subscriptions. This occasioned the lords justices to issue another order, wherein they declared that, having been attended by Mr. attorney-general, they gave him express orders to bring writs of scire facias against the charters or patents of the York-building's company, Lustring company, English copper, Welsh copper, and lead, and also against other charters or patents which had been, or should be made use of, or acted under, contrary to the intent or meaning of an act passed the last session of parliament, &c.
They likewise instructed the attorney-general to prosecute, with the utmost severity, all persons opening books for public subscriptions; or receiving money upon such subscriptions; or making or accepting transfers of, or shares upon, such subscriptions; or which they gave public notice in the Gazette, as "a farther caution to prevent the drawing of unwary persons, for the future, into practices contrary to law." This effectually frustrated the plans of plunder, exercised or contemplated at that period. How necessary so vigorous a resistance was must be obvious from this fact, that innumerable bubbles perished in embryo; besides an incredible number which could be named that were actually set in motion, and to support which the sums intended to be raised amounted to about 300,000,000l. The lowest advance of the shares in any of these speculations was above cent. per cent., [sic] most of them above 400l. per cent.; and some were raised to twenty times the price of the subscription. Taking these circumstances into account, the scandalous projects would have required seven hundred millions sterling, if such a sum could have been realized in the shape of capital. To such a height of madness had the public mind been excited, that even shares were eagerly coveted, and bargained for, in shameless schemes which were not worth the paper whereon their proposals were printed, at treble the price they nominally bore. From a list of only a part of those that the air of 'Change-alley teemed with, the names of a few are here set forth:
For supplying London with cattle.
For supplying London with hay.
For breeding and feeding cattle.
For making pasteboards.
For improving the paper manufacture.
For dealing in lace, hollands, &c.
For a grand dispensary.
For a royal fishery.
For a fish pool.
For making glass-bottles.
For encouraging the breed of horses.
For discovering gold mines.
For an assurance against thieves.
For trading in hair.
For loan offices.
For dealing in hops.
For making of china ware.
For furnishing funerals.
For a coral fishery.
For a flying machine.
For insuring of horses.
For making of looking-glasses.
For feeding of hogs.
For buying and selling estates.
For purchasing and letting lands.
For supplying London with provisions[.]
For curing the gout and stone.
For making oil of poppies.
For bleaching coarse sugar.
For making of stockings.
For an air-pump for the brain.
For insurance against divorces.
For making butter from beech-trees.
For paving London streets.
For extracting silver from lead.
For making of radish oil.
For a perpetual motion.
For japanning of shoes.
For making deal boards of sawdust.
For a scheme to teach the casting of nativities.
JOINT STOCK COMPANIES OF 1825.
The large surplus capital and consequent low rate of interest during the last, and in the present, year, induce its possessors to embark their money in schemes for promoting general utility. One of the advantages resulting from a state of peace is the influx of wealth that pours forth upon the country for its improvement. Yet it behoves the prudent, and those of small means, to be circumspect in their outlays; to see with their own eyes, and not through the medium of others. The premiums that shares in projects may bear in the market, are not even a shadow of criterion whereon to found a judgment for investment. This is well known to every discreet man who has an odd hundred to put out; and he who cannot rely on his own discrimination for a right selection from among the various schemes that are proffered to his choice, will do well to act as if none of them existed, and place his cash where the principal will at least be safe, and the interest, though small, be certain. This month presents schemes for
Twenty Rail Road Companies,
Twenty-two Banking, Loan, Investment, and Assurance Companies, Eleven Gas Companies,
Eight British and Irish Mine Companies,
Seventeen Foreign Mine Companies,
Nine Shipping and Dock Companies,
Twenty-seven Miscellaneous Companies,
A London Brick Company,
A Patent Brick Company,
A London Marine Bath Company,
A Royal National Bath Company,
A Great Westminster Mild Company,
A Metropolitan Water Company.[sic]
An Alderney Dairy Company,
A Metropolitan Alderney Dairy Company,
A South London Milk Company,
An East London Milk Company,
A Metropolitan Milk Company.
A correspondent in the "London Magazine" declares, that "if we named the several divisions of the year after the French revolutionary fashion, by the phenomena observable in them, we should, from our experience of January, 1825, call it Bubblose— it has been a month of most flagitious and flourishing knavery." He pleasantly assumes that Mr. Jeremiah Hot-the-twig, attorney at law, benevolently conceives the idea of directing "surplus capital" to the formation of "a joint stock company for the outfit of air-balloons, the purchase of herds of swine, and the other requisites for a flourishing lunar commerce; Capital One Million, divided into 10,000 shares of 100l. each." The method is then related of opening an account with a respectable banking-house, obtaining respectable directors, appointing his son-in-law the respectable secretary, the son of a respected director the respectable standing counsel, and the self-nomination of the respectable Mr. Jeremiah H. and Co. as the respectable solicitors. Afterwards come the means of raising the bubble, to the admiration of proper persons who pay a deposit of 5l. per share; who, when the shares "look down" try to sell, but there are "no buyers," the "quotations are nominal;" a second instalment called for, the holders hesitate; "their shares are forfeited;" the speculation is conse quently declared frustrated; and there being only £10,000 in the bankers' hands to pay "Mr. Hop-the-twig's bill of 10,073l. 13s. 4d. that respectable solicitor is defrauded of the sum of 73l. 13s. 4d. This is the rise and fall of a respectable bubble."
Undoubtedly, among these varius schemes afloat, some will be productive of great benefit to the country; but it is seriously to be considered whether the estimation of some of them in a money view be not too high, and forced to an undue price by the arts of jobbing:
Haste instantly and buy, cries one
Real Del Monte shares, for none
Will hold a rich project;
Another cries— No mining plan
Like ours—the Anglo-Mexican
As for Del Monte, scoff it.
This grasps my button, and declares
There's nothing like Columbian shares,
The capital a million;—
That, cries La Plata's sure to pay;
Or bids me buy without delay
Hibernian or Brazilian.
'Scaped from the torments of the mine,
Rivals in Gas, and endless line,
Arrest me as I travel;
Each sure my suffrage to receive,
If I will only give him leave,
His project to unravel.
By Fire and Life insurers next
I'm intercepted, pester'd, vex'd,
Almost beyond endurance;
And though the schemes appear unsound,
Their advocates are seldom found
Deficient in assurance.
Last I am worried, shares to buy
In the Canadian company,
The Milk Association,
The Laundry-men who wash by stream,
Rail-ways, Pearl-fishing, or the scheme,
For Inland Navigation.
New Monthly Mag.
Stalkless moss. Phascum muticum.