The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1891-01-04
THE EARL OF OIFORD'O MASTERPIECE
How The English National Debt Was to Have
Been EItilgUiShGd-A Scheme That Looked
Exceedingly We'll On Paper, but Which
Brought Disaster TO Many a Family in
Great Britain The Protector Of the
Scheme SkiDS with Money.
CORRESPONDENT writing

SS 0H Bnh Sn1"T which TS 'I attracted acted
SO much attention in England 10 years ago,
and which brought financial ruin to so many
who thought that by speculation they would
acquire fortune in no time. The following
interesting sketch on this subject, published
some time ago in the st. Louis Post-Dis-
. patch, is an answer to the question asked:
In the year III Robert Harley, Earl of
Oxford, was Prime Minister of England; a
small peg. l have always thought him, for SO
large hole. Public credit had suffered Sc
riously by the overthrow Of the Wing Gov
eminent, and Harley undertook to restore il
and also to eXtinguiSh the floating national
debt-then amounting to .ef0O01Oo0. This
debt was assumed by a number of leading
merchants and capitalists, the Government
agreeing to guarantee them per cent inter
est or $4,000 per annum. To secure this
interest the duties on wines, vinegar Indian
goods, wrought silks, tobacco, whale-finS and
some other articles were declared perma-
nent; and, most important OF all,
A MONOPOLY
OF the trade 10 the South Seas was granted.
So when the company was incor GRATED by
act Of Parliament IL took the name of The
South Sea CompanY-by which it has been
damned 10 everlasting fame" Harley was
particularly proud of this work, and those
Elrl of Oxford masterpiece"
AT that time, we must remember, nOtvery
much RiOre was known in England about
South America than there WAS about Central
Africa before the recent missionary eXpedi-
tion 10 rescue Emln PaSha from the cap
tivlty he loved. The vast amount of gold
and silver which Spain had drawn from
Mexico and Peru made Englishmen believe
that the entire eastern coast of South Amer
lea was overU helmiuglY rich in the precious
fol md oil fh..r- I'D 4
getrlch themselves was 10 send out English
goods and exchange them with the IN
sophisticated natives for thel product of
their eXbaustess mines. Meanwhile the
report was vigorously circulated that Spain
would willingly permit English free
sessions when, in fact. the freest trade
ever obtained " as permission from Phillip
' 10 send one ship a year-and that of
limited tonnage and value Of cargo. And
only one shit ever was sent, and that not
until I7l7. Next year the war with Spain
put an effectual QuietuS upon this branch Of
the business.
Meanwhile, however, the public had
swallowed the bait without suspecting the
hook. Shares had increased so much in
value that III 1717 the company petitioned
Parliament TO raise the capital stock from
&l0,O0O,O90 to SI2, 0OQ, zoe, and offered to take
3 per cent instead of g. The Bank of En-
gland wanted some Of the pie" too; but
HudllE TIE CUulu sea DlQleES WalkeQ Oh WIN
the prlZe, and at once began TO make the
most OF it. Such was their success that in
1920 they actually proposed to assume the
entire national debt-then about e3l O0O, eco
in consideration of per cent per anuum
secured 70 them until midsummer 1927.
After that tIme the whole was TO be redeem
able al the pleasure of the Legislature, and
the Interest reduced to per cent. Then the
bank began To- bid against the company, and
tie competition became fast and furious.
Finally on February 2, 1920, Parliament re-
solved that tie cOmpaDyS proposals were
tile mos. advantageous for the country. and
leave was given to bring in a bill to that eff
feet. Shares Went.up from 100 to 800 and con-
tfnUed TO rise randy during tie whole time
. the bill was under discussion. Mr.-after-
ward Sill RObert-Walp0le strongly opposed
II, and was almost the only public man who
did With wonderful foresight always so
much better than hindsighD he predicted
the result and vas laughed al for his pains.
Usually he had the closest attention of the
House but now, when he rose TO speak
against the South sea Bill, his audience was
largely composed Of empty benches. Two
months was spent in debate, the company
meanwhile "builing" the stock by all sorts
Of devices, and at last the bill passed by l72
against 90, the stock then standing at $50
From tile 4th TO the 9TH OF April the bill was
in the House Of Lords passed on the last
date by IS to Il, received the royal assent
immediately and 50 became a law. Singu-
larry enough the stock dropped to $50 the
following day, and the Directors who up to
this time are conceded to have been toler-
ably'honest. men, threw aside all scruples
and began
- PULLING THE STOCK"
In a systematic and scientific style that has
never been surpassed since, and seldom, II
ever equaled. Shares began to climb, and
by June lst were selling at $50. On the Sd
OF the same month they had dropped to 100,
but in the. early days OF August had been
"bulied" up to 1000-the highest point
reached. 1t was during these three or four
months that the mania OF speculation in
yadcd all classes, and London literally went
crazy over nuney-making scheme based
upon a South Sea tr de, which consisted of
a single small ship with a small cargo sent
out three Years before, and with not the
slgh'eSt prospect of another one! Ex-
change alley was crowded every day; Corn
hlll blocked by carriages. The high and
the low, the rich and the poor, all wanted
some of the precious stock. Every fool"
II was said, Inspired to be kuave." Here
are two descriptive verses Of ballad sung
about the streets at this time:
Then stars and garters did appear
Among the neaner rabble;
To buy and sell. TO and hear
The jews and Gentiles squabble
The greatest ladies' thIther came
And pied in ehariots daily,
Or pawned their jewels for a sum
To venture in the Alley.
The enormous success of the original
bubble naturally generated a multitude of
limitations, and the following
LIST OF BUBBLE COMPANIES
Are among the most amusing specimens OF
human idiocy ever displayed in the depart
meut of business and finance:
For the importation Of Swedish iron; for
supplying London with sea coal, capital
&3,OO0,GD; for building and rebuilding
houses throughout all England, capital
100000; for making of muslin; for carry
mg on and improving the British Alum
works; for etfectually settling the islands
Blanco and Sal TartaguS; for supplying the
town nl Deal with fresh water; for the i'm
portatlon Of Flanders lace; for the improve
B.ent OF lands in Great Britain, capital
44,QOo,OOO; iCr improving land in the county
OF Flint, capital 81 100000; for purchasing
land to build on, capital e2,o0O,0O0; for
trading IN hair; for ere ting salt works in
Holy Island, capital 100000; for paving
tie streets of London, capital g., GOO, 600 ;
Tor furnishing funerals TO any part of
Great Britain; for buying and selling lands
ana lending money at interest, capital
100000; Tor carrying on the royal
fishery Of Great Britain, capital 10000, 600
for erecting loan Offices for the assistance
and encouragement of the Industrious, capt.
tai 81, 100000; for II grand dispensary, CAPT
tai 43UOO,COO; Tor insuring of horses, capt.
tai 43,000,0O0; for wheel for perpetual
motion, capital 9l,OO0,000; for imp1rting
walnut trees from Virginia, capital g, GOO
coo; for importing fur beaver, capital g., OOO,-
COO; for making JOpDa and CASTLE soap; for
improving malt liquors, capital $4,000, coo /;
fer grand American fishery; for insuring
to all masters and mistresses the losses they
have sustained from servants capital
92,000,000; for extracting silver from lead
for buying and fitting out ships to suppress
pirates; for the transmutation Of quicksilver
INTO malleable metal, and last, but not
least, for carrying Oh an undertaking of
great advantage; but nobody TO know what
II Is. Supplemented by another: For the
making Of deal boards out of sawdust.
These were all organized companies, or
about TO be. organized, and the list given
does not embrace halt of them. Incredible
as 1t may seem, the impudent rogue who
proposed IAN undertaking of great advan-
tage, but nobody TO know what it is"
opeAed an Office in Cornhill and imme-
dlately had rush of customers. The re-
CURED capital was 100000, in 5000 shares