The morning news. [volume] (Savannah, Ga.) 1887-1900, 1896-02-02
THE SOUTH SEA BUBBLE.
ENGLAND GAMBLING MAD FOR
NEARLY EIGHT MONTHS.
Fortunes Gained and LOst-LOrds and
Commons Took Brides for Votes to
Charter a Company With no Pros
pecl of Maxim a Pront.


throne itself. was blown 10y the action Of
commons Jan. p, 1920.
The South Sea Company was incorpor-
ated by act OF parliament in i7ii, and orig
mated with the Earl of oxford. Its incor-
poration was with the view of restoring
public credit and discharging a portion OF
the public debt, amounting to $50,O0O,OOO.
The company assumed this debt, the gov
eminent agreeing to pay the interest for
certain time. The consideration to the
company was a monopoly of the trade to
the south seas. Il was believed that the
eastern coast of South Africa was virtu-
ally plated with gold and silver, and that
English goods could be sold to the natives
for at least 100 times their value. The
company reported that the King of Spain
would open four ports to English trade on
the coast Of Shile and Peru. but it devel-
oped that Philip V would allow the COM
pany to send but one small vessel yearly.
he to receive one-fOurth of the profits.
The company sent out one vessel in III,
with no profit, and Spain suppressed the
trade. More legislation, favorable TO the
company, was enacted by parliament in
III, by which the company agreed to ad-
vance $1O,O00,0O0 toward the discharge Of
the public debt. So glittering was the pros
pect of this South American trade that the
company's stock kept above par although
ii had done nothing.
In 1719 the mississippi bubble" had been
blown to its fullest in France by John
Law, the most pyrotechnic 1inancier the
world has ever seen. The nation had gone
crazy, industry was paralyzed and the
cost of the necessities of life had in
creased ten-fold. Laws company of the
Indies alone issued $4,000 shares of stock,
at the par value of 500 francs per share,
or above $50, 900 900, but such was the de-
mand for it that the sale realized 1868, 800
600. These figures are taken by the Mail
and Express from Frank S. Fiskes trans
lation of Tiers history of the MISSISSIPPI
pi and South Sea" schemes.
Profiting by the success of Law in
France, the comparatively conservative
English company resolved on a bold
stroke; II proposed to take the total
cent. interest until 1724, and at per cent
after that date, in consideration of the
South sea trade. The Bank of England
also made bid for the debt, and each con-
Germ finally had two propositions before
the committee. The House committee re-
solved on Feb. that the South Sea Com
pany's proposition was the better for the
in a bill to that effect Later develop
ments showed that this conclusion was
reached and the bill finally passed by
means of wholesale corruption of the
members of both houses. Sir John Blunt
projected the bill, which was I'm the
House two months. Exchange Alley in
London experienced the same excitement
at Rue Quincanpofx in Paris. The Eng
fish delirium came later, but it was as In
tense the French, and with less foun-
dalton, for the South Sea Company had
absolutely nothing on which to build a
speculation. The day before the bill was
brought into the House, the stock was
quoted at 1870. The next day ii went to 300,
and when the bill passed finally it stood
at 800.
Walpole was the only man who fought
the bill on the floor of the House and his
prophecy as to the ruin 1t would entail
was fulfilled almost to the letter
The House of Lords rushed the bill
through with shameless haste. 1t came to
them from the commons April T. and was
put through all the stages and passed fin
ally April Z The companys stock books
We're opened for subscriptions April u,
S5,0O0,0O0 of stock being offered at 300. When
the books closed in few days above $0-
100000 of stock had been sold for more than
$4,000, 900, and the price rose to $40 In July
a quarterly dividend of 10 per cent. was
paid on this stock, and subscription books
were opened for s., 100000 more stock. With
in three hours S.50O,0O0 of stock had been
sold at 400, raising the receipts from the
sale of stock TO $60.000.000.
All manner of lesser swindles follow
ed in the wake of the big robber. Above
one hundred swindling corporations were
licensed by the government in a month.
The Prince of Wales was Interested in a
scheme which netted him $4,000 in a few
days The public eagerly bought stock
in a company organized to make deal
boards out of sawdust." A perpetual mo-
F'gNV'fNNNs
Stock was eagerly sought in a company
organized for encouraging the breed of
horses and rebuilding parsonages." One
man was given articles of incorporation
for company organized "for carrying on
an undertaking of great advantage, but
nobody to know what 1t is. From the IL
tie of his company, he was evidently test
ing the temper of the authorities, and hav-
ing secured his papers he tested the pub
lie. He opened an office in the street an
nounced stock for sale at 500 per share,
requiring a deposit of but SO on a share
In one days business of five hours he sold
1000 shares, took in $4,000, closed his Of
flee and departed for the continent.
South Sea Company stock was quoted at
500 on May 49, and at this time 1t was esti-
mated that two-t thirds OF the government
annuitants had traded their state securi-
ties for South Sea stock. By June the
stock had risen to $780, and there was a
scramble to sell out. 1t touched $40 June
g. and the promoters went into the alley
and bothered 1t up by large purchases.
Aug. l the stock touched 1000, and
from that point steadily fell. 1t was learn
ed that Sir John Blunt had sold his hold
ings Sept. for 7O0 and public confidence
was greatly shaken. The directors of the
company held a meeting and passed labo-
rious resolutions of praise for themselves
and the company but the public fool was
regaining his sense, and the day after the
directors meeting the stock fell to $40.
Matters grew worse, and the Bank of
England, late in September attempted
to stop the stampede, but failed. Then
came run on all the London banks and
When the stock touched 1876, in Deem
Der, the Bank of England refused the COM
pany further aid and the crash came. The
king hurried home from the continent and
called parliament together. The official
inquiry developed incredible corruption in
high official life. Only two mobiles I'm Eng
land were found guiltless of gambling in
the stock, and it developed that Walpole
had made a fortune at it,
As soon as parliament met Knight. the
treasurer of the South Sea Company fled
the island, taking with him the books and
dangerous secrets. The king offered s1O-
900 reward for his capture, and closed all
the ports. Knight was captured, and for
a time imprisoned in the citadel of Ant
werp, but he escaped before the king could
effect his return to England, and was not
retaken.
The committee of inquiry reported Feb
16. Many high officials in parliament were
found guilty of accepting South Sea stock
for their votes, the prices of their honor
ranging from $4,000 to 100000. MANY
members were expelled from both houses
of parliament, and one lord was Sentenced
to Imprisonment in the Tower and his
entire estate confiscated. The people of
London celebrated this with bonfireg and
dancing. All the directors of the South
Sea Company were arrested and much OF
their property cotfiscated and returned to
their victims. IT was computed that the
any had uT.IH afr.