/> entirely passed over. It occupied a period of about eight months, from

February 1, 1720, to the end of the following September. It was an

unreasonable expansion of the value of the stock of the "South Sea

Company." This Company was formed in 1711; its stock was at first about

$30,000,000, subscribed by the public and handed over by the corporators

to Government to meet certain troublesome public debts. In return,

Government guaranteed the stockholders a dividend of six per cent., and

gave the Company sundry permanent important duties and a monopoly of all

trade to the South Pacific, or "South Sea." This matter went on with

fair success as a money enterprise, until the birth of the "Bubble,"

which was as follows:--In the end of January, 1720, probably in

consequence of catching infection from "Law's Mississippi Scheme" in

France, the South Sea Company and the Bank of England made competing

propositions to the English Government, to repeat the original South Sea

Company financiering plan on a larger scale. The proposition of the

Company, which was accepted by Government, was: to assume as before the

whole public debt, now amounting to over one hundred and fifty millions

of dollars; and to be guaranteed at first a five per cent. dividend, and

afterward a four per cent. one, to the stockholders by Government. For

this privilege, the Company agreed to pay outright a bonus of more than

seventeen million dollars. This plan is said to have been originated and

principally carried through by Sir John Blunt, one of the Company's

directors. Parliament adopted it after two months' discussion--the

Bubble having, however, been swelling monstrously all the time.



It must be remembered that the wonderful profits expected from the

Company were to come from their monopoly of the South Sea trade.

Tremendous stories were told by Blunt and his friends, who can hardly

have believed more than one half of their own talk, about a free trade

with all the Spanish Pacific colonies, the importation of silver and

gold from Peru and Mexico in return for dry goods, etc., etc.; all which

fine things were going to produce two or three times the amount of the

Company's stock every year. When the bill authorizing the arrangement

passed, South Sea stock had already reached a price of four hundred per

cent. The bill was stoutly opposed in Parliament by Mr.--afterwards

Sir--Robert Walpole, and a few others but in vain. Under the operation

of the beautiful stories of the speculative Blunt and his friends, South

Sea stock, after a short lull in April, began to rise again, and the

bubble swelled and swelled to a size so monstrous, and with colors so

gay, that it filled the whole horizon of poor foolish John

Bull:--perfectly turned his bull-headed brain, and made him for the time

absolutely crazy. The directors opened books on April 12th for

L5,000,000 new stock, charging, however, L300 for each share of L100,

or three hundred per cent. to begin with. Double the amount was

subscribed in a few days; that is, John Bull subscribed thirty million

dollars for ten millions of stock, where only five millions were to be

had. In a few days more, these subscribers were selling at double what

they paid. April 21st, a ten per cent. dividend was voted for midsummer.

In a day or two, another five million subscription was opened at four

hundred per cent. to begin with. The whole, and half as much more, was

taken in a few hours. In the end of May, South Sea stock was worth five

hundred to one. On the 28th, it was five hundred and fifty. In four days

more, for some reason or other, it jumped up to eight hundred and

ninety. The speculating Blunt kept all this time blowing and blowing at

his bubble. All summer, he and his friends blew and blew; and all summer

the bubble swelled and floated, and shone; and high and low, men and

women, lords and ladies, clergymen, princesses and duchesses, merchants,

gamblers, tradesmen, dressmakers, footmen, bought and sold. In the

beginning of August, South Sea stock stood at one thousand per cent! It

was really worth about twenty-five per cent. The crowding in Exchange

Alley, the Wall street of the day, was tremendous. So noisy, and

unmanageable and excited was this mob of greedy fools, that the very

same stock was sometimes selling ten per cent. higher at one end of the

Alley than at the other.



The growth of this monstrous, noxious bubble hatched out a multitude of

young cockatrices. Not only was the stock of the India Company, the Bank

of England, and other sound concerns, much increased in price by

sympathy with this fury of speculation, but a great number of utterly

ridiculous schemes and barefaced swindles were advertised and

successfully imposed on the public. Any piece of paper purporting to be

stock could be sold for money. Not the least thought of investigating

the solvency of advertisers seems to have occurred to anybody. Nor was

any rank free from the poison. Almost a hundred projects were before the

public at once, some of them incredibly brazen humbugs. There were

schemes for a wheel for perpetual motion--capital, $5,000,000; for

trading in hair (for wigs), in those days "a big thing;" for furnishing

funerals to any part of Britain; for "improving the art of making soap;"

for importing walnut-trees from Virginia--capital, $10,000,000; for

insuring against losses by servants--capital, $15,000,000; for making

quicksilver malleable; "Puckle's Machine Company," for discharging

cannon-balls and bullets, both round and square, and so on. One colossal

genius in humbugging actually advertised in these words: "A company for

carrying on an undertaking of great advantage, but nobody to know what

it is." The capital he called for was $2,500,000, in shares of $500

each; deposit on subscribing, $10 per share. Each subscriber was

promised $500 per share per annum, and full particulars were to be given

in a month, when the rest of the subscription was to be paid. This great

financier, having put forth his prospectus, opened his office in

Cornhill next morning at nine o'clock. Crowds pressed upon him. At three

P. M., John Bull had paid this immense humbug $10,000, being deposits

on a thousand shares subscribed for. That night, the financier--a shrewd

man!--modestly retired to an unknown place upon the Continent, and was

never heard of again. Another humbug almost as preposterous, was that of

the "Globe Permits." These were square pieces of playing-cards with a

seal on them, having the picture of the Globe Tavern, and with the

words, "Sailcloth Permits." What they "permitted" was a subscription at

some future period to a sailcloth-factory, projected by a certain

capitalist. These "permits" sold at one time for $300 each.



But the more sensible members of Government soon exerted their influence

against these lesser and more palpable humbugs. Some accounts say that

the South Sea Company itself grew jealous, for it was reckoned that

these "side-shows" called for a total amount of $1,500,000,000, and

itself took legal means against them. At any rate, an "order in council"

was published, peremptorily dismissing and dissolving them all.



During August, it leaked out that Sir John Blunt and some other

"insiders" had sold out their South Sea stock. There was also some

charges of unfairness in managing subscriptions. After so long and so

intense an excitement, the time for reaction and collapse was come. The

price of stock began to fall in spite of all that the directors could

do. September 2, it was down to 700.



A general meeting of the company was held to try to whitewash matters,

but in vain. The stock fell, fell, fell. The great humbug had received

its death-blow. Thousands of families saw beggary staring them in the

face, grasping them with its iron hand. The consternation was

inexpressible. Out of it a great popular rage began to flame up, just as

fires often break out among the prostrate houses of a city ruined by an

earthquake. Efforts were meanwhile vainly made to stay the ruin by help

from the Bank of England. Bankers and goldsmiths (then often doing a

banking business) absconded daily. Business corporations failed. Credit

was almost paralyzed. In the end of September, the stock fell to 175,

150, 135.



Meanwhile violent riots were feared. South Sea directors could not be

seen in the streets without being insulted. The King, then in Hanover,

was imperatively sent for home, and had to come. So extensive was the

misfortune and the wrath of the people, so numerous the public meetings

and petitions from all over the kingdom, that Parliament found it

necessary to grant the public demand, and to initiate a formal inquiry

into the whole enterprise. This was done; and the foolish, swindled,

disappointed, angry nation, through this proceeding, vented all the

wrath it could upon the persons and estates of the managers and officers

of the South Sea Company. They were forbidden to leave the kingdom,

their property was sequestrated, they were placed in custody and

examined. Those of them in Parliament were insulted there to their

faces, several of them expelled, the most violent charges made against

them all. A secret investigating committee was set to rip up the whole

affair. Knight, the treasurer, who possessed all the dangerous secrets

of the concern, ran away to Calais and the Continent, and so escaped.



The books were found to have been either destroyed, secreted, or

mutilated and garbled. Stock bribes of $250,000, $150,000, $50,000 had

been paid to the Earl of Sunderland, the Duchess of Kendal (the King's

favorite,) Mr. Craggs (one of the Secretaries of State,) and others. Mr.

Aislabie, the Chancellor of the Exchequer, had accumulated $4,250,000

and more out of the business. Many other noblemen, gentlemen, and

reputable merchants were disgracefully involved.



The trials that were had resulted in the imprisonment, expulsion or

degradation of Aislabie, Craggs, Sir George Caswell (a banker and member

of the House,) and others. Blunt, a Mr. Stanhope, and a number more of

the chief criminals were stripped of their wealth, amounting to from

$135,000 to $1,200,000 each, and the proceeds used for the partial

relief of the ruined, except amounts left to the culprits to begin the

world anew. Blunt, the chief of all the swindlers, was stripped of about

$925,000, and allowed only $5,000. By this means and by the use of such

actual property as the Company did possess, about one-third of the money

lost by its means was ultimately paid to the losers. It was a long time,

however, before the tone of public credit was thoroughly restored.



The history of the South Sea bubble should always stand as a beacon to

warn us that reckless speculation is the bane of commerce, and that the

only sure method of gaining a fortune, and certainly of enjoying it, is

to diligently prosecute some legitimate calling, which, like the quality

of mercy, is "twice blessed." Every man's occupation should be

beneficial to his fellow-man as well as profitable to himself. All else

is vanity and folly.