Charles Mackay - Extraordinary Popular Delusions and the Madness of Crowds (Complete Edition - Volume 1-3)

D'Argenson shared with Law and the Regent the unpopularity which had alighted upon all those concerned in the Mississippi madness. He was dismissed from his post of Chancellor, to make room for D'Aguesseau; but he retained the title of Keeper of the Seals, and was allowed to attend the councils whenever he pleased. He thought it better, however, to withdraw from Paris, and live for a time a life of seclusion at his country-seat. But he was not formed for retirement, and becoming moody and discontented, he aggravated a disease under which he had long laboured, and died in less than a twelvemonth. The populace of of Paris so detested him, that they carried their hatred even to his grave. As his funeral procession passed to the church of St. Nicholas du Chardonneret, the burying-place of his family, it was beset by a riotous mob, and his two sons, who were following as chief-mourners, were obliged to drive as fast as they were able down a by-street to escape personal violence.

As regards Law, he for some time entertained a hope that he should be recalled to France, to aid in establishing its credit upon a firmer basis. The death of the Regent, in 1723, who expired suddenly, as he was sitting by the fireside conversing with his mistress, the Duchess de Phalaris, deprived him of that hope, and he was reduced to lead his former life of gambling. He was more than once obliged to pawn his diamond, the sole remnant of his vast wealth, but successful play generally enabled him to redeem it. Being persecuted by his creditors at Rome, he proceeded to Copenhagen, where he received permission from the English ministry to reside in his native country, his pardon for the murder of Mr. Wilson having been sent over to him in 1719. He was brought over in the admiral's ship, a circumstance which gave occasion for a short debate in the House of Lords. Earl Coningsby complained that a man, who had renounced both his country and his religion, should have been treated with such honour, and expressed his belief that his presence in England, at a time when the people were so bewildered by the nefarious practices of the South Sea directors, would be attended with no little danger. He gave notice of a motion on the subject; but it was allowed to drop, no other member of the House having the slightest participation in his lordship's fears. Law remained for about four years in England, and then proceeded to Venice, where he died in 1729, in very embarrassed circumstances. The following epitaph was written at the time:—

"Ci git cet Ecossais celebre,

Ce calculateur sans egal,

Qui, par les regles de l'algebre,

A mis la France a l'Hopital."

His brother, William Law, who had been concerned with him in the administration both of the Bank and the Louisiana Company, was imprisoned in the Bastile for alleged malversation, but no guilt was ever proved against him. He was liberated after fifteen months, and became the founder of a family, which is still known in France under the title of Marquises of Lauriston.

In the next chapter will be found an account of the madness which infected the people of England at the same time, and under very similar circumstances, but which, thanks to the energies and good sense of a constitutional government, was attended with results far less disastrous than those which were seen in France.

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At length corruption, like a general flood,

Did deluge all, and avarice creeping on,

Spread, like a low-born mist, and hid the sun.

Statesmen and patriots plied alike the stocks,

Peeress and butler shared alike the box;

And judges jobbed, and bishops bit the town,

And mighty dukes packed cards for half-a-crown:

Britain was sunk in lucre's sordid charms.

—Pope.

The South Sea Company was originated by the celebrated Harley, Earl of Oxford, in the year 1711, with the view of restoring public credit, which had suffered by the dismissal of the Whig ministry, and of providing for the discharge of the army and navy debentures, and other parts of the floating debt, amounting to nearly ten millions sterling. A company of merchants, at that time without a name, took this debt upon themselves, and the government agreed to secure them, for a certain period, the interest of six per cent. To provide for this interest, amounting to 600,000 pounds per annum, the duties upon wines, vinegar, India goods, wrought silks, tobacco, whale-fins, and some other articles, were rendered permanent. The monopoly of the trade to the South Seas was granted, and the company, being incorporated by Act of Parliament, assumed the title by which it has ever since been known. The minister took great credit to himself for his share in this transaction, and the scheme was always called by his flatterers "the Earl of Oxford's masterpiece."

Even at this early period of its history, the most visionary ideas were formed by the company and the public of the immense riches of the eastern coast of South America. Everybody had heard of the gold and silver mines of Peru and Mexico; every one believed them to be inexhaustible, and that it was only necessary to send the manufactures of England to the coast, to be repaid a hundredfold in gold and silver ingots by the natives. A report, industriously spread, that Spain was willing to concede four ports, on the coasts of Chili and Peru, for the purposes of traffic, increased the general confidence; and for many years the South Sea Company's stock was in high favour.

Philip V of Spain, however, never had any intention of admitting the English to a free trade in the ports of Spanish America. Negotiations were set on foot, but their only result was the assiento contract, or the privilege of supplying the colonies with negroes for thirty years, and of sending once a year a vessel, limited both as to tonnage and value of cargo, to trade with Mexico, Peru, or Chili. The latter permission was only granted upon the hard condition, that the King of Spain should enjoy one-fourth of the profits, and a tax of five per cent. on the remainder. This was a great disappointment to the Earl of Oxford and his party, who were reminded much oftener than they found agreeable of the

"Parturiunt montes, nascitur ridiculus mus."

But the public confidence in the South Sea Company was not shaken. The Earl of Oxford declared, that Spain would permit two ships, in addition to the annual ship, to carry out merchandise during the first year; and a list was published, in which all the ports and harbours of these coasts were pompously set forth as open to the trade of Great Britain. The first voyage of the annual ship was not made till the year 1717, and in the following year the trade was suppressed by the rupture with Spain.

The King's speech, at the opening of the session of 1717, made pointed allusion to the state of public credit, and recommended that proper measures should be taken to reduce the national debt. The two great monetary corporations, the South Sea Company and the Bank of England, made proposals to Parliament on the 20th of May ensuing. The South Sea Company prayed that their capital stock of ten millions might be increased to twelve, by subscription or otherwise, and offered to accept five per cent. instead of six upon the whole amount. The Bank made proposals equally advantageous. The House debated for some time, and finally three acts were passed, called the South Sea Act, the Bank Act, and the General Fund Act. By the first, the proposals of the South Sea Company were accepted, and that body held itself ready to advance the sum of two millions towards discharging the principal and interest of the debt due by the state for the four lottery funds of the ninth and tenth years of Queen Anne. By the second act, the Bank received a lower rate of interest for the sum of 1,775,027 pounds 15 shillings due to it by the state, and agreed to deliver up to be cancelled as many Exchequer bills as amounted to two millions sterling, and to accept of an annuity of one hundred thousand pounds, being after the rate of five per cent, the whole redeemable at one year's notice. They were further required to be ready to advance, in case of need, a sum not exceeding 2,500,000 pounds upon the same terms of five per cent interest, redeemable by Parliament. The General Fund Act recited the various deficiencies, which were to be made good by the aids derived from the foregoing sources.