Malcolm Balen - A Very English Deceit - The Secret History of the South Sea Bubble and the First Great Financial Scandal

The King’s mistresses also played their part in overturning the established political order, to promote the men who were to prove susceptible to the overtures of the South Sea Company. The catalyst for political change was the legal obstacle the two consorts faced in their desire to make their mark on British society, a desire which began to undermine, insidiously, Walpole’s return to office. The mistresses wanted to acquire the status which would be the true sign that they had been accepted by their adoptive country, that their foreign accents and their physical unattractiveness would no longer be the butt of jokes. They considered that the best social defence they could gain against such cruelty was to become aristocrats. But the Act of Settlement of 1701 prevented them from receiving titles or any position of profit under the Crown.

This did not, however, prevent them from working out a cunning way round the difficulty. Madame Schulenburg decided to become naturalised, and campaigned to be granted an Irish title. So it was that the Maypole was transformed into the Duchess of Munster. This merely spurred her rival for the King’s affections into a fury of action. The Elephant too became naturalised, and after much trumpeting of her cause was rewarded with the tide Countess of Darlington, though not until 1722. Here was the formal recognition that the Maypole and the Elephant stood at the pinnacle of society. But it didn’t entirely work. The mistresses were too comic, the King too foreign, for the country to stand in awe. Indeed, the King’s preference for these women was just too alien for popular taste, as the balladeers made clear in scatological vein:

At St James’s of late

On a great bed of State

A dismal Disaster did happen;

For Munster’s good Grace

In her Brunswick’s Embrace,

was taken indeed, but not napping.

But, alas! In this Hurry,

While with too much Fury,

The rampant old lecher embrac’d her

Her Ladyship’s Weight

(which we all know is great)

Brought down on ’em both, the Bed’s Tester.

In the face of such ridicule, the attainment of titular aristocracy was never going to be enough to sate the mistresses’ ambition. The Maypole continued her campaign for social acceptance, deciding that an Irish title was not enough and that she wanted an English one instead. Her preferred route was to exploit the jockeying for position among the ambitious politicians in and around the government.

She had several men to choose from, all of them eager for power. Charles, the third Earl of Sunderland, was a court man to the tips of his well manicured fingers. It was in his blood: he was the son of a minister to three kings and connected through marriage to perhaps the greatest family of them all, the Marlboroughs. He was cunning and clever, self-possessed and rich; he spoke French fluently, and floated easily through the European courts; indeed, he lived and breathed court life, at ease with himself and with greatness. But Sunderland, though he could offer George a window on the world which the introverted king could not see for himself, was not the only Whig with ambitions. James Stanhope, who later became the first Earl Stanhope, was already a master of foreign diplomacy, the war hero who had fought valiantly in the War of the Spanish Succession as commander of the British forces and who had been imprisoned for a year. Politically, he was the friend of everyone, but he was committed to no one.

Sunderland and Stanhope were ranged against Charles, the second Viscount Townshend, who had been appointed by George as his first minister. He had none of Sunderland’s sophistication: indeed, upon his retirement a decade hence he would become known as ‘Turnip Townshend’ because of his passion for experimental farming. But what he lacked in finesse he made up for with hard work, notably as a commissioner negotiating the union with Scotland and as an ambassador to the Netherlands.

Townshend’s key political ally was his brother-in-law, Robert Walpole. Walpole, like John Blunt, was physically unattractive. He was short and stout, and had a large head. At first glance, his features appeared to be coarse – a double chin, bushy black eyebrows and a thick lower lip. His eyes were large and wide-spaced, giving him an air of openness, even vulnerability. He played on his looks by affecting the demeanour of a blunt-speaking, unsophisticated Norfolk squire, even munching his little red homegrown apples during debates in the House of Commons. He had let it be known that he always opened his gamekeeper’s letters before any official communication. But appearances were deceptive. Walpole was equally at home in London as he was in the country, relishing the life of a city socialite, and he would rise smoothly through the political ranks. He was a political amphibian, a countryman with Whig ambitions, a Westminster politician with roots, a man who quickly saw the merit of using his rustic image as a camouflage for ambition. His political brain was as sharp as Huguenot steel. He would not have been so trusted had he been lean.

From a modest upbringing, Walpole came to amass riches on a scale never fully explained, living in splendour and taste on his country estate at Houghton, where he built a small palace, and at Orford House, his Chelsea residence, which overlooked the Thames. More than £100,000, the equivalent of many millions today, passed through his bank account when he became Paymaster-General, the most lucrative post in government. Ten acres were added to the grounds of his Chelsea house, where he kept brightly coloured parakeets and goldfinches, and gifts of jewellery were showered on his friends and relatives.

In 1715, George’s yearning for his beloved Hanover played a crucial role in helping to shift the balance of power in Sunderland’s direction, and away from Townshend and Walpole. With the King now abroad, ambition had to travel too. Sunderland was quick off the mark, his speed belying his affected casualness. He set off for Aix-les-Bains with alacrity, covering his tracks by claiming the need of a health cure. Conveniently, it was only a short distance from there to Hanover and the King. So while Sunderland was able to plot with his ruler, helped by the whispering campaign led by the King’s mistresses, the brothers-in-law were stuck at home, without any hope of influencing the King: Townshend and Walpole were now effectively in exile, with the country run from Europe.

On the King’s return, a journey much delayed by bad weather, the duo were sacked in favour of Sunderland and Stanhope, who were to be the government’s two key figures throughout the year 1720. Walpole had been outmanoeuvred this time not by the Tories, but by his own party.

He was in the wilderness again.

John Blunt, surveying the new political landscape, had wasted no time in pressing his cause with George I. He was keen to make the South Sea Company part of the new establishment, and with it secure his own place in society. In order to do this, he wanted to bring some famous names into the Company’s orbit. In place of Harley, he persuaded the Prince of Wales himself to become its Governor in 1715. It was a recognition both of the changed political times and of Blunt’s desire for the royal imprimatur. For the Prince, it was a useful way of making money, given the high running costs of being royal.

George I, too, was amenable to Blunt’s overtures and acquired a large shareholding in the South Sea Company for himself. It did not take long for the Company to change its composition: in the first year of the reign, leading Tory politicians were voted out as directors by the shareholders, to be replaced by Whig businessmen. Even the Duke of Argyll, a Whig and a loyal Hanoverian, became a director of the South Sea Company – an extraordinary step for a man of such social standing and a sign of Blunt’s ability to capture the upper echelons of society with his schemes. But there was another sign, too, of the Company’s future direction: half a dozen of its directors, including Blunt, had begun their careers with the original Sword Blade Bank, and had an eye on manipulation of the markets rather than any genuine interest in trade. The deaths, three months apart in 1718, of two great men among the directors, the sub-Governor Bateman and the Deputy Governor Shepheard, tipped the balance of the Court of Directors firmly towards the Sword Blade men, and away from the experienced financiers.