SOUTH SEA SCHEME, TIIE, commonly designated the SOUTH SEA BIMBLE, a term peculiarly expressive of its hollow and ephemeral splendor and sudden collapse, was originated by Harley (q.v.), earl of Oxford, in 1711. with the view of restoring public credit, and providing for the extinction of the floating national debt, which at that time amounted to £10.000,000. This debt was taken up by a number of eminent merchants, to whom the government agreed to guarantee for a certain period the annual payment. of £600,000 (being G per cent interest), a sum which was to be obtained by rendering per manent a number of import duties. The monopoly of the trade, to the South seas was also secured to these merchants, who were accordingly incorporated as the "South Sea company," and at once rose to a high position in the mercantile world. The extravagant ideas then generally current respecting the riches of the South American continent were carefully fostered and encouraged by the company, who also took care to spread the belief that Spain was prepared, on certain liberal conditions, to admit them to a considerable share of its South American trade; and, as a necessary consequence, a general avidity to partake in the profits of this most lucrative speculation sprung up in the public mind. It may be well to remark in this place that tune company's trading projects had no other result than a single voyage of one ship in 1717, and that its promi nence in British history is due entirely to its existence as a purely monetary corporation. Notwithstanding the absence of any symptoms of the carrying out of its great trading scheme, the company had obtained a firm hold on popular favor, and its shares rose day by day; and even when the outbreak of war with Spain in 1718 deprived the most san guine of -the slightest hope of sharing in the treasures of the South seas, the company continued to flourish. Far from being alarmed at the expected and impending failure of a similar project—the Mississippi scheme (q.v.)--the South Sea company believed sin cerely in the feasibility of Law's scheme, and resolved to avoid what they considered as his errors. Trusting to the possibility of pushing credit to its utmost extent danger, they proposed, in the spring of 1720, to take upon themselves the whole naticual debt (at that time :30,981.713), on being guaranteed 5 per cent per annum for 7 years, at the end of which time the debt might be redeemed if the govern:neut chose, and the interest reduced to 4 per cent. The directors of the bank of England, jealous of the prospective benefit and influence which would thus accrue to the South Sea company, to government a counter-proposal; but the 'more dazzling nature of their rival's offer secured its acceptance by parliament—in the commons by 172 to 55, and (April 7) in the lords by 83 to 17; sir Robert Walpole in the former, and lords North and Grey, the duke of Wharton, and earl Cowper in the latter, in vain protesting against it as involving inevitable ruin. During the passing of their bill the company's stock rose steadily to 330 on April 7, falling to 290 on the following day. Up till this date the scheme had been honestly promoted; but now, seeing ,before them the prospect of speedily amassing abundant wealth, the directors threw aside all scruples, and made use of every effective means at their command, honest or dishonest, for keeping up the factitious value of the stock. Their zealous endeavors were crowned with success; the shares we,'e quoted at 550 on May 28, and 890 on June 1. A general impression having by this time gained ground that the stock had reached its maximum, so ninny holders rushed to realize that the price fell to 640 on June 3. As this decline did not suit the personal interests of the directors, they sent agents to buy up eagerly; :And on the eve ning of June 3 7.50 was the quoted price. This and similar artifices were employed as required, and had the effect of ultimately raising the shares to 1000 in the beginning of August. when the chairman of the company and some of the principal directors sold out.
On this becoming known. it wide-spread uneasiness seized the holders of stock. every one wits eager to part with his shares, and on Sept. 12 they fell to 400. in spite of all the attempts of the directors to bolster up the company's credit. The conster nation of those who had been either unwilling or unable to part it lib their scrip, was now extreme; many capitalists absconded, either to avoid ruinous bankruptcy, or to secure their ill-gotten gains, and the government became seriously alarmed at the excited slate of public feeling. Attempts were made to prevail on the bank to come to the res cue. by circulating some millions of company's hoods; hut as the shares still declined, and the company's chief cashiers, the Sword-blade company, now sloppy(' payment. the ' hank refuse.' to entertain the proposal. The country was now wound up to a most alarming pitch of excitement; the punishment of the fraudulent directors wan clamor ously demanded; and parliament was hastily summoned (Dec. 8) to deliherate on the best means of mitigating this greAt calamity. Both houses, however, proved to he in as impetuous a moral as the public; and in spite of the moderate counsels of Walpole, , it was resolved (Dec. 9) to punish the !maims of the national distresses, though hitherto no fraudulent acts had been proved against them. An examination of the proceedings of the company was at mice commenced; and on Walpole's proposal nine. millions of South Sea bonds were taken up by the bank, and a similar amount by the East India company. The officials of the company were forbidden to lease the kingdom for twelve months, or to dispose of :my of their property or effects. Ultimately, various schemes, involving the deepe.st fraud and villainy, were discovered to have been secretly con cocted and cart-I:41 out by the directors; and it was proved that the earl of Sunderland, the duchess of Kendal. countess Platen and her two nieces, 31r. (rungs, M.P., the company's secretary, Mr. Charles Stanhope, a secretary of 1 he treasury. and the Sword-• blade company, had been bribed to promote the company's bill in parliament by a pres ent of 4:170.000 of South! Sea stock. The total amount of fictitious created) for this and similar purpose Was .t1,260,000. nearly one-half of which had been disposed of. Equally flagrant iniquity in the allocation of shares was discovered, in which, among others, Mr. Aislabie, the chancellor of the exchequer, was implicated. Of these offend ers, Mr. Stanhope and the earl of Sunderland were acquitted, through 11.e unworthy partiality of the parliament; but Mr. Aislabie and the other directors who well, mem bers of the house of commons, were expelled; most of the directors were imprisoned, and all of them suffered confiscation of their, possessions. The chairman was allowed to retain only .P.5.000 out of £183,000, and others in proportion to their .share in the fraudulent transactions of the company. At the end of 1720. it being found that £13,300,000 of real stock belonged to the company, £8,000.000 of this was taken, and divided among the losers, giving them a dividend of 33* per cent; and by other schemes of adjustment, the pressure of loss was so fairly and widely distributed, that the excite ment gradually subsided. Contemporary with this great gambling scheme were numer ous other " bubbles," most of them based upon the most shadowy foundations, and pro jected for the achievement of the most frivolous and even absurd ends; hut none of them rose to such importance as the South Sea :theme, though collectively they added greatly to the general distress of the period, till they were suppressed by net of parlia ment, July 12, 1720.:--See Coxe's Walpole, Ba&bier's Medley, published by Carrington Bowles, Mackay's Popular Delusions, and tire various histories of England during this period.