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

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СКАЧАТЬ now, the political and financial path which had led to the formation of the company appeared to be one and the same. Harley genuinely wanted peace with Spain and France, and believed he could extract, as its price, the right to trade in the southern seas. But first he had to negotiate a deal. Peace, if it was to be struck, had to be struck quickly, so as to enable the South Sea Company to trade successfully and pay off the portion of the national debt it had shouldered. Harley had already begun the process, but he had failed to inform Parliament, and he did not yet have its consent.

      Harley had the support of his party and of the country: both thought the war had to end. But the Whig-dominated House of Lords was in a rage, and mobilised for attack. Their aim was to bring down the Tory ministry in a political contest that ranged the old aristocratic Whig order against the upstart who was running the country. In some desperation, Harley tried to delay the return of Parliament, which was in recess. But confrontation at some point was inevitable, a sure sign of which was the propaganda war unleashed by Harley and his pet pamphleteer, Daniel Defoe.

      For polemical persuasiveness Defoe had few equals. In his pamphlets on The Balance of Europe, an Essay upon the National Credit of England, and in Reasons why this Nation ought to put a Speedy END to this Expensive WAR, where Defoe argued his most trenchant case of all, the ink flowed as thick and fast as the imagery:

      How have we above twenty years groaned under a long and a bloody war? How often has our most remote view of peace gladdened our souls and cheered up our spirits. Our stocks have always risen and fallen, as the prospects we had of that amiable object were near or remote.

      Now we see our treasure lost, our funds exhausted, all our public revenues sold, mortgaged, and anticipated, vast and endless interests entailed upon our posterity, the whole kingdom sold to usury, and an immense treasure turned into an immense debt to pay; we went out full, but we are returned empty.

      But even with Defoe on his side, Harley faced a struggle to get his policy accepted. When he could avoid a vote on his peace moves no longer, he found himself defeated by a majority of one. His policy lay in tatters. But Harley was adamant that he would not be forced from office, and circumvented the Lords’ hostility by creating a dozen peers to back his peace policy, and with it secure the future of the fledgling South Sea Company. Emboldened, he moved against his Whig enemies by charging the Duke of Marlborough and Robert Walpole with corruption over the Army’s accounts, sending Walpole to the Tower.

      For Harley it was now imperative to circumvent Parliament and strike a peace deal, whatever the cost. Despite the peace negotiations led by the poet and diplomat Matthew Prior the spring campaign against the French was about to start, with the Duke of Ormonde leading British, German and Dutch forces in Flanders. So the British politicians decided to sabotage their own battle plan. The allied forces were ordered by the leading Tory minister Henry St John, Viscount Bolingbroke, to avoid fighting. Worse still, and with official sanction, via a go-between he revealed the battle plan to the French foreign minister. Then he sent the infamous ‘Restraining Orders’ to the Duke of Ormonde: ‘It is the Queen’s positive command to your Grace that you must avoid engaging in any siege, or hazarding a battle, till you have further orders from Her Majesty.’ Ormonde was in an impossible position: he was the leader of an army which had been forced to keep the peace by not fighting at all. He was not even allowed to tell his allies, but was ordered to make excuses for the attack’s delay, until finally – to the amazement of the allies – the French and British announced their truce.

      But the French now advanced on the allied army, capturing town after town, inflicting defeat after defeat on a force which, until the British treachery, had confidently expected to win the war. It was one of the most discreditable episodes in British history. It was peace, but not with honour. In the light of future events it was appropriate that it was on the back of this disgrace that the South Sea Company was launched. Bonfires were lit around the country to celebrate its foundation.

      But political and financial interests now started, unnoticed, to spin apart. They were two halves of a lottery ticket which at first sight appeared to join but whose flourishes failed to match. In September 1711, Harley addressed the South Sea directors but, significantly, failed to admit he had abandoned his peace demands for trading settlements in South America. In January 1712, the South Sea directors, secure in their ignorance, informed Harley, now Earl of Oxford, that they wanted to raise an expeditionary force of four thousand soldiers, forty transport ships, twenty men-of-war, plus store ships and hospital ships. Harley, keeping his secret to himself, began to stay away from the directors’ meetings. By September, twelve hundred tons of merchandise lay rotting in London warehouses, awaiting dispatch to the South Seas.

      In March 1713, eighteen months after he had conceived the South Sea Company, a peace deal was finally signed at Utrecht. Harley had triumphed over the old generation, steeped in war. But in return for the decades of fighting, Britain had won a comparatively trifling prize: a thirty-year slaving contract, and a licence to send a single merchant ship a year on a direct mission to one of the seven ports where the Company was allowed to set up trading stations, but not to establish settlements: Buenos Aires, Caracas, Cartagena, Havana, Panama, Portobello and Vera Cruz. Britain had won no territorial guarantees near the South Seas as a result of the peace treaty. The war was over, though, and Harley stood at last unchallenged on the political stage.

      But the child of Harley’s peace project, the South Sea Company, was in fact becalmed. The next year, seven ships, including the Hope and the Liberty, carried more than 2,500 slaves – voyages financed by the Company raising £200,000 in bonds. But it never made a profit in its cargo of human flesh, not least because the Spanish charged such heavy taxes. Then Queen Anne declared that she had the right to keep a quarter of any profits. But the Company must take its share of the blame for its failure to make money: in 1714 it took woollens to Cartagena, where there was no market for them, rather than to Vera Cruz, where there was, so they were left behind to be eaten by the moths and rats. By default, if not intention, the Company had become nothing more than a financial corporation, a ship to float the national debt. As a trading enterprise, it effectively lay at anchor.

      By 1713, Harley, too, was going nowhere. The political combination of middle-ground Tories he had put together had proved to be a temporary structure without firm foundations. Harley was hemmed in, too, on the other side, by the Tory hardliners in the October Club, whose members drank together in Westminster and proudly took their name from the month in which the strongest beer was brewed. Their constant harassment of the government to try to shake it out of its moderation on occasions ground the Commons’ business to a halt. With the war over, and with credit seemingly restored, Harley could not give his party what it most wanted: clear and decisive Tory leadership. He had not even managed to rid himself of the national debt: by the end of his rule, the government owed another £9 million from the lotteries which Harley had continued to run. Ironically, this sum exactly matched the amount of government debt the South Sea Company had taken over.

      The pressure told. Like many a politician, he had found solace in drink. On 25 July 1714 Anne was finally forced to sack Harley from his post. She told the Lords he ‘neglected all business; that he was seldom to be understood; that when he did explain himself she could not depend upon the truth of what he said; that he never came to her at the time she appointed; that he often came drunk; that lastly, to crown all, he behaved himself toward her with ill manner, indecency and disrespect’. She would not reign long without him: she was dead within the week.

      The Hanoverian era was upon the country and with it a change in political power. George I had a distaste for the Tories matched only by the contempt he held for a foreign kingdom which could never match his beloved homeland. Harley was to be impeached for ‘high treason and other crimes and misdemeanours’. In contrast, his Whig rival, Robert Walpole, who had been sent to the Tower for corruption, had been handed a route back to office. Before he left his prison, he penned a note to his sister Dorothy:

      Dear СКАЧАТЬ