Читать книгу A Very English Deceit: The Secret History of the South Sea Bubble and the First Great Financial Scandal - Malcolm Balen - Страница 9

The most fundamental overhaul ever carried out on the rules governing the way members of the royal family run their business lives was announced by Buckingham Palace last night. In an attempt to ensure that family members do not exploit their position for financial gain, the palace said new safeguards would ensure a ‘complete separation’ between official engagements andcommercial projects. ‘It is entirely in tune with today’s world that members of the royal family should be allowed to pursue careers, including in business, if that is what they wish to do,’ a Palace statement saidlast night.Observer, 8 July, 2001

King George I exhibited his eagerness to take over his new throne by dawdling all the way from Hanover to London. Weeks went by before his pernickety nature was satisfied with the detailed preparations for his forthcoming ordeal. When he finally set out, he made sure he stopped all the way along his route to receive the congratulations which befitted his new status and which put off the point at which he could no longer avoid stepping on to the timber-clad deck of the royal yacht for the sea journey to the grey, cold, inhospitable island which it was now his fate to rule. So disagreeable was this prospect that he clung to Holland as if it was home, meandering through its cities and basking in the receptions he was accorded, so that he did not embark for England until 27 September 1714, nearly two full months after Anne’s death.

The British weather retaliated, responding to George’s preconceived view of his kingdom as a damp and chilly outpost by exceeding his expectations. Dense fog shrouded London on his arrival, drifting ethereally over the waters of the Thames as his yacht neared port, wrapping itself around Wren’s masterpieces and obscuring the soaring cathedral. George could no more make out the spiritual grandeur of the city’s horizon than his bulging blue eyes could penetrate the narrow, twisting streets to glimpse the temporal realities of his subjects’ lives. So slow was his progress that he was forced to come ashore at night. Then he was rowed to Greenwich in his barge to avoid damage to the royal yacht. As he stepped ashore, to be greeted by ranks of fawning politicians, George could just make out the symmetrical splendour of Wren’s seamen’s hospital. But his kingdom was still a mystery. Even when the clinging fog finally relented, and throughout the rest of his reign, it remained so.

On dry land, the torchlit reception which greeted George appeared both to lend some atmosphere to the occasion and to give appropriate recognition to his new-found status. The Whigs, loyal throughout their parliamentary difficulties to the House of Hanover, were there in force to reap their reward. George singled out their standard-bearer, the Duke of Marlborough, for attention, while Harley was relegated to the background, his hopes that the King intended to rule without favourites or party already dead. With George the power of the Whigs would come irresistibly flooding back.

For the leading players in the South Sea drama which was about to unfold, the ground had also shifted. John Blunt had to court the new regime, as he had courted Harley, but Robert Walpole, at the age of thirty-eight was back in power. He held office first as Paymaster of the Forces, and then, within a year, as Chancellor of the Exchequer, posts which allowed him to see at first hand the debts of the nation, and which also gave him a licence to line his own pockets.

Political stability was absent at the start of George’s reign. He was a contingent king, an interloper who had taken the throne after a political battle of wills, not through divine right or the hereditary principle. His presence assured the Protestant succession, but not the warm embrace of his new countrymen. Both sides in this convenient compact eyed each other warily, not knowing quite what to expect; neither felt an emotional pull towards the other. George was an administrative convenience, a fruit grafted on to Anne’s barren reign, a foreigner who would have to win the respect of his citizens, but who possessed neither the charm nor the intellect to do so. Cruelly, the traveller and letter-writer Lady Mary Wortley Montagu noted: ‘The King’s character may be comprised in a very few words. In private life he would have been called an honest block-head.’

This was an exaggeration. George was a complicated man, not clever but not entirely stupid either; idle, but energetic enough to want to rule in his own way without interference, and short-tempered enough to cast out those who did not fall into line. At fifty-four, he was not in the full flush of youth; nor was he handsome, but he more than made up for this with an extraordinary appetite for women which was to make him an object of ridicule in his kingdom – less for his sexual charge per se, more for the way he chose to express it: the objects of his desire were, by common consent, downright ugly. Added to which, there was something positively medieval about his family background. His wife Sophia had once taken a lover, perhaps in retaliation for her husband’s considerable dedication to his extramarital activities. George’s revenge was terrible to behold. The lover, the Swedish Count von Königsmark, disappeared after he was lured to a false rendezvous with his lady. George probably ordered the murder, though he was away in Berlin when it happened. Sophia was divorced and incarcerated in the Castle of Ahlden, near Hanover, forbidden to see her children again. For her, there was no fairy-tale rescue by a handsome prince. For thirty-two years she languished there until her death, while George frolicked with his mistresses.

The two mistresses he brought with him to England were both, in their own ways, improbable recipients of their monarch’s favours. Baroness Eremengarda Melusina von der Schulenburg was tall and bony. She was called ‘the Maypole’ by the King’s subjects; Madame Carlotte Sophia Kielmansegge, fifty and fat, was known as ‘the Elephant’. As a child, the writer Horace Walpole was scared witless by her: ‘I remember being terrified at her enormous figure … [she] was as corpulent and ample as the Duchess was long and emaciated. Two fierce black eyes, large and rolling beneath two lofty arched eyebrows, two acres of cheeks spread with crimson, an ocean of neck that overflowed and was not distinguished from the lower parts of her body, and no part restrained by stays – no wonder that a child dreaded such an ogress!’

Money, or the lack of it, was still the driving force in politics, and with the presence of the royal mistresses it became even more so. Their grasping nature, the rapidly acquired debts of the new monarch and the shattering of the government Exchequer through war combined to form a corruption which wrapped itself around the very institutions of state. In this the strangeness of King George I also played a part. He was a foreigner, who spoke little or no English; an outsider, who had brought with him not just his own women to share the royal bed, but his own placemen who staffed his court and who needed to be bribed. An American businessman, William Byrd, attended court in the hope of being appointed Governor of Virginia and was advised to bribe one of the leading German courtiers, while the future Duke of Chandos oiled his way through the early years of George’s reign in order that his brother could become cashier of the Salt Office, dishing out 250 lottery tickets here, 400 guineas there. In 1715 he gave £3,000, an enormous sum, to Madame Kielmansegge, followed by a ring for her daughter. The Maypole, in particular, saw that she could make serious money out of her status. She sold the patent for copper coinage in Ireland for £14,000 and she also sold peerages. George’s arrival on the throne had accentuated the establishment’s tendency towards corruption.

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.

In 1715, to cement its place in the Hanoverian order, the Company had declined the interest payments which were due from the government for servicing the national debt. This had saved the Treasury more than £1 million, and in return the Company was allowed to increase its capital size by the same amount, so that it now had several thousand shareholders, more than either the Bank of England or the East India Company. In the same year, for the first time, its share price reached par, the value at which the stock had been launched under Harley. Four years later, in 1719, the Company was also allowed, through an Act of Parliament, to convert a further part of the government’s debt into shares. Unlike Harley, who had merely converted the floating debt (the debt that could be paid off if the Treasury could afford it), the government proposed to sell off that part of the debt to which it was committed for years ahead: this was called the funded, or ‘irredeemable’, debt. By transferring its subscribers to a stock-market holding in the Company, this new small-scale conversion scheme aimed to remove the burden on the Treasury created by the lottery of 1710. Two-thirds of the annuitants eventually took up the offer, and under the terms of the deal the Company agreed to lend the government more than half a million pounds. As a reward, the Company was allowed to sell extra stock for itself, on a rising market, to increase its reserves of cash.

By 1719, therefore, the Company’s capital size had risen past the £12 million mark – and this was financially absurd. In the previous two years, forty-five ships had carried a total of thirteen thousand slaves for the Company under the slaving contract, but it had still not made a profit. Nor had it made any money on its direct trade with South America. Yet, paradoxically, the financial health of the Company, as the dispenser of half the entire joint-stock capital in the country, was vital to the economic security of the nation. And it readily embraced this nonsensical reality: its desire to develop the Sword Blade Bank, from which it had emerged, grew stronger than its attempts to sell its goods abroad. Robert Knight, the general manager of the bank, was appointed as the Company’s cashier and became the main conduit between the two sides of the operation, his advancement a tangible sign that the Company was more eager to pursue its role as the holder of the national debt than as a trading concern.

Even as its trading base shrank to nothing overseas, the Company’s political horizons grew wider. Its domestic ambitions were reflected in its plan to move into a magnificent flat-fronted building on the north-east corner of Threadneedle Street. More than thirty windows, on three levels, enabled the directors in South Sea House to look down on to the financial district at its feet; there was a dark basement below the iron railings at the front, while a colonnaded entrance made a grand statement of its claim to be an accepted part of the establishment. Appropriately, its rival, the Bank of England, stood at the other end of the street.

To the Bank’s chagrin, the connection between the Company and the government was close, and becoming closer. John Aislabie, as Chancellor of the Exchequer, appointed Francis Hawes, one of the Company directors, to be Receiver-General of Customs; four directors were also MPs, and another six had posts that had connections with the public purse. These men provided a key link between the Company and the institutions which controlled public money. The South Sea Company had become a fully fledged member of Britain’s political, financial and social order, and, in recognition, the Company’s newly launched ship was called The Royal Prince. The Prince himself, and his courtiers, were treated to a lavish party on board, to celebrate the ship’s impending departure for the South Seas in search of the bottomless riches on which the Company’s foundation was supposedly predicated.

It should have been a big moment in the Company’s history. But the royal establishment which Blunt was courting was far from united. The King’s frequent absences in Hanover had made him ever more intolerant of his son, suspicious as he was that the Prince had been manoeuvring against him, and resentful of having to return to the foreign land he had inherited against his better judgement. All the signals pointed towards there being a familial explosion, and, given the curious nature of George’s family history, it duly came in the happiest of circumstances.

In November 1717, the Prince’s beautiful wife Caroline of Anspach had given birth to a baby boy, her fifth child. Instead of celebrating, however, the King and his son fell out in spectacular fashion. It was, strictly speaking, the King’s right as ruler to name the boy’s godparents; but the Prince wished to do so himself, and chose the Queen of Prussia and the Duke of York. The ensuing fall-out was dramatic. The King banished the Prince and his wife from the palace without their children. A few weeks later, the baby boy died. The Hanover family seemed genetically programmed for disaster.

The political impact of the schism was immediate: George had, through his intemperate actions, forced his son into internal exile. A rival court was established, with the Prince choosing Leicester House at St Martin’s in London as his base, barely a mile from St James’s Palace. No longer was the King in total command of all he surveyed. This time, dissent had a focus, a rival power base in which the thwarted ambitions of the powerless and the embittered could find expression. The political tensions were reflected most obviously in the South Sea Company’s make-up, with the rivalry between the King and his son reflected in the efforts made by their respective candidates, in 1718, to be elected to the Court of Directors. Walpole and Townshend’s candidates stood against the government, and by implication the King, with some success. Harley’s brother Edward wrote: ‘the King’s people … have lost it for sub- and deputy-governors of the South Sea, and those who are reckoned of the Prince’s party have carried it’.

Crucially, the row between the King and his son led directly to George I, as an act of revenge, assuming the role of Governor of the South Sea Company. It was the highest accolade the ambitious directors could have sought for their upstart venture, but it was dangerous territory for the monarchy. It signified not just royal approval of the enterprise, but royal entanglement too. By his presence at the head of the company, the King had signalled that the business was to be trusted. But the obverse might be proved, too. If for any reason the Company failed, where did this leave a monarch unloved by his people, assailed by Jacobite incursions, and viewed with intense suspicion, if not animosity, by members of a dispossessed Tory party? The Company, launched by the Tories, had effectively been reinvented as a Whig project, with the King as its guarantor.

The omens were not good. War with Spain broke out again at the end of 1718, and with it the South Sea Company’s last hopes that it would live up to its motto and travel ‘from Cadiz to the dawn’, that it would trade with faraway lands and bring home booty to compare with the Elizabethan adventurers’. Instead, its seven overseas trading posts were seized by Spain. The Royal Prince, its hold crammed with cargo, lay at anchor and could not sail for Spanish America. A full two years were to pass before she made her maiden voyage, to Vera Cruz, at which point the Spanish fleet attacked her: so she gave up and languished in port for half a dozen years more. A second ship, named The Royal George in honour of the King, was launched in 1718 but war prevented her, too, from setting sail. The Company now looked not to a faraway dawn for inspiration, nor to Cadiz, though that was nearer the mark.

Instead, it was the ambitious economic theories of the Scottish outcast John Law that helped to change the destiny of the South Sea Company. Under his leadership, France was transforming its fortunes with a speed and skill that George’s indebted government, and the South Sea Company of which he was now head, could only admire and fear. ‘I wish to God,’ complained a despairing British diplomat in France to an under-secretary back home, ‘there may be something done quickly to put our affairs in order before it is too late; and that the great men of Britain would think of something else than merely of tripping up one another’s heels.’

The unthinkable had happened – France was winning the peace. War had been replaced by something which proved to be far more dangerous for Britain: economic rivalry.