George II: “never mind the crash, send me a billion” (Snippets 45)

Edward Matthew Ward’s interpretation of the “South Sea Bubble”, painted in the style of Hogarth more than a century after the events depicted.

In 1746, William Pulteney, Earl of Bath, became Prime Minister.  He held the post for a grand total of two days.  Admittedly, this is debatable as strictly speaking there was no official office of Prime Minister at the time, but there is no doubt that he occupies a very unusual place in history.

During the early 1730s, Pulteney had served as a Whig minister, in strong opposition to Robert Walpole.  Although Walpole was also a Whig, Pulteney and his fellow “Patriot Whigs” considered Walpole to be a corrupt prime minister during his extraordinary two decades in power.

In 1734, Pulteney wrote An Enquiry into the Conduct of our Domestick Affairs, from the Year 1721, to the Present Time,  in which he quoted from a financial request from King George II, and discussed its implications:

“His Majesty finds it necessary to acquaint his loyal House of Commons with the difficulties he labours under, by reason of debts contracted in his civil government; which being computed at Lady-day last, do amount to more than five hundred and fifty thousand pounds.  If the provision, made by an act of the last session of parliament, for discharging this debt, had not hitherto proved in a very great degree ineffectual, his Majesty had not been under a necessity of applying again to parliament, upon this occasion; but being resolved to cause a retrenchment to be made of his civil-list expenses for the future, and finding that such a retrenchment cannot well be effected, without discharging the present arrears, hath ordered the accounts thereof to be laid before the House, and hopes he may be empower’d to raise ready money, for that purpose, on the civil-list revenues; which, to avoid the laying any new burthen on his people, his Majesty proposes shall be replaced to the civil-list, and reimburs’d, by a deduction to be made out of the salaries and wages of all offices, and the pensions and other payments from the crown.”

The provision, hinted at in this message, was the sum of 600,000 pounds, which was to have been paid by the two assurance companies, for their charters, granted in the year 1720.  But these gentlemen having represented that, by their common sufferings with the rest of the nation in that unhappy year, they were not able to pay more than half the sum they had promised to lend the crown, the other moyety of three hundred thousand pounds was remitted to them and though the message says that this money would have been sufficient to have satisfy’d the debts of the civil-list in the year 1720; yet, in the year 1721, the sum of five hundred thousand pounds was ask’d and granted, to make good the deficiency of three hundred thousand pounds.  In drawing the Act of Parliament for this extraordinary supply, a remarkable clause to this purpose was slipt into it – “Or prejudice any pensions, or annuities charged upon the hereditary revenues, in pursuance of any Act of Parliament, or by virtue of any grants, or letters patents made by any former kings, or queens, of this realm; which pensions and annuities shall be paid, but not deem’d to be part of the seven hundred thousand pounds, during his Majesty’s life.” – I appeal to every member of that Parliament, may even to every one of the gentlemen of the revenue, (who have lately taken upon them a sort of exclusive authority to draw and present all money-bills to the House) whether they remember any motion, leave, or instruction, to insert this clause; which in the most summary manner, at once cases the civil-list of the annual sum of thirty-six thousand, two hundred pounds.  This sum, if valued at twenty five years purchase, amounts to above nine hundred thousand pounds; and we may truely affirm that it is the most concise, and unprecedented grant of money, that was ever made in Parliament.

The reference to the year 1720 is actually something that predates the reign of George II, and his father George I was the monarch at the time.  In an interesting parallel with our recent financial troubles, a get-rich-quick scheme was developed to take advantage of public finances, and backfired spectacularly.  The South Sea Company took over an enormous amount of national debt in exchange for shares in the company, which rose rapidly in value.  Copycat flotations of other companies, some of a fraudulent nature, were suppressed when the government passed the magnificently named “Bubble Act”, but with the unforeseen consequence of panic in the market and a crash in the value of shares.  The aristocracy lost enormous amounts of money, and were subsequently not very well placed to fund the huge “civil-list”, money paid to the monarch each year.  To put the king’s 550,000 pounds demand into perspective, it would be at least 80 million pounds in today’s terms, and by some methods of calculation more than a billion.

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A series of “Christmas History” articles, counting down to Christmas, starts tomorrow on Windows into History, and continues daily through December.