by Swift's friend, Harley, Earl of
Oxford, in the year 1711. The new Tory Government was less popular than
the Whig one it had displaced, and public credit had fallen. Harley
wishing to provide for the discharge of ten millions of the floating
debt, guaranteed six per cent. to a company who agreed to take it on
themselves. The L600,000 due for the annual interest was raised by
duties on wines, silks, tobacco, &c.; and the monopoly of the trade to
the South Seas granted to the ambitious new Company, which was
incorporated by Act of Parliament.

To the enthusiastic Company the gold of Mexico and the silver of Peru
seemed now obtainable by the ship-load. It was reported that Spain was
willing to open four ports in Chili and Peru. The negotiations, however,
with Philip V. of Spain led to little. The Company obtained only the
privilege of supplying the Spanish colonies with negro slaves for thirty
years, and sending an annual vessel to trade; but even of this vessel
the Spanish king was to have one-fourth of the profits, and a tax of
five per cent. on the residue. The first vessel did not sail till 1717,
and the year after a rupture with Spain closed the trade.

In 1717, the King alluding to his wish to reduce the National Debt, the
South Sea Company at once petitioned Parliament (in rivalry with the
Bank) that their capital stock might be increased from ten millions to
twelve, and offered to accept five, instead of six per cent. upon the
whole amount. Their proposals were accepted.

The success of Law's Mississippi scheme, in 1720, roused the South Sea
directory to emulation. They proposed to liquidate the public debt by
reducing the various funds into one. January 22, 1720, a committee met
on the subject. The South Sea Company offered to melt every kind of
stock into a single security. The debt amounted to L30,981,712 at five
per cent. for seven years, and afterwards at four per cent, for which
they would Pay L3,500,000. The Government approved of the scheme, but
the Bank of England opposed it, and offered L5,000,000 for the
privilege. The South Sea shareholders were not to be outdone, and
ultimately increased their terms to L7,500,000. In the end they remained
the sole bidders; though some idea prevailed of sharing the advantage
between the two companies, till Sir John Blunt exclaimed, "No, sirs,
we'll never divide the child!" The preference thus given excited a
positive frenzy in town and country. On the 2nd of June t