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