Speculators scrambled to invest in the thousands of new projects, launched in the wake of the grandest scheme of them all, a scheme which would grow to such a size it seemed as if there was not enough money in the kingdom to support it. Some would make or lose up to a quarter of a million pounds in the madness of 1720, when shares in some ventures rose as high as the cathedral itself. Few investors kept their feet firmly on the ground; many felt under pressure to join in as they watched their neighbours climbing a new social ladder through the sudden acquisition of riches. Politicians, the clergy, landowners and the poor all joined in the scramble. Social mobility appeared to race out of control, with barriers between the classes seemingly removed by the chance of easy money. Women, defying convention, invested too – to claim, albeit briefly, an equal place in society. A there porter in Exchange Alley was said to have made £2,000 – ten times the annual income of an entire well-to-do family and a hundred times his own likely yearly earnings. Investors flocked to Britain from Holland and France. The canton of Bern in Switzerland made a corporate decision to invest. The streets of Exchange Alley heaved with desperate souls seeking to place their money in the mushrooming schemes. Fortunes, it appeared, could be made overnight.
The story of the events of 1720 holds more than just the elements of greed and pathos. It was, to those on the edges of the affair, so ridiculous that it inspired a generation of satirists to make fun of the human condition. And it was cruel, causing suffering among many families across the land. Ultimately, it showed England at its most corrupt, exposing the poisonous underbelly of the monarchy, of the ruling classes and of the elected politicians.
The three actors in the drama would be John Blunt, the aspiring son of a Kent shoemaker; John Law, a Scottish gambler; and Robert Walpole, a scheming Whig politician from Norfolk with an ambition as large as his girth. Blunt and Law would, in very different ways, lead the search for the alchemy that would overturn the vast debts of two nations and fill ordinary people’s pockets to overflowing. From 1710 to 1720 their careers would collide, and the impact would change the political and economic direction of two great countries, England and France. One was a shallow schemer, who conned a nation; the other a brilliant economist, far ahead of his times, whose intellectual theories blinded him to reality; but both would be condemned as charlatans when their inventions failed. On the backs of their triumphs and disasters, Walpole would, through cunning and ability, rise to unparalleled political power.
When reality returned, as inevitably it would, the old industries of shipping, farming and land-ownership, too dull for the exciting times of the stock-market ride, would once more be seen to be the places to put hard cash. The same would be true of the trade of which Wren was the architectural master: bricks and mortar would come back into favour. Those who had transferred their allegiance to the share market would be left to bemoan their fate and mourn their thumping losses. The Duke of Portland quietly applied for, and was granted, the governorship of Jamaica. A more ignominious position for a member of the eighteenth-century aristocracy can scarcely be imagined. But he needed to draw a salary.
CHAPTER II
A National Lottery, and a Rake’s Progress
Edwin Thrasher was stony-broke before he won, and one day he touched the ring that his father left him when he died, and said, ‘Dad, please send me some money.’ That afternoon he won £50,000 on an Instants scratch card. ‘Fun Facts About Winners’, the UK National Lottery website
With hindsight, it was five shillings’ worth of metal that changed the course of history.
In April 1694, in the London suburb of Bloomsbury, two men walked purposefully out of a tavern, glancing around in case there were any bystanders. Within a few paces, they had drawn their swords to settle their differences over a woman they both loved. It was over as quickly and silently as it began. The younger man made a single quick thrust; his rival fell to the ground, and was left dying, alone in Bloomsbury Square.
Within a day the survivor was arrested and thrown into Newgate jail. Within a fortnight he was in court to hear the charge against him: that ‘of his malice aforethought and assault premeditated he made an assault upon Edward Wilson with a certain sword made of iron and steel of the value of five shillings with which he inflicted one mortal wound of the breadth of two inches and depth of five inches, of which said wound the said Edward Wilson then and there instantly died’.
John Law, ‘Beau’ Law, scion of the Laws of Lauriston, gambler and ladies’ man, was sentenced to hang. There was little time to lose if his life was to be saved. According to the official version of events, Law was handed the means of escape by friends: they managed to supply him with a file with which he cut through the bars of his cell; also, drugs which he somehow managed to slip into his guards’ food or drink, to put them to sleep; and, for when he had achieved both these tasks, Law’s friends had a carriage waiting outside the prison, ready to whisk him away. Shortly after New Year’s Day, 1695, Law jumped thirty feet from his prison wall, and, although he apparently sprained his ankle on landing, he made it to the carriage and was promptly driven to the coast and smuggled aboard a boat to Holland. It appeared, in every detail, to be a daring escape, and one which became more and more colourful in the telling.
Soon afterwards, the newspapers were supplied with this description of the man on the run: ‘Captain John Lawe, a Scotchman, lately a prisoner in the King’s Bench for Murther, aged 26, a very tall black lean Man, well-shaped, about Six foot high, large Pockholes in his Face, big High-Nosed, speaks broad and low, made his Escape from the said Prison. Whoever secures him so he may be delivered at the said prison shall have £50 paid immediately by the Marshal of the King’s Bench.’ Descriptions can be misleading: Law had a clear complexion, and his nose was not large. Nor was his voice broad and low, and neither, for that matter, was he a captain. It appeared that influential friends had persuaded the newspapers to run a misleading description. Escape routes from justice, in the seventeenth century, could be arranged for the influential.
For the best part of two decades, John Law would wheel around Europe in exile. A quarter of a century would pass before he returned to London to receive a royal pardon. A quarter of a century in which he became the most important politician in Europe, a millionaire who invented a financial system that would capture the shattered economy of England’s greatest enemy and transform it into the most powerful in the Western world.
Many countries, but especially England and France, had empty coffers and restive taxpayers, mainly because they had failed to shake off their habit of waging expensive wars against each other. Since 1688, the English government had been almost permanently in combat against the French and Spanish. As the wars ground on, so the national debt had spiralled out of control, matched only by the harshness of the taxes on the country’s landowners and the crippling generosity of the government’s rate of interest to its moneylenders. All men were ‘led by their profit’, declared the banker Sir Josiah Child. The new breed of unprincipled, self-serving ‘moneyed-men’ was doing fast business in the coffee houses of’ Change Alley, growing fat on the interest on their loans.
In 1693 Parliament, for the first time, had guaranteed the government’s debt, removing the responsibility and authority for it from the monarch. The cost of borrowing money soon came to dominate political life. Within a year, in April 1694, Parliament voted to establish the Bank of England as an expedient to get the government out of financial trouble. Under its charter, the Bank was required to lend more than £1 million to the government, although in return it was guaranteed a profitable 8 per cent interest a year on its money. The Bank was also given permission to issue its own paper currency, and soon Exchequer bills and promissory notes were introduced to manage the debt.
Trading companies, too, were tapped for loans by the government. The East India Company was forced to pay heavily for its charter: £2 million in 1698 to see off a rival syndicate, and another £1 million in 1708 when these two companies merged. The Bank of England and the East India Company were the country’s two great financial institutions, the pillars of the City, the props on which a financially