came out of the royal closet, she told her attendants that she was transported at the King's "mighty kind reception". But Walpole had another version of the interview, to the effect that the King had been very rough with her and had chidden her severely. He told her she might say what she pleased to excuse herself, but he knew very well that she could have made the Prince behave better if she had wished, and he hoped henceforth that she would use her influence to make him conduct himself properly. These private interviews over, it was decided to celebrate the reconciliation in a public manner. The Ministers gave a dinner to celebrate the Whig and the royal reconciliation at one and the same time; the King held a drawing-room at St. James's, to which the Prince and Princess went with all their court. The King would not speak to the Prince nor to any of his suite, except the Duchess of Shrewsbury, who would not be denied. When she first addressed him he took no notice, but the second time she said: “I am come, Sir, to make my court, and I will make it," in a whining tone of voice, and then he relented so far as she was concerned. But otherwise the drawingroom could hardly be described as harmonious. "It happened," writes Lady Cowper, "that Lady Essex Robartes was in the circle when our folks came in, so they all kept at the bottom of the room, for fear of her, which made the whole thing look like two armies in battle array, for the King's court was all at the top of the room, behind the King, and the Prince's The Prince looked down, and

court behind him.

behaved prodigious well. The King cast an angry look that way every now and then, and one could not help thinking 'twas like a little dog and a cat— whenever the dog stirs a foot, the cat sets up her back, and is ready to fly at him.”

The reconciliation thus patched up was a hollow one, but it served to hoodwink the public, and it depressed the Jacobites, who had been saying everywhere that even outward harmony was impossible. Neither side was satisfied; the King was indignant at having to receive the Prince at all, and unwilling to make concessions. He would not grant the Prince and Princess the use of any of the royal palaces, and refused to let them come back to live under the same roof with him. He gave them leave to see the three princesses when they liked, but he refused to part with them, and the Ministers conveniently ignored the payment of the Prince's debts, which indeed were not settled until he came to the throne. All that the Prince and Princess regained were the royal guards and the honours paid officially to the Prince and Princess of Wales, the leave to come to court when they wished, and permission to retain the members of their household, which at one time the King had threatened to discharge en bloc. But the great gain to the Government, and to the House of Hanover, was that a formal notification of the reconciliation was sent to foreign courts, and a domestic quarrel, which had become a public scandal, and threatened to become a public danger, was officially at an end.

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CHAPTER X.

THE SOUTH SEA BUBBLE.

1720.

IN June, soon after the reconciliation, the King, attended by Stanhope, set out for Hanover. He had intended to make a longer stay than usual, for everything appeared prosperous and peaceful when he left England. The Ministry was in the plenitude of its power, the Whigs were reconciled, the wound in the Royal Family was healed, or at least skinned over, and the Jacobites were in despair. But this proved to be merely the calm before the storm. In a few months the storm burst with unprecedented violence, and the King's visit was cut short by an urgent summons from the Government, who, like the nation, were plunged into panic and dismay by the collapse of the South Sea Bubble.

The South Sea Bubble was one of the most glittering bubbles that ever dazzled the eyes of speculators. The South Sea Company had been established by Harley, Lord Oxford, in 1711, to relieve taxation. The floating debts at that time amounted to nearly ten millions, and the Lord Treasurer wished to establish a fund to pay off that sum. The interest

was secured by making permanent the duties on wine, vinegar, tobacco, and certain other commodities; and creditors were attracted by the promise of a monopoly of trade with the Spanish coasts of America. This scheme was regarded by friends of the Government as a masterpiece of finance, and it was sanctioned both by Royal Charter and Act of Parliament. The leading merchants thought highly of the scheme, and the nation saw in it an El Dorado. People recalled the discoveries of Drake and Raleigh, and spoke of the Spanish coasts of America as though they were strewn with gold and gems. The Peace of Utrecht ought to have done something to destroy these illusions, for instead of England being granted free trade with the Spanish colonies in America, Spain only gave England the Asiento treaty, or contract for supplying negro slaves, the privilege of annually sending one ship of less than five hundred tons to the South Sea, and establishing certain factories. The first ship of the South Sea Company, the Royal Prince, did not sail until 1717, and the next year war broke out with Spain, and all British goods and vessels in Spanish ports were seized. Nevertheless, the South Sea Company flourished; its funds were high, and it was regarded as a sort of rival to the Bank of England.

At the close of 1719 Stanhope's Administration was anxious to buy up and diminish the irredeemable annuities granted in the last two reigns, and amounting to £800,000 per annum. Competing schemes to effect this were sent in by the South

Sea Company and the Bank of England, and the two corporations tried to outbid one another; they went on increasing their offers until at last the South Sea Company offered the enormous sum of £7,500,000, which the Government accepted. The South Sea Company had the right of paying off the annuitants, who accepted South Sea stock in lieu of Government stock, and two-thirds of them agreed to the offer of eight and a quarter years' purchase. There seemed no shadow of doubt in any quarter that this was a most satisfactory solution of the difficulty. The South Sea Company was everywhere regarded as prosperous.

Throughout the summer of this year, 1720, speculation was in the air. The example of John Law's Mississippi scheme in Paris had created a rage for it. Law was a Scottish adventurer, who had some years before established a bank in Paris, and afterwards proceeded to form a West Indian company, which was to have the sole privilege of trading with the Mississippi. It was at first an enormous success, and Law was one of the most courted men in Europe. "I have seen him come to court," says Voltaire, "followed humbly by dukes, by marshals and by bishops." He became so arrogant that he quarrelled with Lord Stair, the English ambassador, and the fact that Lord Stair was recalled shows how great was the financier's power. A great number of Frenchmen amassed large fortunes, and Law's office in the Rue Quincampoix was thronged from daybreak to night with enormous crowds. One