Friday, May 4, 2012

Vengeance is Mine, Saith the Public

The calls in Cato's Letters for vengeance against the directors of the South Sea Company were answered by the British Parliament. Although the company treasurer escaped to the continent, many other directors found their estates confiscated for the financial relief of the victims of the bubble. In addition, the primary government official involved, Chancellor of the Exchequer John Aislabie, was convicted and sent to the Tower of London.

The South Sea Company, however, continued to live on. Robert Walpole crafted a plan to have the company divided up. Part of the assets and obligations were taken over by the Bank of England ( Britain's equivalent of the Federal Reserve). Part were taken over by another monopoly trading company, the East India Tea Company. In Cato's eyes, this last act only demonstrated how people forget.

"Last year a South-Sea project was to be established to pay off the national debts; and now a project is said to be in embryo, to remit the greatest part of the debt due to the nation by the South-Sea: And if so, the whole nation is to suffer this general loss, out of mere pity to a small part of the nation. Twelve months ago forty millions was not too much to be trusted with one company, high in credit, and its reputation hoisted up by publick authority; but now, when they are bankrupt and undone, and when their directors and undertakers are universally hated and detested, it is to be feared, it seems, that they will become too formidable, if all the stock subscribed into them be continued with them.

There is, therefore, I am told, a project on foot, in Exchange Alley, to deliver up the nation to three companies; and to let them divide us, their cully, among them. In order to prevail upon these three great societies to accept us as a present, to be used as they think fit, I humbly presume that we must behave ourselves as follows: We can do no less than sacrifice the poor halfstarved manufacturers to one of them, and oblige ourselves to lay no restraint upon India callicoes, &c. We must also confirm the clause which makes that society perpetual. New trades, more monopolies, and fresh privileges, must be given to another great and virtuous company, which had made so good use of the old: And the Bank of England, which long preserved its integrity, must be brought into the conspiracy; and without doubt something more must be given them, perhaps the increase of their term."

Now, if this mighty project, this noble design, can be accomplished; I suppose that every one will see, or be prevailed upon to see, the absolute necessity why all past errors, and former management, should be forgot; because publick credit, which depends upon temper and moderation, must not be interrupted by ill-timed enquiries, nor disturbed by publick vengeance." 

And crony capitalism lives on . . .

No comments: