Last time, we left off with Robert Walpole seeing an incredible opportunity
in the collapse of the South Sea company,
and trying to maintain the very delicate balance between being the incorruptible
hero of the people who opposed all this market madness,
and pulling the strings behind the scenes just right
so that the only horrible corruption that actually got exposed
was that of the people who stood between him, and being Prime Minister
Unfortunately for him, there was about to be a wrench thrown in the works.
You see, Robert Knight was the cashier of the South Sea Company,
and he had secretly been keeping a record of all of the company’s transactions,
including a list of everyone they’d bribed.
If this list fell into the hands of anyone with honest intent,
it would bring down most of the political establishment of Britain
and ruin Walpole's chance at power.
Now, you'd think at this point, the government would just raid the South Sea offices,
confiscate everything,including this ledger, and take all the principle actors into custody.
But instead, they began to debate how to form a committee to investigate South Sea
which is probably partly due to a lot of prodding from Walpole.
This gave Robert Knight time to cook the books,
adding legions of phony names to hide just how badly
they'd overstepped the government's strictures on what could be lent to whom
but perhaps more importantly, it gave him time to move the ledger,
with its list of who they'd bribed still intact, from the company's files
into his own personal possession.
Finally, though, the government got their act together
and called Knight in front of the committee to investigate just
what exactly went on at South Sea.
This left him with, as one of my favorite commentators on the period put it,
three options: tell them nothing, which would leave him in prison for a very long time;
tell them everything, which would certainly bring down the government
and probably put him on a lot of people's short lists for a very untimely, very bloody accident;
or, as soon as the day's questioning was over, walk out the door,
grab the first coach for Dover and hop a ship across the channel.
Needless to say, he chose option three.
Because this was the government and no one was working on weekends,
nobody realized he was gone until the following Monday.
With such a head start, he wound his way through France
and ended up in Brussels, conveniently part of the Austrian Netherlands,
one of the few countries in western Europe without an extradition treaty with Great Britain.
But, somehow, and by ‘somehow’ I mean ‘almost certainly with the help
of certain members of government', Knight had managed to transfer most of his money overseas
well before he absconded with a certain, extremely-implicating list of names,
so he wasn’t exactly inconspicuous as he traveled,
living the high life and putting himself up in the most expensive hotel in Brussels.
The local British chargé d'affaires , who wasn’t wrapped up in all the machinations from back home,
took notice of Knight’s extravagance and, per the official instructions of
his government and the public statements made by Walpole,
went to have Knight arrested.
Of course, this was actually the absolute last thing
that Walpole, the King or any of the Whig elite wanted to happen,
and, at the last moment, somebody tipped Knight off...
it was Walpole... Walpole tipped Knight off.
and he attempted to flee again.
But this time, he was caught by our industrious chargé d'affaires
just before he could slip across the border. He was carted off to a prison in Antwerp,
and as news reached England, Walpole, the King, and the Whig elite
publically celebrated and demanded his immediate return.
Oddly enough, for some reason, Knight’s ledger never made it to prison with him.
'who' knows where that went...
it was Walpole...
Meanwhile, back in Britain, Blunt came to the realization that,
with Knight on the lam, he himself was just about the only
person still around who knew just who South Sea had bribed.
Unlike Knight, though, Blunt had far fewer compunctions
about selling out his former business partners,
so he promptly began selling out whomever he could in exchange for a deal.
He only squealed to the committee from the House of Commons, though,
leaving the House of Lords completely in the dark.
He knew which people he was likely to get a better deal from.
This threw everything into chaos, and chaos just happened to be something
Walpole could make good use of.
On top of this, since no one had that dangerous ledger anymore,
Blunt was just working from memory and, in a stroke of great fortune,
the names that Blunt could remember happened line up remarkably well
with the list of people that Walpole needed to get rid of.
But there was still the threat of Robert Knight’s far better memory,
which was currently sitting in a jail cell in Antwerp.
With the public angrily clambering for his return
and those MP's who weren't involved in the scandal demanding
continuously and publicly to be able to question him,
the King was forced to bring Knight back.
But, since Britain had no extradition treaty with the Austrian Netherlands,
the King couldn’t just haul him back. Instead he dispatched a man to go
“convince” the Austrian government to send Knight back to England for trial.
The particular fellow chosen to do the convincing was a bit of an odd choice,
as he had never performed diplomatic service before and, in fact,
had no obvious qualifications for the job
other than that he was a close friend of Walpole's.
Secretly, this fellow had instructions to convince the Austrians that
‘On no condition should they return Knight to Britain. Ever.
Please. In fact, if they could just let him escape, that would be awesome.
Walpole then also sent two letters to the Austrians.
One of the letters demanded vociferously that Knight be returned.
The other, which is one of the most extraordinary diplomatic documents I've ever read
pretty much explicitly offered the Austrians a blank check
as far as the British were concerned
so long as Knight never came back to Britain.
This is the point where history needs a Benny Hill theme.
Parliament wanted Robert Knight back in Britain.
Walpole couldn’t have him coming back.
Parliament offered Knight a royal pardon if he’d return to England and give his testimony.
In response, Walpole’s agents in Antwerp quietly told Knight
that ‘even with such a pardon, Parliament could still prosecute him,
'Don’t you dare.’
Since the pardoning attempt fell through,
sitting members of Parliament hopped on a boat
boat to sail over to the Austrian Netherlands to question Knight personally,
but the governor of the Netherlands, tipped off by Walpole,
prevented them from entering the country.
Then, Walpole convinced the Austrian government to move Knight to a different prison
while still pretending he was in the original one
so that any British MPs who happened to show up unannounced
couldn’t question Knight without their knowing.
When rumors started to circulate that Knight wasn’t in his original cell in Antwerp,
they took him back to Antwerp, put him back in that cell,
let someone verify he was there…
and then in the middle of the night, took him out to the Arden forest
and just let him go.
No one would hear from him again for 20 years.
With Knight safely out of the way,
Walpole could finally let the hammer of justice come down without consequence for himself.
And, as that justice hammer was being wielded by a parliamentary committee rather than by the courts,
it meant that the guilty were basically trying themselves
and Walpole’s now enormous influence
could determine exactly where that hammer fell.
Whig leaders like John Aislabie, along with along with notables like the Postmaster General,
the First Lord of the Treasury nd the Lord of the Council,
either resigned or were stripped of their positions,
clearing the way for Walpole to become First Lord of the Treasury,
a position he would use to become what most historians consider
the first Prime Minister of England
Many other individuals were fined, but very few served jail time,
and even among those fined, very few lost more than they had made from the South Sea Bubble.
And those who managed to remain in power
all knew exactly who they had to thank:
Robert Walpole.
And Blunt? Well, since he, unlike his associate Knight, was willing to name names,
Blunt began trading for a deal on the people he’d bribed as soon as he could.
In the end, he was left with 5000 pounds to his name,
which is still probably more than he had at the beginning of this story.
and hilariously, he remained a Baronet,
a title he had been given for his good work with the South Sea company
a few scant months earlier.
In fact, his family holds the Blunt Baronet to this day.
In the end, when we look back on all this madness,
I think it’s important to remember that Britain couldn't have survived
without financial institutions like the South Sea Company and the Bank of England.
Without them, the government couldn’t have carried the debts it needed
to prosecute its wars and keep the country afloat.
But, without oversight, with politicians financially tied to the entities
they were supposed to be responsible for reining in,
and with the public good being guarded only by the very people
who stood to profit from the public good being subverted,
these institutions lead the national economy to the brink of ruin
and left generations of the middle class to foot the bill.
This is a good lesson.
I hope we learn it someday. See you next time.
Oh! And for any of you who are wondering what happened to Robert Knight
after he ran off into the woods, years later he wound up in Paris,
used the money he fled with to start a bank and did quite well for himself.
Such is the heavy price of crashing a national economy…
yep...
see ya' next week!