Feb 22, 2009

January 18, 2009: Two Mistakes and a Short Tale

L.F. Hamp

I'd hardly finished writing, printing and distributing my last missal when a friend stopped by to file two complaints. First, he pointed-up the fact I'd misled people about the “Great South Sea Bubble” scandal in Britian, writing it had ocurred in the early 19th century. He no sooner spoke than I recognized my error. The scandal of 1814 was referred to by some as, “another South Sea Bubble,” and involved speculation in every branch of British government and business, but particularly corruption in the Royal Navy. (More about that story below.)

The original “South Sea Bubble” scandal occurred 94 years earlier, in 1720, and involved manipulation of stocks and bonds which originated atfounding of the South Sea Company in 1711. The Company was granted exclusive trading rights in South America and the Pacific Ocean islands. As 1719 came to a close, the Company proposed to take over the entire British national war debt from the French Revolution and the ensuing war against Bonaparte. Their plan was to have investors receiving annuities (most investors received annual payments) exchange annual pay-outs for stock in the company. A rather small amount of stock would be issued at a very high price and the annuities extinguished.

The company's stock took off much like our mortgage market in recent years, and in less than a year had ballooned to ten times the original asking price. The whole nation immediately went “bonkers” for this and similar schemes. Then, early in 1720, the public suddenly lost confidence and panicked. South Sea Company shares dropped nearly a thousand points from its high-water mark, falling below the original asking price, and took Bank of England stock down with it. The rest of the story is much what our parents and grandparents got during those long years 1929-1940, and what we've been seeing for the past few years and, particularly, in this year.

A special committee of the House of Commons found ample evidence company officers were a brotherhood of thieves. Many officers of government had taken huge gifts of cash and/or goods to smooth the corporate pathway. Among them were the Chancellor of the Exchequer (the equivalent in the United States to the Secretary of the Treasury), the Postmaster-General, at least two commissioners of the national Treasury, and a (large) handful of the nation's most prestigious families. Many company officers were releived of their estates. The company, too important to the natinal economy to be allowed to die (sound familiar?) survived into the next century.

The other complaint was about my mocking of John McCain as looking (in real life) like the cartoon character “Mr. Bill” of SNL fame, and particularly about him waving his damanged arm about as though trying to execute a Roman military salute. Now, look at the facts. Since McCain returned from his stay at the Hanoi Hilton, through years of service in elective office, he'd always done his best to keep the injured wing close to his body, usually with a pen, or a rolled-up sheaf of paper in his right hand to discourage “hand-shakers”. He never did anything to draw attention to his wounded limb.

During his pathetically inept run for the presidency, however, he began waving the thing around in the air at every opportunity, trying to call attention to the wounds he suffered, the imprisonment he endured, at Obama's expense (since Obama never served in the military). If Obama's (largish) ears are fair game, so is the warrior's wounded wing. No apology offered.

Now for the short tale. The scandal of 1814 cost Britian the services at sea of one of her greatest maritime warriors, Thomas, Lord Cochrane. (The 'Lord' was a courtesy title due the eldest son of a bankrupt Scots earldom.) Cochrane had proven a veritable Paul Jones or Horatio Nelson as a young officer commanding small ships. He once took on the large Spanish Frigate “El Gumo” with the tiny brig “HMS Speedy”, defeated her in battle at sea, then took her back to England as a prize. He later made a fortune as commander of the frigate “HMS Pallas”, and in the previously captured French-built frigate “HMS Imperiuse”.

Cochrane was a restless, troublesome subordinate in a service best known for very touchy, stodgy and conservative Admirals. He made many enemies, and serving as member of the House of Commons, castigated them freely and often. Political enemies (many senior naval officers and friends in parliament) trumped-up charges of corruption against him related to a stock scandal during what became known to many as, “another South Sea Bubble,” in 1814. He was falsely and maliciously convicted, briefly imprisoned, stripped of rank and seniority in the Royal Navy, and expelled from Parliament.

In 1817 Cochrane was hired to command the navy of Chile, which he successfully directed until the new nation and Peru were freed by Spain. He then took command of Brazil's navy, leading it to victory over Portugal, resulting in Brazilian independence. He later commanded the Greek navy during their successful war for independence from Turkey.

Lord Cochrane was a pioneer innovator. He was the first Royal Navy commander to recommend use of steam-powered warships, and of the screw-propeller. At one point he recommended use of disabling (poison) gas in sea warfare though his superiors declined to pursue the plan. All in all, Cochrane enjoyed a gratifying career, and helped free Chile, Peru land Brazil from the grip of Spain and Porutugal. It's pleasant to report Queen Victoria restored him to rank and seniority in her Royal Navy, and he died Admiral of the Fleet Thomas Cochrane, 10th Earl of Dundonald (Scotland), and a member of the House of Lords.

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