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!
