George I of Great Britain - Ministries

Ministries

In Hanover, the King was absolute monarch. All government expenditure above 50 thalers (between 12 and 13 British pounds), and the appointment of all army officers, all ministers, and even government officials above the level of copyist, was in his personal control. In contrast, in Great Britain George had to govern through Parliament.

In 1715 when the Whigs came to power, George's chief ministers included Sir Robert Walpole, Lord Townshend (Walpole's brother-in-law), Lord Stanhope and Lord Sunderland. In 1717 Lord Townshend was dismissed and Walpole resigned from the Cabinet over disagreements with their colleagues; Lord Stanhope became supreme in foreign affairs, and Lord Sunderland the same in domestic matters.

Lord Sunderland's power began to wane in 1719. He introduced a Peerage Bill which attempted to limit the size of the House of Lords by restricting new creations. The measure would have solidified Sunderland's control of the House by preventing the creation of opposition peers but it was defeated after Walpole led the opposition to the bill by delivering what was considered "the most brilliant speech of his career". Walpole and Townshend were reappointed as ministers the following year and a new, supposedly unified, Whig government formed.

Greater problems arose over financial speculation and the management of the national debt. Certain government bonds could not be redeemed without the consent of the bondholder and had been issued when interest rates were high; consequently each bond represented a long-term drain on public finances, as bonds were hardly ever redeemed. In 1719 the South Sea Company proposed to take over £31 million (three fifths) of the British national debt by exchanging government securities for stock in the company. The Company bribed Lord Sunderland, Melusine von der Schulenburg and Lord Stanhope's cousin, Charles Stanhope, who was Secretary of the Treasury, to support their plan. The Company enticed bondholders to convert their high-interest, irredeemable bonds to low-interest, easily-tradeable stocks by offering apparently preferential financial gains. Company prices rose rapidly; the shares had cost £128 on 1 January 1720, but were valued at £500 when the conversion scheme opened in May. On 24 June the price reached a peak of £1050. The company's success led to the speculative flotation of other companies, some of a bogus nature, and the Government, in an attempt to suppress these schemes and with the support of the Company, passed the Bubble Act. With the rise in the market now halted, uncontrolled selling began in August, which caused the stock to plummet to £150 by the end of September. Many individuals—including aristocrats—lost vast sums and some were completely ruined. George, who had been in Hanover since June, returned to London in November—sooner than he wanted or was usual—at the request of the ministry.

The economic crisis, known as the South Sea Bubble, made George and his ministers extremely unpopular. In 1721 Lord Stanhope, though personally innocent, collapsed and died after a stressful debate in the House of Lords, and Lord Sunderland resigned from public office. Lord Sunderland retained a degree of personal influence with George until his sudden death in 1722 allowed the rise of Sir Robert Walpole. Walpole became de facto Prime Minister, although the title was not formally applied to him (officially, he was First Lord of the Treasury and Chancellor of the Exchequer). His management of the South Sea crisis, by rescheduling the debts and arranging some compensation, helped the return to financial stability. Through Walpole's skilful management of Parliament, George managed to avoid direct implication in the Company's fraudulent actions. Claims that George had received free stock as a bribe are not supported by evidence; indeed receipts in the Royal Archives show that he paid for his subscriptions and that he lost money in the crash.