In the inquiry that followed the South Sea Bubble, the payments received by Sophia Charlotte [the half-sister] and Melusine [von Schulenberg, the mistress] became public. George I blocked the extradition of South Sea Company Treasurer Robert Knight, who fled England in January 1721 after alluding to immense bribes paid to the most prominent people at court. John Blunt, one of the company’s founders, was arrested and provided the list of payments. In March, Melusine and Sophia Charlotte were accused in a House of Lords debate of accepting bribes.
Because members of his court were implicated, George I couldn’t claim the authority to resolve the situation alone. Instead, Robert Walpole, the newly created first lord of the Treasury, took charge. The assets of South Sea Company directors were confiscated and distributed to bankrupt shareholders, and the stock was divided between the East India Company and the Bank of England. Walpole also fought to protect the king, shielding Melusine and Sophia Charlotte from prosecution.
Although Walpole never formally received the title of prime minister in his lifetime, his authority after the South Sea Bubble was unprecedented and set the tone for the future of the constitutional monarchy. The monarch would retain some control over foreign affairs but the prime minister would assume the role of head of government in the domestic realm as “the King’s Servant.” Walpole conducted state business in the House of Commons and united the Cabinet as an executive authority. The monarch’s direct influence over subsequent prime ministers varied over the course of the 18th and 19th centuries, but Walpole’s example set the tone for the office.
The monarch's power is by now almost completely dependent on that of the prime minister. Now if we could only find a way to curtail the PM's power. For this we would do well to look to Peter Aucoin, Mark Jarvis and Lori Turnbull in Democratizing the Constitution: Reforming Responsible Government, which I assigned to my Canadian Government students this term.