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First term

Under the guidance of Walpole, Parliament attempted to deal with the financial crisis brought on by the South Sea Bubble. The estates of the directors of the South Sea Company were used to relieve the suffering of the victims, and the stock of the company was divided between the Bank of England and East India Company. The crisis had gravely damaged the credibility of the King and of the Whig Party, but Walpole defended both with skilful oratory in the House of Commons.

Walpole's first year as prime minister was also marked by the discovery of a plot formed by Francis Atterbury, the bishop of Rochester. The exposure of the scheme crushed the hopes of the Jacobites whose previous attempts at rebellion (most notably the risings of 1715 and 1719) had also failed. The Tory Party was equally unfortunate even though Lord Bolingbroke, a Tory leader who fled to France to avoid punishment for his Jacobite sympathies, was permitted to return to Britain in 1723.

During the remainder of George I's reign, Walpole's ascendancy continued; the political power of the monarch was gradually diminishing and that of his ministers gradually increasing. In 1724 the primary political rival of Walpole and Townshend in the Cabinet, Lord Carteret, was dismissed from the post of Southern Secretary and once again appointed to the lesser office of Lord Lieutenant of Ireland. In Ireland, Lord Carteret used his power to secretly aid in the controversy over Wood's Halfpence and support Drapier's Letters behind the scenes and cause harm to Walpole's power. Walpole was able to recover from these events by removing the patent. However, Irish sentiment was situated against the English control.

Townshend, working with the king, helped keep Great Britain at peace, especially by negotiating a treaty with France and Prussia in 1725. Walpole was not consulted and stated that Townshend was "too precipitate" in his actions. Great Britain, free from Jacobite threats, from war, and from financial crises, grew prosperous, and Robert Walpole acquired the favour of George I. In 1725 he persuaded the king to revive the Knighthood of the Bath and was himself invested with the order, and in 1726 was made a Knight of the Garter, earning him the nickname "Sir Bluestring". His eldest son was granted a barony.