Random Facts about the South Sea Bubble
THE SOUTH SEA BUBBLE
The "South Sea Bubble," as it is generally called, was a financial scheme which occupied the attention of prominent politicians, communities, and even nations in the early part of the eighteenth century. Briefly the facts are: In 1711 Robert Hartley, Earl of Oxford, then Lord Treasurer, proposed to fund a floating debt of about L10,000,000 sterling, the interest, about $600,000, to be secured by rendering permanent the duties upon wines, tobacco, wrought silks, etc. Purchasers of this fund were to become also shareholders in the "South Sea Company," a corporation to have the monopoly of the trade with Spanish South America, a part of the capital stock of which was to be the new fund. But Spain, after the treaty of Utrecht, refused to open her commerce to England, and the privileges of the "South Sea Company" became worthless. There were many men of wealth who were stockholders, and the company continued to flourish, while the ill success of its trading operations was concealed. Even the Spanish War of 1718 did not shake the popular confidence. Then in April, 1720, Parliament, by large majorities in both Houses, accepted the company's plan for paying the national debt, and after that a frenzy of speculation seized the nation, and the stock rose to L300 a share, and by August had reached L1,000 a share. Then Sir John Blunt, one of the leaders, sold out, others followed, and the stock began to fall. By the close of September the company stopped payment and thousands were beggared. An investigation ordered by Parliament disclosed much fraud and corruption, and many prominent persons were implicated, some of the directors were imprisoned, and all of them were fined to an aggregate amount of L2,000,000 for the benefit of the stockholders. A great part of the valid assets was distributed among them, yielding a dividend of about 33 per cent.