|
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.
|
