*Ø* Blogmanac January 22, 1720 | Nothing new under the sun
The South Sea Bubble
1720 The beginning of the infamous South Sea Bubble – the name given to the economic bubble that occurred due to overheated speculation in and subsequent disastrous collapse of the South Sea Company.
In 1717 in England, a group of speculative merchants (including the English statesman Robert Harley, 1st Earl of Oxford, and Edward Gibbon, the grandfather of the famous historian), who had formed a huge corporation called the South Sea Company, proposed to the government that they should take on the national debt of 30,981,712 pounds. The public had confidence in the scheme and stock rose from 130 per cent to 300. Only soon-to-be Prime Minister Robert Walpole opposed the scheme, and he warned the country of the likely consequences, but was ignored.
The speculators spread rumours about their prospects in places such as Mexico and Peru, and stock went to 400, then settled at 330. Soon after the bill was passed by parliament, the stocks went up to 340. Crafty speculators made huge profits with sham or 'bubble' companies. The Prince of Wales was said to have reaped 40,000 pounds. Such investors merely put money in to raise the public hope, only to pull it out again as stocks rose. One of the schemes was "A company for carrying on an undertaking of great advantage, but nobody to know what it is."
Satirists as eminent as Swift produced caricatures of bubble companies in verse and on playing cards. By May 28 the shares sold at 890; soon they hit 1000. The inevitable happened, and stock slumped. The Chancellor of the Exchequer had profited by nearly 800,000 pounds. The poet John Gay was one of those wiped out. Many prominent members of the establishment were bankrupted for their fraud and speculation.
This is just a snippet of today's stories. Read all about today in folklore, historical oddities, inspiration and alternatives at the Wilson's Almanac Book of Days, every day. Click today's date when you're there.
The South Sea Bubble
1720 The beginning of the infamous South Sea Bubble – the name given to the economic bubble that occurred due to overheated speculation in and subsequent disastrous collapse of the South Sea Company.
In 1717 in England, a group of speculative merchants (including the English statesman Robert Harley, 1st Earl of Oxford, and Edward Gibbon, the grandfather of the famous historian), who had formed a huge corporation called the South Sea Company, proposed to the government that they should take on the national debt of 30,981,712 pounds. The public had confidence in the scheme and stock rose from 130 per cent to 300. Only soon-to-be Prime Minister Robert Walpole opposed the scheme, and he warned the country of the likely consequences, but was ignored.
The speculators spread rumours about their prospects in places such as Mexico and Peru, and stock went to 400, then settled at 330. Soon after the bill was passed by parliament, the stocks went up to 340. Crafty speculators made huge profits with sham or 'bubble' companies. The Prince of Wales was said to have reaped 40,000 pounds. Such investors merely put money in to raise the public hope, only to pull it out again as stocks rose. One of the schemes was "A company for carrying on an undertaking of great advantage, but nobody to know what it is."
Satirists as eminent as Swift produced caricatures of bubble companies in verse and on playing cards. By May 28 the shares sold at 890; soon they hit 1000. The inevitable happened, and stock slumped. The Chancellor of the Exchequer had profited by nearly 800,000 pounds. The poet John Gay was one of those wiped out. Many prominent members of the establishment were bankrupted for their fraud and speculation.
This is just a snippet of today's stories. Read all about today in folklore, historical oddities, inspiration and alternatives at the Wilson's Almanac Book of Days, every day. Click today's date when you're there.
Pip Wilson posted item above at 8:53 PM | Permalink
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