THE SOUTH SEA BUBBLE

The "South Sea Bubble," as it is generally called, is the name given to the disastrous financial project set on foot by HARLEY to relieve the national debt of England and restore public credit, which produced an unparalleled rush of speculation, ending in the ruin of thousands of people.

It 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 £10,000,000 sterling on a government guarantee of 6 per cent. interest, and a right to a monopoly of trade in the South Seas. The interest calculated was, 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.

The shares rose by leaps and bounds as tales of the fabulous wealth of the far South Seas circulated, till, in 1720, £200 shares were quoted at £1000; earlier in the same year the company had taken over the entire national debt of upwards of 30 millions. In the craze for speculation which had seized the public hundreds of wild schemes were floated.

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 £300 a share, and by August had reached £1,000 a share.

At length the "Bubble" burst. The chairman and several directors of the company sold out when shares had reached £1000; suspicion followed, confidence vanished, stock fell, and in a few days thousands from end to
end of the country were bewailing their ruin.

All it began with Sir John Blunt, one of the leaders, who sold out his shares, 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 £2,000,000 for the benefit of the stockholders.

A part of action taken was also confiscation of the private estates of the fraudulent directors for the relief of the sufferers. A great part of the valid assets was distributed among them, yielding a dividend of about 33 per cent.

To Sir Robert Walpole belongs the credit of extricating the finances of the country from the muddle into which they had fallen.