South Sea Bubble

The South Sea Bubble was a fair match for Law's Mississippi Scheme, the great difference being that the Government of England became involved. The South Sea Company was organized by Harley, Earl of Oxford, Lord Treasurer of England, to carry on trade with Spanish, or South America. The national debt of England had grown, during the Continental wars, to the enormous sum of ten million pounds. A bill was passed in Parliament allowing those to whom the nation owed money to take shares in the South Sea Company in lieu of their claim upon the nation. All classes in England were under the delusion that the wealth stored up in Spanish America was so enormous that the trade of this Company would enrich all who took shares in it. So great was the rush for stock that in 1719 the South Sea Company submitted proposals to the Government for the buying up of the entire national debt. The Bank of England now entered into competition with the South Sea Company, and the counterbidding reached an enormous sum, resulting at last in favor of the Company. The madness of speculation spread rapidly. Landlords sold their estates, clergymen and widows brought their savings to invest in the South Sea Company, and all who could even borrow money rushed madly to buy shares, which were supposed to be of priceless value. The Company's stock rose rapidly from pound 100 to pound 1000 sterling. Madness ruled the hour. For lack of office room the streets leading to it were lined with desks, and clerks full of business negotiating the worthless stock. The news of the failure of Law's Mississippi Scheme and its consequences in Paris opened all eyes to the delusion, and as the year 1720 closed, the South Sea Bubble burst, bringing ruin to the Company and to thousands of families who had so recklessly embarked their all upon the treacherous sea of speculation.