The South Sea Bubble

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The South Sea Bubble of 1720

The South Sea Bubble by Edward Matthew WardThe treaty of 1713 between Great Britain and Spain had also granted to English merchants the right of sending a merchant ship every year to the South Seas, as the Pacific Ocean was then called. 

In consequence, English commerce and wealth began to increase by leaps and bounds.  All this made people ready to venture their money in risky enterprises, and a number of merchants and bankers formed a great company for trading with the South Seas.  Their schemes caught the public fancy, and when the South Sea Company promised to make all rich who trusted their money to it, people rushed to take its shares.  They paid absurdly high prices for very doubtful chances of gain; and men and women, rich and poor, went almost crazy with excitement. 

When they regained their senses they saw that they had paid far too dear for profits which might never come.  Then, all at once with equal folly they rushed to sell their shares, but very few people would buy.  The great South Sea Bubble burst, and many thousands of people were ruined. 

The only man who came forward with any plan for healing some of the misery was Robert Walpole, who was known to be the best man at figures in the House of Commons.  He had warned people against trusting these schemes, and now he showed his skill in repairing some of the ruin.  This brought him back to power as one of the chief of the king’s ministers, and for the next twenty one years he was the first man in England next to the king.

Excerpt from Stories from English History by Henry Pitt Warren – 1908

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