South Sea Bubble
South Sea Bubble is the name given to a curious financial transaction of the 18th century. In 1710 a South Sea Company was formed to take up a national debt of £10,000,000, for which it would pay 6 per cent. interest, receiving in return a monopoly of trade with South America. The Peace of Utrecht, and the resulting conditions imposed by Spain on the trade, rendered the monopoly worthless. But in 1720 the whole country went mad on the point, and all were eager to obtain the South Sea stock at any premlum. The Company now obtained leave from Parliament to take up £800,000 more, but the Bank of England entered into the competition. The South Sea Company then made more astonishing proposals, and the public enthusiasm rose still hlgher; but their success, which partly arose from the fact of paying interest out of capital; raised many imitators whom the Company tried to suppress by argarguments people soon recognised as applicable toto the Company also. The inevitable crash came, Walpole was called in to right matters, and inquiry showed that huge sums had been spent to bribe in high places. He began by confiscating the estates of the directors, and eventually many of the victims received a dividend of 33-1/3 per cent.