South Sea Bubble

The South Sea Bubble was the collapse in 1720 of speculative investment in the South Sea Company, causing widespread financial losses and a crisis of public confidence.

South Sea Company: An English joint-stock company chartered in 1711 to trade with Spanish America and manage government debt. Its debt-conversion scheme and soaring shares formed the center of the 1720 speculation.
War of the Spanish Succession: A European war fought from 1701 to 1714 over the Spanish succession and the balance of power. Its costs left Britain with substantial public debt that the company proposed to refinance.
Robert Harley, Earl of Oxford: An English statesman who served as lord treasurer from 1711 to 1714 and helped establish the South Sea Company. He created the company as part of a plan to manage Britain’s wartime debt.
South Sea Bubble inquiry: The British parliamentary investigation of the South Sea Company’s conduct and the 1720 financial collapse. Investigators exposed insider dealings and examined the roles of ministers and company directors.
Debt-for-equity swap: A transaction in which creditors exchange debt claims for ownership shares in a company. The company used share issues to absorb government debt and reward participating investors.
Treaty of Utrecht: A series of agreements in 1713 that ended major parts of the War of the Spanish Succession. Its trade concessions gave the company a limited right to supply enslaved Africans to Spanish America.
John Blunt: A financier and former director of the Sword Blade Company who helped devise the South Sea scheme. His financial planning helped turn the company’s debt proposal into a share-selling campaign.
Robert Walpole: A British politician who became the leading minister during the aftermath of the South Sea crisis. He managed the company’s restructuring and gained political authority through the crisis response.
Stock market speculation: The purchase or sale of securities in expectation of profiting from future price changes. Speculative demand helped drive South Sea shares far beyond the company’s trading prospects.
Asiento de negros: A contract granting the right to supply enslaved Africans to Spanish America under Spanish authority. The South Sea Company’s commercial privileges included this deeply exploitative trade.

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