South Sea Bubble

The name given to the disastrous financial project set on foot by Harley (q. v .) to relieve the national debt and restore public credit, which produced an unparalleled rush of speculation, ending in the ruin of thousands of people. Through the efforts of Harley a company of merchants was induced in 1711 to buy up the floating national debt of £10,000,000 on a government guarantee of 6 per cent. interest, and a right to a monopoly of trade in the South Seas. 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. 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. The private estates of the fraudulent directors were confiscated for the relief of the sufferers. To Sir Robert Walpole belongs the credit of extricating the finances of the country from the muddle into which they had fallen.