An early trade label of the South Sea Company, for export of finest English serge cloth. South Sea company itself before platen forex peace collapse. In Great Britain, a considerable number of people were ruined by the share collapse, and the national economy greatly reduced as a result.
The founders of the scheme engaged in insider trading, using their advance knowledge of when national debt was to be consolidated to make large profits from purchasing debt in advance. A parliamentary enquiry was held after the crash to discover its causes. The company was restructured and continued to operate for more than a century after the Bubble. In August 1710 Robert Harley was appointed Chancellor of the Exchequer in a government of commission.
The government at this time had become reliant on the Bank of England. 300,000 for the next quarter’s pay for the British army operating in Europe under Marlborough. Although prizes were advertised by their total amount, they were paid in the form of a fixed annuity over a period of years, so that the government effectively held the prize money as a loan until it was paid out to the winners. 9,000,000 was owed, without any allocated income to pay it off. Edward Harley and John Blunt together had devised a scheme to consolidate this debt in much the same way that the Bank of England had consolidated previous debts, although the Bank still held the monopoly on operating as a bank. At that time, when continental America was being explored and colonized, Europeans applied the term “South Seas” only to South America and surrounding waters.
The concession both held out the potential for future profits and encouraged a desire for an end to the war, necessary if any profits were to be made. Harley was rewarded for the scheme by being created Earl of Oxford on 23 May 1711, and was promoted to Lord High Treasurer. With a more secure position, he began secret peace negotiations with France. Unless the Spaniards are to be divested of common sense, infatuate, and given up, abandoning their own commerce, throwing away the only valuable stake they have left in the world, and in short, bent on their own ruin, we cannot suggest that they will ever, on any consideration, or for any equivalent, part with so valuable, indeed so inestimable a jewel, as the exclusive trade to their own plantations. The originators of the scheme knew that there was no money to invest in a trading venture, and no realistic expectation there would ever be a trade to exploit, but the potential for great wealth was widely publicised at every opportunity, so as to encourage interest in the scheme. The objective for the founders was to create a company which they could use to become wealthy, and which offered future scope for further government deals.