The Bubble Act – 1720 – A Royal Charter

The Bubble Act – 1720

The Bubble Act - 1720
The Bubble Act – 1720 – James Carter’s engraving of Edward Matthew Ward’s painting of London’s Exchange Alley captures the speculative excitement created by the South Sea Bubble.

Financial crises are not unique to any one economic or financial system, but they all arise from human greed.

The War of the Spanish Succession (1701–1714), a struggle primarily between England, the Dutch Republic, and France for succession to the Spanish monarchy and access to lucrative trading possibilities in the Spanish colonies, had proven costly, and Parliament needed to raise cash.

It did so in a variety of ways, including selling its debt to merchants. The South Sea Company was founded in 1711 by a group of investors as a joint-stock company with transferable shares, and Parliament granted it a charter. The firm was offered a trading monopoly on Spanish territories in the Caribbean and South America in exchange for taking on war debt.

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