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South Sea Bubble

The British episode of 1720: a company granted a trading monopoly took on government debt and exchanged it for its own rising shares.

How to read the number

The scheme rested on that exchange — the dearer the share, the better the conversion terms, so the rising price was part of the design rather than a result of profit.

When the metric lies

The story is told as a parable about a gullible crowd, though its core is a state privilege and the interests of those who granted it.

Also known as: south sea company

Related terms