The term refers to an unhappy experiment in eighteenth-century English public finance. In 1720 public creditors were invited to convert their claims on the government into South Sea Company stock. Since the price of Company shares started to climb the moment the authorizing statute was passed in February, and further price increases were anticipated, many hastened to take up the offer. By June Company stock had risen sevenfold in value. But after hovering a little below this peak for the next two months, in September the price suddenly collapsed. By the month’s end it was back almost where it had started in February. Huge fortunes were made and lost in the interim. Those on the losing end complained bitterly and hunted for villains.

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Published 09 November 2004

Citation: Kleer, Richard. "South Sea Bubble". The Literary Encyclopedia. 9 November 2004.
[http://www.litencyc.com/php/stopics.php?rec=true&UID=1024, accessed 20 November 2009.]