South Sea Company bubble

In the 1700s, the British Empire was the strongest force on the entire globe. The British South Sea Company was formed in 1711 and is considered as a prime example of a speculative bubble. The company was promised a monopoly on trade to the Spanish colonies and the prospect of exclusive rights to trade with new wealthy countries easily attracted more and more investors. Prices of shares spiked in January of 1720, from a modest £128 to £175 in February. With investor confidence mounting, the share price climbed to approximately £330 by the end of March. Speculation drove the price higher around £550 in May. When the South Sea company received the government charter by the end of June, which investors view as a vote of confidence in the company share price skyrocketed at £1050. And then came the collosal price fall that ruined hundreds of people and caused a nationwide crisis. Read more about the South Sea bubble here.

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