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Riding a wave: the Company's role in the South Sea Bubble

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  • Richard A. Kleer

Abstract

type="main"> It is widely believed that officials of the South Sea Company deliberately engineered London's stock market bubble of 1720, hoping in the process to line their own pockets. This article considers the available evidence, including some manuscript records of securities trading by Company officials, and finds there is little support for the standard view. An alternative account is proposed. The Company had broader aims to which the bubble was in fact a major obstacle. The directors acted to support the market price of South Sea stock whenever it came under downward pressure.

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  • Richard A. Kleer, 2015. "Riding a wave: the Company's role in the South Sea Bubble," Economic History Review, Economic History Society, vol. 68(1), pages 264-285, February.
    • Handle: RePEc:bla:ehsrev:v:68:y:2015:i:1:p:264-285
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    File URL: http://hdl.handle.net/10.1111/1468-0289.12056
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    References listed on IDEAS

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    1. Temin, Peter & Voth, Hans-Joachim, 2013. "Prometheus Shackled: Goldsmith Banks and England's Financial Revolution after 1700," OUP Catalogue, Oxford University Press, number 9780199944279.
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    4. Gary S. Shea, 2007. "Financial market analysis can go mad (in the search for irrational behaviour during the South Sea Bubble)," Economic History Review, Economic History Society, vol. 60(4), pages 742-765, November.
    5. Kleer, Richard, 2012. "‘The folly of particulars’: the political economy of the South Sea Bubble," Financial History Review, Cambridge University Press, vol. 19(2), pages 175-197, August.
    6. Ms. Anna Scherbina, 2013. "Asset Price Bubbles: A Selective Survey," IMF Working Papers 2013/045, International Monetary Fund.
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    Cited by:

    1. William Quinn, 2019. "Squeezing the bears: cornering risk and limits on arbitrage during the ‘British bicycle mania’, 1896–8," Economic History Review, Economic History Society, vol. 72(4), pages 1286-1311, November.

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