South Sea Company  

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The South Sea Company (officially The Governor and Company of the merchants of Great Britain, trading to the South Seas and other parts of America, and for the encouragement of fishing) was a British joint-stock company founded in 1711, created as a public-private partnership to consolidate and reduce the cost of national debt. The company was also granted a monopoly to trade with South America and nearby islands, hence its name (the modern use of the term "South Seas" to refer to the entire South Pacific was unknown in England at the time). When the company was created, Britain was involved in the War of the Spanish Succession. Spain and Portugal controlled most of South America. There was no realistic prospect that trade would take place, and the company never realised any significant profit from its monopoly. Company stock rose greatly in value as it expanded its operations dealing in government debt, peaking in 1720 before collapsing to little above its original flotation price; the economic bubble became known as the South Sea Bubble.

The Bubble Act 1720 (6 Geo I, c 18), which forbade the creation of joint-stock companies without royal charter, was promoted by the South Sea company itself before its collapse.


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