The South Sea Bubble of 1720 was a major financial scandal that saw thousands pushed to bankruptcy and the finances of the nation shaken.
The South Sea Company was founded as a trading company, but in 1717 it took over £2m of government debt in return for an annuity. Two years later the company took on a further £30m of government debt, financing the deal by selling new shares in the company.
Over the next few months company directors and government ministers colluded to push up share prices while hiding the true financial situation of the company. Share prices rose from £124 to £1,000 in feverish speculation, peaking in August 1720. Shareholders in the know then began selling and the share price collapsed.
John Aislabie (chancellor of the exchequer) and James Craggs (postmaster general) were both arrested for fraud, along with the company directors. Craggs died in 1721, and is thought to have committed suicide. Aislabie was imprisoned and, like Craggs, was stripped of all profits he had made from the company. Several other ministers were expelled from office. The company directors were not imprisoned, but had their entire estates confiscated and the money was used to aid the victims of the scam.
Rupert Matthews, historian and author