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‘The folly of particulars’: the political economy of the South Sea Bubble

  • Richard Kleer (a1)

In 1720 Britain embarked on a project to convert a large part of the public debt into shares in the South Sea Company. Most narratives assume the Company stood to profit from an anticipated increase in the market price of its shares. Though some have noted that this assumption is incorrect, no one has yet tried to find an alternative explanation for the Company's motivation for entering into the project. In this article I argue that the Company had no need to profit directly from the conversion operation and instead saw it as an opportunity to establish dominance in the British banking industry.

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N Johnson . (2006). Banking on the king: the evolution of the royal revenue farms in old regime France. Journal of Economic History, 66(4), pp. 963–91.

L Neal . (2004). The monetary, financial and political architecture of Europe, 1648–1815. In L. Prados de la Escosura (ed.), Exceptionalism and Industrialisation: Britain and its European Rivals, 1688–1815. Cambridge: Cambridge University Press.

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G Shea . (2007). Financial market analysis can go mad (in the search for irrational behaviour during the South Sea Bubble). Economic History Review, 60(4,) pp. 742–65.

F Velde . (2009). Was John Law's system a bubble? The Mississippi Bubble revisited. In J. Atack and L. Neal (eds.), The Origins and Development of Financial Markets and Institutions. Cambridge: Cambridge University Press.

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Financial History Review
  • ISSN: 0968-5650
  • EISSN: 1474-0052
  • URL: /core/journals/financial-history-review
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