Share price peaks at £1,050
South Sea stock rose from £128 in January to £1,050 in June — an eightfold gain in six months. Shares were bought on credit advanced by the company itself. Parliament members and the King's mistress were given free allotments, creating the appearance of official endorsement and suppressing early skepticism.
Isaac Newton sold early and made a modest gain. He re-bought at the peak and lost roughly £20,000 (millions in today's money). 'I can calculate the motion of heavenly bodies,' he reportedly said, 'but not the madness of people.' The quote may be apocryphal. The loss was not.
02 · The South Sea Bubble
The South Sea Company was granted a monopoly on trade with Spanish America — a business that turned out to be almost entirely theoretical. To mask the lack of actual revenue, the company proposed converting British government debt into its own shares. Insiders pumped the price with orchestrated rumors, sold into the retail mania they had manufactured, and walked away with fortunes before the inevitable collapse.
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