The collapse and the Tower of London
As insiders quietly cashed out, prices slipped. Other companies that had copied the South Sea pattern failed first. When the main stock broke £400, margin calls cascaded. By December it was near £124 — essentially back to where it had started. Parliament passed the Bubble Act in a panic, inhibiting joint-stock companies for the next 100 years.
Chancellor of the Exchequer John Aislabie was found guilty of 'most notorious, dangerous and infamous corruption' and imprisoned in the Tower of London. It remains one of the few financial bubbles in history to have produced actual jail time for its orchestrators. Nearly every bubble since has wished for the same standard.
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.
Read the full era →