ABSTRACT
The years from the middle of the 1690s to the early 1720s were crucial to the development of joint stock companies in Britain. Two distinct waves of company promotion, and their collapse, led to moves to curb the activities of speculators and to restrict the formation of new ventures without the consent of Parliament. The first of these booms occurred in the 1690s and came to an end during the financial crisis of 1696–97 which had been induced by war and its effect on government spending and the restriction of trade. The collapse of many over-ambitious joint-stock enterprises or ‘bubbles’ led to government measures to curb the activities of stock jobbers who dealt in their stocks. The second boom, based on the plans of the South Sea Company in 1719 and 1720 to assume responsibility for aspects of the national debt by exchanging government securities for South Sea Company stock, was greater in scope and much more severe in its consequences. Speculative mania surrounded the conversion of these stocks and led to the flotation of numerous other schemes, many of which were highly speculative and of doubtful legality. Fear within the South Sea Company that such ventures would drain the flow of capital necessary for its own success led to pressure being exerted on the government to curb the menace of ‘bubbles’. 1
