GREY:MCOUF - Post by User
Post by
TERRIBLEon Oct 16, 2011 3:30pm
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Post# 19154019
1720
1720************************
This is an off-topic .
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recently,i came across some old but interesting & entertaining stock market activity ....see below.
....................................................WHAT.......company shares & get-rich-quick schemes
WHERE....England
YEAR.........1720
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.....an English company was organized for trade in the South Seas (West Indies/Carribbean).The South Sea Company (1711) was granted certain privileges from time to time including a monopoly of the trading rights secured from Spain.
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The company was very successful in its ventures and was able to persuade holders of government bonds to exchange them for shares in the company.
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the South Sea Stocks rose rapidly.
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People were seized with a get-rich-quick gambling fever.
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Over a hundred wildcat schemes were floated in a few weeks.
some examples:
....for a perpetual motion wheel
....for erecting an orphanage
....for converting base metals to precious ones.
....for an undertaking of great advantage but nobody is to know what it is (the promoter of this last enterprise wrote up 100,000 shares by midday and skipped out in the afternoon).
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South Sea shares went up from 100 (British) Pounds in the spring (1720) to 1,000 Pounds in the summer and then tumbled to 135 Pounds.
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Tens of thousands (investors) were ruined.
(note #1): in these companies, investors were not confined to experienced business men; everyone considered himself "a keen investor")
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but wait.....all was not lost....read on.
.................................
Robert Walpole (a Norfolk squire) had predicted this market failure & proved his knowledge of finance by buying shares of the company & selling out at the peak!!
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In 1721, Walpole became Prime Minister, investigated the books of the company & of the directors, confiscated practically all of their property and returned 33 1/3 cents on the dollar to the investors.
(note #2): one of the cabinet ministers was put in the Tower (of London), another dropped dead of apoplexy and his son committed suicide. Others had to resign office.)
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food for thought:
would todays investors succumb to such wily schemes?...qui sait...(who knows)!!
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a side-note:
source of information...
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Britain and the Empire (from 1603).....E. L. Daniher
pages 83 - 85