South Sea Company Flashcards

1
Q

when was it formed?

A

1711 as a consequence of the War of Spanish Succession

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2
Q

what was it founded on?

A

on the expectation that at the end of the war, favourable terms could be agreed with Spain. at the time, they held a monopoly on trade with Southern America and the Caribbean

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3
Q

what was the company granted?

A

a charter and a monopoly of trade with Spanish colonies in Southern America and the Caribbean by the Crown

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4
Q

what kind of company was it?

A

as well as being a trading company, they took on an amount of the government’s debts (because of war)

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5
Q

what did taking on debts allow?

A

people could trade government securities (saving bonds) for stocks in the company

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6
Q

what did King Philip of Spain also demand in the Assiento?

A

each ship that traded goods, 1/4 of profits should be paid to the Spanish throne

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7
Q

what did the company invest in?

A

it had invested a large amount of money in an infrastructure which far outweighed the needs of the trading possibilities it had been granted

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8
Q

what did the company scheme do?

A

take over the national debt entirely- Britain owed £50 million due to the wars. the company had little actual stock to trade

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9
Q

what happened to the share price?

A

at first, the value of shares rocketed to over £1000 per share. by December 1720, the stock share price fell to £100 per share.

left the company, the banks and royal charter in disarray

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10
Q

what was the South Sea Bubble?

A

financial collapse of the company. there was a need to have checks and balances in place on imperial trade

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11
Q

what was the Bubble Act of 1720?

A

aimed to reduce speculation and the threat of corruption.

speculation on the stock market, dependence on credit from the Bank of England, no checks and balances by the government

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12
Q

what did the Bubble Act also prevent?

A

stopped the creation of joint stock companies which ruled out one of its ways in which the British had organised their expansion overseas

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13
Q

what prime minister dealt with the aftermath of the bubble?

A

Walpole- made sure the king did not run into any trouble, meaning no new taxes, no wars and less expansion

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14
Q

after 1714, why did the monarch have less power?

A

shared with the parliament, 50/50

before 1688, kings had a lot more power than later monarchs

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15
Q

what was the difference in trade between SSC and EIC?

A

SSC had a very small and relatively valueless range of products to trade in Central and South America

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16
Q

where did they find goods to trade?

A

in small isolated islands, swamps and jungles

17
Q

why was the slave trade not as profitable?

A

there was a high death rate in the transportation of slaves, the taxes levied and the company was ineffectively managed

18
Q

how was Spain at an advantage?

A

they tried to minimise the profitability of British trading ventures, they were able to delay and detain ships so that Spanish cargo arrived first and could be sold at a higher price and had a greater presence

19
Q

when did the Assiento end? what did this mean for the company?

A

1750- slaves could be traded, they were given a one-off payment by the Spanish to compensate them

20
Q

when was the SSC liquidated?

A

by the mid 19th century