South Sea Company

Question 1

when was it formed?

Answer 1

1711 as a consequence of the War of Spanish Succession

Question 2

what was it founded on?

Answer 2

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

Question 3

what was the company granted?

Answer 3

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

Question 4

what kind of company was it?

Answer 4

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

Question 5

what did taking on debts allow?

Answer 5

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

Question 6

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

Answer 6

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

Question 7

what did the company invest in?

Answer 7

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

Question 8

what did the company scheme to do?

Answer 8

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

Question 9

what happened to the share price?

Answer 9

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

Question 10

what was the South Sea Bubble?

Answer 10

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

Question 11

what was the Bubble Act of 1720?

Answer 11

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

Question 12

what did the Bubble Act also prevent?

Answer 12

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

Question 13

what prime minister dealt with the aftermath of the bubble?

Answer 13

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

Question 14

after 1714, why did the monarch have less power?

Answer 14

shared with the parliament, 50/50

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

Question 15

what was the difference in trade between SSC and EIC?

Answer 15

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

Question 16

where did they find goods to trade?

Answer 16

in small isolated islands, swamps and jungles

Question 17

why was the slave trade not as profitable?

Answer 17

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

Question 18

how was Spain at an advantage?

Answer 18

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

Question 19

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

Answer 19

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

Question 20

when was the SSC liquidated?

Answer 20

by the mid 19th century