Collapse of the South Sea Bubble
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- The Rise and Fall of the Great Powers whole source · open book
It was upon these solid foundations that Britain’s “credit” rested, despite early uncertainties, considerable political opposition, and a financial near-disaster like the collapse of the famous South Seas Bubble of 1720. “Despite all defects in the handling of English public finance,” its historian has noted, “for the rest of the century it remained more honest, as well as more efficient, than that of any other in Europe.”12 The result of all this was not only that interest rates steadily dropped,* but also that British government stock was increasingly attractive to foreign, and particularly Dutch, investors. Regular dealings in these securities on the Amsterdam market thus became an important part of the nexus of Anglo-Dutch commercial and financial relationships, with important effects upon the economies of both countries.13 In power-political terms, its value lay in the way in which the resources of the United Provinces repeatedly came to the aid of the British war effort, even when the Dutch alliance in the struggle against France had been replaced by an uneasy neutrality.
chapter: The “Financial Revolution”
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