South Sea Bubble (1847). Oil on canvas. 130 x 188. The South Sea Company was a British joint-stock company founded in 1711, created as a public-private partnership to consolidate and reduce the cost of national debt. The company was also granted a monopoly to trade with South America and nearby islands, hence its name. When the company was created, Britain was involved in the War of the Spanish Succession. Spain and Portugal controlled most of South America. There was no realistic prospect that trade would take place, and the company never realised any significant profit from its monopoly. Company stock rose greatly in value as it expanded its operations dealing in government debt, peaking in 1720 before collapsing to little above its original flotation price; the economic bubble became known as the South Sea Bubble. The Bubble Act 1720, which forbade the creation of joint-stock companies without royal charter, was promoted by the South Sea company itself before its collapse. In Great Britain, a considerable number of people were ruined by the share collapse, and the national economy greatly reduced as a result. The founders of the scheme engaged in insider trading, using their advance knowledge of when national debt was to be consolidated to make large profits from purchasing debt in advance. Huge bribes were given to politicians to support the Acts of Parliament necessary for the scheme. Company money was used to deal in its own shares, and selected individuals purchasing shares were given loans backed by those same shares to spend on purchasing more shares. The expectation of profits from trade with South America was used to encourage the public to purchase shares, but the bubble prices reached far beyond the profits of the slave trade. A parliamentary inquiry was held after the crash to discover its causes. A number of politicians were disgraced, and people found to have profited unlawfully from the company had assets confiscated proportionate to their gains. The company was restructured and continued to operate for more than a century after the Bubble. The headquarters were in Threadneedle Street, at the centre of the financial district in London. At the time of these events, the Bank of England was also a private company dealing in national debt, and the crash of its rival consolidated its position as banker to the British government. In August 1710 Robert Harley was appointed Chancellor of the Exchequer in a government of commission. The government at this time had become reliant on the Bank of England. This was a privately owned company, chartered 16 years previously, which had obtained a monopoly as the lender to Westminster, in return for arranging and managing loans to the government. The government had become dissatisfied with the service it was receiving and Harley was actively seeking new ways to improve the national finances. A new Parliament met in November 1710 with a resolve to attend to national finances, which were suffering significantly from two simultaneous wars: the war with France, which ended in 1713, and the Great Northern War, which was not to end until 1721. Harley came prepared, with detailed accounts of the situation of the national debt, which was customarily a piecemeal affair, with different government departments arranging their own loans as the need arose. He released the information steadily, continually adding new reports of debts incurred and scandalous expenditure, until in January 1711 the House of Commons agreed to appoint a committee to investigate the entire debt. The committee included Harley himself; the two Auditors of the Imprests, whose task was to investigate government spending; Harley's brother Edward; and Paul Foley, his brother-in-law. Also included were the Secretary of the Treasury, William Lowndes, who had had significant responsibility for reminting the entire debased British coinage in 1696; and John Aislabie who represented the October Club, a group of around 200 MPs who had agreed to vote together. Harley's first concern was to find E300,000 for the next quarter's pay for the British army operating in Europe under Marlborough. This was provided by a private consortium of Edward Gibbon, George Caswall and Hoare's Bank. The Bank of England had been operating a state lottery on behalf of the government, but this had not been particularly successful in 1710, and another had already begun in 1711. This too was performing poorly, so Harley granted authority to sell tickets to John Blunt, a director of the Hollow Sword Blade Company, which despite its name was an unofficial bank. With sales commencing on 3 March 1711, tickets had completely sold out by the 7th. This was the first truly successful English state lottery.