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Law’s Shadow: The South Sea Bubble
Following Law’s scheme to refinance the French debt, the South Sea Company launched a similar plan to acquire British government debt in January 1720.21 The financial operations of the British scheme, however, were much simpler than those of Law: the South Sea Company was not involved in large-scale takeovers of commercial companies or of government functions such as the mint, the collection of taxes, or the creation of legal tender paper money. The British debt in 1720 amounted to approximately £50 million of face value. Of this, £18.3 million was held by the three largest corporations: £3.4 million by the Bank of England, £3.2 million by the East India Company, and £11.7 million by the South Sea Company. Redeemable government bonds held privately amounted to £16.5 million; these could be called by the government on short notice. About £15 million of the debt was in the form of irredeemable annuities: long annuities of between seventy-two and eighty-seven
