17
South Sea Finance Operations
Figure 17.1 depicts the movement of South Sea share prices during the speculation. Starting at about £120 per £100 par value share in January 1720, prices moved upward as the refunding proposal was negotiated. With the passage of the refunding act on March 21, prices jumped from about £200 to £300. To finance the contracted bribes and to make loans to shareholders, the Company offered two subscriptions of shares for cash on April 14 and April 29. In the first subscription, 22,500 shares were issued at a price of £300 per share; one-fifth of the price was required immediately in cash with the remainder due in eight bimonthly installments. In the second, 15,000 shares were subscribed at a price of £400; one-tenth was required immediately in cash, with the remainder due in nine payments at three- or four-month intervals. From these issues, the company immediately realized about £2 million to pay its bribe commitments.
