The South Sea Bubble

Resulted in

Led to

REASON RESULT

 

 

a move to larger premises

A rise in rent in August

Was due to

Resulted from

RESULT REASON

 

Study the sentences below. Which are reasons and which are results? Link them with one if the phrases above

 

1. The factory automation__________ an increase in productivity.

2. The stuff reductions__________ the factory automation.

3. The large pay rises __________ a decrease in stuff turnover.

4. The increase in sales costs____________ the rise in spending on advertising.

5. The big orders from Japan ___________ a recovery in sales.

6. The shorter delivery times__________the new distribution system.

7. The increase in competition__________ a decrease in our market share.

8. The rise in distribution costs__________ the increase in petrol prices.

 

The South Sea Bubble

The South Sea Bubble is the name given to a speculation in 1720, and associated with the South Sea Company in London. People bought shares in the company expecting to make a huge profit, but the boom in shares collapsed and many investors lost all their money.

The South Sea Company was founded in 1711 to trade with Spanish America. The Company’s stock offered a guaranteed interest of 6% and it sold well. Unfortunately, however, Spain allowed the company to send only one ship a year to trade in the area.

The first voyage in 1717 was a success. The King George I became governor of the company in 1719. This created confidence in the business, and soon it was paying 100% interest.

In 1720, there was a boom in the South Sea Company’s share because it agreed to take over the country’s national debt. It expected to get back its money by increased trade and a rise in the value of its shares.

The shares did, in fact, rise dramatically. The stock of the company, which had been around £128 in January 1720, reached £1,000 in August. However, by September the market had collapsed, and the price fell back to £124. Eventually, with the support of the Government, the shares leveled off at around £140.

The South Sea Bubble had burst and it led to an economic depression in the country.