On this day in 1711, Thomas Bowrey invested £810/6/2 (over £115,000 today) in the new South Sea Company.
When Robert Harley became Chancellor of the Exchequer in 1710, he inherited a massive government debt. His solution was to set up a new joint stock company linked to the opening of trade with Spanish America. The South Sea Company was, in name, to be similar to the East India Company. It would be given the monopoly of British trade in the South Sea. In reality, the government’s debt was to be repaid by giving its unsecured creditors the equivalent value plus 6% per annum (representing the interest due) of shares in the Company.
Bowrey’s receipt demonstrates that investments in the South Sea Company went directly to repaying specific Government debts. His investment is shown as covering the 31 March 1708 Victualling Bill of Francis Holloway together with the 6% interest due on that debt.
Bowrey, Daniel Defoe and others had high hopes for the trade potential in South America but their recommendations were never implemented by the South Sea Company despite one of the directors being a good friend of Bowrey. Less than a decade after Bowrey’s death, the South Sea Bubble started. After the Bubble burst, a contemporary observer commented the project was a gross, palpable illusion.