TEXT 25
Read the text and do the tasks follow.
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 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. Then 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 shares 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 levelled off at around £140.
The Sourh Sea Bubble had burst and it led to an economic depression in the country.
1. Find the words or phrases in the text which are similar in meaning to the
definitions below.
1. a very large amount of money ______________.
2. set up ______________.
3. sudden increase in buying and selling ______________.
4. to accept responsibility for ______________.
5. go up very fast ______________.
6. in the end ______________.
7. remained stable ______________.
2. Answer the question.
1. What name was given to a speculation in 1720?
2. Where and when did it happen?
3. When was the South Sea Company founded?
4. What was the main activity of the company?
5. How much interest did the company pay to the shareholders?
6. Why did the shares rise dramatically in 1720?
7. What were the consequences of the boom?
3. Translate the text.