On This Day
1721 – The Committee of Inquiry on the South Sea Bubble publishes its findings.
The South Sea Company (officially The Governor and Company of the merchants of Great Britain, trading to the South Seas and other parts of America, and for the encouragement of fishing) was a British joint-stock company founded in 1711, created as a public-private partnership to consolidate and reduce the cost of national debt. The company was also granted a monopoly to trade with South America and nearby islands, hence its name (the modern use of the term “South Seas” to refer to the entire South Pacific was unknown in England at the time). When the company was created, Britain was involved in the War of the Spanish Succession and Spain controlled South America. There was no realistic prospect that trade would take place, and the company never realised any significant profit from its monopoly. Company stock rose greatly in value as it expanded its operations dealing in government debt, peaking in 1720 before collapsing to little above its original flotation price; the economic bubble became known as the South Sea Bubble.
The Bubble Act 1720 (6 Geo I, c 18), which forbade the creation of joint-stock companies without royal charter, was promoted by the South Sea company itself before its collapse.
In Great Britain, a considerable number of people were ruined by the share collapse, and the national economy greatly reduced as a result. The founders of the scheme engaged in insider trading, using their advance knowledge of when national debt was to be consolidated to make large profits from purchasing debt in advance. Huge bribes were given to politicians to support the Acts of Parliament necessary for the scheme. Company money was used to deal in its own shares, and selected individuals purchasing shares were given loans backed by those same shares to spend on purchasing more shares. The expectation of profits from trade with South America was used to encourage the public to purchase shares, but the bubble prices reached far beyond the profits of the slave trade.
A parliamentary enquiry was held after the crash to discover its causes. A number of politicians were disgraced, and people found to have profited unlawfully from the company had assets confiscated proportionate to their gains (most had already been rich men and remained so). The company was restructured and continued to operate for more than a century after the Bubble. The headquarters were in Threadneedle Street at the centre of the financial district in London. At the time of these events the Bank of England also was a private company dealing in national debt, and the crash of its rival consolidated its position as banker to the British government..
Born On This Day
1795 – Anselme Payen, French chemist and academic (d. 1871)
Anselme Payen (French: [pa.jɛ̃]; 6 January 1795 – 13 May 1871) was a French chemist known for discovering the enzyme diastase, and the carbohydrate cellulose.
Payen was born in Paris. He began studying science with his father when he was 13-year-old, and later studied Chemistry at the École Polytechnique under the chemists Louis Nicolas Vauquelin and Michel Eugène Chevreul.
At the age of 23, Payen became manager of a borax-refining factory, where he developed a process for synthesizing borax from soda and boric acid. Previously, all borax had been imported from the East Indies exclusively by the Dutch. Payen’s new method of synthesizing borax allowed him to sell the mineral at one third the going price, and break the Dutch monopoly.
Payen also developed processes for refining sugar, along with a way to refine starch and alcohol from potatoes, and a method for determination of nitrogen. Payen invented a decolorimeter, which dealt with the analysis, decolorization, bleaching, and crystallization of sugar.
Payen discovered the first enzyme, diastase, in 1833. He is also known for isolating and naming the carbohydrate cellulose.
In 1835, Payen became a professor at École Centrale Paris. He was later elected professor at the Conservatoire National des Arts et Métiers. He died in Paris on May 13, 1871.
The American Chemical Society’s Cellulose and Renewable Materials Division has established an annual award in his honor, the Anselme Payen Award.
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