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{{short description|British legislation}}
{{Use dmy dates|date=April 2022}}
{{Infobox UK legislation
{{Infobox UK legislation
|short_title =Bubble Act
| short_title = Royal Exchange and London Assurance Corporation Act 1719
|parliament =Parliament of Great Britain
| type = Act
| parliament = Parliament of Great Britain
| long_title = An Act for better securing certain Powers and Privileges intended to be granted by His Majesty by Two Charters for Assurance of Ships and Merchandizes at Sea, and for lending Money on Bottomry; and for restraining several extravagant and unwarrantable Practices therein mentioned.
|long_title =
|year = 1720
| year = 1720
| citation = [[6 Geo. 1]]. c. 18
|statute_book_chapter =
| introduced_commons =
|introduced_by =
|territorial_extent = [[Great Britain]] <br>
| introduced_lords =
| territorial_extent = [[Great Britain]] <br />
* [[England and Wales]]
* [[England and Wales]]
* [[Scotland]]
* [[Scotland]]
Later extended to Colonies, including:
Later extended to American colonies, including:
* [[Province of Massachusetts Bay|Massachusetts]]
* [[Province of Massachusetts Bay|Massachusetts]]
|royal_assent =
| royal_assent = 11 June 1720
|commencement =
| commencement =
|repeal_date =
| expiry_date =
|amendments =
| repeal_date = 5 July 1825
| amends =
|related_legislation =
| replaces =
|repealing_legislation=
| amendments = {{ubli|Bubble Companies, etc. Act 1825|[[Statute Law Revision Act 1867]]}}
|status =Repealed
| repealing_legislation = [[Royal Exchange Assurance Act 1901]]
|original_text =
| related_legislation =
|legislation_history =
|use_new_UK-LEG =
| status = repealed
| legislation_history =
|revised_text =
| theyworkforyou =
| millbankhansard =
| original_text = {{GBurl|BYlKAAAAYAAJ|page=322}}
| revised_text =
| use_new_UK-LEG =
| UK-LEG_title =
| collapsed =
}}
}}

'''Bubble Act 1720''' (also '''Royal Exchange and London Assurance Corporation Act 1719''')<ref>[https://books.google.ca/books?id=BYlKAAAAYAAJ&lpg=PA372&ots=ujx1vUF28B&pg=PA322#v=onepage&f=false ''An Act for better securing certain Powers and Privileges intended to be granted by His Majesty by Two Charters for Assurance of Ships and Merchandizes at Sea, and for lending Money on Bottomry; and for restraining several extravagant and unwarrantable Practices therein mentioned''], 6 Geo I, c. 18</ref> was an [[Act of Parliament|Act]] of the [[Parliament of Great Britain]] passed on 11 June 1720 that incorporated the [[Royal Exchange, London|Royal Exchange]] and London Assurance Corporation, but more significantly forbade the formation of any other [[joint-stock company|joint-stock companies]] unless approved by [[royal charter]]. Its provisions were extended later by the Bubble Schemes, Colonies, Act 1740<ref>[https://books.google.ca/books?id=bIpKAAAAYAAJ&pg=PA732#v=onepage&q&f=false ''An Act for restraining and preventing several unwarrantable Schemes and Undertakings in His Majesty's Colonies and Plantations in America''], 14 Geo. II, c. 37</ref> to include its colonies, particularly Massachusetts.<ref>{{cite book |last= Savelle|first= Max|date= 1974|title= Empires to Nations: Expansion in America, 1713-1824|url= https://books.google.com/books?id=crhJ5-mbDygC&pg=PA43&|location= Minneapolis|publisher= [[University of Minnesota Press]]|page= 43|isbn= 0-8166-0709-5 }}</ref>
The '''Bubble Act 1720''' (also '''Royal Exchange and London Assurance Corporation Act 1719''')<ref>[https://books.google.com/books?id=BYlKAAAAYAAJ&pg=PA322 ''An Act for better securing certain Powers and Privileges intended to be granted by His Majesty by Two Charters for Assurance of Ships and Merchandizes at Sea, and for lending Money on Bottomry; and for restraining several extravagant and unwarrantable Practices therein mentioned''], 6 Geo 1. c. 18</ref> was an [[Act of Parliament|act]] of the [[Parliament of Great Britain]] passed on 11 June 1720 that incorporated the Royal Exchange Assurance Corporation and London Assurance Corporation, but more significantly forbade the formation of any other [[joint-stock company|joint-stock companies]] unless approved by [[royal charter]].

{{anchor|Bubble Schemes (Colonies) Act 1740}}
{{Infobox UK legislation
| short_title = Bubble Schemes (Colonies) Act 1740
| type = Act
| parliament = Parliament of Great Britain
| long_title = An Act for restraining and preventing several unwarrantable Schemes and Undertakings in His Majesty's Colonies and Plantations in America.
| year = 1740
| citation = [[14 Geo. 2]]. c. 37
| introduced_commons =
| introduced_lords =
| territorial_extent =
| royal_assent = 25 April 1741
| commencement =
| expiry_date =
| repeal_date = 15 July 1867
| amends =
| replaces =
| amendments =
| repealing_legislation = [[Statute Law Revision Act 1867]]
| related_legislation = {{ubli|Royal Exchange and London Assurance Corporation Act 1719}}
| status = Repealed
| legislation_history =
| theyworkforyou =
| millbankhansard =
| original_text = {{GBurl|bIpKAAAAYAAJ|page=732}}
| revised_text =
| use_new_UK-LEG =
| UK-LEG_title =
| collapsed = yes
}}
Its provisions were extended later by the '''Bubble Schemes (Colonies) Act 1740''' ([[14 Geo. 2]]. c. 37)<ref>[https://books.google.com/books?id=bIpKAAAAYAAJ&pg=PA732 ''An Act for restraining and preventing several unwarrantable Schemes and Undertakings in His Majesty's Colonies and Plantations in America''], 14 Geo. 2. c. 37</ref> to include its colonies, particularly Massachusetts.<ref>{{cite book |last= Savelle|first= Max|date= 1974|title= Empires to Nations: Expansion in America, 1713-1824|url= https://books.google.com/books?id=crhJ5-mbDygC&pg=PA43|location= Minneapolis|publisher= [[University of Minnesota Press]]|page= 43|isbn= 0-8166-0709-5 }}</ref>

The act gave the [[South Sea Company]] a monopoly over British trade with [[South America]]<ref>{{Cite web|url=https://www.historic-uk.com/HistoryUK/HistoryofEngland/South-Sea-Bubble/|title=The South Sea Bubble of 1720|last=Castelow|first=Ellen|website=Historic UK|language=en-GB|access-date=2019-07-31}}</ref> until the [[South Sea Bubble]] "popped" in Britain's first major stock market collapse.


==Background==
==Background==
Various motivations have been suggested for the Act. They include the desire to prevent the speculation that produced the contemporary [[South Sea Bubble]], an attempt to prevent smaller non-charter companies from forming and so reduce the importance of Parliament in regulating businesses; or the [[South Sea Company]] itself wanting to prevent other bubbles from forming that might have decreased the intensity of its own.<ref name="Harris">{{cite journal |last1= Harris|first1= Ron|date= 1994|title= The Bubble Act: Its Passage and Its Effects on Business Organization|jstor= 2123870|journal= [[The Journal of Economic History]]|volume= 54|issue=3|pages= 610–627|doi=10.1017/s0022050700015059}}</ref>
Various motivations have been suggested for the act. They include the desire to prevent the speculation that produced the contemporary [[South Sea Bubble]], an attempt to prevent smaller non-charter companies from forming and so reduce the importance of Parliament in regulating businesses; or the [[South Sea Company]] itself wanting to prevent other bubbles from forming that might have decreased the intensity of its own.<ref name="Harris">{{cite journal |last1= Harris|first1= Ron|date= 1994|title= The Bubble Act: Its Passage and Its Effects on Business Organization|jstor= 2123870|journal= [[The Journal of Economic History]]|volume= 54|issue=3|pages= 610–627|doi=10.1017/s0022050700015059|s2cid= 154429555}}</ref>


Recent scholarship indicates that the last was the cause: it was passed to prevent other companies from competing with the South Sea Company for investors' capital.<ref name="Harris"/><ref>{{cite book |last= Cooke|first= Colin Arthur|date= 1951|title= Corporation, trust and company: an essay in legal history|url= |location= |publisher= [[Harvard University Press]]|page= 82|isbn= |author-link= }}; {{cite journal |last1= Gower|first1= L.C.B.|date= 1951|title= A South Sea Heresy?"|url= |journal= [[Law Quarterly Review]]|volume= 68|issue= |pages= 214|doi= |author-link= Laurence Gower}}</ref>
Recent scholarship indicates that the last was the cause: it was passed to prevent other companies from competing with the South Sea Company for investors' capital.<ref name="Harris"/><ref>{{cite book |last= Cooke|first= Colin Arthur|date= 1951|title= Corporation, trust and company: an essay in legal history|publisher= [[Harvard University Press]]|page= 82}}; {{cite journal |last1= Gower|first1= L.C.B.|date= 1951|title= A South Sea Heresy?|journal= [[Law Quarterly Review]]|volume= 68|pages= 214|author-link= Laurence Gower}}</ref><ref>{{Cite book|last=Carswell|first=John|url=|title=The South Sea Bubble|publisher=Cresset Press|year=1960|isbn=7800660370|location=London|pages=139|oclc=}}</ref>


{{anchor|Bubble Companies, etc. Act 1825}}
In fact, the Act was passed in June 1720, before the peak of the bubble. The Act was repealed in 1825.<ref>[https://books.google.ca/books?id=vqZFAAAAcAAJ&lpg=PA1&ots=oCr0LC6mrD&pg=PA271#v=onepage&f=false ''An Act to repeal so much of an Act passed in the Sixth Year of His late Majesty King George the First, as relates to the restraining several extravagant and unwarrantable Practices in the said Act mentioned; and for conferring additional Powers upon His Majesty, with respect to the granting of Charters of Incorporation to trading and other Companies''], 6 Geo. IV, c. 91</ref>
{{Infobox UK legislation
| short_title = Bubble Companies, etc. Act 1825
| type = Act
| parliament = Parliament of the United Kingdom
| long_title = An Act to repeal so much of an Act passed in the Sixth Year of His late Majesty King George the First, as relates to the restraining several extravagant and unwarrantable Practices in the said Act mentioned; and for conferring additional Powers upon His Majesty, with respect to the granting of Charters of Incorporation to trading and other Companies.
| year = 1825
| citation = [[6 Geo. 4]]. c. 91
| introduced_commons =
| introduced_lords =
| territorial_extent =
| royal_assent = 5 July 1825
| commencement = 5 July 1825
| expiry_date =
| repeal_date = 5 August 1873
| amends = {{ubli|Royal Exchange and London Assurance Corporation Act 1719}}
| replaces =
| amendments =
| repealing_legislation = [[Statute Law Revision Act 1873]]
| related_legislation =
| status = Repealed
| legislation_history =
| theyworkforyou =
| millbankhansard =
| original_text = {{GBurl|vqZFAAAAcAAJ|page=PA27}}
| revised_text =
| use_new_UK-LEG =
| UK-LEG_title =
| collapsed = yes
}}
In fact, the act was passed in June 1720, before the peak of the bubble. The act was partially repealed in 1825 by the '''Bubble Companies, etc. Act 1825''' ([[6 Geo. 4]]. c. 91).<ref>[https://books.google.com/books?id=vqZFAAAAcAAJ&pg=PA271 ''An Act to repeal so much of an Act passed in the Sixth Year of His late Majesty King George the First, as relates to the restraining several extravagant and unwarrantable Practices in the said Act mentioned; and for conferring additional Powers upon His Majesty, with respect to the granting of Charters of Incorporation to trading and other Companies''], 6 Geo. 4. c. 91</ref> The residue of the act was repealed in 1901.<ref>{{cite web |url=https://www.legislation.gov.uk/ukla/Edw7/1/10/pdfs/ukla_19010010_en.pdf |title=Royal Exchange Assurance Act 1901}}</ref>


==Contents==
==Contents==
The Act declared "illegal and void" all business that raised money or offered shares in the manner of a [[chartered company]] without a charter from the royal government.<ref name="Harris"/> Under the terms of the act, the [[Royal Exchange Assurance Corporation]] and the [[London Assurance Company|London Assurance Corporation]] were granted charters to write [[marine insurance]]. Until 1824, they remained the only joint-stock firms with such a charter.
The most significant provision read:
<blockquote>All undertakings ... presuming to act as a corporate body ... raising ... transferrable stock ... transferring ... shares in such stock ..., either by Act of Parliament or any charter from the Crown, ... and acting under any charter ... for raising a capital stock ... not intended ... by such charter ... and all acting ... under any obsolete charter ... for ever be deemed illegal and void.<ref name="Harris"/> </blockquote>
Under the terms of the act, the [[Royal Exchange Assurance Corporation]] and the [[RSA Insurance Group|London Assurance Corporation]] were granted charters to write [[marine insurance]]. Until 1824, they remained the only joint-stock firms with such a charter.


==See also==
==See also==
* {{cite CommonLII|litigants=R v Cawood|link=|reporter=ER|fullstops=off|year=1790|num=1954|volume=92|firstpage=386|pinpoint=|parallelcite=2 Ld Raym 1361|date=1 January 1790|courtname=|juris=}} - the only prosecution brought under the Act which, according to [[Laurence Gower|L.C.B. Gower]], "decided nothing of importance".<ref>{{cite book |last= Gower|first= L.C.B.|date= 1979|title= Principles of Modern Company Law|url= |location= London|publisher= Stevens And Sons|page= 31|edition=4th|isbn= 0-42044580-3|author-link= Laurence Gower}}</ref>
* {{cite CommonLII|litigants=R v Cawood|link=|reporter=ER|fullstops=off|year=1790|num=1954|volume=92|firstpage=386|pinpoint=|parallelcite=2 Ld Raym 1361|date=1 January 1790|courtname=|juris=}} - the only prosecution brought under the Act which, according to [[Laurence Gower|L.C.B. Gower]], "decided nothing of importance".<ref>{{cite book |last= Gower|first= L.C.B.|date= 1979|title= Principles of Modern Company Law|location= London|publisher= Stevens And Sons|page= 31|edition=4th|isbn= 0-42044580-3|author-link= Laurence Gower}}</ref>


==References==
==References==
Line 45: Line 118:


==Further reading==
==Further reading==
* {{cite book |last= Carswell|first= J.|date= 1960|title= The South Sea Bubble|url= |location= London|publisher= Cresset Press|page= |oclc= 316196437|author-link= J. P. Carswell}}
* {{cite book |last= Carswell|first= J.|date= 1960|title= The South Sea Bubble|url=https://archive.org/details/southseabubble0000unse|url-access= registration|location= London|publisher= Cresset Press|oclc= 316196437|author-link= J. P. Carswell}}
* Paul, H., Di Liberto, N., Coffman, D'M. (2023). ''The Bubble Act: New Perspectives from Passage to Repeal and Beyond,'' Palgrave MacMillan, ISBN 9783031318931.

{{UK legislation}}


[[Category:Great Britain Acts of Parliament 1720]]
[[Category:Great Britain Acts of Parliament 1720]]
[[Category:Repealed Great Britain Acts of Parliament]]
[[Category:Repealed Great Britain Acts of Parliament]]
[[Category:1720 in economics]]
[[Category:South Sea Bubble]]
[[Category:1720 in economic history]]
[[Category:Economic history of the United Kingdom]]
[[Category:Economic history of the United Kingdom]]

Latest revision as of 20:18, 7 October 2024

Royal Exchange and London Assurance Corporation Act 1719
Act of Parliament
Parliament of Great Britain
Long titleAn Act for better securing certain Powers and Privileges intended to be granted by His Majesty by Two Charters for Assurance of Ships and Merchandizes at Sea, and for lending Money on Bottomry; and for restraining several extravagant and unwarrantable Practices therein mentioned.
Citation6 Geo. 1. c. 18
Territorial extent Great Britain

Later extended to American colonies, including:

Dates
Royal assent11 June 1720
Repealed5 July 1825
Other legislation
Amended by
Repealed byRoyal Exchange Assurance Act 1901
Status: Repealed
Text of statute as originally enacted

The Bubble Act 1720 (also Royal Exchange and London Assurance Corporation Act 1719)[1] was an act of the Parliament of Great Britain passed on 11 June 1720 that incorporated the Royal Exchange Assurance Corporation and London Assurance Corporation, but more significantly forbade the formation of any other joint-stock companies unless approved by royal charter.

Bubble Schemes (Colonies) Act 1740
Act of Parliament
Parliament of Great Britain
Long titleAn Act for restraining and preventing several unwarrantable Schemes and Undertakings in His Majesty's Colonies and Plantations in America.
Citation14 Geo. 2. c. 37
Dates
Royal assent25 April 1741
Repealed15 July 1867
Other legislation
Repealed byStatute Law Revision Act 1867
Relates to
  • Royal Exchange and London Assurance Corporation Act 1719
Status: Repealed
Text of statute as originally enacted

Its provisions were extended later by the Bubble Schemes (Colonies) Act 1740 (14 Geo. 2. c. 37)[2] to include its colonies, particularly Massachusetts.[3]

The act gave the South Sea Company a monopoly over British trade with South America[4] until the South Sea Bubble "popped" in Britain's first major stock market collapse.

Background

[edit]

Various motivations have been suggested for the act. They include the desire to prevent the speculation that produced the contemporary South Sea Bubble, an attempt to prevent smaller non-charter companies from forming and so reduce the importance of Parliament in regulating businesses; or the South Sea Company itself wanting to prevent other bubbles from forming that might have decreased the intensity of its own.[5]

Recent scholarship indicates that the last was the cause: it was passed to prevent other companies from competing with the South Sea Company for investors' capital.[5][6][7]

Bubble Companies, etc. Act 1825
Act of Parliament
Parliament of the United Kingdom
Long titleAn Act to repeal so much of an Act passed in the Sixth Year of His late Majesty King George the First, as relates to the restraining several extravagant and unwarrantable Practices in the said Act mentioned; and for conferring additional Powers upon His Majesty, with respect to the granting of Charters of Incorporation to trading and other Companies.
Citation6 Geo. 4. c. 91
Dates
Royal assent5 July 1825
Commencement5 July 1825
Repealed5 August 1873
Other legislation
Amends
  • Royal Exchange and London Assurance Corporation Act 1719
Repealed byStatute Law Revision Act 1873
Status: Repealed
Text of statute as originally enacted

In fact, the act was passed in June 1720, before the peak of the bubble. The act was partially repealed in 1825 by the Bubble Companies, etc. Act 1825 (6 Geo. 4. c. 91).[8] The residue of the act was repealed in 1901.[9]

Contents

[edit]

The Act declared "illegal and void" all business that raised money or offered shares in the manner of a chartered company without a charter from the royal government.[5] Under the terms of the act, the Royal Exchange Assurance Corporation and the London Assurance Corporation were granted charters to write marine insurance. Until 1824, they remained the only joint-stock firms with such a charter.

See also

[edit]
  • R v Cawood (1790) 2 Ld Raym 1361, 92 ER 386 (1 January 1790) - the only prosecution brought under the Act which, according to L.C.B. Gower, "decided nothing of importance".[10]

References

[edit]
  1. ^ An Act for better securing certain Powers and Privileges intended to be granted by His Majesty by Two Charters for Assurance of Ships and Merchandizes at Sea, and for lending Money on Bottomry; and for restraining several extravagant and unwarrantable Practices therein mentioned, 6 Geo 1. c. 18
  2. ^ An Act for restraining and preventing several unwarrantable Schemes and Undertakings in His Majesty's Colonies and Plantations in America, 14 Geo. 2. c. 37
  3. ^ Savelle, Max (1974). Empires to Nations: Expansion in America, 1713-1824. Minneapolis: University of Minnesota Press. p. 43. ISBN 0-8166-0709-5.
  4. ^ Castelow, Ellen. "The South Sea Bubble of 1720". Historic UK. Retrieved 31 July 2019.
  5. ^ a b c Harris, Ron (1994). "The Bubble Act: Its Passage and Its Effects on Business Organization". The Journal of Economic History. 54 (3): 610–627. doi:10.1017/s0022050700015059. JSTOR 2123870. S2CID 154429555.
  6. ^ Cooke, Colin Arthur (1951). Corporation, trust and company: an essay in legal history. Harvard University Press. p. 82.; Gower, L.C.B. (1951). "A South Sea Heresy?". Law Quarterly Review. 68: 214.
  7. ^ Carswell, John (1960). The South Sea Bubble. London: Cresset Press. p. 139. ISBN 7800660370.
  8. ^ An Act to repeal so much of an Act passed in the Sixth Year of His late Majesty King George the First, as relates to the restraining several extravagant and unwarrantable Practices in the said Act mentioned; and for conferring additional Powers upon His Majesty, with respect to the granting of Charters of Incorporation to trading and other Companies, 6 Geo. 4. c. 91
  9. ^ "Royal Exchange Assurance Act 1901" (PDF).
  10. ^ Gower, L.C.B. (1979). Principles of Modern Company Law (4th ed.). London: Stevens And Sons. p. 31. ISBN 0-42044580-3.

Further reading

[edit]
  • Carswell, J. (1960). The South Sea Bubble. London: Cresset Press. OCLC 316196437.
  • Paul, H., Di Liberto, N., Coffman, D'M. (2023). The Bubble Act: New Perspectives from Passage to Repeal and Beyond, Palgrave MacMillan, ISBN 9783031318931.
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