There was speculation in
insurance for all types of occurrences, such as house-breaking,
highway robbery, death by gin-drinking, and horses becoming
disabled. The total capital invested in all these enterprises rose
to over five times the cash resources of all Europe. When the
bubble burst, 100 pound South Sea stock had gone up to 1050 pounds
and back down again to 120. Since the government had in effect
bought this stock at a low price and paid off its debt with this
stock at a high price, this bubble relieved the government of much
of its massive debt. It also redistributed wealth. After the
bubble burst, investors took refuge in investing in 3-4%
government fixed-interest securities. A result of this bubble
burst was the chartering of two corporations for marine insurance
and prohibition of such by any partnership or firm. Private
persons could continue to write policies, and they chose Lloyd's
Coffeehouse as their headquarters; it came to dominate the world
of marine insurance after the two chartered companies came to
concentrate on fire and life insurance. Lloyd's list became the
foundation for a new newspaper. There were speciality boxes at
Lloyd's such as on America or the Baltic. Many ships were reported
captured by enemies or pirates, but underwriting insurance was a
lucrative business for many.
In 1717 the gold guinea was assigned a value of 21s. In 1774, the
gold standard was introduced.
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