Bubble Act

Bubble Act
Status: Repealed
Parliament of Great Britain
Territorial extent	Great Britain England and Wales Scotland Later extended to Colonies, including: Massachusetts

Bubble Act 1720 (also Royal Exchange and London Assurance Corporation Act 1719) (6 Geo I, c 18) was an Act of the Parliament of Great Britain passed on 11 June 1720 that incorporated the Royal Exchange and London Assurance Corporation, but more significantly forbade the formation of any other joint-stock companies unless approved by royal charter. Its provisions were extended later by the Bubble Schemes, Colonies Act 1740 (14 Geo. II, c. 37) to include its colonies, particularly Massachusetts.^[1]

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.^[2] 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.^[2]^[3]

In fact, the Act was passed in June 1720, before the peak of the bubble. The Act was repealed in 1825.

The most significant provision read:

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.^[2]

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.

Notes

↑ Max Savelle, Empires to Nations: Expansion in America, 1713-1824, p.43 (1974)
1 2 3 Ron Harris, 'The Bubble Act: Its Passage and Its Effects on Business Organization' The Journal of Economic History, Vol. 54, No. 3. (Sep., 1994), pp. 610-627
↑ Cooke, Corporation Trust and Company at 82; Gower (1952) 68 LQR 214

References

J Carswell, The South Sea Bubble (London, Cressett Press 1960).

United Kingdom legislation

Pre-Parliamentary legislation	List of English statutes Charter of Liberties Magna Carta

Acts of Parliament by states preceding the Kingdom of Great Britain	Acts of the Parliament of England to 1483 1485–1601 1603–1641 Interregnum (1642–1660) 1660–1699 1700–1706 Acts of the Parliament of Scotland Acts of the Parliament of Ireland to 1700 1701–1800

Acts of Parliament of the Kingdom of Great Britain	1707–1719 1720–1739 1740–1759 1760–1779 1780–1800

Acts of Parliament of the United Kingdom of Great Britain and Ireland and the United Kingdom of Great Britain and Northern Ireland	1801–1819 1820–1839 1840–1859 1860–1879 1880–1899 1900–1919 1920–1939 1940–1959 1960–1979 1980–1999 2000 to date Halsbury's Statutes UK Statute Law Database Short titles

Church of England measures	List Church of England Assembly (Powers) Act 1919

Legislation of devolved institutions	Acts of the Scottish Parliament Acts and Measures of the National Assembly for Wales Acts of the Northern Ireland Assembly Acts of the Parliament of Northern Ireland Orders in Council for Northern Ireland

Orders-in-Council	Order in Council

Secondary legislation	United Kingdom Statutory Instruments Scottish Statutory Instruments Act of Sederunt, Act of Adjournal

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Bubble Act

Background

Contents

See also

Notes

References