Some very old IOUs


It was a sorry tale of speculation, grossly over-inflated share values, stock crash and ruin for many thousands.

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.

Sound familiar? The national and European economies slumped and the government would be saddled with a debt that would not be paid off for ... nearly 300 years.

We speak, of course, of the slave-trading South Sea Company and the infamous bubble of 1720, not our own more recent bubble – by contrast, Ireland, all being well, will have paid back its EU loans in a mere 30 years.

And the degree of political venality involved in the earlier crash would make our own “blind-eye” political class appear like angels – a parliamentary inquiry revealed widespread fraud among the company directors and corruption in the cabinet, a large part of whom were impeached.

The chancellor of the exchequer, John Aislabie, was jailed.

Among the many companies to go public in that gloriously unregulated year was one that infamously advertised itself as “a company for carrying out an undertaking of great advantage, but nobody to know what it is”. A latter-day Anglo?

The chancellor’s latest successor, George Osbourne, on Wednesday announced in the Commons that he hopes shortly, finally to repay the last of the South Sea Company bonds and five others of £435 million in historical “perpetual” gilts, which have no repayment date, “when we deem it value for money to do so”.

The treasury, taking “advantage of the low yield environment to consolidate the debt portfolio”, will also repay the UK’s entire remaining first World War debt of £1.9 billion from next March, nearly 100 years after it was first issued. The war loan bond pays 3.5 per cent interest and is by far the most widely held UK government bond, with more than 120,000 individual holders.

Generations on, we still pay for the shells that decimated our grandparents’ generation.