Editing South Sea Company (section)

==== Public announcement ====
[[File:South Sea Annuities share certificate, issued November 13, 1784. On display at the British Museum in London.jpg|thumb|South Sea Annuities share certificate, issued 13 November 1784. On display at the British Museum in London]]
On 21 January the plan was presented to the board of the South Sea Company, and on 22 January [[Chancellor of the Exchequer]] [[John Aislabie]] presented it to Parliament. The House was stunned into silence, but on recovering proposed that the Bank of England should be invited to make a better offer. In response, the South Sea increased its cash payment to £3.5 million, while the Bank proposed to undertake the conversion with a payment of £5.5 million and a fixed conversion price of £170 per £100 face-value Bank stock. On 1 February, the company negotiators led by Blunt raised their offer to £4 million plus a proportion of £3.5 million depending on how much of the debt was converted. They also agreed that the interest rate would decrease after four years instead of seven, and agreed to sell on behalf of the government £1 million of Exchequer bills (formerly handled by the Bank). The House accepted the South Sea offer. Bank stock fell sharply.<ref>Carswell, pp. 112–113</ref>

Perhaps the first sign of difficulty came when the South Sea Company announced that its Christmas 1719 dividend would be deferred for 12 months. The company now embarked on a show of gratitude to its friends. Select individuals were sold a parcel of company stock at the current price. The transactions were recorded by Knight in the names of intermediaries, but no payments were received and no stock issued – indeed the company had none to issue until the conversion of debt began. The individual received an option to sell his stock back to the company at any future date at whatever market price might then apply. Shares went to the Craggs: [[James Craggs the Elder|the Elder]] and [[James Craggs the Younger|the Younger]]; [[John Leveson-Gower, 1st Earl Gower|Lord Gower]]; [[George Granville, 1st Baron Lansdowne|Lord Lansdowne]]; and four other MPs. [[Charles Spencer, 3rd Earl of Sunderland|Lord Sunderland]] would gain £500 for every pound that stock rose; George I's mistress, their children and Countess Platen £120 per pound rise, Aislabie £200 per pound, [[James Stanhope, 1st Earl Stanhope|Lord Stanhope]] £600 per pound. Others invested money, including the [[Richard Hampden (1674–1728)|Treasurer to the Navy, Hampden]], who invested £25,000 of government money on his own behalf.<ref>Carswell, pp. 114–118</ref>

The proposal was accepted in a slightly altered form in April 1720. Crucial in this conversion was the proportion of holders of irredeemable annuities who could be tempted to convert their securities at a high price for the new shares. (Holders of redeemable debt had effectively no other choice but to subscribe.) The South Sea Company could set the conversion price but could not diverge much from the market price of its shares. The company ultimately acquired 85% of the redeemables and 80% of the irredeemables.