In early 1720 the South Sea Company and the Bank of England were cometing for the right to issue new shares and to exchange those shares for government bonds, which were then in the hands of the public. The British government has already executed two such debt conversion with South Sea Company. Most of the people that were convertible bonds to shares in 1711 and 1719 saw their South Sea shares valued at the same time, the government has reduced the debt servicing costs as a result of these changes. Transformation considered in 1720, however, it would Ona much larger scale. At the time, South Sea Company won the bidding war, and the House of Commons approved a plan for conversion of debt. Now it was up to the House of Lords to approve or reject the deal. "Hide
by David Moss, Eugene Kintgen, Agnieszka Rafalska Source: Harvard Business School 20 pages. Publication Date: December 20, 2007. Prod. #: 708005-PDF-ENG
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