The South Sea Bubble: How Isaac Newton Lost a Fortune

In 1720 Isaac Newton sold his South Sea shares at a profit, then bought back in near the top and lost about £20,000, close to £4 million in today's money. In this documentary: • How a government-backed company turned the national debt into a stock market frenzy • Why the South Sea Company needed its share price to rise, not profits • Who got paid to keep the price climbing: ministers, insiders and the crowd • Why Newton sold in April 1720 and rushed back in on 14 June • The crash, the reckoning and the one man who sold early and built a hospital • Three questions to ask whenever a price goes up and everyone is excited Chapters 0:00 The Genius Who Went Back In 1:23 A Company With No Business 2:40 The Trick 4:25 Price Go Up 6:44 Two Men Who Sold 8:42 The Day Newton Went Back In 11:06 The Crash 12:50 What Newton Lost 14:15 The Three Questions Sources & notes • Wikipedia, "South Sea Company" (https://en.wikipedia.org/wiki/South_S... founded January 1711 to absorb about £9 million of national debt; 1713 Treaty of Utrecht asiento (4,800 enslaved Africans a year to Spanish colonies, one 500-ton annual ship); 22 Jan 1720 Aislabie presents plan; debt of £30,981,712; offer raised 1 Feb; accepted April; shares given to Sunderland, the King's mistress, Aislabie and Stanhope with resale options and no upfront cost; price path £128 (Jan), £330 (Mar), £550 (May), £890 (June), about £1,000 (Aug), £150 (Sept), about £100 (Dec); Bubble Act June 1720; 33 directors removed, lost about 82% of wealth on average; Aislabie found guilty and imprisoned; Walpole restores confidence. • Wikipedia, "South Sea Bubble" (https://en.wikipedia.org/wiki/South_S... price timeline (£128 Jan, £175 Feb, £330 Mar, £550 end May, £890 early June, £1,000 early Aug, about £100 by year end); the Company itself lobbied for the Bubble Act; the "company for carrying out an undertaking of great advantage, but nobody to know what it is" is an anecdote (apocryphal). • A. Odlyzko, "Newton's financial misadventures in the South Sea Bubble", Notes and Records: The Royal Society Journal of the History of Science 73(1), March 2019, 29-59 (https://www-users.cse.umn.edu/~odlyzk... Newton held at least 10,000 of South Sea stock; instructed broker Fauquier on 19 April 1720 to sell; sold about 8,000 in April-May near £350 for a profit probably over £20,000 (the author calls the reading "most likely", the evidence scanty); on 14 June sold 26,000 of Bank annuities and rushed back into South Sea stock (price about £700); converted a further 6,000 in July; signed up for the maximum in the Fourth Money Subscription on 24 Aug (pay 200 for the right to buy at 1,000 when stock traded about 750); stock "well over 900" at its peak, about 800 on 4 Aug, below 300 by end of September, many sales below 200; loss "just about £20,000" (77% of the June purchase), matching the figure his family later gave; Mint earnings a little over £2,000 a year; died a very rich man (1727); "could not calculate the madness of the people" first appears in Spence's anecdotes (told by Lord Radnor, published 1820), the "motions of the heavenly bodies" flourish added later; Thomas Guy held 54,040 of stock and began selling on 22 April 1720 at 340. • Wikipedia, "Thomas Guy" (https://en.wikipedia.org/wiki/Thomas_... sold 54,040 stock for £234,428, profit about £175,000; began selling near £300 and sold the last at £600; used the money to found Guy's Hospital in Southwark (1721). • Physics Today, "Isaac Newton and the perils of the financial South Sea" (https://physicstoday.aip.org/features... Newton's net worth before the bubble just over £30,000; Mint pay about £2,000 a year; estate at death about £30,000. • Wikipedia, "South Sea Company": a UK price-index comparison puts £10,000 (Newton's minimum loss on that page) at about £1.91 million in 2025; used only as a rough "today's money" comparison (so £20,000 is close to £4 million on that measure). Some scenes in this documentary are AI-generated visual reconstructions created for education and storytelling. Subscribe to The Money Parable for more. #SouthSeaBubble #IsaacNewton #NewtonSouthSeaBubble