Explain the cause and process of the South China Sea bubble incident, as well as the difference and influence of the measures taken by Britain and France to deal with the crisis.

South sea bubble began in France. /kloc-In the second decade of the 0/8th century, the French government faced a severe financial situation: 3 billion livres of national debt, a large amount of money and capital outflows, successive crop failures and reduced tax revenue. In order to restructure the economy and unify debts, the Duke of Orleans decided to allow the face value of China bonds to buy shares in a trading company, an Indian company. Since the price of China bonds in the market is less than half that when they were fired, most bondholders are eager to exchange their bonds for shares of Indian companies. Soon, there was a rush to buy shares of Indian companies, and the share price soared to nine Wan Li.

The success of France made Britain, which is also facing the debt crisis, adopt the same method, only exchanging annuities for shares of Nanhai Company. Like France, the share price of Nanhai Company has soared. The stock price of Nanhai company rose, which led to a general bullish stock market. Stock speculation swept through European metropolises such as London and Paris, and new joint-stock companies were established one after another. Most of these companies have no century business projects and no licenses. In the absence of certain development prospects and performance support, the stock price of joint-stock companies will inevitably return to rationality. 1720, the Paris stock market crashed. In August, the British government promulgated the Regulations on Prohibiting Bubble Companies to control speculation. So the South China Sea rice run-away event happened.

The South China Sea bubble incident is the product of the imperfect financial system. This crisis almost caused the newly-built financial building to collapse, which seriously affected the development of the financial industry.