1 00:00:01,280 --> 00:00:04,320 Speaker 1: Welcome to Stuff You Missed in History Class, a production 2 00:00:04,360 --> 00:00:13,640 Speaker 1: of I Heart Radio. Hello, and welcome to the podcast. 3 00:00:13,680 --> 00:00:17,439 Speaker 1: I'm Tracy V. Wilson and I'm Holly Fry. Back in, 4 00:00:18,840 --> 00:00:21,079 Speaker 1: I wanted to do an episode on the south Sea 5 00:00:21,160 --> 00:00:25,160 Speaker 1: Bubble because that was its three anniversary, and for various reasons, 6 00:00:25,200 --> 00:00:30,160 Speaker 1: that just did not happen. But I saw a random 7 00:00:30,240 --> 00:00:33,760 Speaker 1: joke on Twitter recently that referenced both the south Sea 8 00:00:33,800 --> 00:00:36,680 Speaker 1: Bubble and tulip Mania, and I thought, hey, let's go 9 00:00:36,800 --> 00:00:40,400 Speaker 1: take another look at that. One of the one of 10 00:00:40,400 --> 00:00:42,240 Speaker 1: the reasons I did not do with south Sea Bubble 11 00:00:42,320 --> 00:00:45,960 Speaker 1: episode back in is that at that time, a lot 12 00:00:46,000 --> 00:00:50,320 Speaker 1: of the resources that I found were written by economists 13 00:00:50,320 --> 00:00:54,960 Speaker 1: and economic historians. They were really, really in the weeds 14 00:00:54,960 --> 00:00:59,120 Speaker 1: on their financial jargon, and some of them read like 15 00:00:59,840 --> 00:01:05,120 Speaker 1: there weren't people involved in this, It was just market forces. 16 00:01:05,240 --> 00:01:09,199 Speaker 1: It was all money and concepts. Yeah, it's like, that's 17 00:01:09,200 --> 00:01:12,240 Speaker 1: not the approach that we take on our show. So 18 00:01:12,280 --> 00:01:15,679 Speaker 1: a big upside of my procrastination is that a ton 19 00:01:15,720 --> 00:01:19,080 Speaker 1: of new stuff came out in late and then all 20 00:01:19,120 --> 00:01:23,440 Speaker 1: through that was geared more toward a general audience and 21 00:01:23,520 --> 00:01:26,600 Speaker 1: not toward other economists. And then was written from a 22 00:01:26,760 --> 00:01:30,959 Speaker 1: historical perspective. That's more like our approach of our show. 23 00:01:31,080 --> 00:01:33,679 Speaker 1: So back to the top of the list it went. 24 00:01:34,480 --> 00:01:38,760 Speaker 1: The south Sea Bubble happened alongside a similar bubble in 25 00:01:38,840 --> 00:01:41,600 Speaker 1: France that was known as the Mississippi Bubble, and in 26 00:01:41,680 --> 00:01:45,679 Speaker 1: some ways these two financial bubbles were interconnected. I thought 27 00:01:45,680 --> 00:01:49,760 Speaker 1: about making this episode cover both of them, but it 28 00:01:49,800 --> 00:01:53,320 Speaker 1: turns out that they're similar enough in big chunks of 29 00:01:53,360 --> 00:01:57,480 Speaker 1: it that there were parts that were almost repeated but 30 00:01:57,640 --> 00:02:01,760 Speaker 1: not exactly, but then also difference enough that there was 31 00:02:01,800 --> 00:02:06,440 Speaker 1: a key passage that involved an unwieldy explanation two different times. 32 00:02:06,880 --> 00:02:11,280 Speaker 1: So I pitched that idea. We will talk a little 33 00:02:11,280 --> 00:02:13,920 Speaker 1: about the Mississippi Bubble, but the south Sea Bubble is 34 00:02:13,919 --> 00:02:18,840 Speaker 1: the primary focus here. In the early eighteenth century, Britain 35 00:02:19,080 --> 00:02:22,600 Speaker 1: needed money. The Nine Years War, also known as the 36 00:02:22,639 --> 00:02:25,640 Speaker 1: War of the Grand Alliance, had stretched from sixteen eighty 37 00:02:25,720 --> 00:02:28,600 Speaker 1: nine to sixteen ninety seven, and then the War of 38 00:02:28,639 --> 00:02:33,040 Speaker 1: the Spanish Succession started in seventeen o one. As a result, 39 00:02:33,200 --> 00:02:36,120 Speaker 1: Britain was deeply in debt, with much of that debt 40 00:02:36,280 --> 00:02:40,000 Speaker 1: involving navy contractors. It had reached a point where some 41 00:02:40,080 --> 00:02:44,320 Speaker 1: of them were refusing to provide service beyond its actual 42 00:02:44,440 --> 00:02:47,680 Speaker 1: involvement in the war. The Royal Navy was also protecting 43 00:02:47,720 --> 00:02:52,160 Speaker 1: British ships from pirates, enemy warships, and enemy trading ships, 44 00:02:52,200 --> 00:02:56,079 Speaker 1: so Britain really could not afford to jeopardize it. This 45 00:02:56,120 --> 00:02:59,840 Speaker 1: was happening alongside some changes in the world of British finance. 46 00:03:00,520 --> 00:03:05,120 Speaker 1: British periodicals had started printing lists of stock prices around 47 00:03:05,160 --> 00:03:09,840 Speaker 1: sixteen seventy nine. Then in sixteen a man named John 48 00:03:09,919 --> 00:03:14,200 Speaker 1: Casting started posting price lists for stocks and commodities and 49 00:03:14,280 --> 00:03:18,639 Speaker 1: other investments at Jonathan's Coffee House is founded by Jonathan 50 00:03:18,720 --> 00:03:23,480 Speaker 1: Miles Coffee houses in London's Financial District, where where stockbrokers 51 00:03:23,520 --> 00:03:25,919 Speaker 1: worked a lot of the time, and Jonathan's Coffee House 52 00:03:25,960 --> 00:03:29,440 Speaker 1: was one of the busiest. For this purpose, Casting's price 53 00:03:29,639 --> 00:03:33,600 Speaker 1: list became a newspaper that was called Course of the Exchange. 54 00:03:33,960 --> 00:03:36,600 Speaker 1: This was really the first time that all of these 55 00:03:36,640 --> 00:03:39,960 Speaker 1: prices were brought together in one place and published in 56 00:03:40,000 --> 00:03:43,480 Speaker 1: a way that was easily and publicly accessible. So sometimes 57 00:03:43,920 --> 00:03:47,280 Speaker 1: it's described as the beginning of the London Stock Exchange, 58 00:03:47,320 --> 00:03:51,240 Speaker 1: although that was not formally founded until much later. This 59 00:03:51,400 --> 00:03:55,240 Speaker 1: may be apocryphal, but stockbrokers were allegedly working out of 60 00:03:55,240 --> 00:03:58,960 Speaker 1: coffee houses because their behavior was so disruptive that they 61 00:03:58,960 --> 00:04:03,000 Speaker 1: were banned from the Oil Exchange. But coffee houses had 62 00:04:03,040 --> 00:04:06,920 Speaker 1: also become a hub for socializing and information sharing. Most 63 00:04:07,000 --> 00:04:10,560 Speaker 1: of them subscribed to multiple newspapers and periodicals, and the 64 00:04:10,600 --> 00:04:13,560 Speaker 1: coffee houses where people would go to read them. So 65 00:04:13,880 --> 00:04:17,240 Speaker 1: just as coffee houses made these publications more accessible to 66 00:04:17,320 --> 00:04:20,960 Speaker 1: more people, the stockbrokers working from them did the same 67 00:04:21,000 --> 00:04:24,919 Speaker 1: for investing. As that was happening, the Bank of England 68 00:04:25,080 --> 00:04:28,680 Speaker 1: was also established in sixteen nine four. It acted as 69 00:04:28,720 --> 00:04:32,880 Speaker 1: the government's banker, including loaning the government money to fund 70 00:04:32,960 --> 00:04:36,159 Speaker 1: its wartime efforts. This led to the whole idea of 71 00:04:36,360 --> 00:04:40,000 Speaker 1: national debt in Britain, but at this point the British 72 00:04:40,080 --> 00:04:44,200 Speaker 1: nation as a whole had no overall budget. Loans and 73 00:04:44,240 --> 00:04:49,359 Speaker 1: expenditures were approved as they came up. Nobody had a 74 00:04:49,440 --> 00:04:52,960 Speaker 1: clear sense of even how much money the British government 75 00:04:53,000 --> 00:04:57,880 Speaker 1: owed and who they owed it to. Eventually, Robert Harley, 76 00:04:58,160 --> 00:05:01,800 Speaker 1: Chancellor of the Exchequer, was asked with sorting through all 77 00:05:01,839 --> 00:05:05,520 Speaker 1: of this. As Harley was working on that Britain still 78 00:05:05,560 --> 00:05:08,400 Speaker 1: needed to find enough money to cover the military payroll. 79 00:05:09,160 --> 00:05:13,480 Speaker 1: Harley worked with John Blunt, secretary of the sword Blade Company, 80 00:05:13,560 --> 00:05:17,799 Speaker 1: to raise funds through the National Lottery. The sword Blade Company, 81 00:05:17,920 --> 00:05:21,480 Speaker 1: sometimes called the Hollow sword Blade Company, was exactly what 82 00:05:21,520 --> 00:05:24,720 Speaker 1: it sounds like. They made French style swords that had 83 00:05:24,760 --> 00:05:28,440 Speaker 1: become popular in Britain. But the company had also gotten 84 00:05:28,480 --> 00:05:31,040 Speaker 1: into banking and it had raised funds to buy lands 85 00:05:31,120 --> 00:05:34,280 Speaker 1: by exchanging shares in the company for what we're basically 86 00:05:34,360 --> 00:05:38,400 Speaker 1: unsecured government bonds. The company had also bought up more 87 00:05:38,480 --> 00:05:41,320 Speaker 1: of these same bonds ahead of time, expecting them to 88 00:05:41,440 --> 00:05:44,360 Speaker 1: increase in value when people heard about the share swap, 89 00:05:44,960 --> 00:05:48,039 Speaker 1: which they did. Harley was impressed with all of this, 90 00:05:48,200 --> 00:05:50,440 Speaker 1: and that was what led him to look to Blunt 91 00:05:50,480 --> 00:05:53,320 Speaker 1: for help with the National Lottery. Blunt was in charge 92 00:05:53,320 --> 00:05:57,080 Speaker 1: of marketing and promotion. All of this really boosted the 93 00:05:57,120 --> 00:06:01,960 Speaker 1: lottery's performance. It existed before or this, but not in 94 00:06:02,000 --> 00:06:04,520 Speaker 1: a way that was making a lot of money. This time, 95 00:06:04,640 --> 00:06:07,719 Speaker 1: it raised one point five million pounds, and then other 96 00:06:07,800 --> 00:06:11,960 Speaker 1: lotteries followed. This was really a stop gap though it 97 00:06:12,200 --> 00:06:15,040 Speaker 1: let the government cover some of its most immediate debts, 98 00:06:15,080 --> 00:06:17,640 Speaker 1: but the money that was raised with this lottery was 99 00:06:17,720 --> 00:06:21,719 Speaker 1: just a fraction of what the government owed. In seventeen eleven, 100 00:06:21,839 --> 00:06:24,800 Speaker 1: the south Sea Company, or the Governoring Company of the 101 00:06:24,839 --> 00:06:27,800 Speaker 1: Merchants of Great Britain, trading to the South season other 102 00:06:27,839 --> 00:06:31,320 Speaker 1: parts of America and for the encouragement of the fishery, 103 00:06:31,560 --> 00:06:34,560 Speaker 1: was established to try to manage this debt. It was 104 00:06:34,600 --> 00:06:38,080 Speaker 1: to be a counterpart to the British East India Company. 105 00:06:38,279 --> 00:06:41,560 Speaker 1: There was also a political element to this. The British 106 00:06:41,680 --> 00:06:45,159 Speaker 1: East India Company was controlled by Whigs, but the plan 107 00:06:45,360 --> 00:06:48,320 Speaker 1: was for the south Sea Company to be under Tory control, 108 00:06:49,000 --> 00:06:52,440 Speaker 1: so this newly established company would, at least in theory, 109 00:06:52,839 --> 00:06:56,320 Speaker 1: adjust the financial balance of power between the two parties. 110 00:06:57,160 --> 00:07:00,400 Speaker 1: John Blunt was tapped as the company's first chief exact Cative, 111 00:07:00,640 --> 00:07:04,360 Speaker 1: with Robert Harley as governor. The south Sea Company was 112 00:07:04,480 --> 00:07:09,120 Speaker 1: a public private partnership and it had multiple overlapping purposes. 113 00:07:09,800 --> 00:07:12,640 Speaker 1: It was a business. It would have a monopoly on 114 00:07:12,760 --> 00:07:16,240 Speaker 1: trade with Spain's colonies in the Caribbean and South America. 115 00:07:16,960 --> 00:07:20,400 Speaker 1: Britain also hoped this trading enterprise would allow it to 116 00:07:20,600 --> 00:07:23,920 Speaker 1: influence the Spanish colonies. In addition to all of this, 117 00:07:24,040 --> 00:07:26,440 Speaker 1: the South Sea Company would also provide a way for 118 00:07:26,520 --> 00:07:29,960 Speaker 1: the government to restructure and consolidate some of its debt. 119 00:07:30,600 --> 00:07:33,320 Speaker 1: The heart of this debt consolidation was a debt for 120 00:07:33,400 --> 00:07:37,040 Speaker 1: equity swap. The south Sea Company would buy a significant 121 00:07:37,040 --> 00:07:41,080 Speaker 1: portion of the nation's debt. Investors would then be encouraged 122 00:07:41,120 --> 00:07:43,920 Speaker 1: to swap any government debts they had for shares in 123 00:07:44,000 --> 00:07:47,360 Speaker 1: the south Sea Company. The government would pay six percent 124 00:07:47,440 --> 00:07:49,840 Speaker 1: interest on the debt of the south Sea Company held, 125 00:07:50,160 --> 00:07:52,760 Speaker 1: and the south Sea Company would distribute that interest to 126 00:07:52,920 --> 00:07:56,720 Speaker 1: investors as a dividend, So this would provide a solid, 127 00:07:56,760 --> 00:08:01,440 Speaker 1: predictable return on people's investments. This wasn't just about that 128 00:08:01,520 --> 00:08:05,240 Speaker 1: six percent return, though. As the price of shares in 129 00:08:05,280 --> 00:08:08,400 Speaker 1: the company went up, the number of shares that were 130 00:08:08,440 --> 00:08:12,120 Speaker 1: required to cover the government's debt would go down, but 131 00:08:12,200 --> 00:08:15,640 Speaker 1: the total number of shares stayed the same, so once 132 00:08:15,680 --> 00:08:19,360 Speaker 1: the government's debts were all accounted for, any surplus shares 133 00:08:19,400 --> 00:08:23,080 Speaker 1: could be sold off at market value. As the price 134 00:08:23,160 --> 00:08:25,800 Speaker 1: went up, people who sold their shares had the potential 135 00:08:25,880 --> 00:08:28,200 Speaker 1: to make a profit that would be well above that 136 00:08:28,360 --> 00:08:31,760 Speaker 1: six percent, and if Britain's trade with the Spanish colonies 137 00:08:31,840 --> 00:08:35,280 Speaker 1: was successful, the company would become more profitable. In a 138 00:08:35,320 --> 00:08:38,160 Speaker 1: portion of those profits would be passed along to investors 139 00:08:38,160 --> 00:08:41,760 Speaker 1: as well. Of course, there was a giant hitch to 140 00:08:41,840 --> 00:08:44,360 Speaker 1: that part of it when the company was first established, 141 00:08:44,600 --> 00:08:46,920 Speaker 1: which was a Britain and Spain were a war, they 142 00:08:46,920 --> 00:08:50,000 Speaker 1: were not trading with one another. Don't seem like kind 143 00:08:50,040 --> 00:08:54,920 Speaker 1: of a weird thing to make your plan whoops. In 144 00:08:54,960 --> 00:08:58,440 Speaker 1: addition to the potential for turning a profit, swapping debt 145 00:08:58,679 --> 00:09:01,440 Speaker 1: for equity in the south Sea Company had some other 146 00:09:01,600 --> 00:09:06,960 Speaker 1: potential benefits for investors. Holding government debt directly had become 147 00:09:07,000 --> 00:09:12,400 Speaker 1: notoriously difficult. In many cases, debt holders were seriously limited 148 00:09:12,400 --> 00:09:15,320 Speaker 1: and how or whether they could transfer the debt they 149 00:09:15,320 --> 00:09:18,240 Speaker 1: were holding to somebody else or otherwise get rid of it. 150 00:09:18,960 --> 00:09:21,680 Speaker 1: There was a lot of red tape involved. Sometimes it 151 00:09:21,720 --> 00:09:25,800 Speaker 1: was essentially impossible, and because of the government's ongoing problems 152 00:09:25,800 --> 00:09:29,840 Speaker 1: with finances, it's payments were often late or even non existent. 153 00:09:30,640 --> 00:09:33,160 Speaker 1: So you could basically be in a situation where you 154 00:09:33,200 --> 00:09:36,160 Speaker 1: had loaned money to the British Government, but the government 155 00:09:36,280 --> 00:09:39,560 Speaker 1: wasn't paying you on time or at all, and you 156 00:09:39,679 --> 00:09:42,800 Speaker 1: just had no way to untangle yourself from this situation. 157 00:09:43,640 --> 00:09:46,720 Speaker 1: The south Sea Company plan got around all of that 158 00:09:46,840 --> 00:09:50,200 Speaker 1: by encouraging people who were holding all kinds of debts 159 00:09:50,520 --> 00:09:53,600 Speaker 1: with all kinds of terms attached to swap them for 160 00:09:53,679 --> 00:09:56,480 Speaker 1: shares in the company. From there it would be up 161 00:09:56,520 --> 00:09:58,600 Speaker 1: to the company to deal with the government and its 162 00:09:58,600 --> 00:10:03,000 Speaker 1: repayments or black thereof, and the company would pay a reliable, 163 00:10:03,080 --> 00:10:06,480 Speaker 1: predictable annuity out to those investors who had swapped their 164 00:10:06,480 --> 00:10:10,360 Speaker 1: debt for shares. At first this seems to work. About 165 00:10:10,440 --> 00:10:14,560 Speaker 1: nine point five million pounds of government debt was consolidated 166 00:10:14,559 --> 00:10:17,160 Speaker 1: through the south Sea Company shares in about six months, 167 00:10:17,679 --> 00:10:20,240 Speaker 1: But eventually things took a turn, which we will get 168 00:10:20,280 --> 00:10:32,800 Speaker 1: to after a sponsor break. As we mentioned before the break. 169 00:10:32,840 --> 00:10:35,680 Speaker 1: When the south Sea Company was first established, Britain and 170 00:10:35,760 --> 00:10:38,200 Speaker 1: Spain were at war, which made it kind of weird 171 00:10:38,400 --> 00:10:40,920 Speaker 1: for Britain to be penning a huge chunk of debt 172 00:10:41,040 --> 00:10:44,200 Speaker 1: restructuring on a company that was supposed to trade with 173 00:10:44,240 --> 00:10:47,800 Speaker 1: Spanish colonies. But in seventeen thirteen, so just a couple 174 00:10:47,840 --> 00:10:50,240 Speaker 1: of years later, Britain's part in the War of the 175 00:10:50,280 --> 00:10:53,400 Speaker 1: Spanish Succession ended with the Treaty of Utrecht, which was 176 00:10:53,520 --> 00:10:56,679 Speaker 1: signed by Queen Anne of England and King Philip the 177 00:10:56,720 --> 00:11:00,240 Speaker 1: Fifth of Spain. Part of the Treaty of Utrecht was 178 00:11:00,320 --> 00:11:04,280 Speaker 1: the Aciento, or contract, which granted Britain a monopoly on 179 00:11:04,320 --> 00:11:08,559 Speaker 1: the transport of enslaved Africans to Spanish territory in the America's. 180 00:11:09,559 --> 00:11:13,360 Speaker 1: Under the Aciento, Britain would provide four thousand, eight hundred 181 00:11:13,480 --> 00:11:18,480 Speaker 1: enslaved people to Spain's colonies per year. Britain assigned this 182 00:11:18,600 --> 00:11:22,480 Speaker 1: right to the South Sea Company. The treaty also specified 183 00:11:22,520 --> 00:11:25,520 Speaker 1: that Britain could send one trading ship of general cargo 184 00:11:25,600 --> 00:11:29,559 Speaker 1: per year to the Portobello Trade Fair in Panama. Although 185 00:11:29,600 --> 00:11:32,640 Speaker 1: these trading rights weren't nearly as broad as people hoped, 186 00:11:33,040 --> 00:11:36,800 Speaker 1: Europe's colonies in the America's relied so heavily on enslaved 187 00:11:36,840 --> 00:11:40,520 Speaker 1: labor that investors sought the Aciento made this a sure thing. 188 00:11:41,200 --> 00:11:42,959 Speaker 1: So yeah, the South Sea Company was going to work 189 00:11:43,000 --> 00:11:47,040 Speaker 1: with the Royal African Company. The Royal African Company was 190 00:11:47,120 --> 00:11:50,680 Speaker 1: who would purchase the enslaved people in Africa, and then 191 00:11:51,400 --> 00:11:54,439 Speaker 1: the South Sea Company would be who transported those people 192 00:11:54,480 --> 00:11:59,000 Speaker 1: across the Atlantic Ocean and then sold them in Spanish colonies. 193 00:11:59,720 --> 00:12:03,240 Speaker 1: We should note that in the early eighteenth century, Britain 194 00:12:03,320 --> 00:12:06,640 Speaker 1: had a small but established population of free black people, 195 00:12:06,720 --> 00:12:11,320 Speaker 1: particularly in London. They're also enslaved people in Britain at 196 00:12:11,360 --> 00:12:14,520 Speaker 1: this time, and there were absolutely people in Britain who 197 00:12:14,559 --> 00:12:18,240 Speaker 1: objected to slavery on moral grounds, but all of this 198 00:12:18,320 --> 00:12:23,720 Speaker 1: was happening decades before an abolitionist movement coalesced in Britain. 199 00:12:24,200 --> 00:12:28,200 Speaker 1: So slavery and industries that relied on slavery were deeply 200 00:12:28,520 --> 00:12:32,200 Speaker 1: entrenched in the British economy. And the fact that so 201 00:12:32,280 --> 00:12:35,559 Speaker 1: many people were so eager to invest in what was 202 00:12:35,679 --> 00:12:39,760 Speaker 1: at its heart a slave trading venture that's really reflective 203 00:12:39,840 --> 00:12:43,400 Speaker 1: of societal attitudes about the institution at the time. In 204 00:12:43,520 --> 00:12:47,160 Speaker 1: seventeen fourteen, Queen Anne died and King George the First 205 00:12:47,240 --> 00:12:50,280 Speaker 1: came to the throne. As we said earlier, the South 206 00:12:50,280 --> 00:12:54,360 Speaker 1: Sea Company had originally been envisioned as an enterprise controlled 207 00:12:54,360 --> 00:12:58,280 Speaker 1: by Tories, but at this point many Tories were Jacobites. 208 00:12:58,480 --> 00:13:02,000 Speaker 1: They supported James Francis Edward Stewart, son of James the 209 00:13:02,040 --> 00:13:05,160 Speaker 1: second and seventh, as heir to the throne, rather than 210 00:13:05,200 --> 00:13:08,160 Speaker 1: George the First. We have talked about all of this 211 00:13:08,200 --> 00:13:11,120 Speaker 1: in prior episodes, including the one on the Jacobite Rising 212 00:13:11,160 --> 00:13:15,960 Speaker 1: of seventeen forty five. So King George's administration was made 213 00:13:16,000 --> 00:13:20,400 Speaker 1: up mostly of wigs. Robert Harley was arrested accused of 214 00:13:20,400 --> 00:13:24,840 Speaker 1: being a Jacobite and imprisoned for two years. John Blunt 215 00:13:25,000 --> 00:13:28,480 Speaker 1: also replaced the south Sea Company's Tory officers with wigs, 216 00:13:28,960 --> 00:13:32,320 Speaker 1: and George's son, the future King, George the Second, was 217 00:13:32,360 --> 00:13:36,520 Speaker 1: temporarily installed as the company's governor. George the First took 218 00:13:36,559 --> 00:13:40,960 Speaker 1: over the south Sea Company himself in seventeen eighteen. Although 219 00:13:41,000 --> 00:13:43,439 Speaker 1: the debt for equity swap with the south Sea Company 220 00:13:43,480 --> 00:13:46,720 Speaker 1: had allowed Britain to restructure a portion of its debt 221 00:13:47,480 --> 00:13:49,400 Speaker 1: didn't really have a part of the plan that was 222 00:13:49,440 --> 00:13:53,400 Speaker 1: about keeping the nation from incurring more debt. By the 223 00:13:53,480 --> 00:13:56,800 Speaker 1: end of seventeen nineteen, the British national debt was about 224 00:13:56,960 --> 00:14:01,640 Speaker 1: fifty million pounds. About three point four million pounds of 225 00:14:01,679 --> 00:14:04,440 Speaker 1: that was owed to the Bank of England, roughly the 226 00:14:04,480 --> 00:14:08,079 Speaker 1: same amount to the British East India Company. Britain owed 227 00:14:08,120 --> 00:14:11,280 Speaker 1: twelve million pounds to the south Sea Company and the 228 00:14:11,280 --> 00:14:15,120 Speaker 1: rest was owed to the public. This was obviously a 229 00:14:15,320 --> 00:14:19,560 Speaker 1: lot of debt, and at about the same time France 230 00:14:19,640 --> 00:14:22,760 Speaker 1: was reckoning with its own debt. As Scottish economist John 231 00:14:22,840 --> 00:14:27,800 Speaker 1: Law tried to totally transform the French economy. He founded 232 00:14:27,800 --> 00:14:30,640 Speaker 1: a bank in France in seventeen sixteen, which became a 233 00:14:30,760 --> 00:14:33,920 Speaker 1: lender to the French government and eventually merged with other 234 00:14:33,960 --> 00:14:38,280 Speaker 1: banks to form the Bunk General. The Bank Generral held 235 00:14:38,320 --> 00:14:41,600 Speaker 1: a huge chunk of government debt and was later nationalized 236 00:14:41,640 --> 00:14:46,760 Speaker 1: and renamed the Bank Royal. In seventeen seventeen, Law established 237 00:14:46,800 --> 00:14:51,040 Speaker 1: the Campaignie dud or the Mississippi Company, to control French 238 00:14:51,120 --> 00:14:55,240 Speaker 1: trading rights in the Mississippi River Valley. He sold shares 239 00:14:55,280 --> 00:14:59,440 Speaker 1: in the company as subscriptions. In seventeen nineteen, he also 240 00:14:59,480 --> 00:15:02,360 Speaker 1: took control roll of both the French East India Company 241 00:15:02,400 --> 00:15:05,600 Speaker 1: and the China Company, and he consolid all of this 242 00:15:05,680 --> 00:15:10,080 Speaker 1: into the Company des Indeed or the Company. This put 243 00:15:10,200 --> 00:15:13,120 Speaker 1: him in control of a company that had a monopoly 244 00:15:13,240 --> 00:15:18,240 Speaker 1: on virtually all French trade outside of Europe. From there 245 00:15:18,280 --> 00:15:22,560 Speaker 1: he amassed even more financial power. The company took over 246 00:15:22,680 --> 00:15:26,600 Speaker 1: tax administration in France. The Law was later named Controller 247 00:15:26,640 --> 00:15:31,960 Speaker 1: General and Superintendent General of Finance. Then, in seventeen nineteen 248 00:15:32,040 --> 00:15:37,160 Speaker 1: and early seventeen twenty, the company's share prices skyrocketed from 249 00:15:37,200 --> 00:15:41,640 Speaker 1: about five d livre per share to nine thousand. After 250 00:15:41,640 --> 00:15:45,160 Speaker 1: the price hit nine thousand livres, the Bank Royale pegged 251 00:15:45,200 --> 00:15:48,880 Speaker 1: it there to keep it from increasing any further. Investors 252 00:15:48,880 --> 00:15:51,800 Speaker 1: started trying to exchange their shares for gold, and there 253 00:15:51,840 --> 00:15:54,440 Speaker 1: was not enough gold in all of France to cover 254 00:15:54,520 --> 00:15:59,120 Speaker 1: the demand. Inflation was rampant as the banc Royal started 255 00:15:59,120 --> 00:16:02,000 Speaker 1: trying to get people to take their payouts in paper notes, 256 00:16:02,480 --> 00:16:08,000 Speaker 1: including issuing a nine thousand livre note. John Law laid 257 00:16:08,000 --> 00:16:11,520 Speaker 1: out a plan to systematically reduce the share price from 258 00:16:11,600 --> 00:16:14,640 Speaker 1: nine thousand liver to five thousand livers to try to 259 00:16:14,760 --> 00:16:19,640 Speaker 1: deflate the currency somewhat without losing too much share value 260 00:16:19,760 --> 00:16:23,560 Speaker 1: in the company, but as the share price started to drop, 261 00:16:23,680 --> 00:16:26,680 Speaker 1: his efforts were not enough to keep it from just plummeting. 262 00:16:27,280 --> 00:16:30,040 Speaker 1: By the end of seventeen twenty, it had fallen all 263 00:16:30,080 --> 00:16:32,800 Speaker 1: the way back to about five hundred livres, which is 264 00:16:32,920 --> 00:16:35,640 Speaker 1: where it had been in the spring of seventeen nineteen. 265 00:16:36,520 --> 00:16:39,040 Speaker 1: All of this came to be known as the Mississippi Bubble. 266 00:16:39,600 --> 00:16:42,960 Speaker 1: The Bunk Royale collapsed in its wake, and John Law 267 00:16:43,040 --> 00:16:47,520 Speaker 1: had to flee France after the bubble burst. As all 268 00:16:47,560 --> 00:16:51,040 Speaker 1: of this was happening, the South Sea Company share swaps 269 00:16:51,080 --> 00:16:53,840 Speaker 1: were also kicking in the high gear, with some of 270 00:16:53,880 --> 00:16:56,600 Speaker 1: the demand coming from investors who had gotten out of 271 00:16:56,640 --> 00:17:00,800 Speaker 1: the French market. First, the south Sea Company posed another 272 00:17:00,920 --> 00:17:04,520 Speaker 1: round of debt for equity swaps and also loaned the 273 00:17:04,520 --> 00:17:09,680 Speaker 1: British Government roughly half a million pounds. Then Parliament passed 274 00:17:09,720 --> 00:17:13,879 Speaker 1: an Act for making fourth new Exchequer Bills. Under this 275 00:17:13,960 --> 00:17:17,000 Speaker 1: Act of the south Sea Company loaned the government roughly 276 00:17:17,160 --> 00:17:22,240 Speaker 1: five point seven million pounds. It also acquired roughly thirty 277 00:17:22,240 --> 00:17:25,600 Speaker 1: one point five million pounds in government debt, which it 278 00:17:25,680 --> 00:17:29,879 Speaker 1: was going to convert into shares. The promised returns on 279 00:17:29,920 --> 00:17:32,879 Speaker 1: this were huge. The government was going to be paying 280 00:17:32,960 --> 00:17:36,320 Speaker 1: five interest on the debt that was converted into shares, 281 00:17:37,040 --> 00:17:40,359 Speaker 1: but the company was promising to pay investors a thirty 282 00:17:40,440 --> 00:17:44,240 Speaker 1: percent dividend by the end of seventeen twenty, and then 283 00:17:44,280 --> 00:17:47,040 Speaker 1: that was supposed to jump to fifty percent for the 284 00:17:47,160 --> 00:17:53,000 Speaker 1: ten years after that. That probably sounds like too good 285 00:17:53,000 --> 00:17:57,680 Speaker 1: to be true. Spoiler dun Dune Dune. The company had 286 00:17:57,720 --> 00:18:02,200 Speaker 1: promoted its earlier swaps through adver tisements and pamphlets and propaganda, 287 00:18:02,440 --> 00:18:06,400 Speaker 1: including some written by people like Daniel Dafoe and Jonathan Swift. 288 00:18:07,200 --> 00:18:10,560 Speaker 1: In seventeen nineteen and seventeen twenty, it ramped up these 289 00:18:10,600 --> 00:18:15,040 Speaker 1: efforts as well. It also published lists of prominent investors, 290 00:18:15,080 --> 00:18:18,480 Speaker 1: including the King and various members of Parliament. This was 291 00:18:18,520 --> 00:18:21,240 Speaker 1: all to reinforce the idea that this was a totally 292 00:18:21,280 --> 00:18:24,159 Speaker 1: reliable investment that had the support of some of the 293 00:18:24,240 --> 00:18:29,120 Speaker 1: nation's most powerful people. All of this fed into an 294 00:18:29,160 --> 00:18:35,240 Speaker 1: investing frenzy. The south Sea Company started offering subscription plans 295 00:18:35,240 --> 00:18:38,200 Speaker 1: so that investors could buy shares even if they didn't 296 00:18:38,200 --> 00:18:40,720 Speaker 1: have all the money up front. There were multiple waves 297 00:18:40,760 --> 00:18:44,400 Speaker 1: of these subscription plans, and they allowed investors to pay 298 00:18:44,400 --> 00:18:48,879 Speaker 1: for their shares and installments. The company also loaned money 299 00:18:49,000 --> 00:18:52,440 Speaker 1: to prospective investors so that they could buy stock with it, 300 00:18:52,600 --> 00:18:55,720 Speaker 1: and they loaned current investors money based on the value 301 00:18:55,760 --> 00:18:58,000 Speaker 1: of the stock they already had so they could buy 302 00:18:58,080 --> 00:19:05,359 Speaker 1: more stock. Hello unsustainable. As interest in investment surged, share 303 00:19:05,400 --> 00:19:07,960 Speaker 1: prices spiked in the Bank of England and the East 304 00:19:08,000 --> 00:19:10,919 Speaker 1: India Company, but not nearly as much as in the 305 00:19:10,960 --> 00:19:14,399 Speaker 1: south Sea Company. The number of companies to invest in 306 00:19:14,600 --> 00:19:18,400 Speaker 1: surged as new joint stock companies were established all over 307 00:19:18,440 --> 00:19:22,600 Speaker 1: the place, one for making Muslin, one for importing lace 308 00:19:22,680 --> 00:19:26,960 Speaker 1: from Flanders, one for ensuring horses, one for making soap, 309 00:19:27,160 --> 00:19:30,760 Speaker 1: on and on and on. Some of these new companies 310 00:19:30,800 --> 00:19:35,119 Speaker 1: were obvious scams, and in seventeen twenty Parliament past the 311 00:19:35,160 --> 00:19:39,240 Speaker 1: Bubble Act, which banned all joint stock companies that did 312 00:19:39,280 --> 00:19:43,240 Speaker 1: not have a Royal charter. Those new companies were outlawed, 313 00:19:43,320 --> 00:19:46,240 Speaker 1: and many of their former investors turned to south Sea 314 00:19:46,280 --> 00:19:50,680 Speaker 1: Company stock. The price for shares of the south Sea 315 00:19:50,720 --> 00:19:54,080 Speaker 1: Company rose from about a hundred pounds per share in 316 00:19:54,200 --> 00:19:58,440 Speaker 1: seventeen nineteen to three hundred pounds in April and nineteen 317 00:19:58,520 --> 00:20:02,320 Speaker 1: twenty five undred pounds in June, all the way to 318 00:20:02,440 --> 00:20:06,359 Speaker 1: more than a thousand pounds per share in August. The 319 00:20:06,520 --> 00:20:09,840 Speaker 1: company thought this price was just gonna keep going up, 320 00:20:10,000 --> 00:20:13,680 Speaker 1: especially once it had covered all the required government debt 321 00:20:13,720 --> 00:20:16,400 Speaker 1: and could just sell the remaining shares at market rate 322 00:20:16,480 --> 00:20:19,679 Speaker 1: out of profit without having to offset government debt with it. 323 00:20:19,800 --> 00:20:24,080 Speaker 1: So the company started paying out more money to investors 324 00:20:24,160 --> 00:20:26,720 Speaker 1: who wanted to cash out then it was taking in. 325 00:20:27,400 --> 00:20:30,800 Speaker 1: I was expecting those future games to make up the 326 00:20:30,840 --> 00:20:35,960 Speaker 1: shortfall that it was creating, but instead the price plummeted precipitously, 327 00:20:36,080 --> 00:20:39,920 Speaker 1: dropping from about a thousand pounds in August of seventeen 328 00:20:40,000 --> 00:20:45,679 Speaker 1: twenty two a hundred pounds in September. Like the Mississippi bubble, 329 00:20:46,000 --> 00:20:49,600 Speaker 1: this had just basically dropped back to its pre bubble price. 330 00:20:50,680 --> 00:20:53,560 Speaker 1: A more limited bubble was also playing out in the 331 00:20:53,600 --> 00:20:56,639 Speaker 1: Dutch Republic. As all of this was going on, The 332 00:20:56,760 --> 00:20:59,560 Speaker 1: price for shares in the Dutch East India Company and 333 00:20:59,600 --> 00:21:03,320 Speaker 1: the Dutch West India Company both rose, along with the 334 00:21:03,320 --> 00:21:08,120 Speaker 1: Mississippi and South Sea shares. Roughly forty small joint stock 335 00:21:08,200 --> 00:21:11,360 Speaker 1: companies were established in the Dutch Republic which went through 336 00:21:11,400 --> 00:21:14,919 Speaker 1: the same pattern. This became known as the Dutch vent 337 00:21:15,040 --> 00:21:19,000 Speaker 1: Handel of seventy and that, combined with the Mississippi and 338 00:21:19,080 --> 00:21:23,080 Speaker 1: South Sea bubbles, is sometimes described as the first international 339 00:21:23,160 --> 00:21:27,879 Speaker 1: stock market collapse. This sense of the word bubble existed 340 00:21:27,920 --> 00:21:31,000 Speaker 1: before this point. Its first use in writing was in 341 00:21:31,200 --> 00:21:35,040 Speaker 1: Edward Ward's Labor in Vain or what Signifies Little or 342 00:21:35,119 --> 00:21:39,880 Speaker 1: Nothing in seventeen hundred, but writing about these three intersecting 343 00:21:39,920 --> 00:21:44,920 Speaker 1: financial collapses popularized the words use. We will get into 344 00:21:44,920 --> 00:21:49,359 Speaker 1: the aftermath of all of this after a quick sponsor break. 345 00:21:57,600 --> 00:22:00,600 Speaker 1: When the price of shares in the South Sea Company 346 00:22:00,680 --> 00:22:05,080 Speaker 1: dropped precipitously in September of seventeen twenty people who had 347 00:22:05,119 --> 00:22:07,919 Speaker 1: bought shares when the price was low saw all of 348 00:22:07,960 --> 00:22:14,080 Speaker 1: their games evaporate seemingly overnight. They were understandably outraged, but 349 00:22:14,160 --> 00:22:17,440 Speaker 1: a whole lot more people lost actual money, not just 350 00:22:18,200 --> 00:22:23,800 Speaker 1: unrealized games that reverted to the previous amount. Some of 351 00:22:23,840 --> 00:22:28,200 Speaker 1: these were wealthy people who had previously held government debt 352 00:22:28,240 --> 00:22:31,640 Speaker 1: and they had swapped that debt for shares, but others 353 00:22:31,680 --> 00:22:34,840 Speaker 1: were just ordinary folks who had gone to a coffee 354 00:22:34,840 --> 00:22:38,080 Speaker 1: shop and had bought shares of the company with their savings. 355 00:22:38,880 --> 00:22:41,880 Speaker 1: People who had bought subscriptions when the price was still 356 00:22:41,960 --> 00:22:46,040 Speaker 1: high also still had payments due on those subscriptions, but 357 00:22:46,080 --> 00:22:48,639 Speaker 1: now these payments were for more than the stock was worth. 358 00:22:49,680 --> 00:22:53,000 Speaker 1: People who had taken out loans to buy stock defaulted 359 00:22:53,040 --> 00:22:55,720 Speaker 1: on them, and in some cases had to declare bankruptcy. 360 00:22:56,640 --> 00:22:59,960 Speaker 1: Britain reportedly saw an increase in suicides in the way 361 00:23:00,080 --> 00:23:04,639 Speaker 1: of this financial collapse. Meanwhile, people who had bought early 362 00:23:04,840 --> 00:23:08,520 Speaker 1: and sold before the crash he mostly just kept quiet 363 00:23:08,560 --> 00:23:10,760 Speaker 1: about it. Okay, you don't. You don't hear a lot 364 00:23:10,800 --> 00:23:13,439 Speaker 1: of about the people, except for the officers of the 365 00:23:13,440 --> 00:23:17,119 Speaker 1: company who were accused of wrongdoing. You really don't hear 366 00:23:17,160 --> 00:23:19,320 Speaker 1: a lot of the people who sold at the right 367 00:23:19,359 --> 00:23:22,800 Speaker 1: time after having bought at the right time. Uh there 368 00:23:22,840 --> 00:23:26,040 Speaker 1: were also some people who sold their shares before the 369 00:23:26,080 --> 00:23:29,920 Speaker 1: price crashed, but then wound up buying more shares. One 370 00:23:29,920 --> 00:23:32,720 Speaker 1: of those was Sir Isaac Newton, and he is often 371 00:23:32,840 --> 00:23:36,479 Speaker 1: used as an illustration for how financially devastating this was. 372 00:23:37,400 --> 00:23:41,760 Speaker 1: After some initial skepticism about this whole setup, Newton had invested, 373 00:23:42,000 --> 00:23:44,800 Speaker 1: he had made about a hundred percent return on his 374 00:23:44,840 --> 00:23:47,000 Speaker 1: initial investment, and then he had gotten out of it, 375 00:23:47,920 --> 00:23:51,480 Speaker 1: but then he purchased more shares near the peak of 376 00:23:51,520 --> 00:23:55,440 Speaker 1: the bubble. According to his family lore, he lost about 377 00:23:55,480 --> 00:24:00,000 Speaker 1: twenty thousand pounds when the price collapsed, but more modern 378 00:24:00,000 --> 00:24:02,719 Speaker 1: analysis of his financial records suggest that it was closer 379 00:24:02,760 --> 00:24:07,159 Speaker 1: to ten thousand pounds. This is still a lot of money, 380 00:24:07,359 --> 00:24:09,560 Speaker 1: even if he did lose more than that, which would 381 00:24:09,600 --> 00:24:12,200 Speaker 1: be a lot more money he seems to have recovered. 382 00:24:12,280 --> 00:24:15,480 Speaker 1: He was rich when he died in seventy seven, with 383 00:24:15,520 --> 00:24:18,360 Speaker 1: an a state that was valued at about thirty thousand pounds. 384 00:24:19,000 --> 00:24:21,560 Speaker 1: One of the reasons that Newton became sort of the 385 00:24:21,640 --> 00:24:24,760 Speaker 1: poster child for the Soucia bubble. It's just that He 386 00:24:24,840 --> 00:24:28,239 Speaker 1: was Isaac Newton. He was a mathematician. He was the 387 00:24:28,280 --> 00:24:31,760 Speaker 1: warden and later the master of the Royal Mint. If 388 00:24:31,800 --> 00:24:35,320 Speaker 1: Isaac Newton, of all people could fall victim to this crash, 389 00:24:35,440 --> 00:24:39,280 Speaker 1: then surely no one could have foreseen it. Newton is 390 00:24:39,320 --> 00:24:43,280 Speaker 1: still widely quoted as saying I can calculate the motions 391 00:24:43,320 --> 00:24:46,200 Speaker 1: of the heavenly bodies, but not the madness of people, 392 00:24:46,640 --> 00:24:49,439 Speaker 1: when he described the rapid rise of the stock price 393 00:24:49,480 --> 00:24:52,800 Speaker 1: and the bubble's ultimate burst. But that quote may very 394 00:24:52,800 --> 00:24:57,040 Speaker 1: well be apocryphal, and the idea that nobody could possibly 395 00:24:57,119 --> 00:25:01,920 Speaker 1: have foreseen this is just inaccurate. In early seventeen twenty, 396 00:25:02,080 --> 00:25:06,359 Speaker 1: multiple publications warned that this escalating share price was just 397 00:25:06,480 --> 00:25:10,840 Speaker 1: not sustainable. On March thirty one, seventeen twenty, Member of 398 00:25:10,880 --> 00:25:15,280 Speaker 1: Parliament Archibald Hutcheson wrote quote, if the truth be as 399 00:25:15,359 --> 00:25:18,160 Speaker 1: I verily believe it is that there is no real 400 00:25:18,359 --> 00:25:22,879 Speaker 1: foundation for the present much less the further expected high 401 00:25:22,960 --> 00:25:26,720 Speaker 1: price of south Sea stock, and that the frenzy which 402 00:25:26,760 --> 00:25:30,160 Speaker 1: now reigns can be of no long continuance in so 403 00:25:30,240 --> 00:25:34,400 Speaker 1: cool a climate. And amongst the people hitherto so justly 404 00:25:34,560 --> 00:25:38,639 Speaker 1: famed for wisdom and prudence, I say If this be 405 00:25:38,760 --> 00:25:42,000 Speaker 1: the case, is it not the duty of a British 406 00:25:42,040 --> 00:25:46,160 Speaker 1: Senate to take all necessary precautions to prevent the ruin 407 00:25:46,359 --> 00:25:50,640 Speaker 1: of many thousands of families? And that our weekly bills 408 00:25:50,680 --> 00:25:54,320 Speaker 1: of mortality may not be filled with large numbers of 409 00:25:54,520 --> 00:25:58,919 Speaker 1: unhappy people who have hanged, drowned, or shot themselves. And 410 00:25:59,119 --> 00:26:04,080 Speaker 1: surely no honest, good natured man can enjoy with comfort 411 00:26:04,160 --> 00:26:08,840 Speaker 1: an estate, how immense soever, raised on such a foundation 412 00:26:09,000 --> 00:26:13,000 Speaker 1: as this. Hutchinson printed up and distributed a lot of 413 00:26:13,040 --> 00:26:15,920 Speaker 1: material about this, trying to warn people at his own expense. 414 00:26:16,640 --> 00:26:20,640 Speaker 1: Economists and economic historians have made all kinds of arguments 415 00:26:20,680 --> 00:26:24,440 Speaker 1: about what exactly caused the South Sea bubble to inflate 416 00:26:24,520 --> 00:26:29,040 Speaker 1: and burst, factoring in market forces, policies, and individual and 417 00:26:29,080 --> 00:26:33,160 Speaker 1: collective decisions. But the two prevailing ideas in the eighteenth 418 00:26:33,240 --> 00:26:36,760 Speaker 1: century where that it had been a deliberate fraud, or 419 00:26:36,800 --> 00:26:40,320 Speaker 1: that more emotional factors were at work, like greed, or 420 00:26:40,359 --> 00:26:45,320 Speaker 1: as Newton allegedly said, madness. In the face of public 421 00:26:45,400 --> 00:26:50,320 Speaker 1: outrage about alleged fraud, Robert Walpole was named Chancellor of 422 00:26:50,359 --> 00:26:54,040 Speaker 1: the Exchequer and was tasked with sorting all of this out. 423 00:26:54,640 --> 00:26:59,400 Speaker 1: Walpole again restructured the national debt, including establishing a sinking 424 00:26:59,560 --> 00:27:03,639 Speaker 1: fund that the nation paid into to help stabilize the economy. 425 00:27:04,119 --> 00:27:08,160 Speaker 1: Multiple committees investigated and issued reports on the bubbles rise 426 00:27:08,240 --> 00:27:12,480 Speaker 1: and collapse in seventeen one. One big source of criticism 427 00:27:12,560 --> 00:27:14,879 Speaker 1: was that a lot of officials who had promoted this 428 00:27:14,920 --> 00:27:18,320 Speaker 1: stock or worked on these debt swaps had taken bribes 429 00:27:18,400 --> 00:27:22,159 Speaker 1: to do so, although bribery was really routine at this point. 430 00:27:22,920 --> 00:27:25,480 Speaker 1: Directors of the board of the south Sea Company were 431 00:27:25,560 --> 00:27:30,879 Speaker 1: arrested and faced corruption trials. The Postmaster General was implicated. 432 00:27:31,240 --> 00:27:34,520 Speaker 1: Former Chancellor of the Exchequer, John A. Souby, who had 433 00:27:34,520 --> 00:27:38,080 Speaker 1: heavily promoted south Sea Company stock and had sold his 434 00:27:38,119 --> 00:27:40,800 Speaker 1: own shares at the peak, was expelled from the House 435 00:27:40,840 --> 00:27:44,520 Speaker 1: of Lords and imprisoned. In January of seventeen twenty one, 436 00:27:44,600 --> 00:27:47,720 Speaker 1: Parliament banned the former directors of the company from leaving 437 00:27:47,760 --> 00:27:51,760 Speaker 1: England and also prohibited them from serving as officers in 438 00:27:51,800 --> 00:27:55,080 Speaker 1: the south Sea Company, the East India Company or the 439 00:27:55,119 --> 00:27:59,520 Speaker 1: Bank of England. In August of seventeen twenty one, Parliament 440 00:27:59,560 --> 00:28:03,159 Speaker 1: passed an Act for making several provisions to restore the 441 00:28:03,200 --> 00:28:06,720 Speaker 1: public credit, which suffers by the frauds and mismanagements of 442 00:28:06,760 --> 00:28:09,880 Speaker 1: the late directors of the south Sea Company and others. 443 00:28:11,240 --> 00:28:14,600 Speaker 1: This was in part a relief act that canceled some 444 00:28:14,680 --> 00:28:17,359 Speaker 1: of the debts of people who had borrowed money to 445 00:28:17,480 --> 00:28:21,359 Speaker 1: buy south Sea stock, as well as canceling subscriptions for 446 00:28:21,400 --> 00:28:25,760 Speaker 1: stock purchases that still had outstanding payments. It also seized 447 00:28:25,840 --> 00:28:28,679 Speaker 1: the money that the company's directors had earned when the 448 00:28:28,720 --> 00:28:32,120 Speaker 1: share price increase, and it redistributed that money among people 449 00:28:32,160 --> 00:28:35,920 Speaker 1: who had suffered big losses. Some of the company officers 450 00:28:36,200 --> 00:28:39,320 Speaker 1: estates were also seized and sold, with most of that 451 00:28:39,400 --> 00:28:43,920 Speaker 1: money covering the south Sea Company's losses. At the same time, 452 00:28:44,200 --> 00:28:48,360 Speaker 1: Walpole's response was widely perceived as scapegoating some of the 453 00:28:48,360 --> 00:28:52,200 Speaker 1: people while shielding others from punishment. As a result, he 454 00:28:52,240 --> 00:28:57,080 Speaker 1: was nicknamed Screenmaster General. In spite of that, he effectively 455 00:28:57,120 --> 00:29:00,800 Speaker 1: became Britain's first prime minister before that term was even coined. 456 00:29:01,560 --> 00:29:04,680 Speaker 1: A lot of people also wrote about how greed had 457 00:29:04,720 --> 00:29:07,520 Speaker 1: been at the root of all of this. One of 458 00:29:07,520 --> 00:29:11,000 Speaker 1: those was Daniel Dafoe, who published this in the Complete 459 00:29:11,000 --> 00:29:15,280 Speaker 1: English Tradesmen Quote. Avarice is the ruin of many people 460 00:29:15,480 --> 00:29:19,520 Speaker 1: besides tradesmen, and I might give the Late south Sea Calamity, 461 00:29:19,600 --> 00:29:23,680 Speaker 1: for an example, in which the longest heads were most overreached, 462 00:29:24,080 --> 00:29:26,280 Speaker 1: and not so much by the wit or cunning of 463 00:29:26,280 --> 00:29:29,080 Speaker 1: those they had to deal with, as by the secret 464 00:29:29,240 --> 00:29:34,040 Speaker 1: promptings of their own avarice, wherein they abundantly verified an 465 00:29:34,080 --> 00:29:39,520 Speaker 1: old proverbial speech or saying all covet all lose. So 466 00:29:39,560 --> 00:29:43,760 Speaker 1: it was there, indeed, and the cunningest, wisest, sharpest men 467 00:29:44,080 --> 00:29:48,440 Speaker 1: lost the most money. Defel also wrote such works as 468 00:29:48,720 --> 00:29:53,080 Speaker 1: The Villainy of stock Jobbers. Detected jobber was the name 469 00:29:53,160 --> 00:29:56,440 Speaker 1: sometimes used for stockbrokers and sometimes for go betweens who 470 00:29:56,480 --> 00:30:02,440 Speaker 1: connected stockbrokers to ordinary British investors. Other people placed the 471 00:30:02,520 --> 00:30:08,600 Speaker 1: blame on naive or inexperienced investors. The government's encouragement of 472 00:30:08,640 --> 00:30:11,680 Speaker 1: people to buy south Sea Company stock had combined with 473 00:30:11,720 --> 00:30:14,680 Speaker 1: the use of coffee houses as a stock trading location 474 00:30:14,720 --> 00:30:17,640 Speaker 1: to make investing possible for people who had just never 475 00:30:17,720 --> 00:30:22,320 Speaker 1: done it before. This included people with more modest incomes, 476 00:30:22,520 --> 00:30:26,600 Speaker 1: and it included women. About twenty percent of the general 477 00:30:26,640 --> 00:30:31,440 Speaker 1: public investors in the south Sea Company were women. Consequently, 478 00:30:31,480 --> 00:30:35,240 Speaker 1: there was a lot of sexist commentary about women's involvement 479 00:30:35,320 --> 00:30:40,480 Speaker 1: in the market after the bubble burst. Propaganda, artwork, satirical writing, 480 00:30:40,520 --> 00:30:44,640 Speaker 1: and even playing cards also targeted immigrants, Jews, and non 481 00:30:44,760 --> 00:30:48,479 Speaker 1: conforming Protestants as people who should never have been involved 482 00:30:48,480 --> 00:30:52,280 Speaker 1: in the market in the first place. Therefore they were 483 00:30:52,320 --> 00:30:57,120 Speaker 1: to blame past podcast subject. William Hogarth published and engraving 484 00:30:57,440 --> 00:31:00,960 Speaker 1: called the south Sea Scheme in seventy one, so this 485 00:31:00,960 --> 00:31:03,960 Speaker 1: would have been one of his earlier works. The inscription 486 00:31:04,080 --> 00:31:07,080 Speaker 1: at the bottom alludes to this idea that this mixing 487 00:31:07,200 --> 00:31:10,920 Speaker 1: of women and immigrants and nonconforming Christians was involved in 488 00:31:10,960 --> 00:31:15,560 Speaker 1: the collapse. Quote here all religions flocked together, like tame 489 00:31:15,680 --> 00:31:19,680 Speaker 1: and wild fowl of a feather, leaving their strife religious bustle, 490 00:31:20,080 --> 00:31:23,440 Speaker 1: kneel down to play at pitch and hustle. Thus, when 491 00:31:23,440 --> 00:31:26,240 Speaker 1: the shepherds are at play, their flocks must surely go 492 00:31:26,320 --> 00:31:30,400 Speaker 1: astream the woeful cause it. In these times, honor and 493 00:31:30,480 --> 00:31:34,920 Speaker 1: honesty are crimes that publicly are punished by self interest 494 00:31:34,960 --> 00:31:39,200 Speaker 1: in villainy. So much for money's magic power guests at 495 00:31:39,200 --> 00:31:42,920 Speaker 1: the rest you find out more. By the mid nineteenth century, 496 00:31:42,960 --> 00:31:46,480 Speaker 1: people were looking at this in terms of math psychology. 497 00:31:46,560 --> 00:31:50,720 Speaker 1: For example, in eighteen forty one, Scottish journalist Claude McKay 498 00:31:50,840 --> 00:31:55,960 Speaker 1: published Memoirs of Extraordinary Popular Delusions and the Madness of Crowds. 499 00:31:56,600 --> 00:31:59,800 Speaker 1: He described the south Sea Bubble this way quote. During 500 00:31:59,840 --> 00:32:04,040 Speaker 1: the progress of this famous bubble, England presented a singular spectacle. 501 00:32:04,200 --> 00:32:07,760 Speaker 1: The public mind was in a state of unwholesome fermentation. 502 00:32:08,360 --> 00:32:11,200 Speaker 1: Men were no longer satisfied with the slow but sure 503 00:32:11,280 --> 00:32:16,000 Speaker 1: profits of cautious industry. The hope of boundless wealth for 504 00:32:16,040 --> 00:32:20,360 Speaker 1: the morrow made them heedless and extravagant. For today, a 505 00:32:20,560 --> 00:32:24,280 Speaker 1: luxury till then unheard of was introduced, bringing in its 506 00:32:24,320 --> 00:32:29,719 Speaker 1: train a corresponding laxity of morals. The overbearing insolence of 507 00:32:29,760 --> 00:32:33,840 Speaker 1: ignorant men who had arisen to sudden wealth by successful gambling, 508 00:32:34,360 --> 00:32:38,200 Speaker 1: made men of true gentility of mind and manners blush 509 00:32:38,840 --> 00:32:42,000 Speaker 1: that gold should have the power to raise the unworthy 510 00:32:42,160 --> 00:32:46,560 Speaker 1: in the scale of society. Although the immediate effects of 511 00:32:46,600 --> 00:32:49,960 Speaker 1: the south Sea bubbles collapse were huge, it does not 512 00:32:50,240 --> 00:32:53,320 Speaker 1: appear to have caused a long term recession or depression 513 00:32:53,320 --> 00:32:56,520 Speaker 1: in Britain. The south Sea Company sold most of its 514 00:32:56,600 --> 00:33:00,400 Speaker 1: rights to the Spanish government in seventeen fifty. For a while, 515 00:33:00,600 --> 00:33:04,360 Speaker 1: the company moved into whaling, but eventually it mostly retained 516 00:33:04,400 --> 00:33:08,880 Speaker 1: only its purpose for managing governmental debt. It existed as 517 00:33:08,880 --> 00:33:13,200 Speaker 1: a company until eighteen fifty three. That was south Sea Bubble, 518 00:33:13,440 --> 00:33:17,200 Speaker 1: something that, Uh, it's weird to consider still. I mean 519 00:33:17,240 --> 00:33:19,360 Speaker 1: we talked about a little bit earlier in the episode. 520 00:33:20,040 --> 00:33:23,120 Speaker 1: Weird is probably not the right word that all of 521 00:33:23,160 --> 00:33:27,840 Speaker 1: this was essentially tied up in a slave trading company. Uh. 522 00:33:27,880 --> 00:33:31,600 Speaker 1: There are a lot of articles that just seemed to 523 00:33:31,720 --> 00:33:36,560 Speaker 1: not say that part. Uh. For a while, there was 524 00:33:36,560 --> 00:33:39,440 Speaker 1: a perception that this whole thing was basically a giant 525 00:33:40,240 --> 00:33:44,560 Speaker 1: scheme and that there was no actual work being done 526 00:33:44,600 --> 00:33:47,640 Speaker 1: by the south Sea Company. But that is just not true. 527 00:33:47,680 --> 00:33:51,520 Speaker 1: It was definitely actively involved in the trans atlantic slave 528 00:33:51,560 --> 00:33:54,160 Speaker 1: trade and had a monopoly on Britain strade with the 529 00:33:54,160 --> 00:33:57,160 Speaker 1: Spanish colonies, and like that's that was not something that 530 00:33:57,200 --> 00:34:02,400 Speaker 1: existed only on paper. That is something that existed for real. Uh. 531 00:34:02,440 --> 00:34:05,160 Speaker 1: And so of course the lives of the people who 532 00:34:05,160 --> 00:34:09,160 Speaker 1: were captured and transported across the Atlantic and enslaved are 533 00:34:09,320 --> 00:34:15,040 Speaker 1: underpinning all of this. On that pepper note, Um, do 534 00:34:15,200 --> 00:34:17,799 Speaker 1: you have listener mail as well? I do? I do? 535 00:34:18,000 --> 00:34:20,520 Speaker 1: I have a listener mail from Emily. Emily says Hi, 536 00:34:20,640 --> 00:34:23,960 Speaker 1: Holly and Tracy. Longtime listener, first time writer. Though I'll 537 00:34:23,960 --> 00:34:26,279 Speaker 1: admit I'm a bit behind on episodes, I knew how 538 00:34:26,320 --> 00:34:29,640 Speaker 1: I had to write after listening to the October edition 539 00:34:29,760 --> 00:34:33,160 Speaker 1: of Unearthed. In part one, you covered a story about 540 00:34:33,239 --> 00:34:36,880 Speaker 1: Jeremy the pigeon who saved World War once lost Battalion. 541 00:34:37,480 --> 00:34:40,399 Speaker 1: My great grandfather was one of the one ninety four 542 00:34:40,440 --> 00:34:43,440 Speaker 1: men who survived the World War one lost battalion, so 543 00:34:43,600 --> 00:34:46,759 Speaker 1: Cheremy and the battalion story hold a very important place 544 00:34:46,800 --> 00:34:50,600 Speaker 1: in my family's history. In the episode, you wondered whether 545 00:34:50,760 --> 00:34:54,319 Speaker 1: you'd previously covered this lost battalion on the show. I 546 00:34:54,360 --> 00:34:57,399 Speaker 1: can confirm that you have not, as I've listened for it. 547 00:34:57,520 --> 00:35:00,399 Speaker 1: In every episode of the archive you did would cover 548 00:35:00,520 --> 00:35:04,440 Speaker 1: a World War two lost battalion, and I experienced emotional 549 00:35:04,480 --> 00:35:07,560 Speaker 1: whiplash when that episode came out, thinking you'd finally done 550 00:35:07,560 --> 00:35:11,000 Speaker 1: an episode on quote my lost battalion. I hold out 551 00:35:11,040 --> 00:35:12,920 Speaker 1: hope that one day you'll do a full episode on 552 00:35:13,040 --> 00:35:17,000 Speaker 1: this lost battalion. My family was incredibly fortunate to honor 553 00:35:17,040 --> 00:35:19,840 Speaker 1: the legacy of the lost Battalion by visiting the site 554 00:35:19,880 --> 00:35:23,160 Speaker 1: of the battle on the one dredth anniversary in ten. 555 00:35:23,880 --> 00:35:26,400 Speaker 1: It was surreal to stand in the ruins of the bunker. 556 00:35:26,560 --> 00:35:30,080 Speaker 1: Photos attached where my great grandfather, a second lieutenant, was 557 00:35:30,120 --> 00:35:33,280 Speaker 1: with Major Whittlesey when he received the orders that launched 558 00:35:33,320 --> 00:35:36,600 Speaker 1: the offensive. We've also visited Jeremy while he is on 559 00:35:36,640 --> 00:35:39,840 Speaker 1: display at the Smithsonian, although he's looking a little worse 560 00:35:39,920 --> 00:35:44,080 Speaker 1: for wear a hundred years later. Photo attached. Ironically, I 561 00:35:44,120 --> 00:35:47,120 Speaker 1: did not miss the Lost Battalion in history class. My 562 00:35:47,200 --> 00:35:49,680 Speaker 1: world history teacher showed us a two thousand one A 563 00:35:49,800 --> 00:35:52,000 Speaker 1: and E film about the battle. Shout out to Mr 564 00:35:52,080 --> 00:35:55,520 Speaker 1: de Bruin, and these days, my sister, a high school 565 00:35:55,560 --> 00:35:58,719 Speaker 1: history teacher, is also ensuring students don't miss the Lost 566 00:35:58,719 --> 00:36:01,760 Speaker 1: Battalion in history class. Thank you for all the hours 567 00:36:01,760 --> 00:36:05,560 Speaker 1: of education and entertainment. Attaching favorite photos of our beloved 568 00:36:05,560 --> 00:36:08,640 Speaker 1: mini assured Dots and Daisy in the hope it brings 569 00:36:08,640 --> 00:36:10,920 Speaker 1: you a moment of joy, Best Emily, Thank you so 570 00:36:11,000 --> 00:36:14,880 Speaker 1: much for all these pictures, Emily. I really appreciated seeing 571 00:36:14,880 --> 00:36:17,520 Speaker 1: the ones of the battle site and Jeremy, and of 572 00:36:17,560 --> 00:36:23,760 Speaker 1: course seeing as sleeping Dots Dots. Daisy is so cute. 573 00:36:24,680 --> 00:36:27,680 Speaker 1: I want to, like, I don't know, I want to 574 00:36:27,760 --> 00:36:33,480 Speaker 1: kiss Daisy's face real fa um. So, thank you so 575 00:36:33,640 --> 00:36:36,759 Speaker 1: much for sending that email those pictures. If you would 576 00:36:36,760 --> 00:36:39,080 Speaker 1: like to send us an email about this certainly other 577 00:36:39,120 --> 00:36:42,920 Speaker 1: podcasts where at History podcast at i heart radio dot com, 578 00:36:43,040 --> 00:36:45,600 Speaker 1: we all over social media. Missed in History. There's where 579 00:36:45,600 --> 00:36:48,759 Speaker 1: I'll find our Facebook, Twitter, Pinterest, and Instagram. And you 580 00:36:48,800 --> 00:36:51,759 Speaker 1: can subscribe to our show on iHeart radio app and 581 00:36:51,840 --> 00:36:59,080 Speaker 1: wherever else you like to take your podcast. Stuff you 582 00:36:59,120 --> 00:37:02,120 Speaker 1: missed in History class is the production of I heart Radio. 583 00:37:02,160 --> 00:37:05,000 Speaker 1: For more podcasts from I heart Radio, visit the iHeart 584 00:37:05,080 --> 00:37:08,160 Speaker 1: Radio app, Apple Podcasts, or wherever you listen to your 585 00:37:08,200 --> 00:37:09,800 Speaker 1: favorite shows. H