Sweet begins with a succinct and cogent background to the South Sea Bubble, one that will surely appease the academic and layman alike. Most pertinently, she outlines the thwart political tension undergirding the financial collapse. Conventionally the South Sea Company has been designated as a bastion of the Tory party. Indeed, it was probably set up to rival the Whiggish East India Company. The country’s Chancellor of the Exchequer, Robert Harley, a Tory, took a leading role in setting up the newer joint-stock company in response to a growing dissatisfaction with the lending power of the Bank of England amid spiralling debts. Skirmishes with France and Spain had put England into dire financial uncertainty. Bragg’s panel were keen to point out that the move to push public debts into the hands of private companies was actually a logical one, and perhaps inevitable. The administrative structures involved with the Bank of England, Sweet observes, were notoriously restrictive and arcane, even though the institution had been set up as recently as 1694. The South Sea Company, by contrast, possessed the business acumen to streamline administration in order to get money moving. And they would happily bribe members of any political persuasion, not merely the Tories.
Murphy, next, takes us back to earlier examples of “bubbles”, thereby broadening out the historical, and geographical, context. As Murphy rightly reminds us, a number of bubbles popped up on the continent. As an illustration, she briefly discusses the “Tulip mania” in Holland. In the 1630s, tulips had become highly desirable goods, and so their prices soared on an unprecedented scale. As the traders had little sense of how to handle the demand, amid new marketing and financial ploys, boom led to a bust. Murphy’s example was well-chosen as later in the programme she points out that many of the famous satirical images of the London bubble were in fact based on the much older Dutch prints. And so, even if the South Sea Bubble has become a valuable starting point, or at least a key historical juncture, for many historical surveys of financial speculations in England, it is by no means the first of its kind. Indeed, each of the panellists takes pains to place the British market within a European context. Paul addresses the impact of the French and Dutch financiers on the London market. In particular, she scrutinises the influence of the economist John Law – or “Scottish gambler”, as Bragg prefers – as a financial minister in France. Law pioneered a tranche of new strategies, especially in marketing, and he sought to consolidate disparate trading companies into one large organisation. For a brief time he managed to get the French market moving quickly and, inevitably, a boom ensued. Speculators in London aped his ideas, but, curiously, the “contagion effect” (in Paul’s words) pushed each market into a downward if manageable spiral. So why does the South Sea Bubble loom so large in eighteenth-century studies, asks Bragg, if it’s neither unique nor a complete disaster? The panel offer a remarkably concise yet comprehensive bank of reasons, many of which have yet to be explored fully. First, the bubble was the first of its kind in England, and so it duly occupies pride of place in any history of economics. Second, the collapse coincided with the Licensing Act, hence with the rapid rise of print culture. The abundance of adverts, satires and financial pamphlets has long attracted historians and literary critics alike. Indeed, the bubble occurred in arguably the golden age of English satire. Third, the crash has long been viewed as symptomatic of the Walpolian regime, during which intense national growth went hand in hand with a pervasive culture of corruption. The financial collapse represents at once the over-eager progress and perils of the British Empire.
On a related note, Paul considers the slave trade context, a key consideration that has often been overlooked. When the 1713 Treaty of Utrecht gifted monopolistic trading rights to the Spanish Empire the South Sea Company managed to secure their business largely due to their well-known success in meeting quotas. The company purchased roughly 34,000 slaves, principally through the Royal African Company. Of these slaves approximately 30,000 survived the passage to the New World. Approximately 11% of the men and women died; gruesome as the implication of this figure is, it was relatively much lower than that of rival traders. Bragg cuts off this line of enquiry, unfortunately, just as Paul seemed to be gearing up to her major contribution to the debate. After all, as she might have said, we mustn’t forget that the South Sea Company’s trade in human slavery actually peaked during 1725, five years after their apparent financial collapse. Fortunately, the panel do spend some time with another neglected theme surrounding discussions of the South Sea Bubble: gender. As is well-known, a number of famous people bought shares. The names of Newton, Pope, and John Gay alone secured a great deal of interest. The Duchess of Marlborough, famously, worked the market well; she profited sufficiently before selling her shares at just the right time. She was not the only woman involved, though. In fact, a large proportion of investors were women from all walks of life, from the grimiest street-corners to the grandest country houses. In fact, contemporary satirists routinely mocked female investors as common prostitutes and, wittily, vice versa. Such attacks have long undermined the popular conception of the role of women in the business world, as Murphy argues here.
To be sure, the most intriguing points the panel raises gesture towards lessons for the modern world. At root, the South Sea Company shared an ineffable problem with current financial institutions: there existed no mechanism to reign in hubris or greed. A boom invariably leads to a bust not because the infrastructure cannot support it, but because speculators go too far. Murphy even makes a delightful comparison between the minor companies set up in the eighteenth century, many of which had whimsical names that lampooned the lack of physical property in the credit exchange, and the dot.com craze of the 1990s. Frustratingly, though, Bragg quickly interjects that “that’s a different programme”, and insists on returning to a narrow discussion of the South Sea Bubble as though, well, it existed in a bubble. While disavowing historical parallels, most of Bragg’s questions are in fact steeped in modern assumptions. Is there one clear villain? he asks. Well, no, Murphy rebuts. There was no equivalent of “Black Tuesday”, no master criminal upon whom the accusation of a Ponzi scheme might be pinned. After all, as the panel argue in unison, the South Sea Bubble was not as calamitous as one might assume. Indeed, the conventional narrative of the so-called collapse is perhaps a classic example of a history written by the losers. Those men and women who lost money, particularly in large amounts, of course spoke up. Satirists ran riot. However, the profiteers, understandably, kept quiet. Did the country crumble? No, Murphy asserts; Britain “moved on”. As for the South Sea Company, it continued to eke out an existence well into the Victorian era by turning to the risky but rewarding (financially speaking) whaling industry.
So why did the bubble burst, if at all? Again, the panel are admirably concise and cogent in offering reasons. First, substantial foreign funds ebbed away. Bubbles were drying up, as it were, in the major trading cities Amsterdam and Paris. Second, the mechanism of cheap credit lending shrank. Third, and perhaps most disastrously of all, the South Sea Company pushed for the Bubble Act, which forbade the establishment of other joint-stock companies without Royal charter. The effect on the market came rapidly: it seized up. Nonetheless, as this lively programme shows, discussion of the South Sea bubble remains as tantalising as ever.