Abstract

The South Sea Bubble is one of history's most iconic economic events. While much ink was spilled during the bubble year to make sense of events as they unfolded, commentators were left scrambling for ways to grasp what happened because no one had ever experienced a stock market bubble before. This article focuses on how the London press covered the events that later became known as the South Sea Bubble. A review of every newspaper article in which the company was mentioned during the year of 1720 captures how the movement of the price of the company's stock was interpreted, as well as how it was related to broader social, political, and geopolitical affairs.

Introduction

The South Sea Bubble is one of history's most iconic economic events.1 During the year 1720, between March and June, the price of South Sea Company stocks first soared from £170 to £1,000 only to plummet to £200 by September. The bubble is said to have marked the arrival of modern financial capitalism, and it is often used to demonize finance as imaginary, irrational, and corrupt. To many contemporaries, the bubble came to symbolize a new era, one in which traditional values were under assault. As witnessed by the newspaper quote in the title of this article, the ordinarily courageous and noble English people (lions) had fallen victim to the newly ascendant clever and devious stock-jobbers (owls) (Trenchard and Gordon [1720] 1995: 57).

The English financial revolution coincided with the emergence of the public sphere, in which the London newspapers, together with the city's vibrant coffee shop culture and the empowerment of Parliament, played a central role in shaping public opinion (Habermas 1991; Cowan 2005; Pincus 2007). Indeed, many scholars have highlighted the coproduction of the financial revolution and the birth of the public sphere (Carruthers 1996; Braddick 2000; Shiller 2000; Murphy 2009; Wennerlind 2011). In exploring the South Sea Bubble, scholars often draw on journalistic writings, along with newsprint, printed ballads, poems, satirical plays, novels, and, most importantly, pamphlets. Together, these sources are used to reconstruct the drama of history's first stock market bubble. The characteristic hyperbole of ballads, poems, and plays provides historians with particularly vivid soundbites. Pamphlets are also popular among historians, as they often provide impassioned, one-sided, politically inflected arguments that were aimed at shaping public opinion and ultimately decision-making in Parliament. The purpose of this article is to investigate what happens to our understanding of the bubble if we focus only on how it was portrayed in the London press.2 By drowning out the clamor of the ballads and the party strife of the pamphlets, focusing exclusively on the day-to-day coverage, this article captures how London journalists narrated and editorialized the events related to the South Sea Bubble.3 What counted as news in this new culture of credit? How did journalists curate the information to create newsworthy content? Journalism is often viewed as the first draft of history, but in this case, given that no one had ever experienced a stock market bubble before, journalism also provided the first effort to shape the public's understanding of the causes of stock market booms and busts.

Based on a reading of every article in which the South Sea Company was mentioned between January 1 and December 31, I provide a sense of the “real-time” narrative of the bubble. Because of the regularity and continuity of newsprint, the journalistic accounts were epistemologically different from ballads, novels, and pamphlets. The press coverage was not necessarily more objective or accurate; much of it was indeed highly opinionated. But the ongoing commentary created a particularly vivid picture that can be compared and contrasted with other accounts of the bubble. While the perception of the South Sea Bubble as a cataclysmic and devastating event has been the norm since 1721, the historian Julian Hoppit recently challenged this version of history as based on mythmaking. Hoppit (2002: 158) argues that the ill effects of the bubble were limited to people in the realms of “high politics, high finance, and high society,” and therefore left the general public rather unaffected. Hoppit challenges long-standing notions that (1) investors “blindly left behind all reason and prudence, scepticism and caution”; (2) the bubble “produced considerable social mobility by enriching many and impoverishing more still”; and (3) the “collapse led to widespread and profound economic dislocation” (145). In developing his argument, Hoppit entirely ignores the London press. Yet, as this article shows, the coverage in the London newspapers in many ways corroborates Hoppit's interpretation of the bubble.

A Brief Note on Sources

The primary source materials for this article are the major London newspapers published during the year 1720. Since the expiration of the Licensing Act in 1695, there had been a steady increase in print media in London. The government's own London Gazette was now joined by a growing number of privately issued newspapers. Among the eighteen London newspapers in circulation during 1720, some daily, some triweekly, and some weekly, there were an estimated forty-four thousand newspapers published every week (Barker 2014: 29–31). Literacy rates for adult males in England were approximately 45 percent by the start of the eighteenth century, with rates likely to have been much higher in London, particularly among the professional classes (Cressy 1980: 176). Given that multiple people read the same copy of a paper, and it was commonplace that papers were read aloud in coffeehouses, it is estimated that each paper reached ten to twenty people. This suggests that a large share of London's 674,000 people was regularly informed by newsprint (Dale 2004: 15).

The papers that most commonly mentioned the South Sea Company during 1720 were the London Gazette, Daily Courant, Daily Post, London Journal, Evening Post, Mist's Weekly Journal or Saturday Post, Flying Post, and Post Boy. While some of these newspapers had explicit political allegiances—the London Gazette and the Flying Post were pro-Whig, and Mist's Weekly Journal or Saturday Post leaned Tory—they were cautious about expressing strong political viewpoints. Even though censorship rules had been lifted, newspapermen and publishers were still subject to arrests, fines, pillorying, or imprisonment for libel. Imprisoned newsmen might have to wait for a shift in government before they were released. Newspapers thus remained rather “safe and bland,” at least in comparison with the pamphlet literature, in which much of the battle over public opinion was waged (Murphy 2009: 92; Clarke 2004: 48). This pattern began to change toward the end of 1720. Once the political wranglings over the handling of the South Sea affair intensified during 1721, the discourse took on a different tone. From November 1720, John Trenchard and Thomas Gordon's articles in the London Journal, later published as Cato's Letters, and Nathanial Mist's Weekly Journal became major irritants to the Walpolian government.

The newspapers were generally six pages long—a length that allowed publishers to circumvent the 1712 Stamp Act (Black 1987: 8–11). The front page often contained a lead article offering social or moral commentary on the follies of humanity, often cloaked in satire. Drawing on the example set by Joseph Addison and Richard Steele's short-lived, yet highly influential, Spectator (1711–12), newspapers in 1720 often printed opinion pieces as letters to the editor, penned by either anonymous readers or familiar fictional characters, such Philalethes or Cato. As these characters appeared regularly, they were known to represent particular points of view. After the lead-off article, the rest of the paper contained news articles and advertisements, printed in two columns per page. The anonymous and impersonal articles were generally brief, anywhere between two and twenty lines (Black 1987: 19). Newspapers relied on news gatherers, who were dispatched to public places, such as coffeehouses, taverns, and alehouses, where they recorded bits of information, rumors, and stories. Incidentally, these were also places where newspapers were read, both in private and aloud (Clarke 2004: 42). Newsprint and coffeehouses thus reinforced each other. News was also sought from government offices, corporate headquarters, the Royal Exchange, the London docks, and from foreign correspondents. Topics were not organized according to themes or order of importance but seem to have been entered in the order that they were submitted. Financial news, to the extent that it was published, often appeared along with stories about missing animals, tales from Newgate prison, or reports from foreign correspondents in Paris, Madrid, Hamburg, or Amsterdam. The news items, regardless of topic, rarely contained much background material, explanation, or analysis. The paid advertisements contained information about the sale of anything from medicines to embroidered silks, as well as occasional plugs for the publication of pamphlets, ballads, and playing cards pertaining to the South Sea Bubble.

The South Sea Company: A Brief History

The South Sea Company's notoriety stems from its role in the financial turbulence of 1720. What is less well known is that the company was conceived a decade earlier during another financial crisis, the so-called Loss of the City (Hill 1971). At that time, the instruments introduced during the English financial revolution were stretched to the limits. Many of the outstanding, publicly traded government bonds issued to finance England's two-decade-long war against France were now trading far below par (Dickson 1967). At a moment when England was in a position to strike a fatal blow to the French and force them to accept a demeaning peace to the War of Spanish Succession, the loss of faith in public credit had made it more expensive for the English government to raise the funds necessary to complete the victory. The loss of confidence in public credit was sparked when the remarkably successful ministry of Sir Sidney Godolphin and John Churchill, the Duke of Marlborough, fell out of favor with Queen Anne. Godolphin was replaced by Robert Harley, soon to become the Earl of Oxford, as the new prime minister. His first order of business was to find a swift solution to the crisis of public credit.

Harley's plan was to launch the South Sea Company, or more precisely, The Company of the Merchants of Great Britain Trading to the South Seas and Other Parts of America and for Encouraging the Fishery. The company was given the right to create a capital stock of £9,471,325, the exact amount of the outstanding debt the company was designed to absorb. Even though these bonds, issued by the navy, army, ordnance, and transportation departments, were trading at a heavy discount, the company offered to trade its shares for the government bonds at par. That is, the holder of a £100 bond trading at £65 was offered a stock in the company with the nominal value of £100. The treasury committed itself to paying the company an interest of 6 percent on the debt absorbed, secured by revenues from the excise tax on wine, vinegar, and tobacco. More importantly, the company was offered the Asiento de Negros, a monopoly contract to deliver African captives to Spanish America, where they would be sold into slavery.

The company was formed in 1711, but it had to wait almost two years for England to formally obtain the Asiento as part of the Treaty of Utrecht (1713). In the meantime, the company launched its financial conversion scheme, to the seeming delight of bondholders. By the end of the second month, two-thirds of the debt had been converted. Recognizing that his scheme would work only if the investing public formed a favorable impression of the company's future trading prospects, Harley employed a distinguished propaganda staff, including the two great Augustan writers, Daniel Defoe and Jonathan Swift. Defoe sang the praises of the South Sea Company, calling it a project “formed with great Wisdom and Publick Spirit by the Prime Minister.” He added, “Bringing so great an Undertaking so near Perfection, in so short a Time, may well be reckon'd among the Wonders of [Queen Anne's] glorious Reign” (Defoe 1711: 5, 37).

As the stock started trading, it initially hovered around £65, reflecting the heavy discount of the bonds. Before long, however, it started to inch upward. Rising expectations of vast profits from the slave trade gave the stock a positive momentum. The company was contractually obliged to deliver 4,800 African captives annually for the next thirty years. It was also allowed to send one five-hundred-ton ship of British-made manufactures to the annual fair in Spanish America, a privilege that many saw as not only valuable in itself but also an opportunity to engage in the smuggling of English goods. After having hovered around £90 for many years, the stock finally reached £100 in May 1715. Although Harley had failed to hang on as prime minister, his scheme had now been proved a success. The company had pulled off a massive debt-for-equity conversion and launched a major slave-trading business (Palmer 1981). At this point, any remaining criticism of the financial viability of the scheme dissipated. Although it is not the topic of this article, it should be noted that there was never much concern expressed in newspapers or pamphlets about the immorality or inhumanity of the company's slave trade (Wennerlind 2011: chap. 6).

Around the same moment, across the English Channel, the Scotsman John Law had embarked on an ambitious project. He had witnessed how credit had enabled Britain to pay for armies and fleets on a scale that enabled the three-times smaller and less populous nation to ultimately defeat its neighbor in a two-decade-long war. Very much in the spirit of the Bank of England and the South Sea Company, Law launched a bank that he would soon merge with the Mississippi Company, which held the monopoly rights on trade to the vast French-held Louisiana territory, stretching from the Appalachians to the Pacific Ocean. Soon he added the Senegal Company and the Company of Africa, both of which were engaged in the Atlantic slave trade. Moreover, similar to the South Sea Company, the Mississippi Company converted substantial amounts of outstanding government debt into company stock. In August 1719, Law reached an agreement with the French state to incorporate the entire national debt, amounting to a staggering 1.5 billion livres (about £400 million). This instantly restored France's public credit and made Law the most powerful person in France. Debt had become an asset, and Law had made the most of it (Murphy 1997).

The success of Law in Paris made the South Sea Company pay attention. Since it no longer enjoyed the right to trade to Spanish America, a consequence of war breaking out between England and Spain in 1718, the company lacked a source of revenue. Wheels were therefore put in motion to copy Law's latest move. In 1719, the company made a bid to the government to convert another £3 million worth of annuities into its capital stock. The company was given the privilege to issue enough £100 shares to absorb the said debt. However, as the shares were now trading at £114, the company did not have to use all the allotted shares for the conversion. Instead, it could sell the remaining shares for cash. This netted the company a handsome revenue and, more important, whetted the directors' appetite for more. Like Law, they soon made a massive bid to take over the entire English public debt, amounting to more than £30 million. In the meantime, as the Bank of England became worried about the South Sea Company becoming a financial behemoth, it entered the fray by making a counterbid. In the end, the company prevailed, but only after promising to pay the government £7.5 million for the right to take over the debt. As long as the share prices kept on appreciating, the company would have plenty of stocks left over, which it could sell for cash, allowing it to easily pay off the government.

The company started converting bonds into stocks in April 1720 (the first of three conversions) and simultaneously started selling stocks for cash (one of four such money subscriptions). Aided by the company's installment sales, direct loans, bribes, and promises of generous dividends, interest in the stock was high. It was not until the end of May, however, that the shares really started to appreciate rapidly (see fig. 1). A general financial euphoria had now gripped the London-Amsterdam-Paris triangle (Neal 1990). In England, it was not only the South Sea Company shares that rose quickly. Shares in the Bank of England and East India Company also appreciated, by 60 percent and 70 percent respectively, between January 1 and June 23, while the Royal African Company's shares skyrocketed by 483 percent, not far from the 498 percent increase of the South Sea Company share (Dale 2004: 107). The stock market was also inundated by what we today call initial public offerings (IPOs). Starting in the fall of 1719, but intensifying during the spring of 1720, some 190 new joint stock companies had been launched, promising vast profits from engaging in anything from construction and mining to machine guns with square bullets and alchemical transmutations of lead into gold. Only four of the so-called bubble companies survived the year.

The price of South Sea Company shares peaked at £1,000 by the end of June. After holding steady for most of July, August brought on an adjustment, only for everything to come crashing down in September. Law's scheme was in a similar predicament. The difference between the two crashes was that during the aftermath the English government acted quickly and brokered a private bailout of the company. The Bank of England and the East India Company were ordered to absorb part of the South Sea Company shares, which prevented them from losing all value (Dickson 1967: chap. 7). By the end of the year, the South Sea Company shares traded at £220, while the Mississippi Company shares had essentially become worthless. There was much political wrangling surrounding the South Sea Company during 1721, but eventually the company found itself back on its feet. Once the war with Spain came to an end, the company restored its slave trade to South America, sending an additional nineteen thousand African captives across the Atlantic, as well as launching a side business of whaling off the coast of Greenland. The company lost the Asiento in 1750 and was finally liquidated in 1853 (Paul 2011: chap. 9).

The Lead-Up (January to April)

On the first day of what would become a fateful year for the South Sea Company, the company's shares traded at £127, not far from where they had been hovering for the last five years. The company's year in the news began with an occasional mention of relatively mundane matters such as reports of the company physician stationed in Vera Cruz dying and the house of one of the directors, William Astell, burning down. On January 9, there was an article in the Weekly Journal reporting that there “is a great deal of Noise” about a proposal by the South Sea Company to take in various annuities into its capital stock, but nothing “more has been made publick.” This notice appears between two news stories: one about a Dutch East India ship lost at sea and one about two highwaymen robbing a coach, getting away with “thirty Guineas in Gold, ten Pound in Silver, besides two Gold Watches.”4 Another newspaper expressed a certain suspicion of the South Sea Company directors' motivation behind the conversion scheme. The anonymous author suggested that lately their pursuit of profits had metamorphosized into a quest for political power. By allowing the company to absorb the entire national debt and thereby committing the government to use such a large share of its tax revenues to pay the interest to the company, the directors would no longer be just managing trade and commerce, they would emerge as a powerful political force.5 On January 16, various newspapers reported that the directors held a “great Meeting to settle their Schemes, by which it is said, they are to take 30 Millions of Publick Debts into the Stock.”6 As noted above, the Bank of England became concerned about the implications of the South Sea Company becoming such a dominant financial power. In a January 29 article, it was reported that should the South Sea scheme materialize, it would be the end of the Bank—“no Corporation could stand against so Great a Body.”7 The only remaining notice in the press in January regarding the company was a reference to its planned dividends. The month ended with the stock price essentially unchanged. Thus far, the company was clearly not a major preoccupation of the London press.

The Court of Directors met on January 27 and resolved to pursue the absorption of £30 million of outstanding annuities. Multiple papers reported that a bill to that effect would be presented to Parliament before too long. This sparked a two-week run-up of the South Sea stock, reaching £184 by February 18. Only a few newspapers reflected on this remarkable rise (35 percent). In the Weekly Packet, after a report of a fire breaking out at Christ Church College at the University of Cambridge, there was a brief notice that “the sudden rising of our South-Sea Stock has been a very great Surprize to abundance of People.” It also noted, rather hyperbolically, that those who missed out on this quick rise were “ruin'd and broke.”8 On the same day, February 13, the Weekly Journal published a longer piece about how the “Gamesters” of Exchange Alley had turned stock trading into a game of “Box and Dice.”9 Investors, the article complained, were far too gullible, hoping for quick gains by engaging in risky speculations. All too often, this ended in disaster—one merchant reportedly lost £40,000 and another lost £30,000. Some, however, made fortunes in the prevailing bull market. The Post Boy mentioned one “very worthy Citizen,” known for his generosity to the community, who had made some £20,000, “to the great Joy of all his Friends, more especially of those Persons who are Necessitous Objects.”10

Rounding out the still relatively limited London press coverage of the South Sea Company in February was an advertisement for the publication of a pamphlet that compared the company's proposal for absorbing the public debt to that of the Bank of England's counterbid, and two articles mentioning how the South Sea Company was rapidly becoming a copy of Law's Mississippi Company. Related to the latter, a number of newspapers noted that a “fine Lady” had showed up at a masquerade in the Hay-Market wearing a “very odd comical Dress.” She told onlookers that “she came from Missisippi, and was going to be married to the South Sea.”11 With the flare of Augustan wit, the masquerading woman simultaneously ridiculed both companies.

February also saw the publication of a short, but potentially devastating, article in the Weekly Journal, in which the underlying logic of the South Sea Company was scrutinized. The article inquired as to what the eventual result would be of the company exchanging its shares, then valued at £200, for annuities valued at £100? Given that the South Sea Company, at least for the moment, did not have any other sources of revenue than the interest payments from the government, why should the public debt be worth more in the hands of the company than in the hands of the public? The author could have made the case, as historians subsequently did, that because the government might be more likely to service a debt owed to a powerful company than individual investors, annuitants might prefer owning shares. It was also possible that the national debt was more valuable in the company's hands because it was cheaper for the government to administer a consolidated debt. It is also possible that shares were more liquid and thus less risky than annuities. None of these explanations were provided.

The month of March began with the London press continuing its sparse coverage of the South Sea Company. On the basis of the limited frequency and extent of the articles, no one could have predicted that something remarkable was in the making. The relationship between the company and the Bank of England came up in the reporting. The Weekly Packet indicated that the Bank and the company were negotiating “with great Warmth” and that the stock prices of both corporations held their ground.12 There were also reports on the flow of capital between Paris and London.13 It is clear that the papers viewed this as a zero-sum game. If the Mississippi Company attracted more funds, the South Sea Company would be on the losing end. Later in the month, two articles reported on investors selling their Mississippi stock and moving their investment capital from rue de Quinquampoix to Exchange Alley. A letter from Paris, published in the Daily Post, predicted that the exuberance surrounding John Law was abating, and before the “Year is at an End, the Affair of the Mississippi Stock will sink very much lower.”14 Informed by the prevailing “jealousy of credit,” the English anticipated that the decline of France's credit would translate into a rise of credit in England, which would shift the balance of power in England's favor (Shovlin 2016: 278).

Although the London newspapers did not take much notice, by mid-March a certain excitement was starting to build around the company. By March 19, the price of the stock stood at £195, and a week later it had skyrocketed to £350, an 80 percent increase in just a few days! The Daily Post reported that the brokers were selling options wagering that the stock would rise above £500 in a month. Clearly something was happening. The underlying event that triggered the rise was that Parliament had voted 201 to 31 on March 21 to select the South Sea Company's conversion scheme over that proposed by the Bank of England. Although it still had to await final approval by King George I and would take another few weeks before the annuities would be converted into company stock, investors clearly welcomed the news of the parliamentary decision. The rise in the price of South Sea stock was contagious. As noted above, many other companies saw their share price beginning to appreciate rapidly. This moved one newspaper to issue a dire warning to all those gentry and rich farmers traveling to London in order to wager the riches “the Industry and Care of their Ancestors” had created: there were far more blanks than prices to be had in Exchange Alley.15

The scheme received royal assent on April 7, and the company commenced the debt conversion a week later, something that many of the London newspapers noticed. The first conversion of annuities into stock and the first two money-subscriptions were reportedly very successful. The Weekly Journal noted that the first money-subscription led to a million pounds “subscribed in an Hour's Time.”16 According to the Daily Post, the interest of the public was unmistakable—“People shewing the greatest Eagerness imaginable to come in.”17 Foreign investors were also attracted to London. Large sums of French and Dutch funds were reportedly arriving along with instructions to purchase South Sea shares.18 At a moment when the stock stood at £340, a colonel parted with a set of horses upon the condition that if the South Sea stock traded above £500 by the end of the month, he would receive £1,500 for his horses. In the event that the price stayed below, he would receive nothing at all.19

To posterity, there were plenty of indications that a bubble was forming. Why did the newspapers not pay more attention to the company, and why did they not write more about the fact that the London stock market was enveloped in a speculative craze? The simple and obvious answers to these questions was that the reporters and opinion makers had no previous experience with stock market bubbles and therefore did not recognize the emerging pattern. There was no theory or knowledge of stock market booms and busts. While there had been one previous asset price bubble sparked by speculation in Europe—Tulipmania in Holland in the 1630s—this was not part of the popular memory in England at the turn of the eighteenth century. The London press simply did not recognize the pattern that would later become known as a stock market bubble. They were venturing into unchartered territory, trying to make sense of something they had never seen or heard about before.

Some articles offered explanations of the South Sea scheme that made it appear reasonable for investors to continue buying shares, even as prices were rising rapidly.20 The way the scheme was structured, the South Sea Company would have plenty of cash on hand to pay out generous dividends. The Weekly Journal revealed that by giving the company the privilege to convert the entire outstanding national debt into corporate stock, Parliament gave the company the right to issue the quantity of shares that at par (£100) would suffice to absorb the approximately £31 million national debt. The article explored various scenarios depending on the future evolution of the stock price. If the shares would trade at £300, the company would be able to sell the remaining stocks for close to £63 million in cash. If the shares would trade at £600, the revenues would amount to the astronomical figure of £155 million (corresponding to approximately £38 billion today). As the article points out, this would have made it rather easy for the company to cover the payment of £7.5 million to the government. It is, of course, debatable whether the South Sea Company actually would have been able to sell that many shares, at such high prices, but it certainly seemed to contemporaries that the company was sitting on a veritable gold mine. The company's financial prospects, combined with its long-term trading opportunities once the trade of slaves to South America was restored, suggest that investors were quite sensible in buying into the scheme and thus further pushing up the price.21 What exactly the stocks were worth, no one knew, and there was very little agreement as to how to even think about the evaluation of stocks (Deringer 2018: 188–89).

The South Sea Company continued to fly under the radar for most of the spring of 1720. Even though the company won the privilege to absorb the national debt and its stock price increased from £127 to £350, there was remarkably little coverage of the company in the London press. By far the most active newspaper to report on the company was the Weekly Journal. Many of the other newspapers hardly mentioned the company at all. To be sure, there were a handful of articles suggesting that an excitement was building, but in no way can it be said that the company was a protagonist in the news stories or that the public had become obsessed with it. Coverage of the company did not come close to the trending topics of the day, which included reports of diplomatic wranglings, news from Newgate Prison, and commentary on political gossip.

The Bubble (May–July)

For most of the month of May, the company's shares remained around £350 and the relative paucity of articles covering the company persisted. Yet May was the month in which the run-up in prices began in earnest. It was also the month in which the term bubble was first used in a newspaper article, not in reference specifically to the South Sea Company, but to the general atmosphere in which a seemingly endless stream of joint-stock companies was launched. While “bubble” to modern readers denotes a rapid run-up of asset prices followed by an even faster decline, to people in the early eighteenth century, a “bubble” referred to a speculative venture characterized by fraud and folly.

On May 7, in a letter addressed to the fictitious editor of the Weekly Journal, Mr. Applebee, an anonymous writer, questioned his lobbying of the government to put a stop to the creation of additional joint-stock companies. Comparing these efforts to Don Quixote's battles with windmills, the letter writer tried to convince Mr. Applebee that he was fighting an unwinnable war. He ought to recognize that the English people had become obsessed with bubbles, and there was nothing that the government could do to prevent it. Indeed, if the government put a stop to the formation of new companies, it would not put an end to the speculation, but rather channel all the existing funds into one giant bubble. It would “raise [the South-Sea] Stock to a yet more exorbitant Degree.” A month later, when Parliament passed the so-called Bubble Act, requiring all joint-stock companies to be authorized by royal charter, nearly all the bubble companies disappeared and the South Sea stock began to appreciate even faster, confirming the predictions made by the Weekly Journal.

The Court of Directors of the South Sea Company issued a statement in May that the first conversion of annuities would occur at £375. Less than a week later the stock stood at £480, and by May 30 it had broken the £500 barrier. The colonel must have been delighted to fetch such a high price for his horses! Another newspaper reported that the recent increase in prices attracted people of means from Amsterdam and Hamburg, who had come over to “throw great sums of money into our South Seas.”22 Defying the idea of a zero-sum game, stocks in the Mississippi Company were also quickly appreciating, reportedly making the French court so satisfied with Law's handling of France's finances that they ennobled him.

The South Sea Bubble, although no one called it that, was fully underway by mid-June.23 Yet, once again, there was still no discernible increase in the number of articles reporting on the rapid run-up of prices. Even as the stock passed the £800 mark by June 10, and then finally reached its all-time-high of £1,000 two weeks later, the newspaper attention remained minimal. The newspapers did report that the revenues from the company's third money-subscription (June 17) would be lent to investors so that they could buy additional stock.24 Although the newspapers did not spell out the details, what they were referring to was the company's strategy to bolster stock prices by allowing investors to pay on installment. They had to put down only 20 percent of the purchase price of newly issued shares, which enabled them to buy more than their liquid wealth allowed. Clearly the directors were trying to fuel the stock's appreciation.

The murmur of discontent regarding the nouveau riche flaunting their new wealth was now becoming louder. News about rich investors gallivanting around London in their new coaches was upsetting to many. There were reports of how some of the “above fifty new Coaches” parading around Hyde Park on a recent Sunday were met with insults from a mob.25 Further fueling the disdain was the fact that many of the investors were women.26 One woman quoted in the Weekly Journal said that “among all the Ladies of [her] Acquaintance,” she was the only one not to own any shares.27 In a letter to Mr. Applebee, the fictitious writer Endimeon Easy offered an account of a recent encounter with a group of stock-jobbing women. He was amazed that they knew all the financial jargon and that they were fully at ease operating in Exchange Alley. When he asked a young woman why she was pursuing South Sea profits instead of a husband, she responded that men are “Bagatelles, fit only for Idle Girls to hearken after, and not for Women of Business, who can get more by Stocks in one Hour, than the Hearts of the whole Sex are worth.”28 The letter writer further lamented that so many women had become addicted to stock-jobbing, a type of gaming that promoted avarice and instability, neither one of which was becoming of decent women. There was already a well-established practice of assigning female gender stereotypes to credit. Following Defoe's lead, commentators employed the figure of Lady Credit as a metaphor to satirize the dual nature of credit. Like women, they argued, credit was capable of giving life, but it was also prone to hysteria, bouts of melancholy, and tended to be irrational (Brown 2001; De Goede 2005: chap. 2).

Finally, in July, the press gradually started to pay serious attention to the company. The articles were both more frequent and more extensive. On July 2, for example, the London Journal published an issue that with a generally sympathetic tone explored multiple issues pertaining to the South Sea Company.29 First, the article addressed the rumors that the company was about to announce a massive 25 percent Christmas dividend. This was such an absurd and damaging conjecture, the article opined, that any sensible person would dismiss it as “ridiculous and chimerical.” Second, the article examined the Bubble Act and its consequences. The readers were informed that the act, which was given the moniker Act for Suppressing the Bubbles, had had exactly the predicted effect. Many of the recently launched joint-stock companies disappeared overnight. While this turn of events caused some suffering, the author insisted that this was all the fault of the stockbrokers who had fooled so many to buy into the new bubble companies. These nefarious stock-jobbers, who had enticed investors to drink “deep[ly] of the Delusion,” could no longer walk anywhere without being followed “with Reproaches, Threats, and bitterest Curses of the poor People they have deluded to their Destruction.” The article praised the act for redirecting funds toward the real source of national happiness, “Trade and Commerce,” and for bringing a certain calm to Exchange Alley, where people could now move around freely, unobstructed by “Crowds and Bubblers.”30

The article also presented the Court of Directors in a favorable light. It noted that they had in no way anticipated (and thus certainly not fraudulently orchestrated) the rise of the stocks. Apparently one of the directors, when asked by a friend whether to sell his stock when it was trading at £160, had encouraged him to do so, thus preventing him from making more than a hundred thousand pounds. The article also mentioned, but did not make a big deal of the fact, that the directors had been very “Generous” to clerks and officers of both Houses of Parliament. Exactly how liberal the directors had been in the two most recent money-subscriptions is unclear, but the article did not label this as an irregularity, nor did it accuse the directors of illegal bribes, which is how historians later interpreted this act of “generosity.” This article reads as a defense of the directors against many of the accusations that would later, after the bursting of the bubble, emanate from the critics.

As the stock price hovered around £1,000 for most of July, the London Journal predicted that the stock price would rise even further. It anticipated that once the company proceeded with the conversion of the outstanding annuities, the stock would rise to £1,200 and perhaps even as high as £1,500. This would produce even more “extraordinary stories” of South Sea gentry becoming fantastically rich, much like the man from Southampton who just a few years prior had been worth £20, but now commanded wealth beyond £100,000. Reportedly, the windfall increase in wealth had led to a massive increase in the value of estates outside London. Prices had more than doubled, and there were barely any estates near the capital available for sale.31

Finally, the article also mentioned that “the French” had acquired some £5 million of South Sea Company shares. While agents operating in Exchange Alley on behalf of the Mississippi Company had allegedly been trying to sink the South Sea Company stock, they had failed miserably in this effort (Shovlin 2016). Apart from losing significant sums of money, the French agents had found out the hard way that England's military and financial muscle was powerful enough to resist encroachment from any foreign power.

While this issue of the London Journal was unique in terms of the scope of its analysis of the South Sea Company, there was definitely a surge of interest in the company in July. While articles published earlier in the year reported mostly on past events, in July there was an increase in reporting on rumors and hearsay regarding the company. Many articles included phrases such as “We hear that the South-Sea Company will . . .” and “It is thought the South-Sea Company will . . .”32 The phrasing of these articles suggests that they were devised in a speculative atmosphere, in which people were clamoring for any bit of information that might profitably be put to earlier use. These announcements were rhetorically juxtaposed to articles that had proclaimed, “We are certainly informed that . . .” or that simply reported a development post hoc.33

Later in July, the Weekly Journal published a letter to the editor, signed “Cleverkin,” in which the rise of the South Sea stock was ridiculed for defying any sensible scientific explanation. Cleverkin began by saying that since “every Dabbler in Sciences ventures at Systems and Schemes, I would not willingly be out of Fashion.” He then went on to credit Sir Isaac Newton for explaining, using the “Rules of Geometry,” that tides are caused by the location of the sun and the moon.34 This theory explained the underlying causes of tides in most oceans, but it could not account for the “Motions and Phaenomena of the South Sea.” While most seas rise and fall, the South Seas just kept on rising. “To go back one Month or two, May 17, which is one of the Quarters of the Moon, the Sea rose but to the Height of 300 and odd, which in the ensuing New Moon, viz. the 26th, was at near 500 again in the next Quadrature, the Sea, which could not surmount 700; was, in the approaching Full of the Moon, viz. June 9, risen not only to a greater Altitude, but likewise overflowed in two several Streams, called by the Inhabitants, Subscriptions.”35 Now that the stock stood at £1,000, to what heights it would reach during the next full moon, no one could predict.

Even though there were some articles probing the South Sea scheme and marveling at the meteoric rise in its price, there was no sense of fear that it would all soon come crashing down. No one was seriously arguing that investors crowding Exchange Alley had lost all rhyme or reason. The newspapers kept a close watch on Exchange Alley, but the attention was not trained on the numbers and what they really represented. Instead of market analysis, most of the articles focused on the broader social and political implications. The “news” was not the actual value of the South Sea shares but the South Sea gentry, the geopolitics of credit, the role of Parliament, and the status of the company vis-à-vis the bubblers.

The Bursting (August–September)

If the London press commented sparingly on the rise in South Sea Company stock prices, the initial decline encountered almost complete silence. On August 6, the Original Weekly Journal briefly noted, without any further elaboration, that in the last three days the stock had fallen by £100. Instead, the newspapers elected to complain about the nouveau riche. The Weekly Journal complained about “City Ladies [who] buy South-Sea Jewels, hire South-Sea Maids, and take new Country South Sea Houses; [and about how] the Gentlemen set up South-Sea Coaches, and buy South-Sea Estates, that they neither examine the situation, the Nature, or Quality of Soil, or Price of the Purchase.”36 The London Journal added that the South Sea gentry, “who having more Money than they know what to do with,” were buying up estates and thereby displacing “Antient Families” who had made “good old England preferable to any Nation in the World.”37 The stock market boom, they feared, was reshuffling the social hierarchy in an unsettling fashion.

Just as the stocks began to fall, the London Journal published two opinion pieces written as letters to the editor with diverging views on the directors of the South Sea Company. The editor announced that these two viewpoints were published so that the “World may judge of our impartiality.” In the first letter, the anonymous writer reported of having overheard vitriolic language spoken about the company and its directors during a recent visit to Exchange Alley. He initially thought that the harsh words were aimed at the bubble companies, but he soon found that the person was railing against the South Sea Company itself. He charged that “all was a Cheat, a Bubble, and all the Directors Thieves and Pickpockets.” To better understand where the angry man was coming from, the writer asked him how many stocks he owned—to which the man answered, “I STOCK! no not I, I assure you; I have nothing to do with them, nor their Stock either.” This led the writer to conclude that the man was merely raging out of jealousy. He decided that the best way to change the man's mind was by signing him up for the next money-subscription. At a later date when the writer returned to Exchange Alley, the “railing Gentleman” was “quite turn'd; and the South Sea was on a sudden become a mighty good Project, and the Directors very honest Gentlemen.” The moral of the story was thus that objections against the South Sea Company had nothing to do with any inherent faults with the company, but everything to do with the jealousy and envy of those who were left out.38

The second letter, signed “Bubble,” addressed the earlier announcement that the directors of the South Sea Company, “who have got the largest Sums by the Stocks, have agreed to build an Hospital for the Entertainment of a certain Number of antient, decay'd Men and Women, and to endow it at their own Expence.”39 “Bubble” scorned the motivation behind this enterprise. He asked whether such a hospital was designed to “expiate all the South-Sea Sins of the Company” or whether it was to be regarded as a “Sacrifice” for the “whole Congregation?”40 It was only appropriate, the letter writer added, that since the “Company had ruined our Trade, they could do no less than build an Hospital for the Tradesmen.”41 Hence, one article heaped scorn on the critics of the company for being motivated by jealousy, and the other claimed that the company had undermined England's foreign trade by diverting the bulk of the nation's capital. The London Journal thus suggested that the company made people rich, but acknowledged that it might have come at the expense of the real sources of national opulence: industry and trade.

In addition to these opinion pieces, the same issue also included news about the company's dealings. First, it noted that “All our Eyes here are turned upon the South-Sea Company, who begin to exert themselves more than ever.” On August 12, it was announced that the company had opened the subscription books to take in additional annuities, at the rate of £820. It was also reported that the company was preparing another money-subscription whereby it would bring in £63 million, which they could use to pay dividends for years. By providing the company with such a sizeable treasure of cash, the company would be able to reduce the uncertainty about its share prices and thus put an end to the “great Bite of Stock-Jobbing.” Second, the London Journal noted that fraudulent investors had borrowed more from the company to buy stocks than they were allowed. While the company had offered each person a loan of £3,000 to buy shares, many investors viewed it as such a favorable offer that they borrowed much higher amounts, in some cases ten times as much, by using the names of trusted friends. Finally, the paper reported another fraud whereby certain members of Parliament had forged the names of their out-of-town colleagues in order to be able to convert more of their annuities for shares. Yet, in all these notices, the London Journal put a rather positive spin on the condition of the company and the actions of the directors. If there were problems, they had been caused by corrupt investors, greedy stock jobbers, or unprincipled members of Parliament.

Some articles suggested that the price of the stock was falling due to fundamental problems intrinsic to the company. When the stock was trading around £800, one article pointed out, “’Tis said upon Calculation it has been found that the Value of South-Sea Stock is about 690 to 700.” 42 Other articles remained rather bullish about the stock's future. On August 20, the London Journal noted that when the books for the fourth money-subscription would open the following week, “a vast Crowd will be there.” They would be drawn in by the well-circulated rumors of the company's planned announcement of a generous end-of-the-year dividend, amounting to somewhere between 50 and 80 percent!43 It was later reported that the company took in £1 million on the first day of the fourth money-subscription and that they attracted above a million and a half more than they had anticipated in the annuities conversion a week earlier.44 By August 27, after the stocks had tumbled another £100, the newspapers continued to be bullish, reporting that the fourth money-subscription had attracted “such great crowding of People.” The sense was still that matters were under control and that there was a robust confidence in the company's future. While August must be considered the start of the bursting of the bubble, there was very little in the London press suggesting that such was the case. With no previous exposure to asset-price bubbles, contemporaries had no way of knowing what it was they were observing. Lacking previous experiences with stock-market bubbles, there was simply no reason why they should have been able to predict what would come next. Moreover, like most other people experiencing a bubble, there may have been a reluctance to accept that the fun had to come to an end.

During the first two weeks of September, the South Sea Company stock plummeted by £200, a pace of decline that would almost double in the last two weeks of the month. The stock went from £770 to £200 in a month. A total disaster! While the press had been slow to react for most of the year, this free fall garnered serious attention. For the first ten days of the month, the press focused its reporting on the South Sea Company's desperate efforts to stop the bleeding, including the announcement of a 30 percent half-year dividend by Christmas, a subsequent 50 percent yearly dividend for the next twelve years, and a generous offer to shareholders to buy additional shares without paying the full purchase price in cash.45 While most of these notices were recorded without commentary, some tried to comfort the readers. The Weekly Journal, for example, sought to refute “the malicious Calumny that has been industriously spread” about the company and reassured the readers that the fourth money-subscription had been greatly successful and that “a perfect Harmony” was maintained among the directors.46

Starting with the announcement on September 10 of the South Sea Company director John Blunt's nephew cutting his own throat, the coverage of the company changed—confirming the old journalistic adage, if it bleeds, it leads. Increasingly, the articles conveyed a sense of anger and desperation. The London Journal, for example, which had until now been supportive of the company, completely changed its tune. It endorsed a bill proposed to Parliament that would bar the “South-Sea Gentry” from election to Parliament. By allowing only people who had had a certain wealth before the bubble year to stand for election, these “worthless Men, who having engaged their whole Fortunes in Stocks, and Shams, and Bubbles,” could be excluded.47 The London Journal further blamed the directors of the company for selling off vast quantities of South Sea stock. The greatest blame, however, was leveled at foreign investors who sold off stock in bulk and then moved the money abroad to pursue bubbles and projects in other places, such as Amsterdam and Lisbon.48 Swiss and French investors also sold off shares, with the latter reportedly selling £3 million worth of shares in only three days.49

“The South-Sea is very sick,” reported one paper in mid-September.50 Painting a grim picture, the London Journal described how the “great Mortality among the Bubbles, and the present heavy Indisposition of the South-Sea, has most remarkably changed the Scene of Change Alley from Chearfulness, Coaches and Castles, to Poverty, Wailing, &c. which, like a Plague, rages furiously.”51 Another article reported that the sudden fall in the stock was “the Talk of the whole Town, and has already been fatal to no less than three Pair of Bankers.”52 These and other suicides were just the tip of an iceberg of suffering caused by the bursting of the bubble. According to one news source, some 274 noblemen and people of note were bankrupted by the sudden fall in South Sea shares.53

Starting on September 19, when the stock had fallen to £480, there were some indications in the press that the company was working on a measure, whereby “a great Corporation” would come to the assistance and thereby raise the “Credit of the South-Sea Stock to a considerable Pitch.”54 A few days later, it was reported that during a general meeting of the company, the directors were given “full Power to take what Measures they thought proper” to make the stockholders more at ease. Elsewhere it was reported that the “great Corporation” was the Bank of England and that it had agreed to accept South Sea stocks in payment for a loan. There was also reporting, without specifics, on additional agreements negotiated between the two corporations.55 Despite acknowledging that the stock was trading as low as £175, the Post Boy remained somewhat optimistic: “It is believ'd that the happy Agreement between the Bank and the South-Sea Company will, in a few Days, produce a good Effect on the Publick Credit.”56

A miserable month in the life of the South Sea Company had come to an end. The company was now discussed actively in the London press, and the attention would only grow stronger in the next month. In September and October, there were a couple of hundred articles per month mentioning the company and its plight. While the South Sea director had yet to become the object of derision and rage, it was the South Sea gentry, who had made massive amounts of money during the bubble, who were chastised for weakening the nation by selling their stocks and locking in their gains. They, together with the foreign investors who sold off stocks en masse, were, at least for now, regarded as the greatest culprits.

The Aftermath (October–December)

The London press did not hold back in its description of the hardship caused by the bursting of the bubble in October. The London Journal described Exchange Alley as the “Representation of Hell, and nothing appears but Rage, Distractions, and Despair.” The shockwaves from the crash reverberated throughout society, they noted; the “South Sea Stock has done more real Prejudice to the Nation, than 20 Years War could possibly have effected.”57 Another newspaper reported that the entire London economy was in a tailspin. “The Industry the Trade of the Nation has been suspended; and even Arts and Sciences have languished in the General Confusion.”58 The South Sea gentry, previously flush with cash, were now forced to let go of their staff, “so that [London and its environs] abound now with discarded Valets, Footmen, and Chambermaids.”59 Even though the common people had minimal investments in the South Sea company, the ruin of their employers spread the pain throughout the social hierarchy, or at least so the article argued. Another newspaper proclaimed that the suffering was so general that it had “become unfashionable not to be a Bankrupt.”60Applebee's Original Weekly Journal minted the term “South-Sea Face” for the disposition of the South Sea gentry when the stock fell, in particular when it fell from “a Thousand and Fifty, to a Hundred and Thirty.”61

While starting to recognize that part of the responsibility for the sad state of affairs had to fall on the shoulders of the South Sea directors, the London press continued to put most of the blame on foreign investors, in particular “the Secret Agents of a certain Great Man, in France.” While John Law had already lost millions on the South Sea stock, he refused to stop selling, being absolutely intent on ruining England's credit. Hardly a day passed, the article continued, “without some one or other of his Emissaries arriving at Dover; and they are in such Haste, that they have already kill'd 6 or 7 of the Post-Horses, between that Port and London.”62 England's Francophobia was on full display; the only comfort to the English was that “Missisippi has proved as fatal at Paris, as South-Sea at London,” and on top of that the French were facing the prospect that the plague raging in Marseilles would spread throughout the country.63

In addition to accusing foreigners of having orchestrated the fall in South Sea stocks, at least two newspapers placed some of the blame on Jews. Although they may have been referring to the same incident in which a Jewish man allegedly tried to run down the price of South Sea shares by offering to sell below market price even though he did not actually possess any shares, the two articles described two different mob reactions. The London Journal described how the traders in Exchange Alley were so enraged when the man could not deliver the shares that they “were ready to pull him in Pieces.” They pushed him around for nearly half an hour, and “Business stood still till every one had a fling at him.” He was then delivered to a mob, who received him with “Pelting and Daubing: and they did it so effectually, that ’tis not unlikely he will be cast out of their Synagogue for Uncleanness.”64Applebee's Original Weekly Journal provided a shorter description of the assault. The “gentleman,” it was reported, who had offered to buy stock at the artificially low rate hired a mob “to Insult him.” They first “very handsomely Bastinadoed him, and then decently dipt him in a Horse-Pond.”65

A number of newspapers called for Parliament to act. One article called for King George I's swift return to the capital from Germany so that he could call a meeting of Parliament, which had not convened since June. The London Journal predicted that once the king returned, he and Parliament would make sure that the “Nation effectually recover from all the present Discouragements; Credit revived, the Fall of Stock retrieved, and Commerce encouraged.”66 The prospects of such a reversal was grounded in the calculation that the South Sea Company was, despite the decline in its stock price, financially solid, with good commercial prospects. The London Journal reported that the four money-subscriptions had netted the company £50 million and it still had another four million shares in store that could be sold to raise additional cash. The author did not take note of the fact that many of the stocks had not been fully paid off. In numerous articles, Robert Walpole was mentioned as the person with the plan that would redress “our present Grievances.” It was suggested that Walpole's scheme would make the South Sea stock rise again to £500—presently it stood at £200—and “all Things to be restored to the late happy Situation.”67 This is not the last time that Walpole would figure in the history of the company. Indeed, it was his handling of the situation in 1721, many historians argue, that put him in position to become prime minister, an office he would hold for two decades. While some historians question his financial acumen, his contemporary critics focused on his alleged sheltering of some of the leading figures behind the scheme (Paul 2011).

Although the terms had not yet been decided upon, everyone knew that it would involve the Bank of England. At the September 30 board meeting, the directors had announced that the Bank had agreed to accept a debt payment owed to them from the South Sea Company in South Sea stock and that they would also help to circulate South Sea bonds.68 The Daily Post reported from the board meeting that numerous speeches had “expres'd very great Satisfaction in what the Directors had now done.” Yet the announcement did not have the effect the directors had hoped. While the stock appreciated momentarily to £280, it soon fell back to £250 by October 8. The Weekly Packet reported that “it will hardly get up higher, ’till the Sitting of the Parliament.”69 The papers also reported on the many ways in which the South Sea directors adjusted the terms of the past subscriptions and debt conversions, as well as speculations and announcements about future dividends. The company also tried to bolster the public's interest in its stock by reminding everyone that the company was still a trading company engaged in the highly lucrative colonial trade. Once peace was restored with Spain, the company would be able to start trading again. Various papers reported that the company had announced a sale on October 27 of sugar from Barbados, Antigua, Nevis, and St. Christopher.70 None of this seems to have had much of an effect on the share price, which traded around £220 by the end of the month.

Together with the vast increase in newsprint dedicated to the South Sea Company during the month of October, “several Pamphlets are daily publish'd for and against the South Sea Scheme, and the Measures taken, or propos'ed for Redress.”71 There were also numerous advertisements of the printing of satirical ballads, as well as decks of playing cards, containing images and epigrams mocking the present culture of speculative finance. The South Sea Company had become a central focal point of the public sphere. There were also reports of a great deal of anger and agitation among the stockholders. The Daily Post reported that there was a meeting in which the stock owners discussed various proposals for “remedying the ill State of their Affairs.” No agreement was reached, and soon the meeting reportedly became so heated, filled with “indecent Expressions,” that a “Gentleman invested with proper Authority” announced that he would read them the Riot Act, at which point the assembly dispersed.72

September and October definitely witnessed the year's most intense coverage of the company. A steady stream of articles continued for the rest of the year, but for the most part the intensity and anger had subsided. There were certainly exceptions. In the second issue of what would become the famous Cato's Letters, published initially in the London Journal, Cato, the penname for John Trenchard and Thomas Gordon, argued that while the plague of Marseilles had taken sixty thousand lives, the South Sea Bubble “has done worse, it has render'd a much greater number of lives miserable.” Cato blamed the directors and the stockbrokers. Focusing on the latter, Cato argued that they were nothing but crocodiles and cannibals, feeding on human bodies. “The resurrection of honesty and industry can never be hoped for, while this sort of vermin is suffered to crawl about, tainting our air, and putting every thing out of course.”73 The solution was to hang them. Cato added, “I would have no new tortures invented, nor any new death devised. In this, I think, I shew moderation; let them only be hanged, but hanged speedily.”74

Increasingly the blame for the South Sea debacle fell on the directors. It is unclear from the newspaper reporting why the shift in the blame pattern occurred at this very moment. It started slowly. The Weekly Packet, for example, indirectly accused the directors. “Where the Blame lies we know not; but the Ladies that have lost their Fortunes by South Sea Stock, when in Playing at Cards they turn up a Knave, they have got a Trick of saying, there's a Director for you.75 One unnamed director of the company, who had taken it upon himself to pretend that he had “received a mortal Wound in his Fortune from the present Calamities,” was accused of fakery. His poverty was a sham—in reality he was “possessed of an Indies of Wealth.”76 It was also reported in the press that the directors had been called to a meeting with the “great Minister of state.” Around the same time, the directors traveled to St. James, to congratulate the king on his happy return, “but we don't hear what Reception they found.”77

As part of placing the blame on the directors, some newspapers dismissed the claim that Law and his agents had had anything to do with the South Sea collapse. Applebee's Original Weekly Journal quoted a letter sent from France, in which a person who had allegedly attended the Council of the Regency recalled that Law assured his audience that it was by “his Management that the Stocks in foreign Countries were fallen to that Degree.” He was pleased to “say openly” that he “had ruin'd the South-Sea Project in England . . . and he would, in a little Time, overthrow the Commerce.” In a commentary on that letter, the editor soundly dismissed the accusation as preposterous. There is simply no way “that Mr. Law, or his Agents, are able to influence our Stocks one Way or other.” If he would try, he would only find that the “Credit of Great Britain, however wounded by our late Follies, is too bulky and too weighty a Thing for them to meddle with, one Way or other.”78 The fact that the Mississippi Company was in worse shape than the South Sea Company fed the jingoism of the English.

The South Sea stock had started the month of October trading around £220 and ended the month trading around £200, although there had been quite a bit of volatility in between. Some newspapers were still hopeful that the deal with the Bank of England would lead to a “considerable Rise on South-Sea Stock.”79 Others suggested that the price of the stock would likely fall or, at any rate, never reach the level (£400–500) to which the directors aspired. “The Profits of the Company's Trade, and all the other Privileges and Advantages to which they are at present intituled,” are far from substantial enough to restore the stock's value, opined one newspaper.80

The reporting on the South Sea Company during the months of September and October had been full of dramatic descriptions of how horrific conditions were in London. The bursting of the bubble was said to have created a general crisis, in which both the economy and morality suffered. November saw very little of that type of reporting, and December even less. During the last month of the year, journalists did not, with any regularity, paint nightmarish scenarios but focused on the culpability of the directors and the various efforts to broker a Bank of England bailout of the company.

The London Journal seems to have led the pursuit of the directors. It described them as “Fools” and “Knaves,” whom no one should trust with the management of their wealth. The directors had allegedly tried to bribe those who were opposed to the scheme and give them free shares in the third money-subscription.81 They were also blamed for using great sums of the company's money to buy shares in order to prop up its value.82 Another newspaper insisted that while at an earlier point the folly and knavery of the directors could have been undone and reversed, by December the only remaining option was to completely eradicate the scheme.83 This is exactly what had happened in France. As the Post Man reported: “The late Scheme of Mr. Law is overturn'd”; the Mississippi Company “is now depriv'd of all the King's Revenues, except the Farm of Tobacco, and that from henceforth they shall not have the Management of any of the Annuities in that Kingdom.” The article continued, “that Company, which has been the Ruin of that Country, is now reduced to its proper and primitive State.”84 While the Mississippi Company ceased to exist, the South Sea Company soon resumed its trading to South America and continued for more than a century to manage part of the public debt. Had the company and all its directors been completely discredited, the government would have moved the Asiento to a different company.

The proposal that Walpole was trying to gain support for in December was a kind of bailout whereby the Bank of England and the East India Company would engraft £9 million of South Sea Company shares.85 The London Journal reported from the Bank of England board meeting that although there were some voices raised in opposition to “having any thing to do with the South Sea Company,” the directors overruled the dissenting voices by assuring them that all business with the South Sea Company would be mediated through Parliament. The East India Company had also met to discuss the £9 million engraftment, but could not reach an agreement and decided to adjourn until the new year.86 The South Sea Company was very confident that Walpole's scheme to employ the East India Company and Bank of England to bail it out would work, and it was indeed signed into law a few weeks later. The ultimate fate of the bailout played out in 1721 and is thus beyond the scope of this article (Swingen 2019). While the company's shares traded as low as £124 in the middle of the December, by the end of the month the stock stood at £210. This was a far cry from the summer high of £1,000, but still substantially higher than the £127 at the start of the year.

Conclusion

The London press provided a running commentary on the events of 1720 that later would become known as the South Sea Bubble. The fact that there had never been a stock market crash before shaped the reporting. The newspapers did not seem particularly alarmed during the run-up of the stock prices in the late spring. In fact, many articles provided an explanation for why it was perfectly sensible for prices to rise even higher. Lacking previous exposure to bubbles also meant that the newspapers did not panic once the stock prices began to fall. It was only in October that readers were exposed to stories of real suffering and panic. Yet this phase passed quickly and soon gave way to a discussion of who should be blamed. The blame game intensified in 1721, leading to a fundamental revision of the first draft of the history of the South Sea Bubble sketched by the London press. What emerged was an image of frenzied irrationality, widespread suffering, profound economic dislocation, and social panic. This version of the bubble soon became iconic. With every subsequent financial crisis, it became more and more legendary and therefore “true.”

Two decades ago, the historian Julian Hoppit disrupted the received narrative of the bubble and proclaimed that much of it was based on mythmaking. In particular, he challenged the notions that the bubble unleashed a mass folly, reshuffled the social hierarchy, and had a deep long-term impact on the English economy (Hoppit 2002: 145). The first effort to grasp the dynamic of the bubble that emerged from the London press in 1720 contains bits and pieces of evidence to support both the traditional narrative and Hoppit's reinterpretation. Regarding Hoppit's first point, the London press did not seem particularly concerned about the rising prices of the South Sea stocks during the late spring and summer. There was not a well-developed sense that people had been gripped by an irrational frenzy. Indeed, the scheme was often described in a way that suggested that the company would be able to raise a tremendous amount of cash, which it could then use to offer generous dividends.87 This suggested that there were legitimate reasons for why people were willing to pay such high prices, especially if they were also keeping an eye on the long-term slave-trading prospects of the company. Seen from this point of view, the price increase was not really irrational and did not require investors to blindly leave “behind all reason and prudence.” Second, there were certainly many stories of people making fortunes, in particular the so-called South Sea gentry. These articles were followed a few months later by numerous accounts of people losing their entire estates, some going bankrupt and some committing suicide. The South Sea gentry were seen as the biggest losers, which suggests that over the course of the year, it was the same people who made a fortune and then lost it. The press did not continue to harp for very long on the experience of those who had lost their wealth—the discussion moved rather quickly to who should be blamed. This suggests that on the whole the social hierarchy remained largely intact over the course of the year. It might thus very well be the case, as Hoppit indicates, that people's losses were manageable and, most important, limited to a group of people that the press did not much admire. Third, regarding Hoppit's claim that the effects on the real economy were limited, there were indeed a few complaints in October that trade and commerce had come to a standstill, but this was certainly not the general impression that emerged from the press coverage. The press stopped reporting on how terrible matters were as early as November. Curiously, there was as much concern about the negative effects on trade and commerce during the run-up of the bubble. The complaint was that too much money was diverted to speculative ventures instead of being invested in commerce and manufacturing.

Although the newspapers in large part corroborated Hoppit's claim that the bubble was not experienced as drastically as legend has it, there is nevertheless little doubt that the South Sea Bubble cast a long shadow over history. While it is beyond the scope of this article to reflect on why the bubble gained such iconic status, a few speculations may be in order. One possible explanation is that the handling of the South Sea affair by Robert Walpole became a major political flashpoint in 1721. Critics used his alleged corruption to attack the character and governance of the prime minister, who in order to defend himself hired the best writers to explain how terrible a threat to England the bubble was and how grateful the nation ought to be for Walpole's expeditious handling of the crisis (Varey 1993: 247; Gibbs 1992). Another explanation why the legacy of the bubble has kept on growing is because all subsequent financial crises have called it into memory. Whether mentioning the bubble in reference to the 1866 panic, the 1929 crash, or the 2008 meltdown, the bubble has become the paradigmatic example of financially induced suffering and hardship. The final reason why the bubble has taken on such outsize importance is because it has been played up, again and again, by critics, as evidence of both the inherent instability of credit and the dangers of government corruption. Whether we recall Adam Smith's critique of how the British state corrupted the economy or President Andrew Jackson's alleged claim that ever since he read about the South Sea Bubble, “I have been afraid of banks,” the experience of the South Sea Bubble has continued to shape our collective economic imagination. As such, even though Hoppit might very well be correct in arguing that the South Sea Bubble was more of a myth, it is nevertheless the case that this myth has continued to have massive effects on our understanding of economic life.

The author would like to thank participants at the 2022 HOPE conference for many useful suggestions. Thanks to Will Deringer, Tiago Mata, Monica Miller, Steve Pincus, John Shovlin, and Lisa Tiersten for commenting incisively on earlier drafts.

Notes

1.

It is also one of economic history’s most written-about events, starting with Charles Mackay (1841) and continuing with, just to mention a few, Carswell 1960, Sperling 1962, Dickson 1967, Neal 1990, Roseveare 1991, Dale 2004, Paul 2011, and Codr 2016.

2.

Published as part of a volume dedicated to the theme “Economics and the News,” this article focuses entirely on how the bubble was depicted in the London press.

3.

This is not to suggest that the financial turmoil was limited to London. While historians have for some time explored how the financial crisis evolved in London, Paris, and Amsterdam, lately there has been an increased recognition that other parts of Britain (Walsh 2014; McDiarmid 2023), as well as Europe and the Americas (Condorelli and Menning 2019), were affected.

4.

Weekly Journal or Saturday’s Post, January 9.

5.

Weekly Journal or British Gazetteer, January 7.

6.

Daily Post, January 16.

7.

Ludlow Post Man or the Weekly Journal, January 29.

8.

Weekly Packet, February 13.

9.

Weekly Journal or Saturday’s Post, February 13.

10.

Post Boy, February 18.

11.

Weekly Journal or Saturday’s Post, February 20.

12.

Weekly Packet, March 5.

13.

Amsterdam was also mentioned as a nodal point in the increasingly transnational flow of capital; so was Hamburg on occasion. While recent scholarship has pointed to the existence of a broader, pan-European, financial network, the London press during 1720 kept the focus almost entirely on London, Paris, and Amsterdam.

14.

Daily Post, March 22.

15.

Weekly Journal or Saturday’s Post, March 26.

16.

Weekly Journal or Saturday’s Post, April 16.

17.

Daily Post, April 30.

18.

Weekly Journal or Saturday’s Post, April 30.

19.

Original Weekly Journal, April 23.

20.

For a modern discussion that challenges the notion that bubbles are ordinarily the results of herding, see Garber 2000.

21.

The April news coverage of the South Sea Company drew to a close with the publication of a brief note on April 30 in the Original Weekly Journal suggesting that the South Sea Company “will petition to have the Islands of Nevis and Christophers given them by the Crown, for the better carrying on their Trade to the South Sea.” This is noteworthy because it was one of the only articles during the whole year that referenced the company’s colonial trade. While it was not forgotten that the company was founded to carry out the slave trade to Spanish America, it was far from the investing public’s mind at that time.

22.

Weekly Journal or Saturday’s Post, May 28.

23.

In a May 7 letter to Mr. Applebee in the Original Weekly Journal, the author came very close to minting the expression South Sea Bubble. Julian Hoppit (2002: 163) notes that the first use of the term was in 1771.

24.

Daily Post, June 18.

25.

Original Weekly Journal, April 2 and April 9.

26.

It is estimated that some 20 percent of the investors were women (Ingrassia 1998: 2; Carlos and Neal 2004).

27.

Original Weekly Journal, April 23.

28.

Original Weekly Journal, June 4.

29.

London Journal, July 2.

30.

London Journal, July 2.

31.

London Journal, July 2.

32.

For example, Daily Post, July 8; Applebee’s Original Weekly Journal, July 23; Daily Post, July 23; and Weekly Journal or British Gazetteer, July 23.

33.

Daily Courant, July 29; Post Boy, July 30; and Evening Post, July 30.

34.

Newton himself apparently expressed a similar notion after he incurred substantial losses in the crash. According to legend, he said that he could “calculate the motions of the heavenly bodies, but not the madness of people.” Andrew Odlyzko (2018) questions the veracity of this legend. For further discussion of the relationship between the bubble and notions of spontaneous order, see Wahrman 2019.

35.

Weekly Journal or Saturday’s Post, July 23.

36.

Applebee’s Original Weekly, August 6.

37.

London Journal, August 27.

38.

London Journal, August 6.

39.

London Journal, August 6.

40.

London Journal, August 6.

41.

London Journal, August 6.

42.

London Journal, August 13.

43.

London Journal, August 20.

44.

Applebee’s Original Weekly Journal, August 27.

45.

Post Boy, September 3; Daily Courant, September 7.

46.

Weekly Journal or British Gazetteer, September 10.

47.

London Journal, September 10.

48.

London Journal, September 10.

49.

Applebee’s Original Weekly Journal, September 10.

50.

London Journal, September 17.

51.

London Journal, September 17.

52.

Applebee’s Original Weekly Journal, September 24.

53.

London Journal, September 24.

54.

Daily Post, September 19.

55.

London Journal, September 17.

56.

Daily Post, September 30.

57.

London Journal, October 1.

58.

Weekly Packet, October 1.

59.

London Journal, October 29.

60.

Applebee’s Original Weekly Journal, October 1.

61.

Applebee’s Original Weekly Journal, October 8.

62.

London Journal, October 1.

63.

Weekly Journal or Saturday’s Post, October 15.

64.

London Journal, October 22.

65.

Applebee’s Original Weekly Journal, October 22.

66.

London Journal, October 29.

67.

London Journal, October 22, 29.

68.

Weekly Journal or Saturday’s Post, October 1.

69.

Weekly Packet, October 8.

70.

Daily Post, October 20.

71.

Weekly Journal or British Gazetteer, October 29.

72.

Daily Post, October 19.

73.

London Journal, November 12.

74.

London Journal, November 19.

75.

Weekly Packet, November 5.

76.

London Journal, November 12.

77.

London Journal, November 19; Applebee’s Original Weekly Journal, November 19.

78.

Applebee’s Original Weekly Journal, November 12.

79.

Daily Post, November 21.

80.

Weekly Journal or British Gazetteer, November 12.

81.

London Journal, December 3.

82.

Stamford Mercury, December 22.

83.

Weekly Journal or British Gazetteer, December 24.

84.

The Post Man, December 31.

85.

Weekly Journal or British Gazetteer, December 3.

86.

London Journal, December 31.

87.

Some economists question this logic and argue that it would not have been possible for the South Sea Company to prop up its share prices by issuing cash from selling its own stocks (Quinn and Turner 2020: 24).

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